Investigating financing options for business success

The study sought to examine the extent to which the financing options chosen by entrepreneurs will have an impact on business success. The investigator adopted the progression of the ventures along the business life cycle stages as a benchmark for assessing success. The study focused primarily on small, medium and micro enterprises (SMMEs) in the Eastern Cape Information Communication Technologies (ICT) sector. An empirical study, using an online survey was conducted amongst 50 small business owners/ business representative within the ICT sector in the Eastern Cape Province. Key results revealed that the financial support of Broad-Based Black Economic Empowerment (BBBEE) and personal savings have played a key role in the success of ICT SMMEs throughout the business life cycle phases. This occurs after an ICT SMME has advanced successfully over the startup stage and aims for success in the development phase. The empirical finding revealed that for these SMMEs to attain success at this stage, they should finance their business investment projects utilising financing and credit trade in the form of bank loans, families, relatives and friends. According to the empirical finding in chapter five, the abovementioned financing options are only substantially linked to good advancement from the development phase onto the expansion phase. In addition, suggestions have been made to the ICT SMME management to include BBBEE finance, personal savings, bank loans, families, relatives and friends and trade credit as suitable funding choices for the ICT SMME's life cycle. The recommendations made included that proponents of the BBBEE legislation underpinning the enterprise development and supplier development, should intentionally pressure the private sector to comply with this legislation, as compliance will increase the pool of capital available to SMMEs.The chances of receiving these forms of support would therefore improve the probabilites of sucess for ICT SMMEs. Moreover, personal financing is crucial to successful progress for ICT SMMEs along the business life cycle. It is recommended that startup owners should always exercise iv saving in their personal capacity. In the early stages, the owner's capital will still be valuable as "seed financing" for start-up businesses., when all the other options of external funding are not available. Moreover, SMMEs should continuously explore the other financing options, such as bank loans, families, relatives and friends and trade credit only when their business goals are achieving success at the development stage. The study calls upon academia to consider performing descriptive studies to look at these findings. Through setting a concise financing approach for SMMEs in the ICT sector, SMMEs may help to close the distance between themselves and access to various financing options and supportive organisations.Thesis (MA) -- Faculty of Business and Economic Sciences, NMU Business School, 202