Business Efficiency in Small and Medium Enterprises In Selected Districts In Western Uganda.

Abstract

The study was undertaken to determine the level of business efficiency in Small and Medium Enterprises(SMEs) in selected districts in Western Uganda. The study was guided by the following objectives; to determine the level of business efficiency of SMEs in terms of, profitability, growth; The study emplyed ex-post facto or retrospective and prospective designs together with descriptive design and descriptive comparative as well as correlation design. 335 questionnaires were distributed to respondents and were were collected and used for analysis. The study found out that majority of SMEs owners (52%) in western Uganda are female, more than 69% of the SMEs owners are in their early adult hood and majority of the SMEs owners are high school leavers (30.1%), over 50% of the SMEs are sole proprietorship businesses and majority of the SMEs (42.4%) have been in business between 1-4 years. The study found out that the level of profitability among SMEs was high (Average Mean = 2.67), the results also showed that the level of growth in SMEs is low (Average Mean=2.30). the overall findings showed that the level of business efficiency is low among SMEs (Average Mean = 2.48). The study employed the theory of  Pecking Order (Myers 1984) which states that Management has a preference to choose internal financing before external financing, was proven in this study in the aspects of SMEs using internally generated funds as compared to borrowed funds. The recommendations from the study included; The SMEs owners should try to maximise and put to use their assets so as to obtain higher returns on assets. The government, more specifically the Ministry of East African Affairs, URA should sensitize the owners of SMEs on the opportunities that are available in the EAC and how the SMEs can be able to export their products to the neighbouring countries so as to boost their turnover. The owners of SMEs should have sales team in place so as to market the products and services of the business in order to increase sales. The SMEs owners should also make sure that business plans are prepared so as to act as a roadmap on how to take the business to the next level.

Key Words Business Efficiency, SMEs, Profitability, Growth