REVIEW OF RELATED LITERATURE

Financial Management is the management of finances of a business, with the tasks of

sourcing nad alocating funds appropriately to meet the business operations (Turyahebwa,
Sunday, Burani et al, 2013). Wolmarans and Meintjes (2015) expounded financial management
is the planning, directing, monitoring, organizing, and controlling of the finance. Some of the
pactices of financial management include cash management, receivables management, inventory
management, investment, financing, and financial reporting and analysis (Turyebha, Sunday,
Burani et all, 2013).
The Financial Management knowledge within a business consists of the past personal
experiences of the owner, employees, and other external sources (Cleary & Quinn, 2016). An
increase knowledge for small business owners in finance could improve their overall
management of small business (Alpar & Winkelstiter, 2014 ; Drexler, Fischer, & Scoar, 2014)
Financial Management is one of the most crucial areas of management of small
businesses, and if executed correctly, small businesses are likely to be successful (Wolmaraus &
Meintjes, 2015). In line with the financial management tool, accounting information is essential
to the success of small businesses (Zapata, Brito, & Triay, 2014). Mazzarol (2014) approved the
importance of financial management for the growth and expansion of small businesses.
Studies in which financial management has been measured by scales have revealed even
more clearly that financial management has a substantial effect on financial satisfaction
(Godwin, 1994).
Strategies are mechanisms that owners and administrators of organizations establish to
gain a sustainable competitive advantage (Morries, Schindehutte, Richardson, & Allen, 2015)
and success. According to Menard (2014), strategies are plans of actions that influence behavior
within institutional norms and rules. Strategic management is essential for efficient management
of the resources of the firm (Hin, Kadir, & Bohari, 2013). Business strategies are alignment of
the organization with its environment (Palmer, Wright, & Powers, 2015).
According to Agyei-Mensah (2011), the major cause of these business enterprise failures
in Ghana is careless financial management. The intended goals of financial management are the
foundations upon which the efficiency and effectiveness of financial management are evaluated
and compared. The efficient and effective acquisition and use of finance in any enterprise leads
to proper employment of the enterprise’s finance.
 The intended goals of financial management are grouped into two main components and
they are maximization of profit and wealth (Paramasivan and Subramanian, 2009. English (1990)
also added growth as one of the targets of financial management. Researchers who have
researched into financial management have no difference when it comes to the thoughts of key
financial management decisions.
While extant research highlights the importance of acquiring financial resources from
investors, other financial management activities such as financing through operations, strategic
financial planning, and financial controlling have received little attention. This entails the danger
that financial management in the entrepreneurship domain is reduced to the acquisition of
external financing, while other important areas of financial management are ignored.
Financial resources serve as a catalyst in the resource acquisition process, as they can be
used to acquire resources and configure the resource base (Alsos et al., 2006). In this work,
financial management is defined as managerial activities that concern the acquisition of financial
resources and the assurance of their effective and efficient use.
Financial management literature in the entrepreneurship domain is dominated by a focus
on external financing of new ventures (Table 1). The literature suggests that financial resources
constrain the growth of new firms (Cooper, Gimeno-Gascón, & Woo, 1994; Doutriaux &
Simyar, 1987).