Categories of SMMEs
The National Small Business Act divides SMMEs into the following categories:
SURVIVALIST ENTERPRISE
women represent approximately 56% of this category
Operates in the informal sector of the economy. Mainly undertaken by unemployed persons.
Income generated below the poverty line, providing minimum means to keep the unemployed and their families alive.
Little capital invested, not much assets. Not much training required to operate.
Opportunities for growing the business very small.
MICRO ENTERPRISE
women represent approximately 38% of this category with no employees, and 15% of this category with 1-4 employees
Between one to five employees, usually the owner and family.
Informal – no license required, no formal business premises, no labour legislation necessary.
Turnover below the VAT registration level of R300 000 per year.
Basic business skills and training.
Potential to make the transition to a viable formal small business.
VERY SMALL ENTERPRISE
Part of the formal economy, use technology. Less than 10 paid employees.
Includes self-employed artisans (electricians, plumbers etc) and professionals.
SMALL ENTERPRISE
Less than 10 paid employees.
More established than very small enterprises, formal and registered, fixed business premises.
Owner managed, but more complex management structure.
MEDIUM ENTERPRISE
Up to 200 employees.
Still mainly owner managed, but decentralised management structure with division of labour.
Operates from fixed premises and complies with all formal requirements.
The National Small Business Amendment Act (No 29 of 2004) provides for the establishment of the Small Enterprise Development Agency (SEDA) and the incorporation of organisations such as Ntsika Enterprise Promotion Agency, the National Manufacturing Advisory Centre and any other designated institutions into SEDA. This will be dealt with in more detail in the chapter.
