118 | How to Write a business Plan
Common Expenses Here are some of the more common expenses that businesses incur on a regular basis: • Attorneys, consultants, tax advisors • Auto and truck expenses • Bad debts • Commissions (probably should be placed in cost of sales or as a deduction from sales revenue if commissions are paid regularly; if paid only occasionally, include them in fixed expenses) • Dues and publications • Employee benefit programs • Equipment rental
Total Fixed Expenses. Add up lines 4a
through 4n and fill in the total for each month. Profit/(Loss). From the Gross Profit (line 3), subtract the Total Fixed Expenses (line 5) and fill in the result. Make sure that you place brackets around each negative number—that will identify it as a loss. Year Total. Finally, add up each of the rows (lines 1 through 6). Enter the yearly totals under the Year Total column. Check your arithmetic by seeing if the monthly profit figures add up to the same figure you get for your yearly total. If they don’t match, double-check your addition to find the error. If they match, congratulations!
• Freight in on merchandise acquired (also sometimes placed in cost of sales; freight out to customers is usually paid for by the customer) • Janitorial • Laundry • Licenses and taxes including permit fees (not income taxes, which are calculated after profits are known) • Office supplies • Payments to investors • Postage, fax, telephone • Repairs and maintenance • Security and alarm systems • Travel and entertainment • Utilities.
Review Your Profit and Loss Forecast You’ve now completed your first run through a Profit and Loss Forecast. Date it so you won’t get confused if you do another draft. I hope it looks positive. However, if like many people you find you need to increase profitability to make the business a good economic idea, go back through all your assumptions. How can you realistically reduce costs or increase volume? Incorporate into your forecast only those changes you’re sure are sound. Now look at the profit figures again. Do they show enough profit to make a good living, pay back your money source, and leave some margin for error? If they do, and you’re