The Financial Bootstrapping Methods Employed by New Micro Enterprises in the Retail Sector in South Africa

Abstract

New micro-enterprises in the retail sector are vital to the growth of the South African economy. Inaccessibility to formal debt and equity markets is one of the primary causes of the failure of new micro-enterprises in South Africa. Innovative financing methods are vital to the survival of new micro-enterprises in South Africa. This study investigates the financial bootstrapping methods employed by new micro-enterprises in the retail sector in South Africa. Data was collected through the use of self-administered questionnaires in a survey. Descriptive statistics and factor analysis were used for data analysis. Factor analysis identified four bootstrapping methods from twenty nine question items. These are owners’ resources, accounts receivable management, sharing resources and delaying payments. Recommendations to improve financial bootstrapping by micro-enterprises are suggested. DOI: 10.5901/mjss.2014.v5n3p72