Keeping super strict budgets and financial records has almost zero effect on whether a small business actually makes money.
March 19, 2026
Original Paper
Financial Information Practices as Determinants of SME Profitability: Evidence from a Developing Economy
SSRN · 6307861
The Takeaway
Business 101 teaches that disciplined bookkeeping is the key to success, but a study of hundreds of SMEs found that record-keeping practices explained none of the variation in profit. This suggests that in volatile developing economies, external factors or entrepreneurial 'hustle' far outweigh the benefits of formal financial management.
From the abstract
In developing economies, the sustainability and competitive performance of small and medium enterprises (SMEs) are often linked to the quality of their financial management systems. This study investigated the relationship between financial information practices and SME profitability in a developing economy, with particular emphasis on SMEs operating in Abakaliki Metropolis, Ebonyi State, Nigeria. Specifically, the study examined the effects of financial record keeping, budgeting information, an