Budgeting beefs

What do you think is the most difficult part about budgeting?

Our challenge has been with the amount of growth we’ve had over the last couple of years. Setting up a budget is fine, but we seem to exceed our (goals). So our budget needs to be constantly tweaked to keep up with our growth pattern.
– Matt Boelman, vice president, Perficut, Des Moines, Iowa

Predicting the workload – recovering overhead and deciding how much equipment you need and how much profit you want. We always like to start with the profit first instead of last when figuring out our budget.

Another challenge in our market is the predictability of snow. For example, last year we did $1.5 million less in snow than the year before. Even though we do not budget for snow, we have to be prepared.
– Todd Pugh, CEO, Enviroscapes, Louisville, Ohio

The most challenging part of budgeting for me is projecting overhead when considering hiring a new key staff member. For example, if I am in need of a commercial landscape salesperson (which I am actually looking for), I will need to put this salary into my overhead. But you really don’t know how that individual will perform in that position. So in a sense, you have to look at it as an investment that may or may not pay dividends. This is where it gets tricky because a salesperson will need some time to become established with your company, so at first they may not be able to bring in the sales needed to cover their salary. However, if they are good, after some time they should be able to help your company grow and cover their salary. That is the chance you take when budgeting for a new hire, and that’s why it’s so important to get the best talent that you can, even If it means making an investment and taking a chance.

What do you wish you understood better about your numbers?

Individual department financials and how those relate to our overall company financials. We have divided our company into service segments and we try to run individual financial reports. But it’s tough to relate the value of each client through those numbers. For example, if we have a client that we do 5-10 services for, when we look at individual financials, some of those services may not be where we want them to be (with profit margins), but as a whole, the value of the contract may exceed the profitability we want to see. So, being able to evaluate and judge that has been difficult.
– Matt Boelman, vice president, Perficut, Des Moines, Iowa

Looking at the company as separate divisions is still something I struggle with. As we have grown, it has been a lot more difficult to look at the company as a whole from a pure numbers standpoint. Having said that, I still believe in a holistic approach to managing the numbers of an organization. At the end of the day, the company is either profitable or not.