Influence of Financial Management Practices on Performance of Small and Medium Enterprises in Kitale Town, Trans-Nzoia County, Kenya

Abstract

In Kitale town, many SMEs are performing poorly due to poor financial management practices, yet they occupy a large part of the Trans-Nzoia County economy. If this situation is not addressed, their contribution to the economy will likely be affected. It was found that the growth rate of Kenyan small and medium-sized enterprises (SMEs) decreased from 5.4% in 2011 to 4.3% in 2013. Unemployment is a direct result of a drop in performance, and unemployment exacerbates social inequities and criminal activity. Because of this, this research examined the effect of financial management techniques on the performance of small and medium-sized firms (SMEs) in Kitale town, Trans-Nzoia County, Kenya. This study employed a descriptive research design. In this study, the target population comprised all the managers of retail shops/stalls, butcheries, hardware, and small hotels/cafeterias. Using Gay's criteria, the researcher selected a total of 45 respondents based in Kitale Town. The research instruments used included questionnaires. Data for this study was edited, loaded, and then analyzed descriptively to avoid errors by using frequency lowest, mean scores, and percentages. In addition, inferential statistics were applied using the general linear model-ANOVA and robust standard error regression using SPSS V20 statistical package. The results of the study were presented in the form of tables and figures. It was determined that the response rate was 99.2 percent, with 125 people picked using a basic random selection procedure, with data acquired via the use of questionnaires. Three key financial management methods followed by SMEs were identified in the research, all of which were determined to have a beneficial impact on the performance of small and medium-sized businesses. A rise in these factors will lead to a rise in the company's profits. Financial performance may be predicted at any given moment due to the considerable impact of this study. Moderate levels of adoption of financial management strategies show they have not yet been fully employed in order to enhance performance. Therefore, managers and owners of small businesses are urged to prioritize the use of financial management procedures. When it comes to financial management, they should not only devise a strategy but also regularly monitor and analyze its effectiveness. A number of recommendations are made in the report. It was decided to focus on just Kitale County's small businesses, to begin with. It is possible that this is not a true picture of SMEs throughout the nation.