ENTREPRENEURIAL PRACTICES WITHIN THE TRADITIONAL DRESSMAKERS IN BUTTERWORTH

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1 ENTREPRENEURIAL PRACTICES WITHIN THE TRADITIONAL DRESSMAKERS IN BUTTERWORTH S. N. Peter, Department of Fashion, Walter Sisulu University for Technology and Science, Eastern Cape (Ibika Campus) INTRODUCTION The Eastern Cape, though spatially the second largest province in South Africa, is also one of the poorest provinces in the Republic of South Africa. It is semi-rural in nature and has a high level of unemployment. It is apparent that a need for people to create their own employment is of importance in this region. Butterworth is situated in the poor and rural parts of the former Transkei, where many factories closed down, resulting in massive unemployment. Some of the people, who were retrenched from the factories, had acquired certain technical skills related to production, which could be applied in a business. This paper seeks to identify the support needs of women in the traditional clothing industry so as to promote economic and social development, as well as entrepreneurial culture in the Butterworth region. According to Lau & Busenitz (2001:05), the emergence of small business may have a significant impact on economic development. Many people, including those who are directly involved in traditional designing and making of clothes seem to ignore or underestimate the importance of promoting and developing the culture of entrepreneurship for economic growth and promotion of the traditional designs. In South Africa, since 1994, the ensuing transformation in communities has led to a search for new strategies and approaches towards identifying and improving the quality of living, and encouraging a culture of entrepreneurship. However, discussions with the people selling traditional clothes on the street in Butterworth indicate that they lack the entrepreneurial skills to establish their businesses. The entrepreneurial mindsets of the small business owners nevertheless seem to yield important insights into how they view growth opportunities. 1

2 ENTREPRENEURSHIP AS A CONCEPT The key to understanding entrepreneurship, as Sexton & Bowman-Upington (1999:09) put it, is to understand the entrepreneur, the problem faced, the various roles played during different aspects of the firms growth, and the process of entrepreneurship. Johnson (2001) proposes three aspects of the phenomenon that is entrepreneurship: Entrepreneur an individual who takes initiative; who assumes responsibility for making things happen; is open to and able to create novelty; who manages risks attached to the process; who has persistence to see things through to some identified end-point despite obstacles and difficulties. Entrepreneurial attitudes and behaviours enabling people to take ownership, think in a more open and flexible manner and ensure that what they do as individuals contributes to the strategic development of the organisation. This includes the motivation to achieve and complete; taking ownership and being accountable; making independent and self-directed decision; being open to new information; being able to tolerate ambiguity and uncertainty; creative and flexible thinking, problem-solving and decision-making; the ability to see and capture opportunities; awareness of the risks attached to choices and actions, and the capacity to manage and ultimately reduce risks. Entrepreneurship a creative, opportunity driven act, involving a degree of risk and resulting in the creation of value for individual, community and society. Johnson contends that entrepreneurial societies therefore capture ideas and collect resources and combine these to create new products or services that add value to the organization s offering to the market. This makes it vital for entrepreneurship to be at the heart of every organization. If entrepreneurial practices can be fostered within an individual at any level, everyone can display facets of entrepreneurial behaviour that can combine to add value to the society. 2

3 This paper partly tests a model by Busenitz & Lau (2001:07), as to how different sociodemographic variables and individual needs of small business owners affect the intentions of whether or not to expand their businesses? In order to understand what possible support or solutions that can be developed, the following questions were asked: What problems are you currently experiencing? What do you think are the causes of these problems? How do the problems affect your business? THE ROLE OF SMME IN ECONOMIC GROWTH According to Chandra (2002:10), the South African economy was characterised by weak economic performance throughout the 1990 s, and thus there has been a continued rise of long-term unemployment and job losses in mining and large manufacturing firms since the mid-1990's. The author further contends that this has motivated policy makers to search for relevant sources of job creation that could employ unemployed Black South Africans. The small, medium and micro enterprise turned to be the 'cure' for South Africa's poverty and inequality problems. This seems to be the case in Butterworth where many factories closed down resulting in many people loosing their jobs. People then saw the necessity to start their own businesses as a way of substituting their wages or salaries in an attempt to survive. The constraints that rural population operates under, make it difficult if not impossible for them to access any opportunities that they encounter, and are similar to the difficulties mentioned by Mahlati (2002:46), which are: The continuously declining real prices of primary commodities; The relative lack of economies of scale; The logistical difficulties of overcoming the largely long distances involved; 3

4 The widespread poverty and associated lack of skilled or highly educated labour, entrepreneurship, and private vehicles; and The relative isolation of rural areas from the heartbeat of commercial activity: new knowledge and technological innovations are slow to trickle through. Some of the factors that have made the SMME sector's development to be undermined include: Overall economic demand is weak. Real interest rates are too high. Government promotion programmes are insufficient. STRATEGIES FOR PROMOTING SMME S Promoting the SMME sector for Butterworth requires cooperation from two tiers of government, which are the local and the national governments. For local government the challenge is to improve safety, security and the infrastructure. The challenge for national government lies in the ambit of the stability of policies, education and interest rate reduction, of which this is constantly revised (as an on-going process to attract entrepreneurs) The CPPP programme according to Mahlathi (2002:47), is designed to ensure that the patterns of growth benefits the poor communities either directly through increased employment and incomes or through improved social services. The strategy focuses on the four principles that govern job and wealth creation, especially in rural regions: Using the natural resources of the rural region, Developing rural infrastructure (transport, telecommunications, electricity, and so on), Developing skills within the rural region (management, technical, and so on), and Developing industries primarily for the rural region. 4

5 ENTREPRENEURSHIP AS A HUMAN BEHAVIUOR The perceptions of small business owners regarding their environment will lead to varying positions about their businesses, whether they should expand or change direction. As mentioned earlier that entrepreneurship is about human behaviour. Wickham (1998:41), highlights some important entrepreneurial skills required to organise the physical and financial resources which will enhance the entrepreneurial activity. These are: Strategy skills - an ability to consider the business as a whole, to understand how it fits within its market-place, how it can organise itself to deliver value to its customers, and the ways in which it does this better than its competitors. Planning skills - an ability to consider what the future might offer, how it will impact on the business and what needs to be done to prepare for it now. Marketing skills - an ability to see past the firms' offering and their features, to be able to see how they satisfy the customer's needs and why the customer finds them attractive. Financial skills - an ability to manage money, to be able to keep track of expenditure and to monitor cash-flow, but also an ability to asses investments in terms of their potential and their risks. Time management - an ability to use time productively, to be able to prioritise important jobs and to get things done according to schedule. This paper will seek to establish whether the small business owners who are traditional dressmakers in Butterworth posses any of the above mentioned entrepreneurial skills as suggested by Wickham (1998:41), in order to enhance their entrepreneurial activities. The most important strategy for reducing poverty especially in South Africa, as mentioned by Mahlati (2002:46), is undoubtedly to achieve high rates of growth. The 5

6 White Paper (1995:15), adds by highlighting the characteristics that had attained high, sustainable and egalitarian growth share in other semi-developed countries, as follows: High priority for the development of reliable statistics on the SMME sector; High levels of human capital, A strong and broad-based small-scale manufacturing sector, Ready access to information technology, Consistent investment in research and development, and Particular emphasis on women's enterprises, which have a strong orientation programme towards food security, health and children's education. If the aspects of having a high priority in SMME support strategy can be adopted in South Africa with particular reference to the Butterworth area, this would in turn develop the economy of this region and this also result in high, sustainable growth shares. In order to understand the intentions of whether or not to expand and what influence the growth rate of small businesses in this area, strategic thinking and decision making should be the starting point for all entrepreneurs. OBJECTIVES OF THE SMME STRATEGY Chell (2001:126), distinguishes among the three different elements of strategy: Strategy as a plan a consciously intended course of action. Strategy as a pattern a stream of actions which are consistent. Strategy as a position a means of locating the organisation in its environment, for example, its product market domain, its niche. The above mentioned elements seem to be relevant to SMMEs, due to the fact that strategy forms the basis for the growth rate of any entrepreneurial activity. Beaver (2002:125), supports this by suggesting the background and access to resources, the 6

7 nature of the firm, and the strategic decisions taken by the firm once it is trading, as the starting point for the business. CONSTRAINTS FACING DRESSMAKERS For an enterprise to be successful there should be a competitive advantage. The main step in establishing a competitive advantage is the development of a distinctive competence. The key areas of competence that affect dressmakers include quality, flexibility, image, location, and services. The main difficulties currently experienced by these dressmakers, which will in turn inhibit entrepreneurial activities in this region are: Lack of business skills. Infrastructure constraints. Unable to address business viability issues. Business informalities which create risks. Poorly manufactured/designed products. No capital to refinance large orders. Lack of exposure to contemporary designs. RECOMMENDATIONS It is recommended that a Business Advice Centre (BAC), or Business Information Centre (BIC) be available to serve as a tool for business related information purposes. This centre will play an important role in providing the small business owners with information, advice and counselling in matters that are essential for the survival and success of their business. Further recommendations can be made to the fact that the small businesses in the traditional clothing sector are not registered. Due to the reason how SMMEs start their businesses, assumptions can be made that they are not aware of the role they play in the economic development of the country. Small businesses should also be registered and be governed by policies, so that they see themselves as part of the economic growth and social development for this region. 7

8 CONCLUSION Although many people start up small, micro, and medium sized businesses, and thus demonstrate their entrepreneurial flair or practices, many cannot sustain their operations once the initial financial support has been exhausted. It is essential, therefore, to mentor and monitor emerging entrepreneurs through the business cycles, providing them with the necessary skills in a variety of crucial fields like This paper has confirmed some of the hypotheses adapted from Busenitz & Lau (2001:07) model, that social and individual variables have important relationship on cognitive outcome of entrepreneurial growth intentions. In a rural economy as Butterworth, the relationship appears to hold true. The findings revealed that Butterworth has growing business opportunities. However, the uncertain market conditions and other constraints identified in this paper, need to be taken into consideration when small business owners intend expanding their businesses. It can also be concluded that, these small business owners who are women, although economically significant, they remain largely invisible in terms of the business support infrastructure available to assist potential female entrepreneurs. Another conclusion that can be drawn from these findings is lack of access to appropriate, relevant and understandable information, and advice is seen as one of the most important problems among black entrepreneurs of small enterprises, survivalists and small start-up enterprises. REFERENCES 1. Beaver, G Small Business, Entrepreneurship and Enterprise Development. United Kingdom: Financial Times Prentice Hall. 2. Birley, S. and Muzyko, D Mastering Entrepreneurship. London: Prentice Hall. 3. Bouma, G. D The Research Process. Revised Edition, Australia: Oxford University Press. 8

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