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EXPLANATION ON THE FINANCIAL PLAN

ABSTRACT

The financial has and will always be the backbone of any business that is operating in any economic market whether private or public. This means that there must be an intensive market research and analysis in the market before any business starts its operations. The market analysis data is the one is used in coming up with a concrete financial plan to facilitate the establishment and operations of the business. Cull. M (2009) “The Rise of the financial planning industry, University of Western Sydney, over the past decades, financial planning has seen outstanding transformations, a factor that has positively impacted the lives of those that play the role of financial planning. This has led financial planning being considered as a career not only by different industries, but also other non-financial based institutions and organizations. The financial planning does not only strive to promote financial achievements of an industry, but also fulfill the expectations of the consumer in the respective industry.

Financial planning as be defined by different financial board such as the Certified Financial Planner and Financial planning Association as a way of evaluating how to achieve personal or organizational goals by properly managing the available financial resources. According to Warschauer (2001), financial planning refers to a process that considers the personality virtue of the client, what is status financially, lawful surrounding together with social-economic factors that affects the use of strategies and the available financial resources so as to facilitate the outlined customer financial objectives. Therefore financial planning involves proper evaluation of factors to do with taxes, business ownership, debts, investments, how to manage risks and benefits with regard to social security. This basically implies that financial planning is not only advantageous to a business or organization, but also to the country’s economy and to the clients at large.

Elements of the projected budget.

Budgeting is a key aspect of the success of any business and a good budget is drawn a proper financial plan. It can be said to be a process that is continuers since different financial years need to have different financial budgeting allocations as to maintain the relevance of the business in the competitive economic market. Allen. S (2004) “Does budgeting Have a future”? OECD publication France. Those involved in the budgeting process often face frustrating situations in determining the best preferred goals of the budget given that this is a process that never stops and it changes every time.

The first element of the projected budget is Revenue: this is the key determinate of the operation process of any strategic plans and the items considered here are: ICT, MRIs, and General diagnostic and interventional. Revenue is key in kick starting the operations of any business or any project and without it nothing can be achieved no matter how attractive it may seem to be or how profiting it may look.

The other element of this projected budget is expenses which include salaries, travel expenses, supplies, maintenance expenses, contract expenses, marketing and miscellaneous, all this factor have to be considered when creating a budget for any plan. If they are not included in the budget then at the end of the day it becomes hard to evaluate the performance scale of the project of business due inappropriate expenditure. It’s by looking at the total expenses incurred in a particular financial year and evaluating them in reference to the total revenue invested in the project or business that we can get that exact value of capital that the project has gained. When creating the expenses list one should never forget to include the miscellaneous as that will create an incomplete budget plan. Throughout the financial year things do happen in the economic market that may positively or negatively affect the operations of the project and the amount allocated for miscellaneous helps in covering those factors that might arise. Professor Pogue. G.A (1997) “Budgeting as an Aid to Management performance” Chartered Association of Certified Accountants: looks at budgeting to be an aspect in which several activities are inter linked when it comes to their costs and this includes material resources, workforce and other factors that facilitate the operation of any given project. According to Pogue, it is hard to take control of expenses in situations where an operation or project is working with a budget that is fixed. This is because things on the ground turn out to be different that how things were budgeted for there a fixed budgets in most cases turn out to be a destructive budget since it outlines these the limits of the costs that expenses should have, it also doesn’t create space for comparison to be done between the real performance and results that had been budgeted for.

Assumptions of this budget plan

The key assumptions of this plans are:

· An annual increase in revenue by at least 12%

· A lower increase in salaries expenses by at most 4.56% annually

· An annual increase in supply expenses by 4.5%

· A lower travelling expense which should be 0.60%

· Maintenance should stand at 1.20%

· Salaries as a revenue should stand at 50.00%

· And a total of 27.14% for (contracts, marketing, miscellaneous) revenue

Koontz.O.D. (2003)” Management Theory.” McGraw Hill International Company, ltd, UK. Proposes the use of a budget that has zero base, which start with appraising every function, then examines and evaluates other alternatives that might arise in the course of implementation.

According to Koontz, the main idea in this approach is to classify all the programs of any business operations as activities and the resources that are needed before calculating the expenses of each and every package. This approach is instrumental in that champions for the establishment of every financial budget without having to look at how the budget planning was done in a previous financial period.

The current model of business operation, internal resources and financial strength and its impact: currently the business is operating on a manufacturing business model, with all products being supplied to our clients across the country through middlemen approach of product supply. The internal resources and capital capability of the company have positively affected the daily operations of the business, being a business established on the basis of private partnership financial advantages have been a major boost for the business and positive workforce attitude has also played a key role in facilitating the daily operations of the business. This factors therefore that they will positively affect the implementation of the proposed business budget and ensure maximum input that will generate maximum and profitable output and customer satisfaction.

Volume increase strategies.

Basing on the proposed budget plan, the key volume increase strategies are:

· Training/hiring of support staff for the operation of new operation machines

· Purchasing and installation of new machines

· Marketing to clients to be increased.

REFERENCES

Koontz.O.D. (2003)” Management Theory.” McGraw Hill International Company, ltd, UK.

Allen. S (2004) “Does budgeting Have a future”? OECD publication France.

. Cull. M (2009) “The Rise of the financial planning industry, University of Western Sydney,

Lambe, I. (2004). Appraising the Impact of Budgeting and Planning on the Performance of Financial Institutions in Nigeria. Research Journal of Finance and Accounting, 5 (16), 12 - 26. Lucey, T. (1988). Management Accounting (2nd edition). EIBS Op publications Ltd, USA. Maclping, T. S (2000). The Basic Art of Budgeting. Business Book Ltd, London. Onorah, N. B. Owler, L.W. and Brown, J. L. (1999). Wheldon’s Cost accounting. Macdonald and Evans Ltd. London. Pandey I. M. (2002). Fundamentals of Financial Management. Villas Publishing House, New Delhi.

Pogue, G. A. (1997). Budgeting as an aid to Management performance. (Students Newsletter) Journal of Chartered Association of certified Accountants. 7 (20), 21 - 30.

Ray, H. G. (1995). Managerial Accounting Concept for Planning Control and Decision making Business. Publication Incorporated, Texas, USA.

Scot, J. A. (2000). Budgetary Control and Standard Costs. Pitman Publishing Corporation. U.S.A.