Utilisation of budgets in clothing small medium and micro enterprises (SMMEs) within the Cape Metropole

Abstract

According to popular literature, the risk of business failure is described as high amongst small medium and micro enterprises (SMMEs), especially considering that businesses constantly deal with future uncertainties. These uncertainties are amplified by the constant threat of yet another recession looming in the future. Considering that each business owner’s main objective is to generate profits for growth, failure to plan for future endeavours may compromise the goals of the business; which often leads to financial disaster. Budgeting, however, is an important factor for consistency and growth in any business, however, the perception was formed that SMMEs do not make adequate use of budgets in order to make effective decisions. The main objective of this study was to determine to what extent SMMEs make adequate use of budgets to make effective business decisions. This empirical research study was regarded as descriptive research and fell within the ambit of the positivistic research paradigm. The study was also regarded as quantitative in nature and data was collected by means of distributing 30 questionnaires to owners and/or managers of clothing SMMEs in the Cape Metropole. The sampling method chosen was non-random sampling, specifically purposive sampling, with the main intention to obtain rich data. All respondents were assured of confidentiality and anonymity, and all responses were voluntary in nature. Relevant findings were made from descriptive statistics, which were followed by recommendations, which aimed to mitigate and/or solve the identified research problem. A final conclusion was also drawn on the aforementioned phenomenon. Key words: Small and medium micro finance (SMME), budgets, planning tools, business failure, performance measures.