Entrepreneurship gaps framework model: An early-stage business diagnostic tool

Abstract

Background: In South Africa, entrepreneurship literature demonstrates that three out of four businesses collapse within 3 years of their inception. A plethora of research effort identifies factors such as the lack of finance and access to markets as the leading causes for the high attrition rates amongst emerging businesses. This study finds the narrative to be limiting and inadequate as it does not address the possible gap between entrepreneurs’ expectations and their realities of managing their businesses.

Aim: To present the entrepreneurship gaps framework (EGF), an early-stage business diagnostic tool that seeks to assess entrepreneurs’ preparedness.

Setting: This study focused on emerging entrepreneurs operating within the limits of developing economies. The framework can be used by emerging entrepreneurs, capacity development institutions and lenders.

Methods: A descriptive research design supported by a mixed-method research approach was employed. This was coupled by a two-phase data collection procedure which took place within Limpopo province with 215 participants. Explorative data analysis based on discrete choice models was further implemented.

Results: Findings on the EGF illustrated the ability of the framework to act as a more comprehensive diagnostic mechanism that improves early-stage entrepreneurship survival.

Conclusion: Entrepreneurship gaps framework is a decision-making tool that can be used by lenders and capacity development institutions to evaluate the emerging entrepreneur with respect to specific areas of business. This results in the necessary support for improving entrepreneur preparedness being provided to entrepreneurs. Secondly, entrepreneurs are likely to benefit from the EGF, if used as a self-diagnostic tool to measure their business preparedness and experience.