Factors affecting development of business plans by small and medium enterprises in Kenya: a survey of commercial rabbit farmers in Thika District

Abstract

The contribution of small and medium enterprises to global economy in general and the Kenyan economy in particular has been recognized and well documented. Given their importance, it is important that these enterprises be planned for so that possible challenges are anticipated, possible solutions are put in place and their overall contribution of these enterprises to the economy is increased. There is documented evidence that business planning enhances performance of an enterprise. There is also documented evidence that most enterprises, especially those classified as small and medium do not engage in business planning. They therefore, as individual businesses fail to reap the benefits of planning while the economy as a whole also suffers high mortality rates of start-ups, which are crucial for employment creation. In view of the above, this study aimed at assessing the factors that affect development of business plans by small and medium enterprises using a survey of rabbit farmers in Thika District. The specific objectives of this study were to look into the extent to which entrepreneurship skills, stakeholders’ requirements and entrepreneurs’ attitude impact development of business plans. It was anticipated that those who possess some business skills are in a better position to develop business plans; that those who have a close formal relationship with major stakeholders of their businesses are more likely to develop business plans; and that those with a positive attitude towards planning are more likely to develop business plans. This study adopted descriptive research design. The target population was all small and medium enterprises engaged in commercial rabbit farming. A sample of respondents was derived using a combination of cluster and simple random sampling techniques. A semi structured questionnaire was used as the main data collection tool. All the entrepreneurs interviewed had an idea of what a business plan is. The study found out that an overwhelming majority (90%) of the respondents were of the opinion that entrepreneurship skills affect development of business plans by SMEs. A majority (85%) indicated that business plans are influenced by stakeholders and their requirements. The major stakeholders that had a high impact on development of business plans by SMEs were found to be customers (90%), suppliers (80%), financiers (40%) and the government (40%). An outright majority (97%) confirmed that the attitude of the entrepreneur affects development of plans for his business. The study recommends among other things, a more active role of the government, through the various relevant ministries, in assisting SME entrepreneurs in developing business plans.