The role of business incubators in facilitating the entrepreneurial skills requirements of small and medium size enterprises in the Cape metropolitan area, South Africa

Abstract

In both developed and developing countries, small and medium enterprises (SMEs) create employment opportunities and can therefore improve the standard of living. The South African Government have embarked on a number of initiatives in support of SMEs. The Department of Trade and Industry (DTI) and the SEDA Technology Programme (STP) have a number of assistance programmes that are being implemented in support of SMEs. Although there have been many varied studies on business incubators, there is still a need for research to determine the importance of entrepreneurial skills for the development of successful incubators.Business incubators are essentially organisations that assist to increase survival rates of innovative start-up companies and support the entrepreneurial process. Incubators provide resources and services to entrepreneurs, including working space or physical offices, technical expertise, management mentoring, assistance in compiling an effective business plan, shared administrative services, technical support, business networking, advice on intellectual property and sources of financing, markets as well as strict admission and exit rules, which are designed to ensure that the incubator concentrates its efforts in helping innovative and fast-growth business start-ups that are likely to have a significant impact on the local economy. This therefore reduces the start-up capital and overhead costs, and allows the entrepreneur to focus on his/her core business whilst receiving operational support and hand-held coaching. The incubator concept supports the clients’ development journey to ensure business sustainability and growth.The main objective of the study is to determine the role that business incubators play in filling entrepreneurial-skills requirements for SMEs in the Cape metropolitan District. The population of this study comprised all the business incubators on the data base of one of the organisations that promotes SME development strategies and programmes in the Cape Metropolitan Area (CAM). All of the five business incubators that were registered on the database of a local organisation, known as Traction, during the course of the investigation, were deemed suitable for the study and therefore comprised the sample, which promotes SMEs’ development. The study utilises a mixed approach of quantitative and qualitative methods to collect data. From a quantitative point of view, questionnaires are utilised, while face-to-face interviews is used as a qualitative method. A maximum of seventy questionnaires is administered to incubated SMEs, 28 questionnaires were returned and all qualified for data analysis. This amounts to a 40% response rate. To complement the survey questionnaire, five face-to-face interviews were conducted with business incubators. The Statistical Package for the Social Sciences (SPSS) software was utilised to analyse the quantitative data, whereas qualitative data was analysed by means of content analysis and the results for both methods were presented in the format of figures, tables and charts.