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AN EXAMINATION OF FINANCIAL PROBLEMS AND SURVIVAL STRATEGIES OF SMALL SCALE ENTERPRISES IN DOUALA, CAMEROON
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Delivery: Within 24 hoursAN EXAMINATION OF FINANCIAL PROBLEMS AND SURVIVAL STRATEGIES OF SMALL SCALE ENTERPRISES IN DOUALA, CAMEROON
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Small scale enterprises serve as vital components of economic development, contributing significantly to various aspects such as employment generation, income growth, poverty alleviation, and entrepreneurial innovation (Ayyagari et al., 2021). However, entrepreneurs and managers of small businesses have played a significant role in the economic landscape of Cameroon (National Institute of Statistics, 2018). As of 2018, the country boasted a total of 93,217 small businesses, comprising a staggering 99.2% of all enterprises (National Institute of Statistics, 2018). These small businesses are not merely a substantial presence but also serve as crucial contributors to the nation's economy, accounting for 62% of employment and 31% of the gross domestic product (GDP) (Piabuo, Baye, & Tieguhong, 2018).
Furthermore, the repercussions of small business failures have been substantial, exacerbating unemployment rates to 40% and elevating the poverty threshold to 48% in Cameroon (KPMG, 2019). Despite their crucial role, these enterprises often grapple with financial management hurdles. One of the most frequently mentioned concerns that SSEs deal with is financial difficulty (Beck et al., 2008; Karim et al., 2022). These issues can include anything from trouble obtaining financing and capital to poor financial management and planning techniques. Similarly, for many SSEs, obtaining financing is a major problem, particularly in areas where conventional financial institutions could be reluctant to lend to smaller enterprises because of perceived risks or a lack of collateral (Beck et al., 2018). Additionally, SSEs may have trouble with budgeting, financial reporting, and cash flow management—all of which are critical for obtaining finance and making wise business decisions (Karim et al., 2022).
The ramifications of financial challenges on SSEs can be significant, potentially resulting in the closure and failure of businesses (Ayyagari et al., 2021). This failure not only impacts entrepreneurs and their employees but also has wider implications for the economy, such as reduced job opportunities and diminished productive capacity. Hence, it is imperative for policymakers, researchers, and practitioners to comprehend the nature and scope of financial difficulties encountered by SSEs, along with the strategies they utilize to thrive in demanding circumstances, in order to foster the growth and sustainability of small businesses.
However, existing studies have explored diverse facets of financial challenges and survival tactics among SSEs, illuminating the factors contributing to financial hardships and the mechanisms through which SSEs maneuver through these obstacles (Beck et al., 2018; Karim et al., 2022). Nonetheless, there exists a necessity for further investigation into specific categories of financial issues confronted by SSEs across different contexts, as well as the efficacy of various survival approaches adopted by entrepreneurs. Therefore, a survey will be conducted in order to examine financial problems and survival strategies of small scale enterprises in Douala, Cameroon
1.2 Statement of the Problem
Small scale enterprises constitute a significant portion of the business landscape globally, playing a vital role in driving GDP growth and job creation (Beck et al., 2020). Particularly in developing nations, they serve as primary sources of livelihood for a substantial portion of the population (Becherer & Helms, 2018). Additionally, small businesses foster innovation and contribute to economic diversification, enhancing overall economic resilience.
Despite their importance, small scale enterprises encounter various financial obstacles that impede their growth and sustainability. These challenges include limited access to capital, high borrowing costs, cash flow management issues, and insufficient financial literacy among entrepreneurs (Ayyagari et al., 2021). Economic fluctuations, market volatility, and regulatory constraints further compound these challenges.Financial difficulties can have significant repercussions for small scale enterprises, leading to stagnation, reduced competitiveness, and even closure. Such challenges may compel entrepreneurs to adopt suboptimal practices such as underinvestment in technology and delayed payments, further jeopardizing their long-term viability (Beck et al., 2020). In response to financial constraints, small scale enterprises employ diverse survival strategies to sustain operations and foster growth. These strategies include bootstrapping to minimize costs, diversifying revenue streams, forming strategic partnerships, and leveraging technology (Ayyagari et al., 2021). Additionally, alternative financing avenues such as peer-to-peer lending and microfinance are explored to circumvent traditional banking limitations. Similarly, small scale enterprises face formidable financial challenges that threaten their sustainability. However, through innovative strategies and resourcefulness, many entrepreneurs navigate these hurdles successfully. Thus, it is in the light of these that the study seeks to examine financial problems and survival strategies of small scale enterprises in Douala, Cameroon.
1.3 Objectives of the Study
The main purpose of this study is to examine financial problems and survival strategies of small scale enterprises in Douala, Cameroon. Specifically, the study will;
Ascertain the financial related challenges affecting the survival of SMEs in Douala, Cameroon
Determine the impact of inadequate financing on the survival of SMEs in Douala, Cameroon
Ascertain the survival strategies required to sustain and boost the survival of SMEs in Douala, Cameroon
1.4 Research Questions
The following questions have been prepared for the study:
What are the financial-related challenges currently affecting the survival of SMEs in Douala, Cameroon?
How does inadequate financing impact the survival of SMEs in Douala, Cameroon?
What survival strategies are necessary to sustain and boost the survival of SMEs in Douala, Cameroon?
uala, Cameroon.
1.5 Significance of the Study
This research is significant as it explores how the challenges experienced by entrepreneurs in Cameroon can impact different facets of business activities, including operations, sales, and customer relations. Furthermore, it offers valuable perspectives for governmental authorities and policymakers in Cameroon, assisting them in comprehending the hurdles faced by entrepreneurs and identifying potential avenues for advancement. Moreover, this study will play a role in shaping supportive policies and enhancing infrastructure to foster the expansion of entrepreneurship. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to financial problems and survival strategies of small scale enterprises in Douala, Cameroon.
1.6 Scope of the study
The scope of this study is to examine financial problems and survival strategies of small scale enterprises in Douala, Cameroon. Empirically, this study will ascertain the financial related challenges affecting the survival of SSEs, determine the impact of inadequate financing on the survival of SSEs and ascertain the survival strategies required to sustain and boost the survival of SSEs in Douala, Cameroon
Geographically, the study will be delimited to owners of SSEs in Douala, Cameroon
1.7 Limitation of the study
In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.
More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.
1.8 Definition of Terms
Entrepreneurship: refers to the process of identifying, creating, and pursuing opportunities to generate value through innovative ideas, products, or services.
Small Scale Enterprises: SSEs are businesses that fall within a certain size range, typically defined by criteria such as the number of employees, annual revenue, or total assets.
Problems: the challenges or difficulties that SMEs face in the course of their business operations.
Strategies: the plans or actions designed to achieve a specific goal or objectives.
This material content is developed to serve as a GUIDE for students to conduct academic research
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Reference(s):
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