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MBA research explores finance challenges facing SMMEs

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MANCOSA’s Master of Business Administration graduate, Mrs Terés Goslett’s research dissertation titled: The Role of the Banking Sector in Respect of Challenges Facing SMMEs (Small Medium and Micro Enterprises) in the Western Cape sheds light on how SMMEs may overcome the challenges they face when seeking finance through banking institutions.

Mrs Goslett, a Cape Town based Consultant who advises small and medium business enterprises in the Western Cape, was capped with her MBA at MANCOSA’s recent graduation ceremony in Durban.

The study established that the major stumbling block facing SMMEs that apply for finance were: the lack of collateral security; failure to meet requirements in terms of personal capital contributions; blacklisting; lack of entrepreneurial skills, management skills and business experience; and the lack of a business plan that met the criteria for feasible projects.

The study suggests reducing the requirements for collateral security as one of its recommendations.  “There is a need for strong collaboration between banks and SMME support agencies. This could result in more SMMEs being able to access a combination of finance from government agencies as grant funding, as well as the balance required as debt finance from banks eliminating the strict criteria of collateral,” said Mrs Goslett.

Mrs Goslett said banks could improve their limited focus on SMMEs by improving the in-house support it offers this sector through mentorship, monitoring and network opportunity. It was suggested that banks need to improve on their loan applications processes to make it user friendly and efficient. Banks were also advised not to adopt a “one size fits all” type of product, instead have tailor made products that are affordable and meets the needs of the SMME sector.

Moving forward the study suggests that SMMES employ suitably qualified people to manage their finances and maintain high quality financial information, or that those fulfilling this function should seek further training.  It was imperative for SMMEs to acquire financial management skills to fully understand the implications of decision-making relevant to finance.

“The majority of the SMMEs especially the small and micro enterprises are owner managed by people who are in the sector by default and not by design. Many of these business owners are from the previously disadvantaged groups, who were either retrenched or unemployed for various reasons, and some used their life savings or pension as start- up capital,” said Mrs Goslett.

Pleased by her latest academic qualification, Mrs Goslett said the MBA has made her a more strategic thinker and proficient in understanding complex business matters.

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