Author(s): Netshidzivhani Mmbengeni, Musitha Mavhungu, Mamokhere John
Small and Medium Enterprises (SMEs) play an important role in contributing to the economic development of countries. Despite the importance of SMEs an unacceptable and disappointingly high number of these ventures fail during the first few years of operation. It is in light of the importance and challenges faced by SMEs that the performance of SMEs is of interest to all countries. The study investigated the impact of economic factors on the performance of SMEs. A quantitative research design was used in conducting this research. Simple random sampling, a probability sampling technique was used to select a sample of 156 from the sample frame of 261 registered SMEs in retail and wholesale, construction, manufacturing and service. The cross-sectional survey method was used for data collection. Data was collected from small business owners/managers through the survey method. The self-administered questionnaire method was used to collect data from the participants. Descriptive statistics and multiple regressions were used for data analysis. The Cronbach’s alpha was used as a measure of reliability. The findings of this research showed that economic factors have a positive impact on the performance of SMEs and play a critical role in improving entrepreneurial skills and knowledge of SME owners and managers. Hence, the study is an important contribution to the literature that brings solutions to socio-economic challenges. The study suggested recommendations to improve the performance of SMEs in South Africa.