Plan small business finances

This unit describes the performance outcomes, skills and knowledge required to develop a financial plan to support business viability.Specific legal requirements apply to the management of a small business.


This work is undertaken by individuals who operate a small business.

The unit is suitable for existing micro and small businesses or a department in a larger organisation.

Elements and Performance Criteria



1. Identify costs, calculate prices and prepare profit statement

1.1. Identify and document costs associated with the production and delivery of the business' products/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-even sales point to establish business viability and profit margins

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


2.1. Set profit targets/goals to reflect owner's desired returns

2.2. Identify working capital requirements necessary to attain profit projections

2.3. Identify non-current asset requirements and consider alternative asset management strategies

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-up and ongoing financial requirements according to financial plan/budget

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

Required Skills

Required skills

analytical skills to interpret financial data

communication skills to secure finance

literacy skills to develop a financial plan and to interpret legal requirements and financial reports

numeracy skills to calculate costs, prices, profit and other financial information

research skills to identify costs and sources of finance.

Required knowledge

break-even analysis

costing for the business, including margin/mark-up, hourly charge out rates and unit costs

financial decision making relevant to the business

methods and relative costs of obtaining finance

principles for preparation of balance sheets

principles for preparation of cash flow forecasts

principles for preparation of profit and loss statements

purpose of financial reports

relevant accounting terminology

working capital cycles.

Evidence Required

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

Evidence of the following is essential:

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

knowledge of financial decision making relevant to the business.

Context of and specific resources for assessment

Assessment must ensure:

access to relevant documentation

candidate's individual circumstances and work in the context of establishing or running a small business, are the basis for assessment.

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples are appropriate for this unit:

portfolio of evidence including financial plan and records

review of projected profit statement prepared to supplement the business plan

review of cash flow projections

oral or written questioning to asses knowledge of principles for preparation of cash flow forecasts.

Guidance information for assessment

Holistic assessment with other units relevant to the industry sector, workplace and job role is recommended, for example:

BSBSMB401A Establish legal and risk management requirements of small business

BSBSMB404A Undertake small business planning

BSBSMB405A Monitor and manage small business operations

BSBSMB406A Manage small business finances.

Range Statement

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Costs may include:

direct/indirect costs

fixed, variable, semi-variable costs

overheads and employee costs

Pricing strategies may include:

competitor analysis

cost/volume/profit analysis

cost factors

cost plus pricing

demand-based pricing


market conditions

penetration pricing

perceived value

product mix


Financial plan may include:

analysis of sales by product/service, identifying where they were sold and to whom

cash flow estimates for each forward period

current financial state of the enterprise (or owner/operator)

estimates of profit and loss projections for each forward period

financial performance to date (if applicable)

likely return on investment

monthly, quarterly or annual returns

non-recurrent assets calculations

profit, turnover, capital and equity targets

projected profit targets, pricing strategies, margins

projections of likely financial results (budgeting)

projections, which may vary depending on the importance of such information and the stage in the life of the business

resources required to implement the proposed marketing and production strategies (staff, materials, plant and equipment)

review of financial inputs required (sources and forms of finance)

risks and measures to manage or minimise risks

working, fixed, debt and equity capital

working in conjunction with external consultants e.g. investment analysts, accountants, financiers

Profit targets/goals may include:

break-even point

cost of goods/services sold

gross profit/net profit

desired actual/notional salary for owners/managers

desired return on investment

sales turnover/gross fees or income

Cash flow projections may include:

anticipated payments

anticipated receipts

customer credit policy/debt recovery

taxation provisions

Legal requirements may include:

contractual arrangements (partnership agreements, trust deeds)

corporations law

industrial law (for payroll records)

taxation law

Sources of finance may include:

personal, financial institutions, trade/industry sources

government sources, for example commonwealth and state/territory governments which provide various forms of technical and financial assistance including direct cash grants, loans, subsidies, tax concessions, and professional and technical advice

Financial backers may include:

financiers/banks/lending institutions

leasing and hire purchase financiers

providers of venture capital



Unit sector

Competency Field

Management and Leadership - Small and Micro Business

Employability Skills

This unit contains employability skills.

Licensing Information

Not applicable.