I am not sure what is a more challenging subject to write about budgets or bedbugs. They both make me itch and mentally break out in hives. However depending on our job position it is one of those necessary evils to help us prepare for 2011. I remember the day when I would furiously work on developing excel formulas to help link, calculate and report numerous pages of data in order to provide a sensible summary of the fiscal year activity. Okay I am scratching again. Thankfully there are a lot of more robust tools and software out there to keep track of key category expenditures and analyze where profitability took place and why.
In order for those numbers to really work for us though, what did it take? Right now we are about to look carefully at 2010 data and compare it to 2009 data. We also will be looking at how he analyzed 2009 data and review team notes, strategies, and decisions that steered how the 2010 budget looked. The fundamental top question is: Did the 2009 data help make me steer towards a better 2010? Here is another one: What ideas did you have turned down that you thought would have made a better 2010? What will you do now to present your ideas again? Those who are in the budget seats only use the data for mainly one purpose and that is to make next year better. Are numbers the only driving force? Hardly!
Make those Numbers Breathe
Numbers absolutely help you key in on problem areas. You need to know where expenditure percentages fell below or above projections and why. Reflect for a moment on the connecting points that make a budget live and breathe.
- What is our corporate vision?
- What are our company goals and are we achieving our small, intermediate and long term plans?
- What kind of support did we have from our team for the 2010 budget and can that be improved for 2011?
- What trends are we closely analyzing and are we positioned for 2011 to compensate for changing resident behavioral patterns?
When you analyze the above questions, how much does numerical data apply to the answers you need? Really a company’s overall approach is an emotional one. We work to breathe life into our company and into our people. When departments work in harmony with one another towards a common corporate goal and embrace the need to create a coherent company culture, the ultimate side effect turns out to be profitability.
Here are some trend words to think about for 2011 when it comes to budget season.
Same Old Words-Different Trend
- Efficiency- Has my technological approach to operating a company saved me time and money or wasted it? Have you been sold something you don’t need? Unfortunately there are some vendors out there who promise the world and give you very little. Make sure you have a good testing period from key people in order to ascertain its long term benefits. Technology will only be efficient if your team knows how to use it properly and it does not become an item of frustration when it slows your overall team efficiency down. Multifamily technology should be efficient and save your people time and money.
- Sustainability- Green products and opportunities are much more affordable and can be laden with government incentives. Will green products help with resident retention? Green products afford property management companies with the opportunity to send a message to their community, one that in 2011 we can only expect it to grow stronger and stronger. Have you investigated?
- Education- With the explosion of social media and the transparency that is now expected of corporations how are you educating your team to be compliant with Fair Housing and Sexual Harassment Prevention? Does your educational program comply with what OSHA requires? Do your people have the necessary skill sets to convert leads to leases, maximize resident retention and avoid costly conflicts that affect employee turnover? The cost of the consequences for lack of education is exponentially higher than the education costs itself. What apartment training options have you investigated?
- Decision Making- 2010 saw a massive surge in data regarding how people more and more are making decisions based on what their peers do versus responding to conventional advertising methods. This trend is only expected to grow for 2011. How will you respond? It has been a pretty decent debate for 2010 once again regarding marketing methods such as print, email, and new media. When interviewing some key people from property management companies, it made me happy to hear that A/B testing was part of their 2010 strategy and that it would continue in 2011. That is really the only way you will be able to know for sure what will work and what will not. The challenge is to take that unconventional first step and be the first in your company to try and pioneer a new approach based on how you see resident behavior trending. There really is no choice but to pay attention to his. Conventional advertising costs are only going to grow and become harder to discern their impact unless some careful planning is implemented to justify whatever marketing decisions your company makes.
Don’t Forget the Little Things
If you could reduce your electric bill by 3% this coming year how much savings would that mean to you. I can’t tell you the amount of times our customer service desk has encountered individuals who have never turned their computer off since the day they started working. Computers are huge energy suckers. That is just one electrical item of many that help trim the numbers a bit. How about water? Water is very costly for many simple because it is wasted. When analyzing curb appeal of properties it has been noted that the pavement seems to be very well watered along with the bushes and flowers at the entrance. That equals to money just going down the drain…literally! The other little things that are out there I encourage you to comment on below. I know there are plenty!
This is an important part of the year coming up for property management companies. Hopefully you won’t get too many hives but can look forward to 2011 with much anticipation. Numbers do play an intricate role in the decisions we will make for 2011, but it’s the passion that exists in each one of us that will make those numbers a reality. I look forward to your overall thoughts on this topic and how you plan on approaching it this year. What makes your budget season run smoothly and efficiently? What trends are you analyzing approaching 2011?
Written by Jonathan Saar