The Top 10 Ingredients of a Well Prepared 2017 Budget
Whether you are a community property manager or a board of director, the time has once again arrived for the 2017 budget preparation and implementation. By now the associations with management companies should have received the proposed 2017 budgets and self managed associations should be actively putting together their 2017 budgets as well. As a result, I thought I would share my “Italian sauce recipe” for preparing and implementing a successful budget seeing how passionate I am about cooking.
- Review last years tomato sauce. Was it finger licking good? Or did some of the jars end up spoiled? Alternatively, perhaps, you didn’t get around to making the sauce last year? Similarly, how well did last year’s budget stand up to the actual numbers? Then again, was a budget approved? Check the numbers year to date and over the last 12 months and see how well the budget held up to actual numbers. Did you end up blowing the budget mid year?
- Decide how many jars of sauce you want to make this year. Last year, we made 50 jars. Perhaps this year, we want to make 100. Similarly, it’s important to plan ahead for the capital repairs expected in 2017. Ideally, your association should have a reserve study that looks about 25 years ahead.However, in the event your association doesn’t have a reserve study, it is just as important to look ahead especially for the costly capital repairs by putting together a basic 5 year capital plan. And it’s ALWAYS less expensive to pull the trigger proactively rather than when its an emergency. Plan ahead, your homeowners will thank you in the long run.
- Did you purchase the glass jars and sterilize them properly? If you don’t sterilize the glass jars correctly, the sauce will spoil and you will have to throw all the sauce away. Similarly, if you don’t properly plan out the budget correctly, you will surely blow out the numbers in the budget by mid year. Budget realistically and with the intent to build the reserves. Aim for at least a 10% reserve contribution surplus.
- How were the ingredients used last year? Perhaps you may want to invest in better quality tomatoes so you can cook a better tasting sauce. Start using pear shaped tomatoes instead of Roma tomatoes. This might actually cost more money. Similarly, perhaps its time to raise the assessments.Don’t tell me, the assessments haven’t been raised in 10 years?
Well times have changed and it’s time to get current with today’s expenses versus yesterday’s lower costs. People are willing to pay for a better tasting sauce so raise your assessments and get more done around the association so the homeowners can experience the difference.
- Did you cook the tomatoes long enough? If you don’t cook the tomatoes long enough, they won’t soften up enough and then when you put them through the food mill, they won’t crush correctly. Similarly, make sure you spend enough time reviewing the proposed budget and take as long as it takes to approve a properly prepared budget. In addition, make sure that it has a contingency line item just in case something happens unexpectedly.
- Did you mince the garlic fine enough last year? The difference between the right way to mince garlic and the wrong way can decide if it is a good sauce or an outstanding sauce. Similarly, did last year’s budget have the right amount of expenses in the budget categories. Did you include life/safety expenses? Did you include a line item for preventative maintenance? You want to always have the association’s life/safety equipment in good working order before there is a life/safety emergency.
- What kind of onions did you add? Sweet Vadalia? Yellow onions? White onions? This small detail can make all the difference the world of taste. Similarly, did you take into account costs for the skyrocketing water bills? Did you hear that water bills are going UP all over the Chicagoland area?
- Consider using a higher quality olive oil especially an extra virgin olive oil. The richer the oil flavor the better the sauce flavor. Similarly, it’s better to have a moderately overfunded association than an underfunded association. So take that into account when decided how much to raise the assessments.
- Decide how many types of sauces you want to make. Do you want to make a Bolognese sause? How about a Puttanesca sauce? Or perhaps a spicy sauce with mushrooms? Similarly, decide how many different types of cosmetic repairs the association is going to make next year. There are many ways to improve curb appeal without costly capital improvement projects. This will drive up resale values.
- Set a date to make the sauce well in advance. You never want to make sauce at a spur of the moment. It will never come out right. Similarly, plan the approval of the budget well in advance. Send out the proposed budget well in advance and in accordance with IL state laws and your governing documents. You never want to approve a budget on a whim. You won’t end up liking the flavor.
Sauce making is a process that takes time and careful planning. If done right, you will savor the flavor jar after jar over the course of the entire year. Similarly, if you properly prepare the budget, review the budget, make adjustments according to current and projected conditions, you will most assuredly approve a well seasoned budget that will stand the test of 12 months time.
About the Author
Salvatore J. Sciacca aka “Condoboss” is one of the nation’s leading experts in the community property management industry and is also recognized for his stress relieving blogs and insight on personal and organizational transformation. He is also the President and Founder of Chicago Property Services, Chicago’s #1 community property management company specializing in management and operations of condos/townhomes/HOA’s of 100 units and under. Salvatore is also the founder of managmycommunity.com (MMC), which is a state-of-the-art online support portal for community associations.
With over 20 years of industry experience, Salvatore is recognized for his extensive knowledge of capital planning, preventative maintenance, cost-saving measures and community building techniques. He holds industry stature as a Certified Manager of Community Associations (CMCA), the designation of Association Management Specialist (AMS) and is fully licensed as a manager (License #: 261.001386) through the State of IL.
Salvatore has also traveled extensively around the world and has meditated with Buddhist monks in Nepal and met the world’s happiest man, Matthieu Ricard. He’s passions include cooking, traveling, meditating and hiking. He is also the founder and executive director of the Chicagoland Italian American Professionals organization and an amateur chef.
Salvatore can be reached at: 312.455.0107 x102 or at email@example.com.