The financial performance of black-owned Grocery shops in townships in South Africa

Abstract

This study investigates the financial performance of black-owned grocery shops in Mdantsane in South Africa. To achieve this objective, the research hypothesised that variables that impact on the performance of grocery shops are, among other things, bad debts and excessive withdrawals. It was also hypothesised that a lack of sufficient funds implies that grocery shops cannot embark on vigorous marketing efforts, and this erodes profitability. The study is important because grocery shops in townships are a source of income for most of the black population. The results indicate that the management of grocery shops has to pay special attention to asset management in order to achieve an acceptable turnover relative to assets. It is often the case that better asset management sets free some of the funds tied up in a business for creating greater turnover, better discounts or expansion. It is also imperative that the management of small businesses improve their managerial skills on aspects of financing and financial information preparation, and the calculation of capital requirements.