The white paper on the national plan for developing and promoting small companies in South Africa was published by the South African government in 1995. (DTI, 2018). This white paper was created to guarantee that small companies contribute to the development and performance of the South African economy in critical areas such as job creation, equality, and market access. The government pledged in this white paper to continue leading the effort to increase entrepreneurship by involving the corporate sector, private financing institutions, organized businesses, non-governmental organizations, universities, and the media in fostering entrepreneurship development.
The national youth enterprise strategy recommended the following interventions: cultivating an entrepreneurial culture, strengthening and expanding successful youth enterprise support schemes, meeting the financial needs of young entrepreneurs, providing training, and coordinating programs like the new venture creation learnership.
Higher education and training institutions constitute the most significant percentage of adolescents with untapped job-creating potential, which stays underutilized owing to a fear of transitioning from entrepreneurial purpose to entrepreneurial actions. The entrepreneurial intention is a proximal predictor of choice to become an entrepreneur because it indicates how seriously one is willing to put forth the effort to carry out entrepreneurial behaviour (Ferreira, 2017). Entrepreneurial activity is a critical developmental tool for fostering creative economic growth, social mobility, and, most crucially, a plentiful supply of jobs that may help to address some of the world’s most pressing socio-economic issues (Hieu, 2017). Governments worldwide have created policies and methods to encourage the creation of new business initiatives, believing that these enterprises make a significant contribution to the economy of their respective countries.
Entrepreneurial intention is a developing conscious state of mind in which a person wants to establish a new business or provide new core value to an existing one (Kalitanyi & Bbenkele, 2018). The choice to become an entrepreneur is a deliberate and intentional one that requires considerable preparation and a high level of cognitive function (Buli & Yesuf, 2015). An entrepreneurial job choice may be the kind of planned behaviour that an intention model is most suited for (Moriano, Gorgievsk, Laguna, Stephan and Zarafshani, 2012). It was shown that regardless of the program that young people study in higher education institutions, they are more likely to pursue work in entrepreneurship once they complete their studies (Remeikiene, 2013). The desire to pursue entrepreneurship as a career option is only feasible if students who rely on the public and private sectors for employment adopt a self-employment mindset.
Most articles focus on an entrepreneur’s professional goals since it is seen as an essential element that helps economic growth by creating jobs, developing human potential, innovating, and satisfying customers (Farouk and Ikram, 2014). (Mueni, 2016). Personal variables may have a significant impact on entrepreneurial desire.
The analytical thinking process, which can aid in the development of positive attitudes and skills toward starting a business venture, can be developed by acquiring entrepreneurial education; thus, tertiary education plays a crucial role in the development of the analytical thinking process, which can assist in the development of positive attitudes and skills toward starting a business venture (Malebana, 2012). Entrepreneurship education should be encouraged by both the public and commercial sectors, focusing on students, to generate enough jobs to address the country’s current unemployment problems. According to Remeikiene (2013), the present educational system does not offer adequate business knowledge or promote young people’s inventiveness in company start-ups. Academics and practitioners need to understand how early-stage prospective entrepreneurs’ intents emerge and what variables encourage entrepreneurship to guarantee a steady supply of entrepreneurs (Esfandiar et al., 2017).
It is critical for universities, the private sector, and the government to discuss the right interventions that would encourage students to take the risk of starting their business enterprises to put the process of thinking and reasoning into action. Given the country’s persistent unemployment problem, especially among youth, it is critical to understand the variables that affect young people’s entrepreneurial aspirations.
Entrepreneurship is regarded as a driver for economic development, and many nations are adopting it to address their people’s unemployment and underemployment issues. According to Potter and Storey (2007), almost all governments have prioritized entrepreneurship stimulation in the hopes of becoming entrepreneurial economies that reap the benefits of dynamic capitalism. According to Godhan (2013), the South African government has been assisting small companies and entrepreneurs with programs such as tax relief and training assistance. Furthermore, business incentives are being strengthened, including financing for special economic zones. According to Lings (2017), young unemployment has remained at its highest level since 2003, rising from 36.4 per cent in the first quarter of 2017 to 36.6 per cent in the most recent quarter. The high incidence of young unemployment has morphed into a national problem that needs immediate action.
Intervention in the social, economic, and political spheres. According to World Wealth, South Africa is one of the wealthiest countries globally, with a diverse range of natural resources and is well-known for its gold, diamonds, coal, platinum, timber, sugar industry, and wine industry. The transformation of those natural resources into final products allows for the creation of jobs. South Africans’ ingenuity and invention are required to reduce raw material exports, requiring graduates to start businesses.
Entrepreneurship education seems to be a viable option for reducing South Africa’s fast-rising unemployment rate. It should be encouraged, especially among students, to generate enough jobs to help alleviate the current unemployment problems. The economy’s structure must be changed to enable new ideas, companies, and economic activities to develop and flourish (Gigaba, 2018). “At least 30% of public procurement will go to small and medium businesses, cooperatives, township and rural businesses,” says the administration (Ramaphosa, 2018). Entrepreneurial motivation is influenced by entrepreneurs’ perceptions of the environment and their skills or personality traits, according to Estay, Durrieu, and Akhter (2013). According to Stephan and Uhlaner (2010), entrepreneurship is a social activity that is affected by an individual’s social context. Certain socio-cultural behaviours, beliefs, and conventions may help or hurt entrepreneurship. The social environment may benefit entrepreneurial actions by promoting good attitudes about entrepreneurship and increasing perceived control, affecting entrepreneurial intention (Krueger, 1994).
According to the Global Entrepreneurship Monitor South Africa (GEMSA), the percentage of South Africans interested in starting a business fell from 30% to 28% in 2015. Government regulations and access to financing are the most significant impediments to entrepreneurship, with 65 per cent of small companies closing in 2015. (Skade, 2016). According to Eurobarometer’s study, 67% of Europeans do not think educational institutions can foster a mindset that encourages people to start their own company. Nurturing and mentoring young entrepreneurs continues to be a stepping stone out of poverty and into economic stability, as it contributes to poverty reduction, job creation, and economic development, especially for youth.
2. Literature review.
Read as much as I can about investments (why, how, who, when, what, where)
SMEs Success and Recommendations
In many economically prosperous countries such as India and China, SMEs have been the driving factor in the growth of their economies, the United Nations Development Programme (UNDP, 2014). This has resulted in more employment opportunities and economic expansion in these nations. The report adds that when SMEs are supported, it widens the tax base for the government, reduces poverty, reduces crime, reduces unemployment, and brings investors confidence about countries’ business sectors and policies.
The Ruzivo Trust report states the various strategies, which are essential in empowering SMEs:
§ Put in place policies that support enterprise development.
§ SMEs need to be formalized.
§ Invest in workspaces such as vending stalls, sanitary facilities, and factory shells
§ Enhance networking in the business sectors through Business Development Services (BDS) that connect businesses more.
§ Have training and development seminars to assist SMEs in growing themselves.
§ Create awareness of regional and international markets.
§ Facilitate access to technology by SMEs.
§ Promote the development of SMEs focused banks or funds on improving access to capital.
§ We are targeting particular groups, including women, youth and the disabled in SME development.
§ It enacts regulations that treat SMEs separately from the formal sector on aspects of Indigenous Economic Empowerment (IEE), especially on finance, procurement, and enterprise development.
§ We are creating a comprehensive national database on SMEs following a census to guide planning for the sector’s development.
§ Development of an economic empowerment fund.
Measuring the success of a business
Business success is a multidimensional construction, and different metrics are used to measure it. Several methods are used to measure business success. The task of measuring business success is not accessible due to its multidimensional nature. The first measurement can be through subjective (judgment) or objective (quantify) methods. The second alternative method can be through financial or operational methods (Ahmad and Seet, 2009). The third method uses primary or secondary databases (Yıldız and Karakaş, 2012). Companies use indicators or metrics that are monitored periodically to assess success or failure.
An overall perspective is the use of financial performance indicators and non-financial key performance indicators as measures of success. This ranking is shown in Figure 1. The financial performance measurement of business success uses metrics and indicators that the organization tracks at regular intervals to evaluate activities and operations (Wolk, Dholakia, and Kreitz, 2009). Metrics such as sales, profitability, return on investment. The financial performance measure focuses on the elements presented in the company’s financial statements, including the statement of financial position, the statement of comprehensive income and the statement of cash flow. When business sales, earnings, and ROI show an upward movement during the current period compared to previous periods, the business shows signs of success.
Figure 1: Measures of business success
Source: Kaplan Publishing (2015 p.527)
Financial performance measurement
When business success is measured using financial performance measures, the business monitors revenue, costs, and how money is managed. Since the main objective of SMEs is to generate profits and reinvest the profits to grow a business, profitability is an essential financial measure. Financial performance measures focus on profitability, liquidity, activity, and risk (Lekovic and Maric, 2015).
Profitability ratios are used to measure the profitability of a company. Companies must find a way to make a profit as quickly as possible to avoid failure (Haber and Reichel, 2005). This is possible by ensuring that the company charges a high enough price to profit by setting the breakeven point with a sufficient margin in mind. Profits can also be achieved or increased by keeping expenses as low as possible. The profitability ratios are summarized below:
Liquidity focuses on measuring the company’s ability to handle short-term obligations to third parties, such as paying trade debtors. The most common ratios used to measure a firm’s ability to meet its obligations are a good sign of success (Kaplan Publishing (2015).
The third financial measure of success focuses on activity ratios – measuring how well a company can convert its assets into cash. Four ratios are calculated to measure activity:
Adapted from Toledo (2012)
Some authors have classified financial business metrics as objective and quantitative, while non-financial business metrics have been classified as qualitative and subjective (Yıldız and Karakaş, 2012). Several authors in the reviewed literature agree with the notion that financial measures for measuring business success are essential but that they must be complemented with non-financial metrics to obtain a richer picture of actual performance (Ahmad and Seet, 2009).
Growth is also a measure of business success. This could be revenue growth, added value and turnover (Olakitan & Ayobami, 2011). Suttle (2018) states that business success is measured by profitability, high product quality, customer loyalty, social contributions, and brand awareness. The Satellite (2018) suggests that some SMEs measure their business success using indicators such as increases in sales volume, level of earnings, and job creation.
Measuring non-financial performance
Market share, product quality, marketing activity, and new product launches are metrics for non-financial personal business success (Yldz and Karakaş, 2012). Customer satisfaction, customer retention, customer relationships, job, job satisfaction, and function, according to Ahmed and Saitt (2009), are additional non-financial and non-financial aspects of measuring business success, in addition to objective measures of performance. Progress, work-life balance, owner life, and employee satisfaction are all important factors.
Customer loyalty, according to Sattel (2008), is another indicator of success. It is simple to run a business that offers the products and services that its consumers need. This can be accomplished by conducting market research surveys to determine what current customers desire.
Brand awareness, which is the percentage of the population aware of the goods or services that they sell in a particular market, can also measure business success (Toledo et al., 2012). Marketing a single product may help to raise brand recognition. Sales promotions, special events, trade shows, speeches, and articles can all help with this.
The company’s social contributions are another aspect of its success (Toledo et al., 2012). Donations to charities and sponsorship of public programs are two examples of social contributions that can be used to assess business success and benefit the company in the long run.
Having a Financial Perspective
Because an organization’s financial performance is essential to its success, a financial viewpoint is an essential component of a performance assessment system. This viewpoint, however, is based on historical data. This metric is based on comparing the current year’s financial performance to the previous year’s or the creation of acceptable standards. Gross return, return on total assets, and return on equity are the three central rates of return. The business may also compute the growth rate of specific accounts in the financial statements and the profitability ratio. Because these methods are used to assess financial success, the company must have accurate financial data.
The primary issue with depending exclusively on financial indicators is that it focuses on previous success rather than present performance. This is not always a reliable predictor of future results. They are more concerned with the organization’s short-term financial plan than with its long-term financial strategy.
Consider the Customer’s Point of View
It places a strong emphasis on customer satisfaction. Even though the present financial position seems stable, the decrease in company performance indicates a future deterioration. Customers will move to a rival who fulfils their requirements if they are not pleased. As a result, you can assess performance using the metrics listed below. Customer complaints, repeat orders/customers, and recommendations are all factors to consider. In today’s corporate environment, customer happiness is becoming more crucial.
From a business standpoint
These are indications of critical company operations, including manufacturing time, rework expenses and order fulfilment time. Organizations may use these internal business-oriented measures to assess how effectively their company operates and if their goods and services meet their consumers’ requirements. This viewpoint enables managers to assess how well their company is doing and if their goods or services meet consumer needs. Internal procedures for the company’s specific purpose should be meticulously developed by the most acquainted with them. An external consultant is not required to create these.
Recognizing the viewpoint of organizational learning
These are techniques for emphasizing an organization’s capacity for growth and learning. This may be the number of training days, the number of competent employees or the overall time spent training employees. This viewpoint encompasses employee education and attitudes toward company culture and personal and corporate personal development.
Human capital as a predictor of entrepreneurial success
The idea of business success is described in this section. It deals with descriptive problems and the significance of economic success in emerging nations like South Africa. Then think about how you’ll gauge your company’s performance. Individual productivity rises, and companies get a competitive edge when human capital is qualified and improved via education. Human capital is one of the essential assets for SMEs to determine their survival and development.
Human Capital Conceptualization
Human capital encompasses all education, training, and professional activities targeted at increasing employee competence, knowledge, skills, social assets, and talents (Lincoln, 2010). According to researchers, a robust human capital foundation boosts overall company performance while also guaranteeing employee job happiness.
“… the physical and intellectual qualities of an individual that contribute to the success of an organization’s goals” is how human capital is described. Human capital credentials are something that both individuals and businesses invest in. Education, knowledge, skills, experience, and talents are all aspects of human capital that people gain throughout their life and utilize to create market ideas, services, and goods (Unger, 2011). Human capital factors and entrepreneurial success have been found to have a favourable connection in research. Knowledge, formal education, work experience, parents’ backgrounds, beginning experience, talents, and education are some of the factors to consider.
“Acquired skills and knowledge” is how Schultz (1961) defined human capital. The UNECE Human Capital Assessment Task Force (2016) stated Adam Smith’s (1966) definition of human capital “In the 18th century, everyone learned valuable skills. You have the option of returning.” Alternatively, a resident. According to the UNECE Human Capital Assessment Task Force (2016) and Adam Smith (1966), people spend money to acquire these skills.
According to Armstrong and Taylor (2014), human capital comprises intellectual, social, and organizational capital. The movement of stock and knowledge held by an organization is known as intellectual capital. An organization’s intellectual capital is an abstract resource linked with its employees. Knowledge of the network of connections between individuals inside the same organization and relationships between persons within and outside the organization is described as social capital. When individuals connect and work together to accomplish a shared objective, this occurs. Information that an organization institutionalizes and maintains in manuals and databases is called organizational capital (also known as structural capital). This is the data that the company has. Social responsibility, human resource management, corporate ethics, leadership, financial management, communication, time management, decision making, and marketing management are all mentioned as components of human capital by Inyang and Enuoh (2009).
3. Research Methodology
This chapter outlines the procedures that the researcher took in carrying out this study. The methodology is the way of searching or solving the research problem (Weber, 2017). These include the research design, data collection instruments, procedures, ethical issues, description of the study sample, the quality of the data and the analysis and interpretation of the data. Companies that will be helping with this research will be Kutana Group which is located in South Africa (20 Monte Casino Boulevard Monte Circle Office Park Block B, Ground Floor, Fourways, Johannesburg, 2191) and Tafari Capital that is South Africa (1st Floor Fortune Kunene House, 261 Oxford Rd, Illovo, Johannesburg, 2196)
The research approach is essential as it aids in enhancing the reliability of findings or the basis of theory in the perceptions and experiences of female survivors of domestic violence in a rural setting. Silverman (2016) characterized them into two which are quantitative and qualitative data gathering tools. Quantitative gathering tools depend on numbers and are partially supported by words in gathering data; examples comprise questionnaires, observations and official figures like census, whilst qualitative data gathering tools predominantly utilize words in gathering data, with examples including diaries, interviews and focus groups (Weber, 2017).
However, the research was carried out through the use of the qualitative research method. Research design is the framework that assists the researcher to come up with solutions to problems and thus gives a guideline in carrying out research. It also looks at what data is needed to address the research questions and how it will be analyzed.
The research design was defined by Burns and Bush (2013) as a set of specific methods and procedures of data collection and analysis that serve the master plan of problem-solving. Polit and Hungler (2004) highlight it as a solution finding mechanism of research whilst David and Sutton (2004) explain it as providing the framework for collecting and analyzing data for research. Kaplan (2017) defines a research design as the scheme, outline, or plan used to generate answers to research problems. Creswell (2007) similarly notes that a research design is the research structure that holds all the elements in a research project together.
The impact of entrepreneurship and investment cannot be restricted to a mere textbook exercise or unfounded speculation, especially when considering the stakeholders affected by its success within South Africa. It is important to get first-hand information about their perceptions and experiences at a more practical level. A case study will be used for this research. Silverman (2016) defines a case study as an empirical inquiry about a contemporary phenomenon set within its real-world context. Typically, the case study will allow one to arrive at valid findings, conclusions, and recommendations in addressing the research objectives.
Descriptive Research Design
The descriptive research design is one of the quantitative research methods and aims at describing situations and finding out what the actual situation is. Survey methods are often used for the collection of descriptive data (Silverman, 2016). The researcher, as noted above, will utilize the descriptive research design method. The researchers’ ideas and knowledge that provide guidance will play an important role in the researcher’s choices in descriptive studies (Kumar, 2019). Kumar (2019) also highlights that descriptive research is valuable for surveys because it provides the conditions for flexibility and clarification of the research problem and lowers the chances of bias. The researcher found its ability to include quantitative and qualitative research methods essential in providing a reliable study. Despite its positive attributes, the descriptive methods also have the limitation of being costly by involving face to face interviews. Time constraints also often lead to small samples being utilized.
Exploratory Research Design
The researcher also made use of the experimental research design method. One experimental design aims to gather as much information about the research problem as possible and get fresh ideas about the study. Although some of the issues affecting technological dissemination and its impact on society and the economy are already contained in articles and books online, the researcher expects to gain more information from the respondents within the agricultural sector. New data found during the research can also push the student towards altering the direction of his or her study (Quinlan et al., 2019). This research type is often used when dealing with research questions that have not been researched much or none at all (Flicker, 2015). It is easy to define problems and also easy to define new priorities in the study.
Data collection instruments
Self-administered questionnaires will be used as the data collection instruments. A questionnaire is a set of questions with the primary goal of data collection towards a specific research question. McCusker and Gunaydin (2015) state that the goal of a questionnaire is to solicit information during data collection for further analysis.
To this end, the number of open-ended questions will be kept minimal. The questionnaire is an original instrument as the researcher developed it for this research. The questionnaire will be given to two agricultural experts industry to read, modify, add or remove irrelevant items. These two experts will be interested in the findings of this research to enhance their chances of securing investment at their organizations and will not form part of the study sample of respondents. This exercise is likely to result in a reduction of the number of questions and also resulted in more obvious questions being formulated.
Weber (2017) defines an interview as a data-gathering technique in which respondents are asked questions to discover their views about a particular subject. Personal interviews will be used in this research, and the interview questions will consist of both structured and unstructured questions. Unstructured questions will help to get comprehensive answers from the interviewed farmers and agricultural scholars.
The interviews will consist of three parts. Section A will consist of the respondent’s basic information. The researcher will also use close-ended questions (Section B) and open-ended questions (Section C) for the interview. Firstly the researcher will ask the respondent a question, and the response given by the interviewee will determine the interview direction. Interviews will be used to collect data in this study because they allow probing questions on responses that need further explanation. The interviewer will explain questions which interviewees do not understand during the interview. Interviews will also be important in this study because the researcher had control of the interviewee. This is because he can determine the direction of the interview from the responses given by the respondents.
On the other hand, some of the interviewees in the research may be affected by stage fright. However, the researcher will continue to use interviews because the advantages seem to outweigh the disadvantages. Thus, both questionnaires and interviews will help eliminate weaknesses associated with each data collection technique.
A target population is a group of people containing the information required by a researcher and inference (Quinlan et al., 2019). Flicker (2015) adds that the individuals have similar characteristics according to the researchers sampling criteria and states that the target population has the information needed by the researcher.
Kumar (2019) defines sampling as a process in which respondents are chosen. Silverman (2016) postulates that a sample is a group of individual elements selected from a research population as its representation. All attributes of the research population must be contained in the sample. According to McCusker and Gunaydin (2015), a sample must be 30% or more of the research population. A sample allows the researcher to save time and money that would have been expended if the whole research population was to be used.
Research ethics outlines that every researcher is held by a moral code that they should be committed to (Silverman, 2016). The researcher will uphold the ethical guidelines during the study. The researcher will seek consent from all respondents and uphold their desire for anonymity. The researcher will view confidentiality as very important. Nothing will be given to other organizations or the general public. The researcher will also put all stops to ensuring that the findings are reported truthfully. Permission will be sought from all authorities for data collection within the organizations before the researcher starting. Also, it will be necessary to conduct the study so that participant involvement causes no/minimal disruption to the everyday operations of the respondents and organizations. The researcher will consider the possible harm that could be done not only to individuals but also to organizations throughout the research and will employ preventative measures. Raw data records will be availed to ensure other researchers can verify the contents of this study.
Validity and Reliability
Kumar (2019) states that research can never be 100% correct or accurate, but great care must be given by taking measures limiting these inaccuracies and making the research more reliable or dependable. Quinlan et al. (2019) postulate that data validity involves research results being an honest representation of what is on the ground. The researcher will seek stigmatization and victimization avoidance at all times, hence the anonymity of questionnaires. According to Silverman (2016), reliability is concerned with the usefulness of the data collection and analysis techniques in producing accurate findings and relevant research. Questions contained in the questionnaires will be matched according to the research objectives to ensure the study’s relevance.
The analysis of data comprised of descriptive statistics, which catered for the analysis of the qualitative and quantitative data that was collected. Data collected from the various respondents will be carefully examined using SPSS. Tables and Pie Charts will be utilized because they serve as a clear and concise data presentation. The researcher seeks to strike a balance between data and theoretical commentary to provide a more precise meaning of the data, according to Flick (2015). This allows results to be clearly explained using commentary, percentages, graphs, and tables. These, in turn, will allow for ease in comparing the data