Exploring the critical factors that hinder the growth of incubatees in South Africa

Abstract

In as much as entrepreneurial action fosters job creation and economic growth, entrepreneurs encounter the significant risk of failure, and community bears the brunt. Though business incubators were designed to provide support and hope to ailing businesses, evidence suggests that not all on these programs succeed. Going on the assumption that even businesses on incubation programs do not seem to be immune to failure, this study sought to determine the key factors that hinder the growth of incubatees in South Africa. Adopting a quantitative approach, the questionnaire was utilized as the primary data collection tool, and the snowball sampling method was employed resulting in a sample size of 93 respondents. The research participants for this study were limited to firms that were registered on the databases of two business incubators who promote small business development strategy and programs in Cape Town and Johannesburg, respectively. The findings indicated that lack of funding, lack of credit facility, competition, crime, lack of access to external market, lack of business skills and lack of product selection and design were the key factors that hinder the growth of incubatees. Given the substantial resources invested in business incubation programs, the fact that business incubators are entrepreneurial ventures in themselves, understanding and finding sustainable solutions to the factors that hinder the growth of their clients (incubatees) would be a win-win solution for the relevant stakeholders. Keywords: business incubatees, business incubators, entrepreneurship, growth, South Africa. JEL Classification: M1, L84

Support from the government for SMEs in South Africa

“…Additionally, as mentioned by Ardyan (2016, p. 91), SMEs must be able to "monitor competitor's strategy, comprehend external business market trends, and be responsive to the ever-changing market environment conditions" to increase performance. The world has become a global village because of information technology (Lose, Tengeh, Mazirir, & Madinga, 2016). This has posed a significant challenge to development and growth, particularly for SMEs.…”

“…Bourletidis and Triantafyllopoulos (2014) stated that no business can start or continue operating without finance. Lack of raising funding hinders the development of SMEs (Lose, Tengeh, Mazirir & Madinga, 2016). Asoba and Tengeh (2016) concur that the availability of cash flow enables businesses to purchase the necessary machinery, labour, and property to operate a successful business.…”

Implementing 3D Printing in Business Incubator: A SWOT Analysis

“…Lack of entrepreneurial skills, access to markets and select main product and design are some of the factors that affect the business development of the tenants in the Business Incubator [41]. Alishiri et.al, found that there are factors that influence the success of a business incubator.…”

Business incubation practices and sustainability of incubatee start-up firms in Uganda

“…This is particularly so, because previous studies have marginally engaged incubators or incubatees along these lines and have confirmed this evidence. For instance, Cullen et al (2014) and Loose et al (2016), focused on incubator service and sustainability and still realised that there were challenges surrounding sustainability of start-ups hence calling for further research studies in the same phenomena.…”