Budgeting and Funding

When I say budgeting and funding isn’t just a pre-launch task, I mean it. It’s not glamorous, but understanding how your pro forma OpEx (Operating Expenses) will hit you month after month can save your entire business.

Let me tell you about a real-life SOS I once received.

HELP! I’m hemorrhaging money!

That’s not clickbait. That was an actual subject line I received on an SOS email. 🆘

There are very few times that I pick up the phone and call an inquiry without a properly scheduled consult, but after reading the rest of her inquiry, it was clear immediate action was needed.

Backstory:

This client had secured funding and built a GORGEOUS 7-figure venue from the ground up. She had to submit a pro forma (i.e., a document outlining her expenses and projections) as part of the budgeting and funding process. Once she was funded, she stayed fully focused on construction, overseeing every minute detail to ensure her vision came to life.

Her first hire was a social media marketer to help her get the word out. Once bookings started rolling in, she made her second hire: a venue manager.

Six months later, they hit their first engagement/booking season, and bookings exploded. Exciting! But with that came a lot more work than one venue manager could handle, so the client hired a second venue manager.

Then she needed a groundskeeper …

… and a handyman …

… and someone who wanted to work events every weekend.

Hire after hire after hire.

Somewhere along the way, inflation started to creep in and touch every little expense with its dirty little paws. Plus, her actual expenses were increasingly larger than she anticipated in her pro forma.

Unfortunately, the loan she had secured came with a variable interest rate. You can see where this is going…

She was one emergency away from bankruptcy.

I came in and immediately started triaging the business.

There wasn’t much we could do about the interest rate, so after some hard conversations and making some changes in payroll, our next area of concern was inflation. We took a look at recurring monthly expenses and cut waaaaay back by discontinuing software, negotiating rates where we could, dropping down to a lower subscription plan, or finding an alternative solution.

Takeaway:

The snowball effect is REAL with business expenses.

There’s a common myth when it comes to venue startups and it doesn’t matter if you’re building from scratch, acquiring a venue, or leasing a space … most people think the pro forma is a tool simply used to secure your budgeting and funding.

They aren’t wrong. It is a tool to help you secure funding. In fact, I’d venture to say it’s probably the most important tool.

BUT it’s also a new business owner’s lifejacket.

You aren’t done with your pro forma once those funds hit your account.

You should be reviewing and updating it often so you don’t drown in expenses. I recommend reviewing it weekly (set up Finance Fridays!) at least until you get your financial software up and running reports for you.

All expenses are important, but here are the primary ones to keep a close eye on as a new venue owner:

• Payroll
• Utilities
• Insurance
• Communications
• Advertising
• Software/subscriptions
• Professional and financial services
• Equipment leases
• Restock items

If this client had been using her pro forma as a living document, she would have realized change needed to happen much earlier — saving her (and her team!) a lot of heartache.

You can totally run a pro forma yourself (in fact, here’s my free template → ).

🤝 But, if you want someone on your side as you walk through your pro forma (and the rest of the budgeting and funding process), check out my my revamped course, Funding 101™.

Inside, you’ll learn everything you need to know to get that “YES!” from the bank.

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