Accounting and Management of Problems of Small-Scale Businesses

Accounting and Management of Problems of Small-Scale Businesses

Accounting and management respectively are interesting field of study that have permeated all aspects of human endeavour. This is because as a social process, it entails responsibilities for an effective planning and regulation of operations of an enterprise in fulfillment of a given purpose of task. Such responsibi9lities involves:

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  1. Judgement and decision in determining plans and progress of the business;
  2. Guidance, integration, motivation and supervision of personal comprising the enterprise and carrying out it’s operations.

Okafor and Udu (2005) in their work, said that management refers to those charges with the responsibility of taking actions that will make it possible for individuals to make their best contributions to group objectives.

Eze (2006) in his work divided management into three (3)

  • Scientific management
  • Administrative management and
  •  Bureaucratic management

This work has seen and taken administrative management as essential to its success. Accounting on  its own as stated by Igben is the process of collecting, recording presenting and analyzing or interpreting financial information for the users of financial stamens. It involves collection, recording, evaluation and communication of economic events qualified in monetary terms. Its basic roles are to facilitate control processes in management activities so as to provide mean for making intelligent business decision. Management therefore requires accounting information for the purpose of making:

  1. Plans and controlling the affairs of the organization;
  2. Choices among alternatives; and
  3. Policy decisions.

Level of work

  1. Time constraint
  2. Statistical and logistical constraints
  3. Financial limitation and
  4.  Refusal of some officers to release certain information, which they classified as top secret.


Management: Okenwa and Ugbo (2003) sees management in terms of the manager in his ability to plan, organize, direct, co-ordinate and control to achieve the business goal.

Problems: This means all the militating factors or constraints against the smooth operations of management.

       Accounting: Chukwu (2004), sees accounting as the process of recording, classified, summarizing, analyzing and interpreting financial transactions and communicating the results there of to interested users.

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Small-Scale Businesses: Means businesses owned by one or two individual(s), always family influenced to and in the day to day operations of the business usually with inadequate specialist support; and

iv.    The chief executive can know and be known by all employees throughout the business.

What is common in the definition is that they give an upper limit of employment or turnover or even investment capital above which a business would not be regarded as small-scale. The implication is that, any business employing one or more persons and or having annual turnover of investment capital raging from one naira (#1.00) upward to the stated limit fails within the definition of a small-scale business. It does not appear that there is any significant loss to the economy arising from these definitions.

What is important is whether the target group however defined is receiving the right impact of government policy designed for its benefit. A further look at these definitions reveals that emphasis is also placed on independent ownership and type of business.

Nwakoby (1988:11), is of the opinion that the definitions of small-scale business especially those given because, there is absence of appropriate records and suspicion on the part of the owner(s).


There is no generally accepted definition of management due to its abstract nature. Although it is the most integrating of all man’s activities, making it the most complex, embracing, comprehensive, subtle and interesting of all human activities.

With the applications of good management, the 3ms of management: Man, Materials and Money are integrated to bring about the much needed human satisfaction.

Management has to work with the elements: People, Ideas, Resources and Objectives (Known as PIRO) in order to attain the needed objectives and the moist important element is people. These are usually applicable in the accounting system of any organization.

Management is also involved in the inter-relationship of many people so the management system is social in nature.

However, non-human element are also important. Example, financial assets, machinery, physical equipment, technology etc, but it is the human effort and management that harnesses the non-human resource into production and supplies it with necessities of life.

Drucker also noted that management includes the total behaviour of all who participated in an affair including the accounting procedures of a business.

Koontz and O’Donnel stated that, “An efficient management and accounting structure ior systems is likely to be one that operates without waste or carelessness and makes for work satisfaction; has clear outlines of anything and proper exaction of responsibility, allows appropriate participation in problem solving, gives provision for security and status and furnishes an opportunity for personal development and competitive pay rates”.

For any accounting and management system to be meaningful and perfect, there must be some scientific approach to management and accounting problems to decision-making. What was considered necessary was target dates as well as the evaluation of performance as it relates to established goals.

       Within the accounting framework, cost accounting techniques are used as it attempts to measure the cost of producing and distributing goods and services.

Most cost accounting problems involve the determination of manufacturing cost, management controls, business operations study trends and formulation from financial cost accounting and operational records.

As a structure, we have the Board of Directors at the apex, committees, general managers, Departmental managers, production, sales, accounts and stores.

Below the managers are the supervisors, clerks, foremen and the other workers.

Within the structure, there are elements of delegation, which according to Newman does not mean a total giving away or surrendering of authority but granting of rights and approval for the delegates to act within prescribed limits and authority and responsibility.

However, as a small-scale business, the span of management at all level depends largely on the intellectual, physical ability of individual managers heading the various departments or offices.

With the accounting system, a number of book of accounts maintained include:

  • The balance sheet;
  • The trading profit and loss account;
  • Sources and application and cash flaw statements.

Besides, the operation of both accounting and management system are not without problem as noticeable in most small-scale businesses of which some selected small-scale businesses in Abakaliki are no exception, hence the management and accounting problems will be reviewed subsequently using some selected small-scale businesses in Abakaliki as a case study


The smooth and efficient operations of small-scale business in the country are bring hampered by a lot of problems. These are to be examined using some selected small-scale businesses in Abakaliki as a case study. These problems include:

  1. Activities of committees in the business: Inspite of the so many advantages associated with the use of the committee members by virtue of them not being the owners of the business may not be committed and as a result of that, action may be delayed towards achieving business goal. :decision also accounting to Koontz and O’Donnel is compromised at the least common denominator and therefore weak”.
  2. Undue regard for minority views: Many managers often live to operate by unanimous agreement. This leads to teasing or coaxing of the minorities interest when reaching a compromise. In a case where difference in opinion have arised, the minorities may insist or impose on dictating terms their views on the manager and this will result to an influence in the decision of the manager.
  3. Activities of the plural executives: When committees handle such management functions as planning and organizing etc. they are regarded as a plural executives. In most small-scale businesses, this results to conflicts or mismanagement within the business. Instead of leaving such sensitive management policies in the hands of expert managers, such plural executives out of sheer urge to show supremacy over others, monopolize such policies at the expense of the business progress. These groups become housing units to one another and the end result is a total disintegrating of the committee or self-destru8ction unless the subordinates continue to play their parts.
  4. iv.    Management muddle-up: This principle violates the rule of unity of command. This is likely to cause fraction, buck-passing of blames and complication in management, because, when a head of department is held responsible to more than one per, there is the tendency of triggering disunity of command. As a result, the directing and controlling functions of management may be muddled-up due to too much staff activity and task overlap.

habits, trail and error, authority, traditional institutions, expert opinions, personal experience, education and induction etc. Small-scale business owners who have not acquired enough knowledge about business may likely fail of he enters into it.

  1. Lack of skilled manpower: Owners of the Small-Scale business are people of average means with no specialized skills or expertise. Because of financial constraints on part time or full time basis. As a result, efficiency and productivity are low and hence cannot survive stiff competition.
  2. Lack of good accounting system: The problem of good accounting system constitutes one major problem of small-scale businesses in Nigeria. The consequences of these are very imponderable resulting to what is called “sickness in financial management”. A unit is considered sick if it has incurred losses for a year and, in the judgment of the cash in back, is likely to incur cash losses for the current year as well as the following year and/ or there is an in balance in the units of financial

structure on (when the ratio of current liability is less than 1:1 and the debt equity ratio 9total liabilities as a ratio of) is worsening].

  1. Lack of fund: Many small businesses in Nigeria are posed with the problem of funds. This is because funds for such businesses are sourced through personal savings and profit plough back. As such, the assets potentials at the disposal of these businesses are not enough to secure external bank loans. In the end, these businesses suffer some cropping effect without any potential for growth and expansion.
  2. Lack of quality accountants and poor fund management: There is also the problem of shortage of accountants and poor fund management. If the fund management is effective due to the use of qualified accountants, two aspects will emerge because of cost control. Accounting to Osisioma (1990), these aspects include: Operational and Accounting Control, Operational control will take care of cost control through personal observation and supervision of operation and limit idleness, inefficiency and other cost loopholes.


       This research work attempted to appraise the accounting and management problems of small-scale businesses with E. N. Odili Nigeria Limited, Emma Star Nigeria Limited; and Dike and sons Nigeria Limited to represent a portion of some study. This chapter is devoted therefore to summarize the major findings for improvement, conclusion reached and suggestions for further research.


  1. Proper management ands accounting system can help to make small-scale businesses more viable, efficient, effective and successful as 88% of the total population of respondents agreed on the above;
  2. Professionalism in accounting and management functions in small-scale businesses encouraged effectiveness. Here it was seen that the employment of a competent manager solved the problems of:
  • Planning
  • Organising
  • Departmentation
  • Authority, responsibility and delegation
  • Staffing
  • Directing and
  • Controlling.

And it was also seen that in keeping the financial records of the business, professionalism is also needed on the part of the accountant who is expected to carry out the accounting functions. Section 335 (1) of CAMA (1990) requires that the financial statements be prepared by businesses should comply among others with the accounting standard laid down in the statements of accounting standards issued from time to time by the Nigeria Accounting Standards Board (NASB). Therefore, professionalism of accounting and management functions have encouraged busi8ness effectively, which at the long-run will help the business acquire it’s goals which include:

(1)      The satisfaction of the needs of its customers; and

(2)      Profit maximization.

  1. proper planning have impacted positively on the utilization of resources available to small-scale businesses. In the view of ILE (2001) and based on the result of the text as shown in the previous chapter; planning have been classified into three (3) types which is as follows:

a)          Corporate plan,

b)         Strategic plan; and

c)          Tactical plan.

Tactical plan have therefore impacted positively on the utilization of available resources due to small-scale businesses.

Tactical plan as you know, is a plan that deals with the determination of the most efficient and effective use of resources that can be or are allocated for achieving any specific or given objective.

RECOMMENDATIONS        Having highlighted on the findings, it is pertinent to give some recommendations.

  1. Proper planning which should cut across every class of plan should be implemented in the small-scale business in order to:

a)          Asses the business environment

b)         Identify what line of business the firm should go into

c)          To set the business objective or goal for so many years ahead.

d)         Determine the suitable strategies to achieve those objectives, like:

  1. Profitability
  2. Return on capital employed
  3. Avoid loss
  4. Improve market position, and
  5. Improve the opportunity for increased capital.
  6. Qualified Accountants and Managers should employed; they should be given free hand in planning and existing cadres should be set for periodic training and induction courses.
  7. A good system of internal control should be introduced to facilitate the operations of the business. This will subject every member of staff to proper checks and will be intimated immediately if he or she deviates from set standards.
  8. The business is adviced to embark on commercial undertaking such as gaming and casino promotions and to discontinue the use of contractors for supply of raw materials, Sales and Promotion exercise ought to be budgeted for like advertisement slogans for their products to be popular.
  9. in as much as the federal government wants every sector of the economy to contribute to economic development, it will interest government to be aware of the limitations and problems of these small-scale business with regards to financing, high cost of importation of raw materials and persistent increase in taxes. These when used, the small-scale businesses will be pulled out from the threshold of advancement.

  Accounting and Management of Problems of Small-Scale Businesses will only provide papers as a reference for your research. The papers ordered and produced should be used as a guide or framework for your own paper. It is the aim of to only provide guidance by which the paper should be pursued. We are neither encouraging any form of plagiarism nor are we advocating the use of the papers produced herein for cheating.

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  1. Treasure says

    Thanks a million for your write-up very interesting.

  2. Opadijo mercy ibukun says

    Please how can I get d material

    • articles says

      Contact us on 07033378184. Thank you

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