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Management And Training

Budget Planning: The Roadmap To Success

February 01, 2011
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Does your budgeting process provide you with a competitive advantage?

Financial planning is essential to the survival of a business.

As one year comes to a close, business owners should have a sense of where money is going to come from and where it''s going to be spent in the new year.

An annual budget serves as a roadmap to ensure business owners have enough money to fund operations, expand the business and generate an appropriate return.

When devising an annual budget, there is more to consider than last year''s budget and the next year''s projected sales.

Using ISSA''s Cleaning Industry Management Standard (CIMS) as a guide, business owners can build a zero-based budget and stay on course throughout the year.

Workloading: CIMS 1.1.1

The process of workloading a facility, building or cleaning job helps establish a staffing level and an accurate estimate of cost to perform the work.

For many cleaning businesses and organizations, labor can account for over 70 percent of operating costs, so finding labor efficiencies through workloading is invaluable.

For example, with building square footage, productivity rates and tasks calculated, business owners can note areas where their facilities or cleaning jobs might be overstaffed or understaffed.

If necessary, they can shuffle staff to increase performance and reduce labor hours and, therefore, reduce labor costs.

Costing Process: CIMS 1.1.2

Once an organization has gone through the workloading process, business owners and leaders should be prepared to determine the total cost to perform the work.

In addition to the cost of labor, the costing process includes other cost factors such as materials, overhead, profit, taxes, insurance and miscellaneous costs.

This also includes sales and marketing costs and business administration costs.

Business owners also must consider other expected operating costs such as rent, salaries, utilities, office supplies, financing costs, payroll expenses, insurance and legal and accounting costs.

Owners should also estimate sales growth and revenues for the next year.

Expected revenues include not only the services businesses expect to sell, but also the prices of the services.

If prices will increase or decrease in the next year, owners will have to consider whether or not sales will be affected by the change.

The costing process takes business owners a step closer to pinpointing overall operating costs and income — revenues minus costs and operating expenses before interest and taxes.

Staffing Plan: CIMS

Workloading results give organizations an understanding of what their staffing levels should be.

Costing data, customer requests and/or industry benchmarks further define staffing levels and contribute to a robust staffing plan.

Some customers may request additional staff or service in some cases, which will affect staffing levels and cost.

Furthermore, organizations should base staffing on industry benchmarks.

Budget Management: CIMS 1.1.3

Developing an annual budget is one thing; managing it is another.

To ensure that work is completed within workloading, budgeting and costing parameters, business owners should implement cost controls to stay on track.

Reporting systems that track labor costs, labor hours, supply costs and equipment costs are valuable tools for business owners who want to stay aligned with their budgets.

When reviewing these reports, business owners and leaders can easily identify areas where their organizations might be over or under budget.

Finally, business owners should have a plan for correcting budget discrepancies.

The plan does not need to be in writing, but it is useful to document situations during which corrections were made with copies of memos or e-mails.

Business owners and organization leaders should plan to compare operating results to budget plans on a monthly basis.

The key is to consistently analyze the organization''s progress and use the budget as the road map it is designed to be.

Businesses that do so will continue on the path to success.

Jim Peduto is the president of Matrix Integrated Facility Management LLC and the co-founder of the American Institute for Cleaning Sciences (AICS). AICS is the registrar for ISSA''s Cleaning Industry Management Standard (CIMS) certification program. Visit for more information.

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