There are so many influencing factors to consider when setting a budget. It is a lengthy, but worthwhile exercise. The aim is always to: grow the business, set a realistic budget and get it as accurate as possible.

Apart from outside influences like the economy, consumer price index, foreign exchange, politics and natural disasters, we need to take the following steps to create a well thought through income budget.

    • Step 1 : Identify ‘what worked and what didn’t work’ this year. Plan to optimise on what worked and focus on what didn’t work as a potential growth opportunity for the future, unless there is a compelling reason why you should dismiss it.
    • Step 2 : Identify this year and next year’s public holidays, as well as event dates, and the impact it had on business.  Can the same impact be applied to next year and what should be taken into consideration?
    • Step 3 : Identify exceptions in the current year. Exceptions would be highly unlikely to repeat themselves again in the following year. Exceptions must include both positive and negative impact occurrences.
    • Step 4 : Identify this year’s promotions and analyse its success and failures. Apply the successes to next year’s revenue plan.
    • Step 5 :  Revise your competitors set from a product, price and value for money perspective. Is your pricing strategy still aligned with your competitors and your product offering?
    • Step 6 : Consider the shift in Day of Week patterns from this year to next year and the revenue impact that will have on the budget for next year. Calculate the revenue shift from this year to next year.
    • Step 7 : Have a high-level plan per Market Segment group for the next 3-5 years, which includes the sales plan, marketing plan, digital and operations plan. This plan must underpin the revenue growth predicted in the budget.
    • Step 8 : Create your budget for the year starting with a daily draft.
    • Step 9 : Once your daily draft is complete, pull the figures into a Day of Week budget, a monthly budget, a quarterly budget and then your annual draft.
    • Step 10 : Go through the figures and compare this with the strategy documents and ensure that it is true based on what is reflected in the budget. Tweak whatever needs to, to ensure the integrity of your plan.

Revenue Resolutions can help your budget process, with 25 years of hospitality experience and about 20 years of budgeting. Contact Theresa Prins on 071 364 6381 (theresa@revenueresolutions.co.za) for more insightful information or training and development opportunities around budgeting.

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