The impact of selected characteristics on the financial bootstrapping methods adopted by immigrant entrepreneurs in the retail clothing sector of the Cape metropole

Abstract

The metropolitan city of Cape Town is host to a significant number of immigrant entrepreneurs. These entrepreneurs encounter many challenges in conducting their business activities, including limited access to formal financial institutions. As a result, they turn to alternative sources for capital. Financial bootstrapping methods enable businesses to raise resources or stretch available ones without using debt or equity. The characteristics of the individual business owner often affect the way in which these methods are used. This study therefore investigates the extent to which selected characteristics of immigrant entrepreneurs in the retail clothing sector (bootstrap awareness, survival goal and education) influence their use of financial bootstrapping methods. A quantitative research approach was used to collect and analyse data. The study was limited to immigrants involved in retail clothing businesses within the Cape Metropolitan area. Data was collected in the specific areas of Bellville, Parow, Cape Town (CBD) and Wynberg due to the concentration of immigrant retail clothing businesses in these areas. Through self-administered questionnaires, 135 respondents participated in the study. The data obtained was analysed using the Statistical Package for the Social Sciences (SPSS) software, version 24. The frequency and Pearson chi square results displayed in contingency tables were interpreted and discussed to established meaning. According to the findings, extended working hours, negotiations with customers and suppliers, obtaining stock on credit, charging lower prices, changing product offerings and keeping business records are the strategies most frequently used by respondents. Most respondents are unaware of the concept of financial bootstrapping methods despite using some of the strategies in their businesses. The need to survive significantly influences the use of financial bootstrapping methods. Level of education was also found to have a significant influence on immigrant entrepreneurs' use of financial bootstrapping methods. Recommendations to address these challenges are directed to immigrant entrepreneurs themselves and to the government.