Expanding Your Business
A financial plan is a must for any business that wants to succeed; this is what turns goals into reality. The financial plan, or budget as it is also called, helps guide the day-to-day decision making of the business. Comparing forecast numbers to actual results, important information about the overall financial health, and overall efficiency of the business. (Scarborough, 2011) When it comes to creating a financial plan for my driving range I would keep 3 questions in mind, and I would consider these important assumptions. The 1st is what profits can the business expect to learn? Attainable forecasting can help create a more detailed financial report, which helps with budgeting and the allocation of funds. The 2nd question I would ask myself what is the projected amount of sales? Providing excellent customer service is key for any business, having an understanding of reasonable sales projection can help determine when and how to staff. (Scarborough, 2011) The 3rd and final question I would ask would be what depreciation expenses could the business expect to incur at the current sales and usage rate. GAAP defines depreciation as a systematic and rational process of distributing the cost of tangible assets over the life of the assets. (Fasab.gov) If your going to have a detailed financial report you must know what your business is worth.
The component of the financial plan would be the break-even analysis. An example of this for my business is as follows: We don't really expect to reach break-even until a few months into the business operation. We will be charging $4.00 for a bucket of balls and we speculate that if for every two buckets of balls purchased we sell one drink at a cost of $2.00 we will have an average cost per unit of 25%.
Projected cash flow is defined as the timing and amounts of cash that flow in and out of the business for a certain period, due to the seasonal...
Bibliography: Scarborough, M. (2011). Effective small business management. Upper Saddle River: Pearson Learning Solutions.
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