The utilisation of performance measures by the bed and breakfast industry in the Cape Metropole

Abstract

Small, Medium, and Micro Enterprises (SMMEs) are vital in boosting the South African economy. However, despite SMMEs’ important role, research shows these enterprises face an exceptionally high failure rate. Scholars have identified numerous factors impacting the sustainability of SMMEs. As a result, ensuring the sustainability of SMMEs has become a priority for both local and national governments. A key issue contributing to failing SMMEs is the inadequate utilisation of performance measures. Performance measures in the Bed and Breakfast (B&B) industry—a significant role player in the SMME sector—have contributed to improving the growth and profitability of SMMEs. A study of SMMEs revealed that, while financial and non-financial performance measures are considered essential, less attention is focused on financial indicators with a general disregard for financial and non-financial performance measures. To ensure that performance measures are utilised, including guaranteeing that these financial or non-financial performance measures are optimally utilised, depends on the management of the enterprise. This research study hypothesised that the ineffective utilisation of performance measures adversely influences the sustainability of the South African B&B industry. In the absence or lack of adequate performance measures, a scenario develops where an enterprise is vulnerable to risk, and these businesses are prone to failure. Stemming from the above, the study's main goal was to find out how much the South African B&B industry uses performance measures to enhance the sustainability of SMMEs. The investigation was practical and aligned with the positivistic research paradigm. This study was also observed as applied research that integrated quantitative research features. This study employed a survey-based approach targeting B&B owners and/or managers within the Cape Metropole of South Africa. Eighty-two B&Bs were approached for the study, utilising a combination of purposive and convenience sampling under the non-probability sampling method. Of these, the study successfully garnered the participation of 57 respondents. Descriptive and inferential statistical methods were employed, facilitating the drawing of informed conclusions and enabling the study to meet its research objectives and respond to the research questions. Research results reveal a distinctive understanding that SMMEs in the B&B industry apply performance measures for their businesses. However, unlike prevalent assumptions in existing literature, which often emphasise a balanced application of financial and non-financial performance measures, this study discovered a predominant reliance on financial tools. This finding is notable, as it contrasts with the broader trend in performance management literature that advocates for a more holistic approach, incorporating financial and non-financial measures to supplement the key financial tools for business sustainability. Additionally, the study identified a significant knowledge gap among practitioners regarding utilising financial- and non-financial performance measures. These insights suggest a divergence from conventional industry practices, highlighting a unique aspect of the South African B&B industry. To address this gap, the study recommends targeted training in financial and non-financial performance measures to enhance the strategic use of financial tools for business sustainability. This recommendation contributes to the academic discourse by filling a critical knowledge gap and providing practical guidance for industry practitioners.