Budgeting

A forlorn cricketer leaves the pitch, his time's up - on the plus side, it's a lovely sunny day

What's budgeting all about?

So do you really need to budget? The answer is 'yes'!

Budgeting is an essential tool for managing your money. You can use it to plan for the short term - and the long term.

Your budget is usually set a year in advance. It's also known as a financial plan or forecast.

You will need to work out:

How much income you can expect in the next year.
How much income you expect to spend.
The predicted surplus or deficit over the year.

Budgeting Q&A

Here are some frequently asked questions, to help you get to grips with budgeting...

Who should set your club's budget?

Your Treasurer should take the lead.
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They'll need support from others in the team. That's likely to include coaches, trainers, the general manager, bar manager, and committee members.

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Who needs to approve the budget?

The budget should be approved by the committee and leadership team.
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If they've been involved in the planning stages, they're more likely to accept it.
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Should I add VAT to the figures or not?

It depends on whether your group is VAT registered or not.
Get the lowdown
If your group is VAT registered, then all the figures should be net of VAT (so you'll need to put in the price charged before VAT is added).

Otherwise, the figures should be gross (so put in the price charged after VAT is added).
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What's the difference between a short term and long term budget?

Here's an explanation...
Read on
Short term

A short term budget looks at your income and costs for the next year. This will keep you focussed on your everyday finances.

You may find it useful to break this down into a quarterly or monthly budget to help you keep track throughout the year.

Long term

A long term budget looks at your income and costs over a longer period, say the next three to five years.

This will help you plan for the future, and any one-off projects you want to undertake (e.g. funding for facilities or equipment).
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Tips for setting your budget

Not sure where to start? Read on...

List your sources of income

Try and list every type of income that your organisation receives.

The sample budget on this page may inspire you.

Think about every way you raised money last year. Plus will there be anything new to add this year?

List your expenditures

What did you spend your money on last year?

Will there be anything different or new to add this year?

Get estimating

Estimate the income and expenditure for all the categories that you've drawn up, for money in and out.

Ask around

Talk to your organisation's members, to check that you haven't forgotten something.

Speak to your coaches, trainers, general manager, bar manager, facilities manager and committee members.

Look at last year's figures

Compare your budget with last year's.

Are you being realistic, based on how last year's budget worked out?

Is there anything that you haven't included?

Think about the future

Is anything going to be different this year?

For example, have costs gone up? Are you trialling a new form of income, like a lottery?

Fine tune your budget

Tweak your budget until you're happy that it covers everything.

Ask the committee and leadership team to check it too.

If they're happy too, then ask for their approval.

Check it regularly

At regular intervals, check your budget. This might be monthly or quarterly.

Compare your predicted budget with what's actually going in and out.

Discuss any discrepancies with the relevant members.

Take action, if you need to, so that you keep your group's spending on track.

Keep it simple

Your organisation's budget doesn’t have to complex.

In fact, the most important thing is that it is appropriate for your club and you use it regularly.

Be realistic

Overestimating income, and underestimating costs, can quickly get your group into financial trouble, so be realistic.

An unrealistic budget is also demotivating and less likely to be actively used in managing finances.

Make sure it's compatible with your development plan

Your budget should support the objectives in your Development Plan.

These documents should work together, for example you should assess your longer term objectives for the organisation against your longer term budget.

If your projected funds don’t match your ambitions then you may need to revise your objectives or seek ways to boost your budget.

Sample budget

Income	£
Membership fees	50,000
Fundraising activities	35,000
Sporting events	20,000
Grants	10,500
Sponsorship	8,000
Bar	12,000
Merchandise	6,000
Total income	141,500

Expenditure
Staff wages	80,000
Rent and service charges	15,000
Utilities	4,000
Insurance	2,000
Repairs	2,500
Marketing	500
Travel	8,500
Sporting events	6,000
Bar & merchandise costs	12,000
Sinking fund	10,000
Total expenditure	140,500

Surplus/deficit	1000

Benefits of a budget

Budgeting is essential for the long-term survival of your group.

Here are a few of the reasons why it's so important...

Financial control

By setting a budget, you can identify potential financial difficulties before they happen.

For example, if the budget shows that your group is going to spend more money than it receives, you can plan to raise more cash or reduce costs.

No nasty surprises

If you set up a routine of regularly checking your group's actual financial performance, against the budget, then you can immediately spot any problems.

You can then make plans to pay for any unexpected costs or spend less than you've put in the budget.

Alignment of club goals

The budget will be set in line with your group's objectives. It will need input from several people.

This helps to keep everyone working towards the same financial and strategic goals.

Keeps motivation up

A realistic and achievable budget is good for motivating leaders and members.

Everyone will want to meet (or even beat!) the budgeted figures, to ensure your group's survival.