Operating a business can be challenging for CEOs and managers, whether a startup or a big company. One of the toughest challenges is managing variable and fixed costs to ensure everything is running properly.

To help with this task, most business owners recur to a tool called the operating budget template. This way, they are not only able to better visualize capital expenditures but also stipulate estimated costs for the different activities performed.

This article will show you how to make the perfect operating budget document for your company. Follow each step carefully, and you’ll have a document that not only highlights the key expenses that you have but also help you to plan on the business budget and save money.

Before we see how to make this kind of document, it is essential to understand the basics, like what it is and its major impacts. Here is a quick explanation:

Operating budget templates are documents that help the business owner compare the total expenses, including fixed and variable costs, and the company's actual income. The main objective is to see what parts of the business and what activities generate more costs and evaluate what investments are worth it based on the revenue generated.

Moreover, the operating budgets dictate the next steps regarding marketing costs and overhead expenses. The company must make different decisions based on these values and the total revenue generated to ensure financial health.

There are several reasons why this document is so powerful and helpful for most business owners. One of the main ones is that companies of all sizes and kinds can use it.

You can easily make a startup budget template using the same model from other companies, just adapting them to your reality. The document will gather all the information you need before making any decision, like your annual budget and your company's gross profit.

Moreover, the operating budget form also helps you achieve your goals and objectives most efficiently. It shows the best financial decisions to make considering aspects like goods sold, financial goals, and all the expenses left to pay.

Although the operating budget template can easily be used to track startup expenses and other data, it must be adapted for more precise results. Each company type and size has specific needs and calculations.

When making a template for startup costs, you must plan your categories based on the objective you want to achieve and what information you want to gather.

The main difference between a traditional operating budget and a startup budget is that startup companies and small businesses usually have fewer expenses and typically work on a lower income. When planning your template, all this information must be considered when deciding what you want to evaluate and how.

The document's structure will be similar to a big or small business. The only difference will be in the list of costs and the kind of strategy you’ll need to adopt to achieve your goals.

Now it’s time to see what are the main categories and fields that should be included in your template when making an operating budget document. Each category has a different purpose that will impact the decision-making process.

Follow each step carefully to ensure your document shows precise information. Here is the main information for an operating budget spreadsheet:

Variable Costs

Your variable costs are the first items you must list when making an operating budget template. These items are all expenses that are not recurrent and can vary depending on the period.

They are fluctuating expenditures that directly affect the total cost of your business. Some of the most common examples of variable costs are:

• Utility Expenses

• Raw Materials

• Commissions

• Packaging

The variable costs of a business are usually attached to the production volume. The more your company produces, the bigger these costs will be.

One of the reasons for making an operating budget is to understand how you can lower these costs. Through the analysis of the data presented, it becomes much easier to plan strategies for that.

Fixed Costs

Your fixed cost list consists of recurring items every month, regardless of the sales volume or any other aspect. They are usually directly attached to the production and the company itself.

The fixed costs can be easily forecasted since they present low variation and hardly change over the month or year. Some examples are:

• Insurance

• Energy Bill

• Direct Labor

• Maintenance

• Software Subscription

These costs are usually easier to list since we remember them more frequently. Make sure that you list all the essential items for your company.

Otherwise, your final calculation might not represent the actual situation of your budget. Double-check both lists for a precise income statement.

Volume

Next item that should be featured when creating an operating budget document is a field for writing down the number of products or services provided in the specified period. You can also make a stipulation in case you need it.

Notice that the more precise the number gets, the best it will be for the document to represent the company’s real budget. When using simulations and stipulations, make sure to choose a value that is close to reality.

Price

After adding a field for the sales volume, you’ll also need to create a space for writing down the price per unit of the products and services sold. It is simple information, but its total directly impacts the entire company and what decisions the owner needs to make.

Reflecting on the money gathered from direct sales also helps to gain insight into what to do next and what needs to change. These values only regard the price per unit, excluding taxes and other sources of income.

Gross Revenue

Another relevant content to include in the operating budget template is the financial information regarding gross revenue. You can make two different values for this part of the template.

The first one will be a projection of the revenue generated by the products and services provided. The second value will be the revenue that was actually generated.

With this, you can compare both amounts and reflect on the final result. Values that are much different can mean problems during various stages.

Net Revenue

Although gross and net revenue might look the same, one detail makes them completely different values. The gross revenue is the total amount gathered after selling services and products.

On the other hand, the net revenue is the value that represents what is left of this amount once all the other expenses have been paid. It is the same value as gross revenue but deducts costs and losses.

Marketing and Promotion

Marketing is one of the most common types of expenses in companies of all kinds. It is vital that you also list the values representing the marketing efforts and the type of campaign performed.

This kind of information is crucial because it shows us whether the investment is generating profit. If it results in significant expenses but doesn’t generate interest income, you should change the marketing strategy or the value invested in it.

Notes and Descriptions

When making this kind of document, leaving a field for writing down comments and leaving notes is also recommended. This helps when you deal with a different item that is usually not on the list or a problem that happened that justifies the income lower than usual.

This field is perfect for clarifying these events and understanding how they impacted the company. It is optional but recommended.

If you want to create the perfect operating budget template for your business, these tips are for you. We will show you how to make your document perform even better, generating a direct impact when analyzing the data gathered and planning on new strategies.

Here are some quick tips to help you with that:

Keep It Online

When making a document that needs to be constantly accessed and displayed during meetings and planning sections, it is important to keep it in an online format. This minimizes the chances of being unable to access the document.

Restrict the Access

Even though operating budgets are documents that impact the entire organization, their access must be restricted to specific parties.

Make sure you share it with people directly involved in the production and execution of the steps and processes. Parties like stakeholders and managers should also have access.

Keep It Always Updated

The operating budget template is a living document, meaning that it must be constantly updated for the data to reflect reality. Each change and adaptation must be introduced to the document as soon as possible to avoid imprecise results.

One of the best ways to ensure it will be constantly updated is to assign a person responsible for the task. This way, you ensure that the document will always be fresh and ready to be analyzed with the most recent data.

When it comes to creating your own template, there are different tools available online. From known software, like Google Sheets, to specialized tools, each one has its own tools and features.

Among all the options available, we highly recommend using Microsoft Excel for this task. MS Excel is not only an industry standard but also has the best tool set available, including integrations that offer you results calculated automatically.

If you don’t have a Microsoft Office activation key, you can find Microsoft Office 2021 Professional Plus Key Retail Global at RoyalCDKeys for a considerably lower price. This way, you’ll have access to all the necessary tools and still save money that can be invested into other parts of your business.

If you don’t want to create your template from scratch, don’t worry. Here are some absolutely free examples you can download and use.

Don’t forget to edit them using Excel to better fit your needs and expectations. This way, you’ll have a document that truly generates a positive impact when calculating your operating budget.

Template #1

Complete operating budget template. A document containing all critical categories that can be adapted for specific types of business.

Get this template

Template #2

Monthly operating budget. Template with a monthly format for controlling expenses and net income.

Get this template

Template #3

Simple template for basic expenses. Features an item list function and space for description.

Get this template

Having a document to keep track of operating budgets is a game changer for business owners looking for an optimized management system. But for the document to work, it must be correctly built considering your company type and product or service.

From the fixed costs to the gross revenue, the more precise your numbers are represented, the best for reflecting the real situation. Make sure to include all information that you consider relevant in the notes and descriptions section.

Now that you know everything, it is time to start creating your operating budgets. Follow all the steps, and you’ll definitely end up with a document that makes this task easier.