Budgeting – Where’s All the Money Going?

The infamous question that gets asked time and time again. Where does the money go in golf course maintenance? The better question is are we prepared when the question comes? Can we defend the budget when asked? How successful has that been?

Being someone that is very data driven anyway I am not sure why it has taken me so long to put this budget project together but I wanted to build a budgeting program where I could breakdown each category and see where all the money goes and for what items. Now I am not talking about all the way down to each nut and bolt but close. Over the years I have seen a lot of different ways people do the budget. Some just based on last years actuals + xx%, some good guesses, and some appointed budgets where you get no say in the number. The way I view it is when you build the budget it should be based on what it costs to do everything that needs to be done on the course to operate it at 100%. You can always cut things and I will explain that in better detail shortly.

So what I did was build a budget that spits out reports in the following Sections:

– Zero Base Budget – This is each line item broken out into what is purchased, the cost, and how that reflects on what you were budgeted. Also how that compares to what you spent last year.

– Master Budget – This is your master sheet so to speak. Where you combine each zero base budget into a summary.

– Budget Summary – This is where you combine all the line items into their main categorys. Such as Payroll and Operating expenses. This is typically the numbers accountant want to see first.

Zero Base Budget

In the zero base budget this is basically taking one line item and I will use Equipment Repair as my example. What you want to do is write down all the main items that you purchase under this budget. Things such as bedknives, 2 cycle parts, PM Parts, reels, etc. Then what the actual costs of those items are and what you will spend on those items each month of the year. Once all of those items are added up you will have a monthly cost, cost per year on those parts, and a yearly cost.

Breaking each of these line items down to what is actually purchased does a few things for you. It helps make your budget more acurate, it helps you answer the question of where the money goes and when asked to cut the budget you present this breakdown on that line items and ask what are we willing to do without. The reason for that is it sets the expectation up front while budgeting. I get asked to cut the R&M Budget by 10% I say ok here is everything we buy throughout the year. What items on this list do we want to omit this year? It becomes much harder to cut because you have done your homework. It doesn’t mean it won’t be cut but if lets say we choose to take the 10% out of aerification tines this year well the expectation is set at the beginning of the year that we won’t be aerifying as much this year because we cut that budget. If we didn’t do that we would cut the 10 % but in reality no one knows what was cut so the expectations remain the same as they were last year with less money.

Master Budget

The master budget lets you see the summary of each of those zero base budgets. Most GM’s will want to see this breakdown first. It takes the main categories and the line items and gives you a clear picture of what the expenses are each month and year. It is important to break items down per month because it shows the club what the outlay of funds are for that month. So for instance if we know that July is a slow month for revenue we find items that we can put in other months where we have more revenue. This will help keep the club balanced.

Summary

The summary is exactly that it takes all the line items and summarizes them into the main headings in the budget such as payroll and operating expenses. Typically this is what a director of finanance will want to see.

The great thing about this is that I don’t have to manually create these every year. I put the program together one time and then all I need to do is update my zero base budgets each year. Since I have all of these different spread sheets talking to each others when I change a number on a zero base budget it is reflected accross all of these sheets. So when you get the call on Wednesday that hey I need your budget for next year and I need it by Friday all you have to do is hit print. Just keep it up to date each month and you will be good to go. There is no reason to get stressed out every year at budget time unless you are not well prepared. As always let the numbers do the talking.