What Is an FF&E Budget?
The FF&E portion of your business budget considers the furniture, fixtures and equipment that outfit your business location. While some FF&E items, such as lobby and office furniture, storage equipment and display cases are common to most budgets, others depend on the nature of your business, such as a hotel, restaurant or exercise facility. Because FF&E represents a significant expense, a separate section of your budget should address this category.
An FF&E budget includes anything that is not part of the building structure. For example, in the case of a hotel, FF&E budget categories can include hotel room furnishings and decorative items, common area furnishings, restaurant, bar and conference room furnishings and equipment, office furnishings, storage equipment, computers, projectors and other items relating to technology. An exercise facility can include categories for fitness and swimming pool equipment, first aid stations, housekeeping and maintenance supplies, storage, office furnishings and appliances in your staff break room.
Creating an initial FF&E budget that works requires a great deal of planning, preparation and in many cases, walking a fine line between function and comfort. The first step of the process is determining general cost estimates for your type of business. For example, if you are creating an FF&E budget for a hotel, Hotour Hotel Consulting suggests starting with an estimate of 12 to 16 percent of your total financial investment. FacilityPlanners.com suggests using a cost-per-square foot approach, which they set for an exercise facility at $9 to $12 per square foot of empty space.
FF&E budgets deal with long-term cost control by including an accumulating reserve, either in the initial budget or in a separate budget, of about 3 to 5 percent of annual revenues. Because reserve handles asset renovation or replacement costs, the amount you place in this category often increases as the age of assets increase -- up to the fourth year -- and then remains steady. For example, when equipment or furnishings are new, you may choose to allot 2 percent to your reserve, increasing this to 3, 4 and 5 percent in the next three consecutive years. This way, when it is time to renovate or replace, you will have the necessary funds.
Incorporating a preliminary FF&E budget during new construction planning is an essential cost control measure. You may find, depending on the type of business, that without it, FF&E can easily equal or exceed the cost of construction. Within the realm of cost control, a preliminary budget can help you determine whether your ideas fit within dollar limits as well as ensure your building is the right size to accommodate FF&E needs. Thinking about FF&E needs during planning stages can also help you create a shopping list and help with placement of furniture, fixtures and equipment.