THE EFFECTS OF BUDGETING ON THE PERFORMANCE OF SMALL SCALE ENTERPRISES

ABSTRACT

This study was carried out to investigate on the impact of budgeting on the performance of

small scale businesses. It aimed at achieving the following objectives, to establish the impact

of budgeting on organization performance to identify indicators of performance m

organization and to establish the relationship between budgeting and performance of

organization.

The study was carried out to establish the reasons why many organizations have continued to

perform poorly despite management efforts to improve performance through training,

recruitment, motivation, monitoring and evaluation. This was evidenced by low revenue

collection and overspending compare to planned ones, overdependence of grants from the

govemment, low morale and commitment of employees, claims and rumors from customers

in respect to poor services offered to them like corruption and bribes.

To collect the relevant data the researcher used questionnaires, interview and library research

on relevant material. Data was analyzed by the use of descriptive methods such as percentage

distribution and frequency distribution.

The researcher found out that, budgeting has both positive and negative impacts on the

performance of small scale businesses, under positive includes high profits, and avoids

delays in work reduction, in repair, maintenance costs and increase in relationship with

extemal stake holders. Negative side it leads to misappropriation of resources, inefficiency

utilization of resources, low profits and low productivity.

According to the researcher's findings, the role played by budgeting in small scale businesses

included, better planning, increase in profit, high production and attain effective utilization of

resources.

The following area were suggested for further study, establishing the magnitude of the

relationship between budgeting and performance, are pertaining budgeting form different

organization to make a comparison and examining the influence of culture on performance of

small businesses.

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