Chrissy's Views

Components are not people. Components are items that the people involved in creating the budget use to better enable them to forecast the financial future of the community. The more components that are available and the more that you use, the more accurate and complete your fiscal forecasting will be.

How can you see into the future? One of the best ways is to look at the past! That’s right. The historical financial performance of a community is the first component that should be reviewed when creating a new budget for the future. Look at the various categories. Be sure you understand what charges, costs, and other expenses were put into each expense category. Think in terms of the big picture. Are there any planned changes to the operation of the community that will significantly increase or decrease these expenses? Are you increasing the usage of the clubhouse? Will that create more of a demand for supplies or cleaning? Are you subsidizing the uniforms of employees? Or are you planning on getting uniforms this next year?

When looking at past performance, it is helpful to go back more than just one or two years. There are sometimes recurring issues that only happen once every four or five years. Look at those unusual expenses and the timing to project a reoccurrence within the next budget period.

Look at the income side of the picture, too. What increases (or decreases) can you logically expect to take place within the next fiscal period? Are you planning a rent increase? Are you anticipating less late fees to be collected? Are you increasing your NSF charges? What about the application fees? Do you charge pet fees? Are they going up, staying the same, or being eliminated? Do you foresee net economic occupancy increasing? Do you think you will have more economic vacancies?

Consider the deferred maintenance list. This is a list of all items in the community that have been noticed as needing attention, but not immediately. For instance, when someone says, “Boy, we’re going to have to do something about the roof on the clubhouse within the next couple of years,” write it on the deferred maintenance list. Then, when you are preparing the budget, review these items. Which ones need to be considered within the next 12-month period? Which ones can comfortably be put off until the future? Remember that planning ahead for the expense and incurring it while it is still an option is generally less expensive than waiting until it is an emergency. At that point, funds have to be found from somewhere and the cost of repair is usually much higher.

Discuss the appropriate sections of the budget with your onsite employees. The maintenance supervisor should be aware of the total dollars allocated each month for repairs and maintenance supplies, for vehicle repairs, for equipment lease and repair. Other categories that are under his control should be discussed with him for his input. The onsite community manager or office manager should be aware of administrative expenses within the community office, total dollars allocated for office supplies, resident relations, and other functions that are under their control.

Allowing an employee to have input into the budget not only gives you as budget creator more input, but it also gives them more perspective as to how the community operates financially. It allows them to see how their day-to-day decisions on expenditures affects the bottom line. It also then gives you as the owner the future ability to pass responsibility for adherence to the budget to them. Encourage them to make spending decisions only after referring to the budget to be sure the money is allocated and available. Growing your employees and their worth to you begins with sharing responsibility. The creation of the budget is a great beginning.

Don’t stop employee input at the onsite level. If you have a larger corporate office, or regional managers, involve them in the budget creation process. They most likely see things on a broader scale than the community manager, and can give valuable input from a different perspective. With their overview of more than just one community, they are also likely to be more cognizant of events that may take place and can help plan financially for unforeseen expenses.

This entry was posted on Monday, June 28th, 2010 at 2:26 pm and is filed under Cash Flow from Mobile Homes, Community Finances, Manufactured Home Community Management, Maximizing Income, MHC Investment, Mobile Home Park Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.