In the Expenses area of the forecast, you’ll estimate your regular monthly, yearly, and even one-time operating expenses -- rent, utilities, insurance, marketing costs, office supplies, and so on. The expenses entered here are short term; that is, they are typically used up within the period in which they are paid. For example, paying rent in January provides you with value in January but not in February or beyond. The value is temporary.
If your company is just getting started, be sure to include any one-time or short-term startup expenses in the early months as you get up and running. Remember that your operating expenses do not include personnel costs, direct costs, interest expenses, tax payments, or depreciation. These are entered into other areas of the forecast. For more detail, read the section below entitled, "Common expenses you should not include here."
Common expenses you should not include here
There are quite a few special expenses covered elsewhere in the forecast, so you want to avoid adding any of those to the Expenses step. For example, expenses that have long-term value should be entered as major purchases in the Assets step. Also, you don't want to include your direct costs (COGS) here, like raw materials and manufacturing labor, because those are handled in the Direct Costs step. Interest and loan payments are handled in the Financing step. Finally, remember not to add personnel to the Expenses step. They will be automatically pulled in from the Personnel step, once you complete it.
The table below indicates where to enter the most common special expenses:
|Special expense||Where to enter it in the forecast|
|Raw materials||Direct costs|
|Manufacturing labor||Direct costs|
|Sales commissions||Direct costs|
|Inventory||Cash flow assumptions|
|Major purchases (capital equipment, vehicles, long-lasting assets)||Assets (or Financing if you took out a loan for a purchase)|
Adding an expense
- Click the Add Expense button.
- Enter a name for the expense:
Indicate what kind of expense it is:
Note: Identifying your rent and marketing expenses here will allow LivePlan to properly display them in the benchmarks and on the Scoreboard.
Indicate how you want to enter the expense:
- If you choose Constant amount, enter the amount you'll spend on this expense per month or per year:
Then indicate when the expense should begin:
Note: You can also choose one of the next two fiscal years from the very bottom of the list, if the expense will begin in an upcoming year.
- If you choose Varying amounts over time, enter how much you will spend per month and also for the upcoming fiscal years. LivePlan will automatically calculate the total for the first fiscal year in the forecast (which is why it's shown in gray):
- If you choose Percent of overall revenue, indicate the percent of your total revenue that should be allocated to this expense, and also indicate when the expense will begin:
- If you choose One-time amount, indicate the amount you'll spend and when you'll spend it:
- If you choose Percent of specific revenue stream, select the revenue stream that the expense is related to:
Then, indicate when the expense will start.
Click Save & Close.
Editing or deleting an expense
To edit or delete expense, click on it in the Expenses table:
- To edit the expense, make any desired changes, and click Save & Close when you're finished.
- To delete the expense, click the trash can icon, and then click Confirm:
Where does this entry appear in the financial statements?
Your expenses entries appear in the Profit and Loss table as Operating Expenses:
The expenses do calculate into the Balance Sheet and Cash Flow table, but not explicitly. Instead, your expenses are used to calculate your available cash, which appears in the Assets portion of the Balance Sheet:
In the Cash Flow, your expense entries calculate into the lines shown below: