The study investigated the relationship between operational disruption caused by the COVID-19 pandemic and the financial performance of small-scale businesses in Kakoba Division, Mbarara City. A cross-sectional survey design was employed with a sample of 165 respondents comprising 41 business owners and managers, 38 supervisors and cashiers, 71 customers/consumers, and 15 government officials selected through stratified random and purposive sampling techniques. Data were collected using structured questionnaires and analyzed using SPSS version 23. Results indicated that 78.0% of businesses experienced significant operational disruptions, with revenue declining by an average of 61.3% during the pandemic period. A strong negative correlation (r = -0.768, p < 0.01) was established between operational disruption intensity and financial performance. The study concluded that COVID-19 operational disruptions severely impaired small-scale businesses through supply chain interruptions, reduced customer traffic, workforce challenges, and regulatory compliance costs. It was recommended that government implement targeted financial support programs, businesses diversify operations and adopt digital platforms, and stakeholders develop comprehensive business continuity frameworks to enhance resilience against future crises.