A STUDY ON BUDGETING OF START-UP SMALL

BUSINESS ENTERPRISES IN

NORZAGARAY

BULACAN

A Business Research Presented to the

Faculty of Bachelor of Accountancy Division

La Concepcion College, Inc.

In Partial Fulfillment of the Requirements for the Degree

Bachelor of Science in Accountancy

By

Duazo, Cathyrene P.

Legaspi, Tricia May D.

Prepotente, Joyce Anne R.

May 2024
 CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Budget is used as part of planning process in terms of setting goals, implementing

activities, and the expenditure that is likely to be incurred. To start a business, finance has

been considered as the soul of every business. Many businesses tend to fail due to poor

planning and budgeting. The aim of the study is to assess how budgeting significantly

helps these start up small business. A proper budgeting contributes a huge success in

operating small and businesses, and as for starting up business a good foundation makes

it stand out in a competitive market.

Examining the financial landscape is a vital component of starting and running a

small business. In the vibrant world of startups, effective budgeting can show the

difference between the success and failure. Understanding the variation of budgeting for

a startup small business requires attentive knowledge, good decision making and

financial analysis to forecast the budget for the upcoming plan. This study serves to

explore into the elaboration of budgeting for startup progress, researching best practices,

recurring mistakes, and new strategic methods to financing.

A Startup means a company on the first stages of operations. Companies

generally start with high costs and limited revenue, which is why they look for capital
from a variety of sources such as venture capitalists. Funding sources also include family

and friends, venture capitalists, crowdfunding and loans. Startups are riskier than

established businesses because they can fail, but they can also be incredibly special

places to work with amazing rewards, a strong emphasis on innovation, and excellent

learning opportunities. This study will assess how budgeting significantly helps these

start up small businesses, also is to know the relationship between the uses of budgets

with financial performance in startup business enterprises environment.

Statement of the Problem

The study seeks to determine the budgeting practices of startup small and medium

business enterprises and to identify how these practices helps small and medium

businesses to optimize budget in order to sustain success. The researcher prepared

questions that sought for answers:

1. What is the demographic profile of respondents in terms of:

1.1 Age

1.2 Gender

1.3 Educational Attainment

1.4 Asset

1.5 Number of years operating

2. What is the budget preparation of small and medium business owner to open a

business.

2.1 Financial resources

2.3 Business strategy

3. What are the common budgeting challenges encountered by startup small and

medium enterprises?

4. H

5. H

Objective of the Study

The main objective of this study is to determine budgeting practices of startup

small and medium business enterprises and to identify how these practices helps small

and medium businesses to optimize budget in order to sustain success.

1. To identify the demographic profile of the respondents in terms of age, gender,

educational attainment, asset and number of years operating.

2. To determine the budget preparation of small and medium business owner to open a

business.

3. To effectively allocate restricted resources to attain vital goals and intention while

securing financial strength.

4. To determine if there is any significant impact of startup small business enterprises.

5. To know what is the best recommendation that can be apply to the impact of startup

small business enterprises.

Hypothesis
 Ha: There is a significant study of budgeting startup small business enterprises in

Norzagaray Bulacan.

Ho: There is no significant study of budgeting startup small business enterprises

in Norzagaray Bulacan.

Significance of the Study

Aspiring business owners. The findings of this research can guide those who

want to start a small business but has a limited capital. Using our research, they can

already have an idea on where to focus on the aspect of budgeting. That way they can

avoid loss and bankruptcy.

Management and Employees. This study will guide the employees on how they

can improve their service to avoid such losses. The management will know what areas in

their services they may improve by reading the study.

Entrepreneurs. Entrepreneurs who are aware of the research can have greater

confidence on managing their business as well as expanding what they’re offering

without thinking they may experience bankruptcy because they already have knowledge

about budgeting. This confidence contributes to a sense of trust and reliability in the

business.

Researchers. The study contributes to the existing body of knowledge on

budgeting start-up small businesses. Researchers can build upon the findings, exploring

related aspects and further refining the understanding of entrepreneur’s experiences in

this context.
Scope and Limitation of the Study

This research study will focus on analyzing the budgeting practices used by newly

established businesses in Norzagaray, Bulacan. This comprises the technique used for

budget preparation, allocation of financial resources, and setting goals or plans. This

study is to evaluate how well budgeting strategy work in helping newly small and

medium businesses in Norzagaray, Bulacan, to meet their financial targets.

This study will be limited only in newly business enterprises in Norzagaray,

Bulacan. The main purpose is to identify the budget preparation and common budgeting

challenges of startup businesses to present possible result in regards to this problem.

This study examines every characteristic of owner’s individual information that

has an impact on their budgeting and challenges that have been faces in their businesses

such as educational attainment, their gender, age and asset size. Also, the number of years

operating the business. This will be conducted in Norzagaray Bulacan on 2024-2025.

Each of the respondents are given same question to answer, and this study will focus only

in newly business enterprises in Norzagaray, Bulacan.

Definition of Terms

Budgeting - is the process of creating, managing, and adjusting a budget. Budgeting is an

essential tool for organizations to plan, control, and optimize their financial resources to

achieve their strategic objectives.

or exchanging goods or services with the primary goal of earning a profit. This includes

all the day-to-day tasks and functions that are necessary for the company to function and

achieve its objectives. Business operations encompass a wide range of activities such as

manufacturing, procurement, inventory management, logistics, sales, marketing,

customer service, and administrative tasks.

Competitive Market - It is a market structure in which numerous firms compete against

each other to offer goods or services to consumers.

Enterprises - typically refers to business activities conducted by large organizations or

companies, often referred to simply as "enterprises." These enterprises can span various

industries and sectors, such as technology, finance, manufacturing, healthcare, and more.

Finance - It is the discipline that deals with the management of money and other assets.

It encompasses various activities such as investing, borrowing, lending, budgeting, and

managing risks. The primary goals of finance are to optimize the allocation of resources,

maximize returns on investments, and manage financial risks effectively.

Financial Landscape - The "financial landscape" refers to the overall environment and

conditions within which financial activities take place. This serves as a crucial framework

for understanding, navigating, and participating in the complex and dynamic world of

finance, influencing decisions and actions across various sectors and stakeholders.

Forecasting - It refers to the process of making predictions or estimates about future

events, trends, or outcomes based on past and present data, knowledge, and assumptions.
The operational use of forecasts involves applying predicted future conditions to guide

decision-making and planning within an organization.

Funding - It refers to the financial resources provided to an individual, organization,

project, or initiative to support its operations, activities, or growth. The use of funding

involves strategic allocation and management of financial resources to support the

ongoing operations, growth, and success of an organization while maximizing value for

stakeholders.

Start-up business - This refers to a newly established company or venture that is

typically in the early stages of development. These businesses are often characterized by

innovative ideas, rapid growth potential, and a high degree of uncertainty.

Venture Capitalist - A venture capitalist (VC) is an investor or investment firm that

provides funding to startup companies and small businesses with high growth potential in

exchange for equity ownership. Venture capitalists typically invest in early-stage

companies that have innovative ideas, disruptive technologies, or scalable business

models. The operations of a venture capitalist are focused on identifying, evaluating,

investing in, and supporting high-potential startups to generate attractive returns for

investors while fostering innovation and entrepreneurship.

REVIEW OF RELATED LITERATURE

Foreign Literature

Among the advantages of youth in technology and innovation, young people are

sometimes argued to be cognitively sharper, less distracted by family or other

responsibilities, and more capable of transformative ideas—this is in line with “Planck’s

Principle,” whereby younger people may be less beholden to existing paradigms of

thought and practice (Planck 1949; Dietrich and Srinivasan 2007; Weinberg 2006; Jones

2010; Azoulay, Fons-Rosen, and Graff Zivin 2019).

The 2020/2021 Global Entrepreneurship Monitor report confirms that

entrepreneurial activities and entrepreneurship education can “promote aspiration in life

and career as well as the outlook for future business sustainability for women”

worldwide. Unfortunately, new businesses and ventures are more likely to be created by

men than women (Global Entrepreneurship Monitor, 2020).

The existing gender equality in entrepreneurship in Thailand might lead to a more similar

type of behavior of both genders in starting und running a venture, resulting in fewer

gender differences than in other countries. However, the impact of knowing an

entrepreneur significantly enables entrepreneurs –both young businesses and established

for both genders, slightly stronger for male than for female entrepreneurs (Guelich,

2022).

When compared with their male counterparts, women entrepreneurs are in a less

competitive position to accessing national and international markets, resources and

support, and education and training. Most governments therefore promote

entrepreneurship education and training as strategies to mitigate and reduce equality

(Balestra, 2018).

Gender disparities among men and women in higher education and technical and

vocational education and training are not novel. Indeed, it is confirmed that gender

stereotypes, as well as socially constructed roles based on gender, can promote gender

disparities in education and training (Kollmayer et al., 2020).

According to (Wong et al., 2018) Conventional approaches to the study of SME

finance tend to focus on the changing financing options and preferences as small

businesses move through different stages. However, one of the limitations of such

approaches is that they do not explain how small businesses make decisions that lead to

their financial structures. This paper suggests that small business owners deliberately

choose how they manage their firms’ finance as a direct consequence of their personal

objectives for owning a business.

According to (Babajide et al., 2021) The study investigates how financial literacy

and financial capabilities influence small firms’ sustainability in Lagos and Ogun States,

Nigeria. It employs a survey research design to collect data from 300 small business
owners across the two States. Data collected were analyzed using Structural Equation

Modelling (SEM) technique. The study shows that environmental sustainability, financial

sustainability and social responsibility are significant determinants of small firms’

sustainability in Nigeria. Financial literacy and financial capabilities practice also have a

significant positive impact on firm sustainability. However, the use of savings product

shows a significant adverse effect on firms’ sustainability. The findings imply that

financial literacy knowledge and practice in small business operations enhance firms’

sustainability. The study recommends that small firms should incorporate sustainability

models into their business operations and improve their financial knowledge to maintain

sustainability. Small business owners should also invest their savings in an appropriate

investment product that suits their risk tolerance.

Local Literature

Micro-entrepreneurship can reduce poverty and creates employment

opportunities. Many micro-enterprises started every year but fail in their infancy due to a

lack of financial management knowledge. It aims to determine the respondents’ profiles,

business profiles, and the different areas of financial management practices. Micro-

enterprises highly practiced cash management and current liabilities management but

slightly practiced fixed asset management. Cash management and fixed asset

management significantly differ from all the other areas. Financial management practices

significantly differ in age, position, type, form, start, length, full-time employees,

beginning capital, asset, sales, profit, debt, and ending capital of the business. Studying
financial management practices contributes in developing proposed financial model

(Caclini, 2022).

A budget is an economic tool for realizing and facilitating the vision of an

organization. If a budget is to serve as a useful tool, then it is essential that all phases of

budgeting are appropriately linked and managed. This

study made use of the three types of research by methods: descriptive research to gather

the profile of respondents (size and type of business), budgeting practices (manager's

participation, linking budget development to strategy, rational allocation of resources,

flexibility continuous budget, and reduction of complexity and use of information

technology) and level of profitability; causal-comparative research to determine

differences between variables; and correlational research to determine the degree of

relationship between variables and for hypothesis testing (Fortuna, 2021).