3008AHS Health Practice Management For Initial investments

Forecasting for sales has been done by considering the market trend of Australia through implementing survey methodology.

Note: The sale is going to be increased due to increase in members by 50% each year due to referral and marketing. For this purpose, promotion campaigns of business will update on a yearly basis and attractive benefits will be provided to employees and clients who will provide membership to business through referrals. With this approach, both clients and employees will be motivated for making an increase in membership.

Projected Cash Flow

 Projected cash flow shows increasing trend of cash generation efficiency of the business. Through this statement, the target will be set for business to ensure actual performance is as per the expectations (Rossouw, 2016). Implementation of the plan will be supported by effective cash management strategies to ensure liquidity of business and optimum utilisation of available resources.

 Projected of cash flow statement is supported by following financial assumptions:

• The place of the gym is going to be rented, and the amount paid for rent will be fixed @ Aud 4000 yearly.
• The utility expenses will be increased @ 7% p.a.
• The sale is going to be increased due to increase in members by 50% each year due to referral and marketing.
• The telephonic charges are going to be increased @ Aud 100 per year.
• The electricity expenses are expected to be increased by 10% as its capacity is increased
• The loan of business will be repaid in 3 years, and 7% interest is paid for 3 years, and it will be paid on the remaining amount from 2 years.
• The marketing expenses are going to be fixed @500 Aud per year
• The depreciation will be paid @10% straight-line method for 5 years
• The cost of goods sold is minimum @10% for the business
• Insurance of Aud 50000 will be However, the business will make use of AAMI and will need public liability and indemnity insurances 

Break even analysis

Break even analysis is significant for business as it assists in setting targets to ensure all costs are recovered, and appropriate planning is done for desired targets. Break even analysis assist in determining the point of sales at which all fixed and variables costs are covered to attain no profit any loss situation (Johnston, Messina & Yates, 2016). By considering sales and operational expenses break analysis of the business is as follows:

Projected income statement

Balance Sheet

Future financial requirements

With the growth and popularity of business, planning for expansion will be done to enhance profitability and strengthen market positions. After completion of five years; staff will be increased to manage gym clients in a better manner. Further, new machinery will be purchased as per the demand and trend in the market. For this purpose funds will be generated from following sources:

Bank loan

Financial institutions will provide a loan to business as proposed venture will have good credibility in the market (Lanen, 2016). For this purpose, a business can provide their fixed assets as security for a loan through which they have to lower financial cost to banks. In addition to this; business will be liable to pay regular interest payments and be obliged for repayment.

Retained earnings

All profits of business will not be distributed to owners as a portion of the earnings will be saved for future expenses. Cumulative funding of retained earnings can assist in future expansion. For utilisation of this source; business will not be required to pay finance charges and repayment of the used amount.

Collected funds from the above-described financing options will be invested in the following manner:

Training and development of staff

By considering the primary motive of business, i.e. to offer motivation and education while helping with rehabilitation and training business will offer extensive training to new Physio and Personal trainers (DRURY, 2013). Further, they existing trainers will be provided with updating methods for physiotherapy so that they can assist customers in an effective manner with their health goals. For this purpose, experienced experts will be hired.

Renovation of workplace

The workplace will be renovated with the changing requirements of clients and convenience of employees. With this approach better work environment will be provided through which client can be increased by the business entity.

Purchase of new equipment

The new equipment will be purchased by a business in future years for making improvement in services and to add new services to the product portfolio.

Planning for start-up of branch

With the increasing popularity of business, a new branch of the gym will be set up for expansion of business and to take a venture to a new level. 

References

Rossouw, J. (2016). The benefits of using a trust for your financial planning: industry issues. Stockfarm, 6(7), 17.

Lanen, W. (2016). Fundamentals of cost accounting. McGraw-Hill Higher Education.

Johnston, R., Messina, F., & Yates, S. (2016). Your Financial (Life) Game Plan. Sports Journal.

DRURY, C. M. (2013). Management and cost accounting. Springer.