What is the difference between COGS and operating expenses?

COGS (cost of goods sold) are direct costs tied to producing or delivering each sale, such as materials and payment fees. Operating expenses are overheads that exist regardless of sales volume, like rent, salaries, and software subscriptions.

How is gross profit calculated?

Gross profit equals total revenue minus total COGS. Dividing gross profit by revenue gives the gross margin percentage, which shows how much of each sale is left after direct costs to cover overheads and profit.

How is net profit calculated?

Net profit equals gross profit minus total operating expenses, which is the same as revenue minus COGS minus OpEx. A negative result is a net loss and the tool highlights it so you can adjust the plan toward break-even.

Is this a substitute for accounting software?

No. This is a planning and budgeting outline, not bookkeeping. Use it to model a month ahead, then track actuals in proper accounting software and compare them against this budget.

Does my data leave the browser?

No. All calculations run locally in your browser and nothing is uploaded or stored between sessions. Export your budget to CSV or Markdown before closing the tab to keep a copy.

What is the Small Business Budget Builder?

Create a monthly P&L-style budget for a startup or small business. Add revenue streams, cost of goods sold, and operating expenses to get gross profit, net profit or loss, and margins, then export to Markdown or CSV. It runs free in your browser on Gera Tools, with nothing uploaded.

Small Business Budget Builder

Name: Small Business Budget Builder
Creator: Gera Tools
License: https://creativecommons.org/licenses/by/4.0/

Plan a profitable month before it starts

A small business budget is a forward-looking, simplified profit and loss statement. This builder lets you model a single month: list your revenue streams, separate direct costs from overheads, and instantly see whether the plan turns a profit. It computes gross profit, net profit or loss, and both margins, then exports a clean table you can drop into your accounting spreadsheet.

How it works

The tool follows the standard P&L structure:

Gross profit = Revenue − COGS
Net profit   = Gross profit − Operating expenses
             = Revenue − COGS − OpEx

Margins are expressed as a share of revenue: Gross margin = Gross profit ÷ Revenue × 100 and Net margin = Net profit ÷ Revenue × 100. Keeping COGS and OpEx in separate buckets matters because gross margin tells you whether each sale is fundamentally profitable, while net margin tells you whether the whole operation covers its overheads.

Tips and example

Imagine 28000 in revenue, 5900 in COGS, and 12900 in operating expenses. Gross profit is 22100 (a 78.9% gross margin), and after overheads the net profit is 9200 (a 32.9% net margin). If a new hire pushed OpEx to 17000, net profit would fall to 5100 — still positive, but the lower net margin signals less cushion. Build the model, save the CSV, and update only the lines that change each month so you can compare planned versus actual performance.

Gross margin as the primary signal

Gross margin — the percentage of revenue left after direct costs — is the most important single number for a product or service business. A high gross margin (for example, above 60%) means you have wide room to cover overheads, invest in growth, or weather a revenue dip. A low gross margin (for example, below 30%) in a business with significant fixed overheads creates financial fragility: revenue has to stay high just to break even.

Service businesses typically have very high gross margins because their COGS are minimal (usually only direct labour on billable work). Product businesses, especially physical ones, have lower gross margins because materials, manufacturing, and fulfilment are real direct costs. Understanding your gross margin tells you whether the business model is structurally sound before you add overheads on top.

Common categories for each bucket

Revenue lines to consider: product sales, subscription income, service retainers, project fees, licensing, affiliate income, government grants or SEIS/EIS relief (UK), consulting.

COGS to separate out: raw materials, direct labour (only the hours on deliverables, not management), payment processing fees (Stripe, PayPal), hosting costs tied directly to revenue (for example, per-transaction API costs), fulfilment and shipping on sold units.

Operating expenses (OpEx): salaries and contractor fees not in COGS, rent and utilities, software subscriptions, insurance, marketing and advertising, accountancy and legal, bank charges, office supplies, depreciation on equipment.

Using the budget for forecasting, not just reporting

The most valuable use of a monthly budget template is scenario modelling before the month begins. Set the base case (your realistic expected revenue and costs), then run two variants: a downside case where revenue drops by 20% and a stretch case where it grows by 30%. Do those scenarios still show a path to positive net profit? If the downside case puts you at a loss, identify which cost lines are variable and could be cut if revenue misses. This kind of pre-thinking is what distinguishes a business that runs out of cash from one that adjusts early.