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Developing a Budget: Conducting Research

This article is one of a series 4 articles on developing a budget as follows:

  1. Researching Information (this article)
  2. Sources of Information
  3. Consulting people
  4. Building the worksheets that workout anticipated income and expenditure

Researching Information

Persons who have the responsibility to develop a budget will need accurate and up to date information. This requires the budget developer to actively research almost all items of income and expenditure. Only items of income and expenditure that are extremely small or relatively insignificant can be "guessed" instead of researched. Ideally, however, a budget should have very little guesswork.

The extent of research will differ item by item. The following example, a sport club, provides an indication of the level of research work that is required for some of the probable items of income and expenditure.

Item Difficulty What do you research
Advertising Costs Easy The amount of advertising can change significantly from year to year. Don't rely on previous year figure. You have to consult the committee/board/management and decision has to be made on advertising budget for the year.
Athlete Development Costs Moderate Organisations often set aside a fixed amount of money for athlete development. If it's a fixed budget decided by the committee then it is relatively easy. This becomes more difficult if the athlete development budget depends on a number of factors such qualification standards. You will need a lot of consultation on this one.
Canteen Income Moderate Unless there has been some significant change in the canteen or the number of members, it is a matter of research previous years of canteen accounts and making a reasonable estimate.
Electricity Cost Easy Unless there has been a significant change in electrical equipment such as new floodlights, the cost of electricity can be gleaned by looking at usage in KWH on previous bills and then researching current or predicted charges per KWH (Kilo watt hour).
Event income Difficult What events? You need a calendar of events. Each event needs to be considered in terms of location, numbers of participants, fees to be charged participants and spectators. One event on its own is quite a lot of budgeting work but a number of events over the course of the year is much more budgeting work.
Maintenance Costs Moderate There are two ways to play this one. The easy way is to simple set a budget according to what has been normally spent in previous years. However, maintenance is not the same every year. The better way is to consult with organisation personnel and find out what specific maintenance will be needed in the forthcoming year. You can ask them to help you with research.
Membership Income Easy Usually two things to consider: (1) Anticipated number of members and (2) Membership Fee.
Merchandising Income Moderate Product lines are always changing. For example, there can be changes in products, suppliers, quality and product costs. A small number of products gives rise to moderate difficulty but a large range of products would make this research difficult.
Salaries Easy A salary is a fixed payment for services received. This makes it relatively easy. You need to know who will be paid a salary, how much, and for what duration of the year. You also need to add on other employment costs such as superannuation. If there is any salary sacrifice involved, the task become more difficult.
Sponsorship Income Varies In some organisations, sponsorship income could be relatively easy to research i.e. one or two sponsors and agreements already in place. In other organisations, sponsorship could come from many different sources and negotiations are in a state of flux. Err on the side of caution and underestimate.
Telephone Costs Easy Unless there is a change in staffing, or policy in regard to mobile phones, or level of business, it is relatively easy to predict a cost for telephones. It is important to have policies in place however, you don't want staff handing you unexpectedly high phone bills to pay.
Travel Costs Difficult Travel can involves teams of people. The research can include who is traveling to what, airfares, accommodation costs, food costs, ground transport and parking, and more. You will need a lot of consultation and help on this one.

 

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