INFLUENCE OF FINANCIAL LITERACY ON GROWTH OF START-UP BUSINESSES IN MOMBASA COUNTY

Abstract

The general objective of this study was to find out the influence of financial literacy on growth of start-up businesses in Mombasa County. The specific objectives were financial planning literacy, debt management literacy, financial reporting literacy, cash management literacy and their influence on growth of starts-up businesses in Mombasa County. The study employed mixed research design. The target population was 219 start-up businesses in Mombasa County from various business activities or industries. The sample size was 142. A pilot study was carried out to refine the instrument. Secondary data was collected from both published and unpublished records. Data screening was done to identify any missing data and it was further tested for reliability. Reliability was tested using Cronbach’s Alpha. Inferential statistics such as Pearson’s correlation and multiple regression analysis was used for further analysis. The quality and consistency of the survey was further assessed using Cronbach's alpha. Data analysis was performed on a computer using Statistical Package for Social Science (SPSS Version 23) for Windows. The results findings showed that there is strong relationship and positive significant level between growth of start-ups business and independent variables financial planning, debt management, financial reporting and cash management. The overall model was significant and that financial planning, debt management, financial reporting and cash management affects growth of start-up business in Mombasa County. The study concluded that majority of the respondents agreed that financial planning, financial reporting, debt management and cash management have huge influence on growth of starts-up SMES business.  The study also concluded that most of the results showed a high selection for agree and strongly agree as presented by likert scale. The study further recommended financial institutions such as MFIs to educate start-up SMEs in informal sector the basic financial concepts in order to boost their growth and enable them to expand their business. Financial institutions can play a very important role in financial literacy due their frequent interactions with start-up SMEs in financial matters. The study recommended that awareness be created to the start-up SMEs on the importance of participating in financial literacy training program to quip the staff with financial literacy skills. Key Words: Financial Planning Literacy, Debt Management Literacy, Financial Reporting Literacy, Cash Management Literacy CITATION: Nyale, A., & Omar, N. (2020). Influence of financial literacy on growth of start-up businesses in Mombasa County. The Strategic Journal of Business & Change Management , 7(1), 810 – 826.