RECORD KEEPING AND PERFORMANCE IN SMALL BUSINESS

ENTERPRISES.

A CASE STUDY OF KIKUBO KIOSKS IN KAMPALA DISTRICT

BY

KAYEBIRE BOAZ

FEB/2011/BBA/B8289/WKD

A DISSERTATION SUBMITTED TO THE IN PARTIAL FULFILLMENT

OF THE REQUIREMENTS FOR THE AWARD OF A BACHELOR
DEGREE IN BUSINESS ADMINISTRATION
OF NKUMBA UNIVERSITY

OCTOBER - 2016

0
 DECLARATION

I Kayebire Boaz, declare that this work is original and has never been submitted to any
institution/University for any Award of a Degree.

SIGNATURE………………………………………. DATE……………………………

KAYEBIRE BOAZ

FEB/2011/BBA/B8289/WKD

STUDENT

i
 APPROVAL

This dissertation titled, “Record Keeping and Performance in Small Business Enterprises. A
Case Study of Kikubo Kiosks in Kampala District” Has been supervised by me and it is ready
for further examination.

SIGNED:………………………………………… DATE:………………………………………

MR.TURIGYE JOAB

SUPERVISOR

ii
 DEDICATION

This dissertation is dedicated to my parents, entire family and to my course mates for the support
that cannot be exhaustively defined. May God’s blessings be multiplied for their parental love
and care.

iii
 ACKNOWLEDGEMENT

Special thanks to Mr. Turigye Joab who provided unreserved comments and guidance for the
completion of this research paper. Not forgetting the time that you always foregone, this work
would not have been finished. Indeed I am who I am because of you.

I wish to express my gratitude to my parents, brothers and sisters Indeed you owe me a lot as this
is a challenge put before me; I appreciate for your readiness to facilitate me in whatsoever
incidence that challenged me.

I would like to heartily thank all those who have collectively helped to make this study a success
my Lecturers and all other colleagues in School of business administration Nkumba University
for their guidance and support during the course of my study.

I thank the Almighty God who cleared my way and gave me wisdom to study. Also wish to
appreciate the time and assistance granted to me by a number of persons for their direct and
indirect involvement throughout my course; without you, this venture could not have been
successful.

My special thanks go to my entire family for the financial and moral support rendered to see me
get education; I appreciate and love you all.

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 TABLE OF CONTENTS

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION ............................................................................................................................... iii

ACKNOWLEDGEMENT ............................................................................................................. iv

TABLE OF CONTENTS ................................................................................................................ v

LIST OF TABLES ......................................................................................................................... ix

LIST OF FIGURES ........................................................................................................................ x

LIST OF ABBREVIATION .......................................................................................................... xi

ABSTRACT .................................................................................................................................. xii

CHAPTER ONE ............................................................................................................................. 1

INTRODUCTION AND BACKGROUND ................................................................................... 1

1.0 Introduction .......................................................................................................................... 1

1.1 Background to the study ...................................................................................................... 1

1.2 Problem statement ................................................................................................................ 4

1.3 Purpose of the study ............................................................................................................. 4

1.4 Objectives of the study......................................................................................................... 4

1.4.1 The general objective. ...................................................................................................... 4

1.5 Research questions ............................................................................................................... 5

1.6 Scope of the study. ............................................................................................................... 5

1.6.1 Geographical Scope.......................................................................................................... 5

1.6.2 Content Scope .................................................................................................................. 5

1.6.3 Time Scope....................................................................................................................... 5

1.7 Significance of the study. .................................................................................................... 5

1.8 Structure of the Dissertation. ............................................................................................... 6

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CHAPTER TWO ............................................................................................................................ 7

STUDY LITERATURE.................................................................................................................. 7

2.0 Introduction .......................................................................................................................... 7

2.1 Definition and nature of Small Scale Businesses ................................................................ 7

2.2 Record Keeping in Small Business Enterprises ................................................................. 10

2.3 Role of Small Business Enterprises (SBEs)....................................................................... 12

2.4 Quality of Service .............................................................................................................. 13

2.5 Record Keeping and Performance ..................................................................................... 14

2.6 Challenges faced by small scale businesses ....................................................................... 15

2.7 The conceptual Frame work............................................................................................... 20

CHAPTER THREE ...................................................................................................................... 21

METHODOLOGY ....................................................................................................................... 21

3.0 Introduction ........................................................................................................................ 21

3.1 Research design ................................................................................................................. 21

3.2 Area of study ...................................................................................................................... 21

3.3 Study Population ................................................................................................................ 21

3.4 Sample Size ........................................................................................................................ 22

3.5 Data Source ........................................................................................................................ 22

3.6 Data collection methods..................................................................................................... 22

3.6.1 Interviews ....................................................................................................................... 22

3.6.2 Document Review .......................................................................................................... 22

3.7 Data Collection Tools. ....................................................................................................... 22

3.7.1 Questionnaire ................................................................................................................. 22

3.7.2 Interview guide............................................................................................................... 23

3.8 Procedure of data collection............................................................................................... 23

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3.8.1 Data Processing, Analysis and Presentation .................................................................. 23

3.9 Ethical considerations ........................................................................................................ 23

3.10 Reliability and Validity of the instruments ........................................................................ 24

3.10.1 Validity ........................................................................................................................... 24

3.10.2 Reliability ....................................................................................................................... 24

3.11 Challenges faced during the study. .................................................................................... 24

CHAPTER FOUR ......................................................................................................................... 25

PRESENTATION AND DISCUSSION OF THE FINDINGS .................................................... 25

4.0 Introduction ........................................................................................................................ 25

4.1 SECTION A: The demographic characteristics of respondents ........................................ 25

4.2 SECTION B: To Examine The Availability Of Record Keeping In Small Business

Enterprises In Kikubo. .................................................................................................................. 28

4.5 SECTION D: TO Assess the Relationship between Record Keeping and Performance In
Small Scale Business Enterprises In Kikubo. ............................................................................... 30

4.4 SECTION C: To Identify the Challenges Faced By Small Scale Businesses in Kikubo. ...... 32

THE CHALLENGES FACED BY SMALL SCALE BUSINESSES IN KIKUBO. ................... 32

CHAPTER FIVE: ......................................................................................................................... 34

DISCUSSION, CONCLUSIONS AND RECOMENDATIONS ................................................. 34

5.0 Introduction ........................................................................................................................ 34

5.1 Summary of Findings......................................................................................................... 34

5.1.1 Findings on the record keeping availability in small business enterprises in kikubo .... 34

5.1.2 Findings on the Challenges Faced By small business enterprises in kikubo ................. 35

5.1.3 Findings on the relationship between record keeping and performance of small business
enterprises ..................................................................................................................................... 35

5.2 Conclusions ........................................................................................................................ 35

5.3 Recommendations .............................................................................................................. 36

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5.4 Area of further study .......................................................................................................... 37

REFERENCES ............................................................................................................................. 38

Appendix I: Research Questionnaire ........................................................................................... 43

SECTION: B: TO EXAMINE THE AVAILABILITY OF RECORD KEEPING IN SMALL

BUSINESS ENTERPRISES IN KIKUBO. .................................................................................. 44

SECTION: C TO IDENTIFY THE CHALLENGES FACED BY SMALL SCALE

BUSINESSES IN KIKUBO. ........................................................................................................ 45

THE CHALLENGES FACED BY SMALL SCALE BUSINESSES IN KIKUBO. ................... 45

SECTION: D TO ASSESS THE RELATIONSHIP BETWEEN RECORD KEEPING AND

PERFORMANCE IN SMALL SCALE BUSINESS ENTERPRISES IN KIKUBO. .................. 46

Appendix II: Interview Guide ....................................................................................................... 47

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 LIST OF TABLES

Table 1: Showing the gender of respondents ............................................................................... 25

Table 2: showing the age of the respondents ............................................................................... 26
Table 3: Showing the marital status of the respondents............................................................... 26
Table 4: Showing the Level of Experience .................................................................................. 27
Table 5: Showing the Availability of Record Keeping In Small Business Enterprises in Kikubo.
....................................................................................................................................................... 28
Table 6: Showing the Relationship between Record Keeping and Performance In Small Scale
Business Enterprises In Kikubo. ................................................................................................... 30
Table 7: Showing the Challenges Faced by Small Scale Businesses in Kikubo. ........................ 32

ix
 LIST OF FIGURES

Figure 1: conceptual framework ............................................................................................... 20

x
LIST OF ABBREVIATION

ANOVA : Analysis of Variance

CV : Coefficient of Variation

FASB : Financial Accounting Standards Board

GDP : Gross Domestic Product

IMF : International Monetary Fund

NEPRU : Namibian Economic Policy Research Unit

PAN : Pan Asia Networking

PSF : Private Sector Foundation

SAP : Structural Adjustment Programs

SB : Small Business

SBE : Small Business Enterprise

SBEs : Small Business Enterprises

SBs : Small Businesses

Std Dev : Standard Deviation

UNCTAD : United Nations Conference on Trade and Development

USSIA : Uganda Small Scale Industries Association

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 ABSTRACT

The study was about the relationship between the record keeping and performance in small
business enterprises in Uganda. The study was guided by the following objectives; To examine
the availability of record keeping in small business enterprises in kikubo, To assess the
relationship between record keeping and performance in small business enterprises in kikubo and
To Identify the Challenges Faced by Small Scale Businesses in kikubo.

The study adopted a case study design with both qualitative and quantitative approaches .a
sample size of 60 respondents was taken and this was purposively and randomly chosen.

The study established that World Vision International should advocate for participative
budgeting and that Feedback is an important role of budgeting for attaining the expected quality
and standards in planning control and leadership and staffing that it is important to consider their
implications on budgeting and financial planning at World Vision International - Nakasero
headquarters.

And the study recommended that there is need to properly and adequately finance all the
programmes of World Vision International Nakasero Headquarters. This requires that; Donors
are sought and encouraged to donate more finances in form of grants and confessional loans And
put in place credit recovery measures required to recover all credits from government ministries
employees and institutions that consume the services and fail to pay as expected.

Generally, these results indicated that Budgeting Process was a significant factor among those
that affected the Budget performance and capacity of service delivery at World Vision
International Nakasero Headquarters and the study concluded that there was a significant
relationship between Budgeting Process and Budget performance at World Vision International
Nakasero Headquarters.

xii
 CHAPTER ONE

INTRODUCTION AND BACKGROUND

1.0 Introduction

The study was an investigation on record keeping and performance in small business enterprises
in Uganda using the case of kikubo kiosks in Kampala District. 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.

1.1 Background to the study

Small scale enterprises are a major component of the Ugandan business sector that sustained the
economy through the hard times when all the different sectors of the economy were in
disequilibrium. In 1986, Uganda 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.

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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 Uganda.
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 Uganda 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 Uganda 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
Uganda 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 Uganda
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 Uganda. 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.

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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
Ugandan 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 (Uganda Government, 2000).

The study was an investigation on record keeping and performance in small business enterprises
in Uganda using the case of kikubo kiosks in kikubo because of the many small business
enterprises operating there.

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 1.2 Problem statement

The small business enterprises in Uganda have not performed creditably well and hence have not
played expected vital and vibrant role in the economic growth and development of Uganda 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 Uganda
Small scale business sector is a major backbone and dominant of the Ugandan 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 Uganda Hence, the poor
performance exhibited in small business enterprises in Uganda 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 relationship between record keeping and
performance in small business enterprises in Uganda. 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 Uganda.

The objectives of the study were:

i. To examine the availability of record keeping in small business enterprises in kikubo.

ii. To assess the relationship between record keeping and performance in small business
enterprises in kikubo.
iii. To Identify the Challenges Faced by Small Scale Businesses in kikubo.

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1.5 Research questions

1. Is record keeping available in small business enterprises in kikubo?

2. Is there a relationship between record keeping and performance of small business
enterprises?
3. Are there Challenges Faced By small business enterprises in kikubo?

1.6 Scope of the study.

1.6.1 Geographical Scope

The study was carried out in kikubo kiosks, Kampala District.

1.6.2 Content Scope

The study content scope gathered information on record keeping and performance in small
business enterprises in kikubo kiosks.

1.6.3 Time Scope

The study covered all the aspects of record keeping and performance of small business
enterprises for a period of five years from 2011 to 2014. In view of this, a clear insight about its
operations is informed by a sufficient time span of nearly two decades.

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 small business enterprises. It built on the
existing body of literature and knowledge.

The study provided information related to record keeping improvement in the small business
enterprises 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 and performance in small business enterprises.

5
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.

1.8 Structure of the Dissertation.

The dissertation consists of five chapters.

Chapter one(introduction) covers the background to the study, statement of the problem,
purpose of the study, objective of the study, research questions, scope of the study, and
significance of the study.

Chapter two (literature review): shows the existing literature relating to the variables under the
study.

Chapter three (methodology) consists of the research design, area of the study, population and
sample selection, data collection methods data processing and analysis and limitations of the
study.

Chapter four is the presentation, analysis and interpretation of findings.

Chapter five shows conclusions and recommendations.

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 CHAPTER TWO

STUDY LITERATURE

2.0 Introduction

This chapter synthesized the principles and concepts that have been explored and brought out by
various authors in the existing literature on quality of record keeping and performance in small
business enterprises.

2.1 Definition and nature of Small Scale Businesses

The definition of micro, small and medium enterprises includes all types of enterprises
irrespective of their legal form (such as family enterprises, sole proprietorships or cooperatives)
or whether they are formal or informal enterprises to ensure inclusiveness (Hill .T, 1987). Small
business definition has no precise answer, it depends on who provides the definition (Steinhoff &
Burges, 1995), varies between countries (Barrow, 1992), industries (Wabwire, 1996) and
Scholars (Kashyap, 1988). It is usually basing on: number of employees, sales turnover and
capital outlay, amount of capital and colored social aspects and mostly traditional enterprises
(Brel, 1997).

Wabwire (1996) defines SBEs as: generally managed, operated and owned by one or two people,
funds from self and/or close friends or with skill acquired both informally or with residence, joint
usage of same location especially where there is similarity of the output limited geographical
spread, informal nature of business and complete absence of record accounting.

Fields (1990) asserts that non wage employment is the norm in the form of self- employment,
family labour and apprenticeships account for more than 80 percent while the wage employment
accounts for 10 percent with the majority of workers either low skilled or unskilled.

Blunch et al., (2001) defines small business enterprises as informal traditional sector that is
highly heterogeneous in terms of the types of activities and encompasses a range of sub-sectors
including manufacturing, trade, services, construction and transport. Mead et al., (1996) assert
that it is like an elephant: we may not quite be able to exactly characterize its true nature but
once we see it we have no doubt what is in front of us.
7
Balunywa (2003) defined small business (specifically sole proprietor) as that characterised by
single ownership, under one person's control with unlimited liability, having undivided risk with
no government control and has no separate entity from the firm. UBOS (2003) defines a small
business as that employing less than five people. For purpose of this research a small business is
defined as that employing less than five employees

According to De Gobbi (2003), the small scale businesses refer to small and micro enterprises
that lack sufficient collateral to cover the particularly high risks involved yet they operate with
high transaction costs. To her they represent the large proportion of the economic sector in every
country. They sometimes operate in the informal sector since many micro entrepreneurs are
illiterate and have limited access to information, they are vulnerable and neglected group
commonly composed of home working women.

However, international organizations such as the World Bank and the International Finance
Corporations(2002), define Small Scale Businesses as those that require small amounts of capital
to establish, small number of employees or in most cases personally handled by the owner, and
referred to as micro businesses hence to them they are "mini businesses" or "Bop businesses".

The European Union (EU) definition is based on the parameters of development, turnover and
asset size and Organization for Economic Cooperation and Development (OECD) on
employment and sales turnover. This implies that they play a vital role in alleviating poverty and
increasing employment attributed to their promotion of competition and dynamism, since they
augment government efforts in rural and urban areas thereby improving the household incomes
which enables them to access various items for daily use at affordable costs. It is from this
perspective that small scale businesses are dubbed as the small scale establishments since they
operate at the least levels investment.

In Latin America, Small Scale Businesses are characterized by the dependence on family labor
and limited technical and managerial skills. They are commonly not registered, maintain no
business records and do not have access to credit from formal credit institutions. They are
relatively small, flexible, require low capital needs, modest educational requirements with
informal structures that are high labor intensive and do depend on local raw materials.

8
According to Tacy, (2004) the small scale business sector in India has been accorded as a
priority sector of the national economy by the national decision makers since it is protected and
promoted in various ways by government policies and measures to enhance their growth
potential. Small Scale Businesses generate employment at relatively small capital costs, mobilize
resources at micro levels and meet the rising demand for various goods and services required by
the economy. To the decision makers, Small scale businesses constitute nearly 40% of the total
output in the private sector. Much more significant was the employment generation capacity of
70%.

In Ghana, small scale enterprises are officially considered together. Small enterprises are defined
as business units that employ a labor force of not more than 9 persons (Mensah et al, 2007).This
is so because they augment government efforts to achieve economic growth and reduce poverty
in the rural and urban areas through the promotion of competition and dynamism to enhance the
development of low and middle income economies and individual.

According to Ayozie Daniel Ogechukwu(2009), small scale businesses are a seedbed of

innovations, inventions and employment since they assist in promoting the growth of a
country’s economy. Hence at all levels of government policies which promote the growth and
sustenance of small scale businesses have been emphasized to enhance economic development.

In Uganda, UBOS (2006) defines them as components of the informal sector that make up the
National economy since they operate with low level of organization, low capital, low technology
and often temporary premises. They are not registered with the government and not supported by
formal financing institutions. Further these are classified as household enterprises which are
economic units owned by the households but without an identifiable location. It is an informal
establishment that usually employs about 10 employees as evidenced that 56% of the urban
households were operating informal businesses (UNHS 2002).

Small Scale Industries are characterized by the unique feature of labor intensiveness. The
importance of small scale businesses increases manifold due to immense employment generating
potential that is accompanied by fast decision making due to less staff and more control of an
entrepreneur, availability and dependence on local raw materials leads to innovation of products
which cater for the needs of individuals in a particular region hence their significance.

9
Small Scale Industries are characterized by the unique feature of labor intensiveness. The
importance of small scale businesses increases manifold due to immense employment generating
potential that is accompanied by fast decision making due to less staff and more control of an
entrepreneur, availability and dependence on local raw materials leads to innovation of products
which cater for the needs of individuals in a particular region hence their significance.

2.2 Record Keeping in Small Business Enterprises

Records are recorded information, regardless of physical form or characteristics, storage media
or condition of use like cards, correspondence, disks, maps, memoranda, microfilm,
papers, photographs, recordings, reports, tapes, writings and other data, information or
documentary material. (Kegie, 2004)

According to the National Archives and Records Service of Uganda (2006), Records refer to
recorded information, regardless of form, whether electronic or paper-based or medium, like
cassette, disc and document. It can also be defined as a transaction preserved to be used as
evidence in future due to the nature of information it contains. (Adams, 2003).

A record must meet several criteria that make it unique in relation to other types of information.
Different researchers state the characteristics of a record as follows: Records are evidence of
actions and transactions (Reed, 2005), Records are physical, have content, a structure or form,
and are created in a context (Hofman, 1998), Records should support accountability, a
principle that individuals, organizations, and the community are responsible for their actions
and may be required to explain them to others

Record keeping is clearly essential to: good administrative decision-making, consistency and
fairness, impartiality, continuous learning and improvement, and effective risk management
(Tacy, 2004). Quality record keeping is critical and important for any kind of enterprise
(Premaratne, 2002). The Blue Ribbon Committee (1999) in Gregory and Jeannot (2002) asserts
that financial information should be acceptable and of quality. However, quality notion is
relatively ambiguous and is potentially problematic (Krishnamoorthy, et al., 2002). Quality is
often a subjective goal and its measurement is not an exact science but a continual process of
discovery that emerges as a top competitive priority within the firms (Mangiameli and
Reolthlein, 1999).
10
The FASB (1980) deems that financial reporting, which covers the mechanism for providing
information about the financial condition, performance and importantly, risk profile of firms to
all potential users, portrays relevance and reliability. Relevance is defined as the capacity of the
information to make a difference in a decision by being predictive about the future and giving
feedback values about the past performance (McDaniel et al., 2002). Reliability, on the other
hand, is depicted when information is reasonably free from error and bias and faithfully
represents what it purports to represent, thus embraces verifiability, neutrality, representational
faithfulness as well as comprehensiveness of disclosure (FASB, 1980). It may be noted that
financial reports, often the basis for quality measurement, are not prominent documents in SBEs.
Consequently, in this study, quality reporting in SBEs was based on accounting data of type of
record maintained and adequacy and up datedness of record keeping.

The Private Sector Foundation ed. (PSF, 2000) affirm that financial accounting in Uganda is
characterized by poor quality. The PAN (1997) studies in some countries indicate a very small
percentage of SBs that practice quality record keeping: Bargadesh (6 percent), Egypt (6 percent),
Honduras (14 percent), Jamaica (16 percent) and Sierra Leone (18 percent). Yet the key to
quality record keeping is a commitment to a good accounting system that grows out of an
Acknowledgement of its value. Good record keeping, can greatly improve many of the
management decisions a business owner should make, including decisions about borrowing,
pricing and inventory.

For many small business entrepreneurs, the biggest problem is that of not knowing where to start
with business records, so none are kept (Syracuse, 1994). Keeping accurate and up-to-date
financial records is for many' people the most difficult and uninteresting aspect of the business
operations. Most SBEs do not even keep the most basic cashbook and are thus contented with
mental records about their costs, revenue and debt (Stover, 1997). Apparently, this is a
phenomenon replete in many SBEs in Uganda. International Monetary Fund Mission (IMF,
1999) being in agreement with the aforesaid statement affirms that many SB entrepreneurs in
Uganda appear ignorant about keeping books of accounts. Wabwire (1996) states that there is
almost complete absence of record accounting in SBEs in Uganda. On the ground, Sejjaaka
(1996) being in consonant with the ensuing discourse notes that there is poor level of record
keeping in the country.

11
Welford & Prescott, (1996) state that record keeping supports the accounting function and
enables the audit function. Financial record keeping provides the basis or foundation for
accounting and introduces controls that protect essential audit trails. At the most practical level,
if records are disorganized, it will take auditors an excessive amount of time to locate needed
documents, if they can find them at all. Individuals guilty of embezzlement may deliberately
allow financial records to become disorganized or to be stored in unsuitable conditions because
this makes it harder for auditors to identify fraud.

2.3 Role of Small Business Enterprises (SBEs)

In order to highlight the significance of Small Business Enterprises in relation to the growth and
development of a given economy Small Business Enterprises have been variously referred to as
the “engine of growth” Hill, T (1987). This stems from the fact that almost all countries that have
focused on Small Business Enterprises and ensures its vibrancy have ended up succeeding in the
significant reduction and its attendant’s enhancement in the quality and standard of living,
reduction in crime rate, increase in per capital income as well as rapid growth in GDP among
others. (Charmes, 2000)

It has become increasingly apparent that small businesses are the engines that drive an integral
part of a healthy national economy (Lynch and Giorgis, 1999). They are a vital spark in the
economy, playing a big role in forward and backward linkages to large-scale enterprises (Uganda
Government, 2000). They (SBEs) account for 60 to 80 percent of the non-agricultural
employment and contribute 20 to 50 percent of non-agricultural GDP (Charmes, 2000). They are
a survival strategy for many African households, whose significance emerges out of economic
crisis (Wabwire, 1996). The sector carries an immense potential of making an economy
prosperous.

Development of new markets and products can only be achieved by an SSBE that has adequate
capital to carry out activities like advertising so as to capture new customers and maintain the
existing ones. To achieve this, firms need funds of which borrowing is one of the most common
sources of fund. When one borrows he or she has to pay back with an interest of which these
interest rates as per now are high leading to low performance of SBEs. That is, minimal
development of new markets and products (Lumpkin & Dess, 1996).

12
Small business enterprises Increase employment, encourage a flexible decentralised economy
and promote social inclusion (Konrad, 1998). They substantially contribute to the supply of
consumer goods and services by preserving and fostering the image of competitiveness, mobility
and risk taking (Beteman, 1999; Tyson, 1994). For both start- up ventures and existing firms,
SBEs are carried on in pursuit of business opportunities, business expansion, technological
progress and wealth creation (Lumpkin & Dess, 1996). Many SBEs are started with the desire to
make a living, be self-employed and independent, satisfy inventiveness and obtain higher income
or become wealthy (Barkham, 1990 and Elkan, 1998).

2.4 Quality of Service

A service is an activity or a series of activities of more or less intangible nature that normally,
but not necessarily, takes place in interactions between the customer and service employees
and/or systems of service providers, which are provided as solutions to customer (Barrow, 1992)

Quality of service or product is a key to long-term prosperity that reflects entrepreneurs' feeling
of a job well done (Barrow, 1992). Quality has been claimed to be one of most critical success
factors for organizations in recent years (Giuliano, 1995) Non-financial measures such as
quality of service/product are relevant in cases where market based performance measures
showing the total firm's value are not available. The service market is the ideal growth-vehicle
for developing economies thus prompting the liberalized markets to rapidly shift to the service
sector. (Charmes, 2000)

Mainuddin (2002) asserts that when a customer differentiates organizations as brands, it becomes
sufficiently sophisticated to look beyond the product, to service. Through insisting on certain
minimal level of quality, markets are assured. Therefore, providing incentive for quality of
gradation/maintenance and ensuring survival of the SBEs. Alastair (1999) and Fitzgerald et al.,
(1994) measured quality of service/product based on reliability, responsiveness, appearance,
cleanliness, comfort, friendliness, communication, courtesy, competence, access, availability and
security. These variables are exhibited in people, internal environment, product or service and/or
the process of delivering it to customers and the only appreciable artifact of that effort is the
memory the customer carries out of the exit (Zemke, 2003).

13
Quality of service may be perceived differently among individuals and/or firms based on
tangibles, reliability, responsiveness, assurance and empathy (Parasuraman et al., 1988) yet it is
influenced by the environment and specifically work place, irrespective of the industry. The
environment sets a ceiling for the achievement of the set goals (Alastair, 2000). An environment
is a dimension of uncertainty, instability and hostility and unfriendliness; thus low predictability
influences the people's risk aversion and hence performance. African cultures are low on
autonomy but high on embedded-ness and people are unwilling to master the environment but
prefer to have and live with whatever they possess (Munene, 1997). Therefore, for purposes of
this research, quality of service was measured based on work place environment, courtesy,
accessibility and comfort. Self

2.5 Record Keeping and Performance

Factors contributing to the unimpressive performance of Ugandan small scale businesses as

mentioned in different studies are limited capital and limited access to finance. Tushabomwe. K
(2006).

Given small businesses lack access to external finance, their decisions to upgrade their
equipment and machinery by making new investments are further constrained by the limited
internal sources of financing Ssewanyana et al (2007). Several papers indicate additional
constraining factors such as inadequate provision of infrastructure, and services that affect the
private investment unfavorable taxation systems, and heavy regulatory burden and administrative
bureaucracy. Other authors mention limited access to differentiated markets, which might be
related to a lack of forward linkages, the concentration of small scale businesses in low-quality
production, high transport and transaction costs; corruption, low trust and minimalist
entrepreneurs strategies, education and poor managerial and skill competence, weak support
institutions, a lack of sector competitiveness, and an overall neglect a of small businesses in
Uganda, Tushabomwe. K ,(2006), Ssewanyana et al (2007 )

Tushabomwe. K ,(2006) says that Furthermore, when small scale businesses experience limited
access to the market, their growth potential is likely to decrease. Thus, access to market is an
important factor for small scale businesses to perform better and grow.

14
Keeping quality records is critical in determining the survival or failure of business (Mulurge,
2001). Stover (1997) observes that, "bluntly, a small business that fails to keep complete and
accurate record keeping places its long term success and continuance in grave, grave doubt."
Moreover, many SBs view accounting as an overhead that does not contribute to the bottom line
(Mulurge, 2001). Inadequate record keeping has caused operational losses in many SBEs and
has contributed to failure of duties between physical control of assets and liabilities. In the same
vein, McMahon (1998) asserts that accounting of any sort horrifies many SB owners because it
rarely seems to tell them very much and hardly ever seems to have much relevancy to current
operations.

McCannon (2002) asserts that many SBs fail because managers did not keep adequate records
and could not make timely and important management decisions. Empirical studies by Gibson
(1992), Gibson and Wallsschutzky (1992), and McMahon (1998) show that many SBE owners
use financial information rather to determine whether their capacity to generate future profits has
been impaired, than to run their businesses more efficiently and cost-effectively. Flusche et al.,
(2001) assert that without quality record keeping, the firm's competitiveness can be jeopardized.
USAID (1996) affirms that weaknesses in improving the quality of record keeping and internal
management of resources impede enterprise performance.

2.6 Challenges faced by small scale businesses

Despite the nation’s economic recovery, a number of serious constraints have hampered the role
of small scale businesses to adjust towards globalization and this has restricted them to making
low quality products for low returns in the markets. The following factors account for the poor
performance of these businesses in the area of study.

Poor Infrastructure: The major barrier to business success is the lack of infrastructure and the
high costs associated to its development for the administration and location of the business
activities nevertheless the ones available are also expensive in terms of rent as some are not
easily accessible especially for the case of roads in more remote areas (Barney, 1991; Peteraf,
1993). Minimal efforts are being undertaken as improvements for the potential to stimulate
business development in Kampala, including a public transport system that would allow people
to move more easily within the areas of operation for the businesses.

15
Financial Problems: Small enterprises make an important contribution to economic output and
employment in developing economies. While estimates vary greatly depending on definitions,
the World Bank suggests that almost 30% of employment in low-income countries is generated
by the informal economy, while an additional 18% is provided by (formal) small and medium
enterprises. Together these two groups contribute 63% of the GDP (Ayyagari, M., T. Beck and
A. Demirguc-Kunt, Small and medium enterprises across the globe: A new database, World
Bank Policy Research Working Paper 2007). Finance is lifeblood of any enterprise irrespective
of its size. Small businesses face more problems in raising finance, as the provider of finance
may not find the return on investment interesting as compared to large enterprise, and also the
entrepreneurs are skeptical about repayment.

Chijoriga and Cassiman (1997) pointed to finance as a key constraint to the growth of small scale
businesses. Ngobo (1995) further made analysis of finance as a constraining factor for lack of
working capital, wrong choice of financiers, high interests payments, frauds, corruption, lack of
financial control, an absent of costing systems and delay in release of funds by banks or
financiers. Obviously, the professional approach is missing on the part of owners/managers and
promoters, hence there are no concepts to monitor and control the financial affairs of these
businesses with time.

Improper business Feasibility: This factor acts mainly at the initial stages of the project and is
based on the decisions of the entrepreneurs. Many projects and businesses are affected at birth
because of inadequate feasibility reports regarding the demand of product in various markets,
wrong choice of technology, improper forecasting of financial requirements, delayed in supply of
plant and machinery or in their installation or release of funds by financiers. No clear vision,
goals and objectives. The root of all these problems may be traced to the lack of expertise in
business planning and management on behalf of entrepreneurs and promoters (Lockett and
Thompson, 2001; Jacobides and winter, 2007).

Lack of Managerial Knowledge: According to Harper (1994), the formation of small scale
businesses the owners can easily run the business but as it grows and ages, managerial demands
rise. These are in the form of operational managerial requirements like production, sales and
finances and most importantly the ability to deal with them yet this is a hunch to them. Harper

16
clarifies that entrepreneurship goes beyond management since entrepreneurial skills are part of
managerial skills.

The majority of entrepreneurs are unaware about the knowledge of managerial field. Therefore,
they are performing the non-managerial tasks rather than the tasks of managerial functions such
as planning, organizing, leading and controlling (Barney, 1991). Indeed, in this dynamic world
the informal sector needs qualified professionals to handle the various activities of business
affairs more effectively and efficiently. It is clear that, the sound knowledge of managements is a
key to success which is lacking in the small scale businesses (Sleuwaegen and Goedhuys, 2002).

Poor Educational Background or Lack of Education: The research study reveals that most of
owners/managers have a very poor educational background, as majorities are un-educated. In this
scenario, entrepreneurs of the small scale businesses in the region of study are never comfortable
at their business units since they lack suitable training, and leadership skills to sustain their
operations in the various areas of accounting, marketing, technological processes and
development as well as administration and management. It should be noted that SMEs are never
facilitated at the cost of development hence operational shortcomings (Fafchamps and Minten,
2002).

Out-Dated Technology: The methods of production which the small businesses use are old and
inefficient. This results into low productivity, poor quality of products and high costs. The
entrepreneurs lack information about modern technologies and training opportunities which
concerns them. There is little research and development in the field yet the pace of change has
developed new innovations and introduced new technology that is basically mechanized and
requires less labor as a concern which is much faster today small scale business units cannot
survive and withstand the global competition since they depend on cheap labor, adopt simple
labor intensive technologies and keep the pace with changing situations because they cannot
afford to purchase the highly expensive mechanized machines for their productive activities but
rather sustain their competitive advantages(Lockett and Thompson, 2001).

Poor Marketing Strategy: The small-scale businesses also faced the acute problem of
marketing their products. (Barney, 1991). The problems arises from such factors as small stocks,
lack of standardized products, inadequate market knowledge, competition from technically more

17
efficient units, deficient demand, etc. Apart from the inadequacy of marketing facilities, the cost
of promoting and selling their products too is high. The result is large and increasing subsidies
which impose heavy burden on the government budgets.

Increasing Competition: Some businesses possess dynamic capabilities that give them a
comparative advantage in innovations (Barney, 1991). Competition from large scale businesses
gains them credibility with licensing and taxation and enhances their access to rationed
resources; can easily out-price and out-sell the small businesses thus contributing to improved
performance (Sleuwaegen 2002). SMEs can benefit from networking effects, better infrastructure
and larger markets relative to their rural counterparts (Fafchamps and Minten, 2002).

It is suggests that business performance depends not only on the returns of specific strategies, but
also on the cost of implementing those strategies. This explains, for example, behavior and
decision making such as diversification, market entry and exit and innovation, among others.
This is usually attributed to the formal enterprises since it is difficult for competitors to know the
causes of other businesses’ efficiency and they face costs associated with efforts that exhibit
superior performance that retains their position over others for a given period (Barney, 1991).

Gender Inclusiveness in MSMEs Development: Women in Uganda make up more than 50%
of the labour force and are an important pool of potential talent to help the country meet its
development goals, especially in the area of entrepreneurship and micro, small and medium
enterprises, (Tushabomwe. K ,2006) . However, it is generally known that women face more
challenges than men in starting, managing and growing their enterprises as they are more likely
to be impeded by a lack of the necessary capacities, skills and resources. Although Uganda
has made some important advancement in women’s entrepreneurship development since the
early 2000s, the challenges facing women entrepreneurs have not changed much. Some studies
reveal that over the last 10 years, the growth in the number of women-owned businesses has
outpaced that of male-owned businesses by 1.5 times, majority of which are in self employment.
Women have also been more disadvantaged than men due to legal impediments,
established cultural norms and attitudes about women’s roles. Their limited mobility due to
domestic responsibilities does not give many women time to concentrate on their enterprises.

18
Uncoordinated Structure of MSME Sector: Presently, the MSME sector is highly fragmented
which undermines competitiveness, growth and sustainability of the sector. As a result, the
MSMEs do not have a single common voice and forum for effective policy dialogue to and
influencing policy in lobbying government support. This can be attributed to weak internal
capacities of associations representing MSMEs and the liberal policies that lack industry to
industry supplier linkages and development. A strong and coordinated apex body to strengthen
and enable MSMEs to cope successfully within globalization for increased flows of Foreign
Direct Investments (FDI) is needed including facilitation of linkages between larger enterprises
and MSMEs.

Limited Access to Quality Assurance &Affordable Product Certification Services: MSMEs

face the challenge of costly process for their product Certification and Standardizations.
This puts MSMEs in a disadvantageous position within local, regional and export market access
of their products and services. In reality, many of them cannot comply with the present minimum
requirements due to limited capital.

The Dominant Informality of the Sector: The majority of enterprises within the micro,
small and medium sector operate informally. This high incidence of the informal economy in
all its aspects is a major challenge for the achievement of growth and expansion of the
enterprises, enterprise productivity, and working conditions and has a negative impact on the
development of sustainable enterprises, public revenues and government’s scope of action,
particularly with regard to economic, social and environmental policies, the soundness of
institutions and fair competition in national and international markets.

Inadequate technical and business skills: Whereas the country has been blessed by the
increasing number of academic and training institutions, there is still a gap in the
entrepreneurship, technical and management skills. Developing these skills will engender
enterprising persons who should be equipped to fulfill their potential and create their own
businesses.

19
2.7 The conceptual Frame work

A conceptual framework is a systematic representation between the relationship of variables and

congregative map.

Figure 1: conceptual framework

INDEPENDENT VARIABLE DEPENDENT VARIABLE

RECORD KEEPING PERFORMANCE

1. Type of records, 1. Competitiveness

2. Adequacy 2. Timeliness
3. Updated-ness of records 3. Survival
4. Sales growth

MODERATING VARIABLE

1. Government polices

2. Qualifications

3. Ethical Practice

Source - Model adopted from the works of FASB (1980) and Alastair (1999)

The conceptual framework, presented in Figure 1, is adopted from the works of FASB (1980)
that deems that financial reporting should be relevant and reliable, to depicted quality:
Supportive to the concept are: Alastair (1999). In practice, assessment of quality reporting in
small business enterprises is based on record keeping (type of records, adequacy and updated-
ness of records). The quality of record keeping existent in small business enterprises is
influenced by performance considered as the independent variable, had its measurement based
on knowledge, experience and traits On the other hand, performance indicators were:
Competitiveness, Timeliness Survival and Sales growth. Moderating Variables Included
Government Polices Qualifications And Ethical Practice (Alastair, 1999).

20
 CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter provided methods of research applied when collecting and analyzing data research
design and sampling size, sampling procedures and design, methods of data collection, data
analysis and limitations of the study. According to Katebile (2007) Methodology is defined as
the technical or scientific activities, tools and procedures taken to plan gather and analyze data.

3.1 Research design

This study used a case study research design using a descriptive and analytical method. The
quantitative approach were used to quantify incidences in order to describe current conditions
and to assess record keeping and performance in small scale business enterprises using
information gained from the questionnaires. The qualitative approach used to explain the events
and describe findings using interview guide and documentary analysis. All this enabled the
researcher to gain in-depth information that was used to find solutions for the research questions
of the study.

3.2 Area of study

A study area is defined as geography for which data is analyzed in a report. (Business decision
2007).The study was carried out kikubo in Kampala District, which has the highest number of
business units (96,991) in the country: comprising of 63 percent of the total number of
businesses in the country, particularly concentrated in Kampala district that has the highest
number of the total number of businesses in the country (UBOS, 2015).

3.3 Study Population

The study population included Small business enterprises in Kampala District. The total
population included all kiosk owners and attendants in kikubo.

21
3.4 Sample Size

Sample refers to a certain number of respondents from the whole population (Drucker 2013). In
this case 60 Small business enterprises were selected to represent the whole Total population and
this was done from deferent sectors of Small business enterprises.

3.5 Data Source

The study used both primary and secondary data. Primary data was collected from the field using
questionnaires, interviews and secondary data was collected from available published records
such as textbooks, journals, magazines, manuals and internet.

3.6 Data collection methods

3.6.1 Interviews

The researcher used formal interviews as the major method of data collection which enabled the
researcher to deal with respondents directly to get first hand information, explain some hard
questions and at the same time have a direct interaction with the employees of Small business
enterprises in Kampala District

3.6.2 Document Review

The study also reviewed existing information materials related to the study problem and
variables in form of reports, journals, websites and databases to gain information on the topic.

3.7 Data Collection Tools.

3.7.1 Questionnaire

Self-administered questionnaires covering all the aspects of the study variables and accompanied
with a five-point Likert scale response continuum, that is 1 = strongly agree, 2 = agree, 3 =
undecided, 4 = disagree and 5= strongly disagree, were used for this study to collect data from
Small business enterprises owners.

22
3.7.2 Interview guide

The researcher used Interview guides as a tool of data collection which enabled the researcher to
deal with respondents directly to get first hand information, explain some hard questions and at
the same time have a direct interaction with the employees of Small business enterprises in
Kampala District.

3.8 Procedure of data collection

A letter of authorization from Nkumba University was provided as a request for permission to
conduct the study. A covering letter accompanied the questionnaires explaining the purpose of
the study and the questionnaires was distributed directly to the respondents in their respective
areas for filling and was collected after 1 week following its dispatch and filling. The data was
edited and decisions made on whether to use it or not and how.

3.8.1 Data Processing, Analysis and Presentation

Data was analyzed for generalization purpose after ranking the responses to able draw
conclusion themes on record keeping and performance in small business enterprises in Uganda
using Micro Soft word, and Excel a research report was produced for Qualitative Data. Reponses
was coded and analyzed for frequencies using ranking or master sheet technique. Quantitative
Data was entered in Statistical Program for Social Scientists (SPSS) and analyzed for cross
tabulation and graphics.

3.9 Ethical considerations

All respondents were assured of confidentiality and the purpose of the research being academic
was declared and explained in advance to all respondents. An introduction letter was delivered
to all Small business enterprises to ask for permission. Identity of respondents was not required
on the questionnaire. All respondents were skillfully and professionally approached.

23
3.10 Reliability and Validity of the instruments

3.10.1 Validity

The concept of validity ensures that the instruments were used to yield relevant and correct data.
To ensure validity data collection instruments were constructed in such a way that they had an
adequate number of items and that each items or question on the scale had a link with the
objectives of the study and were covered in a full range of issues that was measured. Where
necessary, questionnaires were revised accordingly to suit the objectives of the study.

3.10.2 Reliability

Reliability was used to measure the degree to which the instrument is the same if put under the
same conditions. To ensure reliability, the research instruments were pretested to selected 20
respondents to ensure consistency and comprehensiveness. Further, consultations with other
researchers, supervisors and peers were done to review the research instruments. The
respondents who participated in the study were found to be informed and knowledgeable on the
subject matter to provide reliable answers.

3.11 Challenges faced during the study.

Financial problem; the study needed a lot of money for many functions. For example, printing
questionnaires, feeding, traveling to the places where the respondents were located. Financial
problem seem to be a big factor that affected the study.

Time management; the time allocated for the research was not enough to gather the information
from the field and interpret it. However, the researcher tried to do most of the activities of the
research in time basing on the researcher’s work plan.

Lack of cooperation; Respondents' unwillingness to disclose financial information on their

businesses created data collection problems, which affected the reliability of the findings.

Lack of financial records in SBEs in Uganda and ambiguity surrounding quality measurement
led use of to restricted and subjective measures. Consequently, performance measurement was as
well restricted thus the use of performance indicators.

24
 CHAPTER FOUR

PRESENTATION AND DISCUSSION OF THE FINDINGS

4.0 Introduction

This chapter contains presentation and discussion of the study as per the study objectives. To
examine the availability of record keeping in small business enterprises in kikubo, To assess the
relationship between record keeping and performance in small business enterprises in kikubo and
To Identify the Challenges Faced by Small Scale Businesses in kikubo.

During the study 60 questionnaires were distributed to small business enterprises in kikubo and
all the questionnaires were returned dully filled as required, therefore the rate of response was
100%.

4.1 SECTION A: The demographic characteristics of respondents

This section highlights the biography of the respondents which includes the gender, positions,
age level of education levels of the respondents among others, the information is provided in the
tables below

Table 1: Showing the gender of respondents

Gender No of respondents Percentage %

Female 25 41.7
Male 35 58.3
Total 60 100
Source: field findings 2016

The table above indicates that the study gave opportunity to both male and female respondents.
The results indicated that the study registered most of the respondents of Male sex with a
frequency of 35(58.3%) respondents. The least were the Female with a frequency of 25(41.7%)
respondents. This means that at the small business enterprises in kikubo Males respondents were
more willing to give information as compared to their counter parts the Females.

25
Table 2: showing the age of the respondents

Age No of respondents Percentage %

18-30 15 25

31-50 28 46.7

51-59 12 20

60 and above 5 8.3

Total 60 100

Source: field findings 2016

According to the information in the table 51 – 59 years account for 20% whiles those with 60
years and above account for 5(8.3%) because employees at age of 60 and above are no longer
competent enough and productive. This means that those between 18 – 30 years 25% were all
mature and reliable to study in giving required information. The largest age bracket is 31-50
years 46.7% because they have experience and are competent enough to carry out business on
small scale.

Table 3: Showing the marital status of the respondents

Marital status No of respondents Percentage %

Single 15 25

Married 45 75

Total 60 100

Source: field findings 2016

From table 3 above, 25% of the respondents were single whereas the married respondents
account for 75% and this implies that majority of the respondents at small business enterprises in
kikubo were married followed by single ones.

26
Table 4: Showing the Level of Experience

Period Frequency Percentage

1-5 years 30 50

6-10 years 20 33

Above 10 years 10 17

Total 60 100

Source: field findings 2016

From table 4 above, the results revealed that various respondents of different levels of experience
comprised the sample size. It was noted that majority had experience of 1-5 years with a
frequency of 30(50%. This was followed by those of 6-10 years with a frequency of 33%, 10 and
above had a frequency of 17% each. This means that 30 (50%) of the respondents had working
experience of over 1-5 years were able to give reliable information for study. The result shows
that most of the workers of small business enterprises in kikubo had working experience of more
than five years.

27
 4.2 SECTION B: To Examine The Availability Of Record Keeping In Small Business
Enterprises In Kikubo.

Many kiosk owners and attendants in kikubo were asked about the Availability of Record
Keeping in Small Business Enterprises in Kikubo and the following was revealed by the
respondents as shown in the table below.

1. Strongly agree 2.Agree 3. Not agree 4.Disagree 5.Strongly disagree.

Table 5: Showing the Availability of Record Keeping In Small Business Enterprises in Kikubo.

THE AVAILABILITY OF 1 2 3 4 5
RECORD KEEPING IN SMALL
BUSINESS ENTERPRISES IN SA A NS D SD
KIKUBO

All money paid out is recorded. 40(66.7%) 8(13.3%) 0(0%) 10(16.7%) 2(3.3%)

Entrepreneurship is a common 18(30%) 17(28.3%) 12(20%) 10(16.7%) 3(5%)

feature in the proprietor's family
and/or relatives.

Details such as date, goods 33(55%) 3(5%) 14(23.3%) 3(5%) 7(11.7%)

description and amount on cash sales
are recorded

Money received is compared with the 2(3.3%) 7(11.7%) 28(46.7%) 10(16.7%) 13(21.7%)
total cash sales
All bank deposits made have their 10(16.7%) 20(33.3%) 16(26.7%) 9(15%) 5(8.3%)
deposit slips/pay-in-slips filed
The business has been in position to 10(16.7%) 18(30%) 17(28.3%) 12(20%) 3(5%)
retain most of its regular customers.
The business has its own bank 33(55%) 3(5%) 14(23.3%) 3(5%) 7(11.7%)
account separate from that of the
proprietor
Source: field findings 2016

28
From table 5 above 40(66.7%) of the respondent strongly agree yet 8(13.3%) agree and 0(0%)
not sure and 10(16.7%) disagree and 2(3.3%) strongly disagree. This implies that 80% 0f the
respondents generally agreed that all money paid out is recorded.

From table 5 above 18(30%) of the respondent strongly agree yet 17(28.3%) agree and 12(20%)
not sure and 10(16.7%) disagree and 3(5%) strongly disagree. This implies that 58.3% 0f the
respondents generally agreed Entrepreneurship is a common feature in the proprietor's family
and/or relatives.

From table 5 above 33(55%) of the respondent strongly agree yet 3(5%) agree and 14(23.3%) not
sure and 3(5%) disagree and 7(11.7%) strongly disagree. This implies that Details such as date,
goods description and amount on cash sales are recorded.

From table 5 above 2(3.3%) of the respondent strongly agree yet 7(11.7%) agree and 28(46.7%)
not sure and 10(16.7%) disagree and 13(21.7%) strongly disagree. This implies that Money
received is not compared with the total cash sales.

From table 5 above 10(16.7%) of the respondent strongly agree yet 20(33.3%) agree and
16(26.7%) not sure and 9(15%) disagree and 5(8.3%) strongly disagree. This implies that all
bank deposits made have their deposit slips/pay-in-slips filed.

From table 5 above 10(16.7%) of the respondent strongly agree yet 18(30%) agree and
17(28.3%) not sure and 12(20%) disagree and 3(5%) strongly disagree. This implies that the
business has been in position to retain most of its regular customers.

From table 5 above 33(55%) of the respondent strongly agree yet 3(5%) agree and 14(23.3%) not
sure and 3(5%) disagree and 7(11.7%) strongly disagree. This implies that the business has its
own bank account separate from that of the proprietor.

29
 4.5 SECTION D: TO Assess the Relationship between Record Keeping and Performance In
Small Scale Business Enterprises In Kikubo.

Many kiosk owners and attendants in kikubo were asked about the Relationship between Record
Keeping and Performance in Small Scale Business Enterprises in Kikubo and the following was
revealed by the respondents as shown in the table below.

1. Strongly agree 2.Agree 3. Not agree 4.Disagree 5.Strongly disagree.

Table 6: Showing the Relationship between Record Keeping and Performance In Small Scale
Business Enterprises In Kikubo.
THE RELATIONSHIP BETWEEN 1 2 3 4 5
RECORD KEEPING AND
PERFORMANCE IN SMALL SCALE SA A NS D SD
BUSINESS ENTERPRISES IN
KIKUBO

Recordkeeping is a key to the success of a 23(38.3%) 14(23.3%) 10(16.7%) 3(5%) 10(16.7%)

business.
Recordkeeping is a tedious activity. 33(55%) 3(5%) 14(23.3%) 3(5%) 7(11.7%)
Some business for example micro and 28(46.7%) 13(21.7%) 10(16.7%) 2(3.3%) 7(11.7%)
small businesses do not require
recordkeeping.
It is always good to keep record of all 40(66.7%) 10(16.7%) 0(0%) 2(3.3%) 8(13.3%)
transactions in my business.

All goods/services received on credit are 10(16.7%) 18(30%) 17(28.3%) 12(20%) 3(5%)
recorded
Details such as date, transaction 18(30%) 17(28.3%) 12(20%) 3(5%) 10(16.7%)
description and amount of money paid out
are recorded
Expenses are recorded according to their 17(28.3%) 18(30%) 12(20%) 3(5%) 10(16.7%)
nature e.g. rent, electricity
Source: Primary Data

30
From table 6 above 23(38.3%) of the respondent strongly agree yet 14(23.3%) agree and
10(16.7%) not sure and 3(5%) disagree and 10(16.7%) strongly disagree. This implies that
Recordkeeping is a key to the success of a business.

From table 6 above 33(55%) of the respondent strongly agree yet 3(5%) agree and 14(23.3%) not
sure and 3(5%) disagree and 7(11.7%) strongly disagree. This implies that Recordkeeping is a
tedious activity.

From table 6 above 28(46.7%) of the respondent strongly agree yet 13(21.7%) agree and
10(16.7%) not sure and 2(3.3%) disagree and 7(11.7%) strongly disagree. This implies that some
business for example micro and small businesses do not require recordkeeping.

From table 6 above 40(66.7%) of the respondent strongly agree yet 10(16.7%) agree and 0(0%)
not sure and 2(3.3%) disagree and 8(13.3%) strongly disagree. This implies that it is always good
to keep record of all transactions in the business.

From table 6 above 10(16.7%) of the respondent strongly agree yet 18(30%) agree and
17(28.3%) not sure and 12(20%) disagree and 3(5%) strongly disagree. This implies that all
goods/services received on credit are recorded.

From table 6 above 10(16.7%) of the respondent strongly agree yet 18(30%) agree and
17(28.3%) not sure and 12(20%) disagree and 3(5%) strongly disagree. This implies that all
goods/services received on credit are recorded.

From table 6 above 18(30%) of the respondent strongly agree yet 17(28.3%) agree and 12(20%)
not sure and 3(5%) disagree and 10(16.7%) strongly disagree. This implies that Details such as
date, transaction description and amount of money paid out are recorded.

From table 6 above 17(28.3%) of the respondent strongly agree yet 18(30%) agree and 12(20%)
not sure and 3(5%) disagree and 10(16.7%) strongly disagree. This implies that the Expenses are
recorded according to their nature e.g. rent, electricity.

31
4.4 SECTION C: To Identify the Challenges Faced By Small Scale Businesses in Kikubo.

Many kiosk owners and attendants in kikubo were asked about the To Identify the Challenges
Faced by Small Scale Businesses in Kikubo and the following was revealed by the respondents
as shown in the table below.

1. Strongly agree 2.Agree 3. Not agree 4.Disagree 5.Strongly disagree.

Table 7: Showing the Challenges Faced by Small Scale Businesses in Kikubo.

1 2 3 4 5
THE CHALLENGES FACED SA A NS D SD
BY SMALL SCALE
BUSINESSES IN KIKUBO.
Small businesses face more 33(55%) 3(5%) 14(23.3%) 3(5%) 7(11.7%)
problems in raising finance

they lack suitable training, and 28(46.7%) 13(21.7%) 10(16.7%) 2(3.3%) 7(11.7%)
leadership skills to sustain their
operations

poor educational background, as 33(55%) 3(5%) 14(23.3%) 3(5%) 7(11.7%)

majorities are un-educated

entrepreneurs lack information 40(66.7%) 10(16.7%) 0(0%) 8(13.3%) 2(3.3%)

about modern technologies and
training opportunities which
concerns them

Stock levels are monitored 18(30%) 17(28.3%) 12(20%) 10(16.7%) 3(5%)

through written records or by use
of computer
The business experiences low 10(16.7%) 18(30%) 17(28.3%) 12(20%) 3(5%)
sales due to slow moving goods
Source: field findings 2016

32
From table 7 above 33(55%) of the respondent strongly agree yet 3(5%) agree and 14(23.3%) not
sure and 3(5%) disagree and 7(11.7%) strongly disagree. This implies that Small businesses face
more problems in raising finance.

From table 7 above 33(55%) of the respondent strongly agree yet 3(5%) agree and 14(23.3%) not
sure and 3(5%) disagree and 7(11.7%) strongly disagree. This implies that poor educational
background, as majorities are un-educated.

From table 7 above 40(66.7%) of the respondent strongly agree yet 10(16.7%) agree and 0(0%)
not sure and 8(13.3%) disagree and 2(3.3%) strongly disagree. This implies that entrepreneurs
lack information about modern technologies and training opportunities which concerns them.

From table 7 above 18(30%) of the respondent strongly agree yet 17(28.3%) agree and 12(20%)
not sure and 10(16.7%) disagree and 3(5%) strongly disagree. This implies that Stock levels are
monitored through written records or by use of computer.

From table 7 above 10(16.7%) of the respondent strongly agree yet 18(30%) agree and
17(28.3%) not sure and 12(20%) disagree and 3(5%) strongly disagree. This implies that the
business experiences low sales due to slow moving goods.

33
 CHAPTER FIVE:

DISCUSSION, CONCLUSIONS AND RECOMENDATIONS

5.0 Introduction

This chapter focuses on the discussion, conclusions and recommendations that can be drawn
from the discussion of findings presented in chapter four. The study investigated the relationship
between the quality of record keeping and performance in small business enterprises.

5.1 Summary of Findings

This section focuses on the discussion of results. It highlights the implications of the findings and
where appropriate, relates them to the existing literature. The section is organized according to
the research questions of the study which were,

1. Is record keeping available in small business enterprises in kikubo?

2. Is there a relationship between record keeping and performance of small business
enterprises?
3. Are there Challenges Faced By small business enterprises in kikubo?

5.1.1 Findings on the record keeping availability in small business enterprises in kikubo

Many small business enterprises have poor quality of record keeping: they neither maintain the
original documentation of their business activities (type of records) nor practice adequate and
updated record keeping. This leaves the implementation of quality record keeping to a small
number of the small business enterprises.

These findings are in agreement with empirical studies of Chen & Reinikka (1999), PSF ed.
(2000), Sejjaaka (1996) and Wabwire (1996) in Uganda and PAN (1997), Stover (1997) and
Syracuse (1994) elsewhere in developing countries: they concluded that there is poor quality of
record keeping in small business enterprises.

The majority of kiosk owners and attendants said that record keeping is available in small
business enterprises in kikubo.

34
5.1.2 Findings on the Challenges Faced By small business enterprises in kikubo

From the findings in table 6 it is evident that Small businesses face more problems in raising
finance. Indeed, a critical look at the values of the correlations in Finding from table 6 implied
that poor educational background, as majorities are un-educated.

Some sources had a stronger and significant effect on some indicators of quality record keeping
and performance of small business. Mulurge (2001) Entrepreneurs lack information about
modern technologies and training opportunities which concerns them while others did not even
have a significant effect, Stock levels are monitored through written records or by use of
computer and the business experiences low sales due to slow moving goods. Gibson and
Wallsschutzky (1992).

5.1.3 Findings on the relationship between record keeping and performance of small
business enterprises

The quality of record keeping influences the performance in the SBEs. These findings are in
conformity with Mulurge (2001) who argued that keeping of quality records is critical in
determining the long-term survival of a business. In same consonance are various empirical
studies: Flusche et al., (1996) and Stover (1997) that confirm that businesses that fail to maintain
quality record keeping place their long term success and continuity in grave doubt. The findings
of Elkan (1998a), Fasci and Valdez (1996), Liedholm and Mead (1993) and Tulip and Bitekerezo
(1993) show that SBEs that stagnate at start-up size expose themselves to disadvantages of long-
term liability. The FASB (1980) also asserts that financial performance and position assessment
can be based on quality financial reporting.

Furthermore, the concept that quality records would prompt the closure of the business due to
losses is in agreement with Gibson (1992), Gibson and Wallsschutzky (1992), McMahon (1998)
who argue that many small business enterprises do not focus on record keeping as a tool for good
performance but only as an assessment for future profit impediment

5.2 Conclusions

The following are the conclusions drawn from the findings in accordance with the objectives of
the study.
35
The study examined the relationship between the quality of record keeping and performance of
small business enterprises. The findings depicted that quality of record keeping existent in many
SBEs positively influenced the overall performance of a business. Record keeping in the small
business enterprises is characterized by inadequate and un-updated records. In some SBEs, there
was complete absence of record keeping thus they (SBEs) based performance assessment on
mental records.

Furthermore, the Challenges faced by small scale businesses where Poor Infrastructure, Financial
Problems, Improper business Feasibility, Lack of Managerial Knowledge, Poor Educational
Background or Lack of Education, Out-Dated Technology, Poor Marketing Strategy and
Increasing Competition.

Hence, there is a relationship between the quality of record keeping and performance in the small
business enterprises. Firms that do not keep proper records on the business activities are unlikely
to take corrective action on their performance that may be detrimental to the long-term liability
of the firm.

5.3 Recommendations

The following are the recommendations made in accordance with the previously reached
conclusions.

Small business owner-managers should develop competencies to enhance the quality of record
keeping, with specific focus on type, adequacy and updated-ness of records. It is through such
records that the danger signals of poor performance can easily be detected to lead to corrective
action being promptly taken, hence promoting the long-term liability of the business.

In order to promote a conducive business in the country, there is need to consult all stake holders
so as to come up with an acceptable policy which boosts growth and development in the country
and also promotes high spirit of small business enterprises.

The government should review the existing small scale businesses policies so as to ensure that it
is appropriate to the nature and growth of small business enterprises in Uganda.

36
Policy makers and other stakeholders need to encourage small scale businesses to upgrade their
productive assets. This can be done by enhancing the availability of the production equipment
and spares in the local market and through the provision of technical services at favorable rates.

Small scale businesses need to have access to market at low transaction costs hence increasing
efficiency and sales and to technical information and knowledge through networking.

It is recommended that governments at local and state levels take the necessary action to build
and maintain the infrastructure. Corruption also affects many facets of the businesses
environment in Uganda, therefore anti-corruption measures, such as clear regulatory structure
governing public safety, infrastructure, and fiscal accountability, with actions, laws, and
enforcements instituted by government, should be supported by every citizen, which will reduce
the potential for bribery. For small businesses to succeed, it is essential to have a stable, enabling
environment, a corruption-free society, and a supportive government.

5.4 Area of further study

Recommendations for further studies

A study should be conducted the effect of information technology on the performance of Small
scale businesses

A study should be conducted on the performance of small business enterprises

37
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42
Appendix I: Research Questionnaire

QUESTIONAIRE:

Dear respondent, I am Kayebire Boaz, a final year student of Nkumba University pursuing a
Bachelors Degree in Business Administration. I am carrying out research on research on record
keeping and performance in small business enterprises in Uganda. It is with great pleasure that
you have been selected in the sample. This study is basically for academic purposes and the
information obtained will be kept with utmost confidentiality. Kindly help me generate solutions
to the following Questions:

(Tick the appropriate)

Section A: Democratic Data

1. What is your sex?

A) Male B) Female

2. What is your marital status?

A) Single B) Married

3. What is your education level of attainment?

A) O level B) A level C) Diploma D) Degree

4. Age

A) 18-30 B) 31-50 C) 51-59

D) 60 and above

5. What is your Level of Experience?

A) 1-5 years B) 6-10 years C) Above 10 years

43
For question on wards please indicate

1. Strongly agree 2.Agree 3. Not agree 4.Disagree 5.Strongly disagree.

SECTION: B: TO EXAMINE THE AVAILABILITY OF RECORD KEEPING IN

SMALL BUSINESS ENTERPRISES IN KIKUBO.

NO THE AVAILABILITY OF RECORD 1 2 3 4 5

KEEPING IN SMALL BUSINESS
ENTERPRISES IN KIKUBO SA A NS D SD

1 All money paid out is recorded.

2 Entrepreneurship is a common feature in the

proprietor's family and/or relatives.

3 Details such as date, goods description and amount

on cash sales are recorded

4 Money received is compared with the total cash

sales
5 All bank deposits made have their deposit
slips/pay-in-slips filed
6 The business has been in position to retain most of
its regular customers.
7 The business has its own bank account separate
from that of the proprietor

44
SECTION: C TO IDENTIFY THE CHALLENGES FACED BY SMALL SCALE
BUSINESSES IN KIKUBO.

No 1 2 3 4 5
THE CHALLENGES FACED BY SMALL
SA A NS D SD
SCALE BUSINESSES IN KIKUBO.

1 Small businesses face more problems in raising

finance

2 they lack suitable training, and leadership skills to

sustain their operations

3 poor educational background, as majorities are un-

educated

4 entrepreneurs lack information about modern

technologies and training opportunities which
concerns them

5 Stock levels are monitored through written records

or by use of computer
6 The business experiences low sales due to slow
moving goods

45
SECTION: D TO ASSESS THE RELATIONSHIP BETWEEN RECORD KEEPING AND
PERFORMANCE IN SMALL SCALE BUSINESS ENTERPRISES IN KIKUBO.

No THE RELATIONSHIP BETWEEN RECORD 1 2 3 4 5

KEEPING AND PERFORMANCE IN SMALL SA A NS D SD
SCALE BUSINESS ENTERPRISES IN
KIKUBO

1 Recordkeeping is a key to the success of a

business.
2 Recordkeeping is a tedious activity.

3 Some business for example micro and small

businesses do not require recordkeeping.
4 It is always good to keep record of all transactions
in my business.

5 All goods/services received on credit are recorded

6 Details such as date, transaction description and
amount of money paid out are recorded
7 Expenses are recorded according to their nature
e.g. rent, electricity

46
Appendix II: Interview Guide

INTERVIEW GUIDE

Dear respondent, I am Kayebire Boaz, a final year student of Nkumba University pursuing a
Bachelors Degree in Business Administration.

I am carrying out research on research on record keeping and performance in small business
enterprises in Uganda. It is with great pleasure that you have been selected in the sample. This
study is basically for academic purposes and the information obtained will be kept with utmost
confidentiality. Kindly help me generate solutions to the following Questions:

1. What’s your age?

2. What is your level of education?

3. How long have been working in kikubo kiosks?

4. What do you understand by the term on record keeping?

5. How do you understand the term small business enterprises?

6. How does record keeping impact on performance of kikubo kiosks?

7. In your opinion, what would you consider to be the main cause of poor record keeping in
kikubo kiosks?

8. Identify the Challenges Faced By Small Scale Businesses in Kikubo.

9. Assess the Relationship between Record Keeping and Performance In Small Scale Business
Enterprises In Kikubo?

Thank you for your co-operation.

47