ABSTRACT

Small and Medium Enterprises (SMEs) play a vital role in the economic development of any country. In Bamenda, Cameroon, SMEs are facing several challenges that hinder their growth and sustainability. This study aims to identify the factors affecting the growth of SMEs in Bamenda, with a focus on financial strength, managerial skills, and leadership skills. The research methodology employed in this study is a quantitative approach using a survey questionnaire. The sample size consists of 30 SMEs.

The data collected were analyzed using descriptive statistics and regression analysis. The findings reveal that financial strength is a significant factor affecting the growth of SMEs in Bamenda. Access to finance is limited, and most SMEs rely on personal savings or loans from family and friends. This limits their ability to expand their businesses or invest in new opportunities. Managerial skills also play a crucial role in the growth of SMEs in Bamenda.

Most SME owners lack formal training or education in business management, which affects their ability to make informed decisions and manage resources effectively. Leadership skills are also essential for the growth of SMEs. Effective leadership helps to motivate employees, build strong relationships with customers and suppliers, and create a positive work environment.

In conclusion, this study highlights the importance of financial strength, managerial skills, and leadership skills for the growth of SMEs in Bamenda. Policymakers should focus on providing access to finance for SMEs while also promoting entrepreneurship education and training programs to improve managerial and leadership skills among SME owners.

Keywords: Financial Strength, Managerial Skills, leadership styles, growth of SMEs in Bamenda.

CHAPTER ONE

GENERAL INTRODUCTION

• Background of the Study

Small scale business can be defined as one which is independently owned and operated, and not dominant in its field of operation.4 It can also be defined in terms of sales volume and by the number of employees in the business. In Cameroon, these businesses are very small employing up to a maximum of 50 people, who in most cases are members of the same family. They have working capital of less than one million and revenue value of the same range throughout each year of operation. The major activities of small scale businesses in Cameroon are farming, buying produce, market vending, catering and confectionery, shop keeping, second hand clothing, health/herbal services, secretarial services, telephone services, handicraft, transport, and many others. The majority of these operate in shared premises and are set up before they get licenses. Ownership and management is on family basis and as such has a small scale operation. It is labour intensive and skills are acquired on the job, often using adapted technology. According to John Keough, more than 50 percent of them fight an uphill battle from the start and fail in the first five years. This is a common scenario for Cameroonian small businesses, as most of them ‘never celebrate their first anniversary.’

Entrepreneurship, SME and Startup culture are the most important drivers of economic wealth and engine that drives economic growth; they also address the issues and challenges mentioned by the United Nations Sustainable Development Goals (SDG) (Bosma et al., 2020). The startup and SME businesses pave the way for innovative products and increase employment opportunities. According to GEM’2020 report, startup businesses are the promoting factor that finds the opportunity and converts it’s into a business idea (Bosma et al., 2020), entrepreneurship is a multifaceted phenomenon that drives a country’s economy (Jena, 2020), entrepreneurship is an activity that will become a solution to help solve poverty in both developed and developing economies (Morris, Santos and Neumeyer, 2020). In this innovative era, startup businesses have attracted coverage from both academics and the press, in both developing economies (Brazil, Russia, India, and China), it is predicted that by 2050 these countries perform efficiently than developed economies i.e. G7 and other countries in the EU: (Canada, France, Germany, Italy, Japan, UK, United States, Japan, Germany, and Ireland) (Omri, 2020). Nowadays entrepreneurship is also being promoted to university students for the development of respective countries like India, China, and the UK (Jena, 2020; Liu et al., 2020). 

SME, and startup business activity have become a culture among the business environment (Anwar and Saleem, 2019). Startup business activities increased by 16.8% in 2019 in developed economies (Anwar and Saleem, 2019), Muriithi (2017) supports that 80% of the source of income among the world population is through startup and SME organizations, perhaps, 85% of the jobs are created through this entrepreneurial activity among Asian economies (Pavlovic, Coelho, and Olukuru, 2019; Doran, McCarthy, and O’Connor, 2018). Whilst European countries are stable markets to start and run business (Lanigan, 2020) however business culture varies among economies i.e. the Southeast European region has lesser growth than the rest of the European region (Ivanović-Djukić, Lepojević, Stefanović, Stel, and Petrović, 2018). In EU Ireland is being developed and a stable market for new businesses and recorded a solid increase in entrepreneurship and new business activity. In Ireland, the growth of SME and start-up are increased by 58.5% and employment opportunity has increased by 16.4% in 2019 (Bosma et al., 2020; European Commission, 2019; Lawless, McCann, and Calder, 2014).

Having said that, still, business failure occurs especially with SME and SU organization, these organizations exit from the market due to lack of financial management. The purpose of this study was to investigate the factors affecting small business enterprise failure. 

• Statement of the Problem

Despite the positive face of the new business and entrepreneurship activities in both developing and developed economies, about 75% of startups face failure within a few years of launch in most parts of the country. In countries like India, 90% of the startups fail within 2 years of their launch (Kalyanasundaram, 2018); accordingly, there is risk and failure of business happens in Ireland (Central Bank of Ireland, 2019; ), this research focuses on the aspects of new business failure and learning process involved in, Cameroon not yet explored. According to Bosma et al. (2020), Cameroon is considered a developing economy but research based on entrepreneurship, startup business failure has not been explored to the extent that it has been researched in other countries. There is a research gap in investing in the business challenges and failure factors involved in the economy.

According to Gupta et al. (2020), the common challenges faced in both developing and developed economies for new ventures, startups and SMEs are financial stability, lack of business and market knowledge and retaining human capital. Until 2003, the UK’s SME and startup organizations were not promoted in large numbers and it was lagging compared to the United States regarding developing and encouraging SMEs and startup businesses (Robertson et al., 2003). In the Chinese economy, startups and SMEs have different characteristics in terms of cultural norms, but the innovative secret among the start-ups and risk nature remains the same (Hain, Johan, and Wang, 2016). According to Bosma et al. (2020), entrepreneurs and business people in developing countries like BRIC find good opportunities, however, external factors and fear of failure can stop these people from starting a business (Bosmo et al., 2020). Even though Cameroon is a developing economy and have good opportunity to start a business, still, there is a fear of failure among business people and entrepreneur, eventually, business failure occurs in Cameroon. Besides, there is no clear explanation or definition for the business failure it depends on many internal and external factors and consequences that a firm may face during the development of a product or service, this is happening in the economy as well (Ropega, 2011: Kelpie, 2018). Therefore, this research will be investigating the common factors that affect SMEs and start-up businesses in Cameroon, i.e. the factors across any industry highlighted in the literature or reports such as financial stability, knowledge in business and the market, human capital to retain the business and characteristic traits of entrepreneurs and business owners. The literature is examined to investigate the common challenges in businesses to better understand which challenges lead to failure and what helps to prevent these risks in the business. A business failure is not a sudden event but a dynamic process; this research seeks to understand the origin of the factors affecting business failure and to help reduce future SME collapse and crisis. Specifically, the researcher will be investigating the factors affecting Start-Up and SME business and the learning outcomes from the entrepreneurs and business owners which help to reduce the risk and exit from the business.