A responsible and successful business needs to have a solid grasp of their finances. With a good martial arts school budget, you’ll know how much money you have and which areas of your business need and don’t need further investment. You can track your cash on hand, business expenses, and how much revenue you need, in order to keep your business growing. This also helps you anticipate future needs, spending, profits and cash flow. Just like a good or a , it acts as a roadmap for your business. You can go without it but there will be many situations where you may miss opportunities to cut costs or boost growth.
At the end of the day, knowing how much money you have, how much you need to spend, and how much you need to bring in to meet business goals will help you make the best decisions for your martial arts school. Once you have your budget in place, can be set to further your business needs. Here are a few pieces of advice for creating your first martial arts school budget.
What’s in a Budget?
Budgets should operate according to basic mathematical equations and balance: “sales = total cost + profit” or “sales - total cost = profit”. With that in mind, a good martial arts school budget should be calculated at least yearly but we recommend updating it with every season or semi-annually. For most schools, it can be a large advantage to have instant access to your expenses, using spreadsheets or digital martial arts school tracking.
Sales and Other Revenues
It is very helpful for your martial arts school budget estimates to be accurate but this is one where you want to make an even bigger effort — it might even be a good idea to make it a very conservative estimate, if need be. Although it’s great to expect massive growth each and every year, it needs to be a realistic view. The best thing to base your projections on is last year’s sales figures.
If you’re starting out, do some research on your industry, as well as your community. If you’re part of a plaza or group of shops in a development, asking owners of other businesses for their growth rates isn’t out of the ordinary. That being said, factor in all the influences that may be giving them the growth patterns they’ve been experiencing.
Total Costs and Expenses
Now that you have your revenues accounted for, you can determine the costs that will allow you to perform that level of business. Some tough areas surrounding projecting for future costs include inflation, price increases, and exchange rate fluctuations. Economic factors can play an unforeseen role and have a major impact so plan ahead, based on the current and projected financial climate in your area.
There are 3 different costs involved in budgeting. Fixed costs are those that don’t fluctuate with sales levels, such as rent, leased furniture, and insurance. Variable costs are those that correlate, usually positively, with sales volume; things like freight, products, and inventory. Semi-variable costs are fixed costs that can be variable when the volume of business changes, such as salaries, telecommunications, and advertising.
The result of subtracting your total costs and expenses from your sales gives you your profits. This is where you can plan how much financial energy you’re putting into different aspects of your business’s growth. Deciding where the extra capital goes is an important decision that can greatly impact how next year’s development goes. Because of this, a lot of thought should be put into where the profits go, preferably with the advisory of your senior management.
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