Operating Budget Template

An operating budget consists of all revenues and expenses over a period of time (typically a quarter or a year) which a company, government, or organization uses to plan its operations.  An operating is prepared in advance of a reporting period as a goal or plan the business expects to achieve.

Components of an operating budget

The main components of an operations budget are outlined below.  Each business is unique and every industry has its nuances, but these items are general enough to apply to most industries.

#1 Revenue

Revenue is usually broken down into its drivers and components.  It’s possible to forecast revenue on a year-over-year basis, but usually, more detail is required by breaking revenue down into its underlying components.

#2 Variable costs

After revenue, variable costs are typically deduced.  These costs are called “variable” because they depend on revenue, and are often calculated as a percentage of sales.

#3 Fixed costs

After variable costs are deducted, fixed costs are usually next.  These expenses do not vary as much with changes in revenue and are mostly constant, at least within the time frame of the operating budget.

#4 Non-cash expenses

An operating budget often includes non-cash expenses, such as depreciation and amortization.

5 Non-operating expenses

Non-operating expenses are those that fall below Earnings Before Interest and Taxes (EBIT) or Operating Income.

#6 Capital costs in an operating budget

Capital costs are usually excluded from an operating budget.  The term operating refers to a statement of operations (income statement) which does not include capital expenditures.

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