Assessment of the performance of retail SMEs in Uganda. A case study of Kampala Central Division

Abstract

This research aimed at assessing the performance of retail SMEs in Uganda; the study was premised on three objectives; to assess the current state of SME performance, to examine the factors affecting retail SME performance, and to determine strategies for improving performance of retail SMEs. The study employed a cross-sectional survey research design and using a mixed method approach involving qualitative and quantitative data collected from 169 respondents out of a sample of 200 employees using a survey questionnaire. The study revealed that that retail SMEs used several measures of performance such as achievement of organizational goals, profitability, returns on equity, and returns on assets, market share, and cashflows and cash conversion cycles. However, it was determined that SMEs are performing poorly on nearly all the measures mentioned above. The study examined the factors affecting SMEs performance around the Kampala Central Division area. Additionally, it was revealed that that SMEs face a number of challenges, such as a lack of access to traditional sources of financing, such as bank loans, or difficulty in meeting the requirements or collateral needed to secure financing, information asymmetry, lack of professionalism, inadequacy of long-term financing, stiff competition, globalization, strict regulation and a rough macroeconomic environment. Finally, the study found that businesses could employ strategies such as partnerships, innovation, market orientation, supply chain management, reduced lead times, employee retraining, and ecommerce adoption. The study therefore recommended that should adopt e-commerce, embrace innovation, and undertake financial training and professional development.