If you’ve read, Revenue Forecasting 101, you already know that forecasting is the process of predicting the future based on past and present data and analysis of trends. The purpose of forecasting is to establish benchmarks and some certainty around financials as a business faces its future and the decisions it needs to make to survive and prosper.
Expense forecasts should be fairly straightforward to compile. They provide exactly the same benefits to a business as the benefits outlined in Revenue Forecasting 101.
While there is some guesswork, you should have a sense of a budget to apportion where you think it’s appropriate.
This is a fictitious example of an expense forecast – divided between fixed and variable costs.
This example relates to a business start-up on the Internet.
If you have an existing business, however, you may prefer to apportion a percentage of the costs to the website project you are undertaking.
In other words, if your total technology bill is $1000 per month, and you think your website will account for 50% of it, you may wish to apportion $500 to the website.
Make sure you include these types of calculations in your assumptions to explain how you reached your numbers.
TABLE 1: EXPENSE FORECAST ($ FIXED COSTS (OVERHEAD) BY MONTH)
TABLE 2: EXPENSE FORECAST ($ VARIABLE COSTS BY MONTH)
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