by Paige Wickline, Finance Director
Our Fiscal Year 2023 (FY23) runs from July 4, 2022 through July 2, 2023. Each spring, management prepares an operating and capital budget for the next fiscal year that is presented to the Finance Committee for input and then forwarded to our Board of Directors for final approval.
Operating Budget
Our operating budget is a projection of the sales revenue, cost of wages and benefits, and all other expenditures to run our Co-op. This budget is the blueprint that guides our expenditures and focus for the year.
Total Sales. The FY23 sales projections for our Co-op include modest sales growth of just under 3% growth over FY22. We anticipate inflation along with a small increase in transactions to drive sales growth. We are projecting 38.6% of our sales to be from our Middleton location, 36.3% from our East location, and 25.1% from our North location.
Gross Income (Margin). Gross Income refers to the percent of sales dollars remaining after subtracting the cost of goods sold. Gross Income is the money used to pay for our operations. Gross Income can also be expressed as a percent of sales. Our gross income expressed as a percent of sales is budgeted at 36.2%, which is the same as the previous year’s budget. To achieve this we will continue to focus on monitoring our sales mix and make targeted pricing changes where necessary.
Personnel. Personnel expenses include wages for worked hours, paid time off, and benefits. These costs are budgeted to be 24.49% of sales, which is slightly higher than FY22 wages and benefits. This increase is primarily due to wage increases for staff.
Other Operating Expenses. Other expenses related to running our Co-op include costs related to Occupancy, Operations, Promotions, Depreciation, Administration, and Governance. The total budget for all of these categories is $7,035,133 in dollars and 10.64% expressed as a percent of sales. This is down slightly from the previous year of 10.96% as a percent of sales.
Income From Operations. Our income from operations is budgeted at $254,420 or .41% of sales. This is down from the previous fiscal year 2022 income from operations of $1,044,717 or 1.73% of sales. The difference in income from operations is primarily due to increased costs of labor and other expenses as the result of inflation.
Budget Focus. Our primary FY23 Budget Focus is to move past responding to challenges we encountered during the pandemic and realign our efforts on customer experience.
This includes efforts to ensure consistent product selection at our three retail locations, some minor modifications at each of our locations to improve how we merchandise products along with an increased focus on staff training and engagement.
Capital Budget
The FY23 capital budget is $1,882,500. These expenditures take into account a lead time for equipment delivery of up to 18 months. Many of these projects will not be complete in FY23 but the expenditure approval allows us to order equipment that will be available later in calendar year 2023 and early 2024. Some of the upgrades are related to minor reconfigurations of the interior of our retail locations to improve your experience as you shop the stores.
We thank you for your ongoing patronage and support. If you have any questions regarding the FY23 budget, feel free to email me at p.wickline@willystreet.coop.
