Budget planning—even when the economy is booming—is no simple task. Forecasting your business’s financial future becomes even more complex when you throw a global pandemic, widespread social unrest and a continuing trade war into the mix. Those of us in the retail industry are no strangers to change, but we’re seeing transformation on a whole new reality-defining level.
And yet, it’s not all doom and gloom: The National Retail Federation (NRF) predicts retail sales will grow between 3.5% and 4.1% in the latter half of the year. This is good news, but what does it mean for your bottom line?
Maybe you’re on solid ground today, but will a “second wave” of coronavirus cases derail the progress you’re making now? How can you plan a facilities budget when brick-and-mortar business is in anything but stable?
The truth is, we may be in a state of upheaval now, but the dust will eventually settle. And when it does, you’ll need to have already hit the ground running with a plan and a sound budget.
Whether your business is struggling or thriving as a result of recent events, here are a few tips a retailer of any size and in any industry can use for budget-building in the new normal.
Be Careful What You Cut
When it comes to modifying your budget, it’s best to avoid the slash-and-burn approach. It might be tempting to pluck the lowest hanging fruit—in many cases, this means things like payroll, facilities and maintenance—but this can have adverse effects in the long run.
Prior to the pandemic, reducing janitorial services, for example, may have been a viable option. But as coronavirus cases ebb and flow across the nation, many consumers are hyper-focused on cleanliness. Several consumer surveys reveal that for some customers, where they shop will be determined by which brands show a commitment to meeting safety standards.
The bottom line: Be judicious about what you cut, and always put the customer experience first.
Create a Budget You Can Adapt Over Time
Sure, you have an emergency plan in place when events like natural disasters strike, but what about a pandemic? Many companies were caught off guard when COVID-19 made landfall in the U.S., and as a result, they’ve had to view their budgets through an unfamiliar lens.
CFOs and their teams will need to learn as they go, mapping out what processes and procedures have worked over the past four months, what hasn’t worked and where they can hang onto cost savings.
Track COVID-Related Work Orders and Data Diligently
In order to build a solid budget, you need to be diligent about data collection. Because a good deal of your relevant facilities management (FM) data will tie back to work orders, making sure your work orders are being tracked and updated regularly is crucial. This will not only help ensure vendor SLA compliance, but it will also give you insight into where you’re spending most of your FM dollars.
Increase Reporting on FM Spend
You can’t keep stores safe without the proper resources, so it’s important to increase reporting around word order fulfillment, foot traffic and maintenance costs.
Due to the unprecedented nature of the pandemic, most organizations don’t have historical data to turn to, or applicable benchmarks to reference. This means the data that you base your budget on is live data—making real-time reporting a necessity for CFOs and facilities managers seeking insights into total FM spend.
Much like the weather, forecasting an accurate budget is difficult because it’s dependent on a number of unpredictable factors. When we make the best use of the data at our fingertips, we’re better equipped to weather any potential storms. By remaining adaptable, reallocating resources and analyzing real-time data you can create an FM budget built to last.
Jason Cesare is CFO of integrated facilities management company NEST.