Application
This unit describes the skills and knowledge required to identify financial requirements of a business, including profit targets, cash flow projections and strategies to garner financial support.
It applies to individuals who operate a small business or work within an existing micro or small businesses and interpret financial data.
No licensing, legislative or certification requirements apply to this unit at the time of publication.
Elements and Performance Criteria
ELEMENT | PERFORMANCE CRITERIA |
Elements describe the essential outcomes. | Performance criteria describe the performance needed to demonstrate achievement of the element. |
1. Identify costs, calculate prices and prepare profit statement | 1.1 Identify and document costs associated with production and delivery of business products and services 1.2 Calculate prices based on costs and profit margin, as an hourly charge-out rate for labour or unit price for products 1.3 Calculate break 1.4 Identify appropriate pricing strategies in relation to market conditions to meet business profit targets 1.5 Prepare projected profit statement to supplement the business plan |
2. Develop a financial plan | 2.1 Set profit targets or goals to reflect owner’s desired returns 2.2 Identify working capital requirements necessary to attain profit projections 2.3 Identify non 2.4 Prepare cash flow projections to enable business operation in accordance with business plan and legal requirements 2.5 Identify capital investment requirements accurately for each operational period 2.6 Select budget targets to enable ongoing monitoring of financial performance |
3. Acquire finance | 3.1 Identify start 3.2 Identify sources of finance, including potential financial backers, to provide required liquidity for the business to complement business goals and objectives 3.3 Investigate cost of securing finance on optimal terms 3.4 Identify strategies to obtain finance as required to ensure financial viability of the business |
Evidence of Performance
Evidence of the ability to:
develop a financial plan which identifies financial requirements of the business, including cash flow projections and a projected profit statement
follow the financial plan, including:
demonstrating an awareness of appropriate legal requirements
implementing strategies to monitor financial performance
identify sources and investigate costs of securing appropriate financial assistance.
Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.
Evidence of Knowledge
To complete the unit requirements safely and effectively, the individual must:
explain break
clarify costing for the business, including margin or mark
summarise financial decision-making relevant to the business
outline methods and relative costs of obtaining finance
summarise principles for preparing balance sheets
provide a detailed explanation of:
principles for preparation of cash flow forecasts
principles for preparation of profit and loss statements
purpose of financial reports
explain relevant accounting terminology
describe working capital cycles.
Assessment Conditions
Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the Management and Leadership – Small and Micro Business field of work and include access to:
software for financial calculations
relevant legislation, regulations, standards and codes
relevant workplace documentation and resources
case studies or where possible, real situations.
Assessors of this unit must satisfy the requirements for assessors in applicable vocational education and training legislation, frameworks and/or standards.
Foundation Skills
This section describes language, literacy, numeracy and employment skills incorporated in the performance criteria that are required for competent performance.
Skill | Performance Criteria | Description |
Reading | 1.1, 1.5, 2.1-2.5, 3.1, 3.2 | Identifies, analyses and evaluates complex information from a range of sources |
Writing | 1.1, 1.5, 2.1, 2.4, 3.2 | Prepares written reports and workplace documentation that communicate complex information clearly and effectively |
Oral Communication | 1.1, 3.2 | Uses specific and relevant language to secure finance and uses questioning and listening techniques to clarify outcomes Participates in verbal negotiations using tone and language suitable to audience |
Numeracy | 1.1-1.5, 2.1, 2.2, 2.4-2.6, 3.1, 3.3, 3.4 | Analyses numerical information to determine costs, prices, profit and losses, and other financial data |
Navigate the world of work | 2.4 | Appreciates implications of legal and regulatory responsibilities related to own work |
Get the work done | 1.1, 1.4, 2.1-2.3, 2.5, 2.6, 3.1, 3.2, 3.4 | Sequences and schedules complex activities, including implementing and monitoring financial strategies Makes a range of critical and non-critical decisions in relatively complex situations, taking a range of constraints into account, making adjustments as necessary Regularly uses formal thinking techniques to generate new ideas |
Sectors
Management and Leadership – Small and Micro Business