Abstract:
The aim of this study was be to determine the effects of budgets on financial performance of SMEs in Narok county; Narok town. The study needed to achieve the following specific objectives; to identify the impact of budgeting on expenditure in SMEs, to identify the role of budgeting on expenditure in SMEs and to investigate the relationship between budgeting and financial performance of SMEs. The study used descriptive research method and cluster sampling was used to sample out SMEs to collect data from, the study targeted all SMEs in Narok town CBD, specifically, around cooperative bank, oltalet mall all the way up to kandas’ ground, data presentation was be done using tables, charts and graphs where necessary then data analysis was further done using chi-squire and conclusions drawn from the data analysis, the findings therefore revealed that there is a strong positive effect of budgets on financial performance of SMEs in Narok town. The study recommended that effective budget implementation strategies should be facilitated through capacity building, robust systems and processes prioritization, and close monitoring for evaluation. Managers should get involved in budget execution to enhancing the overall budget implementation in SMEs. Further, financial performance indicators should be made known to the users of budgets so that during budget preparation and implementation they should be keenly analyzed for better results.
