Certificate IV in Property Services (Real Estate) (VIC)
Manage small business finances
Written assessment
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BSBSMB406 – Manage small business finances
This unit describes the skills and knowledge required to implement and review financial management strategies on a regular basis.
It applies to individuals who operate a small business that stands alone, or is part of a department within a larger organisation. Individuals in this role interpret financial reports and other numerical data to develop financial management strategies.
No licensing, legislative or certification requirements apply to this unit at the time of publication.
Getting started
The assessments have been designed to provide evidence that demonstrates your competence in the unit:
BSBSMB406 – Manage small business finances
Your trainer will:
- answer any questions that you have about the assessment
- Assess your competence as stipulated in the unit of competency by making judgments about the evidence you have presented in line with the rules of evidence – validity, authenticity, currency and sufficiency.
- Provide feedback on the outcomes of the assessment process.
Introduction
You are required to complete three assessments for BSBSMB406
This assessment is designed to gather evidence of your competence, specifically:
BSBSMB406 – Manage small business finances
- Implement financial plan
- Monitor financial performance
| Assessment | Description |
| Auto Quiz- BSBSMB406 Manage Small Business Finance | |
| Assessment | Description |
| Portfolio of Evidence
Financial Planning Report Email to Jim and Toula Video Recording |
| Assessment | Description |
| Portfolio of Evidence
Review Report |
Assessment 3:
Activity 1: Monitoring financial performance
Read the following case study and complete the activity below.
| Following the meeting with the bank the capital was approved and the new division of City Surf was established and has been operational now for three months.
Part of the planning for this project was to ensure that regular monitoring and reviews would be conducted to ensure that the financial performance of the new division was meeting the expected targets.
Jim has emailed a report on the first three months of operations for you to look over and prepare the review report which needs to be emailed to him within the week before the management meeting. Holiday Property Management · Initial properties which were tenanted during the first school holiday period was lower than expected. · There was decline in the construction and retail sector which I believe has had a direct impact on the number of people looking for a holiday let. · As a result, the expected sales were not achieved with the overall sales in this division down by 22%. · It is interesting to note that the city holiday rentals met the target but it is the coastal rentals which are down. |
Based on the data which Jim has provided, the business plan and marketing strategies (in appendix A), create an informal report, using the template in Appendix B: Holiday Property – Review Report and email it to Jim which has addressed the following:
Analyse the data and report on:
- The financial performance targets (KPI’s from activity 1e) and outline the extent to which the financial plan has been met (I.e. What are the results of the findings every month? Are tasks being done in line with KPI’s, where are they falling behind, what can be done to improve income/sales?)
- Review the marketing and operational strategies and compare it to the information provided in the case study. Outline the impact marketing has had on the financial plan and its success.
- Conduct the necessary research from within the property services industry and calculate and evaluate the financial ratios against industry benchmarks which should be applied to City Surf. To complete this point, research the current industry and market and provide the current ratios as a % for:
- Sales Growth for the next 3 months
- Percentage of total Current Assets
- Expenses
Provide a reference document which lists where you have researched the information to complete the calculations. Submit your reference document as part of this task.
- Having assessed the financial plan and performance, provide a summary which has determined at least one (1) variation or alternative which is needed and how the changes will be implemented.
Checklist
The learner must complete and submit the following:
| Assessment 3 |
| Activity 1: | |
| Holiday Property – Review Report – Points (a) to (d) | |
Appendix A:
Holiday Letting – Business Plan/Marketing Strategies
Executive Summary
City Surf Real Estate Agency has been in operation for approximately two years. It is owned and operated by Jim Smyth who is the licensee and auctioneer in charge and the business is registered as a corporation.
City Surf Real Estate prides itself on providing exceptional service within the residential and commercial sectors and is now established in the area of holiday letting which includes:
- Management of properties which are leased or tenanted short term for holiday letting including maintenance, repairs and inspections
Mission
City Surf Real Estate provides high-quality, comfortable holiday rental properties is dedicated to a hassle free living environment in which our tenants can enjoy all of the benefits of safe, attractive, and inviting properties. Unlike many other realty companies that are solely concerned with turning profits, our primary objective is to maintain the highest level of customer satisfaction that is achievable. Tenant safety, happiness, and comfort are our main goals.
City Surf maintains competitive market prices, while working toward expanding the number of units managed, and increasing total profits earned. Within the company we will strive to work as a cohesive, harmonious unit focused on exemplifying our mission.
The Market
The two key market segments which will be serviced consist of:
- inner city letting, to capture both domestic and international travellers and holiday makers visiting the capital city
- Coastal letting, to mainly capture the domestic market with a strategy to market families and older holiday makers and particularly during peak holiday seasons such as school holidays, Easter, Christmas and long weekends.
Marketing Strategy
City Surf will promote the availability of holiday lettings using all current methods of advertising and promotion used for current residential and commercial properties.
Objectives
- Moderate income generated within the first 3 months with a review at this time to determine the improvements needed to substantially increase the property portfolio within 6 to 9 months.
- Net profit/sales to be positive within 12 months
Selling Position
Uniquely positioned for its target market. Offering combination of both city and coastal holiday rental properties with options to long term lease up to 3 months.
Anticipated demand
Anticipates high turnover during peak holiday seasons with additional advertising to promote the properties in the low season to maintain profitability and capacity rental.
Pricing strategy
Based in industry research the properties are competitively priced and are based on the type of dwelling and inclusions to suit all levels within the market.
Growth potential
Research indicates a trend towards a continual increase in domestic holidays due to the current international climate and a downturn in the value of the Australian $.
Start-up Summary
The total start-up expenses include legal, stationery, brochures, website, consultants, insurance, rent, expensed equipment, etc.
Start-up assets required include short-term assets (vehicle, cell phone, etc.), and initial cash to handle the fees prior to opening.
| START-UP REQUIREMENTS | |
| Start-up Expenses: | |
| Legal | $6,400 |
| Stationery etc. | $270 |
| Brochures | $275 |
| Website | $2000 |
| Consultants | $2,550 |
| Insurance | $1,315 |
| Rent | $1,400 |
| Expensed Equipment | $600 |
| Other | $750 |
| TOTAL START-UP EXPENSES | $91,560 |
| Start-up Assets | |
| Cash Required | $100.000 |
| Other Current Assets | $12,000 |
| Long-term Assets | $50,000 |
| TOTAL ASSETS | $162000 |
| Total Requirements | $253560 |
Capital Required
Capital required to establish the holiday management division of City Surf Real Estate consists of:
Jim Smyth (licensee) $150,000.00
Additional investment required $ 110.000.00
Operating Expenses
The approximate operating expenses for setting up the new business is below;
| Operating expenses | Approx amount per year |
| Wages | $352,800 |
| Office Equipment | $8000 |
| Motor vehicles | $10,000 |
| Phones | $5,000 |
| Rent | $30,000 |
| Advertising/marketing | $20,000 |
| Computers/IT | $3000 |
| General Office Expenses | $4000 |
| TOTAL OPERATING EXPENSES | $432,000 |
| TOTAL INCOME | $882,000 |
Financial Plan
We want to finance growth mainly through cash flow. We recognise that this means we will have to grow more slowly than we might like.
The most important factor in our case is collection days. We can’t push our clients hard on collection days. Therefore, we need to develop a permanent system of receivables financing.
Important Assumptions
Since we operate on a monthly collection basis, we are assuming that the majority of the collections will be timely and in full.
Some of the underlying assumptions are:
- We assume a healthy growth trend in the local real estate market, along with a continued strong local economy.
- We assume that we stay in line with the continuing advances in technology and housing.
Appendix B
Holiday Property – Review Report
Purpose
Outline the report.
Key Performance indicators
outline the extent to which the financial plan has been met. Refer to activity 1e
Marketing Strategies
Review the marketing strategies and based on the data monitor and outline the impact the marketing has had on the financial plan and its success.
Financial ratios v’s industry benchmarks
Conduct the necessary research from within the property services industry and calculate and evaluate the financial ratios against industry benchmarks which should be applied to City Surf. To complete this point, research the current industry and market and provide the current ratios as a % for:
- Sales Growth for the next 3 months
- Percentage of total Current Assets
- Expenses
Summary
Having assessed the financial plan and performance, provide a summary which has determined at least one (1) variation or alternative which is needed and how the changes will be implemented.
