Running a business can be costly. No matter how much money your business makes, you won't turn a profit if your monthly expenses exceed your revenues. Operating expenses are expenses that occur on a regular, recurring basis. Calculating your monthly operating expenses can help you determine your profit margins, budget and save for large expenditures and cut back on unnecessary expenses.
Rent and Utilities
If your business has a physical store or office, rent and utilities can constitute a hefty portion of your expenses. Since utilities may vary from month to month, calculate your monthly utility costs by adding up the cost of each utility over 12 months and then dividing the number by 12. Determine the cost of your rent. If you have a mortgage, determine its monthly cost as well as the monthly cost of any property taxes and zoning fees or business licenses you must pay. The sum of utilities, rent and related expenses is how much it costs you to maintain your business's physical storefront.
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If you have employees, their wages and any benefits they receive are a significant portion of your expenses. Add up the monthly income of all employees. Then add in the amount of money you spend training employees, as well as any payroll taxes you must pay for your employees. This number is the cost of maintaining your current pool of employees.
Supplies such as accounting software, printers, paper, displays and other items that keep your business running are an important part of your monthly budget. This may also be an area where you are able to cut expenses by, for example, buying frugally or purchasing fewer unnecessary supplies. Add up the costs of all supplies you regularly buy each month. If you buy supplies in bulk on an annual basis, divide your annual cost of supplies by 12.
Advertising can be a necessary component of your business budget. If customers don't know about your business, they won't come, so incorporate reasonable monthly advertising expenses into your budget. You can reduce advertising expenses by determining and targeting your target demographic and by advertising online.
Most businesses have additional expenses depending upon the exact nature of the business. For example, you might have to pay malpractice insurance or may pay expenses to be part of a guild. You should also add in a cushion for unusual and emergency expenses such as attorney's fees into the miscellaneous portion of your budget. Often, it's easier to calculate the cost you spend annually on memberships, professional fees and similar items, then divide this number by 12. Set this amount aside each month to pay these expenses.