Determinants of the failures (low return on investment) of small scale medium enterprises. A case study of Makindye Sabagabo Kampala

Abstract

The purpose of the study aimed at examining the determinants of business failure around Makindye division. A sample of 119 businesses were sampled using simple random sampling and logistic regression was used to predict the factors likely to cause business failure. The summary findings of the study presented that most of the business owners where females (56.78%), most of the owners had acquired primary, secondary and tertiary education, majority were giving the workers incentives (86.44%) though a few conducted business audits (24.58%). Most of the owners strongly agreed that road access was among the major causes of business failure (27.97%), majority of the business owners strongly agreed that power supply was a major cause of business failure (28.81%). Most of them strongly disagreed that market size had a contribution of business failure (30.51%) and lastly population size had an effect on business failure or success (33.9%). The bivariate summary presented that business audits had a significant association with success or failure of the business (chi =23.1, p 0 042). Further education level had a significant association with success and failure of business (chi=10.23, p0.03) and finally logistic regression indicated that concluded that businesses owned by females were 0.551 times more likely to fail than those owned by male counterparts. Businesses owned by primary educated people were 5.6 times more likely to survive than those who had not attained any education. The study recommended that workers should be given incentives and also business audits should always be conducted to ensure survival of business failures. Further the study recommended that for businesses to survive they should easily access funds, should be located in a densely populated areas and also it should focus on the market size. Further research should be done to find out the factors affecting survival of small scale business Further research should be done to determine the correlates of business survival