A macro view of items to keep in mind when forming and executing an annual budget.
By John Paglia III

2019 has come and gone. While some days may have felt longer than others, the majority of us would have agreed that this year flew by. In the January 2019 “From the Experts” column I referenced motivational tactics and the importance of goalsetting to reach your goals and improve your company in every sector of your business. Synonymous with year-end and the 4th quarter, we are all striving to finish 2019 strong. At the same time, we are not losing sight of the near future and January 2020 is just as important to start strong.

Staying on Budget
Staying on budget is a task that becomes challenging when balancing new business. December is usually a happy time around the holidays, and it is very easy to spend money and purchase those last-minute tools, equipment, trucks and other assets in order to improve your business. Balancing wants versus true needs should be taken into account when closing out the final month of the 4th quarter. Understand that pushing all purchases to January will only penalize the start of 2020. Evaluate what is a true want verus a need and make your decision based upon that logic.

Forecasting the Next Year’s Budget
Forecasting the upcoming year’s budget should be done in advance of the new year. There are many factors that determine when your budget should be completed based upon your size and level of sophistication. What will you fund out of cash flow, loans, bonds, etc.? What is the leadtime on assets, trucks, chassis, containers, carts, from the time of ordering versus the time you want to receive them? Do you order trucks versus purchase ready trucks or reconditioned ones? These are just a few examples to consider when growing or replacing your assets for the new year looming.

More than equipment, your budget needs to forecast your plans for internal and external raises. Vendors will no doubt come out in January with new price increases. Fight those! If they cannot explain a logical or defendable reason for their increase, do not accept. If they are persistent, search other vendors—odds are you will find comparable services at a comparable price. Eventually you will find a vendor you are comfortable with and have terms with acceptable increases agreed upon ahead of schedule that you can forecast into your budget.

Dealing with Rate Increases
Vendors to our industry are never afraid of sending us increasing rates; when we can, do not be afraid to raise your customers’ rates as well. Large or small, based on economic factors, we are all entitled to rate increases. I do not agree to a constant barrage of month after month increases. No one would like that, so I do not expect my customers to either. If you provide a great service and can prove your value, stand strong when sending out an increase. If you tie it to a CPI or PPI index related to the sector of business you are issuing the raise, it is very hard for a rational customer to give you a hard time. If we raised every customer based on this index, it does not even come close to the rate increases we receive year over year, but it will help. All of this is a macro view of items to keep in mind when forming and executing an annual budget. | WA

John Paglia III is a 4th generation garbage man. Before he climbed the ranks to become Florida Express Environmental’s General Manager, he had a successful career in college and professional athletics. John has been around the garbage industry since his car seat days. Currently, John is focused on growing his company and offering the highest level of customer service and prolonging the world we live in today. John wakes up every day knowing the impact professional haulers have on their community is far greater than most realize. He can be reached at (352) 629-4349, e-mail John3@floridaexpress.us or visit www.floridaexpress.us.

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