There are many different ways that sports administrators, along with other sporting businesses, keep track of their money. Some companies have an accountant while others just have someone that does their bookkeeping. Yet other organisations do their own bookkeeping. No, what a sporting business does, they have to have some kind of budget to follow so that they know what to spend on what.
Having the knowledge of how to draft a budget is more important to some people than it is to others. If you have never prepared a budget, or possessed a budget, you will want to ensure that you do some research in addition to finding out what type of budget would work the best for you.
There are various types of ways in which a sports administrator could draft a budget that there is at least one way that you can find to prepare your budget. A financial advisor can demonstrate to you exactly where you are as far as finances go and they will also be able to draft you a budget to show you if you spend your money in different ways the results that can come from it.
Why should a sports administrator budget?
Arguably, if you are budgeting on a one-year cycle, you should plan the net budget at least three months in advance of the end of the current budget. If you are budgeting for much shorter periods, say a month, you should be preparing next month’s budget within one to two weeks before the start the period.
The timing is very debatable, but you should plan your next budget in good time so that your objectives and proposed income and payments are clear for the next budgeted period.
How a sports administrator should prepare a budget
As we said earlier in this article, budgets are made to help sports administrators meet the objective. For example, are you trying to minimise costs, increase revenue, gain a higher market share (through increase sales), etc. it is, therefore, essential that you highlight your objectives so that you can coordinate the budget in order to help achieve them.
After you have identified your objectives and determined the period that you will budget for, you need to gather information which will guide you when compiling the budget. This will include past and current performance figures obtained from:
- Profit and loss accounts
- Balance sheets
- Previous cash flow forecasts.
This data can then be made use of in order to identify likely sales numbers and costs in the future.
Sometimes, it is common for people to compile a budget from scratch, ignoring all previous history and current performance. This is known as zero-based budgeting but can be very risky.
When preparing the budget, there may be figures that you will feel confident to state (mainly costs) but sales figures can be much harder to predict due to the number of variable s that can take effect at any time (in/decrease in demand, level of competition, etc.).
Many sporting entrepreneurs launch a new business without carefully analysing the financial prospect in advance. They think that all they are required to do is sell enough of the product to put together a profitable business, but this is seldom the case.
The act of budgeting for your sporting business forces you, as a sports administrator, to think through all of the essential numbers as well as to develop a picture of what your fitness business is going to look like in three, six, nine and 12 months. A budget is a strong business tool that will help you make improved decisions. It enables you to develop as well as maintain a thorough understanding of the internal workings of your business.
Want to become a sports administrator? If you do then you need to have completed our Sports Administration Course. For more information, please follow this link.