Track: Business Management

Abstract

Small to medium sector enterprises (SMEs) play a critical role towards the development of any country including that of South Africa. "SMEs play a significant role in the reduction of poverty, reduction of unemployment and promoting entrepreneurship within the country and they make valuable contributions to the gross domestic product (GDP) of any country. SMEs within South Africa constitute ninety-one percent of all formal business and they are recognised to be of great importance to the economy. Many governments employ the development of SMEs as a means of addressing several socio-economic challenges and goals of a country. Despite the significant role played by SMEs in the countries around the world, they face several challenges that hinder their organisational performance and socio-economic development. This research thus explores the challenges faced by SMEs in South Africa and their effects on the business performance based on a case study. The findings from this study revealed that the challenges faced by SMEs have a significant and negative influence on organisational performance. Challenges that arise as a result of individual factors (management's/entrepreneur's age, education, work experience, personal values, professional support network and moral support network) have the most significant impact on business performance. Based on the study findings recommendations were made particularly addressing the individual factors that represent challenges to the company. The recommendations if heeded will resolve the challenges faced and improve the company's business performance.