Training

Report
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
• Helps to Prioritize programs and
Services
• Helps get rid of Sacred Cows
What If?
• Failure to manage finances effectively -
• A major reason AEs/EVPs/CEOs get fired
What is Program
Budgeting?
• Assigning True costs to all Programs
• Includes Direct costs and Staff costs
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”
Budgeting Sample Timeline
M.A.R. Budget Time Line for 2009 Budgeting Process - Exhibit "A"
DAY
DATE
TIME
MEETING/ACTION
Friday
April 5, 2008
4:00 PM
Budget notices sent out to Executive Committee,
Budget and Finance Committee, and staff.
Friday
April 26, 2008
5:00 PM
Staff to have estimated work hours for the year 2003
to EVP.
Friday
April 26, 2008
5:00 PM
Have all budget figures from your areas of
responsibility to EVP so they can be
compiled into the appropriate form.
Friday
May 3, 2008
2:00 PM
Staff Budget Workshop - all staff need to attend
to provide input.
Friday
May 31, 2008
2:00 PM
Staff Budget Workshop - only key staff with
budget responsibilities need attend.
Thursday
June 20, 2008
2:00 PM
Staff and Leadership Budget Workshop.
Thurdsay
June 27, 2008
2:00 PM
Budget and Finance Committee Meeting.
Thursday
July 18, 2008
10:00 AM
Wednesday
August 7-8, 2008
Thursday
August 15, 2008
Wednesday
September 25, 2008
Executive Committee Meeting.
Annual Planning Conference - Present proposed
2003 budget figures to leadership.
4:00 PM
Mail proposed 2003 budget to M.A.R. Board of
Directors.
M.A.R. Board of Directors to vote on proposed
2003 budget.
Ex. “A”
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
Ex. C1
MILLENNIUM ASSOCIATION OF REALTORS®
CEO/EVP TIMESHEET
Program/Activity
Monday
Tuesday
Ex ecutiv e Committee & Board of Directors
Budget & Finance Committee
By laws & Structural Rev iew
Friday
Total
2.00
Fair Housing
Gov ernment Affairs
Nominating Committee
Wednesday Thursday
3.00
0.50
0.50
Legal Action Committee
Griev ance Committee/Professional Standards
Awards/Recognition/REALTOR® of the Year
1.50
3.50
Affinity /Roy alty Programs
Standard Forms/REALTOR® Store
1.50
Monthly Membership Meetings
2.00
Annual Legislativ e Reception
Annual Education Fair
1.00
Annual Banquet and Installation
Annual Golf Outing
1.00
Community Serv ice Project
0.50
Planning Retreat
Leadership Training
Leadership Support/Committee Selection
New Member Orientation
1.00
0.50
1.50
1.00
Legislativ e Lobby ing at Local Lev el
1.00
Education Courses/Programs
1.50
Broker Round Tables
Magazine/Bulletin/Newsletter
0.50
1.00
Broadcast FAX Bulletin
1.00
Needs Analy sis/Focus Groups
New Member Brochures
REALTOR® Image/Public Relations
MLS Administration
1.00
1.00
1.50
Property Records Administration
Website Administration
0.50
RPAC Administration
NAR Meetings
1.50
State Meetings
0.50
Membership Maintenance
Staff Education and Training
General Correspondence & Calls
E-mails
1.00
1.75
0.50
1.50
0.50
1.00
0.50
2.50
0.50
0.50
Accounting and Banking
Answering the Telephone
Filing
Computer Maintenance
Supplies and Inv entory Control
Staff Meetings
T OT AL
0.50
1.25
0.50
0.50
10.00
8.50
1.00
10.00
8.50
9.00
3.00
2.00
0.00
0.50
0.50
0.00
0.00
5.00
0.00
0.00
1.50
2.00
0.00
1.00
0.00
1.00
0.50
1.00
0.00
1.50
1.50
1.00
1.50
0.00
1.50
1.00
0.00
0.00
1.00
2.50
0.00
0.50
1.50
0.00
0.50
0.00
1.00
6.75
2.50
0.00
0.00
0.50
1.25
1.50
0.50
46.00
MILLENNIUM ASSOCIATION OF REALTORS®
CLERICAL ASSISTANT'S TIMESHEET
Program/Activity
Monday
Tuesday
Wednesday Thursday
Ex ecutiv e Committee & Board of Directors
2.50
3.00
Budget & Finance Committee
2.00
Friday
Total
By laws & Structural Rev iew
Fair Housing
Gov ernment Affairs
Nominating Committee
Legal Action Committee
Griev ance Committee/Professional Standards
Awards/Recognition/REALTOR® of the Year
Affinity /Roy alty Programs
Standard Forms/REALTOR® Store
Monthly Membership Meetings
2.00
Annual Legislativ e Reception
Annual Education Fair
1.00
Annual Banquet and Installation
Annual Golf Outing
1.00
Community Serv ice Project
Planning Retreat
Leadership Training
2.00
Leadership Support/Committee Selection
New Member Orientation
Legislativ e Lobby ing at Local Lev el
Education Courses/Programs
Broker Round Tables
Magazine/Bulletin/Newsletter
Broadcast FAX Bulletin
Needs Analy sis/Focus Groups
New Member Brochures
REALTOR® Image/Public Relations
MLS Administration
Property Records Administration
Website Administration
RPAC Administration
NAR Meetings
State Meetings
Membership Maintenance
Staff Education and Training
0.50
General Correspondence & Calls
E-mails
1.50
2.00
3.00
3.00
1.00
1.50
1.50
2.00
3.00
1.00
3.00
8.00
8.00
Accounting and Banking
Answering the Telephone
Filing
Computer Maintenance
2.00
1.00
Supplies and Inv entory Control
Staff Meetings
T OT AL
0.50
8.00
8.00
8.00
5.50
2.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.00
0.00
1.00
0.00
1.00
0.00
2.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.00
0.00
7.00
0.00
0.00
14.00
2.00
1.00
0.00
0.50
40.00
Ex. C2
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”
• Programs/Activities
• Show non-Program Income and
Expense
• Columns for:
• All Programs/Activities
– Direct Cost
– Staff Cost & Overhead
– Total Cost
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
•
•
•
•
•
•
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
Programs/Services
To get rid of
“Sacred Cows”
• Use Program
•
•
•
Analysis Form
Leadership to Decide
Dues Based or Fee
Based
Or Eliminate
Ex. “E”
Program Analysis Form
Millennium Association of REALTORS®
Program:
Ex. “E”
ADDITION OF PLAT MAPS TO MLS SERVICES
Ranking: 1
Program Description: By arrangement with MLS Vendor RISCAM, the association can add to its computerized MLS
services plat maps of the entire market area for an additional cost of $10,000 per annum. Based on 650 members, the
added cost would be $15.38c per member. Add to this some additional administrative costs and this new service would
necessitate a dues increase of $18.00 per member, increasing member dues from $140.00 to $158.00.
Based on Focus Group reports and feedback from both Brokers and Agents the additional costs of this service would be
welcomed as members are currently spending anything from $15 - $29 per month for similar services from alternative
Internet sources. The plat maps would be an integral part of the MLS, could be accessed remotely by wireless or direct
Internet connection and even downloaded onto member computers or PDAs.
Targeted Members and Customers: This new service would benefit all REALTOR® and REALTOR® Associate
members who participate in the MLS. The additional cost would not be passed on to Affiliate or Institute Affiliate
members, but Brokers would bear the additional cost for their non-member salespersons.
Alternative Providers: Currently mapping services are available from e-neighborhoods and a number of other Internet
based specialty providers. The cost of these services is charged to individual subscribers and averages around $20 per
month.
Program Attractiveness:
High
Marginal
Weak
Our Competitive Position:
High
Marginal
Weak
Outside Alternative Coverage:
High
Marginal
Weak
Yes
No
Q1.
Have members indicated a need for the program?
Q2.
Do we have the capacity to put on the program with existing resources and if not what resources need to
be added? The Association has investigated other sources of mapping information, including our Local Tax
Assessor. It would be more costly for the Association to develop our own mapping program and we currently do not
have the technical expertise to do this.
Q3.
What will our position be if we do or do not offer this program?
Members have indicated that this is their # 1 need and that if we do not provide this service we stand to lose a high
percentage of members to our neighboring Board which is also promising to add a mapping service.
Q4.
Will the program strengthen or weaken our relationship with Large Firms and Stakeholders?
Strengthen
Weaken
Strategy for Implementing the program, including Key Challenges: RISCAM has indicated that the program could
be implemented within 90 days of signing of an addendum to their contract and would be up and running by January 1,
2003. RISCAM has also promised to provide free training for members on the new program and include full download
capabilities. We will sign a three year contract which will guarantee the cost through 2005.
Budget Impact:
Year
Income
Expense
2003
$ 11,700
$10,000
2004
$ 11,700
$10,000
Staff Cost
$1,700
$1,700
Remarks
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”
• 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?
Statement of Financial Position
Exhibit “F”
Millenium Association of REALTORS® Monthly Statement of Financial Position
As of October 31st, 2007
Exhibit "F"
Assets
October, 2007
October, 2006
Current Assets
Operating Accounts:
Cash on Hand
ABC Bank Operating Account
ADT Payroll Account
Money Market Account
CDs
Total Operating Accounts
$
496.00
$ 49,246.87
$ 1,096.00
$ 47,000.00
$ 22,000.00
$119,838.87 $ 119,838.87
$
$
$
$
$
$
Restricted Accounts:
General Operating Reserve A/C
Capital Equipment Fund
Capital Sinking/Building Fund
Issues Mobilization Fund
Legal Action Fund
Total Restricted Accounts
$ 80,000.00
$ 25,000.00
$ 30,000.00
$ 10,000.00
$ 6,000.00
$151,000.00 $ 151,000.00
$
68,000.00
$
21,000.00
$
18,000.00
$
6,000.00
$
5,000.00
$ 118,000.00 $ 118,000.00
Other Assets
Accounts Receivable
Less Prepaid Expenses
Total Other Assets
$
$
$
$
$
$
Fixed Assets Per Audit Report
$197,600.00 $ 197,600.00
$ 178,000.00
TOTAL ASSETS
$ 471,762.87
$ 380,692.00
Increase/Decrease in Net Assets
Over 12 month period
$
3,972.00
(648.00)
3,324.00 $
3,324.00
91,070.87
387.00
42,847.00
981.00
23,000.00
12,000.00
79,215.00 $
5,798.00
(321.00)
5,477.00 $
79,215.00
5,477.00
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
Monthly Budget Report and
Comparison
Exhibit “G”
Millenium Association of REALTORS®
Exhibit "G"
Sample Budget Report - Monthly Tracking Sheet
Sample
BREAKOUT
BUDGET
Breakout
Total
%
Comparison
INCOME
6001.000 Transfers
20,700.00
6010 Transfer - Capital
19,500.00
Equipment Fund
6015 Transfer - Capital
1,200.00
Sinking Fund
6064.000 Legal Action Assessment ($10 per
1,250.00
new member)
Legal Action Assessment
1,250.00
$
$
1,100.00
6,500.00
$
5,700.00
6103 Corporate Affiliate400.00
$
400.00
6104 Institute Affiliate 450.00
$
300.00
6106 Non-Member14,000.00
Salesperson
$ 14,700.00
6108 Realtor
$ 81,000.00
6100.000 Membership Dues
6102 Affiliate
98,350.00
77,000.00
1,100.00
88%
$ 102,100.00
104%
$ 14,000.00
88%
$ 219,000.00
104%
6110 Realtors-Associate
6112.000 Membership Application Fees 16,000.00
Membership Application
16,000.00
Fees
6114.000 MLS Participation Fees
$ 14,000.00
210,000.00
MLS Participation Fees
210,000.00
6115.000 Real Select
Real Select
10,000.00
10,000.00
6120.000 Interest Income
Interest Income
$ 219,000.00
$
9,000.00
$
3,600.00
$
4,000.00
$
800.00
4,000.00
4,000.00
6150.000 REALTOR Magazine/Newsletter 9,000.00
6152 Adv ertising
9,000.00
6200.000 Royalty Fees
Roy alty Fees
1,200.00
1,200.00
$
9,000.00
90%
$
3,600.00
90%
$
4,000.00
44%
$
800.00
67%
More Help with Program
Budgeting
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

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