In today´s turbulent economic environment, a key to the survival on the market and economic success is creating and managing a maintenance budget. This claim is especially applicable to restaurants and hotels since the lack of adequate budgeting can lead to taking business loans. Many business owners found themselves in a trap of economic downturn because they weren´t paying attention to creating a maintenance budget.
Even though business owners can predict most expenses such as fixed expenses and variable expenses, there are the ones that can´t be predicted. In order to avoid taking loans or even bankrupt, you need to learn how to successfully plan a budget. Fortunately, with our tips presented here, you should be able to practice proper budget control and avoid potential financial troubles.
Create an emergency fund
Having an emergency fund going is an absolute must if you want to survive on the market today. Even with just a little financial sense, you should already know that businesses today cannot stand a chance against competitors without an emergency fund. Keep in mind that repair costs apply to everything you have: kitchen equipment, furnishings, HVAC equipment, restaurant vehicles, or floors. Now, these are some of the minor issues you´re surely going to encounter at some point.
On the other hand, there are major issues such as foundation underpinning, wall reinforcement, waterproofing, slope stabilization, drainage corrections, piling, landslide repair, screw piles and so on. Some of these repairs will cost you more than 100k dollars, and if something happens while you´re off guard i.e. without a proper budget, it´s going to be very tough to get out of it easy.
Create a budget strategy that will work
If you put yourself into it, you can create a plan that includes preventive repairs, in-house repairs, and major repairs. One of the most important things you need to pay attention is your cash flow. Try to create your budget by making a list of equipment and maintenance intervals. Also, consider all the expenses and income to be able to predict your cash flow, and to anticipate problems in the future. Of course, regular inspections are necessary to help you to update your budget in case some unexpected problem shows up. For example, many restaurants and hotels planning their budget in 13 or 14 four-week segments, which makes budgeting easier.
Budgeting software can be very helpful
Planning your maintenance budget can be easier by using various budget planning software. You can keep budgets on track by comparing estimated with actual costs. Point-of-sale systems can also be very helpful for getting an overall picture of how your business is going. These systems are tracking every sale you make and can give you an excellent insight of what is having high sales, and what is selling badly.
Always keep in mind maintenance and repair
One of the things many restaurant and hotel owners do is setting aside 1-3 % of their sales for the maintenance purposes. Your liquid capital won´t be affected, and you will accumulate enough for a short amount of time. Keep in mind that maintenance and repair costs are different because they´re affected by age, warrant, or manufacturer quality.