Business Start-ups and Their Prospects of Success in South African Townships

Abstract

ABSTRACT There is consensus within South African society that black entrepreneurship needs to become a more widespread phenomenon. To achieve this aim, it may be helpful to know more about existing black entrepreneurial ventures. Mainly based on a survey of 90 entrepreneurs in a South African township, this article investigates the questions: What characterises black township entrepreneurs? Into what businesses do they venture? And, most importantly, are their businesses successful? The profile of the entrepreneurs yields an over-representation of men, a dominance of middle-age groups, and an above-average level of schooling. The vast majority of the start-ups are informal, necessity-driven businesses in the trade, service and catering sectors. Generally, a successful township start-up can be described as being initiated by a middle-aged man with a relatively high level of schooling and industry-specific experience in the relevant branch; the venture is formally registered; a certain amount of money is invested during the start-up period; and the business operates in the handcrafts or construction sectors. Restricted financial and human capital resources are major barriers for the expansion of black entrepreneurship. The results also suggest that the main problem is not creating interest in entrepreneurship, but putting the black population in a position where they will be empowered to take the step into entrepreneurship with better prospects of success.