SERVICE BUSINESS BUDGETING

💼 Service Budget Builder

Service businesses sell time and expertise, not physical inventory! Step through the process of building an operating budget: calculate billable revenues, direct labor, fixed overhead, and net profitability.

Lesson: Service Firm Budget Structure

Unlike manufacturing or retail companies, a service firm has no Cost of Goods Sold for merchandise and no inventory warehousing budgets:

Budget Schedule	Formula	Operational Purpose
Service Revenue	$\text{Billable Staff} \times \text{Hours/Month} \times \text{Hourly Rate}$	Forecasts gross revenue generated from billable professional client work.
Direct Labor Cost	$\text{Total Billable Hours} \times \text{Staff Pay Rate per Hour}$	Direct compensation of consultants/technicians delivering client work.
Fixed Overhead (OpEx)	$\text{Office Rent} + \text{SaaS Software} + \text{Insurance} + \text{Legal}$	Baseline costs required to keep the firm operating regardless of client volume.
Operating Income	$\text{Service Revenue} - \text{Direct Labor} - \text{Operating Expenses}$	Net operating earnings before taxes and owner equity distributions.

💼 Service Budget Builder

Operating Budget Approved!

Lesson: Service Firm Budget Structure