Modeling A Provision Shop For Improve Record Keeping
INTRODUCTION AND BACKGROUND
1.0 Introduction
The study was on Modeling a provision shop for improve record keeping. This chapter presents the background of the study, statement of the problem, purpose of the study, objectives of the study, research questions, scope of the study and significance of the study.
Background to the study
Provision shop are a major component of the Nigerian business sector that sustained the economy through the hard times when all the different sectors of the economy were in disequilibrium. In 1986, Nigeria undertook economic reforms through the IMF/World Bank funded by Structural Adjustment Programs (SAPs). Like in many developing countries these reforms were meant to change the Economy from an inefficient, import dependent economy to one that is more diversified, efficient and export oriented (Ajibefun and Daramola, 2003).The small scale businesses had a role to play in support of the production and import sectors to achieve the goals of the SAPs at the time.
According to Wabwire (1996) The small scale enterprises is a notion generated and put together for the purpose of starting and running a business for profit maximization thus contributing largely to economic growth and development. Due to challenges facing these innovative conceptions, SSEs therefore require more than what is made available in terms of resources allotment, attention, among others. Because of this, the creativity of new ideas decline thus not allowing the acquisition of relevant skills that gears the sub-sector towards the success of the business for economic development. The business can only enjoy creativeness and innovations through financial stability.
According to Gerber (2003) SSEs have been fully recognized by governments and development professionals as the main engine of economic growth and a major aspect in upholding private sector development and joint venture.
The development of the SSE sector therefore represents an essential element in the growth strategy of most economies in the world and holds particular significance in the case of Nigeria. SSEs not only contribute significantly to improved living standards, employment generation and poverty reduction but they also bring about substantial domestic or local capital formation and achieve high levels of productivity and capability Alastair (1999). The major activities of small scale businesses in Nigeria are farming, buying produce, market vending, catering and confectionary, shop keeping, second hand clothing, health/herbal services, telephone services, handicraft, transport and many others. Sejjaaka (1996)
Performance of a business, that is, how well or poorly a business is doing vis-a-vis owner- manager set objectives is crucial to business’ success. Once a business is not performing well, certain danger signals such as poor profit growth will exhibit themselves. Murray (1994) argues that, “many small business (SB) owners either do not understand the significance of these warnings or tended to optimistically believe that things will get better on their own.” Calvin (2000) put it succinctly that, “most small businesses are myopic.” Dahl et al., (2002) noted that small businesses (SBs) have continued to perform poorly.
Poor performance of small businesses (SBs) results into high failure rates: 75 percent of them (SBs) fail within the first two years (Flusche et al., 2001) and 95 percent fail within the first five years (Gerber, 2003). Studies by Elkan (1998), Liedholm and Mead (1993) in Southern and East Africa show that most SBs stagnate at start-up size while Tulip and Bitekerezo (1993) further note that most SBEs in Nigeria fail in the short run: one out of every two fails within the first two years of operation.
International Monetary Fund Mission (IMF, 1999) observed that many SB entrepreneurs in Nigeria appear ignorant about keeping books of accounts. As well, Public Sector Foundation Ed. (pSF, 2000) and Chen and Reinikka (1999) point out that financial accounting in Nigeria is characterized by poor quality. Sejjaaka (1996) noted that there is poor level of record keeping in the country. This scenario is well documented by Wabwire (1996) who emphasizes that there is almost complete absence of record accounting in small businesses enterprises (SBEs) in Nigeria. The influence of poor records on performance was further observed by Flusche et al., (2001), indicating that 12.3 percent of failure in SBs is due to poor books and records.
Lack of quality record keeping in small business enterprises is a phenomenon replete in many developing countries. The Pan Asia Networking (pAN, 1997) indicates a very small percentage of small businesses that practice quality record keeping: Bargadesh (6 percent), Egypt (6 percent), Jamaica (16 percent), Honduras (14 percent) and Sierra Leone (18 percent).
The Financial Accounting Standards Board (F ASB, 1980) bases measurement of quality financial reporting on relevancy and reliability. However, financial reporting is not commonly practiced in small business enterprises. Consequently, in practice, relevancy and reliability measurement of financial information in small business enterprises is based on record keeping (type of and adequacy and updated-ness of records). Managerial competence measurement was based on skills, knowledge and traits (as advanced by Berryman, 1983; Gaskill et al., 1993; Haswell and Holmes, 1989). On the other hand, age of business, competitiveness (sales growth, relative market share and position) and quality of service are used as indicators of performance (as advanced by Alastair, 1999; Avlonitis and Gounaris, 1997; Berryman, 1983; Fitzgerald et al., 1994; Gaskill et al., 1993; Jowarski and Kohli, 1993).
SSEs have been concentrating in retailing services industries hence providing the majority jobs in various sectors in the country i.e. agricultural, wholesale, and building and construction, transport, restaurants among others. Individuals’ intending to establish their own business has been much attracted to venture into SSE sub-sector because it requires limited capital to start Wabwire (1996).Scoring the importance of small business enterprises, Omari (1997) noted that SBEs form an integral part of healthy national economy and a survival strategy for many African households. The SB sector is the backbone of the Nigerian economy: accounting for over 90 percent of those employed within the off farm private sector, having an annual growth rate of 15 to 20 percent (The New Vision, 2003) and contributing to 20 to 50 percent of non-agricultural GDP (Charmes, 2000). They (SBEs) form one of the best markets in the country (The New Vision, 2003) and play a big role in forward and backward linkages to large-scale enterprises (Nigeria Government, 2000).
The study was an investigation on record keeping and performance in small business enterprises in Nigeria using the case of Anambra kiosks in Anambra because of the many small business enterprises operating there.
1.2 Problem statement
The small business enterprises in Nigeria have not performed creditably well and hence have not played expected vital and vibrant role in the economic growth and development of Nigeria Small Scale Businesses are as important factor in developing countries. Wabwire (1996) this is because they are a fundamental cause for Economic growth and Development through their contribution to income redistribution, and Unemployment reduction in developing economies. In Nigeria Small scale business sector is a major backbone and dominant of the Nigerian economy. However, many small scale businesses in the country tend to perform poorly. It has been noted that small businesses have high failure rates: up to 95 percent of small business enterprises fail within the first five years of operation. According to Sejjaaka (1996) and Wabwire (1996), there is poor level of record keeping in small business enterprises in Nigeria Hence, the poor performance exhibited in small business enterprises in Nigeria could be due to shortcomings in the quality of record keeping, hence the need for investigation
1.3 Purpose of the study
The purpose of the study was to establish the Small scale enterprises. The study subsequently provided recommendations for improving performance in small business enterprises based on the findings.
1.4 Objectives of the study.
1.4.1 The general objective.
To assess the relationship between record keeping and performance in small business enterprises in Nigeria.
The objectives of the study were:
- To examine the availability of record keeping of provision shop.
- To assess the relationship between record keeping and performance of provision shop.
- To Identify the Challenges Faced by Small Scale Businesses in Anambra.
1.5 Research questions
- Is record keeping available in provision shop?
- Is there a relationship between record keeping and performance?
- Are there Challenges Faced By small business enterprises in Anambra?
1.6 Scope of the study.
Modelling a provision shop for improve record keeping inventory, income and expenditure
1.7 Significance of the study.
To The Academia
The findings were of great use to the academia, especially those who carried out further research on record keeping and potential good performance in provision shop. It built on the existing body of literature and knowledge.
The study provided information related to record keeping improvement in provision shop which brought good performance of small business enterprises.
The study contributed to the existing wealth of knowledge on performance and thus stimulates further research in both record keeping.
Policy Makers
The study helped policy makers’ for example ministry of commerce and trade which encouraged people to keep records.
To small business enterprises owner-managers
The study enabled owner-managers of small business enterprises and the general public to grasp the value of quality record keeping as a pillar for sound decision-making and good performance in small business enterprises.
The study provided information to owner-managers towards lasting solutions to poor quality record keeping and potential good performance in small business enterprises.
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