The effect of financial management on the performance of small rural agro-processing businesses.

Abstract

The study examined the effect of financial management on the performance of rural based small agro-processing businesses. It specifically looked at the effect of budgeting on the performance of small rural Agro-processing business, the effect of financial reporting on the performance of small rural agro-processing business and the effect of risk analysis and management on the performance of small rural agro-processing businesses. The study utilized cross sectional survey design with both qualitative and quantitative approaches. The study used Silwany Kiromi Grain Millers as its case study. The study sample involved staff (top management, middle, lower management) and customers. Data was collected from questionnaires and interviews. SPSS was used to come up with descriptive statistics, Univeriate analysis was used to obtain frequencies and percentages of demographic data, whereas bi-variate analysis was done to obtain correlation in establishing relationship between variables. From the findings, the study revealed that there is a positive significant relationship between the effect of budgeting, on the performance of small rural-based Agro-processing business in such a way that the effectiveness of budgetary control in small scale business is very vital to the owner of such business in terms of performance. In terms of financial reporting, the study findings revealed a positive and significant relationship between financial reporting and the performance; it is evident that practice of good financial reporting and management leads to better performance of business. Lastly the study findings revealed a positive relation between risk analysis and management on the performance of small Agro-processing firms. It was therefore recommended that more efforts need to be channeled on proper accountability and record keeping for effective performance of small scale business.