This project investigates The Effect of Effective
Management of Financial Resources on Small Scale Business which case study is
pelican paint Benin-City, Edo
State. The need for
financial resources was stressed, also examine the role it plays in business
organization. In carrying out this research relevant literature on the effect
of effective management of financial resources have been consulted. After
careful analysis of the results of the information and data collected,
important findings were singled out to
enable conclusions to be drawn, some of the findings among others was
non implementation of terms clearly
spelt out. In the light of the above findings. I therefore recommend that
financial management in a business organization should be given adequate
attention. There should be a good management of financial resources to be able
to attained the aims and objectives of the business.
Certification --- --- --- --- --- --- --- --- --- i
Dedication --- --- --- --- --- --- --- --- --- ii
Acknowledgements --- --- --- --- --- --- --- --- iii
Table of Contents --- --- --- --- --- --- --- --- iv
Abstract --- --- --- --- --- --- --- --- --- --- viii
CHAPTER ONE: INTROUDCTION
Background to the Study --- --- --- --- --- --- 1
Statement of the Problem --- --- --- --- --- --- 3
Research Questions --- --- --- --- --- --- --- 3
Objective of the Study --- --- --- --- --- --- --- 4
Statement of Hypotheses
--- --- --- --- --- --- 4
Scope of the Study --- --- --- --- --- --- --- 5
Significance of the Study --- --- --- --- --- --- 5
Limitation of the Study --- --- --- --- --- --- 6
Operational Definition of Terms --- --- --- --- --- 7
TWO: LITERATURE REVIEW
2.1 Financial Management - --- --- --- --- --- --- 9
2.2 Development and Contents of Financial Management
--- --- 10
2.3 Financial Strategy and Objectives --- --- --- --- 12
2.4 Sources of Finance --- --- --- --- --- --- --- 20
2.5 Capital Structure --- --- --- --- --- --- --- 26
2.6 Liquidity and Management of Working
Capital--- --- --- 27
2.7 Method of Evaluating Expected Profitability
--- --- --- 33
2.8 Function of the Financial Manager --- --- --- --- 35
CHAPTER THREE: RESEARCH
3.1 Research Design --- --- --- --- --- --- --- 38
3.2 Population of the Study--- --- --- --- --- ---
3.3 Sample and Sampling Techniques --- --- --- --- ---
3.4 Instrumentation --- --- --- --- --- --- --- ---
3.5 Method of Data Collection --- --- --- --- --- ---
3.6 Method of Data Analysis --- --- --- --- --- ---
CHAPTER FOUR: DATA
PRESENTATION ANALYSIS AND DISCUSSION
4.1 Data Presentation --- --- --- --- --- --- --- 40
4.2 Data Analysis --- --- --- --- --- --- --- --- 40
CHPATER FIVE: SUMMARY
CONCLUSION AND RECOMMENDATIONS
5.1 Summary --- --- --- --- --- --- --- --- --- 44
5.2 Conclusion --- --- --- --- --- --- --- --- 45
5.3 Recommendations --- --- --- --- --- --- --- 45
1.1 Background to the Study
Small scale Enterprises (SSES)
are spring board for rapid industrial development. Akogu (2003) posits that
historical factors show that prior to the late 19th century, cottage
industries mostly small and medium, scale business controlled the economy of Nigeria. The
industrial revolution changed the status quo and introduced mass production.
The twin oil shocks during the 1970s undermined the mass production
model, which triggered an unexpected reappraisal of the role and importance of
small and medium sized enterprise in the global economy. Major findings by
economists over the years shows that small scale business play a much more
important role in economic growth and development.
The Nigeria vision of joining the
league of the developed economy by the year 2020 could be realized only and
only if this important sector of the economy, which is an engine for rapid
economic development is encouraged and developed. The major constrain of small
scale enterprises is finance as they have no opportunity to source for fund
from capital market as large scale companies do. The only sources of finance of
small scale business are personal saving, borrowing from friends or relatives,
banks whose high interest rate militate the development of small scale
businesses. Akogu (2003) opines that in both developed and developing
countries, the government is turning to small and medium scale industries and
entrepreneurs as a means of economic development and a veritable means of
solving problems. It is a seedbed of innovations, inventions and employment.
Unfortunately, Nigeria lacks the necessary
infrastructure facilities especially electricity to develop this important
sector of the economy. Agundu (2002) reiterates that under capitalization
resulting from limited access to funds failure of formal financial institutions
cater later for the financing requirements of small and medium enterprise (SMES)
due to the inherent riskiness of (SMES) Ventures, misapplication of
development loans, deliberate diversion of loan meant for investment into
Orogundade (2011) posits that SMES
lack managerial skills because of inability to acquire modern technology and
formal education, resulting to inability to respond to threatening
environmental condition and lacks enterprises building skills.
This study sets to examine the effect of
effective management of financial resources on small scale business and growth
with a view to:
Determining the training and educational
attainment of Nigerian entrepreneurs to cope with and embrace the modern days
Evaluating accessibility and the rate of
interest on loan available to Nigeria
Ascertaining the extent to which the
infrastructure decay has hindered entrepreneurial growth and development in Nigeria.
1.3 Research Questions
The following research questions were raised for the study:
is the level of manpower training and development of Nigeria entrepreneurs through
the Nigerian entrepreneurs having challenges in obtaining loan at a much
reduced interest rate from the financial institutions?
What extent has the infrastructures decay
especially electricity hampered the growth of small scale enterprises in Nigeria?
1.4 Objectives of the
The main objective of the study is
to examine the effect of effective Management of financial resources on small
the problems financing small scale enterprise.
out the sources of finance available to
small scale enterprise.
the prospect of financing small scale business.
out the strategies for improving the, effectiveness of small scale business.
entrepreneurs are not trained on the job and most of them are militate to cope
with the challenge of the modern days technologies.
entrepreneurs are not experiencing challenges in obtaining loan at a reduced
interest rate from the financial institutions.
of the Study
In order to achieve the purpose of this research work, the
position of finance (money) in the far “resource of management and how it
affect the growth and operation will be look into. It should however, be noted
that although other resources can also be manage by an entrepreneur. It is
however outside the scope of this study to look into other resources which
include man, method and machine. In this research work, am restricted to know
how financial resources is manage in small scale enterprise.
of the Study
This research study will be useful to the researcher and
other researchers that might want to know the significance of the effect of the
effectives management of financial resources on small scale business as it will
give the researcher an understanding of what
importance financial resources is in making an entrepreneur active in
his/her primary objective no business can growth or expand in its operation. It
can be said with out controversy that availability of fiancé distinguishes
partnership from sole proprietorship business.
More so, financial resources enable an organization to
acquire every necessary input it needs to move a business forward and it also
gives an organization the courage to complete with its competitors. Financial
resources is one of the major factors of production. Despite the fact that man
coordinate other factors of production
without money you cannot embark on any tangible project. The lapse implied in
the management financial resources in a small business .will be revealed as a
basis for recommending appropriate action to be taken by the owner/ management
so as to correct such lapses.
1.8 Limitation of the Study
In the course, of this research work a some limitation/
constrain were encountered by the researcher.
Problem of finance: the researcher was not able to have
enough fund out this research work. Another factor that limits the researcher
work is time: bearing in mind that short duration of the semester with the
volume of academic works the needed attention, the time given to the project
work was limited. Another factor that also limits the entrance into the
organization because it is the policy of every organization not release certain
information to non staff. Another factor is transportation.
Operational Definition of Terms
Finance is defined as a man made or provided by people gear toward production.
Finance can also be described as the money used in setting a business.
Management: Management is distinct consisting
of planning, organizing, coordinating and contriving human factors of
production, to be able to attain the aims and objectives of the business.
Small Business: Small business can be defined as
the one which is independently owned and operated and not dominant in its field
Finance Gap: Finance gap is a situation when a
company is growing rapidly with identified business opportunities which are
profitable but which the company has and readily available funds to explore.
Over Trading: This arises when a firm gets
itself involved in a volume of business which exceeds what it can conveniently
and effectively handle with its existing resources.
Financial Planning: This involves the setting up
financial strategies and programmes for achieving a defined object within a
Capitalization: This means the assessment and
eventual ascertainment of the value of the view of the existing assets of firm
with a view to assorting of fixed value to each of the shares of the firm.
Financial Management: Financial management process of
planning the provision and effective utilization of funds.