Global Journal of Management and Business Research, A: Administration and Management, Volume 22 Issue 8

Table 1: Characteristics of the participant SMEs Characteristics of firms 1 2 3 4 5 6 7 8 9 10 Number of employees 40 120 20 26 21 83 16 130 48 15 Years of existence 12 55 20 13 43 13 2 14 53 7 Products manufactured Industrial ovens Corrugat ed boxes Rock drill, blasting and automotiv e parts Steel component s Hand tools Aluminium and fibre technology heat shields Manganes e metal Rubber Exhaust systems and accessorie s Steel product s Interval of financial performance measurement Weekly and yearly Daily and yearly Monthly and every 3 months Monthly Monthly Monthly Weekly Monthly Monthly and weekly update Six months Current financial performance is satisfying Yes Yes No No Yes Yes Difficult to say To be improve d To be improved Yes Importance of measuring financial performance Very important Very important Very important Essential Very important Very important Very Very No 1 priority Very Use of external or internal financial officer Both Both Both both Both both Internal Internal Internal Internal Person interviewed Financial controller Financial controller Owner Co-owner Director: Financial and administr ation Financial controller Managing Director Financial director Project Manager Owner From Table 1, it may be observed that of the 10 SMEs studied, according to their sizes, 7 were small businesses and 3 were medium businesses. Four of the participant SMEs had been operating for over 10 years, one for 20 years, one for over 40 years, two for over 50 years, one for 7 years, and one for 2 years. The fact that these companies had been in business for such a long time means that the information obtained from them can be accepted as meaningful, since the age of the companies could be seen to indicate that they were doing fairly well financially, and could suggest that information gleaned would therefore be helpful to the research objectives. A large majority of the participant businesses reported that they measured their financial performance on a monthly basis on their own, and then discussed the issue with auditors yearly. Two companies reported that measurement was done weekly, one reported that measurement was done daily, and one reported six monthly measurements. The majority of participants reported that they had an internal financial officer and had auditors come in once a year. However, the three medium companies reported that they had auditors in monthly. Half of the participants indicated that their current financial performance was satisfying for the following reasons: • The business was still profitable, with room for improvement. • Re-facility margins were improved. • One of the interviewees explained that the auditors’ report was considered an indicator of the business’s financial performance, but that it was discussed with top management only. According to the financial controller (interviewee) this was satisfactory, since the company took orders only after performing calculations and ensuring that a particular order would result in an acceptable profit for the business. This strategy had always maintained their finances at a very good level. • Another owner reported growth of approximately 50% over the previous 18 months, with a net performance of about 15% before tax. • Four participants indicated that their financial performance was unsatisfactory for the following reasons: • Two participants said they believed that there was always room for improvement. • The severe drop in the economy. One interviewee reported that the business experienced recession during 2009 and 2010 and that because of lower turnover and increased costs, in order to survive in the economy, it had been forced to lay off employees. Six of the interviewees were financial controllers or financial directors, three were owners or co-owners and one was the person in charge of the financial performance monitoring. b) Financial performance measurement Eight of the ten participants indicated that they used financial ratios (they used software packages such as PASTEL and PRO ACC 5). The remaining two stated Financial Performance Measurement of Manufacturing Small and Medium Enterprises in Pretoria, South Africa: A Multiple Exploratory Case Study 37 Global Journal of Management and Business Research Volume XXII Issue VIII Version I Year 2022 ( ) A © 2022 Global Journals