1. Operating Expenses
These are the costs that are necessary to operate the business (do not include the cost of goods sold). By creating a financial form called Operating Expenses, you pull together the expenses incurred in running your business. Expense categories include marketing, sales, and overhead. Overhead includes fixed expenses such as administrative costs, rent, and other expenses that remain constant regardless of how much business your company does. Overhead also includes variable expenses, such as travel, equipment leases, supplies, and labor, which fluctuate based on how much business your company does.
2. Capital Requirements
This form details the amount of money you will need to procure the equipment used to start up and continue the operations of your business. To determine your capital requirements, think about anything in your business that will require capital. For a diaper delivery service, this might be a van, washing machines and dryers, irons and ironing boards, and supplies. A restaurant may require stoves, tables, chairs, silverware, pans, etc.
3. Cost of Goods
For a manufacturing company, the cost of goods is the cost incurred in the manufacturing of the product. For a retail or wholesale business, the cost of goods (sometimes called the cost of sales) is the purchase of inventory. In other words, how much did it cost you to buy or make the product you are selling? To generate a Cost of Goods table, you need to know the total number of units you will sell for a year as well as what other inventory you have on hand, and at what stage of production those units exist. For a manufacturing company, the cost of goods table will include materials, labor, and overhead related specifically to product manufacturing. Once the research on all start-up costs, estimated future expenses, and sales has been completed you will create the financial statements including cash flow, income, and balance sheet statements.