Rarely in an organization’s lifespan is a budget so vital and yet so difficult to prepare as it will be this year. Schools, government agencies, condominiums and all manner of organizations are struggling under the combined weight of the pandemic, a recession, and social unrest. The pandemic will end. The economy will rebound. Business WILL get back to normal, and when it does, the organizations that effectively planned during these trying times will prosper.
Preparing Your Budget
The budget is your plan to spend money. You use the budget to determine if you have enough money to accomplish your goals for a certain period (weeks, months, or years). If you lack the money to accomplish all your goals, then you must adjust your plan.
For example, multi-family housing (i.e., condos) are usually constrained by three factors: (1) occupancy, (2) lease renewal rates; and (3) operating expenses. Each of these factors relates to one another. The renewal rate and operating expenses determine the lease rates, which impacts occupancy. Renewal rates change based on the quality of the condos’ services (i.e., performance) and living costs.
But this year many condos had to cut services due to the pandemic; for example, pools, gyms, and clubhouses were closed for several months. This only adds complexity to the budgeting process as you must take these additional factors into account. Luckily, as of September 17, 2020, gyms and gym classes in Texas may operate at 75 percent capacity. Much of the rest of the US has similar restrictions in place which means your residents, members, guests and students can use the facility at reduced occupancy. Are you planning your 2021 budget with these restrictions in mind?
Planning
Once the budget is prepared, you should consider scheduling a re-opening and budget assessment with a subject matter expert who will be able to advise you on hidden costs like preventative maintenance, increased cleaning and disinfecting guidelines and potential equipment failures With that information you can plan your year by separating anticipated expenses into necessary and optional.
Performance
Performance is looking back to see how well your organization did for the year. Planning is what you would like to do; performance is what you did. For example, an overly conservative planner might have thus far missed out on the potential savings of replacing older fitness equipment this year. When that equipment fails in 2021 it might take a larger percentage of your reduced budget to replace it. If you’re worried about your performance against a tighter budget in 2021 it is even more imperative to look at your options before year end.
The budgeting process can be daunting and with the uncertainty of the next several months you need to be able to make the most informed decisions on all parts of your business. Let us help you to plan efficiently, effectively and responsibly so that you can outperform expectations even in the worst of circumstances.