The role of financial awareness for viable and sustainable small-medium enterprises in Kwa-Zulu Natal, Durban

Abstract

The objective of this study is to examine financial awareness for viable and sustainable smallmedium-enterprises in Kwa-Zulu Natal, Durban. In this study, the researcher examined factors for SME sustainability and viability as they influence organisational survival. The specific objectives are outlined as follows: to examine the influence of financial awareness on SME viability and sustainability; to establish the relationship between financial accounting skills and sustainable SMEs; to establish the relationship between financial awareness and financial accounting skills; and to determine the Influences of budgeting and financial awareness on SME sustainability. The quantitative research method was adopted for this study and the purposive sampling technique was chosen to select the participants for this study. The study collected primary data from respondents who are owners of SMEs in the retail, construction, manufacturing sectors, etc. Data was analysed using SPSS. A total of 310 research questionnaires was administered and 304 research questionnaires were returned for analysis (giving a 98% response rate). A regression analysis and Pearson’s correlation analysis were conducted to address the specific objectives of the study. The study identified access to market, access to finance and financial accounting skills as the independent variables, while SME sustainability was the dependent variable of the regression model. The findings suggest that access to finance has the largest absolute value (0.425), which indicates that access to finance uniquely accounts for the larger proportion of the variance in the regression model. The outcome of Pearson’s correlation shows moderate correlation (r value is 0.531) between financial accounting skills and sustainable SMEs. Moreover, there was a weak correlation (r value is 0.457) between financial awareness and financial accounting skills. The outcome of the regression analysis suggests that budgeting has the largest absolute value (0.372), which indicates that budgeting uniquely accounts for the largest proportion of the variance in the regression analysis. The Exploratory Factor Analysis revealed nine factors that are significant to ensure sustainability and viability. The implication of the outcome is that access to finance and budgeting accounts for SME sustainability. Based on the findings from this research, it is recommended that SMEs owners should pay much attention to access to finance and budgeting in running their businesses. Again, employee performance reviews contribute to enhancing the financial accounting skills and knowledge of staff of SMEs as well. They should seek expert or professional advice before taking a loan and they should avoid loan sharks as the interest charged by loan sharks are very high which may lead to potential debt trap. It is suggested that Government agencies should help SMEs to market their products and keep their businesses viable.