Abstract
The purpose of this article is to uncover the principal obstacles preventing small business owner managers from making sound strategic financial management decisions. These obstacles are generally related to the owner managers’ reluctance to follow accepted theoretical norms (steps) in terms of information search and analysis. This reluctance is attributable to the decision makers’ significant lack of knowledge and experience. Data gathered with a structured questionnaire was based on a sample of 143 small business owner managers registered with SEDA (Small Enterprise Development Agency) in South Africa. The results point to an absence of a proper theoretical framework for gathering and analysing information necessary for effective decision making. This framework commonly entails elements such as experience and techniques acquired from time spent in business and business intuition. Recommendations are made to assist small business owner managers to improve on their strategic decision making and resource allocation processes. Key words: Inhibiting factors, small business owner manager, SMME’s strategic financial management decisions, South Africa.
Highlights
South Africa has a relatively high unemployment rate, low economic growth and dismal performance of small businesses (Chimucheka, 2014:403)
The typical respondents of this study who were mainly involved in the strategic decisions in businesses were composed of owners (27.46%), managers (20.42%), financial managers (2.82%) and human resource, production and technical managers (2.82%)
The results indicate that the important inhibiting factors are related to owner managers themselves
Summary
South Africa has a relatively high unemployment rate, low economic growth and dismal performance of small businesses (Chimucheka, 2014:403). Governments and local communities worldwide have recognized that entrepreneurs and small businesses are key to building prosperity and to stimulate economic growth (Fatoki, 2014: 100). Entrepreneurs and small businesses are regarded as the economic engine necessary for growth, poverty alleviation, and job creation (Smith and Chimucheka, 2014:160). Orobia et al (2013:127) agree that small businesses greatly contribute to the economic development of a country, and their contribution can be gauged in terms of job creation, income generation, and poverty reduction. The main obstacles to growth and survival of SMEs are related to financial decision making (Olawale and Garwe, 2010:729; Fatoki, 2012:179). Effective strategic financial management decision making is an important aspect
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