Influence of Record-Keeping and Financial Analysis on Development of Small-Scale Businesses in Tanzania.

Abstract

The study was to assess the influence of record-keeping and financial analysis on the development of small businesses in Dar es Salaam. The study specifically examined the influence of financial record-keeping, business record-keeping and liquidity analysis on the development of small businesses in Dar es Salaam. This study was underpinned by the Neoclassical Growth Theory. The study employed an explanatory research design. The study involved 400 samples, but valid responses were 335 small businesses. Data was collected through questionnaire, and analyzed by descriptive statistics, and multiple regressions. For the first objective, the study revealed that financial record-keeping has a positive and significant influence on development of small businesses in Dar es Salaam. For the second objective, it was noted that business record-keeping has a positive and significant influence on development of small businesses in Dar es Salaam. For the third objective, it was found that liquidity analysis has a positive and significant influence on development of small businesses in Dar es Salaam. Therefore, the study concludes that the development of small businesses in Tanzania is influenced by financial record-keeping, business record-keeping, and liquidity analysis. This implies that an increase in these practices significantly contributes to the growth of such businesses. The study recommends that small businesses should be trained and encouraged to keep accurate financial records. Owners also should be guided to record sales, expenses, assets, and liabilities. Small businesses should be taught how to monitor cash flow and maintain a healthy current ratio. Last, policymakers should create friendly policies that encourage the use of record-keeping systems and financial analysis tools among small businesses.