CHINHOYI UNIVERSITY OF TECHNOLOGY

SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT

DEPARTMENT OF BUSINESS MANAGEMENT

RESEARCH PROPOSAL

THE SIGNIFICANCE OF RECORD KEEPING ON THE

PERFOMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES
.(SME) IN HARARE

SUBMITTED TO THE SCHOOL OF BUSINESS SCIENCES AND

MANAGEMENTIN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF

BACHELOR OF SCIENCE (HONS) IN BUSINESS

MANAGEMENT AND ENTREPRENUERSHIP

DONE BY

TINOTENDA KUFAHAKUTANE (C14123141D)

1.1 Introduction
SMEs in Zimbabwe play a significant role in building up the economy. They have
significantly supported Zimbabwe especially during the financial crisis from 2000 up to date,
when many sectors were declining. This is due to their flexibility and ability to easily adapt.
The small to medium enterprises (SME) sector is now regarded as the solution to most
developmental problems in developing countries such as Zimbabwe as there is a growing
realization that small to medium enterprises (SMEs) have not only contributed to the gross
domestic product (GDP), but are by far the biggest employers within economies. Nyoni
(2010) identified that SMES help in employment creation, eliminates poverty and contributes
significantly to the GDP of the economy. The Reserve Bank on Zimbabwe (2007) indicated
that SMEs have employed 61% of the individuals in the work force of Zimbabwe. Newsday
(2015) further states that SMEs are contributing over 50% of GDP in Zimbabwe.

In an effort to guarantee the development of SMEs, the Government of Zimbabwe established

the Ministry of Small and Medium Enterprises and Cooperative Development then in 2002
the Ministry of Small and Medium Enterprise Development, Small Enterprise Development
Corporation (SEDCO), Venture Capital Company of Zimbabwe (VCCZ) and the Credit
Guarantee Company of Zimbabwe (CGCZ). The directive of the Ministry is to ensure there is
a guided approach in endorsing development of SMEs and cooperatives in Zimbabwe as a
means of empowering individuals at the same time boosting the development of SMEs and
the economy at large. However, most SMEs are still struggling due to a number of factors.

Thus this chapter will outline the background of the problem under study, describe the
problem statement, pose research questions and show aims of the study. Also contained in
this section are the assumptions, limitations and delimitation of this research paper and the
significance of study.

1.2 Background to the Research Problem

During the period of 2000 up to date most big firms were affected by hyperinflation, liquidity
crisis (foreign currency shortages) amongst others that contributed to the economic crisis that
forced them to close down thus living thousands unemployed. SMEs, through their inherent
advantage of size and operational flexibility, have the ability to engage in product, service
and knowledge innovation, respond rapidly to change and take advantage of new
opportunities, diversify their operations and contribute significantly to net job creation as
stipulated by Gavan and O’Cinneide (1994), thus some of them have managed to survive this
period compared to big firms. According to Snodgrass and Riggs (1996) SMEs are far more
flexible, they are quickly responsive to customer needs as means to competing with large-
scale mass producers and can quickly make decisions compared to large businesses mainly
because they have a few employees, thus little formality associated with the development of
an organizational structure as they follow ‘niche strategies’. Bancy Wawira Muchira (2012)
supports the notion that SMEs are perceived to be key players in innovation, industrial
restructuring, wealth generation and economic growth. According to a report from the
Ministry of Small and Medium Enterprise and Cooperative Development (2010), SMEs
contribute 85% Gross Domestic Product (GDP) thus sustain 95% of the country’s economy.
Zimbabwe Revenue Authority (ZIMRA) 60% of the revenue they collect at Beitbridge
Border post is from SMEs as stipulated by the Ministry of Finance (2010).The importance of
SMEs is evidenced through their contribution to Gross Domestic Product (GDP),
employment creation, and socio economic development as a way to eradicate poverty.

Despite the fact that SMEs are receiving support from the government, Banks, Monetary
Fund Institutions (MFIs) and Non-Governmental Organizations (NGOs) and some institution
most of them are still struggling. Therefore this research seeks to identify the importance of
record keeping on the performance of the Small-Medium enterprises (SMEs) in Zimbabwe
during the period 2000-2017. More so proposing that record keeping is one of the solutions to
SMEs performance. Therefore this study seeks to explore the importance of record keeping
on the performance of Small to Medium enterprises

1.3 Statement of the problem

A number of Small businesses collapse within the first five years of their existence.
Numerous factors have been acknowledged for contributing to this premature death of SMEs
namely, poor financial management/performance, inability to separate business and family or
personal finances, poor decision making, lack of access to loans, inability to distinguish
between revenue and profit, lack of a business strategy and stunt growth. This may be traced
to poor financial record keeping. Lack of records in these businesses which could be due to
 poor educational background of owners or the employment of unskilled bookkeeping staff.
Germain (2010) supports that lack or poor record keeping in small businesses leads to their
collapse. Thus an understanding of the need for record keeping in small businesses may help
to identify a solution to their challenges.

1.4Objectives of the Study:

The major objective of the study is....

To determine the importance of recordkeeping

The specific objectives of the study are:

(i) To determine the types of records the SMEs keep in their business operations,

(ii) To establish the challenges faced by the SMEs in maintaining their records.

(iii) To analyse the extent to which recordkeeping supports the performance of the SMEs

(iv) To make appropriate recommendations

1.5 Questions of the Study

The study strives to answer the following questions:

i. What type of records do the record-keepers of SMEs use for their business
operations?
ii. Which challenges do SMEs face in maintaining their records?
iii. To what extent does recordkeeping support the performance of the SMEs

iv. Do SME owners and workers think recordkeeping is significant in their

enterprises

1.6 Significance of the study

To the SMEs
This study will be beneficial to the small-to-medium enterprises (SMEs); as it helps them
acquire book keeping skills and how to use the skills to their advantage to ensure they
achieve their goals.
To the Economy

The adaptation of the appropriate skills by small-to-medium enterprises and individual

entrepreneurs is also vital to the economy at large as it hinders sustainable benefits to the
nation at large and these are

1. Contribution to Gross Domestic Product

As SMEs succeed in running their businesses effectively if book keeping is carried out
appropriately, the value of locally produced products will also rise affecting the levels of
Gross Domestic Product to rise.

2. Creation of Employment
Through establishment of the accounting department after acknowledging its value many
small firms will create vacancies leading to the creation of employment that leads to
improved living standards and alleviation of poverty.

3. Raises Government Revenues

As small businesses begin to boost, there is the payment of taxes to the local authority thus
boosting the levels of government revenue to increase.

To the university
The college will benefit from the research, mainly its library archives with literature related
to the factors that affect success of SMEs or the importance of record keeping in SMEs. It
will also assist other student who intend on researching on the topic.

To the student
The relevance of this research project is that it will enable the candidate to demonstrate
competence in the ability to organize oneself to carry out an assignment and effectively use
research techniques and to bridge the gap between theory and practice by developing and
undertaking of how to apply concepts and techniques obtained from this course.
1.7 Hypothesis testing

Ho: Record keeping has no significant impact on the performance of small and medium scale
enterprises.
H1: Record keeping has a significant impact on the performance of small and medium scale
enterprises

1.8 Delimitation
The Information in this study will be obtained from small-to-medium scale entrepreneurs in
Harare urban. In this regard Harare urban is the geographical area from which data is
collected. This study seeks to analyze the importance of record keeping by SMEs. Thirty
industries are targeted from the study and the records they keep are examined in order to
obtain information pertaining to the investigation on the importance of record keeping.

1.9 Limitations
LITERATURE REVIEW

2.1Conceptual Framework
The conceptual framework reflects the interaction between business practice factors such as
recordkeeping thus enabling business performance.

Independent Factors Proximate Factors Dependent

Factors

Record keeping
Skills in Business
management Practice of record Performance of SMEs
keeping by the SMEs

Availability of
record keeping
resources

2.2 Theoretical Framework

RECORDS MANAGEMENT THEORY
This hypothesis is separated into three settings the functional context, professional context
and intellectual context by Michael Buckland. Records administration enables a firm and
partners to pick up an impression of the organization's position, along these lines it should be
verbalized with different parts of the organization. The part of records administration is
critical, there is need sees on how a decent records administration program adds to and
bolsters the viability of the association. Records administration can be viewed as recovery
based data frameworks. Files, libraries, records administration programs, and corporate
databases are not the same, despite the fact that they are all recovery based data benefits in
this way have a few highlights in like manner and in addition contrasts that make them
interestingly extraordinary (Buckland 1982, 1991)
LIMITATIONS.
1. This theory just acknowledges the importance of record keeping but does not specify
for how long should it be kept.
2. The theory is outdated

BIG BUCKET RECORDS RETENTION THEORY

This hypothesis, the big bucket concentrates on records maintenance, along these lines
enhancing worker accommodation and diminishing the danger of misused documents
therefore will be put together for simple recovery and utilize (Cisco, 2008). According to
Ademola et al (2012), record keeping is essential to business administration. Record keeping
includes distinguishing proof, grouping, stockpiling and insurance, receipt and transmission,
maintenance and transfer of records for planning of financial statements. The two records
should be kept for all time contingent upon the need of that association. Adikwu (2014) stated
that records that are held for all time in the organisation are created amid the exchange of
Businesses in that Organization. In this manner, a few records should be held never-endingly
for future reference.

Principle of records organization

This principle shows that records in any organization are organized for easy retrieval, (United
States National Archives and Records Management (2014) Organization of the records
activities like sorting, classifying, arrangement and filling are carried out

Principle of legal adherence

This principle talks about the adherence of the laws of the company regarding Records
Retention. Every Business has laws that direct the activities. Brock (2010) stated that Records
in any Business are retained based on the laws of that company with respect to such Records
Created in that Organization.

Principle of record period assigning this principle shows that each Records Created in the
Organization should have a period of time that it should be kept before being destroyed or
thrown away. Thus it makes it makes the easier for the retrieval of such Records.

Previous studies that adopted big bucket records retention theory

Joseph et al (2012) sites record keeping accountabilities as financial, legal, business records
that need to be kept using big bucket theory as a monitoring tool. Cisco (2008) titled Big
Buckets for simplifying Records Retention Schedule introduced an up to date retention
schedule protects the interests of an organization and its stakeholders by ensuring that the
official business records are kept for as long as they are needed to meet legal, regulatory, and
operational needs.

2.3 Empirical review

Similar researches where carried out by Ongayi Vongai Wadesango(2015) who focused on
the importance of record keeping to the growth of small and medium scale enterprises (smes)
in Zimbabwe in 2015. The research focuses on the importance of financial books kept for
record keeping. This research is however outdated, it only focuses on the financial aspect of
record keeping affects small and medium scale enterprises (smes) growth and was a general
overview as it did not focus on a specific area thus it could be biased, therefore this research
will focus on small and medium scale enterprises (smes) in Harare, on both financial and
non-financial aspect of record keeping and on their performance.

2.4 Problems associated with inadequate recordkeeping

Lack of information for decision making

The proprietor needs to know what is going on in the business in order to make decisions.
The decision making process is based on facts and figures thus there is need for
recordkeeping. Maseko and Manyani (2011) states that efficiency is more dependent on the
recordkeeping of business transactions. Even though recordkeeping is painful in small
businesses the information, is vital, lack of which may result in terminal problems. Without
adequate information, decision making is merely guesswork.

Failure to assess business performance

Many business people are in for the profit motive above everything else. Profitability,
solvency and liquidity are the major indicators of business performance. These yardsticks of
business performance can only be ascertained if there are financial statements which emanate
from available records. Eric and Gabriel (2012) stipulates that bookkeeping enables
stakeholders such as managers know the financial position of the business as it is based on
factual information. Adegbite Tajudeen Adejare(2014) states that it is accurate bookkeeping
that can make associated with drawing, where the business owner seeks to enjoy the profits of
his business without knowing how much they are. Thus liquidity and profitability may be
misunderstood and resources are drawn out of a business on the pretext that one is enjoying
profits.

Failure to remit taxes

Every registered business has to pay corporate tax if its revenues are above stipulated levels.
Most businesses in the formal small enterprises sector cannot even determine the amount
revenues or profits they earn annually because of the existence of inaccurate or no been
proper records. Value Added Tax (V.A.T) can thus not be claimed because in puts have not
been calculated neither can it passed on. Thus most small businesses fail to meet the
Zimbabwe Revenue Authority (ZIMRA) prerequisite of proper accounting records in order to
qualify for registration (ZIMRA Module). According to Tonderai Nyamwanza (2014) SMEs
are struggling to meet ZIMRA obligations, however it is made worse by the heavy penalties
charged by the authorities.

2.2 The Importance of recordkeeping

According to Ademola et al (2012), record keeping is essential to business management.Due

to large amounts of information and transactions found in small businesses and other bigger
organizations, it is not possible to keep all the details in mind. A small business entrepreneur
may make millions of transactions annually and though he may recall a few outstanding ones,
not each and every transaction detail can be recalled easily. Thus accounts prepared and kept
by bookkeepers and filed documents can be used as reference whenever particular details
about transactions are required.

Invoices and other related primary documents are evidence of the occurrence of a transaction
and can be retrieved when disputes arise. Maseko and Manyani (2011) emphasizes the
importance of the documents by stating that these are legal documents that show the terms of
agreement. A sales invoice for example would show the description, quantity and price of
products sold as well as the name of the buyer and date of transactions arises, for example
failure to settle an amount on the invoice, these documents can bear witness on the case. In
small businesses where some customers may be forced into liquidation because of the harsh
economic climate prevailing, amounts to be received can be obtained from records of the
transactions.

The entrepreneur of the business is usually interested in knowing whether he is operating a

viable entity. Accounting records can be used to track progress. However most small to
medium business owners do not acknowledge the value of recordkeeping thus a number of
small businesses fail according to Wanjohi (2012).

In essence it is the record that can gives answers to the questions. The final accounts can only
be obtained from the records. Some small businesses operate blindly without checks and
balances and would only discover their bad state when it’s too late. As long as records are
there, progress can be monitored continuously, and corrections made earlier Commonwealth
of Australia (2010).
3.0 RESEARCH METHODOLOGY

3.1 Research method

3.2 Research design

Chimanikire R (2011) views research design as the arrangement and structure of investigation
so considered as to acquire answers to research questions. Aremu, M. A., & Adeyemi, S. L.
(2011) outline three types of research outlines to be specific, exploratory, descriptive and
casual research. The study was done as an engaging review which utilizes both quantitative
and qualitative approaches. Chimanikire R (2011) portrays a review as being helpful in
investigating connections.

3.3 Population

The population was included of 80 people in Harare. These people were selected depending
on the type of business that is Retail shops and small scale producers with identification
numbers

Sample and Sampling procedure

Mcphail (2001) defines sampling as a process of selecting a few (a sample) from a bigger
group to become the basis for estimating or predicting a fact, situation or outcome regarding a
bigger group. As Saunders et al (1997) put it, whatever one’s research questions or objectives
there will arise a need to collect data to answer the questions or objectives but it is often
impractical for a researcher to survey the entire population hence the need for samples.
Wegner, (1993) and Ferber (1974) seem to agree when they define a sample as that part of a
population taken into consideration under statistical inquiry. The sample size in this study are
twenty SMEs. In support Adegbite Tajudeen Adejare (2014) also used a sample size of 113
people which is about twenty companies thus it is a reasonable sample size that might
produce accurate results.one individual from each department will be targeted, the
departments include finance, human resources, marketing and production because it will help
clearly identify how and why each department should value recordkeeping. According to
B.Muchira (2012) percent or more of any population is appropriate representation of the
population and for generalization of research findings.

Sampling method:
Sample done used the stratified random sampling to cater for the alluded diversity in the
nature of activities. The research had a sample size of twenty SMEs. The businesses were
classified according to activity, thus manufacturing, processing, retail and service. In the
stratas the subjects were picked randomly to come up with the sample size. Zhou L (2010),
states that a stratified random sample is used when one knows in advance that the population
in question contains a number of overlapping subgroups. In the study, the mentioned
subgroups had nothing in common and hence could be viewed as not overlapping done
utilized the stratified arbitrary inspecting to provide food for the suggested assorted variety in
the idea of exercises. The research had an example size of twenty SMEs. The organizations
were ordered by movement, in this way fabricating, preparing, retail and administration. In
the stratas the subjects were lifted haphazardly to concoct the example estimate. Zhou L
(2010), states that a stratified irregular example is utilized when one knows ahead of time that
the populace being referred to contains various covering subgroups. In the examination, the
said subgroups had nothing in like manner and thus could be seen as not covering.

3.4 Research Instruments

Tafa Mosisa (2011) asserts that a research instrument is a relevant tool used in a research to
gather information. For this research data was collected using a questionnaire and record
analysis. The questionnaire was administered to the SMEs themselves to ascertain the nature
and extent of record keeping. These instruments are further described below.

Questionnaires
These are structured questions on paper where the respondent is expected to fill in short and
precise answers with little to no space to deviate from the subject. Williams. A. J. (2010)
alludes to the questionnaires as a set of framework consisting of a set of questions and scales
designed to generate primary data. This is the best information accumulation apparatus in
study explore since it can gather information about state of mind, behavior and characteristics
required in this research. The questions were composed in a way that was straightforward
while empowering germane issues to be caught. J. K. Chelimo & I. Ole Sopia (2014)
characterizes a poll as an instrument contained a progression of inquiries that are filled in by
the reacted himself. Both open finished and shut inquiries were utilized as a part of request to
look after effortlessness, gather however much data as could reasonably be expected, yet in
the meantime keeping up control over the procedure of data gathering.

3.5 Data Analysis Procedure

Data from questionnaires will be quantitatively analyzed after processing it. Frequencies were
presented in various graphical and tabular forms after aggregation and coding of data Using
MS Excel. Frequencies will be presented in various graphical and tabular forms after
aggregation and coding of data. Comments on the trends shown by the tables, graphs and
diagrams will also be made.

Presentation
(i) Tabulations- allow arranging data in a tabular format. Basic tables will be used to
classify or group respondents into similar classes or opinions.
(ii) Graphs- used to articulate depiction of tabulated data such will make comparisons
easier. Graphs to be used include pie charts, and bar graphs
(iii) Percentages Calculation- This is the proportion of the respondents one hundred makes
it easier to compare and interpret.
Qualitative- as conclusions to graphical presentation there are going to be qualitative
conclusions noting the most prominent characteristics

Validity and reliability of research instruments

Sarstedt J. (2011) states that validity is the characteristic used to describe research which
measures what it claims to measure. To ensure validity of the instruments, the researcher will
worked in close liaison with the supervisor. This ensured that the literature gathered was
relevant to the data that was collected.

Reliability is the characteristic of research methodology which allows it to be repeated again

and again by the same results. Poor questionnaires or samples which are not representative of
the population are two factors which make it unlikely that repetition of that same project will
produce same results. To ensure reliability of the instruments the researcher referred to
authorities on how to best design questionnaires.

3.6 Ethical considerations

1. The student will seek permission from university and the SMEs before carrying the
research.
2. The participants will sign a Confidentiality form
3. Only assess relevant components
4. Student will respect participant’s privacy
5. There will be Voluntary participation

Research plan
Completion of chapter
1. Final submission will be on the 10th of November
2. Final submission will be on the 1 December
3. Final submission will be on the 4th of January
4. Final submission will be on the 9th of February
5. Final submission will be on the 9th of March
Research Budget
Transport costs for research- $40
Printing cost -$4
Wifi cost -$20
Food -$20
References

1. Adegbite Tajudeen Adejare (2014) International Journal of Academic Research in

Business and Social Sciences.
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the Survival and Growth of Small Scale Enterprises in Ijumu Local Government Area
of Kogi State. Global Journal of Management and Business Research Volume.
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survival strategy for employment generation in Nigeria. Journal of Sustainable
Development.
4. B. W. Muchira (2012) record keeping and growth of micro and small enterprises, a
case study of thika municipality in kenya.
5. Eric E. O. Gabriel D. (2012), Challenges of Book Keeping on Small and Medium
Scale Enterprises (SMEs) in Kwaebibirem District:The Case of Appex Global
(Ghana) Limited. International Journal of Business and Management Cases.
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Medium Business Enterprises in Kabarnet Town, Baringo County, Kenya.
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investigative study of record keeping for performance measurement (A case study of
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Tax Compliance in Zimbabwe
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Chartered Secretary