BUDGETING SKILLS AND FINANCIAL PERFORMANCE OF WOMEN OWNED SMALL AND MEDIUM ENTERPRISES IN NYERI COUNTY, KENYA

Beatrice Wangari Kiambi, Lucy Wamugo Mwangi

Abstract


SMEs that are owned by women in Nyeri County have been experiencing an increase in operating cost declining net income, losses incurred from the businesses and decreasing total assets that expose them to high risks and prevent them from growing and attaining economies of scale. Financial performance among women owned enterprises in Nyeri County has been decreasing with more than 36.7% closing doors in the last five years. In addition, 45% of the women owned enterprises were making losses and only 24.6% had been trained on budgeting skills. The study sought to investigate the relationship between budgeting skills and financial performance of women owned SMEs in Nyeri County. The study adopted an explanatory research design. The target population of the study was 322 women owned SMEs in Nyeri County, whose businesses employ 10 to 99 employees and have an estimated annual net income not exceeding Ksh. 12 million. Stratified sampling was used to arrive at a sample of 96 SMEs and their owners or managers were the respondents for this study. The data collection instrument was semi-structured questionnaires. Data was analyzed using descriptive and inferential statistics with the help of Statistical Package for Social Studies (SPSS) software. Descriptive statistics included mean, standard deviation, frequencies and percentages. Inferential statistics included regression analysis. The study found that budgeting skills have a significant effect on financial performance of women owned small and medium enterprises in Nyeri County. The study recommends that the government of Kenya through Women Enterprise Fund should train women on the importance of preparing written budgets. In addition, women entrepreneurs in Nyeri should be trained on how to prepare budgets as well as forecast and assess revenues and costs.


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