Planning small business finances

BSBSMB402 Plan small business finances

This unit is about identifying financial requirements of a business, including profit targets, cash flow projections and strategies to garner financial support.

How you will be assessed

You will be assessed through:

• Assessor observation on the job
• Supervisor reference (if the assessor is not the supervisor)
• Review of your workplace documents
• Interview/assignment based on the requirements below.

Specific documents Submit a fully researched business financial plan according to the requirements below.

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Practical

You will be assessed in the workplace as a safe environment. You will need to demonstrate consistent performance of typical activities as a small business manager. You will need access to:

1. software for financial calculations.
2. relevant legislation, regulations, standards and codes.
3. relevant workplace documentation and resources.
4. case studies or where possible, real situations.

You will need to show that you can:

1. Develop a financial plan that identifies financial requirements of the business, including cash flow projections and a projected profit statement.
2. Follow the financial plan, including:
1. demonstrating an awareness of appropriate legal requirements.
2. implementing strategies to monitor financial performance.
3. Identify sources and investigate costs of securing appropriate financial assistance.

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Assignment/interview questions

1. Explain break-even analysis.
2. Clarify costing for the business, including margin or mark-up, hourly charge-out rates and unit costs.
3. Summarize financial decision-making relevant to the business.
4. Outline methods and relative costs of obtaining finance.
5. Summarize principles for preparing balance sheets.
6. Give a detailed explanation of:
1. principles for preparation of cash flow forecasts.
2. principles for preparation of profit and loss statements.
3. purpose of financial reports.
7. Explain relevant accounting terminology.
8. Describe working capital cycles.

Note: Your assessor may also ask you a variety of what if questions.

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Detailed requirements

1. Identify costs, calculate prices and prepare profit statement.

1. Identify and document costs associated with production and delivery of business products and services.
2. Calculate prices based on costs and profit margin, as an hourly charge-out rate for labor or unit price for products.
3. Calculate break-even sales point to establish business viability and profit margins.
4. Identify appropriate pricing strategies in relation to market conditions to meet business profit targets.
5. Prepare projected profit statement to supplement the business plan.

2. Develop a financial plan.

1. Set profit targets or goals to reflect owner’s desired returns.
2. Identify working capital requirements necessary to achieve projected profit.
3. Identify non-current asset requirements and consider alternative asset management strategies.
4. Prepare cash flow projections to enable business operation according to business plan and legal requirements.
5. Identify capital investment requirements accurately for each operational period.
6. Select budget targets so that you can do ongoing monitoring of financial performance.

3. Acquire finance.

1. Identify start-up and ongoing financial requirements according to financial plan/budget.
2. Identify sources of finance, including potential financial backers, to give required liquidity for the business to complement business goals and objectives.
3. Investigate cost of securing finance on optimal terms.
4. Identify strategies to obtain finance as required to ensure financial viability of the business.

 

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