Critical Success Factors of Financial Management Practices (FMP) for Small and Medium Enterprises (SMEs) Muslim Family-owned Businesses

Effective financial management practices, such as sound budgeting, cash flow management, and financial planning have been instrumental in driving the success of Malaysian Small and Medium Enterprises (SMEs). The objective of this study is to identify the critical success factors of financial management practices (FMP) within SME Muslim family-owned business. A pilot study was carried out on a sample of 105 Muslim family-owned SMEs from Malaysia. A survey instrument consisting of 25 measurement items was designed to identify the level of FMP implementation in Malaysian Muslim SME family-owned businesses. Descriptive statistical analysis and reliability analysis were conducted using SPSS software to analyze the data. Findings indicate that FPM are one of the critical success factors that play a key role in ensuring good practices within organizations that result in their better performances. It is noteworthy that the most influential factors are Accounting Information System (AIS) and Financial Reporting Analysis (FRA), followed by Working Capital Management (WCM) and Capital Structure (CS). Consequentially, Muslim family-owned businesses need to incorporate the applicable critical success factors of FPM in their operations to enhance financial performance, particularly for Malaysian SME Muslim family-owned businesses. This study contributes to FPM in Malaysian SME Muslim family-owned businesses. This study recommends that businesses delve deeper into the dynamics of FPM within Malaysian SME Muslim family-owned businesses for better performance and resilience.