A Critical Review of the Challenges of Budgeting in New Agricultural Business Enterprises in Kano State

Abstract

Budgeting involves a systematic business analysis and projection of an enterprise’s activities in a manner that specific objectives to be achieved in a defined time frame subject to certain resources are clearly established.  Established businesses tend to ride on existing data and experiences to plan the future. This paper focuses on how new entrants in the agricultural business would overcome the peculiar handicaps of dearth of historical data to enjoy the rich benefits of effective budgeting. Thus, the paper explore the context of new agricultural business enterprises to determine how far their peculiarities impact on the companies’ budgeting processes. Guided by information from the review of relevant literature, the researchers analysed data from a survey of selected farm holdings in Kano; that is, those farmers that have been in business for not more than three years. The results show that farmers acknowledge the relevance of good budgeting for their business success, but they experience budgeting frustrations in the earlier years of operation, especially within the first three years, than in later years. When the business activities of these farmers are paired with budgetary information of more established firms, the researchers found that carefully selected market information of established competing firms can greatly enhance the budgeting success of new agribusinesses in Kano.

Keywords: Budgeting, Agribusiness, Enterprise Budgets, Budget Evaluation, Strategic Fit.