The Role of Financial Management on the Performance of Sme’s a Case Study of Kayabwe and Nkozi (Mpigi District)

Abstract

The topic for this study was the role of Financial Management on the performance of SME’s with Kayabwe and Nkozi trading centers as a case study. The specific objectives were to; establish the effect of budgeting on the performance of SME’s, to assess the effect of risk assessment on the performance of SME’s, to analyze the effect of financial reporting on the performance of SME’s.

The study employed a case study design considering both Kayabwe and Nkozi trading centers. Both Quantitative and Qualitative approaches were used for data collection. The data from the field was then entered and analyzed using SPSS software to generate descriptive and inferential statistics which were used to establish the relationship between financial management and performance of SME’s.

From the correlation analysis that was conducted, it was discovered that budgeting had a positive and insignificant relationship with SME performance. This implies that a change in budgeting brings about a positive change in SME performance. Also from the correlation analysis, it was discovered that risk management had a positive and insignificant relationship with SME performance. The fact that it is positive implies that a change in Risk management practices brings about a positive change in SME performance. And finally, a positive and significant relationship between financial reporting and SME performance, implying that a change in the financial reporting practices brings about a positive change in SME performance.

Therefore, the study concluded that there is a positive and significant relationship between financial management and business performance. Implying that a change in financial management practices brings about a change in SME performance. The study recommended that Business owners conduct financial management with greater diligence in order to realize higher results.

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