South African informal businesses sustainability in the Cape Town central business district: the power of internal financial controls.

Abstract

Small medium and micro enterprises (SMMEs) are key players in the informal sector which contributes substantially to the development of the economy of South Africa. These firms also play an imperative role in promotion of entrepreneurial survival and entrepreneurial sustainability in a demanding and competitive informal sector. This paper provides insight, as to what extent SMMEs make use of internal financial controls to make ends meet in the informal sector. The key objective of this research was to determine the extent to which internal financial controls are utilised by informal businesses in the Cape Town Central Business District (CBD); and to ascertain the level of understanding owners and/or managers have regarding internal financial controls. To execute this research, empirical research was conducted through means of the positivistic research paradigm. This study was also regarded as a quantitative research study and a questionnaire-tool was used to glean data by means of purposive sampling from respondents with the main intention to obtain rich data. From the data analysed, it was found that though these businesses were in fact aware of the beneficial potential value internal financial controls could have on their business’ well-being, however only a minority of these businesses actually had such implemented controls; those who implemented it had limited monitoring over these controls. From the data analysed, relevant recommendations and conclusions were also drawn upon.