Finding New Ways to Reduce Expenses
EXPENSE, n. 1. something expended to secure a benefit or bring a result. 2. one of the most difficult items to keep under control for most on-site professionals.
You're "over" in that category. Ouch! Just when you thought you would close the month under your budgeted expense amount, an unexpected move-out that requires new carpet blows your Carpet Budget out of the water. It seems to happen every month! Something seems to come up beyond your control, causing all your hard work, careful planning, and conservative spending efforts to go down the drain.
Being over a bit in an expense category or two doesn't necessarily mean your efforts are wasted or that you're doing a poor job operating the property. While excessive overspending can indicate a serious management problem, all on-site professionals occasionally miss their goal and spend more than is budgeted. Yet the really expert managers agree most cases of overspending can be prevented with a little more planning and analyzing of what is happening now on the community and how it will impact the near and not so near future.
We'll assume that like most on-site professionals, you are cost conscious and take your budget with great seriousness. You work hard to get the best prices from contractors and suppliers. You don't spend money frivolously. You invest in "extras" that directly or indirectly help you meet your primary objective - Increasing the Value of the Property. So, where else do you cut? It's foolish to save money at the expense of the lifestyle your Residents expect and pay for. We don't recommend slashing expenses or reducing payroll (and service) simply because you've planned poorly. Instead, consider some of these adjustments to your management style that will result in better control of your expenses.
Planning ahead to save tomorrow
There's more to controlling costs than simply using a Budget Control Log, changing vendors, or rebidding your service contracts. Rather than reducing expenses, determine the validity of certain expenses in the first place. Is it possible to eliminate an expense all together? Take a fresh look at Cost Control, and let your creativity help you find new and impactful ways to cut costs and increase Net Operating Income!Rick Ellis, one of multi-housing's foremost consultants & educational speakers.
Rick Ellis' Biography and Article List
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