Small Business Failure In South Africa Case Study

1.1 Introduction

This study examines the factors that lead to small business failure in Johannesburg. Chapter 1 includes the background of the study, the aim/objective of the study, the key concepts and a scope of the study.

1.2 Background of the study The fashion industry is a globally competitive industry that presents challenges when initiating small start-up fashion businesses. Stanley Stasch (2010:3), however, highlights the need to develop small businesses as they contribute positively to the economy by creating jobs that alleviates a portion of the poverty in the country. In South Africa the clothing manufacturing sector has undergone major changes as it needs to compete with mass produced imports from low-wage earning countries as

• Investigate competitive advantage strategies that promote sustainability in a small business.

• Investigate the case study to see how the small businesses in Johannesburg use the competitive advantage strategy and the brand strategy

Definition of key concepts

In this section of the study the key concepts are briefly defined below.

SME

Small and medium enterprises (SMEs) are increasingly seen as playing an important role in the economies of many countries. Thus, governments throughout the world focus on the development of the SME sector to promote economic growth. In South Africa, SMEs contribute 56% of private sector employment and 36% of the gross domestic product (Fatoki Olawale and David Garwe 2010:1)

Brand marketing

Ehmke, Cole (2011:4) a carefully conceived and executed marketing plan with a focus on the customer is a major contribution to business success. A good marketing strategy can be enough to differentiate one business from the rest, all other things being equal. Brand name recognition is reliant upon a good marketing strategy and a consistent, reliable product and venture. Ventures who do not have the resources available to market themselves as their own brand may want to consider joining an alliance or cooperative to market their product under a recognizable brand

There are two strategies that this section of the study will unpack, the brand marketing strategy and the competitive advantage strategy.

2.2 Small businesses

Every small business has a beginning phase that the entrepreneur has to go through. There are two periods, prelaunch period and launch period, which are important before a small business is established. These two periods help the small business owner to identify the risks of opening a business before opening the business. Stanley F. Stasch (2010:9-11) states that the prelaunch period begins when the entrepreneur conceives the new business and starts putting together those things, the plant, equipment, facilities, people, etc needed to make the new business operational and the launch period begins when the new business first opens its doors to potential customers, and ends when it achieves a self-sustaining cash flow from its sales. In order to maintain a sustainable business there are factors that need to be considered. It is always informative to know what happens when getting involved with starting a small