Financial Literacy: A Driver of Business Sustainability Among Small Contractors

Abstract

The construction industry is a primary contributor to national GDP, yet small contractors suffer from disproportionately high failure rates within their first five years due to financial mismanagement. This problem is rooted in a critical deficit of financial-managerial capacity, where owner-managers often prioritize technical execution over the strategic cash flow management and debt control required for long-term viability. There is an urgent need for this study to bridge the gap between general SME financial literacy and the unique "project-based" financial risks inherent in the construction sector, particularly regarding the integration of modern digital and ESG (Environmental, Social, and Governance) requirements. The aim of this study is to examine financial literacy as a strategic driver of business sustainability among small contractors, utilizing the Resource-Based View (RBV) and the Theory of Planned Behavior (TPB) to map the transition from technical knowledge to sustainable performance. The methodology employs a conceptual framework that categorizes financial literacy into dimensions such as debt management, digital literacy, and investment awareness, proposing them as independent variables that influence business survival. The significance of this framework lies in its ability to serve as a "resilience filter," demonstrating that higher financial literacy leads to improved bidding strategies, reduced bad debt, and the adoption of sustainable technologies like Building Information Modelling. The study concludes that financial literacy is the foundational "strategic armor" required for small contractors to achieve solvency and operational longevity. It is recommended that policymakers and professional bodies implement sector-specific financial training to foster resilient enterprises capable of supporting stable employment and national infrastructure development.