By Richard Miller
“Failing to plan is planning to fail.” A budget is a plan, albeit a dynamic process that aids in defining your goals. It can help you to map a strategy to manage your facility and situations that arise along with those responsibilities. “You can’t play-the-game if you don’t know where the goals are, or how to get there.”
Good budgeting is based on good recordkeeping that hopefully provides the history on which to base future decisions. A good place to start the budgeting process is to understand the expectations of the facility owners for your areas of responsibility; list those fields and specific areas under your management and consider the entire scope of the facility and its revenues. We all assume that all sports facilities want safe and playable conditions for their fields and all adjacent areas, but the budget parameters must be adequate to produce those levels of safety and playability.
Income, (I’ll call it “revenue”), is a starting point before expenditures can be realistically projected. Along with your facility owners, start identifying the revenue sources and available funds from each source as well as the cash flow timeline. You will need to know the “when” as well as the total “how much.”
Most of time you will be provided this information, but if you have a new facility or are in a new position, perhaps your predecessor was not a good record keeper and then the challenge to develop a budget from “scratch” presents another task. I would suggest in that situation your tact should be to realistically list your needs as if adequate revenues exist. Note: the emphasis is on need, not a grand wish list. When firm estimates of revenue are realized then you can refine your expenditures knowing that you have identified reasonable needs based upon preset goals.
Understandable for others
Have a system that works for you and is understandable when explanations are required. I find that spread sheets are basic and are usually clear to most people, but don’t get too involved in accounting terminology. It is a piece of paper with columns and rows whether it is a purchased computer based budgeting software program, a system of your own design such as one might develop with Excel or similar systems, or even as simple as a sheet of paper.
Make a budget for the entire year with columns as “months” and rows as “items,” which can be delineated as materials or labor (personnel) costs. This system gives you a “visual” on “sub-categories” for allocated costs like equipment amortization or operational expenses (materials) such as gas, parts, repairs etc. These items (called variable costs) include such necessities as seed, fertilizer, pest control, calcined clay, chalk/paint and even water if fees are allocated into potable and non-potable, heating, electrical and other utilities, if metered separately.
There are also fixed costs which happen whether there is any activity or not at your facility. These are items like insurance, taxes and similar overhead items including your salary. Labor costs can also have a variable and fixed component. This is especially true with larger seasonal crews versus a “skeleton”/full time staff. An annual budget has rows for items even if only used for part of a year.
How to use it
Now the useful part of effective budgeting. It becomes useful for analysis and future planning if you record actual expenses alongside your “educated guesses.” Be diligent to record actual expenses as they occur. You might even “breakout” the monthly column into weekly segments and/or “event” segments. Each day, record actual site expenses and revenues as they occur so nothing is forgotten. This daily activity is helping you also make necessary adjustments in cash flow and improves your creditability as well as efficiency. When you compare “actual” to your budget you are in effect creating the start of the next year’s budget.
I strongly advise that you make a daily log/journal to accompany the budget format. Keep rows as your basic system, but now columns can be daily, for the month, and even a weekly period. This can relate to the analysis of such items as labor or even material use by field or general maintenance practice. Here are some examples of practices for which you need data to decide if you are efficient (receiving maximum utility value): events, irrigation, aeration, topdressing, seeding, fertilizing, and many similar agronomic and maintenance functions. You might even add “sub-rows” for miscellaneous or occasional tasks for general landscape practice like end-of-season pruning or overall hardscaping, and any repetitive tasks in your area of management.
Lest I forget, also important to note but not in a budget format, are such items as weather conditions, specific events and even notable current events. Weather-wise, in sports turf management, this should be more than temperature highs and lows at your site. Factors influencing your decision making include precipitation, related humidity, wind speed and direction, ET rates and other factors you use to manage your fields for special events, tournaments, and even restrictions like water use, noise or light limitations, and even vehicle emissions. I am suggesting a lot of items to put in a log book or journal to aid in the future decision-making. However, if it becomes a burdensome or excessive document then remember the adage (K)eep (I)t (S)hort & (S)imple: KISS. The primary purpose is to organize all your notes and data in a quick and simple reference in one place for your decision-making.
Over time these budgeting documents become the history that helps you to create a highly accurate budget and adds validity to your budget requests. It is invaluable when situations arise to refer to your records to show how much labor or what materials have been needed to accomplish a past activity. You will also be able to improve your purchasing process, look for seasonal buys, use quantity discounts or take part in a group buy for materials, as well as track your labor allocations by tasks or field thereby improving efficiency. Labor costs are often a high percentage item in the overall budget so improved efficiencies in that area can often bring noticeable results.
When we deal with any factors not under our control we must also plan for the unexpected. Your efforts to recognize trends in input costs help you to anticipate some expected price increases and simply calculate a percentage increase, but still there are “surprises.” Examples of these surprises include weather emergencies, unexpected budget cuts (decline in revenue), unusual price hikes for insurance, fuel and fertilizer. Plan for the unplanned by building in methods to handle the short-term by having long-term budgeting. These are usually called contingencies. I often separate longer life items or higher cost items out of the annual operating budget into a capital budget.
Capital budgets are simply common sense. Why wait until equipment like mowers, topdressers, aerators and utility vehicles wear out and then wonder where the “funds” will come from to replace those items?
Plan ahead to replace those items and similar field facility improvements like updated irrigation system controllers, lighting methods and even computers. These contingency funds (based on amortization and depreciation schedules) are essential and provide that “cushion” for short term emergencies by “borrowing” from the future. Annually you can “borrow” from the operating budget to replace what you borrowed from your future budget. Think of it as replacing the “savings” account after you have transferred funds to your “checking” account to cover an unexpected expense.
Amortization schedules are relatively easy to calculate. Make an “educated guess” of what it will cost to replace an item when it has reached the end of its useful “working life,” before repair costs exceed remaining value. Divide that cost by the years of useful life and you have the annual amortized value.
You might even want to put it on a “sliding scale” whereby replacement cost becomes greater as you move along toward the end of its useful life. That replacement (contingency) fund becomes a fixed cost in your annual operating budget.
Generally, major capital improvements for new fields and stadium renovations are covered by the owner’s facilities capital budget process, not your annual operating budget.
When revenues don’t meet your expectations and your priorities must be able to maintain basic safety levels on all fields, always making sure the absolute essentials are covered. Once those safety considerations are met, then shift remaining resources to higher profile fields and restrict use on lesser use or less visible areas. Remember that you need to establish or retain the degree of confidence in your abilities and management decisions that will earn greater funding in the future.
Try your best to build a good rapport with all decision-makers. Keep them well informed, within your area of management responsibilities. If you have been accurate in budget planning so that your “educated guesses” become closer and closer to actual results, year after year, you will gain greater validity and respect. The history contained in your budget records shows that you know what needs to be done and how to accomplish it.
Richard Miller is owner of “A Growing Business” a green industry consulting business based in Janesville, WI. He has been an educator in secondary and post-secondary schools, and has sales and management experience in turf and other horticultural businesses.