- Title
- Internal barriers facing small business owners adopting financial management practices in Makana Municipality, Eastern Cape
- Creator
- Tendayi, Elizabeth
- ThesisAdvisor
- Antoni, Xolile
- Subject
- Small business South Africa Eastern Cape
- Subject
- Business enterprises Finance South Africa Eastern Cape
- Subject
- Financial management
- Subject
- Contingency theory (Management)
- Subject
- Municipal government South Africa Eastern Cape
- Subject
- Business failures
- Subject
- Success in business
- Date
- 2023-03-31
- Type
- Academic theses
- Type
- Master's theses
- Type
- text
- Identifier
- http://hdl.handle.net/10962/419484
- Identifier
- vital:71648
- Description
- Although small businesses are important in South Africa, they have a high failure rate. About 63 percent of small businesses in South Africa fail in the first 18 months of their inception (Van Staden, 2022; Zhou, 2021; Bruwer, 2020: 148). One of the reasons for the failure of small businesses is the improper and ineffective adoption of proper financial management practices (Zada, Yukun and Zada, 2021: 1074). However, the success of small businesses is highly dependent on the adoption of proper financial management practices (Kapitsinis, 2019; Jindrichovska, 2013; Abuzayed, 2012; Kaya and Alpkan, 2012; Banos-Caballero, Garcia-Teruel and Martinez-Solano, 2010). In the Eastern Cape, most small businesses do not adopt proper financial management practices (Raj, 2012; Van Eeden, Viviers and Venter, 2003:1). Therefore, the study aimed to analyse internal barriers facing small business owners adopting proper financial management practices in Makana Municipality in the Eastern Cape. Eastern Cape. Proper financial management practices are evident where there is transparency, efficiency and accuracy in the achievement of the financial objectives of a business (Cheluget and Morogo, 2017: 215). Financial management practices include cash management practices, accounts receivables management practices, accounts payables management practices, inventory management practices, working capital management practices, investment management or capital budgeting practices, financing or capital structure practices, accounting information systems, financial reporting and analysis practices. The study adopted a qualitative research design and a case study methodology. A non-probability judgment sampling method was used to select a sample of twelve small business owners in Makanda, Makana Municipality. Makanda was a relevant study area because it has a high unemployment rate and poverty, and small businesses may be used as one of the driving forces in the reduction of poverty and unemployment in Makana Municipality (Eastern Cape Socio Economic Consultative Council, 2017: 1; Zemenu and Mohammed, 2014: 2; Alebiosu, 2005: 5). Primary data was collected through semi-structured interviews. Content analysis was used to describe and interpret qualitative data using coding and themes. The findings of the study showed that most small business owners or managers in Makana Municipality adopted cash management practices, working capital management practices, inventory management practices, capital structure (equity capital) practices and financial reporting and analysis. However, it was also found that small business owners or managers in Makana Municipality did not adopt accounts receivables management practices, accounts payables management practices, capital structure (debt capital) practices, accounting information systems and capital budgeting (investment) management practices. These barriers included difficulty in debt collection, cost of debt collection, nature of product or industry, challenges with suppliers or creditors, Covid-19, debt avoidance, improvement of cash flow, negative attitude towards computer systems, waste of resources and difficulty use of computer systems. It is recommended that small businesses may overcome these barriers by implementing proper debt collection procedures, honouring credit payments terms with suppliers or creditors, consulting external accountants on how to balance the use of both debt and equity capital, hiring qualified personnel to acquire training and bring awareness to the use of computer systems. In addition, the government should provide financial education programmes that specifically deal with long-term investments, and small businesses are encouraged to apply for Covid-19 rescue packages or grants through role plates such as Debt Relief Finance Scheme and the Small Enterprise Finance Agency (SEFA). It was concluded that each small business adopts financial management practices differently due to the nature of the business or industry. Also, the adoption of financial management practices is dependent on the exposure of the different barriers within each business. Hence, this study confirms that the contingency theory may be used to explain that the adoption of financial management practices is dependent upon the nature of the business or industry and the different barriers that small businesses face. Theoretically, this study contributed to the existing literature by analysing the barriers faced by small business owners adopting financial management practices in the Eastern Cape. Practically, this study highlighted the internal barriers that small business owners need to overcome to the adoption of financial management practices.
- Description
- Thesis (MCom) -- Faculty of Commerce, Management, 2023
- Format
- computer, online resource, application/pdf, 1 online resource (203 pages), pdf
- Publisher
- Rhodes University, Faculty of Commerce, Management
- Language
- English
- Rights
- Tendayi, Elizabeth
- Rights
- Use of this resource is governed by the terms and conditions of the Creative Commons "Attribution-NonCommercial-ShareAlike" License (http://creativecommons.org/licenses/by-nc-sa/2.0/)
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details | SOURCE1 | TENDAYI-MCOM-TR23-41.pdf | 3 MB | Adobe Acrobat PDF | View Details |