Effect of stocktaking on business performance: a case of SMEs in Kampala

Abstract

Stock management has for decades been a serious issue hindering success of many upcoming businesses in Uganda, which experience stock outs and overstocking. The main purpose of this study was to assess the effect of stock management on business performance of MSMEs in Kampala. Specifically, the study intended to find out the frequency and basis for stocktaking for most SMEs in Kampala; the mean difference in sales between stock-takers and non-stokers; the correlation between continuous variables and sales revenue and eventually to investigate the effectiveness of stock-taking to the traders in form of revenue improvement. The researcher adopted a cross-sectional survey design in order to select a proportion of business persons from the streets of Kampala town one at a time without making follow ups into the sample with the aid of both descriptive and inferential statistics. The study used a Chi-square test to find out the frequency of stock-taking, ANOVA to test whether mean sales were the same between stock-takers and non-stock takers, Pearson correlation to test the correlation among all continuous variables and a paired t test to find out the effectiveness of stocktaking. Results from the paired t test revealed that sales realized after stock-taking were much higher than those made before stock-taking suggesting that stocktaking was an effective means to sales and business performance of traders in Kampala. Most of the traders in Kampala who never practiced stock taking were found not to be aware of the practice. The study recommends that Kampala City Traders Association through the government of Uganda should carry out monthly assessments and trainings to their members to ensure continued proceeds to the association and to the traders.