ABSTRACT There is contradiction between business planning and its performance.

Researchers who have undertaken these studies, especially those of small firms, have drawn conflicting conclusions: some claim that businesses plans lead performance in small and medium businesses; others conclude that formal strategic planning has no potential payoff for small and medium businesses because it is a heady, high-level, conceptual activity suited solely to large firms and therefore has no effect on the performance of small and medium businesses. This controversy is interesting and hence there is a need to research the relationship between business planning and performance. The assessment of the performance of small businesses with business plans and with those ones with no businesses plans is required. Which ones are performing better? Which ones do fail? Why?. In short, this study entails on a Comparative Study of Planning and Performance in Small and Medium Businesses in Mbeya City.