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THE INSTITUTE OF FINANCE MANAGEMENT

FACULTY OF ACCOUNTING, BANKING AND FINANCE

BACHELOR OF ACCOUNTANCY

YEAR TWO

RESEARCH PROPOSAL

TOPIC: FACTORS AFFECTING THE GROWTH OF SMALL


ENTERPRISES:

THE CASE OF TAILORING AND DRESSMAKING ENTERPRISES IN


DAR-ES-SALAAM, TANZANIA

NAME: MGONGOLWA ELIZABETH REG.NO: IMC/BAC/14/66758


FACTORS AFFECTING THE GROWTH OF SMALL ENTERPRISES: THE
CASE OF TAILORING AND DRESSMAKING ENTERPRISES IN DAR-ES-
SALAAM, TANZANIA

1.1 Background to the study

The study is set to determine and analyze the factors that affect the growth of tailoring and
dressmaking enterprises in Dar-es-salaam city in Tanzania. The study revealed that most of
the tailoring and dressmaking enterprises were in disengagement stage either not growing or
having a slight growth. In adequacy of availability of finances, poor business management
skills, poor marketing and entrepreneurial attribute of the owner managers were found to be
statistically significant in determining growth of these enterprises. Through the study It was
revealed that the government and other policy makers has a little contribution in helping
these enterprises to grow, so the study recommends that the government of Tanzania, other
local business support organizations and foreign business stakeholders should join together
to develop training programs aiming at providing skills which are lacking to owners-
managers of these enterprises such as management skills and also financial assistance which
could be given through small business associations or joint-groups such as SIDO, Micro-
Finance groups which have the common cause. The growth of small businesses is a strategy
for Economic contribution to Gross Domestic Product (GDP) and Economic growth. As
such they are no longer viewed as ``stepping stones to real business but a means of
industrial and Economic growth and as well as tools of poverty Eradication (ILO, 1986)
1.2 Statement of the problem

In Tanzania the industry sector is characterized and dominated by large and medium sized
agriculture and food processing businesses while cloth making industry is still small and
slow growing such as tailoring and dressmaking but employs many people although in its
small scale level. According to Mc cormick and Pederson (1996), Orser (2000) point out
that most tailoring and dressmaking firms being small and stay that way without any growth
taking place, what factors hinder the growth of these enterprises? This study aims at
answering this question. The study hypothesizes that the factors at play include availability
of finance, business management, and level of marketing and character of the entrepreneur.
1.3 Research objectives

1.3.1 General objective

The study intends to determine the factors that affect growth of tailoring and dressmaking
enterprises in Dar-es-salaam city in Tanzania.

1.4.2 Specific objectives

This study has the following specific objectives:-

1) To determine the characteristics of the entrepreneurs


2) To determine Enterprise life-cycle
3) To measure the relationship between formal education and training to influence in
business growth

1.5 Research Questions

The study will be guided by the following research questions;

1) How do small business owners perceive the term entrepreneur?

2) What are the characteristics of entrepreneurs?

3) What factors hinder the growth of these enterprises?

1.6 The significance of the study

This study will be significant in a number of ways as follows;


SIDO(small industries development organization)-This study will help SIDO to find
business strategies to help small businesses such tailoring and dressmaking to grow due
to the information provided on this research in terms of finance and marketing strategies
and even administration skills

TRA(Tanzania revenue authority)-This study will help Tanzania regulatory authority to


find methods of making these small business able to generate high revenues so as to
make them formal to contribute to GDP of Tanzania in terms of Tax.

Ministry of industry and trade- This study will help this ministry in formulation of
laws and policies to regulate the activities of these organizations so as allow smooth
operations of these businesses which will help them grow fast to support also steady
Economic growth.

Small entrepreneurs- small businesses owners managers will benefit from this study
by getting Information about the factors that hinders their businesses growth and know
the nature of operation of their tailoring and dressmaking businesses.

Future researchers- The findings of this study have helped to identify the research gaps
in this topic, and also contribute to the existing literature and provided a point of
departure for other researchers.

1.7 Limitations of the stud

The study was limited to the following;


a) Limited number of studies articles done in this field

b) Time limitation

- The problem of limited number of studies done in this field is solved by making this
study as sufficiently as possible with Information needed to fill the Information gap,
While the problem of Time limitation will be solved by focusing the study on few people
and one area region in Tanzania which is Dar-es-salaam.

LITERATURE REVIEW

2.0 Introduction

In this chapter various literatures related to factors affecting the Growth of small
businesses is reviewed within the framework of the research objectives and the questions
guiding the study.

2.1 Management

A successful manager is one who understands his business environment, both internal
and external. He or she does not only understand, but is prepared, equipped and ready to
handle any turbulence that emanates from the environment. These include competitors,
suppliers, customers, government agencies, labor organizations, and financial institutions
etc. (Hisrich et al, 2010, Certo and Peter, 1993). What makes management of small
enterprises difficult is the enormity of the range of issues confronting the owner-
managers, which they have to deal with personally. In his multi functional role as a
manager, he/she is in charge of planning and implementation, production, human
resource (recruiting and firing of employees), marketing and finances (Stokes, 1995,
Stokes and Wilson, 2010). All these demands his attention simultaneously, and in most
cases he/she ends up tackling the most immediate first, which may mean overlooking a
less obvious but more significant problem which has a critical impact.
Even with all these responsibilities and challenges, the majority of the owner-managers of
small businesses were not trained or poorly trained or unskilled in the various disciplines.
According to the training needs assessment on small businesses done by SIDO, the
owner-manager were found to not only lack financial management skills but also
methods of identifying staff with appropriate skills and effective decision making.
Bullock et al (2004) found that informal management structure and the owner
managers personal control of strategic and operating decisions hinder Tailoring and
dressmaking output growth significantly. He further found that small business that
adopted a less formal structure and those that were more innovative depicted higher rate
of growth and more especially where the entrepreneur of such firms had undertaken
formal training. Orser (2000) further found a positive correlation existed between
performance and high level of management skills.

2.2 Finances

All business ventures regardless of size require finances from inception and throughout
their life cycles. The amount invested will influence greatly the size of the venture, which
in turn determines the early survival of an enterprise if other factors are held constant.
The entrepreneur will require seed capital to start the business, to operate and manage the
business enterprise. Orser (2000) noted that unavailability or lack of information about
alternative sources of finances and inability of Small enterprises to evaluate financing
option were some of the major problems facing the Small enterprises. Mambula (2002)
singled out lack of access to finances as the main bottleneck facing small enterprises
(tailoring and dressmaking business) growth which was similarly echoed by Florida et al,
(1996) and Livard Pang (2006) who found that start-up capital is a barrier to entry in
most entrepreneurial activities and that lack of capital was cited by 80% of all
respondents as the greatest start-up problem.
2.3 Market and Marketing

Demand for a product establishes a market for it. If the demand is high, the market
becomes vibrant. The converse also applies. A decline in demand may result to shrinking
market. Demand for different products will affect other products depending on the nature
of their relationship whether complimentary or substitute. If they are complimentary, then
an increase in demand for one product will cause an increase demand for the other. If
they are substitutes, an increase in demand for one causes a decline in the other. Tailoring
business faces stiff competition from imported ready - made garments and second hand
(mitumba) clothes which are substitutes to it (Kamau and Munandi, 2009). A market like
that of tailoring and dressmaking enterprises that is highly competitive besides being
relatively small requires adequate marketing strategies for the firms to survive or grow.
These ideas were echoed by Stauart H. Britt (n.d) who said: Doing business without
advertising (read marketing) is like winking at a girl in the dark, You know what you are
doing but nobody else does Today's marketing has shifted from hunting to
gardening (Kotler, 2003 and Morgan 1991). In other words the purpose of marketing is
not to find the right customers for your product but the right product for your customers
making innovation and creativity a key component in the success of tailoring industry.
The research made by SIDO has found out that majority tailoring and dressmaking
enterprises had no or little understanding of marketing principals and its importance.

2.4 Characteristics of the Entrepreneur

Entrepreneurs enter into business with different motives. Some will enter because they
have identified a market opportunity and there is need to utilize their skills, others to
generate income, while others will enter into business because of the desire for
independence to be one's own boss (McCormick and Pedersen, 1996; Dutta, 2009). Other
factors that may attract or pull an entrepreneur into business are financial incentives, a
hobby, previous work experience and family culture acting as a role model (DATI, 2000).
On the other hand Shapero postulates that factors such as lack of employment,
retrenchment, retirement or death of a breadwinner are likely to push one into business.
The characteristics of the entrepreneur are widely accepted as vital ingredient that
influences growth. Research indicates that particular characteristics of the entrepreneur
that are associated with growth of the enterprise include motivation, previous
management experience and demographics of the entrepreneur (age, education). If the
entrepreneurs reasons for starting the business originated in pull or opportunity driven
motivates rather that push or necessity driven motivates, the resulting enterprise is more
likely to grow. Research in developed countries has shown that an entrepreneurs level of
education may be associated with the nature of business characteristics, such as growth
and performance. This is because higher levels of education are associated with greater
verbal communication and comprehension skills, all of which are important in business
decision making and management (McCormick and Pedersen, 1996). Previous
experience from an entrepreneurial activity or occupation is considered to be an incentive
for one to become a successful entrepreneur. McCormick and Pedersen (1996) found that
entrepreneurs with no previous occupation began firms which were relatively small and
remained in the smallest category. On the other hand it was found that the largest
enterprises were almost entirely set up by entrepreneurs with previous experiences either
in manufacturing or in the retail trade.

3.0 METHODOLOGY
Introduction
This chapter describes the methodology used in conducting the study. It describes the
research design, the area and population of the study, sample, sampling techniques and
sample size. It also provides details on data collection methods and research Instruments.
According to Kothari (2004)
Research methodology refers to the systematic way applied to solve a research problem.

3.1 Research Design

A research design is the arrangement of conditions for the collection and analysis of data
manner that aims to connect relevance to the research purpose with economy in
procedure Kothari (2004).A research design can be qualitative or quantitative. This study
employed a cross sectional descriptive approach.

3.2 Research site

This study will take place in Dar-es-salaam region because it is a commercial spot for
both local and foreign business investors. In Dar-es-salaam it is to conduct my research
because it has sufficient population which It can be used to find enough sample for my
study casework, But also it can help me to avoid language barriers because almost 80%
of the population speak Kiswahili so it will help me to have easy communication and
lastly I will be able to travel in almost every area I want due to good supply of roads and
a sufficient transport system.

3.3 The study population

Kombo and Tromp (2006) define population as any group of individuals who have one
or more characteristics in common that are of interest to the researcher. A population
comprises any set of persons or objects that possess at least one common characteristic
and it can be very large or small, depending upon the size of the group of persons or
objects from which the researcher made inferences. In this study the focused population
will comprise a total of all 50 small scale enterprises owners of tailoring and dressmaking
enterprises in dar-es-salaam and it is out of this large population that the sample for the
study will be drawn, using various sampling techniques.

3.4 Sampling Techniques and Sample Size

3.4.1 Sampling Techniques

Sampling is a process of selecting a number of individuals or objects from a population


such that the selected group contains elements representative of the characteristics found
in the entire group kombo and tromp (2006). The sampling technique I will use is a
simple random sampling method for selected sample, in this method all respondents will
be chosen entirely by chance and each member of the population will have an equal
chance of being included in the sample. The chosen respondents will be requested to fill
the questionnaire submitted to them which are self-administered questionnaire with
themselves willingly to participate.

3.4.2 Sample Size

A sample is a small proportion of a population selected for observation and analysis. A


small sample size characterizes qualitative studies and it is sufficient to provide
maximum insight and understanding of the problem under study (Saunders et al, 2007).
The study will comprise of sample of 30 respondents from a population of 50 small scale
tailoring and dressmaking owners.

3.5 Data collection Methods

Due to unpredictability of human behaviors, I will employ to methods of data collect


which are questionnaires and direct observation in order to attain reliability and accuracy
of my research work.

3.6 Data Analysis and presentation


Data analysis will be performed with the purpose of summarizing the collected data and
organizing them in a way that the respondents answer their related questions Kothari
(2004).I will analyze my both quantitative and qualitative data using Microsoft Excel.

3.7 Ethical consideration

Before conducting the main survey, I will introduce myself and provide sufficient
information for the purpose of the research study and assure the participants for their
confidentiality. My research will be for academic purposes only. My introduction I will
carry a letter of recognition from my university as an assurance I adhere to informed
consent principle.

A questionnaire guide for data collection


THE INSTITUTE OF FINANCE MANAGEMENT
P O Box 3918
Tel: + 255-22-2112931/4
15 June 2015

Dear sir/madam
MUSSA, IFM student of accountancy department undertaking a research project to
determine factors affecting the growth of small business of tailoring and dressmaking. We
kindly request that you complete the following short questionnaire regarding your
experience, and knowledge towards about the subject above. It should take no longer than
10minutes of your time. Although your response is of the utmost importance to us, your
participation in this survey is entirely voluntary.
Please do not enter your name or contact details on the questionnaire. It remains
anonymous. Information provided by you remains confidential and will be reported in
summary format only.
Kindly return the completed questionnaire to us in the postage paid return envelope on or
before 01 August 2015.
Summary results of this research will be published in the media and will be available on
our website: www.ifm.ac.tz in august 2015.
Should you have any queries or comments regarding this survey, you are welcome to
contact me telephonically at 0768859819.
Yours faithfully
IFM student- Accountancy department
PLEASE ANSWER THE FOLLOWING QUESTIONS BY CROSSING (_) THE
RELEVANT BLOCK OR WRITING DOWN YOUR ANSWER IN THE SPACE
PROVIDED.

Example of how to complete this questionnaire:


Your gender
If you are female:
A. Male ( )
B. Female ( x )

Section Background information


This section of the questionnaire refers to background or biographical information.
Although we are aware of the sensitivity of the questions in this section, the information
will allow us to compare groups of respondents. Once again, we assure you that your
response will remain anonymous. Your co-operation is appreciated.

1. Gender
A. Male ( )
B. Female ( )

2. Age
A. 18yrs-25yrs ( )
B. 26yrs-35yrs ( )
C. 36yrs-above ( )

3. Ethnicity
A. Black ( )
B. White ( )
C. Colored ( )

4. How would you describe your economic status?


A. Poor ( )
B. Below average ( )
C. Average ( )
D. Above average ( )

5. Your highest educational qualification?


A. Standard seven ( )
B. Ordinary level ( )
C. Advanced level ( )
D. Certificate ( )
E. Diploma ( )
F. Bachelor degree ( )
G. Post- Graduate Degree(s) ( )

6. How would you describe the area in which you are residing?
A. Urban ( )
B. Rural ( )

Section B
This section of the questionnaire explores your experience and knowledge, if any, with
regard to the topic of factors affecting small business growth.

7. What is the nature of your business?


A. Single owned ( )
B. Partnership ( )
8. Net Annual Revenue from Business?
A. 10,000 50,000 ( )
B. 51,000 100,000 ( )
C. 150,000-250,000 ( )
D. 251,000-above ( )

9. What are your sources of fund?


A. Personal savings ( )
B. Loan from micro credit institution ( )
C. Loan from bank ( )
D. Loan from family and friends ( )

Thank you for your co-operation in completing this questionnaire. Kindly return the
questionnaire as specified in the cover

REFERENCES:-
Kothari, C.R (2004).Research methodology: methods and techniques, rev.second edition.
New Delhi: New Age International publishers.

Kombo, Donald k. and Tromp, Delno L.A. (2006) proposal and thesis writing: an
introduction.Nairobi: Pauline publication.

Saunders, et al. (2000).Research Methods for Business students, London: pitman


publishing.

Stokes, D. (1995). Small Business Management: An Active Learning approach. (2nd


Ed). London: AP Publication Ltd.

Papadiki, E and Chami, B. (2002). Growth Determinants of Micro-Businesses in Canada.


Small Business Policy Branch Industry Canada. [Online] Available:
Strategies.ic.gc.ca/epic/internet/insbrp,ppe.nsf/vwapj/growth_determinants.pdf/
$FILE/growth_determinants.pdf.

Orser, B. J., Hogarth-Scott, S. and Riding, A.L., (2000). Performance, firms size and
Management problem solving (x). Journal of small Business Management 38.4 (2000):
42. [Online] Available: http://www.questia.com/pm.qst?a-o&d=5001102764>.n.