Operating Budgeting & Planning Template

What is an operating budget template?

An operating budget template helps you create a business budget that you can use to compare expenditures (like COGS, or cost of goods sold) with revenue or other income sources in order to determine an operation's viability.

An operating budget estimates every line item on an income statement. Sales, materials, labor, overhead (COGS), and SG&A  (selling, general, and administrative) costs. The end result is a pro forma (expected) income statement.

What’s included in the operating budget template

This operating budget template is designed using best practices and includes different methodologies to plan your data effectively. It’s also fully customizable, allowing you to get started right away.

When planning future resource needs, it's important to consider how costs fluctuate with revenues. Think about which costs are relatively fixed, like rent and utilities, and which are more variable, such as personnel-related expenses that grow with headcount.

To help you streamline the process, our operating expense planning template covers:

• Number of products or services: This is all about how many items or services you’re planning to sell, which is a core element of revenue forecasting.

• Price: This is the amount charged for each product or service. Multiply by the number of products or services to help determine your projected revenue.

• Projected and actual revenue: This is the income you expect to earn versus what you actually bring in. Comparing the two helps assess performance in your operating budget.

• Total revenue: This sums up all income sources, giving you a snapshot of expected or realized revenue.

• Net income: This is what's left after all expenses are subtracted from total revenue, showing your operation's profitability.

• Variable and fixed costs: These are expenses that change with production levels (variable) and those that remain constant (fixed), both crucial for budgeting.

Variable vs. fixed costs

In an operating budget, variable costs are costs that adjust according to the level of business activity, like production volume or sales.

Variable costs include, among other things:

• Cost of goods sold
• Direct selling costs
• Sales commissions
• Payment processing fees
• Freight
• Certain aspects of marketing
• Direct labor

Fixed costs typically don't vary with changes in revenue and are mostly constant, at least within the time frame of the operating business budget.

Examples of fixed costs include:

• Rent
• Head office
• Insurance
• Telecommunication
• Management salaries & benefits
• Utilities

You’ll want to consider all variable and fixed costs by department for each period. Using previous year trends and future revenue projects will help determine expected costs.

The result of collecting this information from your department leads is an accurate, timely view of what resources you need to achieve your goals and how much they’ll cost.

Use an operating expense planning template with Cube

This is an Excel template. You don't need to be a Cube customer to use it!

But if you are a Cube user, you can start using this template in under two minutes. Here's how: 

Step 1: Open the operating expense template in Excel or Sheets.

Step 2: Customize the row and column headers to match your Cube's dimensions and filters.

Step 3: Select the range where you want to fetch your data.

Step 4: Fetch your data.

Why operating expense planning matters

In the ever-changing landscape of economic uncertainties and market fluctuations, operating expense planning becomes the bedrock for a stable financial foundation. 

Organizations proactively fortify themselves through meticulous financial forecasting models and scenario planning, ensuring a secure and steadfast financial future.

This empowers decision-makers by providing comprehensive, data-driven insights into financial performance. Armed with a clearer understanding of operating expenses, organizations can make informed decisions, enhance efficiency, and strategically allocate resources, paving the way for sustainable growth.

Benefits of using an operating budget template

There are several advantages to using an operating expense planning template rather than starting from scratch. Operating budget templates are the ultimate strategic budgeting tool because they:

• Save time and effort: Jump right into analysis and strategy with a ready-made framework, skipping the tedious groundwork.
• Ensure consistency: Maintain a uniform format across departments and reporting periods, making your data easily comparable.
• Enhance accuracy: Use predefined formulas within your template to reduce errors and improve data reliability.
• Facilitate strategic planning: With structured financial data, you can forecast better and make smarter decisions.
• Improve communication: Share a clear and understandable format with stakeholders, enhancing transparency and collaboration.
• Customizable: Adjust the template to suit your organization's specific needs, aligning it with your unique business objectives and operational details.
  

How to overcome challenges in managing operating expenses

Managing operating expenses can be tricky, with hurdles like inaccurate tracking, inconsistent data, and unexpected changes in the economy. To tackle these challenges head-on, companies need to take a strategic approach that smooths out processes, improves data accuracy, and boosts flexibility.

Here’s how to make it happen:

Manual Operations: Streamlining with Automation

Streamlining manual operations with automation can significantly improve efficiency in managing operating expenses. By automating tasks like budgeting and expense tracking using business budgeting software, you save valuable time and cut down on errors in routine financial processes. This streamlined approach allows finance teams to focus on strategic activities that drive the company forward, rather than getting bogged down in manual tasks.

Data silos: Achieving clarity through integration

Breaking down data silos is key to gaining a clear financial view. Investing in integrated systems, such as financial reporting dashboards, allows for seamless information flow and better strategic planning across departments. It also enables you to turn scattered data into valuable insights, creating cohesive picture of your finances-and making it easier to survive budget season

Economic uncertainties: Building resilience

When dealing with economic uncertainties, scenario planning is your friend. Setting up flexible forecasting and budgeting models empowers you to quickly adapt to changes in the market. It’s a proactive strategy that helps you anticipate challenges and adjust your financial plans accordingly, providing a safety net against unexpected disruptions. The end result is a stable company that’s ready to tackle whatever comes its way.

Technology gaps: Embracing modern financial tools

Addressing technology gaps involves upgrading to modern financial tools like cloud-bse solotions and advanced analytics. THis not only enhances efficiency, but improves data insights. Ongoing training for FP&A teams is vital throughout this process so they can use these technologies effectively. By doing so, you ensure your team is equipped with the skills and tools needed to optimize financial management and drive strategic success.

How to forecast future resource needs with an operating budget template

Anticipating the future requirements of resources involves a strategic and systematic approach. Here's a step-by-step guide to help you navigate this process effectively:

1. Collect historical data: Gather data on past resource usage, expenditures, and performance. This historical data forms the foundation for future projections.
2. Identify key variables: Determine the key variables that impact resource needs, such as sales volume, production levels, or service demand.
3. Analyze trends: Conduct a thorough analysis of historical trends to identify patterns and fluctuations in resource usage. Look for seasonal variations and any factors influencing changes.
4. Align with revenue projections: Align your resource forecasting with revenue projections. Understanding how resource needs correlate with expected revenue helps ensure realistic and achievable plans.
5. Consider external factors: Take into account external factors like market trends, economic conditions, and industry developments that might influence resource requirements.
6. Engage cross-functional teams: Collaborate with departmental heads and teams to gather insights into specific resource needs. Their input provides a more comprehensive view and ensures a well-rounded forecasting process.
7. Scenario planning: Develop scenarios based on different assumptions or potential changes in the business environment. This prepares your organization to adapt to varying conditions.

Additional resources

Whether you aim to refine your proficiency, optimize procedures, or embrace industry best practices, these guides are designed to enhance and improve your operating expense planning.

• Building a foolproof operating budget
• 9 variable expenses examples you should know
• What’s the difference between a plan, a budget, and a forecast?
• Expense management software: how to control costs and boost profit margins

Grab your free operating expense planning template for Excel

Our free operating expense planning template is designed to help you organize and analyze your financial data.

Enter your business email to the right and download the template to get started immediately.

Operating budget FAQs

What are the different types of operating budget templates?

There are several types of business budgeting templates, each designed for specific needs:

• Incremental budget template: Great for businesses that want a simple, stable approach, using last period’s budget as a baseline with adjustments.
• Zero-based budget template: Suits those eager to cut costs, requiring justification for every expense from scratch.
• Activity-based budget template: Perfect for gaining detailed insights by allocating costs based on activities that drive expenses.
• Flexible budget template: Ideal for dynamic environments because it adjusts with activity levels, keeping financial plans responsive.
• Rolling forecast template: Best for those who need continuous planning—regularly updated to reflect changes and maintain a forward-looking perspective.

What is the 50/30/20 budget rule in Excel?

The 50/30/20 budget rule in Excel is a simple yet effective budgeting framework. It allocates 50% of your income for needs, such as rent and utilities, 30% for wants, including entertainment and dining out, and 20% for savings or paying off debt. It provides a clear guideline for resource distribution so essential expenses are covered while still prioritizing savings and financial health.

What role does depreciation play in an operating budget?

Depreciation plays a significant role in an operating budget by spreading the cost of an asset over its useful life. It's not just about accounting for the wear and tear of assets, but providing a clearer picture of the asset's contribution to generating revenue over time. Including depreciation in an operating budget helps businesses forecast expenses more accurately, manage cash flow effectively, and maintain a realistic view of their financial situation.

What is the difference between an operating budget and an income statement?

An operating budget is a forward-looking plan that estimates future revenues and expenses, guiding financial decisions and resource allocation. On the flip side, an income statement is a historical record that summarizes actual revenues, expenses, and profits over a specific period. While the operating budget sets financial goals and targets, the income statement provides a snapshot of past performance, allowing businesses to evaluate profitability and make necessary adjustments.