Forecasting Expenses

The concept of cost, the difference between direct & indirect expenses, & the process of forecasting each of these.

by David Liu
Financial forecasting tool for startups and small businessFollow

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Description
This video talks through the 'Costs' side of your financial forecast. It talks you through the concept of cost, the difference between direct and indirect expenses, the process of forecasting each of these, and the modeling process.

Direct expenses: these are the direct cost of providing your goods to a customer. The best way to think about direct cost is if you did not make a sale, will you incur this cost? If the answer is no, then it's probably a direct expense.

Indirect costs: incurred regardless of a particular sale.

Forecasting: a key consideration for small businesses is to focus on things that make money. Focus on your revenue, and how your expense supports your revenue.

Watch the video to receive a fuller explanation of each concept alongside explanatory diagrams and examples.

Length: 2 minutes 58 seconds

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