Financial planning on the performance of small scale enterprises

Abstract

The major aim of the study was finding the relationship between financial planning and the performance of small scale businesses. The dimensions of the dependent variable “performance of small scale businesses” were: profitability, liquidity and cost efficiency. While those for the independent variables were: budgeting, financial reporting and risk assessment and management. The study focused on examining the relationship between budgeting and the performance of small scale businesses, evaluating the relationship between financial reporting and the performance of small scale businesses and lastly assessing the relationship between risk assessment and management and the performance of small scale businesses. The study used a case study research design of a sample of 52 respondents out of a population of 60 both employees and owners chosen by use of convenience sampling method. Primary sources of data used to collect data were; structured questionnaire and interview guide while the secondary sources of data used were audit reports and financial statements of the case study. The data collected was analyzed by using SPSS 16.0, correlations, frequency, graphs and tables were used to present the data. The findings of the study revealed that there was a positive relationship between budgeting and performance of small scale businesses. The findings of the study also indicated a positive relationship between financial reporting and performance of small scale businesses and lastly findings showed a positive relationship between risk assessment and management on the performance of small scale businesses. The researcher recommends that for small scale businesses to be successful without collapsing and realize profits, they should always prepare budgets for their firms, involve everyone in budgeting process and in decision making, ensure that there are safe guards for protecting the businesses’ assets and finally, they should keep records for their businesses’ operations