Operating Budgets of of Martial Arts Business

Operating Budgets of of Martial Arts Business

Operating budgets are all about managing the income and expenditure of our martial arts business. Simply put, operating budgets are tools to make sure you manage the money in, and the money out.

So, is there just one budget for income and one budget for expenditure? The answer in short is a resounding "no". There are, in fact, many budgets. We have a budget for each item that is listed on the income side of the profit and loss statement and we have a budget for each item on the expenditure side.

Let's say there are 5 items of expenditure under motor vehicle, then we allocate a budget for expenditure that is forecast for one month against each of these items. We do the same for each item of Income.

Once we have this in place, catering for seasonal fluctuation and variations, then we track our income and expenditure on each of these. The bottom line is that we are managing each account on the chart of accounts in our accounting system to make sure our income comes in on track and that the expenditure happens as planned.

We may change budget allocations as we go, however the budget projections need to align with our business growth plan. This means that if we are planning on spending $1500 on one are of expenditure and we decide we need to increase this to $2000, we either have to find another area to reduce expenditure in or alternatively allocate in the budget another $500 of income to cover this off.

Operating budgets are a management tool to make sure our business earns the amount needed against expenditure and to drive growth to pre-determined targets. They are so critically important as it is a financial process that happens well before the sales start happening and before the bills start arriving. This is your plan of solitude, your stress reducer, your shining light.

Without operating budgets, you are doomed to random speculation on a day by day basis of where the next dollar is coming from, how many of them are going to arrive, and with what frequency.

The seasonal fluctuations are important to budget for. For example, as you come into the first days of the new year you may find you uniform and equipment sales are generally down as many families may be on holidays, whereas your income from trial programs may increase in the times throughout the year when sign ups are more likely, for example the change over from the summer to winter sports.

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