The application of the theory of constraints in the small business sector

M.Comm.A constraint is anything that limits a system's performance relative to its goal. The Theory of Constraints (TOC) is a systems-management philosophy developed by Eliyahu M. Goldratt since the early 1980's in a series of non-fiction books, articles and novels. The overall goal of this study is to understand the nature of the small business environment and the constraints it has to deal with. It is further part of this goal to determine if TOC could be made applicable in the small organisation. This goal is accomplished in the form of a literature study on the small business sector as well as on TOC. The method centres on gathering and analysing information from various literature sources. TOC's fundamental message is that constraints determine the performance of any system, and any system contains only a few constraints. Constraints may be found within or outside a company. A production bottleneck, which can limit the overall profitability of a manufacturing firm, is an example of an internal constraint. An external constraint could be a lack of customer orders. TOC suggests that the goal of for -profit firms is making money, and constraints must be effectively managed if this goal is to be achieved. This is then also the goal of most small businesses, i.e. to be profitable. They need to be profitable in order to survive. The survival and growth of the small business sector is critical to the social and economic development of South Africa. Small enterprises are an integral part of a healthy economy. They increase competitiveness, contribute a great deal to job-creation and can provide long-term jobs for millions. Small businesses faces however a wide range of constraints. These constraints should be addressed in order to sustain growth in the small business sector