02_WB_SIRRRTF003_V1.a.22.pdf

02_WB_SIRRRTF003_V1.a.22.pdf

SIRRRTF003

DRIVE RETAIL PROFITABILITY

WORKBOOK

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CONTENTS

05 INTRODUCTION

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Evaluate and plan retail financials

Access and accurately interpret budgetary and financial plans of the business

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Measure financial results, identifying patterns and trends, including variances from budget and financial plans Identify factors that could improve financial performance and limit variances from budget and financial plan

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Identify contingency actions to be adopted if finan - cial circumstances change

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Clarify and negotiate, with relevant personnel, changes required to the budget and financial plans

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Monitor and control financials

Monitor financials regularly to accurately identify actual results against budget and financial plans

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Identify trends and patterns including variances from budget and financial plans, and take prompt corrective action within work role where significant deviations occur Review variable and semi-variable costs to high - light opportunities Complete workplace documentation and other records of budget performance and expenditure, and report to relevant personnel Recommend, and implement within work role, activities that improve business financial per - formance and limit variances from budget and financial plan

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CONTENTS

38 Positively impact the financials

Consult relevant internal personnel, including work team, on ways to increase productivity and reduce labour spend

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Identify and document strategies to increase pro - ductivity and reduce labour spend

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Promote the strategies adopted to improve produc - tivity and financial profitability, including advising the work team on their roles in improving business financials

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Monitor implementation of strategies, and support team to improve sales results

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Identify changes to strategies to improve uptake and outcomes

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Delegate responsibilities and accountabilities relevant to budget and financial achievement in accordance with organisational policies

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INTRODUCTION

This unit describes the performance outcomes, skills and knowledge required to interpret financial information for a retail business, and to identify, promote and implement strat - egies to positively impact the business financials. This unit applies to senior personnel working in a diverse range of retail industry sectors and business contexts. They operate independently and are responsible for making a range of operational business decisions and financial plan - ning and monitoring.

Elements 1. Evaluate and plan retail financials 2. Monitor and control financials 3. Positively impact the financials

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ELEMENT 01 Evaluate and plan retail financials

Performance Criteria

1. Access and accurately interpret budgetary and financial plans of the business 2. Measure financial results, identifying patterns and trends, including variances from budget and financial plans 3. Identify factors that could improve financial performance and limit variances from budget and financial plan 4. Identify contingency actions to be adopted if financial circumstances change 5. Clarify and negotiate, with relevant personnel, changes required to the budget and financial plans

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Criteria 1.1 Access and accurately interpret budgetary and financial plans of the business By the end of this chapter, the learner should be able to: » Gain access to a range of budgetary and financial plans of the business » Read through operational plans to establish the objectives of the business » Interpre t current organisation budgets, making comments regarding discrepan - cies or key aspects

Accessing budgetary and financial plans

When tasked with positively influencing the financial performance of a business within a retail environment, it is important to first gain an understanding of the current financial situation and retrieve information regarding the business budgetary plans. Documents or information that it would be useful to read and interpret: » Operation plan » Budgets » Inc ome and expenditure figures, e.g. monthly and yearly The processes involved in accessing existing financial information are likely to be impact - ed by the role of the employee and the location where such information is stored. Some - one within the organisation may regularly distribute operational and financial documents to all senior management figures or to the wider workforce, for example through email or physical reports. Alternatively, this information could be stored in a central location such as within a storage room or on the company’s computer system. When access to important financial information is restricted, you should communicate the reasons why you require the documents to the appropriate personnel. Operational plan An operational plan is derived from the strategic plan of the organisation and is a detailed plan to accomplish the objectives of the organisation. Reading through the operational plan is useful when preparing budgets because it can provide you with detailed informa - tion about the direction the business is heading. The objectives contained within the op - erational plan will usually contain explanations of how they are going to be achieved, and this will have a direct bearing on financial forecasting. If for example, there are plans to introduce new products or increase the number of employees in order to increase market share, then additional finances will need to be incorporated into future budgets.

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Use of budgets Budgets should be a central aspect of every business. They are normally stated as finan - cial allocations made to support the organisation in pursuit of a goal or to cover the costs of running a certain aspect of the business. Budgets function on the basis that: » A busine ss will have a budgetary goal – that is, what it wants to achieve in terms of a financial outcome for the period in question » This goal will be achieved, in theory, by following a budgetary plan – that is, a forecast of what income and expenditures are expected for the period » Progress for the period will be monitored by budgetary control – that is, ongo - ing comparisons between predicted and actual figures, combined with action to rectify variances In essence, a budget can be seen as a guide, a map of the upcoming period in a financial sense. It tells us where we are going to be and how we expect to get there. Types of budget Budget types may include: » Budget for a micro, small, medium or large business » Cash budgets » Cash flow budgets » Departmental budgets » Event budgets » Grant funding budgets

» Project budgets » Sales budgets » Wages budgets » Room occupancy budgets » Whole of organisation budgets

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Interpreting budgets Interpreting budgets can involve both looking at the evidence in front of you and using your judgement to notice where improvements can be made. For example, you may need to compare the budget allocation between different periods of the year and year-on-year. You could ask yourself the following questions: » Is there a higher budget during seasonal periods? » Has the wages budget increased significantly over the past two years? » Has the budget allocated to particular departments declined over the past six months? » Do budget forecasts differ substantially to previous budgets? When analysing a budget, you might need to print off or photocopy another copy. This way, you can annotate the documents with useful comments and highlight areas that you feel need to be discussed with others in the organisation. For example, if you notice a forthcoming budget for events has increased by 60% in comparison to the previous year, it would be worthwhile underlining or circling the relevant figures as something to discuss with the appropriate colleagues.

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Criteria 1.2 Measure financial results, identifying patterns and trends, including variances from budget and financial plans By the end of this chapter, the learner should be able to: » Examine the financial results of the organisation, recognising patterns and trends where possible » Highlight where variances in actual spending or income have varied from the budget or financial plan

Measuring financial results

Monitoring performance, especially in terms of financial matters, is an extremely import - ant aspect of any business, no matter how large the company. Financial performance is a chief indicator of the success and health of the business overall. It is crucial to measure the following: » Revenue – The total income received by the business from its activities and operations. This can usually be found in the top line of the company’s income statement. Be careful to look out for whether this is displayed as ‘net revenue’ i.e. excluding things such as discounts or refunds, or ‘gross revenue’, which can be described as the total value of goods or services sold. » Costs – the finances that have to be spent by the organisation in order to oper - ate and maximise income. » Profitability - this is the income that is counted as ‘profit,’ after costs and other expenditures have been deducted from overall revenue. The higher the prof - itability of the business, the more successful and secure the business can be considered. You may need to access the following financial information: » Account summaries and balances » Bank statements » Business activity statements » Invoices » Profit and loss statements

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Identifying patterns and trends in financial information Costs While sales figures are regularly viewed when retail businesses aim to increase profitabili - ty, it is important not to neglect costs. You should examine financial documents to establish patterns of spending and notice where savings can be made. You might look at expenses over various time periods and recognise where costs are at their highest. The next stage is to try and make sense of the >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54

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