Financial management skills and SME survival in Nigeria

Abstract

This study examines financial management skills and SME survival in Nigeria, with emphasis on budgeting skills, cash flow management, and record-keeping and financial reporting skills as key determinants of business sustainability. Small and Medium Enterprises (SMEs) play a vital role in Nigeria’s economic development through employment creation, poverty reduction, and contribution to Gross Domestic Product (GDP). However, despite their importance, SME survival rates remain low due to weak financial management practices among operators. Many SMEs struggle with poor budgeting, inefficient cash flow control, and inadequate financial record keeping, which often lead to liquidity challenges, poor decision-making, and eventual business failure. The study is anchored on the Human Capital Theory, which emphasizes that knowledge and managerial competencies enhance organizational performance and survival. A descriptive survey research design is adopted, with data collected from SME owners and managers using structured questionnaires based on a Likert scale. Data analysis was carried out using descriptive statistics, correlation analysis, and multiple regression techniques with the aid of SPSS. The study anticipates that budgeting skills, cash flow management skills, and record-keeping and financial reporting skills have significant positive effects on SME survival in Nigeria. The findings provide useful insights for policymakers, financial institutions, SME operators, and development agencies in designing strategies that enhance financial capability and improve SME sustainability.