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Budgeting Process In Zimbabwe

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1.1. INTRODUCTION
Many small businesses attempt to operate without a formal budget. Even some businesses that have a budget seldom consult it, meaning they are not gaining the business advantages that they could be through budgeting. For start-up entrepreneurs, a budget is like a roadmap that can help them set goals and evaluate the legitimacy of their business idea. For established small businesses, a budget can be used to take the pulse of the business, determining how the business is performing through the years, and helping identify possible future investments. By regularly consulting a budget, business leaders can compare actual figures and catch potential business shortfalls or other problems early. Budgets can also be instrumental in …show more content…
BACKGROUND TO THE STUDY
As for the background to the study the researcher would want to impart knowledge about the budgeting process, small and medium firms in Zimbabwe and measurement of their performance.
All businesses have to budget. They either have to cut their coat according to their cloth in the short term or provide themselves with additional resources if they want more resources. Budgets are specific targets set for a specific period (J.T.M.Chikondo). Budgets provide a basis for directing and evaluating the performance of individuals or segments of organizations and also structure the decision-making environment (Bruns & Waterhouse, 1975).
The budgeting process consists of three main stages, the setting phase, operating phase and the feedback stage.
Setting stage: this is where the target setting is done.
Operating stage: actual performance of activities is done according to set standards.
Feedback stage: actual results are compared with set standards. …show more content…
 How do we measure business performance?
 What relationship exists between budgeting process and firm’s performance?
 How do SMEs conduct their budgeting process in Zimbabwe?
 What is the formal budgeting process and how does it affect performance of SMEs?
 What are the problems encountered in the budgeting process?

1.6. HYPOTHESIS PROBLEM
Null Hypothesis (H0): there is a positive relationship between the budgeting process and business performance.
Alternative Hypothesis (H1): there is no relationship between budgeting process and business performance.

1.7. JUSTIFICATION OF THE RESEARCH

 The research will help owners/managers of these small and medium firms to improve their budgeting process after they see how it affects the performance of their firms.
 Can also be used as reference material by accounting students to enhance their knowledge of the budgeting process in relation to small to medium enterprises.
 This study will explore the budgeting process specifically of small to medium firms which is not widely known.
 The study can also inform the Zimbabwean government of how the SMEs conduct their budgeting process, if there is need for assistance, it could then be

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