Determinants of the Profit Levels of Small and Medium Enterprises Case Study: Bugolobi Market

Abstract

In an effort to determine factors that influence business profitability, a descriptive study was conducted using a questionnaire administered to randomly selected sample of 67 business owners in Bugolobi market- Kampala Descriptive statistics, correlation tests, ANOVA and multiple linear regression were used to analyze data. From the study findings, business profits highly depended on the age of the owner (p-value= 0.05). The study revealed that one-year increase in the age of the business owner would increase the level of profits by almost 21%. Holding other factors constant, a unit increase in the business operating capital would increase the level of business profits by 88%, increasing the number of business staff by one employee would lead to 43% increase in the level of profits. A switch from a male headed business to a female headed would reduce the level of business profits by 43%. Fail to market the businesses by their owners would reduce the profit levels by 11% Based on results of analysis, it is deemed imperative that in an effort to improve environment of doing business, a number of coordinated measures ought to be considered including:- Business owners should make it an aim to have all their business activities and products marketed to create enough awareness among the potential customers so as to increase sales which would in turn increases business profits. The government needs to intervene and reduces on the taxes they charge on businesses this would reduce on the cost of doing business and increase the business revenue in the study area. and finally, business owners need to increase the business operating capital and their business staff, so as to increase the areas of business operation and enjoy the economies of scale which include reduced costs and increased revenues