You will find a tool to forecast the monthly operating expenses tailored to your project in our list of 200+ financial plans
All our financial plans do include a tool to forecast the monthly operating expenses.
How can you easily forecast your monthly operating expenses without any hassle?
In this article, we provide a free tool to do so. If you're looking for something more tailored to your specific project, feel free to browse our list of financial plans, customized for over 200 different project types here.
We'll also address the following questions:
How can one accurately estimate monthly fixed costs?
What software tools can assist in forecasting monthly expenses?
How can one predict monthly variable costs?
What percentage of revenue should be allocated to monthly marketing expenses?
How can unforeseen expenses be incorporated into monthly expense forecasts?
What is the average monthly cost of software subscriptions for an SME?
How can historical data be used to improve expense forecasts?
The document available for download is a sample financial forecast. Inside, you'll find the calculations, formulas, and data needed to get a forecast of your startup’s monthly operating expenses as well as a full financial analysis.
This document, offered free of charge, is tailored specifically to the realities of running a restaurant. If you need a tool for your own project, feel free to browse through our list of financial forecasts.
If you have any questions, don't hesitate to contact us.
Here Are the Steps to Easily Forecast Your Monthly Operating Expenses
To skip all these steps, you can simply download a financial forecast tailored to your industry.
- 1. Identify Expense Categories:
Start by listing all potential categories of expenses your business might incur. Common categories include rent, utilities, salaries, marketing, software subscriptions, and miscellaneous costs.
- 2. Estimate Rent Costs:
Research the cost of renting office space in your desired location. Consider the size and type of space you need and estimate a monthly rent amount.
- 3. Calculate Utilities:
Estimate the monthly costs for utilities such as electricity, internet, and water. You can do this by researching average utility costs for businesses in your area.
- 4. Determine Salaries:
Decide on the number of employees you plan to hire and their respective salaries. Sum these amounts to get the total monthly salary expense.
- 5. Budget for Marketing:
Plan your marketing efforts and estimate the monthly costs for online ads, promotional materials, and other marketing activities.
- 6. Account for Software Subscriptions:
Identify the software tools you will need, such as project management, customer relationship management (CRM), and accounting software. Estimate the monthly subscription costs for these tools.
- 7. Include Miscellaneous Expenses:
Allocate a budget for miscellaneous expenses such as office supplies and unexpected costs. This helps cover any unforeseen expenses that may arise.
- 8. Sum Up All Expenses:
Add up all the estimated costs from each category to get the total monthly operating expenses. This will give you a clear financial picture of your business before it launches.
A Simple Example to Adapt
This is a simplified example. For a more exact and precise estimate without needing to calculate, use one of our financial forecasts tailored to 200 different business types.
To help you better understand, let's use a made-up example of a startup planning to launch an online subscription service.
First, identify all potential expense categories: rent, utilities, salaries, marketing, software subscriptions, and miscellaneous costs.
Assume the company plans to rent a small office space for $1,200 per month. Utilities (electricity, internet, water) are estimated at $300 monthly.
The startup intends to hire two employees with a combined monthly salary of $6,000. Marketing efforts, including online ads and promotional materials, are budgeted at $1,500 per month.
Software subscriptions for tools like project management, customer relationship management (CRM), and accounting software are projected to cost $400 monthly. Finally, allocate $600 for miscellaneous expenses such as office supplies and unexpected costs.
Summing these figures, the total monthly operating expenses are calculated as follows: $1,200 (rent) + $300 (utilities) + $6,000 (salaries) + $1,500 (marketing) + $400 (software) + $600 (miscellaneous) = $10,000.
By systematically breaking down and estimating each expense category, the startup can forecast its monthly operating expenses to be $10,000, providing a clear financial picture before the business even launches.
Our financial forecasts are comprehensive and will help you secure financing from the bank or investors.
Common Questions You May Have
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- How to forecast variable and fixed costs?
- A free example of a 3-year balance sheet
- How to build a financial projection for investors?
What are the key components to include in a monthly operating expense forecast?
Key components include fixed costs such as rent, utilities, and salaries, which remain constant each month.
Variable costs like raw materials, shipping, and marketing expenses should also be included as they fluctuate based on business activity.
Additionally, consider one-time expenses or seasonal costs that may impact your monthly forecast.
How can historical data help in forecasting monthly operating expenses?
Historical data provides a baseline for understanding past spending patterns and trends.
By analyzing this data, you can identify recurring expenses and seasonal variations, making your forecast more accurate.
Typically, using data from the past 12 months can give you a comprehensive view of your operating expenses.
What software tools are recommended for forecasting operating expenses?
Popular software tools include QuickBooks, Xero, and FreshBooks, which offer robust expense tracking and forecasting features.
These tools can integrate with your bank accounts and other financial systems to provide real-time data.
Additionally, they often come with customizable reporting options to suit your specific business needs.
How much should you allocate for unexpected expenses in your forecast?
It's advisable to allocate a contingency fund of 5% to 10% of your total monthly operating expenses for unexpected costs.
This buffer helps you manage unforeseen expenses without disrupting your cash flow.
Review and adjust this percentage periodically based on your business's risk profile and past experiences.
What is the average percentage of revenue that should be spent on operating expenses?
On average, businesses spend 60% to 80% of their revenue on operating expenses, depending on the industry.
Service-based businesses may have lower operating expenses compared to product-based businesses due to fewer material costs.
Regularly reviewing this percentage can help you identify areas for cost reduction and improve profitability.
How can you use benchmarks to improve your expense forecasting?
Industry benchmarks provide a standard for comparing your operating expenses against similar businesses.
By analyzing these benchmarks, you can identify areas where your expenses are higher than average and take corrective actions.
Typically, industry reports and financial databases offer these benchmarks, which can be invaluable for accurate forecasting.
What is the impact of seasonality on monthly operating expenses?
Seasonality can significantly impact operating expenses, especially in industries like retail and tourism.
During peak seasons, you may experience higher variable costs due to increased demand, requiring adjustments in your forecast.
Conversely, off-peak seasons may see reduced expenses, which should also be reflected in your monthly projections.