GM's Corner — Planning Our Annual Budget: A Complex Balancing Act

Jon Roesser, Weavers Way General Manager

We’ve entered the budgeting season here at the Co-op. Our Fiscal Year 2020 begins July 1, and for the next two months we’ll grapple and wheedle, debate and compromise, and, probably in very late June, arrive at a plan. (We always do.) Anyone who wonders what it was like being in the ring with Muhammed Ali should sit through a budget meeting with our finance manager.

Unlike the federal government, which unabashedly spends money it doesn’t have — don’t worry, our grandchildren will cover it — the Co-op must operate within its means: We cannot spend more than we take in. In FY2020, that will be somewhere north of $30 million.

Much of what we spend that money on is largely predictable. Cost of goods sold, utilities, packaging, trash removal services, credit card processing fees — all of these can be anticipated with a fair degree of certainty.

Other costs are less predictable, or in any case they are more discretionary, and this is where our values come into play.

In a typical business, shareholders expect a profit, and short-lived is the CEO who doesn’t routinely deliver that profit, quarter in and quarter out. At Weavers Way, our shareholders don’t care about profit, but they do care about making sure we do good things.

Our challenge is that there’s lots of good things we can do, and so the budget process becomes an exercise in competing priorities.

A top priority is staff compensation. We offer staff a pretty great benefits package, but wage increases have lagged behind the industry in recent years. We’re going to find a way to budget for both a modest annual increase for staff – one tied to anticipated growth in sales – as well as at least one, perhaps two incremental increases to our entry-level starting wage (currently $11.00 hour). But doing so won’t be cheap, and it will mean spending less on other things.

Training tends to get whacked around during the budget process. We want to train staff on all kinds of things: cost control; inventory management; workplace discrimination; sexual harassment; diversity, equity, and inclusion awareness; first aid and workplace safety; customer service; you name it.

It’s all good stuff. But in the end, we’ll probably find enough money for one, maybe two trainings a year.

Even harder decisions must be made when it comes to the Co-op’s donation and outreach budget. Last year, we made donations — either cash or food — to 61 organizations of various sorts: community organizations, schools, youth groups, and faith-based organizations.

In addition, we partnered with dozens of organizations in the communities we serve on various outreach projects. These projects are all important to the Co-op, but we don’t pull them off for free.

And, regrettably, though we say yes more than we say no, there are times throughout the year when we simply must turn down requests for donations or outreach support, not because the causes are unworthy, but rather because resources are finite.

Through the budget process, we’ll figure out how to pay for the farm — we derive many benefits from our farm, but it is not, in itself, financially profitable — the warehouse, the Shuttle, and a host of other things that make up the Co-op’s myriad operations.

On top of all this is the capital budget, which starts out in early May as sort of like a greedy kid’s Christmas list. Our facilities manager will want to replace this compressor and that condenser and repoint the façade of this building and fix the roof of that building and, oh, solar tubes, fan cut-off switches, three-phase outlets, etc.

Meanwhile, the IT guys will tell us how we simply have to upgrade our servers, motherboards, racks and various other technical doohickeys, and if we don’t, well, they can’t be responsible for what might happen.

The store managers tend to want to spend money on things that will enhance the customer experience: new crispers, deli slicers, convection ovens, and so forth.

By late June, we’ll have pared it all down to the essentials. And after all is said and done, while our shareholders — to be clear, that’s you, our member-owners — aren’t looking for a profit, you are looking for the Co-op to be sustainable, so we’ll budget for a modest surplus of somewhere between 0.5 and 1.0% of sales.

And so, our budget really is a reflection of what we value: a sustainable business, one imperfectly but doggedly committed to shared prosperity.

See you around the Co-op.