The budget of a business plan in Excel is prepared for five years. This period is enough for the company to pass the initial stage on the market and start working at its full capacity. Considering the average payback period of startups increases every year, predicting revenues and expenses for five years is a reasonable decision.
How to prepare a budget for a business plan in Excel
Budgeting starts with a revenue and expenditure plan. First the company calculates how many products will be produced or how many services will be provided. Based on these figures, an expenditure budget is generated. The expenditure budget for the business plan is one of its most important sections.
Traditionally, the costs should be divided into fixed and variable ones. Fixed costs include renting premises, organizational expenses, labor costs, etc. Variable costs are the costs of materials, the cost of labor remuneration for workers, electricity and utilities, taxes, advertising, etc.
The sum of fixed and variable costs allows determine the full cost of production. Having planned a future level of price margin, you can determine the planned volume of sales. Thus, deducting the expenses from the sales volume, it’s possible to predict the amount of profit. Profit is an important indicator for budgeting, but all calculations of the investment efficiency are based on the cash flow, not on the profit.
A cash flow is planned at the second stage. Unlike the financial accounting result in the form of income, the cash flow has a different nature. It shows exactly how much money was earned and how much money was spent.
For example, during the first year of activity, when an enterprise invests money in the purchase of equipment, the cash flow is formed as follows:
- Receipt of money from the investor;
- Transfer of the own funds into a current account;
- Purchase of equipment necessary for work.
All these indicators are not revenues and expenses but input and output cash flows.
With a statement of cash flows available, a planned balance sheet is drawn up. The balance sheet shows the formation and changes in the value of assets. Balance is important for obtaining a bank loan, as well as for understanding the value of the enterprise.
How to prepare a business plan budget with Excel
Carrying out calculations requires compliance with the stages of analysis. In order not to waste time looking for the information about what to count first, it is worth downloading a document with a typical budget for a business plan for five years and enter your own figures into it.
You can also get templates: