This tool can help you estimate your company’s budget. It can be regarded as a worksheet when creating a business budget. With this useful calculator, you will be able to re-evaluate your priorities in a few minutes and plan your month ahead of time. This is of crucial importance to anyone running a business.
Fret not, it is straightforward and very easy to use. All you need to do is input your values into the right fields to get the calculations and statistics required. That will let you know whether your business is profitable or not.
It is best to combine it with other calculators, such as the meeting cost calculator, ROAS calculator, budget calculator, and so on. These tools will help you estimate the cost of running a business, organize your finances, and much more. Today, we will review the Business Budget Calculator and see how it works.
What Categories Does It Include?
To help you get a better idea of how the Business Budget Calculator works, we will divide the calculation into several categories. That will let you review your business budget and quickly identify the categories requiring a cut or additional funds. When using the calculator, you will have two options:
- You can either stick to the ideal budget you’ve created previously, or
- Add the figures (monthly expenses, initial investment, operating income, one-time costs, etc.) from the last month.
Monthly expenses
When calculating your business budget, make sure all of your expenses are included. Here are some of the most common monthly business expenses:
- Rental or mortgage payments
- Utilities (electricity, gas, water, internet)
- Business Insurance
- Health Insurance
- Office supplies and equipment
- Business phone line and mobile phone
- Office expenses (stationery and postage expenses)
- Professional services (accountant, lawyer)
- Marketing and advertising expenses
- Travel costs
- Leases
Salaries
This expense category should be considered separately. That will let you break it into several subcategories, thereby getting an insight into all the commissions and benefits of your employees. As a result, your budget calculation will be more accurate.
One-time costs
As the name suggests, these are the expenses that a business has to pay for one time. These costs can be either fixed or variable and they can also be either short-term or long-term.
It is usually calculated by adding up all of the one-time expenses that have been incurred in a certain period of time. This total amount is then divided by the number of years that the company has been in operation. The result is then multiplied by 100 to get the annual percentage rate (APR).
However, if you’ve already set up a business, this section will not be important to you when calculating your budget. That’s because it’s treated as the initial expense of starting a business in this case. It includes the beginning inventory cost, as well as furniture, equipment, and initial marketing costs.
Non-operating income
Non-operating income is a term that is used to describe the revenue that a company generates from sources other than its primary business. This type of income can be generated in a variety of ways, such as through investments, interest on loans, and so on.
While these income streams aren’t primary, they can have a significant impact on your business. These may include everything from business donations to different grants and bank deposits. So, be sure to include them in your calculation.
Operating income
Operating income is the amount of money left over after all operating expenses are subtracted from the company’s total revenue. It is one of the most important measurements of a company’s performance. In fact, it tells investors how much money is available to reinvest in the company, pay dividends, or make acquisitions.
The measure may also be called “operating profit” or “operating earnings.” This is a primary source when it comes to income. For your convenience, income streams are meant to be separated into a few categories. The formula for calculating operating income can be expressed as follows:
Operating Income = Revenue- Operating Expenses
Business Budget Worksheet: Summary Section
Initial investment
The one-time costs and initial investment are basically the same things. Before your business begins to bring profit, you will have to invest that money. As stated earlier, if your business has already started operating, ignore this category.
Total expenses
Simply put, these are funds that should be spent each month to run a business efficiently. So, make sure that you include these expenses in your budget. Set aside enough money so that all monthly expenses are covered.
Total income
A company’s total income is the sum of all of its revenues that it brings every month. Therefore, it is calculated by adding together all revenue streams and subtracting any costs or expenses. The total income is an important metric for any company to measure its performance. It can be used to compare with other companies in the same sector, with past years, or with competitors.
Business Budget Balance
This is the most significant thing in this section. You will eventually get a positive number if your company has been profitable. On the other hand, negative numbers indicate business efficiency. This actually means that the sum total of your expenses has exceeded the revenue or total income. As a result, your company has lost money. In that case, you should consider changing your business model.
Business Budget Balance = Initial Investment – (Total Monthly Income + Total Monthly Expenses)
Payback Period of Investment
The payback period is the length of time it will take for an investment to start generating a return. In other words, it’s the time needed to get the initial investment cost covered. It is calculated by dividing the total amount of money invested by the total amount of money returned.
Payback periods are usually calculated in months or years. The formula is as follows:
Payback = Initial Investment / Business budget balance
Example:
- Initial Investment: $100,000
- Total Monthly Income: $50,000
- Total Monthly Expenses: $40,000
By using the formulas above, we can easily calculate the Business Budget Balance per month (it is $10,000 in our example) and the Payback Period of Investment – it is 10 months. This means if you’ve initially invested $100,000 in your company, then you’ll get these funds back after 10 months.
Are you eager to see how the Business Budget Calculator works? Use your figures and check it out!