Business plan financial objectives involve

A company exhibits strategic intent when it pursues ambitious strategic objectives and concentrates its competitive actions and energies on achieving that objective.

Business plan financial objectives involve

The aim in managing this performance should be to maximise net profit and net cash surpluses of the operation. The two main measures, therefore, are net profit and net cash flow.

Each indicator for any given period is calculated as follows: Total income revenue less direct costs or C. Total receipts inflows less total payments outflows is equal to net cash flow surplus. Net profit is calculated as the excess of income revenue over expenses of the operation for a given period.

Income revenue is the earnings of the business and expenses are it's running costs. Net cash flow surplus is calculated as the excess of receipts inflows over payments for a given period. Receipts are the cash inflows of the business, payments are it's cash outflows or outgoings. See also performance metrics Financial Plan Outline 1 Break even analysis One of the main financial objectives is to perform a break even analysis.

This should be done before preparing the final financial plans for your operation. You should know the sales break-even point, that is, the level of sales necessary to meet the total business running costs. You can also use break-even analysis to determine the level of sales to achieve a desired profit target.

See also sales break even point 2 Categorise costs as fixed or variable Fixed costs are constant. They do not change when sales levels change provided the business does not change its operating capacity.

Variable costs change proportionally to changes in business activity. When sale levels change, these costs also change up or down. Examples of variable costs are stock purchases, raw material purchases, and direct costs job material purchases.

business plan financial objectives involve

The sales income of the business must be enough to cover it's variable costs and it's fixed cost's as well as the required profit. The contribution margin is the excess of sales income over the variable costs of the business for the period sales less direct costs.

Marketing plan - Wikipedia

The contribution margin measures how much sales contribute towards meeting fixed costs and the desired net profit of the business. This is the one of the key financial objectives, as without sufficient contribution margin you cannot meet your operating costs and you will be in negative net profit territory.

See also sales break even point. The sales forecast is of prime importance because it influences many of the cost forecasts for your business. See also performance metrics 7 Forecast capital expenditure requirements Prepare an annual capital expenditure forecast for each year.

This shows details of your proposed capital expenditure for the period in the business plan. Potential lenders will critically analyse your cash flow forecasts to determine your ability to meet loan repayments.

A cash flow statement shows the intended cash receipts and payments of the business over the period of the business plan, which then allows the cash flow to be calculated. A forecast cash flow statement shows the cash receipts inflows and payments outflows of the operation, which enables future cash positions to be predicted.

This is one of the key financial objectives of your business, and dictates any required level of funding over the coming trading period budget year. They can be used to identify strengths and weaknesses in planned operating activities. Ratios are compared with standard benchmarks such as industry averages for acceptability.

business plan financial objectives involve

Ratios should also be improving over time. The identification of any unacceptable ratios should cause you to review and adjust relevant sections of the operational plan to produce satisfactory forecasts and results.

For a comprehensive understanding of financial ratios see our eBook relationships that show the health of your business. Financial records are necessary for the financial control of the operation.

Records of financial transactions enable accurate reports to be prepared for monitoring the financial results of the operation.Jun 29,  · One set of marketing plan objectives that business owners keep a close eye on are the financial objectives that determine the return on the marketing plan and its overall profitability.

Revenue. Oct 03,  · A Standard Business Plan Outline [Updated for ] by: Start from the very beginning understanding that your business plan ought to be specific to your business needs and objectives.

Every business ought to have a plan, but not every business needs a full formal plan with carefully crafted summaries and descriptions.

/5(). The business plan financial objectives involve measuring financial performance to reflect the total operational performance. The aim in managing this performance should be to maximise net profit and net cash surpluses of the operation.

The two main measures, therefore, are net profit and net cash flow.

Financial Objectives

Basically, the Operational Plan is a plan for the implementation of strategies contained within the Strategic Plan. It is a management tool that facilitates the co-ordination of the organisation's resources (human, financial and physical) so that goals and objectives in the strategic plan can be achieved.

The business plan financial objectives involve measuring financial performance to reflect the total operational performance.

The aim in managing this performance should be to maximise net profit and net cash surpluses of the operation. The objectives for the first three years of operation include: To create a service-based company whose primary goal is to exceed customer's expectations.

To increase the number of clients served by at least 20% per year through superior performance and word-of-mouth referrals.

Financial Management - Meaning, Objectives and Functions