The Effect of Financial Management Practices on the Performance of Micro and Small Enterprises in Keffi, Nasarawa State, Nigeria

Abstract

Micro and small enterprises (MSEs) have been highlighted as an important growth engine, a major driving force, an antidote to unemployment, a wealth creator, and a pathway for sustainable development. Despite the large number of new businesses established, their mortality rate remains relatively high, particularly in underdeveloped nations. Proper financial management is particularly critical in assisting micro and small enterprises (MSEs) in gaining access to cash, which is required for business growth. The study looked at how financial management techniques affected the success of micro and small enterprises (MSEs) in Keffi, Nasarawa State, Nigeria. Descriptive research and ex-post facto designs were used, and the model was estimated using multiple regression analysis. The study’s findings demonstrated that working capital management has a favourable and significant impact on MSE performance. The practical result is that when organisations strive to enhance the financial income used for day-to-day operations, their profitability levels rise. The study also found that financial planning has a substantial impact on MSE performance. Based on these findings, the study recommends that MSE operators ensure adequate cash management controls are in place to ensure that there is always optimal cash where there are strategies in place during minimal cash and surplus cash because either side will contribute to the enterprise’s liquidity risks. This will assist MSEs improve and maintain their performance. MSEs are also encouraged to do financial planning and to always produce and maintain adequate financial records for their daily activities in order to track cash flows. It would allow them to plan for expansion and growth outside Keffi, Nasarawa State, and Nigeria in general.