Small Business Failure Essay

Several factors including record keeping have frequently been cited as the drivers of business performance in SMEs. Keeping proper records has been noted to be one of the important factors influencing the performance of a business. Peacock (1988) found that the inefficient and/or lack of accounting records have led to the failure of many SMEs. Along similar lines, McCannon (2002) argues that, many SMEs fail because owners could not make timely and key managerial decisions resulting from the lack of adequate records. Given the benefits of record keeping, one would therefore wonder why some owners of SMEs fail to maintain books of accounts. It appears many SME operatives are unaware of the contributions of record keeping to the bottom line. Indeed, many have not seen the relevance. McMahon (1998) for instance argues that even the basic form of record keeping deters many owners because to them, keeping records do not provide a trend of their current operations and thus impact less on performance.

Many authors have written on the subject of small scale business failure. Many reasons have been given for their failures. The problem however, remains that many of the authors did not link business failure to the lack of or inadequate record keeping. According to Uzoma (1991), the causes of business failure includes competition, lack of capital, location and premature expansion. Osagbemi (1981) assets that the major factors responsible for small business failure includes lack of luck,