An assessment on the Effects of Capital Finance on Small Business Profitability: A Case Study of Small Businesses in Kasama District of Zambia

This research utilized a descriptive research design to examine the impact of capital financing on the profitability of small businesses in Kasama district, Zambia. The mixed-method approach, combining qualitative and quantitative methods, provided a comprehensive understanding of financial literacy, financial planning, and working capital management in the context of small enterprises. The population of interest comprised 50 randomly selected small businesses in Kasama Town, employing probability sampling to ensure equal representation. Data collection involved questionnaires and interviews, incorporating both open-ended and closed-ended questions. Descriptive statistics, including percentages and frequencies, presented respondents' perceptions, while qualitative data underwent content analysis for detailed insights. Triangulation enhanced data validation, ensuring accuracy and reliability. The research revealed a robust positive correlation between financial literacy levels and small business profitability. Higher financial literacy was linked to increased profitability, emphasizing the role of financial knowledge in informed decision-making. This aligns with prior research advocating for tailored financial education programs for small business owners. Effective financial planning emerged as a pivotal factor in driving small business profitability, with high-quality financial decision-making and detailed planning correlating with improved financial performance. The study underscored the importance of financial budgeting decisions in enhancing profitability. Working capital management as measured by the cash conversion cycle, significantly influenced profitability, emphasizing the positive impact of effective cash management and inventory control practices. Recommendations include prioritizing financial literacy programs and financial planning initiatives supporting SMEs in Kasama.