Exploring ways to construction of a business bootstrapping model to equip emerging micro business in the first year of operation in South Africa

Authors

DOI:

https://doi.org/10.15587/2706-5448.2023.286001

Keywords:

accessibility of capital, Business model, skills deficiency, competitiveness, financial management, business management, marketing

Abstract

In South Africa, the small, medium, and micro businesses (SMMEs) sector contributes between 52 and 57 percent of the GDP. In the coming years, it is expected that the SMME sector would provide 90 percent of the GDP and employment in South Africa. Due to barriers that prevent potential growth, more than 50 % of businesses in South Africa fail during the first five years of operation. The study examined enterprises in their first year of operation in South Africa and identified the lack of business skills and an insufficient supply of financing as contributing factors. The investigation revealed existing concepts such as Financial bootstrapping and Balance Score Card, both of which are crucial for South African enterprises during their first year of operation. A mixed research approach was chosen for the study in order to answer the research questions. The phenomenological (qualitative) and positivist (quantitative) philosophical paradigms were adopted with a determination to achieve a thorough understanding of the strength and direction of the relationship between a business skills deficit and competitiveness of businesses in the first year in South Africa and, furthermore, the development of the Business Bootstrapping Model. The study's data collection tools included semi-structured interviews and questionnaires. In relation to the data that were gathered for the study, content analysis was utilized as an analytical technique to analyse qualitative data, while SPSS was used to analyse responses to questionnaires for a quantitative study. The availability of capital and the lack of adequate financial resources to manage account receivables were found to be major hindrances to a business' sustainability in its first year of operation. Research gaps were filled by combining empirical investigations and conclusions, and this information was then used to construct the business bootstrapping model. In its initial year of operation, the business Bootstrapping Model included three elements: finance, marketing, and corporate governance. Owners of small businesses can begin generating capital using the Business Bootstrapping Model's financial component, which is a key factor in eradicating financial and liquidity obstacles. The Business Bootstrapping Model also equips business owners with the ability to plan and manage daily operations, including developing short-term financial policies for the business. Furthermore, assists in measurement capabilities for the business’s current financial performance, financial position, and anticipated future business plan. As well as providing an overview of the company's revenues and costs from operating and non-operating activities over time. Business owners are provided with the marketing skills necessary for brand positioning, preventing pricing discrimination, and getting pertinent, hard-to-get customer information and insights on social media through the marketing components of the Business Bootstrapping Model.

Author Biography

Eugine Nkwinika, University of Johannesburg

Doctor of Business Administration

Johannesburg Business School

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Exploring ways to construction of a business bootstrapping model to equip emerging micro business in the first year of operation in South Africa

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Published

2023-10-13

How to Cite

Nkwinika, E. (2023). Exploring ways to construction of a business bootstrapping model to equip emerging micro business in the first year of operation in South Africa. Technology Audit and Production Reserves, 6(4(74), 6–19. https://doi.org/10.15587/2706-5448.2023.286001

Issue

Vol. 6 No. 4(74) (2023): Economics of enterprises. Macroeconomics

Section

Economics and Enterprise Management

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Copyright (c) 2023 Eugine Nkwinika

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