IMPROVING THE PERFORMANCE OF SMALL SCALE BUSINESS THROUGH EFFECTIVE BUDGETARY CONTROL
This study was undertaken to verify how much effective budgetary control contributes organization survival. The objective are focused on determining whether budgeting is an effective management tool in organizations whether budgetary control has contributed to the success and survival of organization as well as how organization handle their budgetary process successful organization were used as reference point in all situation. The choice of these organization was because they are primary constituencies that have shown a consistent increase in profits over the years in most cases for the past years hence used in this study as reference point.
Careful and thorough analysis made revealed that:
vOrganization that are survival conscious use budgeting as a management tool
vThis helped organization achieve their overall objectives
vIt was also discovered that there is need for effective budgetary control measures in organization this aids organizational survival.
vIt was also found that here is need for well defined long range objectives in organization as short term objective derive from these long term objectives
vOur findings also showed that management principle i.e. management my objectives and management by exception could be of immense benefit when applied to budgetary control.
The study made the following key recommendations among others.
vIt is imperative that various level of management understand the process through which budget preparation go
vIt is also important to involve subordinates in preparing divisional and departmental budgets as this ensure commitment
vOrganization that hitherto do not use budget as a standard in their business operation are advice to make use of budget as this draws the attention of the managers of a business more explicitly to the nature of the problems they are facing and leads to more careful and critical thinking and greater precision.
vIt was recommended that shorter budget review periods be adopted by organization as this helps manger to detect problems and makes corrections early before they become complex.
According to Jom Odetola Odeleye “budgetary control is the means of determining the extent to which planned goals and objective are attained”. Control ensures that action are taken where necessary and possible, to bridge the gap between the budget and actual performance. Budgetary control is therefore essential if the budgetary targets or objectives are to be achieved.
Plans and actions do not always match some plans are made to be executed in future present and future condition are never the same a lot of forces i.e. economic, social, political, etc.
Act between the times a plan is made and the time it is to be executed to cause variances. There is, then, the need for control mechanism to monitor the plans, detect variances and initiate corrective action so that the objectives of the plans are attained.
Budgetary control mechanism aimed at keeping budgets on course so that the budget objectives are achieved over a period of time.
TABLE OF CONTENTS
1.2 Definition of the terms
1.3 Statement of the problem
1.4 Objectives of the study
1.5 Scope and limitation of the study
2.2 The definition and nature of budget
2.3 The definition and nature of control
2.4 The concept, nature and objective of budgetary control
2.5 Budgetary control and management
2.6 Corporate and long range planning
2.7 Management by objective
2.8 Management by exception
2.9 Establishing a budgetary control system
2.10 The budget period
2.11 The budget structure
2.12 The limiting factor
2.13 Administration for budgetary control
2.14 The budget committee
2.15 The budget manual
2.16 Budgeting system
Findings, recommendation and conclusion
Budgeting control is the process of ensuring the accomplishment of budgetary plans by applying the needed corrective measures to deviation i.e. moving away from the original plans it is also a process of assigning responsibilities for the achievement of budget targets measuring actual performance and comparing actual with planned performance budgetary control is therefore as essential as the making of budget.
All survival conscious organization both public and private have objectives or goals which they try to attain with resources available to them.
These objective or goals include survival in hostile and competitive business world.
Maximizing of profit as well as attaining a certificate level of societal responsibility to community in which they operate. Resources for the attainment of this objectives are limited hence the need for planning.
Planning in form of budgeting a budget is plan of action which an organization intends to execute within any given period it is not enough to make which cannot be achieved. Therefore, the achievement budgetary plans require control mechanism.
1.2 STATEMENT OF THE PROBLEM
The modern business world is characterized by intense competition, new product development, use of advance technology, diversification etc. all these are aimed at making success out of businesses.
But we know that not all business are successful. Some have collapsed. Others liquidated while others have been swallowed by stronger organization, and still many others have successfully weathered the hostile business environment.
Recently, some business organization in Nigeria i.e. banks have been listed as distressed while others are listed as healthy. Some manufacturing organization has ceased production while others are producing below installed capacity. The list is endless.
The question then is, why does some organization find it difficult to survive while others which operate under the same economic condition make huge profits does budgeting and budgetary control influence the survival of organizational?
This research is therefore aimed at determining the import of effective budgetary control on organizational survival using United Africa Company Nigeria Plc. As a case study. United African company Plc is one of the few companies that has maintained a steady progress in its business activities its turnover as well as the profit figure on the increase for the past four years and business has been generally good for the company inspite of prevailing national economic problem. Relating him survival of the company to its budgetary control is the aim of this research.
1.3 OBJECTIVE OF THE STUDY
The objective associate with this study include:
vTo determine whether budgeting is an effective management tool in organizations
vTo determine whether budgetary control has contributed to the success and survival of most set ups.
vTo determine whether some organization would still have achieved success without effective budgetary control
vTo determine whether participatory budgeting aids effective budgetary control
vTo determine the impact of deviation from established budgets
vTo assess the relevance of management principles on budgetary control
vTo make recommendation on how to improve performance in organiztions.
1.4 SCOPE AND LIMITATION OF THE STUDY
Budgetary control measures shall be the focus of our study we may not present budget schedules as this is outside the scope of our study, but rather we shall present, state some problems encountered during the period of data collection.
Their was the problem of time to interview management and staff, time to visit various organization and time to re evaluate the responses to questionnaires.
All these time were not adequate hence time became a constraint. A study of this nature would require financial assistance from either the government or private bodies but since this was not possible the researcher utilized the limited resource available to him.
Some questionnaire administered on management and staff of the organization visited was not returned some were returned unanswered while some came back with incomplete answers. All these limited our sample size form what it was originally intended.