Impact of Financial Management Practices on Sustainable Growth of SMEs: A Case of Catering Organizations in Bulawayo Metropolitan Province

Abstract

The study was conducted to establish the impact of financial management practices on the perdomance of SMEs in Zimbabwe. The problem statement identified lack of business growth of SMEs. The objectives of the study were to establish the impact of financial management  practices on the sustainable growth of SMEs. The study was based on a sample of 101 SMEs from the Catering Industry that were selected through random sampling. Data analysis was done through SPSS version 2.2. The findings revealed that SMEs used mostly four financial management practices: capital budgeting, working capital management, Capital structure, and financial reporting analysis. The challenges faced by SMEs in implementing prudent financial management practices were mainly poor management skills, lack of business registration and lack of financial literacy skills. The results of the study implied that most challenges faced by SMEs were internally localised. The study recommended a model for growth of SMEs in which the government was the major supporter of SMES through financial literacy training and provision of financial support. SMEs were recommended to use equitable financial management practices.