Leadership in Business Report: Big Red Cycle Financial Planning

This report examines leadership in business, focusing on financial planning and management within the context of the Big Red Cycle, a bicycle manufacturer. It covers the creation and adjustment of team budgets, including revenue, expenses, and profit projections, with the goal of achieving a target of $1 million in pre-tax sales. The report details the responsibilities of the financial team, budget preparation, and the implementation of key performance indicators (KPIs). It also addresses contingency planning, such as dealing with unforeseen circumstances like a flooded property, and outlines financial management approaches including communication strategies, allocation of responsibilities, and the importance of feedback and auditing. The report emphasizes the importance of effective resource allocation, financial plan implementation, and the role of leadership in driving financial performance.

Running head: LEADERSHIP IN BUSINESS
LEADERSHIP IN BUSINESS
Name of the student:
Name of the university:
Author Note:

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Table of Contents
Task – 1......................................................................................................................................2
1. Team budget or financial plan.........................................................................................2
2. Making Changes to team budget and Financial plans.....................................................3
A.............................................................................................................................................3
3. Contingency Plan............................................................................................................5
4. Financial Management Approaches................................................................................5
Task - 2.......................................................................................................................................7
1. Monitor and Control Finance..........................................................................................7
2. Review variance..............................................................................................................9
3. Review and Evaluate Process........................................................................................10
Task – 3....................................................................................................................................14

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Task – 1
1. Team budget or financial plan
A.
The chosen assignment is based on the Big Red Cycle (BRB) is a bicycle
manufacturer based in Bendigo, Victoria. The company produces bicycles which are sold to
the retailers in the Australian market. As a managing director of the company, there are
certain activities related to the performance of the company and further it is needed to report
the CEO of the organization. The managing director of the company is wholly responsible for
the financial performance of the company and needed to provide report to the CEO based on
the performance. There are also responsibility including the maintenance of the effective
team, monitoring all the necessary actions, ongoing plans and many more. The other
responsibility includes implementing Target or KPI for production, productivity, wastage,
sales, income and expenditure. The accountability towards the long term plan on the budget
of the company. As per the adjustment of the budget it is required to meet the target of 1
Million sale before tax (Burns, 2016).
B.
The team which is taken in to account is the financial department which includes the
preparation of the financial reports of the company from the day to day activities of the
business. The responsibilities of the team is to gather and record the day to day operation or
transaction in the business and accordingly it is the responsibility of the employees to
perform their duties based on the provided norms and strategies. Then it is needed to collect
the relevant information of the business and the responsibilities of the upper level
management is to prepare the financial report or statement of the company. After the

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preparation of the financial statement, the overall financial performance of the company is
then analyzed.
C.
The budget of the company helps to allocate the resources of the company to different
departments and further manage the cash flow of the business in an effective manner. The
preparation of the financial budget includes the balance sheet, cash flow budget and income
statement of the business. The evaluation of the income is further based on the quarterly,
monthly and half yearly basis which further depends on the sustainability of the organization.
The financial budget of the firm is a powerful tool to accomplish the long term objective of
the organization.
After preparing the budget of the financial plan it is significant for the business to
implement and monitor the performance of the budget. The key tools which must be
implemented by the company are the cash flow projection, long term budget plan, operational
plan and many more. The various sections which are included in the preparation of the budget
are the cash budget, budgeted balance sheet and capital expenditure. In the preparation of the
budget, the company must concentrate to enhance the sales which will automatically increase
the production of the company. At the same time it is the responsibility of the company to
take care of the cost of goods sold. The significant role of the firm is to manipulate the cost
and sales of the business so that the company show profit.
2. Making Changes to team budget and Financial plans
FY Q1 Q2 Q3 Q4
REVENUE
Commissions(2% sales) 60000 15000 15000 15000 15000
Direct wages Fixed 2000000 50000 50000 50000 50000
Sales 3000000 750000 750000 750000 750000
Cost of goods sold 400000 100000 100000 100000 100000
Gross profit 2340000 585000 585000 585000 585000

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Expenses
General & Administrative
Expenses
Accounting fees 20000 5000 5000 5000 5000
Legal fees 5000 1250 1250 1250 1250
Bank charges 600 150 150 150 150
Office suppliers 5000 1250 1250 1250 1250
Postage and printing 400 100 100 100 100
Dues and subscription 500 125 125 125 125
Telephone [phone] 2500 2500
Repairs and maintenance 50000 12500 12500 12500 12500
Payroll tax 25000 6250 6250 6250 6250
Marketing Expenses
Advertising 2000000 50000 50000 50000 50000
Employment Expenses
Superannuation 45000 11250 11250 11250 11250
Wages and salaries
Staff amenities 20000 5000 5000 5000 5000
Occupancy Costs
Electricity 40000 10000 10000 10000 10000
Insurance 100000 25000 25000 25000 25000
Rates 100000 25000 25000 25000 25000
Rent
Water 30000 7500 7500 7500 7500
Waste removal 50000 12500 12500 12500 12500
Total Expenses 1401500 350375 350375 350375 350375
Net profit(before interest &
tax)
TO BE
CONTIN
UE
Income tax expense(25%
Net)
Net profit after tax
A.
The main purpose of the entire team is to meet the goal of 1 Million dollar profit
before tax. In this case it is needed change the rent of the organization. The objective can be
accomplished as sudden changes in various things while executing which will further help to
accomplish the targets. It is also accurate as the figures are changed accordingly based on the

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consideration of the required goals. All the team members are included where the adjustments
in the rent is needed in order to enhance the team budget. This adjustments need to make to
meet the target of 1 Million dollar profit. Detailed conversation in this case are required to
reduce the necessary cost at the time renting system.
B.
The team budget or the financial plan of the company is only achievable if the
estimation which is made is perfect based on the current and past performance of the
company. It also depends on the mission and vision of the company and accordingly the
upper level management takes decision by considering the internal and external. The
sustainability of the environment must be checked in order to certain the competition in the
market. The comprehensive and accuracy in preparation of the budget is based on the certain
parameters which may cause impact in the business in the coming future.
C.
The areas where there are certain improvements needed in order to enhance the
prospect of the business such as the variable expenses of the company. The effective tools
and strategies must be adopted in order to manipulate the variable expenses of the firm while
estimating the budget of the company based on the budget (Burns & Dewhurst, 2016).
D.
In case of any loopholes in the budget it is needed to make the required clarification to
encounter such kind of loopholes in the system. The clarification is made by the key
authorities of the business such as the CEO, Senior Accountant, Head of the Human
Resource, Managing Director and Production Manager. The head of the all the departments
residing in the upper level management of the company takes care of the all the clarification

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and loopholes existed in the company. The main activities of the company is depended on the
individual performance of the departments and based on that it creates impact on the firm.
3. Contingency Plan
Planning plays significant role for each and every business in order to accomplish the
goals of the organization as per the mission and vision of the company. The managers of the
company develops business and marketing plan in order to accelerate the performance of the
business. Planning is one of the fundamental management of the business and is also
regarded as one of the primary function of the management.
A.
The contingency plan of the company plays significant role in order to save the
situation of the company at the time of the critical moment of the company. There is a pipe
flooded at the new renting place and now we are unable to move to the new place. Suppose
there’s an example of contingency plan, where it is needed settle a contact on Current Real
state about the situation and ask them to stay here for one more quarter and if possible can
they reduce the rent to half for this quarter. Then it is needed to make a deal with real state to
reduce the rent to half and it will help me to manage my budgets. Then in such a case it is
required to decrease the wages of the employees which is going to help me to achieve the
original goal of 1 Million dollars. If the contingency plan is in place, it will still help me to
take to the target of 1 million dollar profit before tax.
4. Financial Management Approaches
A.
The relevant details of the agreed plan in the organizational process will enhance the
overall financial performance of the company. It is need to arrange meetings or send emails

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to team members based on the relevant details of the agreed plan. It is also possible on the
basis of one to one conversation. Accordingly there will be discussion regarding the agreed
plan with the employees which can further be done by arranging meetings or sending mails to
the employees. There are different methods different methods to communicate and gain
agreements on the details of plans. Firstly, it must be based on the written agreement and
written documents accordingly. After the meeting it is needed to take feedback from
everyone and further it is needed to ask that they are going to meet the new target. Necessary
training in that case are needed for the staffs in order to accomplish the targets.
B.
The information’s will be disseminated from the upper and the lower level
management in a chronological order. The whole process of the system is conducted by
sending mails and message through the system. Significant meeting may also take place
during the process.
C.
In case of any critical situation effective communication of the process must take
place in order to make clarification regarding the criticality of the situation. The details of the
plan are kept within the higher level authority of the company.
D.
There must be certain norms and responsibilities which the employees of the
organization based on the hierarchy of the organization. Before implementation of the budget
or financial plan each and every employees of the organization must follow their own
responsibilities to develop the budget or financial plan for the next five years of operation
(Laudon & Traver, 2016). In case of preparation of the budget most of the work is rest upon

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the lower level management of the company in preparation of the budget and rest of the upper
level management takes decision regarding the implementation of the ultimate budget.
E.
The feedback process plays a significant role where each members of the company
gives comment regarding the current performance and the budgeted variance of the company
in that case. The objective of the financial plan or budget is to accomplish the projected target
of the budget and at the end of the year it is the responsibility of the upper level management
of the company to find the reason behind such of budgeted variance.
F.
The financial management roles which must be allocated to the team members must
be audited that the company in a proper manner to understand the members of the financial
management can perform the respective duties allocated to them. The individual performance
of the employees must be audited by the help of which management of the company will
understand the employee’s performance at the same time. Based on that the company will
take decision to further enhance the skills of the employees so that they can perform
accordingly based on the roles and responsibilities of the company.
G.
The resources of the company must be allocated and utilizing the resource of the
company in an effective manner. The internal and external operation of the company must be

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analyzed by the company and further the work team will be responsible to set the efficiency
of the system based on the roles and responsibilities of the management.
Task - 2
1. Monitor and Control Finance
A.
Constant monitoring and check regular process from bottom to up is required. It is
needed to meet the 1 million dollars target based on certain accomplishment. The staff
training is needed to upgrade the new technologies. It is needed to continuously check and
review the process in order to ensure that modification is done as per the requirement. It is
needed to monitor the accuracy in the budget by the process of constantly monitoring in an
internal basis (Pilbeam, 2018).
B.
The company will not be able to manipulate the fixed cost which is incurred by the
firm but will definitely able to manipulate the variable cost of the firm (Peng, 2016). The
variable cost of the company must be kept into record and significant changes or sudden
increase in the expenses of the company can be taken into consideration by the management.
Later on the management in that case must further adopt rules and cost control strategies
must be adopted by the company in order to lower the overall budgeted cost of the firm. The
cost control strategies are managed by the head of the cost department and on the basis of it
the manipulation of cost must be taken accordingly. The financial performance of the
company will fluctuate accordingly as per the movement of the cost in that case.

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C.
After monitoring each and every aspect of the firm it is required to prepare the
contingency plan for the company. The contingency plan of the company will further be able
to assist the company at the time of significant downfall of the company. When the
management level of the company is facing pressure in the business it is the responsibility of
the management to understand the implication of such budget and further adopt the strategies
to change the outcomes accordingly. After analyzing the downfall, adjustment in that case are
made based on the transaction of the company with the perspective to accomplish the overall
business objective (Bloom et al., 2018).
D.
The members of the team provides feedback in order to manipulate the expenses or
the cost which are associated in the business. On the other hand, cost incurred in performance
of the financial function is needed to be minimized by the company. The tools and techniques
in that case must be adopted by the company in order to further lower the potential expenses
in that case (Scholes, 2015). Every business objective of the company must be analyzed by
the firm in order to utilize the business prospects.
E.
The evaluation in order to calculate the variance is by using the excel spreadsheet and
in that the difference between the actual and budgeted is shown in the spreadsheet evaluation.
By utilizing the respective formulas, it will be possible for the firm to find out the respective
variance of the company (Kaplan & Atkinson, 2015).

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2. Review variance
Actual exp – bud ex*100 = va TO BE CONTINUE
A.
The main areas of the accounts variance are the revenue, cost and profit of the firm.
The original outcome of the company must be evaluated based on the certain parameters of
the company (Horst, 2018). The main objective of the company is to minimize the variance
and for that the required steps are needed to be adopted by the company.
B.
The eight accounts where the significant variance of the company is identified are the
sales, cost of goods sold, bank charges, repair and maintenance, electricity, insurance, rates
and waste removal. This are the eight accounts where the significant variance of the company
will take place accordingly.