The Value of Operating with a Budget

Fourth quarter is HERE! Have you updated your budget? What? You don’t have one? Let’s talk about the value of operating from a budget. This is the best time of year to begin looking at plans for the future and how you are going to meet the goals you have for the upcoming year. Need to do renovations? Pay your staff more? Increase your owner pay? All these things can be planned with greater accuracy (meaning…you actually plan with a budget rather than just hoping you reach random goals).

When you operate your business by a budget it’s easier to make key business decisions with confidence. There are three main areas of financial management that a budget helps tremendously.

First is by providing a revenue comparison of your actual to plan. Knowing this by your different key services and product sales helps you quickly identify areas that are operating ahead of plan or lagging behind. You can then take action such as:

• Monitor discounts and reduce to ensure total revenue goals are met
• Engage staff to increase revenue; reward upselling…get team buy-in to meet sales goals
• Provide incentives to team members with a bonus paid out quarterly when goals are met or exceeded

Second is monitoring actual cost of your operating expenses to your budget. In the current business environment of higher payroll costs, minimum wage mandates and overall inflation your costs are increasing. Quickly target in on items costing more so you can take quick action to get costs under control such as:

• Reduce payroll costs by monitoring labor hours based on pets serviced, cross-training team members and holding your leadership team accountable to monitor hours and/or payroll as a percentage of revenue targets.
• Implement utility conservation steps and when possible competitive vendor bids (e.g., internet, phone, electric, etc.)
• Monitor supply costs and encourage conservation or implement tools such as chemical dispensers

The third area is your overall profit and your own pay. Be sure to watch our video where we talk about not devaluing your own services or taking a pay-cut in this environment of rising costs. We share more tips on the value of operating your business based on your budget and not your bank balance.