Achieving optimal business performance through business practices: evidence from SMEs in selected areas in South Africa

Abstract

Enhancing business performance is of increasing interest to all business leaders in today’s business environment. Studies relating to both large firms and small and medium enterprises (SMEs) constantly emphasise a positive relationship between business practices, management activities and performance, as it is often articulated that best business practices produce superlative business performance. This study examines empirically which business practices are implemented by SMEs in some selected areas in South Africa and how these business practices impact on their optimal performance. The population for the study comprised business owner-managers in the SME sector in Bloemfontein, Botshabelo and Thaba’Nchu (Free State province of South Africa). A statistical methodology was used to test the relationships hypothesised in the research model. The results reveal that all six selected business practices that were examined (marketing practices, strategic planning practices, human resource management practices, risk management practices, performance management practices and teamwork practices) have a positive and significant relationship with SME performance. Moreover, 97.1% of the SMEs that implemented all six business practices had optimal business performance. This study could serve as a guide for business consultants and SME support mechanisms to develop SME training programmes to help SME owners/managers to acquire the necessary skills to properly implement these six business practices, which will enable SMEs to achieve optimal performance.Achieving optimal business performance through business practices

Key words: SMEs, business practices, SME performance, optimal performance, South Africa