Implications of Business Resilience on Financial Sustainability of Small and Medium Scale Enterprises (SMES) in Nigeria by Sanusi, A.J & Olawanle, V.O

Abstract

Business resilience includes the capacity of an enterprise to adapt and adjust to a new environment and new circumstances. This study examines implications of business resilience on financial sustainability of small and medium scale enterprises (SMEs) in Nigeria. Hence, product diversification and market diversification (exploration of new market) are used as the elements or strategies of business resilience, while net profit margin measures the financial sustainability of SMEs. A sample size of 327 registered SMEs was purposively selected from a cluster of population of 1794 registered SMEs across different economic sectors in Ogun State. Questionnaire was used as a method of primary data collection, designed on a 5-point Likert scale system and were analyzed using a simple regression statistic enabled by SPSS version 22. Findings from the study revealed that market diversification element has a more significant impact on net profit margin of SMEs financial sustainability than product diversification with coefficients of β1= 0.187 and β2= 0.742 respectively at p-value<0.000 at 5% level of significance. It was concluded that both product diversification and market diversification are significant resilience factors that enables SMEs financial sustainability through a positive net profit margin and thus could assist operators to adapt into new business environment created by the current economic contingencies. Hence, market diversification is more resilient in promoting operators’ net profit margin towards achieving financial sustainability than product diversification. It is therefore recommended that government should provide enabling environment for SMEs by providing positive economic policies that will guarantee financial sustainability towards ensuring business survival and sustaining their net profit margin during and after this current economic turbulence.

Keywords

Business Resilience, Product Diversification, Market Diversification, SMEs’ Financial Sustainability, Net Profit Margin.

Publication Information

Publication Type

Conference Paper

Publication Date

2024-07-10

Language

English

Pages

44–58

ISBN

2645-2391

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