Assessing the influence of financial literacy skills on small and medium business success in Mkhambathini

Abstract

The success of small and medium enterprises (SMEs) is vital for the economic growth of any emerging economy, including that of South Africa. The sector directly impacts the country’s growth prospects since it is a significant contributor to the gross domestic product (GDP) however, the failure rate of SMEs is high throughout the world, and South Africa is no different. This study adopted to examine the influence of financial literacy skills impact on SME success. The success and sustainability of any SME rely heavily on the technical skills to manage financial issues within the business. This study adopted a quantitative research approach by administering an in-depth questionnaire to SME owners or managers. This study was quantitative and descriptive. The empirical results revealed that efficient use of information on income, expenditure, borrowing, business protection and saving/investment has a significant impact on SMEs' success in Mkhambathini Municipality. This study concluded that financial literacy is an important tool for the success of a medium and small business because it helps to understand and evaluate the information needed to make daily decisions that have a financial impact on business. This study, therefore, recommends timely training of small business owners on how to use financial information attached to their businesses to achieve business growth within the shortest time in the region.