Kudos – to Administration and the Operating Departments for making budget for January 2019. Hopefully this is a trend that will continue throughout the year.
Net income for the month represents an improvement of $84k over January 2018, but it must also be recognized that this improvement was largely attributable to an increase of $65k in property owner assessments ($20 per month) and $8k in contributions. (1 – Pg 1)
Now for the bad news – Food and Beverage losses for January further corroborate, and are a continuation of, the trends and deficiencies outlined by this author previously. Specifically,
• Payroll and operating expenses combined were over budget $12k. (1 – Pg 6)
• Right out of the gate, net losses of $124k for the month were over budget $27k. As one property owner pointed out during the board meeting, continuation of that trend for the remainder of the year would create a loss in F&B at year end of more than $800k. That can not happen. (1 – Pg 6) (2 – at 14:52)
• One presenter was quick to defend by saying that F&B had actually improved over the previous year. (2 – at 23:26) Well no – revenue did improve, but perhaps most important of all, the net loss actually increased. This is important. The dialogue on revenue is misleading and must be changed. While leadership continues to focus on increasing revenue, no explanation is given for why F&B is actually losing more money as sales increase. Do we really need to continue looking for new venues and forms of revenue if we do not have an answer for this anomaly? (1 – Pg 6)
And yet, without any acknowledgment that additional revenue is not improving the bottom line, a NEW capital component, the Food Trailer, was approved and purchased with support of the board and finance committee using the assumption that it will increase revenue. Further, the original budgeted amount of $35,000 was increased to $70,000 to include additional enhancements. (2 – at 24:45)
Well perhaps, now is the time to also mention depreciation. Expenses in F&B, or any amenity for that matter, do NOT include depreciation. One can only imagine what F&B losses would be, if the depreciation expense for the food trailer and all other components was actually attributed to the F&B cost center. (1 – Pg 1)
These examples only continue to demonstrate that this should probably be the time to work on controlling expenses rather than increasing revenue while also freezing new and unnecessary capital expenditures until these issues can be addressed and appropriate corrective measures taken.
Patricia Cross
10438 Big Canoe
References:
(1) https://bigcanoepoa.org/getrnedial03a3c7d9-d888-467a-ad79-Odf24gecb1e8/January_2019_Financials.aspx (pgs. 1 and 6 – see specifically excerpted sections above in links)
(2) https://vimeo.comluser59886203/review/319325567178be895fc4
EDITOR’S NOTE #1: This is the 2nd letter from Patricia Cross. I have set her up with her own “TAG”. Click here to see all of Patricia’s writings.
EDITOR’S NOTE #2: There is a governing document in the history of Big Canoe that nobody seems to know about. I’ve run it by a lot of people, and it was completely unknown. It is the 1987 Food and Beverage Agreement that gives the Company (aka the Developer) the right to “the exclusive first right of refusal to provide ALL food and beverage services” to the clubhouse, swim club snack bar and all other similar venues within Big Canoe. Perhaps we need to look into whether this is being exercised, and what impact it may be having on our bottom lines. I’ve been meaning to release this for a while now, and this is an appropriate time based upon the subject matter. Full document here: http://bigcanoe.themountainsvoice.com/docs/1987-05-14(FoodAndBeverageAgreement-SEHCandBCPOA).pdf
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