Basic Financial Planning (Page 5 of 9) in pdf

Basic Financial Planning Page 5

FINANCIAL PLANNING

Financial planning, record-keeping and control is so large a

subject that you can only learn so much from a short training

program. There are many books on the subject available from

libraries or bookshops.

Keeping Control

Every business must calculate costs

accurately, monitor changes (such as wage

It is important to know how much

rises) and review it’s pricing policy. At least

running an organisation or business will

one member must have the skills to draw

cost and whether you can generate enough

up budgets and cash flows though it is

income to cover these costs. This is done

better if all members have good financial

by preparing a

budget

including wages,

skills so they can cover for sickness and

material costs, rent, power etc - the

question reports. The organisation should

business’ overheads. From this a

break

discuss its financial situation regularly.

-even analysis

can be worked out.

break-even analysis

is an estimate of

future income and expenditure which will

help you decide if the business will become

profitable and when. It is vital in planning,

especially deciding if you will need a loan

or overdraft.

If the organisation is operating

commercially these figures will help it

calculate the selling price of its product

or service. Adding together all the costs

of operating the business and fixing a profit

margin will give a total cost that can be

matched to expected sales to produce

a selling price.

P 163

Basic Financial Planning Page 5