Why an operating budget?
In the operating budget, it becomes clear what minimum turnover you need to achieve to cover the costs and make a profit. You draw up this budget for yourself and external financiers. The operating budget is part of the financial plan.
Example – Business space
If you rent commercial space, you incur costs. Such as the monthly rent, service costs, and perhaps additional costs. These costs are all included in the operating budget.
5 steps to an operating budget
1. Determine turnover
Determine how much turnover you expect in the next 3 years. State the turnover per year.
2. Determine purchase value
Determine the purchase value (or purchase costs) and subtract these from the turnover. This is how you determine the gross profit.
3. Provide insight into operating results
Add up all other business expenses, such as personnel, business space, internet/telephone, and insurance. You also list the depreciation of your business assets as costs, under the heading of depreciation. Subtract all costs from the gross profit, this is the operating income. Operating income is also known as net profit from the business before tax.
4. Deduct taxes
Deduct the income tax and the income-related health insurance contribution from the operating result.
5. Calculate net profit
Determine the amount that remains. That is the net profit. Your business income comes from this profit. You can choose to keep part of your profit in your company or use it for repayment or expansion.
Example operating budget
| Turnover | 400.000 | |
| Minus: purchase value turnover | 150.000 | |
| Gross profit | 250.000 | |
| Rent | 20.000 | |
| Depreciation | 15.000 | |
| Promotion and communication costs | 10.000 | |
| Transport | 10.000 | |
| Administration | 10.000 | |
| Staff | 75.000 | |
| Insurances | 10.000 | |
| Energy costs | 10.000 | |
| Minus: total costs | 160.000 | |
| Net profit | 90.000 |
Tips for the operating budget
- Create several realistic scenarios, for example, based on personnel costs or energy costs. Then you can better respond to changes and easily adjust the figures in your budget.
- If you have already received assignments or orders, include them in the explanation.
- Keep in mind that personnel costs are approximately 30% higher than the gross salary due to costs for pension and employer insurances.
Do you need help drawing up your operating budget? Then engage a bookkeeper or accountant via NOAB (in Dutch) or NBA.
Difference between operating budget and liquidity budget
In an operating budget, you budget amounts per year. These amounts are exclusive of VAT. In a liquidity budget, you show your income and expenses per month or per quarter. This ultimately provides an overview on an annual basis as well. You state VAT in a separate column. This provides additional insight into the VAT settlement every quarter and therefore a more specific insight into the (monthly or quarterly) balances of your liquidity budget.
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