Advanced Diploma of Leadership & Management

BSBFIM601 Manage finances

Assessment 1

PART A

Business Revenue, Expenditure and capital investment Proposals

1.1 Cost
This is a business plan to operate a restaurant specializing in Guabao (kind of burger)
and cold dishes as appetizer. Start-up capital is $70,000, overheads cost including rent,
wages and stock. The location wills around Burwood, rent is $500 per week. There is
four staff in the restaurant, so the wages will be $600 per person per week. Stock would
be only around $5000 for food, but we need tables/chairs which my cost up to $30,000.
The goal of growth is just growing stably around 10% in the first two years.

1.2 Strategic Opportunity:

New Product: Cold dishes been invited
Expansion: After achieving stable income, once $50,000 has been generated a second
shop will be in the plan.
Outsourcing: The cleaning parts could be outsourced.
New Business Opportunities: Inter-state and overseas shops could be opened by
franchise.

1.3 Financial Budget

Start-up Capital $70,000

First 6 months’ rent $12,000

Furniture $20,000

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 First month food raw material $5,000

Wages Per month $8,000

Total start up capital

Projected profit and loss for 12 months:

Profit and
Loss Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Forecast

$480, $480, $480, $480, $480, $480, $480, $480, $480, $480, $480, $480, $5,760,
Sales
000 000 000 000 000 000 000 000 000 000 000 000 000

Cost of
$60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $60,0 $720,0
goods
00 00 00 00 00 00 00 00 00 00 00 00 00
Sold

Gross $420, $420, $420, $420, $420, $420, $420, $420, $420, $420, $420, $420, $5,040,
Profit 000 000 000 000 000 000 000 000 000 000 000 000 000

Operating Expense

$24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $24,0 $288,0
Rent
00 00 00 00 00 00 00 00 00 00 00 00 00

$96,0 $86,0 $80,0 $90,0 $95,0 $85,0 $90,0 $86,0 $80,0 $90,0 $95,0 $96,0 $1,069,
Wages
00 00 00 00 00 00 00 00 00 00 00 00 000

Advertisin $2,00 $2,00 $2,50 $2,50 $3,00 $3,00 $1,00 $1,50 $2,00 $2,00 $2,50 $2,50 $26,50
g 0 0 0 0 0 0 0 0 0 0 0 0 0

Depreciati $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $2,00 $24,00
on 0 0 0 0 0 0 0 0 0 0 0 0 0

Telephon
$6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $72,00
e and
0 0 0 0 0 0 0 0 0 0 0 0 0
Internet

Insurance $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $1,00 $12,00
0 0 0 0 0 0 0 0 0 0 0 0 0

Miscellan $1,00 $900 $800 $850 $1,00 $900 $800 $1,00 $750 $1,00 $850 $850 $10,70
eous 0 0 0 0 0

Operating $288, $298, $303, $293, $288, $298, $295, $298, $304, $294, $288, $287, $3,537,
Income 000 100 700 650 000 100 200 500 250 000 650 650 800

Other $25,0 $27,0 $26,0 $27,5 $27,0 $24,0 $24,5 $27,8 $27,8 $26,8 $24,5 $26,0 $313,9
00

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Expense 00 00 00 00 00 00 00 00 00 00 00 00

Net $263, $271, $277, $266, $261, $274, $270, $270, $276, $267, $264, $285, $3,223,
Income 000 100 700 150 000 100 700 700 450 200 150 050 900

Cash flow plans:

Find another investor to invest $35,000 total $70,000 as the start-up capital to begin this
business. All food supplies will be paid by cash in the first month then by 30-day account.
The aim is to generate at least $250,000 net profit at the end of the year.

Cash Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
flow
forecast

Staring $400,0 $400, $400, $400, $400, $400, $400, $400, $400, $400, $400, $400, $4,800,
cash 00 000 000 000 000 000 000 000 000 000 000 000 000
position

Incoming

Cash $500,0 $420, $450, $480, $500, $430, $440, $427, $470, $420, $510, $520, $5,567,
sales 00 000 000 000 500 000 000 000 000 000 000 000 500

Collection $200,0 $150, $180, $210, $190, $250, $120, $145, $155, $165, $150, $205, $2,120,
s from 00 000 000 000 000 000 000 000 000 000 000 000 000
accounts
receivabl
e

Other $85,00 $60,0 $75,0 $55,0 $50,0 $65,0 $45,0 $60,0 $75,0 $45,0 $60,0 $55,0 $730,0
cash 0 00 00 00 00 00 00 00 00 00 00 00 00
receipts

Total $785,0 $630, $705, $745, $740, $745, $605, $632, $700, $630, $720, $780, $8,417,
00 000 000 000 500 000 000 000 000 000 000 000 500

Outgoing

Fixed $250,0 $250, $250, $250, $250, $250, $250, $250, $250, $250, $250, $250, $3,000,
costs 00 000 000 000 000 000 000 000 000 000 000 000 000

Administr $100,0 $100, $100, $100, $100, $100, $100, $100, $100, $100, $100, $100, $1,200,
ation 00 000 000 000 000 000 000 000 000 000 000 000 000

Marketing $75,00 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $900,0
0 00 00 00 00 00 00 00 00 00 00 00 00

Operation $75,00 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $75,0 $900,0
s 0 00 00 00 00 00 00 00 00 00 00 00 00

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Variable $150,0 $150, $150, $150, $150, $150, $150, $150, $150, $150, $150, $150, $1,800,
costs 00 000 000 000 000 000 000 000 000 000 000 000 000

Administr $65,00 $65,0 $65,0 $65,0 $65,0 $65,0 $65,0 $65,0 $65,0 $65,0 $65,0 $65,0 $780,0
ation 0 00 00 00 00 00 00 00 00 00 00 00 00

Marketing $50,00 $50,0 $50,0 $50,0 $50,0 $50,0 $50,0 $50,0 $50,0 $50,0 $50,0 $50,0 $600,0
0 00 00 00 00 00 00 00 00 00 00 00 00

Operation $35,00 $35,0 $35,0 $35,0 $35,0 $35,0 $35,0 $35,0 $35,0 $35,0 $35,0 $35,0 $420,0
s 0 00 00 00 00 00 00 00 00 00 00 00 00

Capital Expenditure Budget

The process of budgeting for capital expenditures is essential for a business to operate
and grow from a sound financial position. Capital expenditures are expenses a business
makes to generate financial benefits over a period of years. Thus, a capital expense is the
cost of assets that have usefulness and can help a company create profits for a period
longer than the current tax year. This distinguishes them from operational expenditures,
expenses for assets that are purchased and consumed, or used up, all within the same tax
year. For example, printer paper is an operational expense; the printer itself is a capital
expense. Capital expenditures are much higher than operational expenses, covering the
purchase of buildings, equipment and company vehicles, although they may also include
items such as money spent to purchase other firms or on research and development.
Operational expenses are just what their name signifies, the expenses required for the
company to operate from week-to-week or month-to-month.

PART B

In developing the budgets and plans proposed, the topics below are to include details on
how:
 Negotiation was undertaken with relevant groups and individuals in ways to
build commitment to the plans
In large corporations, budgeting is a collective process in which operating units
prepare their plans in conformity with corporate goals published by top
management. Each unit plan is intended to contribute to the achievement of the

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 corporate goals. Unit managers prepare projections of sales, operating costs,
overhead costs, and capital requirements. They calculate operating profits and
returns on the investment they intend to use. The budget itself is the projection of
these values for the next calendar or fiscal year. As part of this process, each unit
presents its plans and budget to a reviewing upper management panel and may,
thereafter, make whatever changes result from instructions from or negotiations with
the higher level. Texts presenting, documenting, and defending the rationales
underlying the numbers are usually part of the planning document. Approved
budgets then become the road-map for operations in the coming year. Ideally
monthly or quarterly budget reviews track performance against the budget. As part
of such reviews, changes to the budget may be approved. At year-end managers
are judged by their performance against the budget.

 You identified and agreed on the links to the achievement of organisation

strategies
Strategy realisation essential elements
 motivational leadership - concentrates on achieving sustained performance
through personal growth, values-based leadership and planning that
recognises human dynamics
 turning strategy into action - entails a phased approach, linking identified
performance factors with strategic initiatives and projects designed to
develop and optimise departmental and individual activities
 performance management - involving the construction of organizational
processes and capabilities necessary to achieve performance through people
delivering results

 Your negotiated with your supervisor (your assessor) to obtain a clear

agreement of the matters to be incorporated into the budgets and plans
Planning and procedures play a crucial role in embedding sustainability into the day
to day operations of your business. Achieving the goals and strategies set by senior
management will rely, in part, on setting up the right work systems and clear
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 procedures. Providing information, training or mentoring will ensure that all
employees understand what is expected of them. Another crucial factor is making
sure that the procedures are applied consistently. This requires commitment from
employees to apply the procedures and from management to allocate the time and
equipment needed.

Regarding to the budgets and plans, they will show all outcomes confirmed in terms of
clear, concise objectives and timeframes. Also, incorporate the outcomes of your
negotiations and meet organisations approval process and provide written confirmation of
all delegations, accountabilities and responsibilities.

PART C

 Detail in writing all delegations and budget accountabilities for

implementation and management of your package

A written financial management and delegation’s policy is required as part of

meeting Standard 11 (Governance and accountability). The organisation develops,
implements and reviews procedures for financial delegations and internal controls in
the organisation, and financial management including insurance management and
management of service agreements.

Policy checklist

The following checklist will help you check that an existing policy covers this area
adequately.

The policy should:

‰ say who will be responsible for financial management

‰ explain how financial systems will be established and managed

‰ say how delegations of authority for financial decisions will be documented

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 ‰ show how the organisation will be protected from fraud and financial
mismanagement

‰ contain clear procedures and actions

‰ indicate the timing of any actions

‰ show when it was approved

‰ show when it was last reviewed.

Budget accountability is best understood and implemented as an evolutionary,

ongoing process best characterized by a culture that recognizes the need to follow
sound financial management and appreciates financial monitoring and controls.

 Develop a written procedure that details the recording systems and

documentation process you will follow for monitoring and controlling all
activities against your plans.
 Implement processes to monitor actual expenditure and to control costs
across the work team
 Monitor expenditure and costs on an agreed cyclical basis to identify cost
variations and expenditure overruns
 Implement, monitor and modify contingency plans as required to maintain
financial objectives
 Report on budget and expenditure in accordance with organisational
protocols

 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

Risk identification Risk rating (H/M/L) Contingency plan

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Risk Management and contingency plan:

Risk management is a systematic way of identifying potential risks within a project,

gauging or estimating the probabilities of these risks occurring, to then develop
strategies to manage these risks. In the commercial sector, considerable resources
are rarely available to strategies to publicly funded digitization projects, nevertheless
effective risk management plans can be put in place by adopting a systematic
process of identifying and evaluating potential risks and using this analysis to
develop strategies to manage and control them. This process can be broken down
into three main processes: assessment, implementation and monitoring.

Risk assessment is the process by which potential risks to project are identified and
assessed, and appropriate responses to these risks are developed. Firstly, a list of
the uncertainties involved in the project is produced. Secondly, the likelihood of the
uncertainties occurring and the relative impact they could have assessed. Thirdly
the risks are prioritized and strategies developed in order to minimize their
seriousness.

It is not too difficult to think of several “generic risks” involved in digital resource
creation. Listed below are the mail potential areas of risks for a vast majority of
digitization projects:

 Tasks involving third parties: shortage of food supplies/electricity

 Relevant staff development: Lack of Staff
 Compliance to Standard: The food standard may rise in the future
 Preservation and sustainability of resource: recycling equipment and waste
removal
 The appearance of competitors may result in the drop of sales.

Risk Analysis

Risk Analysis is a proven way of identifying and assessing factors that could
negatively affect the success of a business or project. It allows examining the risks

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 that organization face, and helps you decide whether or not to move forward with a
decision.

Risk Probability

The appearance of competitors and food industry standard to change are probable
in the future.

The corners of the chart have these characteristics:

o Low impact/low probability – Risks in the bottom left corner are low level, and
you can often ignore them.
o Low impact/high probability – Risks in the top left corner are of moderate
importance – if these things happen, you can cope with them and move on.
However, you should try to reduce the likelihood that they'll occur.
o High impact/low probability – Risks in the bottom right corner are of high
importance if they do occur, but they're very unlikely to happen. For these,
however, you should do what you can to reduce the impact they'll have if they do
occur, and you should have contingency plans Add to My Personal Learning
Plan in place just in case they do.
o High impact/high probability – Risks towards the top right corner are of critical
importance. These are your top priorities, and are risks that you must pay close
attention to.

 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
Underpinning all financial management systems is a series of financial policies and
procedures which guide operations and lay out how your organisation uses and
manages its money. A financial procedures manual brings all these together in one
document. It helps to establish financial controls within the organisation that ensure
accuracy, timeliness and completeness of financial data. The manual is generally
used by finance staff, but it can also act as a reference for trustees, managers and

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other staffs. There is no one model of a financial procedures manual and yours will
depend on the needs and structure of your organisation. Below are the content
headings of each section of a typical financial procedure manual. They can act as
the starting point for your own manual and can be adapted to cover the needs and
activities of your organisation. Your manual may also need to include key elements
of external financial regulations.
Review and evaluate financial management processes
o Collect and collate for analysis, data and information on the effectiveness of
financial management processes within the work team
o Analyse data and information on the effectiveness of financial management
processes within the work team and identify, document and recommend any
improvements to existing processes
o Implement and monitor agreed improvements in line with financial objectives
of the work team and the organisation

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