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From “Zero Based” Program Budgeting to Easily Understood Financial Reporting Jim Peters, RCE, CAE, e-PRO www.JimPetersStrategist.com. Why Program Budgeting?. Most Effective Management Tool Keeps your Directors informed Tells Members where their money is going

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From “Zero Based” Program Budgetingto Easily Understood Financial ReportingJim Peters, RCE, CAE, e-PROwww.JimPetersStrategist.com


Why program budgeting
Why Program Budgeting?

  • Most Effective Management Tool

  • Keeps your Directors informed

  • Tells Members where their money is going

  • Helps to Prioritize programs and Services

  • Helps get rid of Sacred Cows


What if
What If?

  • Failure to manage finances effectively -

    • A major reason AEs/EVPs/CEOs get fired


What is program budgeting
What is Program Budgeting?

  • Assigning True costs to all Programs

  • Includes Direct costs and Staff costs


First things first a b b1
First Things First - “A”, “B” & “B1”

Cash Budgets More Easily Understood

  • Develop Timeline – See Exhibit “A”

  • Prepare Line Item Budget – Exhibit “B”

  • Budget conservatively for 2008 and 2009

  • Assign Allocations to each Line Item “B1”

  • Break out non-Program Line Items “B1”

  • Determine General Administration Program Costs “B1”

  • Establish Fixed Expenses “B1”

  • Determine Administrative Overhead “B1”



Tracking staff time ex c
Tracking Staff Time - Ex. “C”

  • List all Programs and Services

  • Prepare Basic Staff Time Tracking Sheet

  • For first year - Estimate hours for each Program

  • Begin tracking staff time on a weekly basis

  • Computer tracking most effective -

    • Excel Spreadsheet Program




Determining staff hourly costs ex b2
Determining Staff Hourly Costs Ex. “B2”

  • Add General Administrative & Fixed Expenses

  • Add Total Staff Hours

    • Use 2,000 hours per year per staff member

  • Divide Expenses by Number Staff Hours

  • = Cost per hour per Staff Member

    • Usually $30 - $50 per hour per staff member, depending on location


Preparing the program budget ex d
Preparing the Program Budget Ex. “D”

  • Programs/Activities

  • Show non-Program Income and Expense

  • Columns for:

  • AllPrograms/Activities

    • Direct Cost

    • Staff Cost & Overhead

    • Total Cost


Preparing the program budget ex d1
Preparing the Program Budget Ex. “D”

  • Columns for: (Continued)

  • Income

  • Net profit or (Loss)

  • Cost per member of Dues $$

  • Program/Activity


Using the program budget
Using the Program Budget

  • Helps Prioritize Programs and Services

  • Tool to Get Rid of Sacred Cows

  • Keeps Members informed

  • Helps determine what to include in Base Dues

  • Justifies the Value of Programs/Services

  • Open Communication to all


Questionable ex e programs services
Questionable Ex. “E” Programs/Services

To get rid of “Sacred Cows”

  • Use Program Analysis Form

  • Leadership to Decide

  • Dues Based or Fee Based

  • Or Eliminate



Directors have a hard time understanding financial statements
Directors Have a Hard Time Understanding Financial Statements

  • Recognize that we are in a time of transition after 5 – 6 spectacular years

  • Budget Numbers may be Growing or Shrinking – relate directly to membership numbers

  • AE needs to have finger on the pulse

  • Easily understandable Financials make it easy for Directors to make quick decisions

  • You need to be prepared to cut back when income figures are not on track


Statement of financial position exhibit f
Statement of Financial Position Exhibit “F”

  • Keep it Simple

  • Take Figures from Accounting Program, ie Quickbooks/Peachtree

  • Compare month end figures to month end figures for same month the previous year

  • Are total Assets up or down?



Preparing monthly budget reports
Preparing Monthly Budget Reports

  • Use Your Monthly Accounting Report and Budget to prepare month end reports

  • Prepare using Excel Spreadsheet

  • Track Income and Expense

  • Critical columns to include are:

    • Budget Breakout

    • Total for each Category

    • Year to Date Breakout

    • Total Year to Date for each category

    • % of budget collected or spent

    • Comparison $ with same period previous year



More help with program budgeting

More Help with Program Budgeting Exhibit “G”

See article “Better Budgets” in 2003 Spring issue of “REALTOR® Association Executive “ magazine.

All Excel templates can be found at

http://www.realtor.org/eomag.nsf/pages/budgets (Revised)


Questions
Questions Exhibit “G”


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