Sabine N Konig. Worksheet Templates. January 28th , 2018.
When you have a business budget, you will know how much money you are able to spend without digging yourself into a pile of debt. Cutting back on expenses does not necessarily mean that you provide less value to your customers. Rather, you spend wisely instead of wasting dollars on supplies, salaries or fees that do not add income to your bottom line.
Setting up a budget can be as simple as drawing out a budget worksheet with columns allocated to start-up costs (if you are launching a business) and monthly operating expenses. Depending on your type of business, expenses include items like business equipment, office supplies, inventory, shipping costs, furniture, licenses and permits, leases, utility costs, insurance, legal and accounting fees, salaries, travel and transportation costs, entertainment, benefits and advertising and marketing costs.
In the last step of his cash flow worksheet, Dave sums the expenses and revenues for each year and all 5 scenarios. He charts these out in graphs with a horizontal line for minimum acceptable return. ESP has access to public project funding at a 6% interest rate, to which he adds 3% for additional risk factors, for a 9% discount rate. Finally, he discounts the net returns per year under all scenarios at 9%, and calculates an NPV for each revenue path. This gives him 5 project values at 5 different revenue assumptions based on his variable markup. At least 3 of these NPVs must exceed the companys 12% hurdle rate in his cash flow worksheet for the bid to viable.
Dave times the initial payment to coincide with the project start date, which will cover foundation materials, site excavation, and pile drilling costs. The other two payments are timed to fall 6 months after the completion of Phases 2 and 3, which are the bridge structure building, and construction of he roadway and toll facilities.
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