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High failure rate of new SMMEs

Date posted: 29.10.2014 | Author: Harry Bovensmann

New SMMEs have a high failure rate and the Department of Small Business Development claims it is working towards reversing this rate. According to research the failure rate for new businesses is almost 80 percent in the first year, and only about half of those who survive remain in business for the next five years.

The department wants to create a conducive environment for the development and growth of small businesses and cooperatives through the provision of enhanced financial and non-financial support services, competitiveness, market access, promotion of entrepreneurship, advancing localisation and leveraging on public and private procurement.

Lindiwe Zulu, minister of small business development (Photo: Citypress)

Minister Zulu said that the department would lead an integrated approach on the promotion and development of small businesses and cooperatives through a focus on the economic and legislative drivers that would stimulate entrepreneurship to contribute to radical economic transformation.

A number of programmes had been developed that would assist small enterprises and co-operatives including centres for entrepreneurship, micro franchising, incubation support and cooperatives supplier. Other programmes are tackling with red tape reduction which was aimed at addressing the regulatory burden and B’avumile skills, an enhancement programme aimed at enhancing the skills of women to produce quality and commercially viable cultural products for participation in major local and international markets.

For the SMMEs and Cooperatives to play their envisaged role in the development of the economy, the issues of standards and quality go hand in hand with the development and growth of sustainable enterprises. Consumers would not buy goods that were not of good quality. Even for the local market, products and services need to comply with certain compulsory technical regulations either set by government or private specifications set by those who procure these products and services.

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