Operating Budget Template - Excel

Create a plan of your month-to-month revenues, costs, and expenses to gain insight into your company's fiscal health. That way, you can plan your business operations and make crucial decisions.

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Operating Budget Template Key Features
  • Keep track of your current business revenues and expenses, including fixed and variable costs such as salaries and benefits, office rent, and marketing costs.
  • Plan your budget in both the short and long term to predict your future expenses by comparing the monthly or quarterly budgeted costs and revenues to the actuals.
  • Review historical data of your spending and overhead expenses to set your business priorities and limit or eliminate certain costs to reach your desired net income.
About the Operating Budget template

What is an Operating Budget?

An operating budget is a financial plan that covers the expenses associated with running a business. This includes rent, salaries, marketing costs, and other operational expenses. The goal of an operating budget is to ensure that a company has enough money to cover its costs and still make a profit.

Operating budgets can be either static or dynamic. A static budget assumes no changes in the level of activity. This means that the same amount of money will be spent every month, regardless of how much revenue is generated. On the other hand, a dynamic budget adjusts expenditures based on actual sales. This allows businesses to respond quickly to changes in demand and optimize their spending.

Operating budgets are typically prepared on a yearly basis. However, they can also be done on a quarterly or monthly basis. This allows businesses to track their progress and make necessary adjustments to ensure they are staying on track.

What Is Included in an Operating Budget?

The items included in an operating budget will vary from business to business. However, some common expenses are typically included. These include:

  • Rent or mortgage payments
  • Utility bills
  • Insurance premiums
  • Employee salaries
  • Marketing and advertising costs
  • Office supplies and equipment
  • Travel expenses
  • Legal fees

Operating budgets can also include other items, such as research and development costs or money set aside for contingencies.

What Is Not Included in an Operating Budget?

Some items are typically not included in an operating budget. These include:

  • Capital expenditures: are money spent on long-term assets, such as buildings or machinery.
  • Debt payments: These are payments made to creditors, such as loans or credit cards.
  • Dividends: This is money paid to shareholders from the company’s profits.

How to Create an Operating Budget?

Operating budgets are created by businesses of all sizes. However, the process can be different depending on the size and complexity of the company. For small businesses, the owner or manager may be able to create the budget on their own. Larger businesses may have a team of accountants or financial analysts who work together to create the budget.

1. Gather Financial Data

The first step in creating an operating budget is to gather financial information. This includes income statements, balance sheets, and cash flow statements. This information will be used to identify the company’s current financial position and assess its historical performance.

2. Forecast Sales and Expenses

Next, the business will need to forecast its future sales and expenses. This can be done using various methods, such as trend analysis or market research. Once the sales and expense forecasts are complete, the business can then develop a budget that allocates funds accordingly.

3. Monitor the Operating Budget

Once the operating budget is created, it is essential to monitor it regularly. This means tracking actual results against the budget and making adjustments as needed. By doing this, businesses can ensure that they stay on track and achieve their financial goals.

How to Calculate the Operating Budget?

To calculate the operating budget, businesses will need to determine their total revenue and expenses. This information can be found on the company’s income statement. Once these numbers are known, the business can calculate its operating budget by subtracting its total expenses from its total revenue.

For example, let’s say a company has total revenue of $100,000 and total expenses of $80,000. This would give the company an operating budget of $20,000.

It is important to note that the operating budget differs from the profit margin. The profit margin is a measure of profitability that considers both revenue and expenses. The operating budget only includes expenses and does not take revenue into account.

What Are the Benefits of an Operating Budget?

There are many benefits to creating an operating budget. These include:

  • Helping businesses track their progress: Operating budgets can help companies track their progress toward their financial goals. This information can be used to make necessary adjustments and ensure that the business is on track.
  • Improving decision-making: Operating budgets can provide businesses with valuable information that can be used to make better decisions. This includes deciding how to allocate funds and what expenses to cut back on.
  • Improving efficiency: Operating budgets can help businesses improve their overall efficiency. This means that they can save money and time by reducing wasteful spending.

What Are the Drawbacks of an Operating Budget?

There are also some potential drawbacks to creating an operating budget. These include:

  • Taking up time: Creating an operating budget can be a time-consuming process. This is especially true for businesses that are large and complex.
  • Requiring accurate forecasting: Operating budgets require businesses to make accurate forecasts about their future sales and expenses. This can be difficult, especially if the business is new or there is little historical data to work with.
  • Can lead to over-optimism: Operating budgets can sometimes lead businesses to be too optimistic about their future prospects. This can cause them to overspend and end up in financial difficulties.

What is an Operating Budget Template?

An operating budget template is a tool businesses can use to create their operating budgets. The template includes all of the necessary information and calculations that companies need to make. This includes sales and expense forecasts, income statements, and balance sheets.

Operating budget templates can be found online or in business software programs. They are typically easy to use and can save businesses time and effort.

Why Use an Operating Budget Template?

There are many reasons why businesses might choose to use an operating budget template. These include:

  • To save time: Creating an operating budget from scratch can be time-consuming. Using a template can help businesses save time by providing them with a ready-made structure that they can use.
  • To ensure accuracy: Operating budgets require businesses to make accurate forecasts about their future sales and expenses. Using a template can help companies to ensure that their projections are accurate by providing them with pre-filled formulas and calculations.
  • To avoid mistakes: Businesses can avoid making mistakes when creating their operating budgets by using a template. This is because the template will already include all necessary information and calculations.

Operating budgets are an essential tool for all businesses, but they are especially critical for small businesses. This is because small businesses often have tight margins and must carefully control their expenses to be profitable. An operating budget can help business owners identify areas where they can save money and make changes to improve their bottom line.

This operating budget template can be used by businesses to create their operating budgets. The template includes pre-filled formulas and calculations to help businesses save time and effort. It also provides space for businesses to input their own data, such as sales and expense forecasts.

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