Build an Operating Expense Forecast
Plan overhead line by line and explain how costs scale as the business grows.
Overhead assumptions into earnings · FY2026–FY2027
Preview · Illustrative values · EUR thousands / Units as labeledOperating costs and profit
| Line item | FY2026 | FY2027 |
|---|---|---|
| Rent | (120.0) | (126.0) |
| IT seats | (13.2) | (13.5) |
| Marketing | (240.0) | (275.0) |
| SG&A | (1,245.1) | (1,334.9) |
| EBITDA | 3,554.9 | 4,495.1 |
| EBIT | 3,014.9 | 3,955.1 |
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Define overhead and its place in the business
An operating expense model forecasts the costs of supporting and running the organization beyond its direct delivery costs. Start with rent, IT, marketing, administration and other relevant lines. Document which personnel costs are included and which are shown separately. Comparable forecasts require stable classification across history and future periods.
The forecast fits within the financial operating model and feeds the P&L forecast. It explains the overhead assumptions rather than the complete financial position or cash plan. Named cost lines can represent teams or activities without implying a separate departmental reporting system.
Use explicit amounts for commitments
Known rent, subscriptions and service contracts can use explicit period amounts. Record renewal dates, contractual increases and one-time payments rather than growing everything with revenue. A fixed annual rent can remain unchanged while sales rise; a move to larger premises can create a later step.
Growth is suitable when a recurring cost has a defensible prior amount and escalation assumption. A EUR 120,000 rent increasing by 5% becomes EUR 126,000. Keep that explanation separate from sales growth. The operating expense reference lists methods supported by each product category.
Link variable expenses to the relevant activity
Use the cause of the expense: software seats may follow average FTE, vehicles may follow a count and marketing may follow an eligible revenue reference. In the preview, IT costs EUR 1,200 per average FTE while marketing is 2% of sales. A staffing change therefore affects IT and payroll through different sources.
The headcount planning guide explains staffing exposure and compensation. Reuse the relevant group where supported, then verify reference eligibility and avoid cycles. The product offers category-specific methods, so a driver available for rent or IT is not automatically available for every expense line.
Separate fixed, variable and step costs
A variable cost responds to activity; a fixed cost stays stable within its relevant capacity; a step cost changes when the business needs another resource. Identify the trigger and its expected date. An additional support team can increase cost before its full revenue contribution appears.
Model these effects with supported assumptions rather than assuming one universal automatic scaling rule. Split a committed amount from an activity-driven component when that explains the decision. Maintain labels for material activities or team costs, but avoid a level of detail that obscures the few assumptions responsible for most of the change.
Prevent payroll duplication and explain profit effects
Personnel groups and direct personnel-cost sources are alternative ways to supply the relevant expense. Confirm which source contributes before adding salaries to another SG&A line. The preview’s total SG&A contains the delivery personnel group as well as rent, IT and marketing; the three visible overhead lines alone do not reconcile to that total.
Lower overhead raises EBITDA if other factors remain unchanged; depreciation and amortization then lead to EBIT. Use the EBITDA calculator or EBIT calculator to inspect a selected-period bridge. The profitability reference explains the model’s classifications and derived subtotal impacts.
Review operating leverage over the forecast
When sales grow faster than committed overhead, the overhead ratio falls and operating margin can improve. This operating leverage also works in reverse: falling sales can leave a cost base that does not shrink immediately. Review absolute cost, cost per relevant driver and margin together, using comparable periods.
Keep forecast assumptions separate from adjustments to reported results. Explain whether an expense change is recurring, temporary or a capacity decision. Follow the same inputs into the P&L before concluding that a lower cost ratio is sustainable. The expense-source reference documents category controls and their active contribution.
Frequently asked questions
What belongs in an operating expense model?
Overhead needed to run the business, such as rent, IT, marketing and administration, with personnel included or shown separately under a consistent classification.
Should operating expenses all grow with revenue?
No. Contracts, staffing, activity and capacity thresholds can drive different lines. Use a revenue ratio only when it describes the expense’s economic relationship.
How does overhead affect EBITDA and EBIT?
Operating expenses contribute to EBITDA alongside revenue, COGS and other operating items. Depreciation and amortization then connect EBITDA with EBIT.
How does this guide differ from the Handbook?
This guide explains how to construct and interpret an overhead forecast. The Handbook documents the specific methods, references and source controls available in BalanceCheat.