The importance of the informal sector in developing countries was confirmed in a study done by Tripple (2005:2) on home-based enterprises in the informal sector. It is estimated that there are between 1 and 2.3 million informal businesses in South Africa, which contribute between 7 and 12 percent to South Africa’s GDP (Von Broemson 2007:3). It is also known that South African entrepreneurs have a poor skills record, which often leads to business failure. To effectively manage a business in the informal sector requires management skills. The implementation of simple systems can assist business in the informal sector to manage their businesses more successfully and even grow. The intention of this study is to explore how, and if, township businesses execute management functions in their businesses. A quantitative study was done, by interviewing ninety three business owners in the township of Port Elizabeth, South Africa. Secondary sources was consulted to gather an idea of what prior research has been done on the informal sector, with special reference where possible to the management functions executed in the informal businesses. A comprehensive questionnaire was designed based on this information. Descriptive statistics was used to analyse the data. The empirical results identified the gaps in the management abilities of informal traders in terms of the management functions and show that the financial management and information management function is the most neglected. Guidelines on how each function could or should be applied are given. The research also clearly indicates that businesses in the informal sector can assist in economic growth and relieving unemployment in the country.
|Keywords:||Informal Businesses, Management Functions, Developing Countries|
Senior Lecturer, Business Management, Nelson Mandela Metropolitan University, Port Elizabeth, Eastern Province, South Africa
Associate Professor, Business Management, Nelson Mandela Metropolitan University, Port Elizabeth, Eastern Province, South Africa
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