Operating Budget

Definition

A financial plan that estimates your business’s revenue and expenses over a specific period, usually a year.

Example

A coffee shop creates an operating budget for the next year. It projects $100,000 in revenue from selling coffee, pastries, and catering services. The expenses include $24,000 for rent, $12,000 for utilities, $30,000 for wages, $10,000 for ingredients, and $9,000 for marketing. This budget helps the owner monitor profitability and adjust spending if revenue falls short of expectations.