How to Plan an Operating Budget
- 1). Use the daily receipts to calculate the "Sales/Turnovers" for the budget period, usually a month, a quarter or a year. This figure is the total collected for the sales of your goods and services minus taxes collected and the first entry in your operating budget. Pre-launch, project this figure by adding known fixed costs like rent and equipment depreciation, and projected cost like labor and supplies, to your desired net profit.
- 2). Subtract the cost of the goods or services you sold from the "Sales/Turnovers" figure; if you sold ten widgets, this figure is the wholesale cost of those widgets or the cost of the hours invested in making them. Include your labor costs as well as insurance contributions in this figure. This calculation is the second entry in the commercial operating budget structural plan; label it "Variable costs /Used goods." The third entry, "Gross Profits," is the figure obtained by subtracting cost of goods from sales. It is pivotal to your business and a measure of your success; if your gross profit is inadequate, you will not be able to pay your bills.
- 3). Add your "Fixed Costs"; these are the ones that occur regularly regardless of sales like rent, Internet service and utilities. Calculate your "Write off/Depreciation" for equipment at 30 percent of the value; subtract these plus any interest paid on loans from your gross profit to determine your profit and complete your operating budget.
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