Take Control of Your Future Finances

Are you struggling to make ends meet? Have you seen revenues slashed? Is demand for your services increasing? Have your revenues been cut so much you simply don’t know where to turn?

If any of that sounds familiar, you are not alone. Today’s economic environment has really given state and local governments a big punch in the face. As more governments across the country are defaulting on debts and filing bankruptcy, the situation may seem overwhelming. But there are steps you can take to get a handle on the situation and improve your government’s fiscal condition.

Don’t sit around waiting for an economic recovery when proactive business and financial planning can help. Research shows that local governments with formal business plans and financial forecasting processes are weathering the economic storm better than those without them.

Examine Services and Operations

A business plan is meant to challenge your current operational design – it helps you determine if change is needed. For example, it can tell you if some operations should be shut down or if services should be shared with another government or not-for-profit organization.

Reducing operations is not always the answer. Sometimes service expansion can bring in much needed revenue. Perhaps expanding ambulance, water or sewer services is a viable option for generating additional net income. Or maybe you can invest more money into the economic development department and be awarded more grants and see additional businesses coming into the community as a result.

Plan for Capital Assets

Capital asset planning involves scheduling a timetable for improvements – and making sure that you have the funds to finance them. What are the plans for vehicle replacement and maintenance? Street improvements? Building construction, purchase and maintenance costs? And how do you plan to finance these projects? Capital asset planning helps you figure this out.

An important part of the business plan is that it brings a corporate perspective to your government operations. It helps ensure that you have the cash flow to cover these capital asset expenses and any emergencies that come up along the way.

Forecast Your Future

Ohio schools are required to prepare a 5-year forecast every year. While you may not be required to do so, you could benefit from making this part of your business plan. It’s a bit more complicated to forecast a general fund with the State budget situation, but it can be done.

Counties and municipalities that use a 3- or 5-year forecast have information that can enable them to be proactive instead of reactive. This leads to better operational decisions and perhaps even financial savings. You will be able to see how potential cuts could impact your budget, giving you the tools to plan accordingly. And you will be able to tell your board or council what financial impact a revenue cut or new revenue source will have on your government in years to come.

Develop a Business Plan

If you feel like your finances are out of control… like you’re shooting blind when planning for your government’s financial future… then you need a business plan. Municipalities have begun to hire governmental CPAs to help them develop business plans because they have both business planning skills and a deep knowledge of local government finances.

Whether you seek help or attempt to tackle a business plan yourself, you will find that a plan that fits your unique situation will make your government’s future brighter – and your job easier.

This article was originally published in Publicly Speaking: Financial News for Public Officials, a Rea & Associates enewsletter, June 2012.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.