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Time Required To Break-Even For Small And Medium Enterprises: Evidence From Kenya

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  • Charles M. Rambo

Abstract

The past two decades have seen exponential growth in the number of small and medium enterprises in Sub-Sahara Africa; however, about two-thirds of such enterprises often fail to take off, resulting to negative economic impacts at the micro and macro-levels. However, documentation of the subject remains limited, especially in Kenya. This study involved 146 enterprises that had been operational for between 1 and 5 years. Inclusion criteria included availability of consistent financial records as well as willingness to share such information. The findings showed that the duration taken to break-even ranged between 3 and 40 months. The level of training in financial management was the most important covariate, explaining up to 12.1% of variation in the duration taken to break-even. Ever training in financial management accounted for 10.2%, marketing (9.7%); educational attainment (8.6%), capitation-funding level (7.5%) and firm size (6.8%). The study recommends the need for universal entrepreneurship training programs, integration of entrepreneurship training in national plans, a multisectoral approach to entrepreneurship training, linkages between the private sector, academia and development partners as well as support centres at the county level to facilitate the development of such enterprises.

Suggested Citation

  • Charles M. Rambo, 2013. "Time Required To Break-Even For Small And Medium Enterprises: Evidence From Kenya," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 6(1), pages 81-94.
    • Handle: RePEc:ibf:ijmmre:v:6:y:2013:i:1:p:81-94
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    References listed on IDEAS

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    1. Watson, John, 2007. "Modeling the relationship between networking and firm performance," Journal of Business Venturing, Elsevier, vol. 22(6), pages 852-874, November.
    2. Rosemary Atieno, 2009. "Linkages, Access to Finance and the Performance of Small-Scale Enterprises in Kenya," WIDER Working Paper Series RP2009-06, World Institute for Development Economic Research (UNU-WIDER).
    3. Rosemary Atieno, 2001. "Formal and informal institutions’ lending policies and access to credit by small-scale enterprises in Kenya: An empirical assessment," Working Papers 111, African Economic Research Consortium, Research Department.
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    More about this item

    Keywords

    Small and Medium Enterprises; Break-Even Analysis; Break-Even Point; Urban Slums;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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