Financial business plan - Djaouida Oukil

 

The financial manager (Djaouida Oukil) organises and collates financial information which is then assessed. Financial strategies and decisions are then made for the future years to increase customer satisfaction and in business terms the profitability of the company.

 

Financial forecast of 2021 – 2026:

 

2021:

-        Total revenue of £184500 coming from a local government grant, bank loan and private investor as well as two projects, this is essentially our start-up revenue.

-        Large operating expense figure of £185,245 in this year due to one of purchases of furniture and I.T equipment.

-        Inevitably this totals to a negative net profit/loss due to the expenditure being higher than the income of the business.

 

2022:

-        Private investors will provide the company with an additional revenue of £30,000 on top of the existing income from the two projects of this year.

-        In this year our expenditure will be just under the total revenue, however due to taxes applied this will set us back into a loss.

 

2023:

-        This year we will financially depend on our projects income for revenue. Due to a better reputation. From this year we go from a previous project unit of 2 per year to 3 per year.

-        Due to this increase in revenue we will also employ a technologist to the firm which will increase the expenditure of the firm.

-        Despite this, we will break-even in this year as our revenue in higher than our operating expenses and therefore we will make a net/retained profit of £1,085.

 

2024:

-        Revenue mirrors the previous year as we have a consist reputation due to marketing strategies (same number of projects as previous year).

-         Staff numbers are also constant.

-        What varies from the previous year is that we pay less dividends and set aside less contingencies in this year and therefore we have a higher retained/net profit.

-        This way the net profit left at the end of the year can be invested into other areas such as marketing or I.T upgrades and maintenance which is vital for our field of work.

 

2025:

-        In this year another project will be taken which means we will be doing 4 projects in the year. This will be due to the money that has been previously invested in marketing in building our reputation and image.

-        Therefore the revenue for this year will be greater than the previous and the operating expenses are constant which will lead to an increase in retained/net profit.

-        In this year we will begin to repay the bank as well as setting aside a larger amount of contingencies and paying dividends to our private investor.

 

2026:

-        As the previous year we will have 4 projects in this year due to our client referrals and positive feedback and reviews.

-        Therefore our income and expenditure is constant, what varies is the change in repayment amounts.

-        By the end of this year we will have repaid back the bank and private investor. Which will set us into a positive position for the next coming year.

 

 

Summary of the financial decisions & strategies based on financial and future forecast:

 

-        Investing more into marketing to boost the firm’s reputation and image which will in turn increase clientele and increase in clientele over time increases income.

 

-        Investing more into I.T by keeping up to date with software and new technology as a method of reaching to our clients and presenting our work through digital virtual reality.

 

-        Steady increase and expansion of staff in order to gain new expertise and generally increase in size as a firm so we can be more time efficient with work load, this way we can carry out sale generating activities in the spare time.

 

-        Over time due to size of the firm and reputation we will be taking on more projects and therefore there will be an increase if retained/net profit.

 

-        Due to the period 2021-2026 predicted as a time when we will be out of recession, there will be a larger amount of people wanting to invest in the company. To make the most of this period we could increase the profit fee from 5% to 5.5%

 

-        Over time through having punctual and regular purchases of our consumables we may be able to get a deducted prices on these products or a larger amount for the same price from our provider which will in turn reduce operating expenses.

 

-        Another way of reducing operating expenses will be through reduction of utility bills. To achieve this we will need to switch off lights when we leave a room as well as some spaces having motion sensor lighting. Use windows for cooling rather than mechanical cooling to reduce electricity use. Make sure taps are turned off properly and not dropping. To radiate heat in winter months, put a reflective board between the wall and heater.

 

-        Due to lack of land we can build on in the UK, building in flood risk zones will be a niche market we will fit into. Niche markets are created by identifying needs, wants and requirements that are not being addressed by others and developing a service to meet them.  

 

Project/service fee:

 

-        As shown in the cash flow sheets, each project income is estimated to be £75, 000 which is a 5% profit fee of the £1.5 million project which is the cost of the amphibious house.

 

-        Under this £75,000 bracket is the cost of the service for producing the amphibious home drawings, client consultation meetings, and planning permission and building regulation fees. In the final stage the digital virtual reality representation of the final product will be included in this service fee.

 

-        VAT is also included in the service charge so it’s not an extra charge needed to be paid out by the firm.

 

Contingencies:

 

-        Money will be set aside every year in case problems arise. This amount will vary based on how much as a firm we can afford to set aside.

 

Validation and verification:

 

-        On a regular basis the financial manager will carry out verification and validation methods on the financial data stored to ensure there are no inconsistencies or errors.

 

-        These checks will be carried out after new data has been inputted.  

 

-        They will also be carried out on a weekly basis (every Friday).

 

-        Through accuracy of data, correct decisions and strategies can be taken in order to make the business more profitable.

 

 

 

 

Definitions

 

Assets = Things a business owns, e.g. buildings, vehicles, stock and money in the bank.

 

Brand = Refers to the words and symbols such as a name, logo and slogan that represent a business’s identity.

 

Breakeven = The amount of sales a business needs to make to cover all its costs.

 

Business plan = A document that describes a business’s aims and objectives and a plan for how they can be achieved.

 

Capital expenditure = Money spent on buying or improving items that will be owned by a business for a long time, e.g. Buildings or equipment.

 

Carbon footprint = A measure of the impact that human activities have on the climate in terms of the total amount of greenhouse gases produced.

 

Cash flow forecast = An estimate of the amount of money a business will spend and receive within a certain time period (usually a year).

 

Private investor/ Creditor = Somebody to whom a business or individual owes money.

 

Expenditure = Money paid; cost.

 

Fixed assets = Things a business owns or controls for a long time, such as premises or equipment.

 

Fixed costs = Costs that stay the same, regardless of how many sales a business makes, e.g. Rent.

 

Gross profit = Total income from a business’s sales minus the direct costs of making the sales (this does not include a business’s overhead or running costs).

 

Margin = The difference between the selling price of a product/service and its costs. The higher the margin, the more profit that is made.

 

Marketing = Any activity a business does to try and contact potential customers.

 

Market positioning = How a business presents its products/services in relation to its competitors; higher quality, cheaper, etc.

 

Net profit = A business’s total income minus its total costs.

 

Profit and loss account = Shows a business’s total income and expenditure for a given period of time.

 

Target market = The group of customers a business chooses to focusits marketing efforts on.

 

Turnover = A business’s total sales income for a year.

 

Usp (unique selling point) = A benefit that a business offers to its customers that its competitors do not.

 

Values = The principles and beliefs that guide what a business does and how it does it.

 

Variable costs = Costs that vary in line with a business’s level of sales.

 

Viable = If a business idea is viable, it means that it should work and the business should be success.

 

Vision = A business’s long-term goal.