Date of Conferral
Doctor of Business Administration (D.B.A.)
Roger W. Mayer
Over 390,000 businesses failed in the United States in 2014. The primary cause for most business failures is poor planning, and budgets are a primary means of planning. The purpose of this correlational study was to examine to what extent, if any, budget planning, budget control, and the age of the business significantly predict financial performance in small businesses. The target population consisted of small business leaders in the Midwest. Churchill and Lewis's theory on the relative importance of selected management factors of small businesses through 5 stages of development formed the theoretical framework for this study. Data were collected through a self-developed online survey using existing Likert-scale measures for each variable based on prior research about those variables. A convenience sample of 86 Midwest U.S. small business leaders identified through SurveyMonkey's crowdsourcing pool resulted in 77 participants with useable responses. Standard multiple linear regression determined the extent to which budget planning, budget control, and age of the business predicted the value of financial performance. The model as a whole was able to significantly predict financial performance. The linear combination of predictor variables (budget planning, budget control, and business age) accounted for approximately 12% of the variation in financial performance. Budget planning significantly predicted financial performance, even when budget control and business age were held constant. Better planning using budgets may help leaders improve the financial health of their small businesses, potentially reducing business failures and job losses. Financially strong and healthy small businesses can create jobs and improve the economic health of local communities.