A needs analysis of financial management and accounting skills in the SME sector in KwaZulu-Natal.

Abstract

The Theory of the Firm consists of a number of economic theories that attempt to describe the nature and the behaviour of the firm. One of the important assumptions of the theory is that of profit maximisation. In order to maximise profits, there are four factors of production that are required by the firm, i.e. land, labour, capital and entrepreneurship. Although capital may relate to the acquisition of funds that are required by the business, it also relates to proper financial skills that are needed to manage these funds. Therefore, in order to successfully establish and manage a business, especially a small or medium sized enterprise, it is necessary to possess financial management and accounting skills. The SME sector has been identified as having the potential to contribute to economic growth of the country. In order to achieve this objective, is important that the sector is well managed and that there are sufficient accounting and financial management skills in the sector. The research has been undertaken in order to determine and evaluate accounting and financial management skills that are needed by the SME sector in KwaZulu-Natal. The literature review suggested that an absence of accounting and financial management and accounting skills contributes to the poor performance of the sector in South Africa and that the possession of some basic skills in these fields may enhance the growth and profitability of the sector. The research design was of a quantitative nature. A questionnaire was completed by a group of thirty industry experts and these findings were statistically analysed. The questionnaire allowed for further comments and opinions from the experts on selected accounting and financial management aspects in the SME sector. The empirical research indicated that: • there is a low level of accounting and financial management skills in the SME sector in KwaZulu-Natal; and, • there is a need to improve the accounting and financial management skills in the SME sector in KwaZulu-Natal.