It’s the 4th quarter…
- you have three and a half months left until the end of the year
- you haven’t completed all of the programs, projects or other business goals you planned for the year and;
- as of today, you haven’t secured all the money to make those goals happen.So what do you do? Give up on accomplishing that goal? The way I see it, you have two options.
- Organize your time, gather the appropriate (physical and financial) resources and focus on the 1 or 2 goals that you can reasonably and successfully make happen by December 31st.
- Put those unfinished goals into the plans for 2016. Grab a pumpkin spice latte and a journal or notepad and start planning out what you want to accomplish next year. Brainstorm, tease out ideas and do back up research so you make decisions on how long the program, service or product you provide will take to be up and running, what human and physical resources you’ll need, when will it be performed/presented/sold and how much will it all cost? You use all of that information to build a budget.
Many of us are familiar with budgets and have created one for our personal lives, individual projects or even, grant proposals.
A budget is a (forecast or financial) plan made at a point in time with the best information at hand. That’s it!
An operating budget can also be thought of as the sum of individual project budgets plus the costs that you pay regularly just to stay in operation (fixed costs, e.g. office rental space, cable/internet, telephone, utilities). I encourage people to review their budget quarterly to see if it still makes sense for them, their creative mission and goals for the year. If you expect do or sell the same programs, projects, services and products next year as you did this year, then jot down the revenue earned and expenses incurred from those activities and use the numbers as a starting point to create your 2016 budget. If you’ve never created an Operating Budget as a freelancer or business owner, start today and here’s how:
- Decide which activities you want to accomplish or products and services you want to sell in 2016.
- Determine and quantify what it would cost to execute each activity, make each product or provide the services planned. Some of the expenses will be fixed (remain constant from period to period). Some will be variable (often project-oriented and more adjustable period to period) or semi-variable (costs that must happen but can be mitigated like printing in color versus black & white or renting versus purchasing equipment. And others will be unexpected. So add an expense category to account for those “Contingencies”. Make the amount 10-15% of the total expenses forecasted before “Contingencies”.
- List the different sources of income you expect to get from freelancing or running a business. Estimate to the best of your abilities, how much you can make from each income source. So if your business entails getting an artist fee for each residency, generating ticket sales from your production and raising income from works sold, you can decide how many residencies, productions and works you have to sell in a given year in order to cover the total cost of the business (Step 2.)
- Put it all together. Use business management software, an Excel spreadsheet or a journal with horizontal and vertical lines to build the budget and track the numbers. List all the Income sources first and then all the Expense categories underneath the Income section. Then add columns to forecast this information by month for 2016.
- Be patient with yourself. It takes time to build a budget from scratch and furthermore to predict the numbers. Do a lot of research to find out what numbers make sense. As you get more information, update your 2016 budget. You have 3 months to do the research and make the adjustments!
Each week I seek to bring topical and relevant information to the artistic and creative entrepreneur community. But I want to hear what you think about these posts. Please leave any constructive feedback, testimonials or reflections at the end of the blog.
Have a great week!
Your fellow creative and business owner.