[Finance] Draft Budgets

[Jeremy Hull]

Great work Mark, Amanda.  Lots of detail there, it would take a while to go
through it all.  A couple of initial comments - the number of planned
events (25) is almost the same as this year (24) with almost the same
distribution by size.  Based on the numbers of bikes parked as shown in the
BV annual report there were 3 small events, 4 medium sized events, 6 large
events, and 10 Bombers games.  There was also one small event during the
winter cycling conference.  The timing of the events last year should give
us a pretty good indication of the timing of events this year, and
therefore the timing of expenses and revenues.  Last year this worked out to

May - 1 Small, 1 Medium
June - 2 Small, 2 Medium, 2 Large, 2 Bombers
July - 1 Large, 2 Bombers
August - 1 Medium, 2 Large, 1 Bombers
September - 1 Large, 3 Bombers
October - 1 Bombers
November - 1 Bombers
February - 1 Small

So June and September were the busiest months.  In terms of cash flow we
should make sure the Bombers contract provides for timely payments, rather
than having to wait until the end of the year.

I note that Bill has suggested a larger amount for depreciation ($1389)
than is shown in the budget ($867). I'm not sure if this requires an
adjustment to the budget.

Overall it looks like a good budget to me, but it raises the question of
whether the clients will pay the amounts shown which are an increase from
last year.  I think Bike Valet needs to be firm in its fee rates, but
flexible in adjusting to either increased demand (such as larger Bombers
set-up options) or decreased demand (such as clients not being willing to
pay our rates).

Jeremy




On Mon, Mar 10, 2014 at 5:12 AM, Mark Cohoe <mark at bikewinnipeg.ca> wrote:

> HI,
>
> Amanda and I met over the weekend and did a detailed run through of the
> numbers for bicycle valet to come up with pricing for small (<50 bikes),
> medium (50-150 bikes) and large (> 150 bikes) setups. For the Bombers, we
> developed 4 scenarios based on capacities of 1250, 1000, 750 and 500 bikes,
> 500 being the status quo. Amanda, I've made a few small changes to the
> numbers from what we had Saturday, but mainly to deal with the service
> hours. I also decided you were right about listing the capital costs under
> expenditures in the budget, so that's in there too.
>
> To develop the prices, we broke down costs into fixed and operational
> costs. We borrowed Jeremy's idea of service hours to help factor fixed
> costs into the rates. To calculate a service hour fee, we assigned a fixed
> number of service hours to each setup type, multiplied that number by the
> estimated number of each contracted setup type to determine a service hours
> total for the season, and then divided fixed costs by that number to get a
> service hour cost. See the Cost Analysis Spreadsheet to review these
> calculations.
>
> The service hour fee was then combined with estimated variable costs to
> get a total setup cost (which included transport and a fixed number of
> operational hours) and hourly rate for any additional hours.
>
> Note that because the Bombers contract takes up such a large portion of
> our contract setups, the service hour costs depends on which capacity
> scenario the Bombers choose for 2014. The actual service hour charge is
> listed on each tab (Bombers-1250, Bombers-1000, etc.) as a fixed number
> rather than as a linked cell. In each case it was calculated by setting the
> service hours cell on the rates tab and adjusting the quantity of new
> stations and racks in the depreciation calculation.
>
> I've marked the 1250 bike capacity option as the preferred option. If the
> Bombers go with that option, we would have to come up with an additional
> $12,000 for capital acquisition. Amanda and I thought it would be best to
> ask for a multi-year contract from the Bombers, so ideally this would give
> us ability to get a loan. We also recognized that regardless of what option
> is chosen by the Bombers, we will need to bill game by game to manage our
> cash flow.
>
> For the BV and BW budgets, I've made calculations based on the Status Quo
> option, which gives capacity for 500 bikes/game. We had a capacity for
> 400-450 last year.
>
> To balance the BV budget, I pushed the Bomber rate up a bit to $1300/game.
> The BW budget includes a contingency of 4% of expenses (BV and BW Core).
>
> Cheers,
> Mark
>
> --
> Mark Cohoe
> Executive Director
> Bike Winnipeg
> www.bikewinnipeg.ca
> 204-894-6540
>
>
>
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