Financial record keeping and financial performance of small businesses

Abstract

The study was about Financial Record Keeping and Financial performance of small businesses and a case study of Kikuubo Lane was used from where data was collected by the researcher with the aim of finding out the relationship between Financial Record Keeping and Financial Performance of small businesses. The variables comprised of Financial Record Keeping which was the independent variable as well as Financial Performance as the dependent variable. The independent variable was measured using dimensions which were Asset Register, Accountable Documents and Accounting Books whereas Turnover, Profits and Asset Base were the dimensions for the dependent variable. Specific objectives were then derived from the dependent variable and the dimensions of the independent variable thereby coming up with: to examine, evaluate and assess the relationship between asset register, accounting books as well as accountable documents and financial performance. The survey method was then used for the research since it was of a large population of 7449 small businesses whereas the quantitative research approach was also applied which required the issuing of questionnaires to 380 small businesses which were the sample size of which 230 responded after which the collected data was analyzed using IBM SPSS Statistics version 20. The findings revealed that there is a significant relationship between asset register and financial performance although the small businesses in Kikuubo Lane do not maintain them because of various reasons like lack of knowledge to prepare them as well as the ignorance of not knowing why an asset register is essential in a business especially during the measuring of its financial performance. The findings further reveal that there is a significant relationship between accounting books and financial performance of small businesses though most of them do not keep accounting books like the cash book, sales book and purchases book. They also reveal that there is a significant and positive relationship between accountable documents and financial performance of small businesses because most of the small businesses in Kikuubo Lane possess accountable documents like receipts and delivery notes which can be used to track cash in the business thereby enabling the business owners to know the financial stand of their businesses. The study therefore concluded that there is still a lot left to be desired in small business Financial Record Keeping as well as Financial Performance of small businesses since they hardly keep financial records and can hardly measure their financial performance the right way which is why small businesses cannot stay for long in business. Conclusively, I recommend the sensitization of the small business owners on the different financial records they ought to keep, how to manage them and their usefulness in the business especially for measuring financial performance.