Charity Retail Budgeting Check List
Every year charity retailers set their budget for the following year. There is normally a structured process and one of the key elements on which the future budget is based is the current performance of different individual sales channels (shops and online). However, this is really the best methodology because it takes no account of the potential performance of any of the individual or collective sales channels.
A. Individual shops potential sales performance
This is what each individual charity shops and online turnover could be if performing at its optimum performance. This should be the budget for quarter 4 once the optimisation for all shops and online is completed. If you are not confident of the optimised figures, then getting external input to obtain what the optimised sales should be.
B. Current sales performance
Use the current individual charity shop and online turnover current performance for budgeting purposes but only for the initial quarter. The budget then should be scaled gradually upwards quarter by quarter to reach the potential sales performance levels.
C. Market Trend
Understanding the overarching market sales trends should be considered when setting the initial budget.
D. Costs
Rising costs like increases in the national living wage will need to be considered. There is no better time than at budget preparation to consider the staffing levels and structure within the retail shops and online then align them to best practice rather than accepting the current staffing as correct. If you are not confident of what the ideal retail structure and manning levels should be consider external input.
E. Align budget to sales calendar:
Charity retail has a sale calendar which in financial terms is a percentage of total sales each week of the year. Not all weeks achieve 1.92% (1/52) of the total sales and this needs to be overlaid to the total sales. This will make budgeting more complex with the planned growth quarter by quarter to reach potential, but it should be the overarching sales budgeting framework.
F. Summary
Retail budgeting can often be simply adding the known costs increases and adding some sales growth based upon sales performance however is that really the best method? With the charity retail sales boom slowing down and costs increasing budgeting against potential and working to close the gap between actual and potential will definitely improve the unrestricted income.
