Page 310 - TCDB combined Book

Chapter 6 MANAGEMENT 289

Operating Budget:

Before deciding on capital or other expenditures an indirect Overhead-operating budget
should be prepared. The format can vary but the inclusion of all major items is important. Your
gross mark-up percentage should cover this overhead budget amount and also allow for profit.
This budget preparation will also provide the minimum gross sales volume needed to cover your
indirect overhead, based on the percentage of mark-up applied.

All budget-input figures should be reasonably accurate costs and not guesstimates.

The importance of preparing a budget is that it allows you to see the list of expenses that
will be incurred and establishes the minimum contract dollar volume required to cover your
overhead budget expenses. The following typical budget outline is offered.

Operating Budget Expense Items: (Indirect Overhead)

Office rent, mortgage

Taxes (business, property)

Salaries, Wages (including payroll burden)

Truck, Auto, Equipment

Utilities (telephone, hydro, heat etc.)

Travel

Advertising

Entertainment, Promotion

Office expenses

Licenses, Fees, Memberships

Insurance

Accounting, Legal

Maintenance, repairs (office, shop etc.)