In this video, learn how to capture the inputs and costs of a business to understand the difference between fixed and variable costs—and how it can impact a budget model in Excel.
- [Narrator] You might be wondering…how to budget effectively…when there are so many variables with a business.…With every business budgeting exercise,…it pays in the long run to plan up front.…So let's take the time to define our cost drivers;…that is, the bills that the business will pay.…If you'd like to follow along with me,…then have my business budget EXP inputs open…and navigate to the expense types worksheet.…That's this worksheet here at the very bottom of the page.…Once the worksheet is open, you'll notice…that we have two columns: expense types…and fixed and variable.…
Fixed and variable is something that we'll come back to…in just a moment, but let's start…by thinking of all of the expense types…that this business is likely to incur to run the business.…In this case, the example that we'll use…is a cafe that specializes in making coffee.…Now you'll notice that I've already prepared a list here…of 10 expense types that are likely to be incurred…by a business that specializes in making coffee.…Now there are bound to be plenty more expense types…
- Identify why it is a good idea to use Excel when creating a business budget.
- Examine the importance of revenue drivers when putting together a business budget.
- Recognize how to calculate staff costs when creating a business budget.
- Explore the elements of preparing a concise report.
- Break down the fundamentals of enhanced reporting.
- Determine the best ways to utilize efficient updates.