Unraveling the Connection Between Budgeting Practices and Financial Performance of Start-Up Businesses

Despite the critical role of budgeting in financial planning and control, many businesses, particularly start-up, struggle to establish effective budgeting practices, leading to inconsistent financial performance. This study examined the relationship between budgeting practices and financial performance in start-up businesses. A descriptive-correlational research design was employed, with data collected from 75 start-up owners and managers using stratified random sampling technique. The study assessed the level of budgeting practices, the level of financial performance and the relationship between the variables. Findings indicate that start-ups demonstrate a very high level of budgeting practices, which corresponds with a high financial performance. Statistical analysis confirms a significant and positive relationship between budgeting practices and financial performance. These findings emphasized the need for entrepreneurs to adopt systematic budgeting practices - resource allocation, budget planning, financial forecasting, and budget control - to enhance financial performance as to profitability, growth in sales and liquidity.