Budgeting and Business Planning

If you are one of the many businesses who are fast approaching their financial year end, then here are a few questions you may want to be asking of yourself.

1. Have you started your budgeting process yet ? It is always beneficial to involve the wider team from the start of the budget setting process, as it is more likely that they then take ownership of the plans
2. Are you using accurate historical data on which to base your budget ? Historical data is paramount, not just revenue but also average spends, yield, occupancy percentages and costs per room let/sleeper/diner
3. Are your margins on both food and liquor at their optimum ?  If you have been tracking your margins this year, then when did you last review all your menu and bar/wine prices to ensure that there has been no cost creep into your profit levels ? If you don’t regularly take stock, then it would be prudent to do so
4. Is your marketplace still the same as last year or has your position within it changed ? You will need to carefully establish if it has fundamentally shifted, not forgetting to look at all the various segments that make up the business - rooms, local F&B, residential F&B, conference, banqueting and leisure
5. Do your key margins and indicators sit within the bounds of industry norms ?  If they don’t, can you realistically give the reason ?
6. Have you taken a constructive view of the current payroll cost and the relative roles within the business ? Very often, additional roles and/or hours can creep into departments unnecessarily
7. When the budget is complete, does it make sense ?  Is it realistic and achievable or is it over ambitious - there can be little more demoralising for the team than failing to make budget consistently from the start !  Banks and finance institutions like to see realism in any budget. But don’t forget that a budget set too low can breed complacency and under performance.
8. Do you want / need to incentivise the budget (or elements of it) to the team ?  Any incentives set should always aim to be self financing
9. Have you written a brief action plan of how you will achieve the targets for next year ? Everybody needs to be crystal clear on how you are going to achieve it
10. When all is done, get the team’s buy in to it. Your budget is their budget

Finally, do you need an outside, independent view of the budget and business plan, or indeed need help to complete the process ?

If you would like to talk to us about how we can help you review and develop your business plan, then do Contact Us.