Facility managers need to be a jack of all trades as the master of their particular domain, whether that’s a school campus, storage facility or another type of commercial space. As explained by an article from the International Facility Management Association, FMs must be adept communicators, knowledgeable on engineering and technology, and capable of doing much more in order to effectively manage some or all of a business. That, in turn, means they must also understand the basics of financial management, as they are usually in charge of making decisions regarding where money is spent for repairs and upgrades.
With all this in mind, FMs should take care in crafting a budget that’s tailored to their particular duties within the organization. Whether they are a team of one or just a small part of a sprawling complex, it’s helpful to know how best to manage funds and plan for what’s ahead.
Simply knowing that your business will have a steady, sizeable income is enough of an uncertainty for most. Taking those projections and using them to plan out a detailed budget well in advance presents many of its own hurdles. As noted by the U.S. Small Business Administration, many people and businesses dread putting together a budget because it often involves a significant amount of work, but could prove almost useless when things don’t go as planned. And as just about anyone in business will readily admit, very little in their professional lives ever does go according to plan.
Still, understanding and building a budget is important for any organization, especially for people like an FM who usually have very specific duties and financial goals. In fact, FMs might have it somewhat easier than a typical executive who must make a best guess on both income and expenses. Ideally, an FM’s income will be relatively fixed by their own supervisor, giving the FM a great jumping off point to create a breakdown of expenses.
Keys to a strong budget
As the SBA noted, at its most basic, a budget is a detailed list of future receipts balanced against expenses. Of course, it tends to become much more complex in practice. Some tips to keep in mind when creating a budget:
- Budgets are useful for planning and strategizing, but don’t always work well if they are completely inflexible. Think of a budget as a guide rather than a precise financial roadmap.
- With that in mind, try to update budgets at least once per month to account for any changes in income or expenses.
- Making room for unexpected costs is also easier with a good budget. If roof repairs are needed on one building, for example, it might be wise to pencil this in for the next budget review period.
Managing cash flow
A major task of an FM will likely include managing cash flow, working either as his or her own boss or utilizing an allotment of money from a larger business budget. As explained by small business mentoring service SCORE.org, business owners in charge of financials should manage inflows using both a cash flow statement and a cash flow forecast in conjunction with a budget. A cash flow statement will act as a current snapshot of income to help organize how it is being spent. On the other hand, a cash flow forecast will make an informed estimate of how much income will be available in the future, and how that will be used.
Staying on top of finances is never easy, particularly when you have many other tasks to juggle. By ensuring they work with only the best contractors, FMs can take at least some stress off their plate.