The strategic financial management framework for small and medium-sized enterprises in Zimbabwe

Abstract

Small to medium enterprises (SMEs) by nature often encounter performance and growth-related challenges attributable to failure by SME owner managers to embraceStrategic Financial Management Practices (SFMPs) that are popular for promoting business growth and performance. The Zimbabwean economy, which relies on SMEs following the collapse of the economy due to the agrarian reform initiated by the government in the year 2000, faces economic crisis of large proportions as SMEs fail perform and grow. Aim: The overall aim of the study was to develop a strategic financial management framework for SMEs towards improving performance and growth. Study setting: The study was conducted in Mashonaland West Province of Zimbabwe, a relatively impoverished community that rely on SMEs as a source of livelihood. Methods: The study employed the mixed method research design that include the quantitative, and qualitative methods gathering data from a target population of 640 SMEs selected from the furniture, steel, metalwork, retail, confectionary, and the hospitality sectors. Cluster, and stratified sampling techniques were used to select 240 participants for the quantitative study while purposive sampling technique was used to select 21 participants for the qualitative study. Quantitative data was analysed using the Statistical Package for Social Science (SPSS) version 25 with qualitative data analysed using N-Vivo and thematic analysis. Results: The main study findings revealed that SMEs across the province partially applied SFMPs which include developing a vision that guides the business, opening a fixed asset register to serve as collateral security, bulk stock ordering, and networking. Conclusions: The study concluded that SFMPs were critical for SME performance and growth, and that SMEs should embrace the practices. The study therefore recommended the implementation of the FNBE11 framework by SMEs across the province to ensure sustenance of growth and performance. The recommended framework would compel SMEs to be visionary, invest in fixed assets as collateral security, open bank accounts that provides creditors/financiers with solid financial history used as the basis to seek funding.