Archive for the ‘budgeting’ Category

Real-Time Accounting Improves the Ease and Accuracy of Budgeting

Monday, August 17th, 2015

For most bottom line managers budgeting season is a royal pain.  Every year they have to forecast revenues, project their cost of goods sold and payroll, and budget their operating expenses.  The process is always time consuming; and it always seems to come at a time when the manager is pressed with ongoing operations and other urgent issues.  The good news is that there is a better way!

Recognizing that the best predictor of the future is the recent past, the discipline of Real-Time Accounting and tracking of key data is, among other significant benefits, a simple way to improve both the ease and accuracy of the budgeting process.  As an example, the HRI Tools to Beat Budget program organizes the discipline of:

1.   tracking daily revenues on a week by week basis,

2.   benchmarking and analyzing cost of goods sold on a monthly basis for F&B and retail operations,

3.   recording the details of payroll cost on a pay period basis, and

4.   detailing other operating expenses monthly.

The beauty of this discipline is that at the end of the year, all of this information is in a three-ringed binder – available to the manager at his or her fingertips to create next year’s budget.

There are even some managers who take their operating results month by month and build their future budget as they progress through the year.  Come budget time, their budgets are pretty much done – and they breeze through budget season without breaking a sweat.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for Hospitality Operators!

 

 

Who’s Sandbagging their Budgets?

Monday, November 4th, 2013

Most of us in the golf business are familiar with the term “sandbagging.”  Wikipedia gives the following definition:

“Sandbagging (golfing), a player deliberately plays poorly until establishing a handicap and then raises his money bets, using the established handicap to unfairly win.”

But the term also has a budgeting connotation, no doubt lifted from the golfing world, as can be seen from an alternative definition:

 “Sandbagging (budgeting), a manager deliberately overstates financial requirements with the intent of coming in under-budget, thus being praised (or rewarded).”

It is certainly natural for any manager to “pad” his budget to give himself some wiggle room in a process that is fraught with uncertainty.  I’ve done it and I’m sure everyone else has as well.

But in these tough economic times, it’s important that we try to create as “honest” budgets as we can.  One way to promote this honesty is to benchmark actual to budget performance by department on an annual basis.  The controller simply needs to track annual variances line by line and compare them year-to-year.  When this is done it’s pretty easy to spot the “sandbaggers.”

Benchmarking budgets and using Tools to Beat Budget are two ways to improve the honesty and accuracy of budgeting.  Instead of paying out incentives to managers who beat budget, it may be better to reward a combination of beating budget and budget accuracy.  This will go a long way toward taking sandbagging out of the game.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking  hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for the Hospitality Industry!

Slashing Overtime With a Simple Change

Monday, July 20th, 2009

I was on the road again last week, traveling to Richmond to speak to the Central Virginia Chapter of the Hospitality Financial and Technology Professionals.  Attendees met Thursday afternoon at the Willow Oaks Country Club to hear my presentation on Tools to Beat Budget – a program that provides a disciplined approach for club Department Heads to monitor their revenues and expenses in a more timely manner.  In addition to keeping managers in closer touch with their numbers, the program has proven itself to be an important tool in preparing more accurate budgets with far less effort.

One of the more interesting things to come out of this meeting during a discussion of overtime costs, was the fact that none of the clubs represented had modified their workweeks and/or pay periods to reduce overtime.

The next day while making the same Tools to Beat Budget presentation to the management staff at another Richmond area club, the General Manager directed his Controller to investigate modifying their workweek to take advantage of this straightforward strategy to cut OT.

To find out more about how you can dramatically cut your overtime costs with one easy change, click here.

As with so many things that club managers can address during this economic downturn, much of it is about focusing on the basics.

Next week:  8 Key Basics to Successfully Operating a Club

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – where membership and all resources are FREE!

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