ASSESSMENT 1 – Project

Michel

Submission details
The Assessment Task is due on the date specified by your trainer. Any variations to this
arrangement must be approved in writing by your trainer.
Submit this document with any required evidence attached. See specifications below
for details.
You must submit both soft copies and printed copies of your answers.
Soft copies-
Upload on the eLearning to the specific submission folder with a cover page clearly
indicating your name, student id, assessment no and the unit name or put that
information in the header and footer of your documents.
Printed copies-
Submit to your Trainer with the "Assessment Cover Sheet" (Filled out and signed
appropriately) attached on top of your documents.

Description
This assessment consists of three parts
PART A
You are to research and prepare the following revenue, expenditure and capital investment proposals for a
business or strategic opportunity of your choice. This opportunity must be for a business that, as a minimum
has:
 Start-up capital
 Overheads including rent, wages, stock, etc
 Scope for growth

Your strategic opportunity may include one of the following:

 New product / service development
 New models / revisions of products / services
 Expansion / contraction of operational activities
 Alliances / joint ventures
 Outsourcing / in sourcing
 New business opportunities

The reports must include:

 Financial budgets including start-up capital
 Projected profit & loss for 12 months
 Cash flow plans
 Capital expenditure budgets
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Introduction

The Bicycle Store opened its doors back in 2001, from our humble beginnings we have strived to
provide first-class customer service and after sales support. With an emphasis on online sales, we have
steadily grown to become one of the largest online bicycle retailers in Australia, no other retail bike
shop has as many bicycle and accessories available for purchase as The Bicycle Store.

For more than ten years we have been serving serious cycling enthusiasts, commuters and recreational
cyclists throughout Australia. Now with more accessories and components available for online
purchase, more efficient check out systems, help guides, how-to videos, news and reviews you'll find
the new look Bicycle Store a step above the rest.

Special projects or work programs

Analyse all components of our businesses when identifying internal strengths and weaknesses. Look
into the education, experience and overall competence of our employees to discover competitive
advantages in your workforce. Review your production systems to spot any competitive advantages or
clear impediments. Review our cost structure, pricing policies and financial ratios to determine our
financial strength or weakness compared with competitors.

Analyse financial trends, and interpret them in context of your objectives

The financial trend will be depending on the volume of purchase and supplier. Bicycle are for some
special group, but the group is bigger and more aged group. However, when finances are tight and the
chips are down, a company often begins making decisions to cut costs in order to preserve profit
margins or even its viability. Decreased revenues may lead companies to become tighter on supply
purchasing, travel expenses, new initiatives, training and equipment. Smart companies look for
optional expenses, more efficient ways to do things and maximizing purchasing power to get
discounts from suppliers and vendors.

Important Assumptions

Payment days are averaged at 45. This is an average figure used for planning purposes. Bicycle
manufacturers and some accessories suppliers offer dating programs where shops order product at the
annual trade show in September for delivery in February or March so that new product will be
available to customers at the beginning of the cycling season. Shops are invoiced for payment due,
depending upon the program, somewhere between May and July.
The financial projections presented here assume that suppliers will continue their current invoicing
programs with University Cycle Works. We are thankful for the active support and advocacy of the
various sales representatives who deal with us.

Other products are ordered on a monthly basis to replace items sold, such as tires, tubes, aptitude and
cages, ball bearings, drive chains, etc. These are invoiced at net 30. Some special orders are C.O.D.

We also assume that:

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  Interest rates will fluctuate only slightly.
 The level of discretionary income will remain steady or increase.
 The current enrolment at the university will continue at or above its current level.
 That the lack of auto parking in the university area will continue.
 That gasoline prices will continue to encourage alternative transportation, e.g., bicycle
commuting.
 World trade treaties will continue to allow shipping of material and product across all borders,
continents and oceans.

Financial Objectives

- To increase sales gross profit in the next financial year 10%

- To reduce the unnecessary expense 10%
- To increase commission 10%

The following chart compares five key indicators as they change over time. The indicators include
sales, gross margin, operating expenses, inventory turnover, and collection days. The chart uses
indicator values that are set to compare changes with the base year showing up as 1.00 and all other
years showing up as multiples from the base.

Stakeholders

There are both internal and external stakeholders such as our employees as the internal stakeholders
and management level as we value on the human resource. Another stakeholder is external
stakeholders including; Customer who like riding bicycle, Community, Government, Suppliers,
Partners, Creditors.

Consider past experiences, present trends and future expectations

In the past experience, the bicycle is for some group who like to ride but we found out from the
research that Australian like to ride the bicycle as their outdoor activity and it was still in some group.

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At the moment, we can see many people riding the bicycle as their everyday life and more of people
concern about their health and social environment.

In the future, we are expecting on aging group as they are more concern about their health, and they
have the ability to buy the expensive bicycle.

Start-Up Business

The current owner, Han Delbar, has sold the business to The Bicycle Store for $140,000. To help
determine this price, a business valuation specialist was hired. This professional priced existing store
fixtures, tools, and mobile leasehold improvements. These included bicycle wall racks, display cases,
track lighting, repair and assembly tools, supply cabinets and storage shelving, air compressor, etc.,
and are part of the purchase price.

The value of the existing company, its reputation, assumption of the business name, existing client
base, etc. is recognized as part of the purchase. It appears as a start-up expense in the following table
as Down Payment. The balance appears as a long-term liability. Additional payments shall be made
monthly.

Inventory, accounts payable, and invoices were tracked for five months to determine an accurate price
of current inventory and amounts of accounts payable assumed.

A deposit equal to one-month rent was required by the landlord as assurance in continuing the
current lease to the new owner. It appears as a short-term asset.

The Bicycle Store is investing some of his own money, partially a home equity loan, in the company. An
additional amount is being invested, as short-term interest free loans, by family members. This plan
calls for these loans to be repaid in the first year.

A budget is a plan to:

 control your finances
 ensure you can continue to fund your current commitments
 enable you to make confident financial decisions and meet your objectives
 ensure you have enough money for your future projects

It outlines what you will spend your money on and how that spending will be financed. However, it is
not a forecast. A forecast is a prediction of the future whereas a budget is a planned outcome of the
future - defined by your plan that your business wants to achieve.
 Financial analysis assessments
 Financial management manuals
 Legal and organizational policies, guidelines and requirements

List Amount Notes

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Professional Advisors
Legal 20,000

Accounting 30,000Software account

Training courses 25,000For employee

Website development 20,000

Graphic design fees 25,000

Licenses and Registrations

Licenses and permits 20,000

Business name registration 20,000

Professional association fees 10,000

Plant and Equipment

Computer equipment 7,000

Vehicles 10,000

Mobile phones 4,000

Office furniture 19,000

Photocopier 2,000

Fax machine 4,500

Manufacturing equipment 3,500

Tools 3,500

Business premises
One month's rent 6,000

Lease bond 12,000

Legal fees for lease preparation 4,000

Fit-out costs 2,000

Signage 4,000

Telephone installation 1,000

Utilities installation 2,500

Insurance premium 5,500

Operations
Business cards, letterheads 1,200

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Business travel and accommodation 1,400

Office supplies 1,500

Opening inventory and raw materials 1,300

Pre-opening advertising and promotion 1,400

Wages and salaries 1,500

Contingency 1,600

Working capital, 2-3 months 1,200

Total Establishment Costs 271,600

Sources of funds
Personal savings of shareholder1 80,000

Personal savings of shareholder2 80,000

Personal savings of shareholder3 80,000

Loans from Bank 150,000

Loans from -

Supplier credit -

Bank loans -

Grants -
Venture capitalists -
Other
Total Funds Available 390,000

Balance 118,400

Master Budget with Profit Projection

The Bicycle Store
Financial Q1 Q2 Q3 Q4
Year
Revenue
Sales on the shop 600,000 150,000 150,000 150,000 150,000

Sales on the website 700,000 175,000 175,000 175,000 175,000

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Gross Profit 1,30 0 325,000 0 325,000

Expense
General & Administrative 240,000 60,000 60,000 60,000 60,000
Expense
Marketing Expense 160,000 40,000 40,000 40,000 40,000

Employment Expense 400,000 100,000 100,000 100,000 100,000

Other 44,000 11,000 11,000 11,000 11,000

Total expense 604,000 151,000 151,000 151,000 151,000

Balance 696,000 174,000 174,000 174,000 174,000

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 PART B
Next, you are to develop the budgets and plans for your proposals developed in PART A. Throughout this
process, you assessor will act as your supervisor for all negotiations required.

In developing the budgets and plans proposed, you are to include details on how:
 Negotiation was undertaken with relevant groups and individuals in ways to build
commitment to the plans
 You identified and agreed on the links to the achievement of organisation strategies
 Your negotiated with your supervisor (your assessor) to obtain a clear agreement of
the matters to be incorporated into the budgets and plans

Your budgets and plans should:

 Show all outcomes confirmed in terms of clear, concise objectives and timeframes
 Incorporate the outcomes of your negotiations and meet your organisations
approval process
 Provide written confirmation of all delegations, accountabilities and responsibilities
 Be clearly documented and include a communication plan

Throughout this project you need to communicate clearly with your trainer/assessor. You are to demonstrate
professionalism with all communications, as you will be representing your company and position.

Trainer/assessor will role-play the position of supervisor, and all parties required for negotiation in order to
demonstrate competency in this unit.

Negotiate necessary change to the budget

The negotiating budget is depending on the allocated budget

1. The quality of products should be negotiated with supplier and discount from supplier
2. Marketing such as advertising for example billboard, brochure and online marketing
can negotiate as focus on online store with less cost
3. Sales commission can negotiate depend on the season of sales
4. Employee expense should reduce if we focus more on online store

The budgeting process is an essential component of management control systems and has been an
effective system by which management can successfully plan, coordinate, and control. The process
involves the creation and implementation of the broad objectives of an organization, the detailed
objectives, and a short-term and long-term financial plan. The philosophy and procedures used to
implement zero-base budgeting in industry and government settings are quite similar, only slightly
differing with the mechanics to fit the specific needs of each organization. The basic process of zero-
based budgeting is to justify budget requests every budgeting cycle, regardless of prior period
budgets. The following sections address the specifics including the history, implementation,
drawbacks and solutions, and behavioural impacts of zero-based budgeting.
During the budget development processes, when are qualitative methods more commonly are below;

• gather perceptions of events and other experiences

• explore and compare the range of perspectives
• identify important factors or variables when these are poorly understood
• provide vignettes or stories that illustrate patterns or outcomes captured by quantitative data
 PART C
Now you are to take your completed PART A and PART B and arrange an appointment with your assessor,
who will role-play a finance specialist. In this meeting, you are to
 Manage the meeting direction and progress
 Discuss with the finance specialist the aspects of your budgets / financial plans
(the package)
 Have your package reviewed, ensuring you validate your reasons and proposals
 Amend / revise your package as appropriate

You must now:

 Detail in writing all delegations and budget accountabilities for implementation and management
of your package

 Develop a written procedure that details the recording systems and documentation process you
will follow for monitoring and controlling all activities against your plans.

 Develop a risk management and contingency plan for all your proposed financial plans; along with
a policy and procedure to be followed when implementing these plans

 Develop a policy and procedure that outlines proper maintenance of records of financial
performance and provides for evaluation of the effectiveness of your financial management process

The trainer/assessor will be available to role play were required for this assessment

Meet with team member to coach them in role:

Minute of meeting
Date 14 February 2021
Subject: Financial planning for 2021
Location: meeting room 1
Attendees: Financial department: Job, Danny and Michel

Meeting agenda
Subject: Financial planning for 2021
Venue, time, date, duration:
Date 14 February 2021
Location: meeting room 1
Attendees: Financial department: Job, Danny and Elisabeth
Agenda:
No. Time Item Responsible
1 9am Summary about 2020 financial statement Financial manager
2 9.15am Job
Financial budget for 2021
3 10.00 am Danny
Financial software
4 11.15am Michel
Communication plan
11.45am Next meeting Financial manager

Item/Issue Outcome/action When Who

Summary about The financial budget 2020 was good. N/A Financial
2020 financial Financial manager thanks for all staff. manager
statement
The reason why it is important that budgets
are clearly explained to all staffs because the
internal budget shows an organization’s
expected financial performance, financial
position and cash flows disaggregated by
area of responsibility. Developing an
internal budget involves making decisions
on the allocation, use and administration of
resources to achieve the organization’s
objectives.

Also, Listening is one of the most important

skills you can have. How well you listen has
a major impact on your job effectiveness,
and on the quality of your relationships
with others

Financial Financial budget 2021 done since October 03/08/2021 Job

budget for 2021 2020. However, management would like
Financial department to conduct Due
Diligence

Due Diligence is required to mitigate the

risks in supply chain.

- It assesses the risks involved in

procurement process. Also calculates
the common strength and weakness
of procurement.
- Complete suppliers’ evaluation
which includes technical &
commercial competitiveness and
most prominent is commitment.
- Consider company policy and its
attributes.

Financial Business software with Standard Business 20/08/2021 Danny

software Reporting (SBR) functionality incorporates
standard terms that are used across
government for reporting requirements. The
Australian Reporting Dictionary (ARD)
presents these standard terms (or taxonomy)
in plain English. The online ARD supports
government and business to find and use
standard terms for policy and software
development. The ARD has two main
views:
 definition – a single dictionary term
or data element reducing the need to
create new definitions for reporting.
A single definition can be used
across any number of Reports. 
 report– a grouping of definitions
used in context of a report.

The contingency plan for this web-based

business is a documented structure which
provides instructional and referral
information for response to emergency,
back-up operation and post disaster
recovery for information technology
systems pertaining to system malfunction,
power failures and protection from hackers
and fraudulent activities. The contingency
plan answer questions such as is the data
backed up every day?

Whether alternative servers are available for

applications to be accessed from in the event
of failures, additional power generators for
power failures, if there are several access
points to the internet in instances whereby
one line goes down and the security plans
for databases if the system is hacked and
vital trade secrets are disclosed. 

1. Network issues
2. Incompatible software and the
data required to be displayed is
time consuming since it does the
match the current software and
alternate measures are utilized
3. Power outage
4. Hackers and illegal access to
databases
5. Viruses and spyware which
corrupt files
 Our company will use SAP software
updated.
Training will provide on 20 Aug 2021

Communicatio Financial team will conduct meeting every 18/08/2021 Michel

n plan Monday 9 am in meeting room 1 to report
the progress of work and barnstorming
section
Next meeting 18 Aug 2021, 9 am. Meeting room 1 18/08/2021 Financial
manager