Table 5.2, following, presents all the SNE-related demographics relevant to this study.
Table 5.2: SME Demographics
Variable Categories N (%)
Legal status of the SME
Private limited corporation 32 (25.6)
Close corporation 18 (14.4)
Partnership 38 (30.4)
Sole proprietor 37 (29.6)
Province
Gauteng 15 (12.0)
KwaZulu-Natal 75 (60.0)
Eastern Cape 10 (8.0)
Free State 3 (2.4)
Limpopo 3 (2.4)
Mpumalanga 2 (1.6)
North West 4 (3.2)
Northern Cape 3 (2.4)
Western Cape 10 (8.0)
Number of employees
Up to 5 48 (38.4)
6-20 37 (29.6)
21-50 18 (14.4)
51-100 14 (11.2)
101-200 5 (4.0)
>200 3 (2.4)
SME sector
Agriculture 16 (12.8)
Manufacturing 6 (4.8)
Construction 11 (8.8)
Mining and minerals 3 (2.4)
Business service 10 (8.0)
Travel and tourism 3 (2.4)
Healthcare, education, social services 7 (5.6)
Wholesale and retail trade 15 (12.0)
Motor vehicles and motor services 6 (4.8)
Finance 5 (4.0)
Transport and communication 5 (4.0)
Customer services 16 (12.8)
Other 27 (17.6)
Age of SME
<3 years 47 (37.6)
3-<5 years 23 (18.4)
5-<10 years 36 (28.8)
10-15 years 7 (5.6)
>15 years 12 (9.6)
5.5.1 Legal status
According to Table 5.2, 30.4% of the SME sample’s legal status relates to a partnership, followed by 29.6% (n = 37) sole proprietors, 25.6% (n = 32) private limited corporations, and 14.4% (n = 18) close corporations. The majority of SMEs included in this study was partnership structured (30.4%, n = 38). The literature indicates that SMEs in South Africa face numerous (micro and macro) challenges; however, partnership tend to be one of the strategies employed to mitigate many of these challenges. In particular, the literature highlights that partnership legal structures tend to alleviate certain challenges for SMEs and help to produce SME sustainability, growth, and development. Therefore, the majority of the sampled SMEs in this study’s legal status of partnership correlates with the literature regarding partnership strategy structures for SMEs’ development and growth in South Africa.
5.5.2 Provinces
Table 5.2 indicates that 60% (n = 75) of the participating SMEs are based in KwaZulu-Natal, followed by 12% (n = 15) in Gauteng, and 8% (n = 10) in both the Eastern Cape and Western Cape. The minority is found in Mpumalanga (1.6%); with the Free State, Northern Cape, and Limpopo all with 2.4%; and the North West with 3.2%. The three provinces that contribute the
most to South Africa’s GDP and general economic wealth are Gauteng, KwaZulu-Natal and Western Cape (Herrington et al., 2017; StatsSA, 2019c).
As noted previously, this study’s target population consisted of members of the DCCI, MCC, and JCCI. Two of these Chambers are based in KwaZulu-Natal (i.e., the DCCI and MCC), with the other in Gauteng (i.e., the JCCI). Since these were the three Chambers from where data were collected, it explains why the majority of SMEs that participated in this study were based in KwaZulu-Natal and Gauteng. However, Table 5.2 also shows that the majority of the SMEs that participated come from the three noted ‘highest economic contributing’ provinces, along with a small representation of SMEs from all other South African provinces. All SMEs participated in the study are active members of the DCCI, MCC and JCCI, and the province profile section looks at their location.
5.5.3 Number of employees
From the data presented in Table 5.2, it is evident that the majority of the SMEs that participated in this study employ up to five people (38.4%, n = 48), followed by 37% (n = 37) that employ between six and 20 people, 14.4% (n = 18) that employ between 21 and 50 people, and 11.2% (n = 14) that employ between 51 and 100 people. Only 2.4% (n = 3) of the participating SMEs employ over 200 people, while 4% (n = 5) of SMEs with employees between 101 and 200. The literature indicates that the South African definition classifies SMEs according to size or class of enterprise (i.e., small, micro, or medium), as well as number of employees and annual turnover (Department of Small Business Development, 2019).
Therefore, based on the South African definition, the majority of SMEs that participated in this study could be categorised as ‘small’ enterprises, followed by ‘micro’ enterprises, and then only ‘medium’ enterprises.
5.5.4 Small and medium-sized enterprises sectors
According to Table 5.2, Other-categorised SMEs formed the largest sector of SMEs that participated in this study, at 17.6% (n = 27). The category of Other included SMEs operating in a combination of two or more sectors and/or SMEs involved in a sector not listed as part of the question items. The second largest sectors in which participating SMEs operate are the Agriculture and Customer Services sectors, with 12.8% (n = 16) each. The third highest came from the Construction sector, at 8.8% (n = 11); followed by the Business Services sector with 8% (n =10); and the Health, Education, and Social Services sector, at 5.6% (n = 7). The smallest
SME sectors represented in this study were Mining and Minerals and Travel and Tourism with 2.4% (n = 3) each; followed by Finance, and Transport, and Communication, at 4% (n = 5) each; and Motor Vehicles, Motor Services, and Manufacturing with a total of 4.8% (n = 6). All the SME sectors presented in this study are representative of the study sample, but cannot be generalised to the greater SME population.
5.5.4.1 Small and medium-sized enterprise age
Table 5.2 shows that the majority of participating SMEs have been in business for no more than 3 years (37.6%, n = 47), followed by 36% (n = 28.8) that have been in business for between 5 and 10 years, and 18.4% (n = 23) that have been in business between 3 and 5 years. Only 5.6% (n = 7) of the SMEs that participated in this study have been in business for 10-15 years, with 9.2% (n =12) having been in business for more than 15 years.
The extant literature indicates that SMEs that have been operating for 10 or years are considered to be ‘established’, while SMEs that have been operating for no more than 5 years are considered survivalist (Sitharam & Hoque, 2016). Therefore, the majority of SMEs that participated in this current study can be categorised as survivalist. Only the minority of SMEs that participated in this study are established.
The demographic data related to the participating SMEs indicated that the sample consisted of a majority of SMEs registered as a partnership (n = 38), followed by sole proprietors (n = 37), private limited corporations (n = 32), and close corporations (n = 18). The majority of SMEs are based in KwaZulu-Natal (n = 75), followed by Gauteng (n = 15). The third largest geographic location of participating SMEs was the Western and Eastern Capes (n = 10 each).
These four provinces are all major contributors to South Africa’s economic growth and development (StatsSA, 2018). In addition, the SME sample consisted of SMEs from across all the different provinces of South Africa. The majority of participating SMEs can be classified as micro-enterprises, followed by small and then medium enterprises.
The sample also indicated that 48 SMEs have up to five employees, followed by 37 SMEs with six-20 employees, and only three SMEs with more than 200 employees. The majority of SMEs also primarily operate in sectors categorised as Other (n = 27), followed by the Agriculture and Customers Services sectors, with 16 SMEs each. Furthermore, the sample consisted of 47 SMEs that have been operating for less than 3 years, followed by 36 SMEs that have been
operating for more than 5 years but less than 10 years, and only 12 SMEs that have been operating for more than 15 years.