Abstract:
This paper reports the impact of business planning on key financial
performance in Sri Lankan Small and Medium Enterprises. Business planning
is a critical activity and it is differently considered as an essential tool to
initiate and manage a business successfully. The study expected to examine
the availability and nature of the business plan and its impact on key financial
performances of the businesses were evaluated. Major performance indicators
such as ROI, Profit Growth Rate, Asset Turnover Ratio, Payback Period and
Current ratio were measured against business planning. The data were
collected through primary sources and secondary sources including journals,
research papers and a questionnaire. Eighty entrepreneurs have been selected
as the sample. The sample represented the manufacturing SMEs in urban areas
in the Western Province since most of the rural SME’s rarely practice Business
Planning. The study explored that the comprehensiveness of the Business
Planning is at average level denotation that they prepare moderately
comprehensive Business Plans. Further the results suggested that there is a
significant relationship between the nature of the business plan and the
financial performance of the business.
