By Margie Stelzer, Farmers Market Support Program Associate
Guest Writer, Aleta Botts, Executive Director, Kentucky Center of Agriculture and Rural Development
Organizations develop budgets to guide their operations, but also to help ensure that the money coming in does not run out before the year is over and all the year’s expenses are counted. The budget should become a guiding document for the market year, often prompting discussions about member fees and marketing expenses.
Coming up with the budget itself is a simple three-step process:
- What revenue or income do you expect to come into the market? Typically, farmers markets receive funds from vendor fees, donations, grants, or other sources. Count how many vendors you expect for the year and estimate your vendor fees from that amount. Donations can be hard to predict, but if you are planning to secure donations, you should list possible donors and how much you intend to ask them to contribute. Any known grants should be included as well as any other income anticipated in the year.
- What expenses do you expect to have to pay in the market? Some markets have rental space and leasing expenses. Many markets have marketing, labor, and insurance expenses. All of your expenses should be listed for the year. Give special attention to marketing expenses and labor expenses. You should identify where you plan to promote the market and how much it will cost (i.e. two radio ads at $250 each). For labor expenses, you should calculate the hours and wage rate along with all taxes associated with the wages.
- Put these revenue and expenses into a sheet that is easy to understand, often referred to as a profit/loss statement or an income statement.
Of course, revenue has to be larger than expenses. If it is not, you have to either increase your revenue, decrease your expenses, or both. Here is a Budget Template used by the Berea Farmers Market that you can download and use.
Developing a budget is just the beginning of living off the budget. For it to become a guide for the year, the budget needs to be used in the right way.
Share the budget with market members. Whoever was responsible for developing the budget for the market needs to share the document with the market members and secure approval from the market or its board, as appropriate.
Run comparisons on a monthly basis of the actual expenses compared to the budgeted ones. By running the actual expenses against your plan, you will see any overages or shortfalls before they have a negative effect on the market.
Do year-end recap. At the end of the year, do a final run-through of the budget and see how the actual revenue and expenses compared to what was planned. Examine why the numbers differ and where improvements can be made the next year. Use the information to guide decision-making for the next year. This year-end review should include a review of the marketing expenses and how much bang for the marketing buck the market got.
The Kentucky Center for Agriculture and Rural Development (KCARD) can help markets develop budgets, put them into shareable formats, and develop good record-keeping strategies to make sure they stick with their budget. Give us a call at 859-550-3972 or email us at firstname.lastname@example.org for more information.