Assessment 2

PART B

Thank you so much for assigning me as a Restaurant manager. I was excited to allocating
funds expenses and income projections based on the sales and expenses. It means a lot that
you believed in me and gave me this opportunity. I promise to make you proud in future
endeavours.

Components of Budgets.

1. Estimated revenue
This is the money you expect your business to make from the sale of goods and services.  

2. Fixed cost
When your business pays the same amount regularly for a particular expense, that is
classified as a  fixed cost.

3. Variable costs
This category includes the cost of goods or services that can fluctuate based on your business
success. Forecast and estimated cost of goods sold or services rendered.

4. One-time expenses
These are one-off, unexpected costs that your business might incur in any given year

5. Cash flow
This is the money that travels in and out of the business. You can get an idea of it from your
previous financial records and use that information to forecast your earnings for the year
you’re budgeting

6. Profit
The final budget component is profit, which is a number you arrive at by subtracting your
estimated cost from revenue. An increase in profit means your business is growing, which is
a good sign.

Allocating funds

A budget allocation is the amount of funding designated to each expenditure

line. It assists in the allocation of resources. It designates the maximum amount of
funding an organisation is willing to spend on a given item or task, and it is a limit
that is not to be exceeded by the employee authorised to charge expenses to a
particular budget line

Funds may be allocated for various reasons such as:

• Sales and marketing
• Operations
• Utilities
• Purchases of assets
• Repairs and maintenance
• Staff hiring
Budget allocation is a significant part of all business and financial plans. It is
therefore, important to stick to the budget allocated funds. Each category can be made of
several budget allocations, referred to as line items, for the specific
needs necessary to support the program or overall department operation.

Business Functional Priorities- The budget’s functional objectives would include planning
the CAPEX forecast on the basis of the business development strategy. Prior to the benefit
budget, his revenue budget would be prepared. The budget of cash flow will be planned for
the first 3 months after the benefit budget is prepared. After that, with the projection of
benefit, the master budget will be planned and the distribution of expenditures will be
rendered to the cost centres on this basis. Unless exceptions are negotiated and accepted, the
overheads are to be allocated fairly. Unless otherwise required by market conditions, the
expenditures and profits are split evenly. The financial period would continue for one year,
finishing on 30 June

Budget overview- The budget is planned for the financial year ending 30 June 2012, -
The budget is planned for the financial year ending and the revenue and expenditure
bifurcation has been equal for all four quarters. The expenses are known as general and
operating costs, advertisement costs, job costs and accommodation costs. The cost centre
spending budget for sakes has already been planned, which involves bifurcation of
commissions, salaries, and telecommunications and office equipment to all cost centres
fairly.

Expense repayment provision

Allocating expenditures Expense repayment provision- This policy applies to reimbursement
of expenditures that This policy applies to reimbursement of expenditures that are fair and
permitted to perform the catering incurred by workers, explicitly providing expenses for
which employees would not be reimbursed. It also included the information of clams to be
made for transport expenses, hotel expenses, and employee’s own meals. With the necessary
documentation attached, a signed Cost Payment Request must be sent.

Policy for Petty Cash-

The policy applies to procedures for monitoring the expenditures of
Policy for Petty Cash- The policy applies to procedures for monitoring the expenditures of
small cash in which small business purchases could be provided by approved business
individuals. The petty cash disbursement is rendered by one team member with one
emergency substitute. The money is tightly locked and safe. At the end of the day, all
vouchers are given with money and are reconciled. Amounts of cash receipts in excess are
credited to the fund. The charges are reported as miscellaneous expenditures.

Part C

Introduction:

A budget is a fundamental tool by which business owners and managers can predict,
with reasonable accuracy, whether their restaurant will profit, break even or lose
money. A budget is an organizational plan expressed in monetary terms. It forces
management to consider changing conditions and adapt their operations to maintain
profitability and consistency of product and service.

Step 1: Implement an Accounting Process

We’re going to guess accounting isn’t one of your core competencies. (If you were an
accountant in a past life, congratulations on the serious advantage!) 

First, hire outside expertise to assist you with the budgeting process. You’ll thank yourself
later when you’re not bogged down by general ledger maintenance or manual account
reconciliation. 

Here’s what you’ll need before you start your operational budget:

A point of sale: A mobile POS reduces reporting errors and can include accounting
software integrations to simplify budgeting and forecasting. The most sophisticated POS
systems allow mobile access to your sales and labour data, so you can make informed
business decisions. 

Accounting software: Accounting software that connects to your POS  will allow your
accountant to generate financial reports, determine tax contributions, and perform financial
reconciliation.

An accountant and/or bookkeeper: Your restaurant accountant will perform in-depth

analysis on your financials to ensure your operations are meeting industry standards. Your
bookkeeper is in charge of keeping your financial records. Combined, these restaurant
experts take financial management off your shoulders. 

The important thing is to make sure you have a record of everything you spend. Your
accounting system and POS can automate cost tracking, including your Cost of Goods
Sold (COGS), labour costs, and supplier invoices. 

Step 2: Set Accounting Periods

Before you start budgeting, you’ll want to define your accounting period. There are two
periods a restaurant can use: a 12-month period or 13 periods of four weeks each. 

Many restaurants have consistent busy days and consistent slow days. For restaurants that
know their Friday and Saturday nights will yield substantially more revenue than Monday
and Tuesday nights, the 13-period method serves as a better basis for comparison and
projections. 

Thirteen periods of four weeks each have the same number of each day. Four Mondays, four
Fridays, four Saturdays, etc.

Once you decide which method is right for your restaurant, you’re now ready to set targets
within those periods.
Step 3: Set Budget Targets

The information you’ll be working with in your budget includes:

 Sales revenue from two years previous

 Food and beverage costs  

 Alcohol costs

 Payroll costs over the last year

 Occupancy costs over the last year

 Controllable expenses

You’ll set budget targets by projecting revenue and costs based on historical performance. 

Check your POS reports: how did you perform within the same time frame last year? 

From there you’ll learn how to adjust your strategy so you can stay within your financial
limits while maximizing your potential for profitability. 

Step 4: Define Your Costs

The nice thing about restaurant costs is that many of them are fixed. Fixed costs don’t
change, making them easier to anticipate and include in your budget. But you’ll also have to
account for semi-variable costs, which will change slightly from month to month. 

Then there’s non-fixed costs, which are guaranteed to change every month. You’ll need to
include some padding in your budget based on your previous year’s restaurant expenses, so
that you can project these to a degree of accuracy.

Here’s the breakdown of the kinds of costs you’ll need to define for your budget.

Fixed costs: Costs that won’t change. 

Examples: insurance, rent, loan payments

Semi-fixed/semi-variable cost: Costs that are guaranteed but can vary every month. 

Examples: salaries, hourly pay, utility bills, food costs, smallware’s replacements, take out
supplies

Non-fixed/variable costs: Costs that respond directly to changes in the restaurant and sales
volume.

Example: Repairs, marketing, advertising, taxes, delivery charges 

When you’re budgeting, it also helps to know costs you can control versus what you can’t. By
defining these costs, you can determine your must-haves against your nice-to-haves.

Controllable costs: Costs you can control. 

Examples: labour, marketing, food cost

Uncontrollable costs: Costs you can’t control. 

Example: rent, property taxes, other occupancy costs

Step 5: Forecast Your Sales

Before we can create a restaurant budget breakdown, you’ll need to analyse your previous
year’s events so you can include your sales forecast. 

Use your POS to  analyse past sales reports for trends and anomalies.

Assessment 3

Part b (Role play 1)

Purpose

The purpose of the meeting is to measures the improve the budgetary performance and have
asked you to undertake the activities to:

• Renegotiate prices and credit terms with existing suppliers

• Sourcing new suppliers

Negotiating payment terms

These initiatives will certainly help many businesses but one key way to manage cash
flow and to keep your head above water in the short term is to negotiate payment terms with
your suppliers.

This is essentially how and when you pay the companies that supply you, in particular the
amount of time that you have in which to pay.

This process normally begins when you put in an order.

For most orders, especially where small items are concerned, you just pay the full amount up
front. But in other cases, you’ll have days, weeks or even months before you have to pay.
If the item has to be specially created for you and it’s more expensive, you’ll probably pay in
instalments. This might start with a deposit followed by further payments before the final
amount is paid on delivery.

Talk to multiple suppliers

In order to encourage competitive pricing, talk to at least three suppliers and let each of
them know that you are getting other quotes. Explain to them that you will go with the
supplier that offers you the most competitive bid. Don’t forget to take quality into
consideration when considering the bids.
Offer larger deposits for a bigger discount

Suppliers are concerned about their accounts receivable just like any other business owner,
so another way to secure bigger discounts is to offer large deposits on your orders. If the
supplier knows they will receive 50 to 60 percent from you up front, you will increase your
bargaining power, and they may be more likely to deal on the prices.

Consider transferring all your business to one supplier

Suppliers love business owners who order a lot of product from them, and oftentimes those
people get deeper discounts and other perks from the suppliers. If you’ve been giving your
business to multiple suppliers, consider transferring all of it to one. But before you make the
transition, call the supplier and talk to them about increased discounts in exchange for all of
your business.

Be someone suppliers want to do business with

It doesn’t matter how much business you give your suppliers, if you’re a problem customer,
you may not get the best deal because it’s too much work to do business with you. It’s
important to maintain good supplier relationships by remembering that while they need you
as a customer, you need them, too. Be sure to pay your bills on time, maintain open
communications, and treat the relationship as a partnership, where both of you get what you
need.

(Role play 2)

Purpose

the F&B Manager of the restaurant to meet we have to discuss the sourcing of new suppliers.
A budget is a quantitative expression of a plan for a defined period of time. It may include
planned sales volumes and revenues, resource quantities, costs and expenses, assets,
liabilities and cash flows. It expresses strategic plans of business units, organizations,
activities or events in measurable terms

Budgetary Process This is the process of converting plans into budget. Budget can be
expressed in terms of I) Cash budget ii) Sales budget iii) Labour cost budget iv) Budgeted
profit and loss account.

resource use by sourcing new suppliers

When defining what is sourcing in procurement, they two go hand-in-hand. Before you can
procure goods, you’ve got to find the suppliers and vet them out. Connecting with the right
suppliers is crucial. If you make mistakes in the sourcing process, it can be difficult – and
costly – to backtrack.

Simply put, sourcing is the process of selecting suppliers to provide the goods and services
you need to run your business. It may sound uncomplicated, but the process can be complex.

Sourcing involves the following:

 Finding quality sources of goods and services

 Negotiating contracts
 Establishing payment terms
 Market research
 Testing for quality
 Considering outsourcing for goods
 Establishing standards

New supplier of alcoholic and non-alcoholic beverages.

Buyers affect an industry through their ability to force down prices, bargain for higher
quality or more services, and play competitors against each other. A buyer or a group of
buyers is powerful if some of the following factors hold true:

A buyer purchases a large proportion of the seller’s product or service,

A buyer has the potential to integrate backward by producing the product itself,

Alternative suppliers are plentiful, because the product is standard or undifferentiated

Changing suppliers’ costs very little,

The purchased product represents a high percentage of a buyer’s costs, thus providing an
incentive to shop around for a lower price,

A buyer earns low profit and is thus very sensitive to costs and service differences,

The purchased product is unimportant to the final quality or price of a buyer’s products or
services and thus can be easily substituted without affecting the final product adversely.
Negotiate better term with the new suppliers.

As a procurement professional in this competitive world “negotiation” reminds us of how

supplier negotiation is an essential skill.

1. BUILD YOUR RAPPORT

In business, building rapport plays a prime role. Excellent rapport manifests excellent
communication helps negotiate better. By being communicative; attentive, responsive, and
approachable, professionals can build rapport with suppliers and gain a competitive
advantage over decision making.

2. REACH OUT FOR MORE

When you are looking to buy a service/product, reach out to more than one supplier. Ask
each one of them to give you their best price while informing them about the other suppliers
you have contacted. This way, each supplier will know that they have to provide you with
their best to be able to win a contract with your organization.

  3.COST TO SUPPLIER
On the negotiation table, be in the know of the actual cost of the product/service you are
trying to buy. By figuring out the cost incurred to make the product, you have a much better
idea of how less you can expect from the seller.

4. BUILD ON THE OFFER PRICE

Inquire the supplier for the best price for a large quantity. Once you get the price, you can
then go for the exact amount you need with an offer that is neither hurts you nor the seller. In
this attempt, be reasonable to offer a sensible price that doesn’t trigger a loss to the seller.

5. FLEX YOUR FINANCE

When you come to the negotiation table, come with a cash reserve. The higher advance you
can afford, the more command you can have over the whole negotiation. It will flaunt your
financial strength and sustainability on which the supplier can bank for a long time. Ensure
you clear about the payment terms beforehand and make more than half of the total price as
a deposit.

6. MENTAL MATH
In most buyer-supplier negotiations, a supplier is willing to work with the buyer who wants it
the least (kind of mental game). Be like Tom in Huckleberry Finn; show your unwillingness
on the face and keep willingness to the heart. A general disinterest will intrigue your supplier
to consider your offer and be your supplier-of-choice.

7. FIND YOUR SWEET SPOT

Have you a record of working with great suppliers, have your stories where your suppliers
have praised you for your timely payment? You can include such anecdotes in your
negotiation to position yourself as a buyer of choice. A supplier would love to consider a
long-term business deal even if it is asking for a significant cut in price.
8. BE EMPATHETIC
Do proper research on your supplier’s business goals, which will help you draw on your
common interests and build empathy. Supplier may refuse the price you offer, but an
empathetic approach may help you negotiate with the down payment, after-sales service, or
product warranty period, etc.

9. BRAG YOUR CREDIBILITY

The best way to win a supplier is to think like a supplier. Try their shoes and understand that
they have the product to sell but need credibility to earn a long-term business deal. Likewise,
as a buyer present your credibility, that’ll build trust and competitive rates.

SUPPLIER NEGOTIATION: CONCLUSION

The above strategies are not only useful in supplier negotiation but in business negotiations
as well. Whatever be your strategy, do not forget your long-term goals and never to burn a
bridge with a supplier. Even if you are not going to be doing business with a particular
supplier, be polite in your dealings.

Part B

Creates endorsements
Loyal customers provide positive endorsements and good online reviews that can help
businesses strengthen their brand. A loyal customer, on average, is 10 times more valuable
than their first purchase. Research shows that people often make purchasing decisions based
on recommendations from family and friends vs. advertising messages. Here are four
statistics:
1. About 97% of customers will tell others about very good or excellent customer
service experiences.
2. Nearly 70% of people would spend more money with a company that has
excellent customer service.
3. Approximately 24% of satisfied customers will return to a business two or more
years after a good customer service experience.
4. Research shows that 59% of people would try a new company to receive better
customer service.
Prevents business failure
One of the contributing problems is poor customer service. Buyers become frustrated over
small problems that are not addressed. It happens when a business does not have good
customer service associates who follow up on questions and promptly fill requests.
Reduces employee turnover
Employees want to work for businesses that appreciate worker contributions, encourage new
ideas and treat customers fairly. When people work for an employer that provides good
customer service, they are more engaged in their work. They become advocates for the
business. Plus, they are more willing to stick with the company through business challenges
and economic changes.
Customer service example
Customer service programs are important in every business industry, including employee
benefits. For more than 13 straight years, its claims contact centre associates have earned
Benchmark Portal’s Centre of Excellence award, an achievement only held by a handful of
other companies.

Advantages of incremental budgeting

1. it is not difficult to plan and is thusly speedy. Since it is not difficult to get ready, it is
additionally effectively distributed to more junior individuals from staff.

2. As well as being not difficult to get ready, it is straightforward.

3. Less planning time prompts lower arrangement costs.

4. Prevents struggle between departmental directors since a predictable methodology is

embraced all through the association.

5.The effect of progress can be seen rapidly. For instance, the increment of $138k in staff
costs for the previously mentioned school can rapidly be followed back to the work of two
new staff individuals and a 5% boost in salary since all the other things in the staff pay rates
spending plan stayed unaltered.

Downsides of incremental budgeting

1.It accepts that every current movement and expenses are as yet required, without
inspecting them in detail. In our school model above, we realize that the head instructor has
planned for two new dialect instructors. How cautiously has he investigated whether both of
these new instructors are really required? It very well might be that, with a few plan
changes, they could make do with just a single new educator, however there is no motivating
force for the head educator to very evaluate the current expenses of $1.5m (gave, obviously,
that the financing is accessible for the two new educators).

2.With gradual planning, the head educator doesn't need to legitimize the current costs by
any stretch of the imagination. On the off chance that he can essentially demonstrate that
there is an increment in the quantity of language exercises comparable to two new staff’s
showing hours, he can legitimize the expense of two new educators. By its actual nature,
gradual planning looks in reverse Maybe than advances. While this isn't such an issue is
genuinely steady organizations, it will mess up quickly changing business conditions.
3.There is no motivation for departmental administrators to attempt to lessen costs and
indeed, they may wind up going through cash only for it, realizing that in the event that they
don’t go through it this year; they won’t be apportioned the money one year from now, since
they will be considered not to require it.

4. Performance targets are regularly unchallenging, since they are to a great extent
dependent on past execution with some sort of token increment. Thusly, administrators are
definitely not urged to challenge themselves and failures from past periods are conveyed
forward into future periods. In our school model over, the head educator may have recruited
an additional cook for the school kitchen when he imagined that there was going to be more
prominent interest for school suppers than there really ended up being. One of the cooks
might be sitting inactive in the kitchen more often than not be that as it may, with nobody
taking a gander at the current expenses, it is probably not going to change.

logical recommendations for budget management

Presenting recommendations for budget management It is important that you can present
clear and logical recommendations for budget management, based on review and analysis of
current financial controls, and on research carried out.
To persuasively make a case for a particular approach or strategy, you will need to have
clear evidence to suggest why it will work. Evidence can be broken down into the two
categories outlined below.
Evidence of clear failures or weaknesses
Firstly, you must make a case for why change needs to happen, and this should focus on
current strategies and approaches which have proven to be inadequate.
Focus on any financial data (contained in financial documents) which shows:
i. Poor estimations of costs and income
ii. unexampled of overspending
iii.Examples of significant variances and deviations
iv. Examples of wastage
v Examples of poor funding allocation
vi. Examples of objectives and goals that have not been met because of poor

Importance of Monitor Budget

Monitoring the budget is important to ensure that the financial, operational and capital plans
that were developed and approved for implementation as part of the budget processes are
being implemented. Budget monitoring is crucial for an organization to be able to enforce
accountability related to spending. In addition, regular, comprehensive monitoring of the
budget allows a government to evaluate service level provision, ensure any new initiatives
are making expected progress towards goals/expectations, learn more about trends and other
deviations that may impact future operations, and finally demonstrate transparency by
sharing findings from this regular monitoring.