Whether you’ve just begun the process of opening a new sports business or you’re looking to evaluate your business’ current expenditure, there’s no wrong time to review your budget.
A detailed and up-to-date budget is a key part of the foundation of a successful business, because it enables you to make smart financial decisions for growth.
Check out a few of our top tips to building a budget below.
Why is a detailed budget important for sports businesses?
- It empowers you to make smart financial decisions. You can use it to see where your business finances stand right now-and what you need to do to achieve your financial goals in the future. Think of it like your baseline.
- It helps you assess where to minimize spending or grow revenue. Having a business budget can help you identify areas in which you can decrease your spending or increase your revenue, thus increasing your profitability.
- It enables you to secure funding to grow your business. A detailed budget outlining your income and expenses is required if you plan to apply for a business loan or to raise capital from investors.
With a budget you will be able to manage cash flow, which is one of the most challenging aspects of being a business owner. Learning to budget can help you overcome this challenge.
Without a budget or a plan, your facility or club runs the risk of spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete. Putting together a budget requires guesswork, time and focus.
Failure to have a comprehensive plan will inevitably stunt your businesses growth. For example, as your business grows you may want to consider software to help with managing the business. But if you fail to factor in things like finances adequately, the help will be futile.
How to create a successful sports business budget:
Whether you are a sports academy, club, facility or other training business, here are three keys to understanding a great sports business budget.
1. Compile all necessary information to include in your budget
A budget for your business may be one of the most important accounting tools you use. Ensure all information gathered is accurate and up-to-date. The three main areas to focus on are as follows:
- Revenue: This data comes from sales (e.g. registrations, lesson fees, rentals, etc), accounts receivable (e.g. future payments like team payment plans, memberships, etc), interest and other sources.
- Cost of Goods Sold: This data is the direct cost of items like tournament entry fees, vending machine items, or uniforms.
- Operating expenses: These are typically recurring expenses like payroll, rent, and software fees.
2. Pull all information together
An editable Google Sheet or excel spreadsheet will allow you to continually update your budget as you add expenses and generate revenue. Ensure your sheet is clean and up to date to make the best use of it. A general best practice is to keep your spreadsheets organized by monthly and annual budget so that you have a vision for the short and long term goals of your business.
3. Use your sports business budget to stay on track
This should come as no surprise, but our third tip to creating a successful sports business budget is…to use it! Too often business owners spend hours creating a budget, only to disregard it altogether. As we mentioned earlier, a firm and detailed budget has countless benefits. Ensure you’re reaping those rewards by putting your budget to work.
The hard work is not in creating a budget, but maintaining it. To maintain an effective budget you should refer to it at regular and frequent intervals, making changes based on what you learn. And always remember, the key for any budget is being realistic in your projections of revenues. If you are facing an audit and are in need of advice, see what this Dallas based CPA firm recommends so that you can get your finances in order. A budget should not be numbers made up of hopes and wishes; it should be based on a review of revenues for the current year and what you expect to bring in in the future.