THE RELATIONSHIP BETWEEN FINANCING STRATEGY AND ENTREPRENEURSHIP PERFORMANCE: AN EXAMINATION OF SMALL AND MEDIUM SCALE ENTERPRISES IN IKEJA LOCAL GOVERNMENT AREA OF LAGOS STATE.

Abstract

This study examined relationship between financing strategies and entrepreneurial performance of small and medium sized businesses in Nigeria. Financing strategy is measured by bootstrapping, crowd funding and angel investors, while competitiveness is used as a proxy for entrepreneurial performance. Descriptive survey research design was adopted. Primary data were collected using a structured questionnaire administered to a sample of 154 SME businesses in Ikeja Local Government Area of Lagos State. The sample size was determined using the Cochran (1977) Z-score formula, while purposive sampling technique was used for administration of the questionnaire to the identified entrepreneurship. Eventually, 142 retrieved copies of the questionnaire were found to be valid, thus utilized for the study. To analyze the data, descriptive statistical techniques and inferential statistics, specifically Pearson correlation coefficient was adopted. Upon analyses of data, the study found a significant positive relationship between ‘Bootstrapping’ on ‘entrepreneurial competitiveness’, (r = .115, p.001<0.05); a positive associate between ‘Crowd funding’ and ‘Entrepreneurial competitiveness’, (r = .239^**, p.002< 0.05); and a strong positive correlation between ‘Angel investors effect and Entrepreneurial performance’ in Nigeria, (r = .216^**, p.000 < 0.05).The study recommended that informal business owners should be educated on avenues for business financing, conditions for obtaining facilities from specialized institutions such as the bank of industry should be simplified; funds from contributions should be converted to equity in the name of the funders, among others.