IMPACT OF BUDGETARY CONTROL ON FINANCIAL PERFORMANCE OF SMES: A CASE STUDY OF YOLA NORTH LGA
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Background of the Study
Small and Medium Enterprises (SMEs) play a vital role in the economy of many local governments, contributing to employment, innovation, and income generation. In Yola North LGA, SMEs are essential for economic development, yet many face challenges in managing their finances effectively. One tool that can significantly impact financial performance is budgetary control. Budgetary control involves setting financial targets, monitoring actual performance, and taking corrective actions to align actual outcomes with the budgeted figures. This study aims to investigate the impact of budgetary control on the financial performance of SMEs in Yola North LGA, focusing on how this practice influences profitability, cost management, and overall business success.
Statement of the Problem
Many SMEs in Yola North LGA struggle with financial management, leading to inefficiencies, low profitability, and business failure. Despite the importance of budgetary control in enhancing financial performance, many small business owners do not effectively implement it due to a lack of awareness or capacity. This study will explore how the application of budgetary control affects the financial outcomes of SMEs in the area, aiming to provide insights into how businesses can improve their financial performance through better budgeting practices.
Aim and Objectives of the Study
Aim: To assess the impact of budgetary control on the financial performance of SMEs in Yola North LGA.
Objectives:
- To evaluate the effectiveness of budgetary control in improving profitability and cost management of SMEs in Yola North LGA.
- To investigate the relationship between budgetary control and financial performance in SMEs.
- To identify the challenges faced by SMEs in implementing budgetary control in Yola North LGA.
Research Questions
- How does budgetary control affect the profitability and cost management of SMEs in Yola North LGA?
- What is the relationship between budgetary control and the financial performance of SMEs?
- What challenges do SMEs face in implementing budgetary control in Yola North LGA?
Research Hypothesis
- H₀: Budgetary control does not significantly impact the profitability and cost management of SMEs in Yola North LGA.
- H₀: There is no significant relationship between budgetary control and financial performance of SMEs.
- H₀: Challenges in implementing budgetary control do not significantly affect the financial performance of SMEs.
Significance of the Study
This study will provide SMEs, policymakers, and local government authorities in Yola North LGA with insights into the benefits of budgetary control in improving financial performance. By identifying best practices and challenges, the study aims to guide SMEs in adopting better financial management practices.
Scope and Limitation of the Study
The study will focus on SMEs within Yola North LGA, specifically those that actively implement budgetary control. Limitations include the availability of financial data and potential reluctance from SMEs to disclose sensitive financial information.
Definition of Terms
- Budgetary Control: The process of planning and controlling the financial resources of an organization through the preparation and management of budgets.
- Financial Performance: The assessment of a company's profitability, efficiency, and overall financial health.
- SMEs (Small and Medium Enterprises): Businesses with limited size, typically characterized by smaller scale operations and a smaller number of employees.
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