BUS613: Advanced International Business

Regardless of business size, budget planning is an essential component for success. A budget is comprised of sales and spending for a given time period. The budget should be used as a tool for assessing how the business is doing by comparing the actual figures for sales and expenditures with the forecast figures by day, by week and by month (if applicable). For pop-up retailers, a budget could be developed based on the length of the pop-up operation, from a few days to a few months. If there are substantial differences between the actual and budgeted figures, further steps must be taken to identify the contributing factors. For example, if sales did not meet the target, the pop-up operator may need to reconsider the marketing strategies. In contrast, if the sales are much higher than forecast, the pop-up retail manager may need to adjust the staffing level and the merchandising plan to ensure adequate customer service and inventory levels to cope with the demand for the entire pop-up operation period. If the expenditure is too high, cost-cutting mechanisms must be implemented.

The sales budget is estimated using the method. It includes factors such as number of classifications, number of units, the price of each unit (markup %) and location (i.e., demand, stock-to-sale ratio). The expenditure budget can be divided into costs of goods sold, operating expenses (such as rents and salaries) and capital expenditures (such as point-of-sale systems or store fixtures).