Original Research

Investigating whether a lack of marketing and managerial skills is the main cause of business failure in South Africa

S Radipere, L Van Scheers
South African Journal of Economic and Management Sciences | Vol 8, No 4 | a1171 | DOI: https://doi.org/10.4102/sajems.v8i4.1171 | © 2014 S Radipere, L Van Scheers | This work is licensed under CC Attribution 4.0
Submitted: 24 July 2014 | Published: 25 July 2014

About the author(s)

S Radipere, SAIMS, South Africa
L Van Scheers, University of South Africa

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Abstract

The literature reveals that 40 per cent of new business ventures fail in their first year, 60 per cent in their second year, and 90 per cent in their first 10 years of existence. The research problem of this study is suggested by this high rate of business failure. This study investigates whether lack of marketing and managerial skills in business owners contributes to the high rate of business failure in South Africa.
It is evident from the results that small business owners lack certain managerial skills, including financial, marketing and human-resource management skills, needed to operate their businesses successfully. The findings confirm that small business owners are in need of support services such as training, counselling, and financial assistance.  They also show that small businesses are constrained not only by financial factors but also specifically by non-financial factors such as lack of education, inadequate managerial skills, poor access to markets, lack of information and unreliable infrastructure.  The analysis also indicates that the managerial skills possessed by the respondents do not correlate with those that they preferably should have to run a successful business.
The study concludes that a lack of marketing and managerial skills has a negative impact on the success, viability and development of small businesses.  The challenge is to improve the managerial skills of small business owners, since the small business sector is widely considered to be the ideal site for the solving of South Africa’s unemployment problems and the rejuvenation of its stagnating economy.

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