The role of financial management training in developing skills and financial self-efficacy

• Main Author: Corrinna L. Kirsten
• Format: Article
• Language: English
• Published: AOSIS 2018-10-01
• Series: The Southern African Journal of Entrepreneurship and Small Business Management
• Subjects: SMMEs; financial self-efficacy; financial management; training; skills development
• Online Access: https://sajesbm.co.za/index.php/sajesbm/article/view/211

Background: Financial management is an essential management function for any small business. Short-term financial management is especially crucial for start-ups and established businesses. Owners of small businesses in South Africa often need to perform this function themselves; however, many do not possess the skills and practices required to perform this function effectively. Financial self-efficacy acts as an important motivating factor in managing the finances of a business. Focused training is important in developing financial management skills, but little research has been conducted to determine whether this type of training improves financial management skills and financial self-efficacy. Aim: To determine whether a tailor-made financial management training course improves the development of short-term financial management skills and financial self-efficacy of small business owners in South Africa. Setting: This study sampled small business owners who attended a tailor-made financial management training course that focused on short-term financial management principles. Method: A quasi-experimental study using a pre-test–post-test single-group design was applied using self-administered questionnaires. Results: The results from a one-tailed paired-sample t-test show that the training course significantly improved both the development of short-term financial management skills and the financial self-efficacy of participants. Conclusion: Tailor-made financial management training courses enhance the short-term financial management skills of owners of small businesses and also improve their financial self-efficacy. By improving both their skills and self-efficacy, small business owners are likely to make better financial decisions and be more motivated to implement financial management practices.