FINANCIAL PLANNING PRACTICES AND THE SUSTAINABILITY OF SMES IN ILORIN METROPOLIS

Abstract

The sustainability of Small and Medium Enterprises (SMEs) remains a central concern in emerging economies where inadequate financial planning often undermines long-term business survival. This study examined the effect of financial planning practices on the sustainability of SMEs in Ilorin Metropolis, Nigeria. The specific objectives were to determine how budgeting practices, cash flow management, savings and investment practices, and financial record-keeping influence the sustainability of SMEs. The study adopted a quantitative survey design and drew its population from 3,124 SMEs registered with the Kwara State Internal Revenue Service, each with annual tax remittances of ₦100,000 or more. Using a simple random sampling technique, data were collected from 355 SME owners and financial managers through a structured questionnaire. Descriptive and inferential analyses, including multiple regression, were employed to test the study hypotheses. Findings revealed that budgeting practices (β = 0.273, p < 0.00), cash flow management (β = 0.241, p < 0.00), savings and investment practices (β = 0.193, p < 0.00), and financial record-keeping (β = 0.321, p < 0.00) each exerted a significant positive effect on SME sustainability. These results indicate that enterprises that engage in proactive and disciplined financial planning are more likely to achieve long-term viability and competitive advantage. The study concludes that sound financial planning practices constitute a strategic mechanism for enhancing the resilience and growth of SMEs in developing economies. It recommends that SME owners institutionalize budgeting systems, adopt digital record-keeping tools, and engage in regular cash flow analysis to strengthen financial sustainability and business continuity