INCOME:
Within the Income section of the Detailed Budget, one can see the various fees generated by each of the investments and Funds. Important fees include Asset Management Fees, Acquisition Fees, Property Management Fees, Construction Management Fees, and Disposition Fees. It is important to not only understand the amount of fee income generated by the Firm’s investments, but also the timing.
SALARIES:
Next, the Detailed Budget considers the salaries of each of the employees, along with bonuses. It is important to denote in the Corporate Model whether Bonuses are distributed on a Quarterly or Annual basis as this will ultimately affect the total budget and timing of payments. Additionally, this employee salary section can assist the Firm in understanding staffing requirements as the firm scales and additional investments are made.
EXPENSES:
Finally, Expenses must be considered to achieve the Total Budget. These items can be divided into Office, Travel, and General expenses. The Salaries and Expenses are then subtracted from Income items to reach Total Cashflows. The budget tab is among the most important in any corporate model, as it will allow the Firm to make decisions around selling assets and deploying capital. Fee income is critical in meeting the salary and expense requirements of running an Investment Firm, so managers must understand the implication of holding or selling assets as it relates to the underlying Firm.
