The Relationship Between Budgetary Control and Leadership Skills on the Financial Performance of SMEs: A Case Study of SMEs in Epworth.

Abstract

The purpose of the research was to evaluate the impact of budgetary control and leadership abilities on the financial performance of SMEs. The investigation was prompted by the many allegations of budget mismatch caused by the global economic slump that has surfaced. The Accounting Theory and the Theory of Balanced Scorecard, which addressed the reasons why management accounting procedures differ from firm to business, served as the foundation for the literature study. The rigorous process of developing hypotheses, conducting empirical tests to test theories, and having the ability to codify the results in a set of rules and predictions are the fundamental components of positivist ideology, which forms the basis of this research. The study used the deductive research methodology, which is often connected to scientific inquiry. The management staff of Epworth Local Board served as the study sample. The researcher used a descriptive approach, which focuses primarily on elucidating how budgetary management affects the relationship between SMEs’ financial success and leadership abilities. The study used a quantitative research strategy, which places a focus on objective measurements and numerical analysis of data gathered via surveys, questionnaires, and other methods, as well as through the use of computing tools to manipulate pre-existing statistical data. A cross-sectional time horizon research technique was used in the study, which produces data at a single point in time. Because stratified random sampling can reflect all of the population’s subgroups, it was used in this research. Thirty respondents who were purposefully selected were given the questionnaire, which the researcher used to gather primary data. Therefore, simple data presentations were used to represent the information gathered from the inquiry. It was discovered that the budgetary control methods used by SMEs are sufficient for enhancing financial performance and that Local Authorities employ at least one budgetary control system. The research also showed that, among other things, goal-setting was a key component of leaders’ active participation in budgetary management in SMEs. Based on the results, the researcher advised executives in SMEs to advocate for and set clear objectives since forecasting helps with decision-making and helps understand the effects of actions before they are taken.