List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.
ELEMENT | PERFORMANCE CRITERIA |
Elements describe the essential outcomes. | Performance criteria describe the performance needed to demonstrate achievement of the element. |
1. Ascertain own financial position and ability to provide capital or equity for the business | 1.1 Realistically detail personal, family or community financial situation showing funds available and commitments already incurred 1.2 Determine equity finance and assets available for micro business from personal, family or community sources |
2. Determine projected cash flow for the business | 2.1 Determine level of forecast business activity over a year and the business mix 2.2 Estimate establishment costs for the business and repayment schedule for borrowings 2.3 Calculate monthly variable and fixed costs needed to conduct business activity over a year 2.4 Estimate personal drawings needed from the business 2.5 Estimate monthly income generated by the business for a year, based on price per unit item or hourly charge rate for labour 2.6 Develop a cash flow budget for the first year of business operation 2.7 Seek professional advice to estimate goods and services tax and operating finance required for the business |
3. Source required funds to establish the business | 3.1 Estimate required funding to establish and run the business based on expected sales and activity levels, available finances and commitments 3.2 Investigate methods of accessing alternative sources of finance 3.3 Identify strategies for meeting financial obligations 3.4 Implement plans to access available funds as required |
4. Monitor business profitability | 4.1 Maintain and review monthly expenditure and income records 4.2 Compare equity at beginning and end of a year to estimate business performance 4.3 Assess financial viability of the business after a year of operation 4.4 Seek professional advice on depreciation, insurance and tax implications of the business |
Evidence of the ability to:
conduct an investigation of own financial position, commitments and needs
determine projected cash flow for the business
estimate the funding needed to establish and operate the business
assess the financial viability of the business.
Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.
To complete the unit requirements safely and effectively, the individual must:
identify sources of specialist financial advice for micro business operators
describe appropriate accounting software for use in the business
locate the Australia Taxation office (ATO) website and summarise data for operating a micro business
explain key financial terminology relevant to micro business
describe the relationship between finances and business sales and marketing strategies
describe methods of costing or pricing and preparation of financial forecasts
Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the Management and Leadership – Small and Micro Business field of work and include access to:
business technology including internet access
specialist accounting software
relevant workplace documentation and resources
case studies, or where possible, real situations
interaction with others.
Assessors of this unit must satisfy the requirements for assessors in applicable vocational education and training legislation, frameworks and/or standards.