Proliferation of SMEs in South Africa: modelling the challenges and outcomes of selling-to-finish

Abstract

This paper aims to analyse the challenges and outcomes of “selling-to-finish” by small and medium enterprises (SMEs) in South Africa. “Selling-to-finish” is a global problem that threatens SMEs everywhere. It entails an unconventional business strategy that deviates from the main goal of most businesses, which is to make profit. In South Africa, “selling-to-finish” in SMEs has a detrimental effect on the country’s economic development, growth, and efforts to combat poverty. The misunderstanding of “selling-to-finish” hinders the growth of SMEs. This is because SME owenrs mistakenly believe that having more clients who buy products and service equates to selling for a profit without doing the necessary calculations. “Selling-to-finish” puts at risk not only the expansion and advancement of SMEs but also the achievement of Sustainable Development Goal (SDG) 1, which is to eradicate poverty and National Development Plan (NDP) vision 2030, which is to build a good economy and provides employment to all citizens. This chapter employed a desktop-based qualitative research. The paper argues that improper application of selling-to-finish causes major downfall of SMEs in South Africa. It found that the achievement of economic growth, development, and poverty reduction is seriously jeopardized by “selling-to-finish” in SMEs. As a result of “selling-to-finish”, SMEs face difficulties such as financial unsustainability, cash flow problems, decreased investment capacity, and competitive disadvantage. It recommends that SME owners should prepare well-informed monthly, quarterly, or annual cash flow statements. It goes on to advise SMEs to contract with outside firms to ensure that their cash flow figures are accurately prepared.

Keywords: {'name': 'SMEs, poverty, poverty reduction, sustainable development goals (SDGs), selling-to-finish'}

Authors & affiliations

Isaac Nkoana
Affiliation not supplied

Kgalema Abbyton Mashamaite
Affiliation not supplied

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