SMEs (small and medium –sized enterprises) are increasingly becoming one the most important enterprises with the most significant change in the economic situation of many countries. Government has since realised the importance of such business and started developing the SME sector. SMEs have reached a 7 percent growth rate and account for approximately 40 percent of the GDP (Gross Domestic Product). There are about 40 000 entrants every year. SMEs account for 60-70 percent of most jobs but are also confronted with challenges in the industry such as limited access to bank credit.
Small and medium-sized enterprises (SMEs) are a very diverse group. These are found in a wide disposition of business activities ranging from the shop down the road to businesses in well-established areas. The individuals owning these enterprises may or may not be poor; the firms operate in very different markets (urban, rural, local, national, regional and international); embody different levels of skills, capital, sophistication and growth orientation, and may be in the formal or the informal economy.
Statistically, in South Africa, SMEs are defined according to the number of employees, value of sales and/ or value of assets. There are five key areas namely: survivalist enterprise, micro enterprise, very small, small enterprise and medium enterprise. Survivalist enterprise is one where the generated income is less than the minimum wage permitted by law. These are normally categorised under the micro-enterprise sector. An example for this can be street vendors. Micro enterprise is one with less than or five employees, where the turnover is less than the VAT registration limit per year (R150 000). An example for this can be a coffee shop around the corner. Very small enterprise is one where fewer than 10 employees are employed. The enterprise operates in a formal market where technology is easily accessible. This differs in the mining, electricity, manufacturing and construction sectors where 20 individuals are employed. Small enterprise has a limit of 50 employees. This is more complex as compared to very small enterprises and has complex business practices. Medium enterprise is one where 100 to 200 people are employed for the mining, electricity, manufacturing and construction sectors. This is characterised by the decentralisation of power to an additional management layer.
The company of my choice is Crystal Clear Creations, a rentals and Events Company serving both business and private clients in the Limpopo Province, headed up by a woman, Mrs R. Manena. Services offered are: event management and wedding coordination, catering, wedding...