Be thorough in identifying all your fixed costs and where possible stay on the high side . Particularly for new businesses that do not have access to accurate past figures managing your cash flow will be easier if you build a little fat into your budget . The important thing to remember here is that you are only identifying areas of expense that you have no control over . It is your controllable expenses that are most important . Primarily you need to concern yourself with cost of sales and cost of labor .
Lets deal with cost of sales first .
It is important to note here that we are in the budget stage and so operational concerns of waste management and purchasing are not contained here . Not because they are not significant simply because they are a variable that is difficult to estimate . Cost of sales at the budget stage then becomes an issue of price structure . Pricing is a difficult issue that effects all sorts of areas . It is then up to your operations team to manage their stock to achieve these levels .