How to Prepare an Operating Budget, Essay Example

The cost of doing business can vary greatly from entity to entity.  The main objective for our business function is to provide service to the target market while maximizing the benefit of each dollar procured.  The expenses are addressed as variable and fixed.  The first section is variable costs which include utilities, tools and services.

The utilities include electricity used in offices and the internet service used.  The costs are variable because rates fluctuate on usage in both electricity and data rate consumption past a certain point.  The estimates are based upon the previous year’s usage.  The current data storage and server use for the web based applications are provided by a parent organization sponsored by another government grant.  The licenses and usage are paid for as a whole by another grant and our services benefit from this.  The only fees we have to pay regarding this are the analyst’s time to analyze our data.  In order to provide the outcomes needed, we have to provide a competitive employment environment and provide benefits which costs are included.  Marketing and finding new funding opportunities for funding require travel and promotion which are variable in nature.

The fixed costs include salaries of the talented employees, the lease of the property and the insurance to conduct business.  The salaries are on par with the market for the education and experience levels we needed.  The lease is slightly below market value due to the negotiation prowess of our marketing manager.

In order to cover all of these expenses we have a variety of funding opportunities which help the income maintain its diversification and ensure cash flow into the business.  With our cash flow we plan to service low income families.  We will extend the benefits of the program to anyone that qualifies based on need and maintain data on who partakes in our services.  The estimated customer base is 2000 new patients to the program in the first year.

References

Halsall, H., & Limited, I. L. S. (1974). How to prepare an operating budget. Longman Publishing Group.

Wolf, H. (2000). Managing a nonprofit organization in the twenty-first century. Free Press.