On Trend with Budgets

by Lisa Gunderson, Bristol Development

Budgeting is like a game of Tetris: You fit all the pieces together, but sometimes you have to make some tough choices. Let’s turn that frown upside down. I know, I know – I can hear the groans… you have so much to do this summer. This is one more thing, and it takes time to do it right. Here is the good news: You have control over your mindset. You are the expert in your property. No one knows your day-to-day operational needs, challenges, and opportunities better. This is your opportunity to shine.

You are developing your plan for next year; this is an estimate and forecast of what you expect to happen. However, life has a funny way of disrupting some of the best-laid plans. For example, you cannot budget for unexpected pipe breaks or a pandemic. Budgeting can get emotional. The key is to remember this is just an approximation of next year, and things can and will change.

Here are some common things that come up during the first round of budget reviews. Are you just repeating expenses from last year? Take out that one-time event this year that was copied into the budget template. Payroll has two months twice a year with three periods instead of two. Work with HR to identify when these will hit your financials (not just occur) so that you plan correctly. Look for what is missing. There is always something that did not make it into round one. Check not just your operational expenses but taxes, insurance, and debt service. Ask questions about those things if you are not involved in them regularly.

What am I looking for as an owner’s representative?

I am looking for thoughtfulness in making your plan. Attention to detail – ensuring you did not just copy and paste. I want you to make your case. Why do we need to invest in that capital project? Why did you budget for X to increase by Y? Photos, articles, and competitive property information go a long way to help show an owner the why behind your decisions. Finally, find your focus to finish the budget sessions. A quiet place with little distraction is the best way to speed through those reviews. Flip that mindset to an expert with evidence to work on all those details. There might be some tough choices in the end, but you will have a winning plan.