Impact of Financial Management Practices on the Growth of Small and Medium Scale Enterprises in Upper Denkyira

Abstract

The research aims to examine the financial management practices of small and medium scale enterprises in Upper Denkyira. The specific objectives are: to examine the effect of financial planning practices on the growth of SMEs in Upper Denkyira, assess the effect of working capital management practices on the growth of SMEs and determine the influence of investment decisions by owners of SMEs on the growth of SMEs. The research design adopted was the descriptive design and the approach was quantitative. A sample size of 92 SMEs in Upper Denkyira was used. The study found out that financial planning practices had no significant effect on growth of SMEs but working capital management practices and investment decisions had a strong positive effect on growth of SMEs. It was also found that findings of the study especially on financial planning contradicted with some of the findings in literature. It is recommended that owners of SMEs in Upper Denkyira should be encouraged to have a clear business plan and monitor their financial position. Again, it was recommended that government should endeavor to bring up social interventions such as financial planning seminars or training for owners of the SMEs through the local government. Moreover, investment banks and capital groups were recommended to have investment policies that are solely for SMEs such that they can build on it to expand their business into larger firms. It was finally recommended that future studies should look at effectiveness of financial planning practices and growth policies of SMEs in the other regions of Ghana.