Exploring the factors that prevent home based to grow in South Africa

Abstract

This research explores the factors that impede the growth of retail home based enterprises in South Africa. The potential contribution of home based micro and small enterprises (MSEs), or Spaza shops to generating income and employment to people in the informal sector of the economy is becoming increasingly recognised. This paper provides the primary data which consists of a non-random sample of 47 Spaza shop owners and managers in the four different areas (old establishments, new establishments, informal and reconstruction and development programme (RDP)) in the township of Mamelodi, applying a quantitative research methodology. The level of human capital, gender, and entrepreneurial mindset of the proprietor are found to have an inverse relationship to the firm’s growth. Key results of the research are that women owners tend to struggle to grow their businesses given the temptation to direct the earnings from the home based business to the needs of the household, and Spaza shops tend to sell the same, if not identical, products as competitors thereby gaining no competitive advantage necessary for growth.