Step 7: Make the Final Review
A good sanity check for your budget is to layer on a line for your 2013 projections onto each of the six charts you created earlier. The charts should look similar to the ones below.
Do the lines indicate the same general trends as the 2010, 2011 and 2012 year-to-date data? If they vary dramatically, you may not be predicting realistic numbers. After working on the budget for next year, the numbers can start to blend together. This is a good time have someone else to take a look. Accountants have a keen sense of expectations, especially for expenses. Ask one to review your proposed budget and provide feedback.
Hopefully, this article will help you organize your thoughts, streamline the 2013 budget process, and create an accurate prediction of net operating income and cash flow for next year.
Alyssa Quill is an owner of Storage Asset Management Inc. (SAM), a third-party management and consulting company that currently manages 27 self-storage facilities across the mid-Atlantic and Northeast regions. For more information, call 717.779.0044; visit www.storageassetmanagement.com.