Assessment of factors influencing success of small scale and medium enterprises in Kabale municipality

Abstract

The study mainly assessed factors influencing success of Small and medium enterprises (SMEs) in Kabale Municipality; specifically the influence of entrepreneurs` characteristics, access to credit and record keeping. More so, it examined the sources of finance and funds SME operators used to start up and for daily running of the business. The study used a cross-sectional research design where a sample of 100 SMEs was considered for the study. Data was collected through face to face interviews with the SMEs operators using a well pre-tested and designed questionnaire and data processing was done in STATA Version 15. A higher proportion of the respondents were females (54%), aged 21 to 31 years (45%), had attained primary education (36%) and secondary education (35%) and a higher percentage (46%) had been operating the business for 1 to 5 years. A higher number of SMEs were dealing in general trade (37%), restaurant/bar (26%) and hair and beauty salon (26%). A slightly higher percentage (37%) of SMEs was generating 10 to 19 million Uganda shillings annual turnover and employing 1 to 2 employees (40%). Most of the SME operators their source of capital was savings (63%) and nearly 60% of SME were reported to have expanded since their start. With regard to access to finance and record keeping, a few SMEs operators had ever applied for a loan (37%) and only 37% were granted the loan. About 64% reported keeping business records though majority (64%) used manual way (hand written papers). Bivariate analysis showed that age, education level, access to credit and record keeping significantly influenced success of SMEs in Kabale Municipality where individuals in their middle age (21-40), those that attained at least secondary school, those that accessed credit and kept business record were more likely to succeed in their business. The researcher recommends government to formulate policies and strategies that can ease access of credit among small and medium enterprises in order to boost their growth and success. And SME operators should ensure proper record keeping in order to easily keep track of their financial transactions and management of their business. This may also enable them to acquire credit facilities from formal financial institutions which could accelerate their business growth. She further recommends a comprehensive research on the influence of access to formal credit on the success and growth of small and business enterprises in developing countries such as Uganda