An operating budget shares the same principle as families developing a budget for day-to-day expenses like food, rent, insurance, entertainment, and clothing where these expenses should not exceed the income generated by the principal members of the family. For small business as well as large companies, their daily expenses must not go beyond the revenue generated by sales to keep the enterprise and business running smoothly.
Taking control of your finances means taking control of the future of your business. Below is a compilation of the best Operating Budget Templates that any business owner or accountant can download and use. These templates are a great help for people who are in charge of preparing the budget and who invest time to make sure that the financial information provided are accurate and consistent.
Annual Operating Budget Template
Organization Operating Budget Template
General Operating Budget Template
Pro-Forma Operating Budget Template
Components of an Operating Budget
Operating budgets are focused on facilitating income, so each of these components are equally important for this type of financial document.
- Sales and collections budget. The sales and collections budget projects revenue over a period of time. The revenue projected is determined through the two main components of a sales budget, pricing, and volume.
- Projected cost of goods sold budget. In order to make sure that you are not losing money on your operation, you must estimate the cost of your products by finding out how much the customer is willing to pay for it.
- Inventory and purchasing budget. Raw materials, manufactured parts, and components purchased from other business, as well as the labor needed to manufacture the product, are indicated in the operating budget.
- Other operating expenses budget. This refers to administrative labor such as executive and secretary salaries, machine and computer service maintenance, and accounting services, as well as rent and office supplies.
For more specific business budgeting needs, check out our Project Budget Template and Monthly Budget Template, along with other budget templates available on the website.
Proposed Operating Budget Template
Project Operating Budget Template
Business Operating Budget Template
Weekly Business Operating Budget Template
Simple Operating Budget Template
Contents of an Operating Budget
Aside from the basic components of an operating budget, what else does it include?
- Foundation of the operating budget. Business owners develop the budget based on past sales performance, current trends, competitive forces and any new product planned for introduction. It does not only project the revenue, but also the basis for the expense plan.
- Direct expense budget. The direct expense budget includes raw materials, manufactured parts and components purchased from other business, as well as the labor needed to manufacture the product. This is used to forecast the funds needed to produce the goods.
- Sales, overhead, and administrative budgets. Operating budgets include sales costs, such as the base salary and commissions of employees, as well as marketing activities like promotion and advertising, overhead expenses like utilities and taxes among others.
- Variance analysis. Through variance analysis, an operating budget provides the opportunity to review the company’s cash flow, change in sales volume and unanticipated costs as demands and supplies change from season to season.
Don’t forget to take a look at our Financial Budget Template, too!