Annual Budgeting Process
Purpose
Establishes how Spartan builds its annual operating budget — aligning revenue expectations, headcount costs, equipment investments, and overhead to a realistic financial plan for the year. ## Who This Applies To
Josh (owner), the Production Concierge (accounting), and any engaged leadership. ## Annual Budget Timeline
| Activity | When |
|---|---|
| Pull prior year P&L final | First two weeks of January |
| Set revenue targets by service line | January — Josh + coaches |
| Build headcount plan | January — Josh |
| Estimate material and COGS | January — the Production Concierge + the Production Concierge |
| Finalize overhead budget | January/February — Josh + the Operations Manager |
| Share with accountant for review | February |
| Lock budget | Before March 1 |
## Budget Components
### Revenue Budget
- Set targets for each service line: service calls, install projects, drain/sewer, water treatment. - Base targets on:
- Prior year actual revenue (from P&L)
- KPI trajectory (is RPL improving? )
- Headcount plan (how many techs running? )
- Seasonal adjustments (Q1 is slower; Q3 is peak)
### Payroll Budget
- Largest expense line. Include:
- Base salaries/hourly rates for all current employees
- Projected commission and bonus at target KPI performance
- Paylocity payroll fees
- Any new hires planned for the year (time their start to revenue ramp)
- Slack commission policy: Commissions only paid on fully collected jobs. Model commission budget at ~85% collection rate on install jobs (conservative). ### Materials / COGS
- Estimate based on prior year materials as a % of revenue
- Factor in any vendor price changes (review with the Production Concierge at Tradeshift/Lee Supply)
- Add 5-10% buffer for commodity price increases
### Operating Expenses
- Vehicle fleet: fuel (Enterprise gas cards), insurance, maintenance
- Technology subscriptions: ServiceTitan, Paylocity, Tradeshift, GoodLeap, Avoca
- Insurance premiums (see Insurance Management & Renewals)
- Nexstar Network membership fees
- Facility costs: 446 Windsor Park Drive lease/ownership costs
### Capital Expenditures
- New service vehicles
- Equipment replacements (Cart Jetter, drain cameras)
- Any facility improvements
## Variance Tracking
- Compare actual monthly results to budget at the Monthly Operations Review. - Flag any line item that is 10%+ over or under budget for investigation. - Mid-year budget adjustment: if revenue is 15%+ off plan by June 30, revise the second-half budget. ## Important Notes
- The budget is a planning tool, not a constraint on good decisions. If a great hire becomes available mid-year, do not refuse because headcount is "at budget. "
- Revenue targets should be stretch goals, not guaranteed figures. Build the expense budget conservatively. - Share final budget numbers only with people who need them (Josh, the Operations Manager, engaged leadership). Field staff do not see the full budget. ## Related SOPs
- P&L Review Process — monthly tracking vs. budget
- Cash Flow Management — ensuring budget is funded
- Capacity Planning & Hiring Triggers — headcount decisions
- Strategic Planning Process — how budget connects to strategy