Start a Budget Now

I’ve had the fortune to be able to meet performers from troupes, theatres and festivals across North America; big and small. Of course, we all know the big established places like iO, Coldtowne and HUGE, but there are great theatre companies in pretty much every city. One thing that’s surprising is that almost every one of these smaller theatres tells me they don’t keep any kind of budget. The reason is almost universally the same; “Oh we don’t make enough money to justify a budget.” I think there’s a big misconception that the purpose of a budget is to keep track of your vast wealth. Well, I suppose that is one purpose of a budget, but it’s so many other things. Even if you only make $40 a year from that one high school gig, a budget is a way not just to keep track of your money, but to help understand the trends and patterns of your organization and help better plan for the future.

Creating a simple budget for your organization, even your troupe is a great way to help you better plan ahead. It can help you plan so you can have the right number of workshops throughout the year without having to cancel them. It can help you know what time of the year is best for your troupe to travel or for your theatre to put on a festival. And if you ever apply for a grant, boy howdy will having good records help you. Perhaps even more important it will give you the habits you need for when you do grow. Because you want to continue doing improv for a long time right? That doesn’t necessarily mean getting rich, but it means planning on how to sustain yourself.

If you don’t have a budget. Start one. Start one this week. Keep in mind, this post is not intended to be the end all, be all of your budgeting system. As you grow, you will need to invest in far more versatile budgeting tools and software or getting an accountant. But I know to many readers that’s an incredibly intimidating thought. These tools are an extreme baseline. These are tools to help you form good basic budgeting habits and learn how to eventually customize them or expand them for your own use. But if you really need to set a budget on your money, then store your money where you can invest it and eventually generate money, you´re starting to consider that then read the US Gold Bureau review to see how they can help you.

There are many kinds of documents and reports and listings that come with any store bought budget. They can be confusing. I suggest starting with these four. Two of them will probably make sense. Two of them will probably seem like a (small) waste of time. I promise you that those ten minutes a month will come back to be of great help in the future. These documents shouldn’t be open ended. Choose a period of time for this budget and then rebuild it for the next period. Usually, that period is a year. Usually they start in January. But find a cycle that suits your organization. For festivals, it may be wise to start your annual budget two months after your festival. Why two months? Because that gives you time to take care of all the remaining payments and income and can start fresh for the next year’s festival. For theatres, January is usually a good idea because if you do incorporate into a business, your taxes, annual reports and 99s (if you’re a non-profit) will be based on that cycle.

Ledger

C’mon. You knew this would be in the list. Keep a basic ledger of every expense and income. This lets you know where your money is coming from and going to and what your available funds are at any time. It’s not complicated. You can even keep just a Google Doc or Excel Spreadsheet with the following columns

Date, Description, Debit, Credit, Balance

For those who aren’t good with spreadsheet software like Excel, here’s a quick set of instructions that will do the very basic math for you. On the very first entry for balance enter the following keystrokes ‘=’, ‘left arrow’, ‘-‘, ‘left arrow’, ‘left arrow’, ENTER. This will give you the balance of your first transaction. On the line below (your second transaction) enter ‘=’, ‘up arrow’, ‘+’, ‘left arrow’,’-‘,’left arrow’,’left arrow’,ENTER Then copy and paste that to each cell beneath it. This will do the math of your ledger for you.

As you grow, you may have several places where your money is being stored; a bank account, Square, PayPal, Brown Paper Tickets (or some other Ticketing Software). Keep a ledger for each.

Balance Sheet

A balance sheet is one of the the things you hear in movies when people are in board rooms talking about boring things. But it’s probably the simplest financial document you can imagine. At the beginning of each month, write down how much money you have right now. That’s it. One number. A balance sheet is simply a snapshot of “where’ we’re at right now”. (If you want to get “fancy”, you can also put down any receivable funds or debts as well.) After one month, or two months, that info won’t be much use to you, but as the year goes on you’ll have quick access to your history. And more importantly, it will help you make educated decisions on your future. (More on that under projections).

Financial Earnings Sheet

Structurally, a financial earnings sheet is similar to balance sheet. While a balance sheet keeps track of how much you have right now, a financial earnings sheet lists how much you’ve spent and earned in the last month. It can be as simple as those two numbers each month, but this one you’ll probably want to break down into categories that will be useful to you. Monthly income is a useful number, but breaking it down into “Tickets”, “Classes”, “Corporate Workshops” will give you a better idea of where your efforts are being focused, and possibly where they should be diverted. If you rent a space for classes and pay instructors, but don’t make back that amount of money in registration, that doesn’t mean stop classes. But it’s good to know that there is a drain there and you probably need to make some changes.

Quick Tip: Obviously, if you break down the income and spending by category at the beginning of each month, that will involve going through all your transactions and deciding which category they go into. Although this won’t completely do all the work for you, a time saver is to list items in your ledger in a consistent way with the category first. For example, ledger entries like “Friday Night Tickets” and “Jerry’s Show” aren’t quite as organized as “Tickets: 1/10/14”, “Tickets: Jerry’s Show”. At the end of the month, you can copy and paste your monthly transactions to another sheet and alphabetize them. It will still take a couple of minutes to add things up, but will be considerably quicker. If there’s something in a slightly gray area. Don’t stress about it too much now. In the years to come you’ll find your own way to organize that data more and more effectively.

Projections

I’ve talked only briefly and vaguely on the benefits of Balance Sheets and Financial Earnings Sheets. Their use will long term become apparent, but short term, they’ll help you build your projections sheet and that’s the one that will really help you more than anything else.

A Projections Sheet should be built at the beginning of each year. It will take more time than the other documents, but outside of little additions throughout the year, the bulk of the work will be done once a year.

The basic structure of a Projections Sheet is quite simple, and to be honest. Your first year’s projections won’t be terribly useful. Make a breakdown of each month how much you “think” you’ll make and how much you “think” you’ll spend. Really do your best to make educated guesses. Are your ticket sales generally lower around Christmas time? Do you know you’ll be having fundraisers during the summer? Don’t forget that you probably have those little expenses throughout the year (printing flyers, etc). Try to include everything and write down a rationale list of all your projected ideas for the year. Do the math and write down how much you think you’ll have at the beginning of each month in the coming year.

Create three columns.

  • The first column is the projections you just made. Never change them. Write protect that column if you need to. Even if mid-year you realize you were drastically off. Keep that original projection.
  • The second column is going to be filled in with the actual amount you have (essentially, the same info you put on your balance sheet).
  • The third column is your adjusted projections. At the beginning of the each month, take what you’ve learned to make any adjustments to your projections to hopefully be more accurate.
  • Now you have a roadmap for the rest of the year. Sit back and look at it. You may find some surprising things. Maybe the months you’re planning on traveling to a festival out of state is the same month that you’re paying your instructors and also the same month your ticket sales are going to a local charity. You knew about all those things separately, but didn’t notice that all of your big expenses were happening at the same time. Maybe a couple extra shows can be added the month before. Maybe that printer you were planning on buying should wait until later in the year.

    Each month, check your actual finances against your projections. If you’re falling behind, look for a way to bring yourself back up to those levels. If you’re ahead. Well, remember that printer? Now’s the time where you can afford it without going below your projections.

    At the end of your first year, you’ll have made some mistakes. It will happen. You’re just feeling your way out. And here’s the beautiful thing. When you go to build your projections next year, you have a record of everything you did last year. Did you buy 200 t-shirts last year and sell 14? It’s there in your balance sheet and your financial earnings sheet. This year. Order 20 shirts because you can have a much more education guess on how many t-shirts you’ll sell this year. Did you offer one Level 1 Class every two months, but realize that during the summer, you had a demand from the college students who were out of school and had to turn them away? Offer two summer classes this year. One year from now you’ll be building projections for 2015 and you’re going to have solid information on what your year might look like. Of course 2015 won’t be exactly the same as 2014, but it’s going to be similar and you’re going to be armed with the knowledge.

    Many people think that thinking about money in improv is somehow… dirty. That you sacrifice your art when you start thinking about money. But that old saying isn’t “Money is the root of all evil.” It’s “The Love of Money”. When you start sacrificing your integrity to make a buck, your in bad territory. But that doesn’t mean that the money you do have is a bad thing. It’s what allows you to continue to perform and travel and share your love. It’s what allows you to bring master teachers to your theatre to raise your game. It’s what allows you to reach out to your community and expose them to the thing you love if you handle it responsibly. Something as simple as keeping these four documents will help you get to that point without turning into a bunch of boring business people or losing your art.

    I really believe if we all start doing this, improv will explode in the next few years and the public awareness and appreciation of improv will blossom. Here’s what I’m willing to do. If this sounds like something you’d like to do but still feel in a bit over your head. Email me directly at bill@nationalimprovnetwork.com. I’ll send you some template files and I’ll get on the phone with you and help you set up an appropriate budget for your own troupe, theatre or festival.

    And don’t stop with these very basic steps, learn to grow and find the right tools for your organization to grow into the next decade.


    Currently Bill is an instructor at The Torch Theatre and producer for the Phoenix Improv Festival. He tours teaching and performing across North America.

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