Managing and Running a Small Business

Managing and
Running a Small
Business
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Table of Content
Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
P1 Covered in brochure ..............................................................................................................3
P2 Covered in brochure...............................................................................................................3
P3 covered in brochure................................................................................................................3
P4 Provide a monthly cash flow forecast by showing both fixed and variable cost which is
related to income..........................................................................................................................3
P5 Explain Break even analysis in relevance of company..........................................................5
P6 Interpretation of financial statements.....................................................................................7
Interpretation..................................................................................................................................11
Interpretation..................................................................................................................................12
P7 Discuss legislation and regulations that have impact on small business..............................15
CONCLUSION..............................................................................................................................15
REFERENCES .............................................................................................................................16
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INTRODUCTION
There are different objectives of an organisation to operate within market but one common
objective that every business owner has is to earn profit. Small scale businesses are the one that
contribute a lot in development of nation as these are the one that offer employment to people
and also come up with innovative products and services. This report is based on scenario in
which Aldgate East is providing suggestions to local businesses communities for running a
successful business. This report includes monthly cash flow forecast, Break even analysis and
legislation and regulations that have impact on small business.
Main Body
P1 Covered in brochure
P2 Covered in brochure
P3 covered in brochure
P4 Provide a monthly cash flow forecast by showing both fixed and variable cost which is
related to income
Statement which consists information about all inflows and outflows of cash of specific
time period is known as cash flow statement. This statement support organisation in decision
making activity. Various sources of cash flow forecasting are given as follows:
Equity finance: This is most commonly type of finance which is used by several
companies as they tend to raise funds by selling of company’s shares. There are varied reasons
that company would not able to sold its share but main reason is that it is operating at small scale
and possess very limited market value which does not allow to minimise its profitability. So,
another best alternative which is considered by the management of small business enterprise is to
obtain funds its friends or relatives and so on.
Bank loan: This is one of the popular methods which is used by small business enterorise
to raise finance as it involves proper and systematic procedure and is very easy to understand
(Miller, 2020). They provide financial assistance by provide loan to small enterprises in return
for interest which is paid for a particular period of time.
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Planning, budgeting and forecasting: These are three significant aspect which help
company to make an effective financial planning regarding future as it is uncertain. Making
planning regarding the investment of funds so that they could use it optimally. Forecasting is
necessary as it involve several predictions which facilitate proper decisions so that they could
ensure growth in a best possible manner. This provide assistance in preparing budgets by
estimating future and make a decision of long-term schemes. The several methods of planning,
budgeting and forecasting are as follows:
Measure moving average: This tool and technique would aid the company to collect and
gather sources of information which provide a better picture of a company. In a dynamic
environment, changes are taken place rapidly which provide business opportunity. This aspect
would help the company to determine the current position of a business enterprise (Esmerova,
2020).
Time series data as well as other details: This method is more valid as it involves the
preparation of production schedules in a respective time period. Other uses of this technique are
that it helps in proper implementation of planning by allocating the time carefully and the
management of concerned firm provide information by analysing budget so that best and great
decision could be taken.
Hence, above mentioned tools could be applied by as they could make proper financial
planning and emphasise on maximising revenue by assessing the availability of resources so that
they could enhance the greater efficiency. For maximising profitability, company would decide
course of action which provides excellent growth as it also helps in making best use of resources
in an appropriate manner.
Cash flow Statement
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