Working Capital and Survival of Smes

IMPACT OF WORKING CAPITAL MANAGEMENT ON SURVIVAL OF SMALL AND MEDIUM ENTERPRISES (SMES) IN NAIROBI KENYA

BY
GACHOGU BENSON KAMAU
REG. NO:L50/82852/2012

FACILITATED BY
PROF. PROF.POKHARIYAL, GANESH P

A RESEARCH PAPER SUBMITTED TO UNIVERSITY OF NAIROBI IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTERS DEGREE IN BUSINESS ADMINISTRATION (MBA)

JANUARY, 2013

DECLARATION
I Walusimbi Samuel declare that this project report is my original work and has never been submitted for any award in any University or institute

Signed……………………………............. Date …………………………….. WALUSIMBI SAMUEL TABLE OF CONTENTS
DECLARATION i
LIST OF TABLES iv
LIST OF FIGURES AND DIAGRAMS vi
INTRODUCTION-4pgs 1
1.1 Background of Research Problem 1
1.2 Problem Statement 3
1.3 Objectives of the Study 3
LITERATURE REVIEW-4pages 5
2.0 Introduction 5
2.1 Cash Management and Policies 5
2.2 Theoretical and Empirical Perspectives 6
2.3 The Key to Effective Cash Management in SMEs 8
2.4 Relationship between Cash Management and Survival of an SME 11
RESEARCH METHODOLOGY-3pages 14
DATA ANALYSIS AND RESULTS-6pages 15
4.0 Respondents’ Background Information 15
4.1 Cash Management 15
4.2 Policies of Handling Cash In Flows 16
4.3 Survival of Business 17
4.3.2 Attendance of seminar/workshop/training relating to business 18
4.3.3 Indicators that those trainings or workshops were beneficial 18
4.3.4 Factors that might hinder survival of business 20
4.4.1 Relationship Between Cash Management And Survival Of Smes 21
4.4.2 Nature of the relationship 21
4.4.3 Indicators 23
4.4.4 Whether the business achieves the purpose of cash management 23
4.4.5 Indicators 23
4.4.6 Other factors that contribute to survival of businesses 24
DISCUSION, CONCLUSION AND RECOMMENDATIONS-1PAGE 25
5.1 Summary 25
5.1.1 Cash management 25
5.1.2 Survival of SMEs 25
5.1.3 The relationship between cash management and survival of SMEs 26
5.2

References: Berry, D.O. (2008). Back Ground Paper of Advocacy. Retrieved February 20, 2011, from www.sba.gov/ADVO/backgr08.PDF. Chandra, D.B. (2002). Principles of Management and Administration. New Delhi: Prentice Hall of India. Fitzjkenny, k. (2010). Small Business Financial Management. Retrieved March 12, 2011 From http://hubpages.com/hub/smallbusinessfinancialmanagement. Hill, J. (2001). A Multidimensional Study: The key determination of effective small and medium enterprises, malt-activity Hill, J and Wright, L.T. (2001). A Qualitative Research for Small and Medium-sized Enterprises James, C.V, Horne, J.M and Wachoowizz, J.R. (1999) fundamentals of Financial Management and Practice Kakooza, T.C. (2006). Causes of Small Business Failure in Uganda. Retrieved March 8, 2011, from httm://web-africa.ufl.edu/asq/u8/u8i4a3.htm. Kasekende, L.A. (2001). Uganda Financial Management, its stability and role in promoting investment and regional cooperation Kikonyogo, C.N. (2000). Recent Development in Uganda Financial Sector Crisis or Transaction Kino, C. (2004). Bank on it: Managing Your Cash flows. Retrieved March 20, 2011, from http://definitions.uslegal.com/u/udercapitalization. Kutenk, J. (2000). Effectiveness of cash management: Understanding the key factors that influencing cash flows Ladu, S.M. (2011, January 25). Uganda Small and Medium Enterprises Need to Become Competitive Linda, H. (2008). Small Business Failure Rate. Retrieved March 4, 2011, from http://geabler.com/small-busimess-failure-rate.htm. Masonson, L. (2010). How to Manage the Business Cash flow Effectively. Retrieved March 12, 2011, from http://www.powerhomebiz.com/vol17/cashflow.htm. Michael, B. (2011). Show me the Money. Retrieved March 15, 2011, from http://www.smeadvisor.com/2011/01/show-me-themoney Monasterski, C. (2007). It is Short Life For Small and Medium Enterprises in Uganda. Retrieved March 12, 2011, from http://psdblog.worldbank.org/psdlog/2007/03/itisshortlif.html. Okello, C.O. (2008). Source of Business Information and Means of Success Used by SMEs in Uganda Pandey, I.M. (1995). Financial Management. New Delhi: Vikas Publishing House. Pandey, I.M. (1998). Financial Management. New Delhi: Vikas Publishing House. Raymond, A.K. (1985). Cash Management. Retrieved March 15, 2011, form http://wwwreferenceforbusiness-failure.html. Schaefer, P. (2006). The Seven Pitfalls of Business Failure. Retrieved March 5, 2011, from http://businessknowhow.comstartup/business-failure.htm. Shakespapere, T.L. (1996). Warning Signals that You Business is Falling. New York: Black Enterprises.