Perspectives From the Other Side
Taking the Pain Out of Private Club Budgeting
I don’t like being the bearer of bad news, but here it is: Summer is coming to a close. And with autumn right around the corner, many private clubs are beginning to take a look at their budgets. How have they adhered to their projected spending this year? How should the funds be allocated next year? How can the club continue to move into the future without breaking the bank? Refreshing the budget is essential to the success of any private club, but few can claim that the process is easy or enjoyable. It can be a trying time of coming to terms with missteps, understanding your limitations, and facing harsh realities.
Luckily, there are many ways to make this process significantly easier. From considering outside forces to shifting our entire approach, these methods will help you not only improve the process, but also produce more detailed, accurate budgets for your private club!
Slow and Steady Wins the Race
Unfortunately, the term “grace under pressure” doesn’t apply to private club budgeting. Cramming the entire budgeting process into the last three or four months of the year creates an unnecessary sense of urgency, puts undue stress on club leaders, and can ultimately produce half-baked results. Instead, consider adopting a 13-month budgeting process that gradually examines your monthly expenses year ‘round. Believe it or not, implementing this idea isn’t as intimidating as it sounds!
While this seems more time consuming upfront, it actually ends up saving you time in the long run, while taking some of the pressure off and producing a more detailed, accurate, and thoughtful budget. Simply spend some time at the end of each month studying your expenses, considering your future needs, and projecting how these needs will shape your expenses next year while your thoughts are still fresh. For example, if you’re looking at the club’s expenses for June 2016, then you can project labor costs, have a better understanding of any anomalies that occurred, and use these factors to map out the possible budget for June 2017.
Slowly crafting the budget month by month ensures that that the monetary needs of each specific 30 day period are fresh in your mind. This saves you the trouble of trying to project your future needs based on vague spending records and unreliable memories. By transforming the budgeting process into an ongoing project throughout the year, you’ll ultimately have a more well-rounded idea of your club’s financial needs – without all the rush!
Multiple Heads are Better Than One
Many club leaders make the mistake of tackling the entire budgeting process alone or with the sole help of a controller, but this is not a one-person operation! Turn part of the budgeting process over to your club’s department heads. Aside from taking some of the weight off your shoulders, it gives them a sense of responsibility that increases morale and shows your trust in them. When department heads deal with the numbers firsthand, it allows them to take true ownership of their work and see how their performance is affecting the bottom line. It also gives you the best view on what each department needs to maintain, upgrade, and prepare for the future needs of members. After all, who is better acquainted with how the club operates on a day-to-day basis?
After they’ve assessed their numbers individually, have everyone gather for a group meeting and present their findings. What was their spending like this year? What will they need for next year? How can they justify the funds they’re asking for? Adding this cooperative element to your budgeting process breaks down potentially harmful internal silos. It gives everyone the opportunity to understand where the club’s money is going, how their department plays into the bigger picture, and how all departments combine to create a first class member experience!
Keep Time on Your Side
As we know, there are many different factors that go into a budget, including items that are dependent on the whims of other entities like insurance companies, HMO’s, or even service or maintenance agreements. With their ever-changing prices and unusual calendars, they can even throw a wrench into the most carefully considered budgets. To minimize the guesswork involved when budgeting for these factors, align your insurance, benefits, and service contracts with the club’s fiscal year. Many companies are flexible and willing to work with your club’s schedule. While negotiating these terms may not be the most fun aspect of budgeting, taking this extra step eliminates confusion and reduces the chance of any unpleasant surprises. After all, few things are more irritating than realizing that you have under (or even over) budgeted for something! During one of my many years as a club manager, I had insurance premiums rise dramatically in the middle of the club’s fiscal year. This was a terrible surprise to say the least, particularly since the club’s budget hadn’t accounted for such an substantial increase. Unfortunately, this conundrum could have been easily avoided by aligning the insurance company’s calendar with the club’s fiscal year.
Stay Ahead of the Game
In today’s world, things seem to be constantly evolving… the private club industry being no exception. Whether it’s the U.S. water shortage drying up golf courses, the DOL’s game-changing Overtime Exemption Rule, or the ACA (Affordable Care Act), there always seems to be some new factor shaking up private clubs – and their budgets. To produce the most accurate budget possible, it’s important to stay on top of industry changes that could impact the allocation of club funds.
Luckily, the world is as highly connected as it is lightning fast, giving club leaders more ways to stay in touch with industry happenings than ever before. Aside from just watching the news each morning or browsing through your favorite websites, joining organizations like CMAA, NCA or even the National Restaurant Association can help you stay abreast of issues specific to the private club industries – and help you prepare for their effects.
Have any thoughts or ideas on taking the pain out of private club budgeting? Email me!
Latest posts by Skip Avery (see all)
- Perspectives from the Other Side: Seven Key Takeaways From CMAA World Conference 2017 - February 21, 2017
- Perspectives From the Other Side
How To Turn CMAA World Conference Into A Mastermind Group - January 12, 2017
- Perspectives From the Other Side
Are You Budgeting For Your Club’s Future? - September 29, 2016