Normas

Infrastructure-related constraints pertain to poor roads and telecommunications networks, erratic electricity supplies, inadequate water supplies, poor sewerage systems, and lack of appropriate training facilities (Gray, Cooley and Lutabingwa

1 997; Liedholm and Mead, 1 999; Levy, Berry, and Nugent, 1 999). Poor

communication networks lead to time delays in obtaining inputs and meeting customer orders. It also increases transportation costs when obtaining raw materials and also moving output to markets. An additional problem that arises due to the infrequency and irregularity of transport, is that enterprises have to keep large stocks to meet the sudden changes in demand, implying additional costs of production, associated with capital, rent of warehousing and wages of store keepers (Briguglio, 1 995, 1 998). It has also been argued that "high transport costs undoubtedly reduce a country's foreign trade, just as tariff barriers can: in a simple Ricardian model, the introduction of sufficiently high transport costs will eliminate trade altogether" (Srinivisan, 1 986:2 1 3). The transport-related problems are likely to inhibit the growth potential of small enterprises more than large enterprises.

Another infrastructure-related constraint emanates from the lack of suitable and appropriate premises and sites, which sometimes are a result of the land tenure system (Carroll, 1 988; Matsebula, 1 996; Mcpherson, 1 996; IFAD, 2001). Many SMEs are believed to have insufficient land, business premises or sites for expansion or their present scale of operation (Mead and Liedholm, 1 998; Mcpherson, 1 996; Carroll, 1 988). In Southern Africa, it has been reported that police harass entrepreneurs for doing business in what are labelled 'wrong places' on the basis of health, yet, sometimes, it is a disguise to protect existing enterprises from competition (Mead, 1 994a: 13, with emphasis). Mead (1 994a: 1 3), illustrates the point of disguised protection very well by stating that sometimes public officials will argue "that the sale

of used clothing constitutes a health hazard," an assertion that is very difficult to make sense of. The lack of appropriate business premises forces SMEs to locate in places that are not suitable for industrial purposes (e.g., residential places, roadside or illegal land). This has negative effects on the quality of products, and production and sales volumes.

Overall, the lack of appropriate infrastructure implies that SMEs have to try and improvise. Operating under such constraints may lead to higher production costs and poor quality products thus negatively impacting on the competitiveness of SMEs.

3.6.4 Marketing

Marketing is one of the important determinant factors in the success of a business. Often however, owing to the high fixed costs associated with marketing research, small businesses find marketing to be one of the maj or hurdles to the good performance and growth of the enterprise (Rogerson, 2000). Marketing-related constraints faced by SMEs also stem from a lack of information about markets and their inability to engage in meaningful advertising. Lall (199 1 ) argues that information gaps as well as transaction costs ansmg from scale economIes m advertising and distribution act as significant marketing barriers to entry and expansion by new small exporters from developing countries.

The marketing problem is more complicated by the failure of firms to conduct proper marketing research and consequently the failure of marketing assistance to address the 'real problem' . Agar (1 999) explains that the marketing problem is frequently presented as 'help me to find more customers for what I make', and yet the correct approach is seeing things from the customer's perspective and then designing products to match the customers' needs and tastes. This is particularly important because product design is a crucial factor in cases where markets are constantly changing such as in the case of handicraft:s (Mikkelsen, 1 999), a sector which tends to be infested by small business entrepreneurs. Agar further argues that, often marketing trainers are requested to design a programme that they believe will meet the researched needs of a particular group of small businesses. However in practise there

may be very different understandings of what is meant by marketing between the commissioner(s) of the research, the researcher(s), those being researched, and those who design the training programmes. Hence, it is important that those assisting SMEs

with marketing see things as the small business entrepreneur sees them and helps the entrepreneur to think like the customer and then design techniques that will help improve sales and earn profits faster. Marketing strategies will be more effective if based on the demands of a particular market/customer (Mikkelsen, 1 999). Such a customer focus approach will enhance the fmancial performance of the business and drive it towards a more profitable future.

Agar (1 999) acknowledges that marketing research is an expensive and sophisticated exercise that many SMEs can rarely afford. However, he suggests that a bit of creativity and imagination can produce some good positive results. He advises that it is not necessary to research markets and recommends 'talking directly to potential customers' as the most effective method of research. In some cases making use of

simple techniques like signboards can work wonders in the case of local markets. Collaborating with other entrepreneurs to share advertising can help to reduce the costs associated with this exercise.