Budgetary Control – Improving Performance Of Small Scale Business

Budgetary Control – Improving Performance Of Small Scale Business

Budgetary Control – Improving Performance Of Small Scale Business

Budgetary control in management studies implies the judicious allocation of limited resources available to a firm in the day to day management of the business which easily varnish from intensive competition because of wrong appropriation of resources.

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Other factors which lead to liquidation of many small scale business unit are lack of finance, incompetence on the part of the entrepreneur and in adequate manner of approach to client of the business such as the government.

Owing to the above problems which has hindered (impaired) effective industrial take-off in this part of the world that this work is close be devoted to consider the issue of budgetary control is a way out.

A myriad (very greet number) of questions on why small scale industries or business flop exit. The answers to such questions among others include the observation of some factors that were left considered by the proprietary and which border the progress of such business. To this wring location of this business often mention since that takes the business away from the actual concentration of the market. Also inter with wrong location, is scanty capital for the liquidity flow of the business one vital issue most often over looked is that wrong or inappropriate allocation of small scale business. It is later that work is aimed at considering especially the efficient way effective budgetary control would ameliorate that small scale industries in their day to day running of the firm. The giant stride made by Nigeria business men from trading mainly buying and selling to manufacturing is in many respect a step toward the direction of transformation Nigeria economy from a non-agricultural dependence to a vibrant technological one.

This process began in 1851 when the British colonial government took control of the area that has become a major Nigeria treading company Chiefly, the Royal Niger company. The expansion of trade was the primary instrument for carrying out their “Oval management in Nigeria” (tadi POA 1970), Nigeria and foreigners alike therefore were poised to develop the various sectrs namely the industrial, commercial and agricultural sector which plays a vital role in the Nations economic development process.

The growing complexity of business has invariably contended with making planning as an indispensable tool for business success. In the past years when business system was still simple, social responsibilities and competition because almost Non-existent and it was only necessary to posses management flair and determination to successful ex-ploit opportunity. The situation has now completely change with the automation (Methods and machines to save human labour) revolution of the sixties couple with the fast rate of technological change and business environment has equally witnessed repaid change. The demands being made on the business so many and varied and essentially that on business can ignore them and continue.

It is know fact that business has to harness in addition to all its resources, external forces such as legal restriction and obligation, social responsibilities change in population cum population structure and competition in the market. There is no production without a substitute as the market is general property, no single business concern has any exclusive right over it (Edward T Mevin 1978) correctly put it that a business concern must have to “wage aware” Its own share of the market. It must strive to maintain the position and at the some time purpose growth objective. As a mater of fact, when lost are rising one would expect revenue to rise also but unfortunately. The relationship is never linera. Government intervention in the area of pricing makes it difficult, to increasing price in viz –a viz rising cost and in order to service the business must control its other controllable cost. This requires persistence and conscious effort. All the above problems makes the situation a complex one that needs to be properly managed as argued by many scholars of management.

1.1 OBJECTIVE OF THE STUDY

The essence of the study is to see the performance of small scale industries (business) (SSB). Through effective budgetary control. To see if the budget actually improve the performance of small scale industries through effective management or control of the fund. The study is also an aid to help management to improve their budgetary strategies, good strategy is a spring broad. “a stepping stone”. For the successful achievement of the successful organizational goal. The performance of small scale business through effective budgetary control is one of the trival issues that requires urgent attention in order for the Nigeria economy to prosper well.

Therefore the Objective of project is to:-

1. Determine the importance of budget and its effect on the performance of small scale business

2. To help management improve their budgetary control strategies.

3. To improve the various types of activities of small business.

4. To ensure the importance of small scale business in Nigeria.

5. Lastly, to identify the cause of low productively in small scale business and ways of improving them.

The above named points would not have been elaborated properly by just my personal view and knowledge. It was then important for a research to be done on the topic.

1.2 METHODOLGY

The methods used in carrying out this research includes:-

1. Personal interview: This was done by personally interviewing experts on issues parading to government budget in the ministry of budget and planning.

2. Working into journals and record – this method was applicable during my visit to the I.M.T library, Enugu.

3. Questionnaire – This was also another method 1 used in making my research.

1.3 DEFINITION OF TERM

Budget: Budget is the financial or quantitative statement prepared and approved to a defined period of time, of policy to be pursued during the period for purpose of attaining a given objective. I WALD “COST ACCOUNTING”.

BUDGETARY CONTROL” Budgetary control is establishment of budgets relating the responsibilities of executives to the requirement of a policy, and the continuous companies of actual budget results either to secure by individual action, the objective of that policy or to provide a basis for it revision “JWALD COST ACCOUNTING”.

QUESTIONNAIRES: A series of questions or prepared set of written questions of the purpose of completion.

COROLLARY: The Natural outcome or sequence of things.

2.0 REVIEW OF RELATED LITERATURE

In the world of business today, small scale business have very much important in economic development of any economy. The effectiveness of budgetary control in small scale business (SSB) is very vital to the owner of such business.

The central bank of Nigeria (CBN) “Credit Guideline” define small scale business as any manufacturing or service industry whose annual business turnover does not exceed N 500,000.

The third national development plan (1975-1980) also defines small scale business as manufacturing establishment employing less than 10 people whose investment and equipment do not exceed N 600.00. Encyclopedia Britannia micropaedia – read Reference and indexes semi lock trial 15th edition defined a small scale industry as “a unity of non-agricultural business enterprise below an arbitrarily determined.

One fundamental function of management which is related to organizing cum controlling function, is budgetary and is a means of using collective knowledge of an organization to prepare a co-ordinate plan for future activities which is the past experience and allowing for future know influence is capable of being achieved, all parts of an organization will be involved in a budget which is essential and it to be successful and the need for co-ordination is obvious for instance the production department may obtain orders for goods in quantities, which exceed production capacities or perhaps whilst production marketing match in their objective, there could be insufficient capital to enable production to proceed beyond a certain point of capacity.

In his book “Management: A functional Approach”, written by Geoffrey N Igboeli, Budgetary control refers to use of budgets to control day to day activities to meet organizational goals. For the fact that business environment changes and the fraught nature of the future adjustment be made to come for future uncertainties.

This can be achieved by including the following in the retinal budgetary control. The problem of management the fact however remain the same reliable project or knowledgeable. Efficient and reliable management seldom fail to attract under serve any. To my concern, this problem could have been solved easily by Nigerian business men if not the problem of poor finance compared to their formal education which is fairly adequate, but it would be regionally set deceit to leap all the blame on the lack of capital, sharing the view with successful businessman and an industrialist Chief Onwuka Kalu (1985) argued that money for financing business to be efficient but effective management and budgetary control as his own experiences in Onwnka international Business group.

Most often problem relating to incompetence management is small scale business are as a result of unplanned ownership. David (1984), in is opinion said that many entrepreneur go into business without taking a realistic view of their strengths and weaknesses let along giving a careful consideration to the economic trend or business condition in that particular sector of activity. The importance of effective budgetary control is small scale business cannot be over emphasized. It enhance the success of any enterprise. The problem of personnel management effect most mall scale enterprise at one time or the other with total consequences most of the time the owners strongly desire for independence creats a problem for his business. He feels resultant to go into partnership with someone who would make up his deficiencies in business in terms of budgetary activities. He became the proverbial “Jack of all trade” but a “Master of One”. The way out is probably enjoying employees but unfortunately, they do not solke all the stream of employees problems due to poor personal administration.

Furthermore, where industries rely in pursuing into the markets what their management think the “hungry” consumers should scramble for, this will bring about business failure, because there is no effective control. Supporting this view, Olaniyi (1986) in this opinion believed “that profitable business can be only emerged through adherence to what the consumers want as opposed to be a prevailing phenomenon.

(Leads A), 1979 arqued that whatever the nature of your business it is certain that you cannot be the ultimate consumers of your products or services. And it is common knowledge that some products have better profit contribution per unit than others for instance products “A” may have a contribution of more than 505 and in absolute terms eqully better than product “B” but due to the ineffective control that serve as a limiting factors, it may not be possible to improve on the quality sold in the short run.

Many authors have written some literature concerning the scales of business in Nigeria. Alan fiber (1985) in his book “Be your own Boss” has this to say about an entrepreneurs starting his won business “Skills are basic in starting up your own business which can sometimes be expanded in due course”. Here we can see with this author that having basic skills in the type of business to start a very important for effective running of the business.

Ulows (1984) has this to say about starting a swell scale business. His ideas seems to reflect that basic skills pointed out by Alan (1975) in his study listed this causes of failure in small scale business has lack of experience in choosing a business line, lack of management experience in – competence and negligence on the part of budgetary, control. All these factor help in ineffective operations of business activities.

Osaze (1986), in his own ideas enumerated three major problems of small scales business sectors in Nigeria as finance, managerial capacity and capability and above all. Lack of budgetary and financial control. He also said that the major problem of small scale business developments in Nigeria “is the lack of floring of co-ordinated policy at National and state level concerning financing, technical and managerial assistance, “And this have led to their in ability to the service to be provided by the small scale industrial schemes and in development centers to small scale firms.

Alson Obaze (1986), saw that the problems of financial control budgetary control and poor record keepings. Most of them do not keep records of their business and this has some grevious effect when they go to borrow or take loans from the banks. Olaniyi (1985), in his write-up marketing side of management – pitfalls said “many Nigeria entrepreneur – business often prefer to opportunities emanating from faulty economic system or maladjustment in national economy. At best they see business failure as an imminent consequence of poor budgetary control and it is on these blind claims they rest their claiwa.

A firms success and even survival is its ability and willingness to maintain production and to invest in fixed or working capital are to a considerable extent determined by its budgetary control policies “this view was ahaved by anreder (1977).

2.1 AN OVERVIEW OF EFFECTIVE BUDGETARY CONTROL STATEGIES

In this chapter the researcher is going to discuss the effectiveness of budgetary control in small scale business.

THE SALES FORCE APPROACH

Sales forecast is the starting point in budget process. In a highly vertical integrated industries, the success of the primary producer depending on the sales success achieved by the final selling organization as such, that the producer regardless of whatever capacity is auditable.

At this juncture, the sales force approach a makes use of sales men and district or regional sales managers in forecasting sales for budget period. Sales forecast forms where provided for the sales by area groups to estimate his sales for the budget period.

As a preliminary, some organization use sales seminar as a forum for briefing sale men on company sales objectives for the period which are usually directed by the sales executives and the sale men briefed on how the sales forecast should be completed.

Provisions are usually made in sales forecast form for justification of whatever forecast is made, and having the initial sales forecast, the district/ regional sales manager together with sales force, discuss the forecast with the sales executives whatever figures arrived at, are them savent to the top management for consideration.

THE OWNER/MANAGERS ESTIMATE APPROACH

The system may not be sophisticated hence forecasting systems is systematically planned. It is so, because the owner wiether the manager makes contracts and order , himself, making it possible to estimate what he considers a fair volume of business he can abstain during the budget period initially, the forecast may not be accurate but with the passage of time the quality of his decision because improved through experience. This approach is commonly used in the small business limits.

3.0 SUMMARY OF FINDINGS

From the fore going (in chapter one) the researcher has been able to identify the initial causes of failure of a small scale industries which include the inappropriate allocation of the business area. In chapter two, the researcher has aimed to know why the effectiveness of budgetary control in small scale business is very important to the owners of such business venation and the problem of financial control, budgetary control and above all, most of them do not keep accurate record of their business.

In chapter three, the researcher has been able to visualize and explain in detail an overview of effectives budgetary control in small scale business (SSB).

Lastly, the types of activities of small scale industries. Moreover, if all there should be rectified in all our industries, it will enhance the performance of effective budgetary control, if all the above mentioned problem effecting the small scale industries are properly tacked or treated then one can say that the end justifies the means.

If on the other hand, the job is not properly planned (in relation to effective budgetary control) they will lack co-ordination and co-operation whenever the manager of business is not aground.

3.1 CONCLUSION

In conclusion, the aim of the findings are meant to determine the areas where effective budgetary control can be applied in order to improves the day to day management of the inducting. Problems like poor finance, poor management skills, misappropriation of funds all the above mentioned should be debbrate upon in order to ensure effective distribution of fund to the rightful person(s) concerned. Moreover, in order to ensure effective budgetary control in the management of small scale enterprise, all the various avenues has to be fully explored and utilized as outlined and explained in heart of this project.

All activities of small scale business likes the manufacturing industry, the wholesales and services industry have to be fully expend both financially and otherwise , in order to guarantee the existence of the small scale industry in Nigeria. Also, the purpose of this write up is to show how the application of budgetary control measures can help to improve business result curm profit and there by ensuring its continuity and increasing the owner equity. Other factors necessary for attaining organizational target, is considered, such as the problem of finance, is management, pricing and marketing of products. To maintain continuity and profit by proprietors in developing countries like Nigeria rials bearing and co-operate planning strategies should be a factor not to be disregarded.

3.2 RECOMMENDATION

Three major recommendations have been identified as strategies optimum for improving business results.

ESTABLISHMENT OF BUDGETARY CONTROL SYSTEM IN BUSINESS

To improve the co-operate planning and achieve the planned target every concern business shelter big or small needs a systematic planning and controlling.

MARKET FORECAST

Since future is uncertain and due, the dynamic business environment, the importance of marketing forecast will be considered. To solve the problem of marketing the product/services could not be left, through the drawing of or (up) sales forecast and budgetary control system. So that variable should be adjusted to achieve planned target.

PRUDENT FINANCIAL MANAGEMENT THROUGH EFFECTIVE BUDGETARY CONTROL

This involved planning and controlling financial resources of the set up organizational goal. A prudent financial management through effective management will be implemented and before any.

Budgetary Control – Improving Performance Of Small Scale Business

To place an order for the Complete Project Material, pay N5,000 to

GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183

Then text the name of the Project topic, email address and your names to 08060565721.  

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