Lesson 11.1: Marketing Finances

Overview

• Discusses financial planning, budgeting, and financial reports.
• Importance of setting financial goals and developing processes to achieve them.
• Focus on revenue goals and sales forecasting.
• Explanation of business budgeting practices.

Key Topics

Financial Planning

• Definition: Process of setting financial goals and developing processes to reach those goals.
• Revenue Goal: A crucial financial goal for a business is setting a revenue goal.
• Sales Forecast: Predicts future sales based on past performance and market analysis.
  • Internal Factors: Changes within the company (e.g., vendor changes).
  • External Factors: Outside company control (e.g., economy, political events).

Sales Forecasting

• Quantitative Forecasts:
  • Based on facts and figures like past sales and market share.
  • Uses formula: Sales from last quarter * Sales Increase Factor.
  • Example: Sales increase by 20% from $80,000 = $96,000 for next year.
• Qualitative Forecasts:
  • Based on judgment, used when there is no past sales data available.

Budgeting

• Purpose: Uses estimated revenue to plan expenditures.
• Departmental Budgets: Each department and the overall company have separate budgets.
• Time Periods: Budgets can be monthly, quarterly, semi-annual, or annual.

Cost Control

• Identifying necessary vs. unnecessary costs to keep within budget.
• Comparison of actual revenue/expenses with budgeted figures for future planning.

Financial Reports

• Public Companies: Required to release financial reports like balance sheets and income statements.
• Actual vs. Pro Forma Reports:
  • Actual reports: Reflect past performance.
  • Pro forma reports: Predictions used for loans.

Conclusion

• Lesson on marketing finances concludes with encouragement to review sources for deeper understanding.