Financial Plan Budget and Projections

This document provides an overview of financial plan budget and projections for effective resource allocation and business growth. It explains the importance of budgeting and projections in financial planning, and provides insights into the sales forecast and expenses for the coming years. The document also highlights the strategies adopted by the company to control costs and achieve sustainable growth.

CONCLUSION

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
SUMMARY.....................................................................................................................................1
Financial Plan Budget..................................................................................................................1
Financial Plan Projections...........................................................................................................3
Conclusion...................................................................................................................................5
REFERENCES................................................................................................................................7

SUMMARY
Financial Plan Budget
Financial plans and budgets are to be made by the company to make effective allocation
of the resources. It refers to the spending plan of the business that provides the management and
company about the utilisation of resources and the targets to be achieved in the given resources.
Budgeting play an important role in the planning of business financial plan. A budget of any
business or company is prepared by making projections about the future sales and expenses. The
projections are made by the business on the basis of previous sales trend or analysing the market
conditions of the industry and its growth. Several adjustments and assumptions are to be made by
the business before preparing budgets and if assumptions are not proper it could affect the
business significantly. Management has to evaluate all the factors and forces that could influence
the business.
In the present case financial budget for the year 2020 -2021 has been prepared. It could
be analysed from the budget that business will be having sales of 32000 in September which will
increase to 96000 in October. It will be having revenues of 600,000 for the year as per the
financial plans. Projected takeaways will be highest in the month of December that also has the
highest sales. Yearly takeaways of company will be 150000 as per the projections of the
management. Projections for the sales have been made by the company after proper evaluation of
the industry trends and other factors such as inflation, market demand and economic factors that
could influence the budgets highly.
Company will be raising investments of250000 from the investors for the business. Funds
are invested in the business with the motive of earning significant returns. Company has to
ensure that business provides for the required returns so that it could provide adequate returns to
the investors (Hovland, 2019). Funds raised from investments will be used by the company for
purchasing machinery and equipments needed for the business.
It could be analysed from the budget that the cost of goods sold will be remaining at scale
except in month with higher sales. It will be maintaining effective control over the cost of goods
sold and other production expenses. Gross profit is the amount left with company after all the
cost of goods sold is covered. Cost of goods sold for the year will be 220000 against the sales.
1

Gross profit is highest in the month of December of 115000. It could be further increased by the
business by increasing the revenues by implementing sales promotion strategies so that
customers become aware of the products and services of company.
The budget also shows the expenses that will be incurred by company during the
financial year. It will have capital expenditure of 105000 in the month of September for
manufacturing the products. Advanced equipments will enable the company to conduct its work
faster and with efficiency. Depreciation will be provided over the fixed assets of the business. it
is also allowed as deduction in the income tax for reducing the tax liability of the business.
Depreciation will be charged on the straight line basis over the assets and total depreciation for
the year will be 7000. Maintenance charges refers to the wages paid to the workers for carrying
out cleanings, kitchen works and other maintenance works. Wages will be paid on weekly basis
and monthly wages amounts to 1000 that will be paid throughout the year (Reder and McKeag,
2020). Water expenses will be paid monthly amounting to 500. The electricity and gas charges
will be also paid on monthly basis amounting to 1000 each. All these utility expenses will be
paid monthly by the business.
Premises of the hotel and restaurant are taken on rent for which rent is to be paid every
month. Annual rent in the initial year will amount to 24500. Quarterly payment of the rent will
put burden on one month disturbing the cash flows of business. The internet and telephone
expenses of the business will amount to 165 for the company. Travelling expenses amounts to
100 for every month. As per the new projects. All the expense will be incurring evenly
throughout the year except for salaries and wages. Effective monitoring and control has to be
maintained by the business for keeping the costs under control.
Income tax has to be deducted by the by the company every month based on the sales of
company. It is essential for the business to maintain effective control over the business ensuring
that there are sufficient earnings to the company. Cash flows of the business are adequate and
shows that the company will earn the desired goals and objectives of the business. a company
without adequate cash flows cannot run the business successfully. There must be enough inflows
so that operational and other business activities of the company could be run successfully
without any interruptions (Page and Lambrias, 2019). By evaluating the present business
financial plan it could be summarised that the cash inflows of the business are adequate and also
2

the expenses are under control. It has to keep effective monitoring over the existing operations of
the business.
Financial Plan Projections
Financial Projections refers to the forecast for future expenses and revenues. Typically,
projections would be accounting for the historical and internal data and includes the predictions
of the external factors of the market. It is required to develop midterm and short term financial
projection. The short term projections account for first year of the business that is outlined
monthly. The midterm projections accounts for the coming business years. It provides about the
inflow and outflows of the business. It is a defined plan that gives the company and management
a structured direction to follow. Financial projections optimise the pricing, planning productions,
major expenditures and for monitoring the cash flows.
Developing business plan requires listing all the expenditures that are needed for making
the company off the ground and subsequent cost of operation. The financial projections about the
future are made on the basis of previous budgets and after analysing the trends of the sales and
revenues. Forecasts are made by the companies and management by proper study and research of
3

the current scenarios and requirements of the business for making the projections (Bruno and
et.al.,2020). It requires the business to consider the adjustments and factors related to inflations,
market conditions, demand of the products, supply of the materials, economic conditions of the
country and such other factors that could influence the business. a company not considering
these factors in the financial projections could get significantly affected by these factors. As a
single factor can be influencing all the projections. Projections about the future sales or revenues
are to be made very carefully for the business as all other expenses and costs are adjusted against
the inflows of funds. It has to make further adjustments and arrangements of the resources on the
basis of inflows. It also evaluates on the basis of projections whether it will be able to meet the
future costs of the project and operations or not. On the basis of this evaluation company
identifies and make arrangements for the funds from sources that will prove to be most
beneficial.
Sales forecast refers to the process of estimating the future sales. The sales forecast could
not be made just on guesswork or on exact predictions. It involves underlying the drivers of sales
and assumptions and tracking & managing them. It could be analysed that the sales for the years
are showing continuous increasing trend. Company will be achieving significant growth in the
coming five years as per the estimates. As per the estimates it will be having sales turnover of
750000 in year 2020 as per the demand and market scenarios. The revenues are estimated on the
basis of present sales in the industry. In the year 2021 it will be having sales of 1,350,000. In this
year there will be significant increase in the sales due to the implementation of the new strategies
and marketing strategies. Undertaking the new strategies will enable the company to manage its
cost and to acquire increased market share which will be increasing the revenues of company.
Successful implementation of the scenarios will increase the sales of business to
1,620,000. The sales level will be required to be maintained by the company by effective
management and cost control measures. It has to ensure that the customer needs and demands are
fulfilled and met by continuously enhancing the servings and products of the restaurant and hotel
for retaining the loyal customers. Customer loyalty could be gained only if they are provided
worth for their money as well as proper services and response to the customers on issues and
problems faced by them (Ferris, Kim and Schlusche, 2017). Every company is aimed at
retaining the old customers and building new customer base.
4

The sustainable growth of the business and effective flow of the business will raise the
sales level to 1,782,000 in year 2023. Proper management and efficient services will enable the
company to achieve the sales forecast. At this stage will grow stable rate with restricted
customers. Along with time inflation and economic effects are also considered that show steady
rise in the sales forecast. It has to further enhance the products and services for increasing the
sales and revenues. It is essential for the business to bring new things in the market for retaining
and maintaining customers (Guthrie and Parker, 2016). Marketing strategies are reframed at this
time for attracting the attention of customers towards the restaurant using various platforms such
as news papers, broadcasts and social media platform that is the fastest source of spreading the
information to people.
Sales are forecasted to be 1,960,000 for 2024 after analysing the market condition and
trends of the business. Significant increase will be achieved with the marketing efforts and
product enhancement. By this time company will be having a established position in the market
and industry. This is required to be maintained by effective strategies and management. It has to
ensure that sustainability is maintained in the growth and profitability of business.
Conclusion
It could be concluded from the above report that the financial plan of the business seems to
be effective and company will be achieving the goals and objectives within the defined time
frame. The restaurant and hotel industry will be growing n the coming years seeing the present
trends and scenarios. The demand for the new offerings will attract the customers towards the
restaurants. It is providing a new taste and experience to the people which will increase the
recognition in the locality. The strategies adopted by the company are highly effective in
controlling the costs and expenditures of the business. The cost efficient strategies will enable
the company to earn the desired profits and to achieve sustainable growth over the years. The
current trends shows that company can acquire significant market share by providing the
customers of their needs and preference. This is very essential for the business to ensure that the
products provided by them are meeting the demands of the customers or making them desirous
of their products. The restaurant is providing quality products which will increase the trust
among the customers and also bring new customers to the business. The financial projections and
budget plans have been made after analysing all the factors and market forces that could
5

influence the business. It is estimated that the business will earn significant growth over the
coming years by its quality products and services. It will increase the market share of the
business. Profits will provide adequate returns to the investors which will attract new investors
towards company. This will be helping the company in expanding its business.
6

REFERENCES
Books and Journals
Hovland, T., 2019. Effective Financial Projections for a Startup: Get a Business Started with
Meaningful Financial Projections. Journal of Accountancy.227(3) p.38.
Reder, R.S. and McKeag, K.R., 2020. Delaware Court Refuses Corwin Cleanse due to
Inadequate Disclosures of Conflicts of Interest and Financial Projections. Vand. L. Rev. En
Banc.73.p.1.
Bruno, R. and et.al.,2020. The Cost-Optimal Analysis of a Multistory Building in the
Mediterranean Area: Financial and Macroeconomic Projections. Energies.13(5). p.1243.
Page, A. and Lambrias, K., 2019.The performance of the Eurosystem/ECB staff macroeconomic
projections since the financial crisis. Economic Bulletin Articles, 8.
Ferris, E.E.S., Kim, S.J. and Schlusche, B., 2017. Confidence interval projections of the Federal
Reserve balance sheet and income (No. 2017-01-13). Board of Governors of the Federal
Reserve System (US).
Guthrie, J. and Parker, L.D., 2016. Whither the accounting profession, accountants and
accounting researchers? Commentary and projections. Accounting, Auditing &
Accountability Journal.
7