FINANCIAL PLANNING AND CONTROL IN SMALL AND MEDIUM ENTERPRISES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Financial planning and control has become a complex management function for both small and medium retailing organizations. Whatever the size of the retail business, adequate and proper financial planning and control are necessary and inevitable. There is no substitute for adequate and proper financial planning for either a new or an existing retail business, many small independent retailers often begin business without adequate funds or proper financial planning, and this has led stores failures. Inadequate financial planning is not limited to small retailers in some instances large chain stores miscalculate their revenues and expenses, thereby causing financial hardships. These errors in judgment may be offset by the overall profits of the chain, however, and may not be readily apparent to the casual observer. (Redinbaugh, L.D. 1987). The financial planning and control function in an organization has the main objective of assisting the management of that organization.

This assistance is directly towards the planning and control activities of manager, but other activities well benefit as well, if the system is well conceived and used; for example, the co-ordinating and motivating aspects of management a good financial planning and control system is one which is in “contex” what is done is relevant to the purposes of that particular organization and the managers who work for it, whatever, those purposes and however they may be measured and appraised. Inevitability, financial fall short of this ideal systems in practice fall short of this ideal, either in their design or in the way they are used. (Professor Robson, A.P. 1988). In essence, the management of capital is concerned with obtaining funds and using them well. The implication is clear enough if involves planning. It means calculating cost of men, machine and materials. It means evaluating the market and the potential success of the product. It means figuring the cost of land, building and capital. And once everything has been decided on, it means making certain that schedules are kept, quality is maintained and that actual cost do no exceed estimated costs. In another words, it also means control. (Anreder, S.S. 1977P.4).