The Manager's Yearly Nightmare
By Julie Adamen

"I can't think about that, it's budget time!" "Don't talk to me, it's budget season!" "Look at me! Busy busy busy! Budget time!" I have one word to say: BUNK.
 
Not "bunk" to the fact that managers are busy and stressed. You are busy and stressed. But let's face it - it's mostly a situation of your own making because you "let" budget season sneak up on you like a freight train (note the oxymoronic tone of that statement). You were busy with other stuff. You went on vacation. Now it's October and you have 8 budgets to be approved and mailed out. It's too late for me to help with this budget cycle, but how does one break out of the stressful budget rut next year? It's not hard, just a little planning, a little preparation, the right presentation and sticking to your schedule.

Planning

Budget Lead Time. Assuming a FYE of 12/31 you should start planning your budgets somewhere in the latter part of June or the first week of July. If you foresee problems with the budget process, have to work with a cantankerous committee or have 10 or 12 budgets to prepare, start a little earlier. What's that you say? Isn't this just too early? After all, you only have 5 or 6 months worth of financial statements to work with, right? No, not right: You have twelve months - or more, if you want - of financial statements so you can put together a reasonable picture of one year's expenses.

Do your homework. Call the vendors - do they anticipate an increase next year? How about utilities? What percentage increase will be coming? 2%? 5%? Any other variances you know or anticipate to be upcoming? This process will probably take you 7 - 10 working days to complete, if you work on all your accounts, including consideration for the rest of your duties. When you finally are done gathering this information for all your accounts - it will be mid-July! Now that you have all pertinent information for each line item, you can prepare your preliminary budget.

Plug in time to work on your budgets just as if they were a meeting or appointment. Close your door (if you have one) and let your calls go to voicemail. They'll survive an hour or two without you.

Preparing the preliminary budget

Format. An excel spread sheet is the optimal budgeting tool for you to use because as the numbers inevitably change you'll be able to plug them in and they will be calculated quickly and accurately. Not to mention it prepares you for next year's budget. Don't know how to do excel? Then get out your calculator, but make it a goal to learn excel for next year.

Reserve contribution: The managers' budget conundrum. Assuming you have a reserve study in hand... It's really your duty to plug in the recommended amount unless you (and the Board) know for a fact that it is inaccurate. That said... Plugging in the recommended amount and then presenting only that as a preliminary budget to your Board/committee will likely give them heart failure. Try this: Prepare two budgets, one with the recommended reserve contribution (you've done your duty) and another with what the committee or Board wants to see (unless your management company has a differing policy regarding this issue).

Budget Presentation

Presentation format. We already talked about using excel, but what can you do to make understanding and absorbing the budget easier for your committees and Boards? Submit your budget with a pie chart (or bar chart) and insert a picture of the community as a part of your excel spread sheet. The chart will give a great visual of what money is going where, so they know at a glance that the management contract is not the biggest line item (far from it, and as much as they would like to think it is). Inserting a picture of the community brings home the fact that the budget is not an abstraction; it truly has meaning and impact on those who reside within. Not sure how to install charts and pictures? See Dan's article below.

Time to present: Early August. Yes, it's August and it seems early and you are going on vacation and much of your Board is as well. Again, it's not a surprise and vacation schedules are usually made at least a month or two in advance, so you should have planned for this. In fact, you did by starting your budget prep in June, right? So talk to the committee or Board members, and schedule a meeting as soon as is possible.

Follow up. If you can't get an August meeting scheduled, at least email the budget out and follow up individually with Board/committee members for their feedback. This way you will have an idea where each association is going with their process and you can schedule your time accordingly. Does it look like smooth sailing? Then you can let this one wait and pick it up again in September. Problems? Issues? Have a rogue Board or committee from hell? Better to know now so you can allot the amount of time you'll need to see it through to approval and still give yourself enough time for distribution.

Make no mistake, even though the budget may now be in the hands of others, it is still up to you to drive the process through to the finish.

Still need help? Some of us just cannot juggle all the tasks in our head or even when properly placed on an annual calendar. In this case a PERT, Gantt or flow chart with each association and the related tasks required from start to finish. This is great for visualization. My husband likes Gantt charts because they are a common scheduling tool that he used in complicated construction projects. Our budgets are generally simpler, but if you can't get your arms around the number of activities for all your associations, critical path items and deadlines, by all means look into these management tools to help you budget your time and track each association's progress. Or, check next month's Tools of the Trade.

What executives can do to help

Budget seminars. How about a nice wine and cheese budget seminar for all your Boards of Directors? A local CPA would likely be happy to speak to association budgets, and executives could speak individually to Boards whom the managers think will be problem children this budget cycle. These meetings are good use of executive time, shows the Boards that the company cares, is great marketing and helps the managers and the Boards by giving expert input in to an individual association's budget process. There is no downside to this type of event, and for those with a marketing talent, the majority of the costs associated with a wine and cheese event can be offset by appropriate vendor sponsorships.

Don't be stressed!

Managers, stress at budget time is almost wholly within your control if you utilize some basic time management tools: Plan ahead, start early and drive the process to conclusion while staying fluid enough to work on issues contingent to the budget AND your "day" job. Like so many things in our business, if it doesn't get handled when it should or earlier it will go from snowball to avalanche in short order. Procrastination is the enemy, especially when it comes to budgets.

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