Abstract
The importance of small business enterprises in a free market economy is reflected by their contribution to economic activity, maintaining competitiveness, and provision of employment opportunities. Despite their economic importance, small business firms are characterized by a high failure rate, inter alia, owing to their unique problems. The independent entrepreneur accordingly has a definite need for aid - which is rendered to the small business sector in the majority of capitalistic countries, including South Africa. It would appear that research in the field of small business has, almost without exception, been conducted in an unsystematic and fragmentary manner. In this paper a conceptual framework, which is based on the developmental approach and the life cycle concept, is advanced. By relating the specific problems of small business firms to the stage of development of the firm in a strategic sense, a systematic approach for studying the dynamic small business firm ensues. This approach will also serve as a conceptual framework for: research into small business firms; developmental aid to the small business sector; development and training of entrepreneurs; financing considerations by the financial sector; and strategy formulation and implementation for the small business firm as such.
Highlights
The term 'strategy' has been borrowed from military science and is derived from the Greek word 'strategos' which literally means 'general'. 1 Various definitions of the term are found in the management sciences, where it is usually used in reference to '8.e strategy of a specific enterprise
The importance, numerically speaking, of the small business sector is clear from the following examples: The small business sector in the United States of America (USA) consists of more than 14 million small and independent business firms, representing 970Jo of all business firms in the USA. 11 The Small Business Advisory Bureau estimates that 75 000 small business firms are currently active in South Africa
An illuminating example illustrates the extent to which the small firm is an important partner of the large-scale enterprise: General Motors in the USA buys goods and services from more than 37 000 independent small business firms, 750Jo of which have fewer than 100 employees
Summary
The term 'strategy' has been borrowed from military science and is derived from the Greek word 'strategos' which literally means 'general'. 1 Various definitions of the term are found in the management sciences, where it is usually used in reference to '8.e strategy of a specific enterprise. 1 Various definitions of the term are found in the management sciences, where it is usually used in reference to '8.e strategy of a specific enterprise. 'Strategies are general programs of action with an implied commitment of emphasis and resources to achieve a basic mission. They are patterns of major objectives, and major policie~ for achieving these objectives, conceived and stated in such a way as to give (the organization) a unified direction.' 2 The small business firm in a capitalistic system, where the entrepreneur stands in a dynamic changing and competitive environment, is the point of departure of this paper which presents, firstly, a review of the nature of the small business enterprise and, secondly, a strategic approach to small business development. Despite the increasing importance of large firms in most industrial countries, 3 there is renewed interest in the small firm. 4 Before certain features of small business enterprises are discussed, we may well ask what is meant by this term
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