Abstract
M.Comm.
A stable and growing economy is essential for the well being of any country and its
people. To make this possible, most able people in the economy should be making a
positive and active contribution.
More than forty six percent of all economically active people in South Africa are
currently unemployed. It is further expected that only ten in every hundred people
coming into the job market in 1994, will find employment in the formal sector (Anon.
4994:6). These alarming statistics are only partly due to the current economic recession
and political instability. What we are experiencing is part of a worldwide trend of
permanent structural changes in traditional employers such as the government and large
companies. As described in a leading article in Time International, the formal sector is
no longer able to supply large numbers of stable and secure employment opportunities
(Church, 1993:20).
A similar view of this worldwide trend in western economies, in terms of employment
creation needs and the changing employment structures is held by well known business
Drucker (1986:13-30). He describes however the possibilities of an "entrepreneurial
economy" wherein the majority of jobs are created by entrepreneurial ventures. His
observation is supported by statistics of the United States showing that small business
comprises 94 percent of the enterprises in the economy, they employ 58 percent of the
work force, and have generated 87 percent of the new jobs over the last twenty years
(100 percent during the 1980-1982 economic recovery) (Keats & Bracker, 1988:41).
The position in the South African economy and the apparent solution is likely to be
similar. Taking into account such factors as the relatively smaller formal sector, the lack
of truly huge and international companies, the shortage of investment capital and the
huge unemployment numbers, the role that small businesses will have to play in future economic growth and job creation in South Africa, is likely to be even more significant.
In the light of this, it is extremely concerning to note that of the large numbers of new
ventures that are started annually, as many as 90 percent may eventually fail (Birley,
1986:361). It is therefore important for the economic future of South Africa, that new
ventures are created, but also that they survive, successfully develop and grow into larger
established companies providing more jobs. Such growing companies may eventually
even enter the international market, further improving the economic growth and
prosperity of the country.