Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsWhen listing your assumptions, if you believe there is some risk that theevent may not occur, include this detail, together with any actions you couldundertake if a particular assumption turns out to be incorrect so that you wouldalready have an action plan in place. Let us return to Adam’s Computer Bagsand see how he is going to set his budget for year two of his business.Using his fi rst year income statement, Adam is now going to set someassumptions for the second year of his business.Assumption TableAssumptionSalesForecast Source Risk ActionIncreaseby 50%ForwardordersSalesremainconstant ordecreaseReviewinventoryholdings andoperatingexpensesIntroducemarketingprogrammeCost ofgoodsRemain at60% ofsalesCurrentsuppliercontractStock pricesincreaseSource newsupplierSalariesIncrease toRM19,500In line withindustrystandardsCash fl owshortageReducesalaryexpenseVehicleexpensePurchasevehicleand includerunningexpensesRequired forsales andmarketingCash fl owshortageReviewoperationalactivities toidentifypossiblesavingsin expenditure34Chapter 2-5 p22-65 Eng.indd 348/15/11 5:01:53 PM