The determinants of the financial bootstrapping strategies use by rural small, medium and micro enterprises in Fetakgomo Municipality, Limpopo Province, South Africa

Abstract

The purpose of this study was to examine the determinants of the financial bootstrapping strategies used by rural based small, medium and micro enterprises (SMMEs). The study was guided by the following objectives, (1) To investigate the financial bootstrapping strategies used by rural entrepreneurs, (2) To examine the effect of the education of the owners on the financial bootstrapping strategies used by rural entrepreneurs, (3) To determine the effect of the age of the owners on the financial bootstrapping strategies used by rural entrepreneurs and (4) To investigate the effect of the gender of the owners on the financial bootstrapping strategies used by rural entrepreneurs. The research followed a quantitative research method with a descriptive research design. A sample of 104 rural SMMEs participated in the survey. Data was collected through the use of self-administered questionnaires in a survey. The participants in the study were rural SMME owners in Fetakgomo Municipality in the Limpopo province of South Africa. The study utilised the convenience and snowball sampling techniques to obtain data from the respondents. Data analysis included descriptive statistics, factor analysis, T-test and regression analysis. The Cronbach’s alpha was used to measure reliability. The results indicated that rural SMMEs have a low usage and adoption rate of bootstrapping finance. The research also found that rural SMMEs mainly utilised owner’s finance as the primary bootstrapping method. The results of the T-test showed significant differences between gender and bootstrapping methods as well as between the level of education and the bootstrapping methods used by rural SMMEs. However, there was no significant difference between age of the owners and bootstrapping methods used by rural SMMEs. Recommendations were ii proposed for the government to create an enabling environment for rural SMEs by embarking on a variety of strategies to raise awareness on the importance of bootstrapping finance. Rural SMME owners were recommended to enrol for a certificate course in financial management to sharpen their skills. Keywords: entrepreneurs’ characteristics, financial bootstrapping, rural area, SMMEs, South Africa.