Exploring the impact of bookkeeping and financial literacy on the performance of small businesses in Alice

Tendai Chimucheka, Siyolise Tikayo and Gift Donga
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Tendai Chimucheka: Department of Business Innovations and Entrepreneurship University of the Fort Hare, South Africa
Siyolise Tikayo: Department of Business Innovations and Entrepreneurship University of the Fort Hare, South Africa
Gift Donga: University of Fort Hare

International Journal of Business Ecosystem & Strategy (2687-2293), 2025, vol. 7, issue 4, 113-126

Abstract: Small, Medium, and Micro Enterprises (SMMEs) are the foundation of South Africa's economy, driving job creation, innovation, and local economic growth. However, these businesses frequently face challenges in critical areas such as bookkeeping and financial literacy, which have a direct impact on operational performance and sustainability. Limited financial knowledge and inadequate record-keeping practices have long been issues for Alice's SMMEs, posing significant challenges to effective financial management. These gaps in financial literacy and bookkeeping make it difficult for SMMEs to manage cash flow, make informed decisions, and plan for growth, limiting their ability to fully contribute to the local economy. Addressing these challenges has become critical for SMMEs, as improved financial management practices are required for success and resilience in a competitive market. The study's exploring the impact of bookkeeping and financial literacy on the performance of SMMEs in the context of Alice. Data was collected qualitatively through in-depth interviews with 15 SMME operators and analysed thematically to gain a thorough understanding of their experiences and practices. The findings show that both accurate bookkeeping and financial literacy improve business performance, allowing owners to make data-driven decisions, avoid cash flow issues, and lay the groundwork for future growth. Those who fall short in these areas suffer from financial mismanagement, which harms their businesses. Despite the challenges, the study identified strategies implemented by SMMEs owners to improve both bookkeeping and financial literacy such as digital bookkeeping tools, external financial advisory support, and collaborative financial management across teams. Finding from this study are crucial for enhancing SMMEs’ operational performance and fostering economic resilience within South Africa's competitive market. Key Words:Bookkeeping; Financial Literacy; Performance; Small Businesses; South Africa

Date: 2025
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