Effect of Budgeting Control on the Financial Performance of SMEs in Germany
Abstract
The study sought to examine the effect of budgeting control on the financial performance of SMEs in Germany. The study used the quantitative technique where data was gathered from the local business owner of SMEs located in Germany's three cities Munich, Berlin and Stuttgart because they have a high number of SMEs. Surveys were self-administered and also sent out to the business owners. The research instruments adopted included questionnaires and the interview guide. The study found that budgetary control integrates the organization’s strategic planning with budgets and processes of cost control. The budgetary control also identifies the budgeting /financial skills required for better decision-making and identifies key financial indicators for the business and how and when to monitor them. The budgetary control identifies sources of financial and business data that provide insights into business and financial strategies when converted into budgets. The budgetary control helps interpret budgets and performance measurements as communication tools and finally helps to think pro-actively beyond budgeting. The study also found that budgetary control economizes management time by using the management by exceptional principle. The study concluded that budgeting control has a significant and positive relationship with financial performance. The adoption of the budgeting control allows SMEs to boost their financial performance while improving contributions to the economic situation, and employment in Germany. The study recommended that SMEs in Germany should pay very close attention to the budget control procedure. The Federal government needs to proceed with the protection of the SMEs to promote income generation, financial development as well as enhance the task chances to the young generation. The study recommended various other nations ought to emulate the German method of SMEs defense for them to be able to totally manipulate their potential in their citizens as well as completely utilize its resources. The Federal government needs to continue with the protection of the SMEs because they are mostly playing an essential function in promoting Germany's economic development through employment creation and generating revenue for the nation. The business owners need to be subjected to brand-new skills and also emerging technologies to be able to make products that can compete both locally and also internationally.
Keywords: Budgeting control, budgets, performance, SMEs, Germany
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