Discuss with Management about future plans

Especially enquire about

  • Approximate Fund Requirement
  • Existing Sales
  • Future sales to be achieved
  • Sales Product vise (Quantity, Rate, Amount) of different items
  • Domestic Sales and Export Sales component
  • Sales Order already received and to be received and when sales will start for these orders

 

Discuss with Production team about

  • Whether Company has the Production Capacity to achieve this sales
  • If no whether new machinery to be installed
  • Cost of Project (Purchase Price of Machine and Installation Cost)
  • Time Required for Installing Machine and Production to Start
  • Product Costing (Cost of Different Expenses for making one product)
  • Approximate Selling Price and margin on products

 

Discuss with Finance team about

  • Where will money come from for new machines?
  • If Loan taken for Purchasing Machine, how much loan required?
  • Amount to be contributed by Promoter/Friends/Relatives/Related Company
  • Rate of Interest on Existing and New Loans
  • Repayment Terms of Loan
  • Any Moratorium Period for Loan (No of months after which repayment will start
  • Existing Loans ,their Source of Funds and Rate of Interest

 

Ask Accounts team for

  • Audited Profit and Loss and Balance Sheet of Last few years with all schedules and notes
  • Current Year Provisional Profit and Loss and Balance Sheet till Date
  • (Suppose making assumptions in July, ask for Provisional Balance Sheet till 30 June)

 

Steps After Gathering Assumptions

  1. Note down all the points discussed and Compile them
  2. Send mail to different departments to confirm points discussed
  3. If some fresh points received ,include them also in assumptions
  4. On basis of decided assumptions, start making projections

 

 

(Note:-In small business ,all these may have to be discussed with a single person instead of whole team

Also some of these points may not be relevant or have to be modified depending upon type of business)

For example :- For Service Sector, there may be cost of providing service instead of cost of products)

  1. Accounts and Finance
  2. Step 5 Preparing Projections and Budgets
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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