bud*get \'buj-et\ v The act of spending countless hours compiling data from the past year so as to get an accurate and complete financial picture regarding revenues and expenses someone above you will ultimately decide does not show you are making enough money and will totally rewrite for you anyway.
Simply put, a budget is a guideline or statement of the probable revenues and expenditures of your self-storage facility. It is meant to project as accurately as possible how much money in revenues will be created by your facility, as well as what you would expect to pay out in expenses.
The revenues include but are not limited to rental revenues, ancillary product or merchandise sales, money generated through administrative fees (sign-up as well as late fees), and any services you may charge for, such as trash service, cleaning, package acceptance, 24-hour access, etc. The expenses side of your budget is usually a much longer list, including but not limited to salaries (this is where you see whether the owner really can't afford to give you a raise), real estate taxes, water and sewer bills, electricity, repairs and maintenance, credit-card fees, bank-service charges, telephone bills, office supplies, Yellow Pages ads, additional advertising expenses, health insurance and even the subscription to the magazine you are now reading.
In a perfect world, you would be in on the creation of your facility's budget. This would allow you, the manager, to get a clear and accurate picture of the financial status/viability of your facility. It may even allow you to help set the goals for your facility--financially and physically; after all, the money for the projects to upgrade/fix/maintain your facility has to come from somewhere. It's much easier to get a couple thousand dollars out of the boss for a golf cart if you've already talked about it and left a little room in your budget. But let's not get ahead of ourselves.
I happen to be in on the budget process of my facility. This is when I look at my expenses from last year and try to gauge what my expenses will be for the coming year. I also look at my revenues and try to predict what they will be for the new year. This is what I like to call a reality-based budget. It's the budget the boss looks at and decides we need to make more money. Then there is the budget he creates, which gets approved and usually has little resemblance to the one on which I was working. Whichever is the case, you should be aware of the budget that has been assigned to your facility.
All too often, owners do not allow their managers to be a part of creating the budget or even sharing the information it contains. They sometimes feel this is proprietary information, or they may not want you to see the net income of the facility (their take). Yes, your owner is probably making a little more money than you. But he came up with all the money to make the facility happen and took all the risk in losing that money if the business failed. Besides, he was probably already doing pretty well. Rarely do people get rich in this business--they're generally already headed in that direction.
The problem comes when the owner believes you should be asked to live up to a set of financial obligations you have had no say in creating. In other words, he does not want you to do exactly what he hired you to do--manage the facility. He is doing himself and you a great disservice, asking you to keep expenses within budget (without telling you what that is) while expecting you to achieve goals (without telling you what they are).
Managers are frequently excluded from the budget process. Most never even see their facilities' budgets. If you are one of these individuals, you should ask to see the budget that has been created for your facility for 2002. It should be completed by now. If you were made part of the budgeting process, you realize the tens of thousands of dollars you are depositing each month is not going directly into the owner's pocket.
I once took a two-story fall from a rickety, broken ladder while doing some sign work at a facility I was managing. I busted the ladder as well as my butt. Do you think I could go out and just buy a new ladder? No. It wasn't in the budget.
The owner I worked for lived in a very upscale community on the coast of California. He lived the lifestyle of the rich and famous, with a couple of Rolls Royces, a $6 million home overlooking the Pacific and shoes that cost more than I made in a week. It infuriated me this person was living large while I couldn't even buy a ladder for my facility. It was hard for me not to resent him. If I had been privy to the yearly budget, however, I would have seen that although my facility performed well and made a tidy profit each year, this wasn't how the owner got so stinking rich.
If you ever get to see the financial balance sheet of your facility, you'll be surprised just how little of those tens of thousands of dollars are left each month after expenses. Had I been in on the budget, I could have left a little room in the miscellaneous-expense column for just such an occasion. Had I looked a little further, I would have seen the owner's biggest expense was actually me. That's right--salaries are usually one of, if not the largest, expenses of a facility. Little did I know the owner could have saved himself a cool $5,000 a year or more by replacing me. My resentment may have turned to understanding had I known more about our budget.
The point is everyone gains when the manager is made part of the budgeting process. Then there are no unseen expectations or surprises. If it's too late to be included in this year's budget, ask to see the final approved budget and open up some conversation regarding it. Trust me when I tell you it will be an education for everyone.
David Fleming and his wife, Tina, are an award-winning management team with Premier Self Storage Inc. of Western New York. Mr. Fleming has more than 10 years of experience in the self-storage industry, having managed facilities in three states. He is currently a corporate trainer and senior site manager overseeing five locations. He and Tina work as full-time resident managers of Premier Self Storage in Amherst, N.Y. To contact the Flemings, call 716.688.8000; fax 716.688.6459; e-mail [email protected].