Identifying risk management strategies of small, medium and micro enterprises in retail and manufacturing industries in Umhlathuze Municipality
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Date
2021
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University of Zululand
Abstract
Small, Medium and Micro Enterprises are usually seen as an important tool for improving living standard. Considering the importance of SMMEs to economic growth, job creation and poverty alleviation, there is a need to train small business owners and managers and to expose them to risk management strategies that will promote businesses and reduce high failure rate. SMMEs are lacking when it comes to risk management knowledge and skills, which contributes to their high failure rate. In addition, South African education system is lacking when it comes to educating and training SMMEs on how to run their businesses successfully, especially exposing small business to risk management strategies for them to be able to respond to different kinds of risks.
Given this background, this study sought to identify risks management strategies for SMMEs in retail and manufacturing industry focusing on uMhlathuze Municipality. The researcher used primary data for this study. The study adopted a qualitative method approach where data was collected through semi-structured interviews. Purposive sampling was used to select 12 SMMEs of uMhlathuze Municipality: 6 from the manufacturing and 6 from the retail industry. Data collected from the participants was coded and analysed using themes and content analyses. The results from the study showed that the risks faced by SMMEs negatively impact daily activities of small businesses and it also results in poor performance on SMMEs. Such risks include financial risk, resource risk, credit risk, reputation risk, inflation risk, and corona virus. Therefore, there is a need to assist SMMEs and improve their growth, as it was found that the strategies, they used to be inadequate in mitigating the identified risks. Whilst all SMMEs involved in this study reported to be faced with risks, not all of them had specific risk management strategies in place to deal with such.
However, it was found that among the risk’s management strategies used by some SMMEs to fight risks are publicity and re-organizing. Use of private security, alerting customers about the price increase to ensure that they don’t get a shock or prices when purchases, insisting on deposit payments and sticking to cash transactions were some of the strategies used. Fewer SMMEs have insurance for their assets. Additionally, some of the selected SMMEs attribute their survival to getting sponsorship from government and private sector, and access to credit markets through short term loans. Sequel to the findings of the study, it is recommended that SMMEs should be given more assistance in education and training in terms of the different kinds of risks they are facing. lso, they need to be assisted with proper and quality strategies capable of keeping businesses protected and secured from risks, that will reduce risks.
Description
A dissertation submitted in fulfilment of the academic requirements for the degree of Master of Commerce in the Department of Business Management in Faculty of Commerce, Administration and Law in the, University of Zululand, 2021.