INTRODUCTION The importance of small business activity in a market economy may be appreciated by considering the role of such activity in the economy of the United States. Applying the Nappi and Vora (1980) definition of small business (either fewer than 100 employees, or less than one million dollars in annual receipts), somewhat more than two thirds (67.9 percent) of all business enterprises in the United States are classified as small (U.S. Department of Commerce, 1982). These firms, in turn, accounted for 40.8 percent of non government and non farm employment, 35.8 percent of sales revenues, and 32 percent of the country's GNP (U.S. Department of Commerce, 1982).
The fact that small businesses employ almost one half of the American workforce illustrates the magnitude of this activity on society. Apart from this concrete impact, small business also has an abstract impact on American society. The very presence of the small business sector supports the dreams of individuals that they can, someday, be independent of large organizations. While the likelihood that such an eventuality will ever come to pass for most Americans is quite low, the continued presence of the dream the mere possibility is important psychologically.
The factors which influence the untimate success of any business enterprise large, medium, or small are both numerous and varied. Ineffective financial management, however, is implicated in an unusually high proportion of small business failures. The purpose of this study was to examine those factors related to the financial management of small business enterprises, which, if effectively addressed, will enhance the probability of the long term success of such enterprises. Methodology
In order to effectively study any aspect of small business enterprise, it is necessary to define the term. Attempting to discover a definition of small business is analogous...