By Rocky Nickles and Tommy Hoffman
Budgeting…depending on the time of year the word is equivalent to a four letter word. It controls our lives all year long and is difficult to pull together. That is most people’s idea, but if done correctly it can be a tool to guide you through any obstacles that may come about.
The Club’s budget is a difficult budget to create. It spans 2 separate companies and 19 different cost centers or departments. It is for completely different types of businesses: retail, restaurants, golf course, bowling, a marina, waste water treatment, road maintenance, etc. Normally, our process would take up to three months and be done in four phases.
Phase 1 is for the Accounting Department to load a spreadsheet with projections for the current year, 5 years of history, and proposed items for the upcoming budget that are fixed and not controlled by the Departments. Phase 2 is for the Departments to create a business plan with dollars associated to it. Phase 3 is for the Accounting Department to meet with the Department Heads to make sure the budgets are all inclusive and realistic. In this Phase, we determine if there is enough revenue to cover expenses. Usually, there is not.
Phase 4 is the most difficult. It consists of n meetings between the GM, Accounting and Department Heads to determine the direction of the Club and the expense priorities. Generally, it involves pushing revenue to higher levels and/or cutting expenses. These meetings are very difficult and taxing. How do we maintain or grow and cut expenses in order to balance the budget? This year, the Board was involved in this phase. It was a rewarding and educational day for all.
Once the budget is balanced, we take it to the following Board meeting for approval. Then the fun really begins. Every Department is held accountable for achieving their budget. If the actual varies from the budget during the year, what was the cause? If it was a negative, what will make it better? If it is a positive variance, will it hold or was it a timing issue?
For 2016 our budget will be $6,813,000 in revenue and $6,778,000 in expenses, projecting a $35,000 profit at year end. This is with all Departments having challenges but giving them sufficient money to do their job right and take advantage of all opportunities that come their way. It is usually a bumpy road but one we have been very successful driving upon in 2015.