Financial Planning and Budgeting: Four Quick Tips
Financial planning and budgeting can be one of the trickiest aspects of running community groups and events in the outdoors sector. If you’re new to managing budgets, here are four tips to help you get started, taken from a live event at The Outdoor Connection 2024 – ‘Financial Planning and Budgeting’ – which was run by Consultant Beverley Francis.
This article is written by ATE’s Content Manager and founder of podcasting company Tremula Network, Francesca Turauskis, who is bringing us her four main takeaways from the session for those who, like her, are new to managing budgets.
Through a series of articles, we’re sharing key takeaways from some of the sessions at The Outdoor Connection 2024. You can find the full list of articles here.
The Outdoor Connection is an All The Elements x YHA Outdoor Citizens partnership event, supported by YHA England and Wales, Natural England and Sport England. It brings together community groups, organisations, system partners and brands, working to support access to nature and the outdoors to share experiences, learn from each other and develop new skills.
When I started Tremula Network, like many people working in a field they are passionate about, I was glad whenever I got some income from the work. The ad-hoc projects and payments from small clients to make podcasts about the outdoors all felt like a success – and they were, particularly as I was starting out from scratch.
However, after two years, I was starting to look at scaling up from that ad-hoc work to a sustainable organisation (and if you are too, I recommend reading this article in conjunction with our one on ‘Scaling up to Sustainable - Insights from The Outdoor Connection 2024’). One of the aspects that I have found really tricky is planning and understanding the finances and budgets of the work I do, particularly on a scale beyond ad-hoc. After all, how can I plan to make my work sustainable if I don’t know how much money I need to bring in to sustain it?
This is why I found Beverley Francis’ session on Financial Planning and Budgeting really useful at this year’s ATE x YHA Outdoor Citizens’ partner event, The Outdoor Connection. Whilst a lot of the session was quite practical because she talked through example budgets and forecasting, there were a few key takeaways I wanted to share that I hope you also find useful.
Know Your Overheads
‘Overheads’ is one of those terms that can feel very business-y, but it simply means the expenses you have to pay on a regular basis to keep your work going. Overhead costs do not vary with your volume of work and are not connected to costs for one specific project – think office rental costs, which you will pay a set amount monthly. Knowing what these consistent costs are can help you to better understand your budget and plan financially.
Overheads are going to be different for every community group or organisation – for me, there are obvious overheads related directly to the work I do (for example website and editing software costs, membership to professional bodies, and public liability insurance - PLI - for the recording and events I do in the field). For other groups, these overheads might include insurance for equipment, rent on premises, accounting fees, advertising or marketing, and much more.
Beverley talked about the importance of identifying overheads that you might not pay yet but would likely pay in the future – such as salaries for permanent staff like admin support – to help with financial planning further ahead.
Build Your Overheads Into Your Project Budget
Once you have identified your overheads, Beverley told us that these costs always need to be built into your sources of income. If your main income comes from working on a project basis (i.e. you run events, work with brands on short-term projects or do consulting) she said there were two main ways to work this into any suggested budget you submit for project funding:
Ask outright for these costs to be covered. There are some overheads that make sense to itemise in the budget for a particular project and ask sponsors to cover it. For example, if a brand partner has asked you to have a specific insurance, make sure that is in the planned project budget even if that insurance would also apply to future work.
Build the cost of overheads into your rates. If you charge for your work by day-rate or consultancy, don’t just charge for the time you and your team spend on the project, but account for the overheads when you set your rates. Make sure that you ring fence some of that rate to go towards those overhead payments.
Add a management fee to project work. When you are writing budgets and itemising costs for projects, you can add a management fee to contribute to the overheads. Beverley suggested adding a minimum of 10% added to the final budget, and again make sure this is ringfenced for paying your overhead fees.
Adding up my current overheads and the overheads I can foresee in the future came to a slightly scary number, and was much higher than I had anticipated. However, it gave me a good basis to raise my day rates, and I haven’t had anyone complain when I explained why.
Plan for Between Your Projects
According to Beverley, an ideal, healthy bank account for a community group, organisation or individual should have at least three months worth of wages and overheads in hand at all times. This can be quite tricky when you get payments from projects rather than regular payments, and it is good to think of those three months as a buffer for emergency situations, rather than something you regularly use up between projects.
This piece of advice stuck with me. Working project to project, there can be the cycle of ‘feast and famine’ where it’s easy to forget after a project that the money has to last until the next one. Honestly, I am looking at ‘three months in hand’ as an aspiration right now – but this knowledge does make it easier for me to remind myself not to overreach as I aim to scale up.
Continually Reassess
My last take away from the session was how important it is to continually reassess financial planning and budgeting. This is especially true in times like now where the cost-of-living means that prices are often rising ahead of income. If the bank balance is regularly falling below three-months in hand, it might be time to go back to the overheads to see if there are savings to be made, and return to thinking about sources of income as discussed in Scaling up to Sustainable.
Following on from this session, looking at the budgeting, finances and upcoming business plan are now a much bigger priority for me, which I have built into the admin part of my work. It’s still not great fun – but it makes a lot more sense to me, at least.
This article is part of our Insights series from The Outdoor Connection 2024, based on the session ‘Financial Planning and Budgeting’ run by Beverley Francis. Beverley offers consultancy support to the charity sector working on change management, governance, leadership and income generation. Find out more about her work here. You can find out more about The Outdoor Connection event and find a full list of articles from the sessions on The Outdoor Connection page.
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If you’re not already a part of the All The Elements community, we’d love to hear from you. We support individuals working on diversity, access and representation in the UK outdoors by providing peer-to-peer support, resources and capacity-building. We believe in the strength of community, and if you’d like to find out more about how we can support you, collaborate with us, or tell us about something you’re working on, please get in touch.
Do This Next:
A top tip from the writer: “Check with your local council to see if they have any free or subsidised courses for local businesses. I am currently taking part in a 6 weeks course funded by Arun District Council to upskill creative businesses in the district and it has been so helpful to identify potential sources of funding!” - Francesca.
Read the Scaling up to Sustainable article based on the session at The Outdoors Connection run by Naveed Bakhsh, Co-Founder of community walking group Boots & Beards. This article, based on his session at The Outdoor Connection, asks you to consider the different elements of developing an organisation, including values alignment, operational considerations, and your role as a leader.
‘Director information hub: Cashflow’ – this guidance on the gov.uk website explains what cashflow is and why it is important.
See an example of a cash flow budget on the BBC BITESIZE website.
Kick Off In Business is a funded online course supported by the government to help new small and medium businesses (SME). Find out more about it and check if you are eligible at https://www.kickoffinbusiness.co.uk/
