Forecasting Financial Needs
Start-up costs, such as lease signing requirements, renovations, inventory, permits, etc., are those incurred when you initially set up the business and are generally only paid once. Since these costs come before the student payments, you must have the money up front. This money may come from your savings, family, your instructor, friends, or bank loans. If you decide to start your business full-time, you will need to plan a personal budget for at least nine months.
Estimates of Monthly Expenses and Receipts
This aspect financial planning is dependent upon the information you have already obtained. Remember, you are estimating, so allow for the worst case.
- Estimates of Receipts. From your earlier estimates, you may forecast your monthly receipts by multiplying your estimated number of students times a reasonable price. You may also include sales of such things as uniforms and sparring equipment, and testing fees. This total only gives a rough estimate. Keep in mind that you earn money personally only after all business obligations have been met.
- Estimates of Expenses. From your previous planning, you have an estimate of monthly costs. Most of these costs are consistent from month-to-month, such as rent or insurance, but you have some control over others, such as electric usage. Other expenses are dependent on usage, such as long-distance telephone calls, advertising, or travel.
The answer for budget problems, other than controlling variable expenses, is to increase revenue. This sounds simple but ii is usually the most difficult part of business. To increase revenue, you must spend time and money on advertising and marketing.