What is an expenses forecast?

The expenses forecast is an estimate of your ongoing operating expenses (overheads, outgoings, fixed costs) for the year. It answers the question of how much it will cost to run your business. The selling price of your products or services must include an amount to recover these expenses.

What's included in an expenses forecast?

The expenses forecast will include the list of expenses developed for your profit and loss statement. Some typical business expenses include:

• Accounting and legal fees
• Advertising and promotion
• Employees salaries and other costs
• Insurance
• Interest and bank charges
• Printing, stationery and postage
• Rent of premises and other occupancy costs
• Telephone and Internet
• Training
• Business travel and accommodation
• Vehicle operating expenses
• All other expenses

If you are already in business, use the accounting records for expenses from previous years as a guide and make adjustments to reflect increases in price or changes to your business strategy. For example, you might be planning for growth in the next year so include additional costs for extra employees or more plant and equipment.

If you are starting a new business and don't have a trading history, base your expenses forecast on research and benchmarks of similar businesses. You can obtain some of your estimates simply by calling a supplier and asking for a quote. For others, you will have to make a management decision about how much you will need to spend on that category.

What's next...

• Work out the establishment costs for your business
• Find out how to work out your cost of goods sold forecast
• Prepare a sales forecast for your business

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