Modification History
Not applicable.
Unit Descriptor
This unit involves the development of a financial plan to support business viability. It is suitable for setting up or existing micro and small businesses or a department in a larger organisation.
This unit is related to BSBSBM404A Undertake business planning.
This unit involves the development of a financial plan to support business viability. It is suitable for setting up or existing micro and small businesses or a department in a larger organisation.
This unit is related to BSBSBM404A Undertake business planning.
Application of the Unit
Not applicable.
Licensing/Regulatory Information
Not applicable.
Pre-Requisites
Not applicable.
Employability Skills Information
Not applicable.
Elements and Performance Criteria Pre-Content
Not applicable.
Elements and Performance Criteria
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Elements and Performance Criteria |
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Element |
Performance Criteria |
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1 |
Analyse the financial requirements of the business |
1.1 |
Income and outgoing expenditure is identified and assessed to plan for business viability |
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1.2 |
Costs associated with the production and delivery of the business' products/services are identified and documented |
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1.3 |
Appropriate pricing strategies are identified in relation to market conditions to meet the profit targets of the business |
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1.4 |
Contribution margins of products/services are considered to obtain the optimum sales mix |
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1.5 |
Profit projections are prepared to supplement the business plan |
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2 |
Develop a financial plan |
2.1 |
Profit targets/goals set to reflect owners desired returns |
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2.2 |
Working capital requirements necessary to attain profit projections are identified |
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2.3 |
Non-current asset requirements are identified and alternative asset management strategies considered |
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2.4 |
Cash flow projections are prepared to enable business operation in accordance with the business plan and legal requirements |
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2.5 |
Capital investment requirements are identified accurately for each operational period |
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2.6 |
Budget targets are selected to enable ongoing monitoring of financial performance |
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3 |
Acquire finance |
3.1 |
Startup and ongoing financial requirements identified according to financial plan/budget |
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3.2 |
Sources of finance, including potential financial backers, to provide required liquidity for the business are identified to complement business goals and objectives |
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3.3 |
Cost of securing finance on optimal terms is investigated |
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3.4 |
Strategies to obtain finance are identified as required to ensure financial viability of the business |
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Required Skills and Knowledge
Not applicable.
Evidence Guide
The Evidence Guide identifies the critical aspects, knowledge and skills to be demonstrated to confirm competence for this unit. This is an integral part of the assessment of competence and should be read in conjunction with the Range of Variables.
Critical Aspects of Evidence
Development of a financial plan which identifies the financial requirements of the business, including profit targets, cash flow projections and strategies for the acquisition of finance
Underpinning Knowledge *
* At this level the learner must demonstrate understanding of a broad knowledge base incorporating some theoretical concepts.
National, State/Territory and Local Government legislative requirements affecting business operation, especially in regard to Occupational Health and Safety and environmental issues, EEO, industrial relations and anti-discrimination
Financial decision making relevant to the business
Basic costing for the business, including margin/mark-up, hourly chargeout rates and unit costs
Breakeven analysis
Working capital cycles
Methods and relative costs of obtaining finance
Purpose of financial reports
Relevant accounting terminology
Basic accounting principles
principles of budgeting
Principles for preparation of profit and loss statements
Principles for preparation of balance sheets
Principles for preparation of cash flow forecasts
Underpinning Skills
Numeracy concepts to analyse financial information regarding the business
Communication including reporting
Ability to relate to people from a range of social, cultural and ethnic backgrounds and physical and mental abilities
Resource Implications
The learner and trainer should have access to appropriate documentation and resources normally used in the workplace
Consistency of Performance
In order to achieve consistency of performance, evidence should be collected over a set period of time which is sufficient to include dealings with an appropriate range and variety of situations
Context /s of Assessment
Competency is demonstrated by performance of all stated criteria, including paying particular attention to the critical aspects and the knowledge and skills elaborated in the Evidence Guide, and within the scope as defined by the Range of Variables
Assessment must take account of the endorsed assessment guidelines in the Business Services Training Package
Assessment of performance requirements in this unit should be undertaken in an actual workplace or simulated environment
Assessment should reinforce the integration of the key competencies and the business services common competencies for the particular AQF level. Refer to the Key Competency Levels at the end of this unit
Key Competency Levels
Collecting , analysing and organising information (Level 2) - to acquire and plan finances
Communicating ideas and information (Level 2) - to obtain and convey financial information
Planning and organising activities (Level 2 ) - to comply with legal requirements and plan finances
Working with teams and others (Level 2) - to obtain finance and financial information
Using mathematical ideas and techniques (Level 2) - to plan and maintain finances
Solving problems (Level 2) - to maximise business financial viability
Using technology (Level 2) - to optimise business performance
Please refer to the Assessment Guidelines for advice on how to use the Key Competencies
The Evidence Guide identifies the critical aspects, knowledge and skills to be demonstrated to confirm competence for this unit. This is an integral part of the assessment of competence and should be read in conjunction with the Range of Variables.
Critical Aspects of Evidence
Development of a financial plan which identifies the financial requirements of the business, including profit targets, cash flow projections and strategies for the acquisition of finance
Underpinning Knowledge *
* At this level the learner must demonstrate understanding of a broad knowledge base incorporating some theoretical concepts.
National, State/Territory and Local Government legislative requirements affecting business operation, especially in regard to Occupational Health and Safety and environmental issues, EEO, industrial relations and anti-discrimination
Financial decision making relevant to the business
Basic costing for the business, including margin/mark-up, hourly chargeout rates and unit costs
Breakeven analysis
Working capital cycles
Methods and relative costs of obtaining finance
Purpose of financial reports
Relevant accounting terminology
Basic accounting principles
principles of budgeting
Principles for preparation of profit and loss statements
Principles for preparation of balance sheets
Principles for preparation of cash flow forecasts
Underpinning Skills
Numeracy concepts to analyse financial information regarding the business
Communication including reporting
Ability to relate to people from a range of social, cultural and ethnic backgrounds and physical and mental abilities
Resource Implications
The learner and trainer should have access to appropriate documentation and resources normally used in the workplace
Consistency of Performance
In order to achieve consistency of performance, evidence should be collected over a set period of time which is sufficient to include dealings with an appropriate range and variety of situations
Context /s of Assessment
Competency is demonstrated by performance of all stated criteria, including paying particular attention to the critical aspects and the knowledge and skills elaborated in the Evidence Guide, and within the scope as defined by the Range of Variables
Assessment must take account of the endorsed assessment guidelines in the Business Services Training Package
Assessment of performance requirements in this unit should be undertaken in an actual workplace or simulated environment
Assessment should reinforce the integration of the key competencies and the business services common competencies for the particular AQF level. Refer to the Key Competency Levels at the end of this unit
Key Competency Levels
Collecting , analysing and organising information (Level 2) - to acquire and plan finances
Communicating ideas and information (Level 2) - to obtain and convey financial information
Planning and organising activities (Level 2 ) - to comply with legal requirements and plan finances
Working with teams and others (Level 2) - to obtain finance and financial information
Using mathematical ideas and techniques (Level 2) - to plan and maintain finances
Solving problems (Level 2) - to maximise business financial viability
Using technology (Level 2) - to optimise business performance
Please refer to the Assessment Guidelines for advice on how to use the Key Competencies
Range Statement
The Range Statement provides advice to interpret the scope and context of this unit of competence, allowing for differences between enterprises and workplaces. It relates to the unit as a whole and facilitates holistic assessment. The following variables may be present for this particular unit:
Legislation , codes and national standards relevant to the workplace which may include :
award and enterprise agreements and relevant industrial instruments
national, State/Territory and Local Government legislative requirements affecting business operation, especially in regard to Occupational Health and Safety and environmental issues, EEO, industrial relations and anti-discrimination
relevant industry codes of practice
Costs may include :
direct / indirect costs
fixed, variable, semi-variable costs
Pricing strategies may include :
cost/volume/profit analysis
competitor analysis
market conditions
perceived value
penetration pricing
skimming
discounting
Pricing methods may include :
mark up on cost
hourly chargeout rates
unit cost of production
Profit targets / goals may include :
desired return on investment
desired actual/notional salary for owner/manager(s)
sales turnover/ gross fees or income
cost of goods/ services sold
gross profit/ net profit
breakeven point
Financial plan may include :
working in conjunction with external consultants e.g. investment analyst, accountant/s, financiers
the current financial state of the enterprise (or owner/operator)
financial performance to date (if applicable)
likely return on investment
a review of financial inputs required (sources and forms of finance)
projections of likely financial results (budgeting)
projected profit targets, pricing strategies, margins
profit, turnover, capital and equity targets
risks and measures to manage or minimise risks
working, fixed, debt and equity capital
non-recurrent assets calculations
projections may vary depending on the importance of such information and the stage in the life of the business
monthly, quarterly or annual returns
analysis of sales by product/service, identifying where they were sold and to whom
estimates of profit and loss projections for each forward period
cash flow estimates for each forward period
resources required to implement the proposed marketing and production strategies (staff, materials, plant and equipment)
Cash flow projections may include :
customer credit policy / debt recovery
anticipated receipts
anticipated payments
taxation provisions
Financial backers may include :
financiers/banks/lending institutions
shareholders/partners/owners
The Range Statement provides advice to interpret the scope and context of this unit of competence, allowing for differences between enterprises and workplaces. It relates to the unit as a whole and facilitates holistic assessment. The following variables may be present for this particular unit:
Legislation , codes and national standards relevant to the workplace which may include :
award and enterprise agreements and relevant industrial instruments
national, State/Territory and Local Government legislative requirements affecting business operation, especially in regard to Occupational Health and Safety and environmental issues, EEO, industrial relations and anti-discrimination
relevant industry codes of practice
Costs may include :
direct / indirect costs
fixed, variable, semi-variable costs
Pricing strategies may include :
cost/volume/profit analysis
competitor analysis
market conditions
perceived value
penetration pricing
skimming
discounting
Pricing methods may include :
mark up on cost
hourly chargeout rates
unit cost of production
Profit targets / goals may include :
desired return on investment
desired actual/notional salary for owner/manager(s)
sales turnover/ gross fees or income
cost of goods/ services sold
gross profit/ net profit
breakeven point
Financial plan may include :
working in conjunction with external consultants e.g. investment analyst, accountant/s, financiers
the current financial state of the enterprise (or owner/operator)
financial performance to date (if applicable)
likely return on investment
a review of financial inputs required (sources and forms of finance)
projections of likely financial results (budgeting)
projected profit targets, pricing strategies, margins
profit, turnover, capital and equity targets
risks and measures to manage or minimise risks
working, fixed, debt and equity capital
non-recurrent assets calculations
projections may vary depending on the importance of such information and the stage in the life of the business
monthly, quarterly or annual returns
analysis of sales by product/service, identifying where they were sold and to whom
estimates of profit and loss projections for each forward period
cash flow estimates for each forward period
resources required to implement the proposed marketing and production strategies (staff, materials, plant and equipment)
Cash flow projections may include :
customer credit policy / debt recovery
anticipated receipts
anticipated payments
taxation provisions
Financial backers may include :
financiers/banks/lending institutions
shareholders/partners/owners
Unit Sector(s)
Not applicable.
