Entrepreneurship skills and financial performance of small and medium enterprises in Uganda: a case of Kawempe division

Abstract

The study sought to examine the relationship between entrepreneurial skills and financial performance of SMEs in Uganda. The study specifically focused on addressing three objectives which included; to examine the relationship between entrepreneur communication skills and the financial performance of SMEs, to establish the relationship between entrepreneur innovation skills and financial performance of SMEs and to establish the relationship between entrepreneur interpersonal skills and financial performance of SMEs in Kawempe Division. The study adopted a cross sectional survey design and data was collected from a sample of 150 SMEs in Kawempe Division. Both purposive sampling and simple random sampling techniques were employed. Several methods were used to collect data both primary and secondary data and they included: the self-administered questionnaires; interviews; review of primary document and secondary literature. Data was analyzed using both descriptive statistics to describe the nature of sample and correlation analysis was used to establish the relationships between study variables. The study found out that entrepreneur’s communication skills had a positive significant relationship with financial performance of SMEs (r=0.74). The study also found out that there was a positive significant relationship between entrepreneur’s innovation skills and financial performance of SMEs (r=0.82) and lastly it was also found out that entrepreneur’s interpersonal skills has a significant relationship with SMEs financial performance (r=0.86). The study therefore generated a number of conclusions. It was concluded that generally the contribution of entrepreneurship skills towards financial success of SMEs in Uganda should not be underrated. SMEs that possess skills that enable them modify existing products and develop new products would have an increase in financial performance. It was further concluded that interpersonal skills contribute most to financial performance of the SMEs as compared to other skills that were chosen for this study. The study therefore recommended that in this competitive environment firms have to develop mechanisms of gathering market information and also pass on information. The study also recommends the SMEs should improve and acquire innovation skills and lastly interpersonal skills are important to financial success of SMEs.