For associations smart financial planning is key. Benefits, events and simply existing takes a lot of revenue and resources.
So how can we ensure we make the most of our members’ money? Creating a solid budget is the best course of action and can show associations where to apply funds, where to pull back and where risks can be taken.
As we head into 2019, here are some dos and don’ts of budgeting to follow:
- DO: Be realistic and thoughtful when aligning new expenses as they relate to your 2019 initiatives. Strategic growth is NOT free.
- DON’T: Don’t straight-line forecast your expenses based on the current year. This is a starting point, not the final budget.
- DO: Be conservative with revenue and aggressive with expenses. It’s okay to plan for growth but don’t expect “pie in the sky” changes to revenue lines.
- DON’T: Don’t abandon your process. A budget that isn’t followed isn’t very beneficial. If something is outside budget and can’t be justified, it’s ok to say no.
- DO: Leave some wiggle room for unexpected expenses and changes in pricing, inflation, revenue, etc.
- DON’T: Don’t be afraid to say no. Sometimes associations find themselves striving to be everything to everyone. Define your core mission and programs and build your budget to meet those needs first.
- DO: Stay on top of data. Track past impact of programs, services and events to evaluate their feasibility moving forward.
- DON’T: Don’t forget about including projections throughout the year. The budget doesn’t have to be written in stone. It can be a flexible document and showing how items are tracking throughout the year can help with those decisions.
- DO: Ask questions. Will costs increase? Will the association plan to expand and what variable costs and revenue can come from that? What reserve funds are in place to offset an upside-down budget?