Entrepreneurial skills and financial performance of small and medium enterprises in Nakawa division, Uganda

Abstract

The purpose of this study was to examine the effect of entrepreneurial skills on financial performance of small and medium enterprises in Nakawa Division. The study was premised on three specific objectives including; to establish the effect of innovation skills on financial performance of SMEs; to determine the effect of managerial skills on financial performance of SMEs, and to establish the effect of interpersonal skill on financial performance of SMEs in Nakawa Division in Uganda. The study was underpinned by the Social Learning Theory (SLT) to explain entrepreneurial skills and financial performance of SMEs. The study adopted a cross sectional-quantitative research design with a target population of 255 and a sample 175 SMEs which were chosen using stratified simple random selection and the sample size estimated using the Krejcie and Morgan (1970) Table. Data were gathered for the study using a closed-ended questionnaire. By employing factor analysis and the Cronbach Alpha test, the validity and reliability of the data were examined. Descriptive and inferential statistics were used to examine the acquired data in SPSS. The correlation results showed a meaningful connection between innovation skills, managerial skills, interpersonal skills and financial performance of SMES. Regression analysis results showed a favorable and statistically significant effect between innovation skills, managerial skills and interpersonal skills on financial performance of SMEs. The study concluded that improving the innovative, interpersonal and managerial skills of entrepreneurs promotes financial performance of SMEs. The study was limited to SMEs in Nakawa Division and therefore future studies can replicate the finding of this study to other settings or even conduct a national study on entrepreneurship and financial performance of SMEs. Keywords: Entrepreneurial Skills, Financial performance of SMEs