THE IMPACT OF FINANCIAL PLANNING ON THE PROFITABILITY AND EFFICIENCY OF SMALL SCALE FIRMS

ABSTRACT

The Nigeria Economy has a lot of turbulence in the 1980’s.  The period witnessed unemployment, inflation, dwindling oil revenue; the need has risen for the government to take serious steps to change the direction of the economy through policies which are aimed at restructuring and making better use of available resources.

However, this study was conducted to examine the impact of financial planning in the profitability and efficiency of small scale industries in Orumba North Local Government Area of Anambra State.  The results of the study showed that financial planning has to be interpreted and used.

After an analysis of data, the study came out with findings of financial planning propels the level of performance of small scale firms.

It was found that small scale firms in Orumba North Local government was identified to be absence of proper financial records, illiteracy, bad attitude to change and high inflation and interest rate.

In other to exploit the optional benefits of this study, the researcher offered the following recommendations for the improvement of financial planning in small scale firms in Orumba north local government area of Anambra state.

1.  Considering the fact most small scale firms lack necessary managerial know-how, experienced and qualified staff should be employed on fulltime basis to design a good accounting system, draw up maintenance plans for such records and help relate them to profitable operations.

2.  Good records should be kept. While a business owned is not expected to be an accountant, he should at least be able to keep memorandum of records to assist the accountant in preparing his financial records or reports.

3.  Small scale industrialists should be enlightened through the use of seminars and government enlightenment policies.

 CHAPTER ONE

1.1   INTRODUCTION

The Nigeria economy has witnessed a lot of turbulence in the 1980s. The period witnessed unemployment, dwindling oil revenue. The need has arisen for the government to take serious steps to change the direction of the economy through the use of policies, which are aimed at restructuring and making better use of available resources. Among these policies, one should aim at increasing the awareness, as regards the positive impact which emphasis on small scale industries could have on the economy.

For the purpose of this research, a small scale industry because of ambiguity in the definition, can toe defined as a continuum starting from the informal sole propertorship and extending to an upper limit defined by the law of the country concerned. In Nigeria for example, various agencies have different classifications – Nigeria Bank for Commerce and Industry, Federal Ministry of Industries etc.

One of the earliest definitions of small scale industry was established in 1952 by the United Economic Commission for Asia and the far East (ECAFE).