Effect of Bookkeeping Management Practices on Business Performance of Micro and Small Butchery Enterprises in Kimilili Sub-County, Bungoma, Kenya

Abstract

Development of MSE's has contributed significantly to the employment opportunities in Kenya. Studies show that MSE's contribute over 50% of the employment opportunities and 40% of GDP in Kenya. Despite this effort by the government, Kenyan societies still experience high unemployment levels, poverty and slow economic growth. Studies have shown that 60% of the MSE's fail within the first few months of operation (Kenya National Bureau of Statistics, 2007). An understanding of the causes of MSE's failure in Kenya is a vital step in ensuring proper management of MSE'S. The purpose of this study was to assess the effect of book keeping management practice on business performance of micro and small butchery enterprises in Kimilili sub-county, Kenya. The study objectives were; to establish the extent of book keeping management practices of MSBE's in Kimilili sub-county, ; to determine the extent to which MSBE's in in Kimilili sub-county, perform in terms of sales growth, market growth, assets growth and income growth; to establish the relationship between book keeping management practices and business performance of MSBE's in Kimilili sub-county, Kenya. Independent variables in the study were; cash inflow management, cash outflow management, account receivables management and accounts payable management. The dependent variable, business performance constituted; profit growth, sales growth, assets growth and market growth. Empirical studies show that research has been done on business failure in Australia, Financial management practices of small firms in Ghana, working capital management practices and causes of firms failure. Little research has been done on the effect of book keeping management practices on business performance of MSBE's in in Kimilili sub-county, thus a gap to fill. The target population of the study was 82 owner managers and managers of micro and small butchery enterprises, privately owned and registered under current Kimilili sub-county. The study used  a cross-sectional survey research design. Both stratified and random sampling technique were used in determining a sample size of 45 MSBE's. The study employed both closed ended structured questionnaires and open ended unstructured questionnaires which were self-administered to 45 owner managers and managers of the sampled MSBE's. Interview guide for the owner was used to collect in-depth information. Observation guide for the researcher and document analysis guide were used to collect both qualitative and quantitative data. Both descriptive and inferential statistics were used in the study. Frequency distribution tables and percentages were used to present raw data for interpretation. Regression analysis was performed so as to establish the relationship between book keeping efficiency and business performance. A statistical package for social science (SPSS) was used in analyzing data. The findings of the study were that book keeping management practice of MSBEs was not adequate as majority had not practiced good book keeping management with means much below the average mean of 9 and their business performance was on a low average with business performance index of 9.4 below the average mean of 11.