Social Impact

Do the demographic attributes of small business owners play a role in their implementation of business elements after training?

By USB MBA student Sabelo Savimbi Ntanjana (supervisor: Dr Marietjie Theron-Wepener)


Why was this study undertaken?

Research shows that the business training offered to small business owners by governments, organisations and NGOs are appreciated and implemented. But the implementation rate of some of the elements of business training is very low.

In order to gain a better understanding of the inability of small business owners to take new training on board, this study looked at business owner characteristics – such as age, gender, race and the small business owner’s business experience with another employer prior to opening his/her own business – to see whether there is a relationship between the implementation of business training and small business owner characteristics.

It is important to know whether there is a link between the characteristics of small business owners who attend business training and their ability to implement what they have learnt in order to improve their business performance. It is also important to know why some of them do not implement what they have learnt in these business courses. The question is therefore: Do business owner characteristics play a role in not implementing what was learnt during training and therefore in the non-performance of the small business?


The context

The failure rate of small businesses in South Africa is among the highest in the world. Training is typically being offered by governments, organisations and NGOs, but it seems that the small business owners do not always incorporate these learnings into their businesses.

Very few small business owners set financial goals that measure and monitor how the business is performing. They usually also lack quality control systems, continuous improvement practices, performance-based rewards and incentives, and other practices and technologies that are used by well-managed firms in developed countries. These are some of the reasons why business training has become the most common form of support provided to small firms to assist them to become more competitive and better managed.

However, there seems to be a lack of evidence showing improvement in the management of these small companies after their owners have attended training. Exploring the relationship, if any, between the training of a small business owner and the performance and competitiveness of the small business is therefore high on the government’s agenda to help small businesses to grow sustainably and ultimately to create jobs.


Doing a literature review to provide understanding

The literature review showed that a major distinguishing factor between high-growth and low-growth small firms is the education, training and experience of the senior managers or small business owners and their employees. The literature review also highlighted the personality traits that play a role in determining the strategy that entrepreneurs use in operating their businesses. However, despite the importance of small business managers’ expertise and employee training, there is a scarceness of research on the causal relationship between and among these variables, particularly in Africa.

 

How was the study conducted?

A questionnaire was distributed to business owners in the Western Cape who attended the business training offered by a government agency. The targeted sample was 100 small business owners.

The first part of the questionnaire covered the business owner’s demographic attributes: age, gender, race, years that the business has been operating, the industry in which it operates, the small business owner’s business experience with another employer prior to opening an own business, level of education, size of the business and the number of days the owner has attended business training during the past two years.

The second part of the questionnaire was used to determine to which extent the small business owners had implemented the business training elements pertaining to marketing, operations (production), financial, general management and overall implementation.

The data was then analysed using descriptive statistical analysis to test the relationship or correlation between the variables. The results showed that there is indeed a positive correlation between the attributes examined and the business training elements implemented.

 

What did the study find in terms of demographics?
  • Age: In total, 54% of the respondents were under the age of 30, 41% were between 50 and 55, while 5% were older than 55. The majority of the respondents were younger than 35 years. This suggests that these younger small business owners see more value in attending business training than the older generation.
  • Gender: Of the participants, 66% were female and 34% male. In this study, small business owners who are female were more responsive to the training.
  • Ethnic group or race: In this study, 81% of the respondents were black, followed by Coloureds (11%), whites (5%) and Indians (1%). The high response rate from black respondents could have skewed the results for a number of reasons.
  • Nationality: In total, 99% of the respondents were South African. This was mainly because the government agency’s mandate is to assist and train South African business owners only.
  • Number of years the business has been in operation: Most of the respondents (76%) owned businesses that have been operating for two years at the most (the initial and start-up stages of the business), while 15% owned businesses that have operational for between three and five years, and the rest for longer.
  • Experience acquired prior to starting an own business: In total, 30% of the respondents had no experience with another employer while 33% had experience of one to two years and 17% had three to five years’ experience with another employer. The remainder had experience with an employer for longer periods of time. It seems that small business owners who start a business without experience at another employer run a higher risk of failing.
  • Level of education: In this study, 41% of the respondents had postgraduate education while 42% had tertiary education. Those with only matric accounted for 14%. The majority of respondents therefore had post-matric education. Most respondents were younger than 30 years. This might indicate that the younger generation is beginning to realise that due to the high unemployment rate the only way out is to start their own businesses.
  • Number of employees: The results showed that 73% of the respondents owned companies that employed between zero and three employees while 13% employed a between four and seven employees. Only 3% of the respondents employed more than 20 employees.
  • Number of training days attended over the past two years: The results showed that 39% of the respondents attended two or less days of training while 26% attended between three and five days of training. Also, 12% have attended between six and ten days of training while another 12% attended between 11 and 20 days of training. This shows that the small business owners are starting to see value in attending business training.

Which elements of training were implemented the most?
  • Perceived implementation level for the general management element of the training: Here, 18% of the respondents said they had implemented nothing while 13% implemented a little, 38% implemented some 23% implemented a lot. Only 7% said they implemented all the general management skills they had learnt. Most of the respondents have therefore implemented some elements of the general management training.
  • Perceived implementation level for the marketing element of the training: Here, 23% said they implemented nothing while 9% implemented a little, 35% implemented some and 22% implemented a lot. Only 10% said they implemented all the marketing knowledge they acquired during the training.
  • Perceived implementation level for the financial management element of the training: Here, 18% said they implemented nothing while 10% implemented a little, 30% implemented some and 31% implemented a lot. Only 11% said they implemented all the knowledge they had acquired through the training.
  • Perceived implementation level for the operations (production) management element of the training: Here, 20% said they implemented nothing while 12% implemented a little, 32% implemented some and 24% implemented a lot. Only 11% said they implemented all the knowledge they had learnt from the training.
  • Perceived implementation level in terms of the overall training: Here, 16% said they implemented nothing while 4% implemented a little, 39% implemented some and 29% implemented a lot. Only 12% said they implemented all the things they had learnt during training.

What did the study find?

Next, the demographic attributes of the business owners were analysed based on the percentage split mentioned above and the extent to which the business owners were perceived to have implemented the elements of training.

The older the business, the more readily the owner will implement all elements of the business training. This means that the older the small business, the higher the chance of the owner attending business training and the higher the chance of the owner implementing the training. The implementation of all the management elements – namely general management, marketing, financial management, operations (production) as well as the overall training – therefore has a positive correlation with the number of years the business has been operational.

The more experience the owner has had with previous employers, the more readily the owner will implement business training. The experience that the small business owners have gained with previous employers has a positive correlation with the perceived implementation of the business training elements. This attribute therefore has a significant impact on the implementation of the business training.

The higher the education level of the owner, the more readily the owner will implement business training. The education level of the small business owner has a positive correlation with the perceived implementation of the business training elements. Even though the correlation is weaker than with the other attributes it is still positive.

The higher the number of employees, the more readily the owner will implement business training. The number of employees that the small business employs has a positive correlation with the perceived implementation of the business elements learnt during the training. Interestingly, the number of employees has a statistical significant impact on perceived implementation of the marketing element as well as the overall implementation of the training. However, the number of employees has no significant impact on the implementation of general management, financial management and the operations (production) management elements of the training.

The higher the number of training days, the more readily the owner will implement business training. This means the more training days the business owner has attended, the higher the probability of implementing the elements learnt during the training.

The study also analysed the correlation between the small business owners’ characteristics and the elements of training that they implemented in their small businesses. The study showed that, mostly, there is no significant difference between small business owner characteristics and the implementation of training elements. However, the study pointed to some interesting results that need to be explored in future.  Among others, the study showed the following:

  • Gender and age have no significant impact on whether small business owners implement what they have learnt during training.
  • There is a difference and preference between the black business owners and the white business owners when it comes to implementing the element of marketing. The black business owners do not implement much of the marketing element while the white business owners implement a lot of the marketing element.
  • There is a positive correlation between the years in operation, number of training days, the small business owner’s level of education and the number of employees employed with the elements of training that the small business owner implements. This shows that the longer the business is in operation the higher the value of implementing training and attending training.
  • It is recommended that training institutions focus more on the financial, marketing and operational elements of the training as these seem to be the elements that the small business owners implement the most.
  • The reasons why the general management element of the training is mostly ignored need to be investigated.

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