It goes without saying that all clubs should have a budget as we need to match our incomings with our outgoings to stay afloat. The two key reasons are for cash flow planning (essential given the seasonality of sport) and for financial review (to understand how well you are performing against plan).
The budget can be as simple as a one page document with month columns across the top, and expected income and expenses filled in on the appropriate month. If you have access to a computer, an excel spreadsheet is an efficient tool for preparing your budget. Clearly the more experience you have within the club in terms of members with financial backgrounds the more comprehensive your budget can be.
However for the layman here are just a few points to consider when preparing your budget:
- Is the timing of membership income correct?
Despite membership fees being due in a certain month, it may take another few months for all the fees to be paid. Can you afford to offer instalment plans or do you need full payment up front?
- When is sponsorship money (if applicable) received?
Some sponsors may pay a set amount each month rather than in a lump sum. Ensure that whoever is negotiating the sponsor deals understands the requirements of the club in terms of payment plans.
- Is the amount estimated for expenses realistic?
The results from previous years may provide a guide, however many expenses will increase each year. It is tempting to put in lower amounts to help balance the budget but wherever possible get accurate estimates or allow a % for inflation. Ask those responsible for negotiating purchase deals to keep you fully informed with negotiations and advise you promptly of any notifications they receive relating to costs.
- Are any expenses dependent on the number of members?
If so you need to speak to the membership secretary to find out the current member breakdown and understand from the committee the plan for expansion or maintenance of the current member base. On the converse income is related to the number of members so this will work both for income and expenditure.
- Your budget should include any initial large expenses such as stock purchase (for example if you have a bar or shop) or new team kit (if the club are changing supplier for example)
- Ensure you are fully aware of the club plan for the year. Planned events, whilst major money earners can also incur large up front costs. Be aware of the timings and include these one off costs within your budget plan.
- You should always plan to have a minimum balance in the bank for any emergencies that arise.
Once the budget is set and agreed, it is not written in stone. So review regularly along with the rest of the committee to maintain a healthy bank account!