Overview

This chapter is concerned with forecasting the costs of implementing the strategic objectives, and ensuring that sufficient funding is available to enable them to be implemented efficiently and effectively. It will also look at the sources of finance available to expanding businesses. The chapter relates to Units G1, G2 and G3 of the revised vocational standards for Business Development.

The production of an accurate and realistic financial plan is fundamental to the whole strategic planning process, and as mentioned in the previous chapter, it is a task for which a large majority of owner-managers are not suitably equipped. The production of budgetary plans and cash flow forecasts is frequently seen as an unpleasant chore, an annual burden that detracts from the mainstream running of the business, and adds nothing measurable in terms of profit or productivity. This attitude leads to the tendency to get it over with as quickly as possible, and to use short cuts, rounded figures and approximations to save time and effort. In the back of the mind lies the view that attention to fine detail and accuracy is pointless when the actual income and expenditure figures will invariably differ right from day one.

Once again, this is where we see the need for another culture shift and change of attitude on the part of the owner-manager. When expansion or diversification is being considered, then it is critically important to be as detailed and accurate as possible in formulating the financial plans for the business. Omissions...