business plan cost analysis template

Free Cost Benefit Analysis Templates

By Joe Weller | December 9, 2016

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A cost benefit analysis weighs the pros and cons, or benefits and costs, of a project or decision in order to determine its feasibility or to compare alternatives. This can be especially helpful for weighing decisions that have calculable financial risks and rewards, or when you need a quick way to evaluate a new initiative. In addition to comparing multiple projects or deciding whether a project is a sound investment, a cost benefit analysis can provide valuable information when it comes time to actually implement a project. Understanding a project’s costs and benefits can help determine appropriate objectives, accurately estimate the needed resources (and associated costs), and inform your methods for measuring project success.

Cost benefit analysis has enjoyed a long history. First created in the 1840s by French economist and engineer Jules Dupuit, it was widely used to measure the value of different projects (especially government projects related to public policy and infrastructure). Today, a cost benefit analysis is suitable for any business setting, but the method is not without flaws. The more tangible the costs and benefits, the more likely it will be to get an accurate analysis. It may be easier to assign monetary values to costs than benefits since revenues can be hard to predict, and intangible benefits - such as increased customer satisfaction or an enhanced business reputation - may have subjective values. An analysis could also be influenced by project supporters who may be looking for data that will back up taking on a project. 

While using a cost benefit analysis can be a useful tool in determining the feasibility of a project, creating one can be a bit overwhelming. To get you started, we’re providing a collection of cost benefit analysis templates in the Microsoft Word and Excel formats that you can download for free. We’ve also included customizable cost benefit analysis templates in Smartsheet, a real-time work execution platform that empowers you to better plan, track, and report on project details.

Simple Cost Benefit Analysis Template for Excel

This cost benefit analysis template provides a simple spreadsheet for listing and calculating recurring and nonrecurring costs, plus revenues and other benefits. The template will calculate totals per year and over the course of five years. For a quick comparison, the second sheet in the template shows total amounts for each type of cost and benefit listed in the first sheet. 

Download Simple Cost Benefit Analysis Template

Excel | Smartsheet

IT Project Cost Benefit Analysis Template for Excel

This project cost benefit analysis template was designed with IT in mind, and includes sheets for creating comprehensive lists of costs and benefits over several years, analyzing projected cash flows, and comparing alternatives. Create a detailed cost benefit analysis that takes the entire project lifecycle into consideration to guide your decision and project-planning process. You can modify the template to suit the needs of your particular analysis.

Download IT Project Cost Benefit Analysis Template

Cost Benefit Analysis Dashboard Template for Excel

Get an easy-to-read dashboard view of your cost benefit analysis with this visual report. Data is represented in a spreadsheet format as well as graphically, which is especially useful if you’re using the cost benefit analysis as part of a presentation. You can use this template to list costs and benefits over time and help determine the net present value (NPV) of a project.

‌ Download Cost Benefit Analysis Dashboard Template

Cost Benefit Analysis Outline Template for Word

If you need a comprehensive cost benefit analysis report in Word format, this template provides a detailed outline with tables for listing figures. You can edit the outline to include information that is pertinent to your analysis, such as an introduction and description of the project or alternatives being considered, assumptions and constraints, particular costs and benefits that need to be highlighted, and recommendations based on the results of the analysis

‌ Download Cost Benefit Analysis Outline Template

Basic Cost Benefit Analysis Chart for Word

This chart can be used to rank costs and benefits of potential actions. List actions or decisions you are considering in the first column, and then describe the costs and benefits associated with each. Assign a rank to each option based on the total costs and benefits listed, and then compare those ranks to see to what degree the benefits outweigh the costs. This is a simple way of comparing and prioritizing options.

‌ Download Basic Cost Benefit Analysis Chart

Conducting a Cost Benefit Analysis

Depending on the length and type of project, a cost benefit analysis may also need to account for costs and revenues that occur over periods of time and take into consideration how monetary values change over time. This can be done by calculating the Net Present Value (NPV), which measures a project’s profitability by comparing the present outgoing cash flows to the present value of future cash inflows. In other words, once the monetary values for all costs and benefits for a project have been determined, a discount rate can be applied in order to convert future cash flow estimates to today’s value. Calculating NPV as part of a cost benefit analysis can help account for inflation and lost return on investment (the amount of money spent on a project that could have been invested elsewhere).

There are three primary steps involved in performing a cost benefit analysis: identifying costs, identifying benefits, and comparing both. Here’s a closer look at each stage of the process.

• Identifying Costs - Begin by brainstorming all potential costs, which may include equipment, payroll, training, travel costs, licenses, and other monetary expenses. You should also consider non-monetary costs such as those related to productivity or risks and uncertainties that could affect project outcomes or your business. Ultimately, all costs need to be assigned a monetary value in order to complete the cost benefit analysis. Your project may require one-time costs related to investment or operational expenses as well as recurring costs over the project lifecycle and beyond. All monetary values for costs occurring over time should be calculated in present value terms in order to create estimates that are as accurate as possible. You may also want to consider what the costs may be if you choose not to undertake the project or if the project fails.
• Identifying Benefits - As stated earlier, it can be hard to determine accurate revenue projections, and certain intangible benefits may not have clear monetary values, so this step can be more challenging than identifying and monetizing costs. Benefits can range from direct profits and increased production to enhanced employee satisfaction or reduced environmental impact. As with costs, the values assigned to benefits also need to be shown in present value terms for a more accurate analysis.
• Comparing Costs and Benefits - Once you have listed all the costs and benefits, you can compare the totals to see if the costs outweigh the benefits or vice versa. If the two totals are equal or very close, you may need to check your calculations, make sure no costs or benefits have been overlooked, and conduct a revised analysis. As you compare costs and benefits, consider how long it will take for the benefits to repay the costs. In addition to considering the difference between total cash flows, this timeframe may also inform your decision of whether a project is a sound investment, or not worth the time and resources. 

Once you have completed your analysis, you can use the information to make a recommendation to either move forward with a project or choose an alternative, and create a plan of action that will support business objectives.

In the next section you’ll find cost benefit analysis templates in Microsoft Excel and Word formats that can be downloaded for free. These templates provide a starting point for developing your analysis and can be edited as needed. Smartsheet also offers a cost benefit analysis template with enhanced collaboration features and additional benefits, or you can create your own template to fit your needs. Find out more about Smartsheet options below.

Take Action on Your Cost Benefit Analysis with Effective Project Management in Smartsheet

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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How to Do a Cost-Benefit Analysis & Why It’s Important

• 05 Sep 2019

Are you unsure whether a particular decision is the best one for your business? Are you questioning whether a proposed project will be worth the effort and resources that will go into making it a success? Are you considering making a change to your business, marketing, or sales strategy, knowing that it might have repercussions throughout your organization?

The way that many businesses, organizations, and entrepreneurs answer these, and other, questions is through business analytics —specifically, by conducting a cost-benefit analysis.

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What Is A Cost-Benefit Analysis?

A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective.

Generally speaking, cost-benefit analysis involves tallying up all costs of a project or decision and subtracting that amount from the total projected benefits of the project or decision. (Sometimes, this value is represented as a ratio.)

If the projected benefits outweigh the costs, you could argue that the decision is a good one to make. If, on the other hand, the costs outweigh the benefits, then a company may want to rethink the decision or project.

There are enormous economic benefits to running these kinds of analyses before making significant organizational decisions. By doing analyses, you can parse out critical information, such as your organization’s value chain or a project’s ROI .

Cost-benefit analysis is a form of data-driven decision-making most often utilized in business, both at established companies and startups . The basic principles and framework can be applied to virtually any decision-making process, whether business-related or otherwise.

Related: 5 Business Analytics Skills for Professionals

Steps of a Cost-Benefit Analysis

1. establish a framework for your analysis.

For your analysis to be as accurate as possible, you must first establish the framework within which you’re conducting it. What, exactly, this framework looks like will depend on the specifics of your organization.

Identify the goals and objectives you’re trying to address with the proposal. What do you need to accomplish to consider the endeavor a success? This can help you identify and understand your costs and benefits, and will be critical in interpreting the results of your analysis.

Similarly, decide what metric you’ll be using to measure and compare the benefits and costs. To accurately compare the two, both your costs and benefits should be measured in the same “common currency.” This doesn’t need to be an actual currency, but it does frequently involve assigning a dollar amount to each potential cost and benefit.

2. Identify Your Costs and Benefits

Your next step is to sit down and compile two separate lists: One of all of the projected costs, and the other of the expected benefits of the proposed project or action.

When tallying costs, you’ll likely begin with direct costs , which include expenses directly related to the production or development of a product or service (or the implementation of a project or business decision). Labor costs, manufacturing costs, materials costs, and inventory costs are all examples of direct costs.

But it’s also important to go beyond the obvious. There are a few additional costs you must account for:

• Indirect costs: These are typically fixed expenses, such as utilities and rent, that contribute to the overhead of conducting business.
• Intangible costs: These are any current and future costs that are difficult to measure and quantify. Examples may include decreases in productivity levels while a new business process is rolled out, or reduced customer satisfaction after a change in customer service processes that leads to fewer repeat buys.
• Opportunity costs: This refers to lost benefits, or opportunities, that arise when a business pursues one product or strategy over another.

Once those individual costs are identified, it’s equally important to understand the possible benefits of the proposed decision or project. Some of those benefits include:

• Direct: Increased revenue and sales generated from a new product
• Indirect: Increased customer interest in your business or brand
• Intangible: Improved employee morale
• Competitive: Being a first-mover within an industry or vertical

3. Assign a Dollar Amount or Value to Each Cost and Benefit

Once you’ve compiled exhaustive lists of all costs and benefits, you must establish the appropriate monetary units by assigning a dollar amount to each one. If you don’t give all the costs and benefits a value, then it will be difficult to compare them accurately.

Direct costs and benefits will be the easiest to assign a dollar amount to. Indirect and intangible costs and benefits, on the other hand, can be challenging to quantify. That does not mean you shouldn’t try, though; there are many software options and methodologies available for assigning these less-than-obvious values.

4. Tally the Total Value of Benefits and Costs and Compare

Once every cost and benefit has a dollar amount next to it, you can tally up each list and compare the two.

If total benefits outnumber total costs, then there is a business case for you to proceed with the project or decision. If total costs outnumber total benefits, then you may want to reconsider the proposal.

Beyond simply looking at how the total costs and benefits compare, you should also return to the framework established in step one. Does the analysis show you reaching the goals you’ve identified as markers for success, or does it show you falling short?

If the costs outweigh the benefits, ask yourself if there are alternatives to the proposal you haven’t considered. Additionally, you may be able to identify cost reductions that will allow you to reach your goals more affordably while still being effective.

Related: Finance vs. Accounting: What's the Difference?

Pros and Cons of Cost-Benefit Analysis

There are many positive reasons a business or organization might choose to leverage cost-benefit analysis as a part of their decision-making process. There are also several potential disadvantages and limitations that should be considered before relying entirely on a cost-benefit analysis.

Advantages of Cost-Benefit Analysis

A data-driven approach.

Cost-benefit analysis allows an individual or organization to evaluate a decision or potential project free of biases. As such, it offers an agnostic and evidence-based evaluation of your options, which can help your business become more data-driven and logical.

Makes Decisions Simpler

Business decisions are often complex by nature. By reducing a decision to costs versus benefits, the cost-benefit analysis can make this dilemma less complex.

Uncovers Hidden Costs and Benefits

Cost-benefit analysis forces you to outline every potential cost and benefit associated with a project, which can uncover less-than-obvious factors like indirect or intangible costs.

Limitations of Cost-Benefit Analysis

Difficult to predict all variables.

While cost-benefit analysis can help you outline the projected costs and benefits associated with a business decision, it’s challenging to predict all the factors that may impact the outcome. Changes in market demand, material costs, and the global business environment are unpredictable—especially in the long term.

Incorrect Data Can Skew Results

If you’re relying on incomplete or inaccurate data to finish your cost-benefit analysis, the results of the analysis will follow suit.

Better Suited to Short- and Mid-Length Projects

For projects or business decisions that involve longer timeframes, cost-benefit analysis has a greater potential of missing the mark for several reasons. For one, it’s typically more difficult to make accurate predictions the further into the future you go. It’s also possible that long-term forecasts won’t accurately account for variables such as inflation, which can impact the overall accuracy of the analysis.

Removes the Human Element

While a desire to make a profit drives most companies, there are other, non-monetary reasons an organization might decide to pursue a project or decision. In these cases, it can be difficult to reconcile moral or “human” perspectives with the business case.

In the end, cost-benefit analysis shouldn't be the only business analytics tool or strategy you use in determining how to move your organization into the future. Cost-benefit analysis isn’t the only type of economic analysis you can do to assess your business’s economic state, but a single option at your disposal.

Do you want to take your career to the next level? Download our free Guide to Advancing Your Career with Essential Business Skills to learn how enhancing your business knowledge can help you make an impact on your organization and be competitive in the job market.

This post was updated on July 12, 2022. It was originally published on September 5, 2019.

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Cost Benefit Analysis Template

Use this free Cost Benefit Analysis Template for Excel to manage your projects better.

When launching a project, you must keep in mind a few things. Are you meeting a need? Providing a service? And most importantly, can you do it within a timeframe and for a reasonable cost that provides a return on the investment? That last consideration is likely the biggest factor when deciding the viability of your project.

Use our free cost benefit analysis template to crunch the numbers and determine if the project expenses are justified. Get started now by downloading our free cost benefit analysis template for Excel.

What Is Cost Benefit Analysis?

A cost benefit analysis is used to compare what you expect to pay for a project against what benefits or opportunities it will provide. It’s a tool to determine if a project is viable or not from a cost perspective.

It does this by placing a dollar amount against every cost and benefit to the project. When you subtract the benefits from the cost, you get an idea of profits; both financially and in terms of business objectives and goals.

When your estimated benefits are greater than the costs, then it’s more than likely you should move forward. If your calculations go the other way, then you’ll probably want to avoid taking on the project.

The more data you have, the better your decision-making. Project management software helps you monitor your work and get the information you need to succeed. ProjectManager is cloud-based, you’re getting real-time data. It feeds the live dashboard, which is capturing high-level performance and progress, such as time, cost and more. Want to try ProjectManager for free? That’s a decision you don’t need to analyze, just sign up now.

Why You Need a Cost Benefit Analysis Template

Our cost benefit analysis template is designed to help you decide whether to move forward with your project. When embarking on a cost benefit analysis, you’re unlikely to just examine one path. Rather, you will explore several different ways you can proceed.

Our template makes it easy to run several cost benefit analyses at once. Just copy as many of the templates as you need. This way, you can work through a range of forecasts, say, from conservative to liberal to get more data to steer your decision-making.

The template gives decision-makers at an organization the information they need to make well-measured choices. Projects can be expensive ventures and one doesn’t go into them lightly. Using our free cost benefit analysis template mitigates some of the risk.

When to Use a Cost Benefit Analysis Template?

The clearest use for a cost benefit analysis is before a project begins. They are usually employed as you’re gauging the scope, creating a success criteria, looking for risks, etc.

Even once you’re sure the project is on solid ground, the cost benefit analysis doesn’t have to collect dust on the shelf until another project is explored. The template can be used to compare the impact of a course of action within the project itself.

Therefore, the cost benefit analysis can be used whenever you’re not sure if it’s in your interest to proceed as planned. For example, you might get a change order and want to analyze whether the benefits will outweigh the costs involved.

Who Should Use the Cost Benefit Analysis Template?

The cost benefit analysis template should be used by anyone who is trying to figure out whether an investment or any decision is worth making. They will also get to see how much the benefits potentially outweigh the cost.

Certainly, any decision-maker at an organization or the project manager of a project will use a cost benefit analysis to determine if a proposal is worth pursuing. But the cost benefit analysis can be used for any decision.

How to Use ProjectManager’s Cost Benefit Analysis Template

Our free cost benefit analysis template is set up to serve businesses, projects and personal matters alike and makes replicating the process quick and easy. Just download the template and start using it. Add your company logo and customize it any way you want. It’s a powerful and flexible tool.

• Project Information: The top of the template is dedicated to identifying the project you’re doing the cost benefit analysis on. The project name, project manager and date compiled or revised are laid out for you to fill in. If you’re working on something other than a project, simply change the heading to reflect what you’re analyzing.
• Quantitative Costs: On top are your quantitative costs. There are three types listed: indirect, intangible and opportunity. Then there are columns for the costs associated with each year. We go six years into the future, but you can go as far as you want. Each column is added up automatically at the bottom, as well as a total cost for that particular type of cost.
• Types of Costs: The three types of cost are defined as follows: indirect costs are usually your fixed expenses, such as rent; intangible costs are those that are difficult to measure, such as reduced customer satisfaction due to some change in customer service; and opportunity costs are lost benefits when a business proceeds with one strategy over another. After you list all your costs, there is a row that automatically adds up the overall costs for each column.
• Quantitative Benefits: The next section collects your quantitative benefits. These are broken into four sections: direct benefits, indirect benefits, intangible benefits and competitive benefits. Again, there are columns to automatically add up the benefits over a six-year period.
• Types of Benefits: These benefits are defined as follows: direct benefits are those that increase your sales or revenue because you’ve launched a new product or service; indirect benefits are measured by customer interest in your brand; intangible benefits are again those difficult to measure, such as a boost in team morale; and competitive benefits place you at an advantage with other companies in your business space.
• Cost Benefit Analysis: Just as the three cost sections are added up column by column, so are the four benefits sections. Now you have a total cost to compare to a total benefit. This will guide you in your decision-making.

How ProjectManager Lets You Act on Your Cost Benefit Analysis

If the cost benefit analysis points to moving forward with your initiative, then you’re going to need a project management software tool to keep you organized and productive. ProjectManager is a cloud-based solution for planning, monitoring and reporting all with real-time data for greater insights.

Just because the project is beneficial doesn’t mean it’ll manage itself. You have to figure out all the tasks that lead to your final deliverable. To organize this work, prioritize it and break it up into milestones requires an online Gantt chart. We automatically calculate the critical path and then you can set a baseline to compare your plan to actual progress and know if you’re keeping to your schedule.

Monitoring progress and performance is key to meeting deadlines and staying within your budget. Our live dashboard gives you a high-level view of the project. Unlike other software tools, you don’t have to set up a dashboard. Our widgets are in place and automatically calculate project variance, cost, time and more. You can catch issues before they become problems.

Managing a project is more than time, cost and scope. There are your stakeholder expectations to keep in mind as well. They want to know things are going smoothly. Keep them informed with our one-click reports. Filter them to show just the data they want to see. Then easily share it as a PDF or even invite them into the tool. You set the security so they have view-only access. Update stakeholders while maintaining the integrity of your project.

More Templates to Move Forward With Your Cost Benefit Analysis

If you’re going to take action on your idea but are not ready to invest in project management software, we have dozens of free project management templates that can carry your project forward. While there are templates addressing many aspects of project management, we picked a few to get started.

Project Plan Template

To realize your idea, you need a plan. Our free project plan template lets you figure out the project scope, list milestones, detail the project phases and more. This template acts as a framework to capture the actions necessary to end up with the deliverable you want.

Project Budget Template

Your project isn’t going to come together without an investment. Using our free project budget template gives you the tools to define costs associated with labor, materials, rentals and other resources. Once you list everything you’re going to have to pay for you’ll have an accurate forecast of how much the project will cost.

Production Schedule Template

If you’re building something, you’ll need our free production schedule template. It lets you manage the supply and demand of the commodities you’ll require to make your widget. The template gives you the tools to balance costs and boost efficiencies.

Related Posts

There’s more to ProjectManager than great software and free templates. Our site is a hub for all things project management. We publish several blogs a week, have hundreds of tutorial videos and guidebooks for those new to the field or seasoned professionals. Here are a few links to get you started.

• Cost Benefit Analysis for Projects—A Step-by-Step Guide
• Risk Analysis 101: How to Analyze Project Risk
• How to Create a Small Business Plan: A Quick Guide

Being able to determine beforehand the viability of a project is important. But once you start the work, having a dynamic project management tool is often what separates failure from success. ProjectManager is award-winning software that organizes your work for greater productivity. Join the tens of thousands of teams who use our tool on projects for NASA, the US Postal Service and the Bank of America. Try the software for free today!

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550+ Business Plan Examples to Launch Your Business

Need help writing your business plan? Explore over 550 industry-specific business plan examples for inspiration.

Find your business plan example

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• Architecture
• Construction
• View All 46

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• Advertising
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• Education Consulting
• Education Products

Business plan template: There's an easier way to get your business plan done.

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• View All 60

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• Event Planning
• View All 17

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• Salon & Spa
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Finish your plan faster with step-by-step guidance, financial wizards, and a proven format.

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• View All 22

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• View All 68

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• Co-op Nonprofit
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• View All 13

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• View All 116

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• Apps & Software
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• Airline, Taxi & Shuttle
• View All 62

View all sample business plans

Example business plan format

Before you start exploring our library of business plan examples, it's worth taking the time to understand the traditional business plan format . You'll find that the plans in this library and most investor-approved business plans will include the following sections:

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you've written your full business plan.

Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).

Products & services

The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you're solving, your solution, and any traction that proves that it truly meets the need you identified.

This is your chance to explain why you're in business and that people care about what you offer. It needs to go beyond a simple product or service description and get to the heart of why your business works and benefits your customers.

Market analysis

Conducting a market analysis ensures that you fully understand the market that you're entering and who you'll be selling to. This section is where you will showcase all of the information about your potential customers. You'll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you're entering is viable and creating a realistic persona for your ideal customer base.

Competition

Part of defining your opportunity is determining what your competitive advantage may be. To do this effectively you need to get to know your competitors just as well as your target customers. Every business will have competition, if you don't then you're either in a very young industry or there's a good reason no one is pursuing this specific venture.

To succeed, you want to be sure you know who your competitors are, how they operate, necessary financial benchmarks, and how you're business will be positioned. Start by identifying who your competitors are or will be during your market research. Then leverage competitive analysis tools like the competitive matrix and positioning map to solidify where your business stands in relation to the competition.

Marketing & sales

The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You'll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.

The operations section covers the day-to-day workflows for your business to deliver your product or service. What's included here fully depends on the type of business. Typically you can expect to add details on your business location, sourcing and fulfillment, use of technology, and any partnerships or agreements that are in place.

Milestones & metrics

The milestones section is where you lay out strategic milestones to reach your business goals.

A good milestone clearly lays out the parameters of the task at hand and sets expectations for its execution. You'll want to include a description of the task, a proposed due date, who is responsible, and eventually a budget that's attached. You don't need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them.

You should also discuss key metrics, which are the numbers you will track to determine your success. Some common data points worth tracking include conversion rates, customer acquisition costs, profit, etc.

Company & team

Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure and history if you're already up and running.

Financial projections

Your financial plan should include a sales and revenue forecast, profit and loss statement, cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and start bringing in actual accounting data.

Now, if you intend to pitch to investors or submit a loan application, you'll also need a "use of funds" report in this section. This outlines how you intend to leverage any funding for your business and how much you're looking to acquire. Like the rest of your financials, this can always be updated later on.

The appendix isn't a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or out-of-place information that simply didn't work naturally into the structure of your plan. You'll notice that in these business plan examples, the appendix mainly includes extended financial statements.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. To get the most out of your plan, it's best to find a format that suits your needs. Here are a few common business plan types worth considering.

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you'll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or in any other situation where the full details of your business must be understood by another individual.

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

The structure ditches a linear format in favor of a cell-based template. It encourages you to build connections between every element of your business. It's faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . This format is a simplified version of the traditional plan that focuses on the core aspects of your business.

By starting with a one-page plan , you give yourself a minimal document to build from. You'll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.

Growth planning

Growth planning is more than a specific type of business plan. It's a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, forecast, review, and refine based on your performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27 minutes . However, it's even easier to convert into a more detailed plan thanks to how heavily it's tied to your financials. The overall goal of growth planning isn't to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and remain stable through times of crisis.

It's faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Download a free sample business plan template

Ready to start writing your own plan but aren't sure where to start? Download our free business plan template that's been updated for 2024.

This simple, modern, investor-approved business plan template is designed to make planning easy. It's a proven format that has helped over 1 million businesses write business plans for bank loans, funding pitches, business expansion, and even business sales. It includes additional instructions for how to write each section and is formatted to be SBA-lender approved. All you need to do is fill in the blanks.

How to use an example business plan to help you write your own

How do you know what elements need to be included in your business plan, especially if you've never written one before? Looking at examples can help you visualize what a full, traditional plan looks like, so you know what you're aiming for before you get started. Here's how to get the most out of a sample business plan.

Choose a business plan example from a similar type of company

You don't need to find an example business plan that's an exact fit for your business. Your business location, target market, and even your particular product or service may not match up exactly with the plans in our gallery. But, you don't need an exact match for it to be helpful. Instead, look for a plan that's related to the type of business you're starting.

For example, if you want to start a vegetarian restaurant, a plan for a steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business plan are likely to be very similar.

Use a business plan example as a guide

Every startup and small business is unique, so you'll want to avoid copying an example business plan word for word. It just won't be as helpful, since each business is unique. You want your plan to be a useful tool for starting a business —and getting funding if you need it.

One of the key benefits of writing a business plan is simply going through the process. When you sit down to write, you'll naturally think through important pieces, like your startup costs, your target market , and any market analysis or research you'll need to do to be successful.

You'll also look at where you stand among your competition (and everyone has competition), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials section can be helpful because you can see what should be included, but take them with a grain of salt. Don't assume that financial projections for a sample company will fit your own small business.

If you're looking for more resources to help you get started, our business planning guide is a good place to start. You can also download our free business plan template .

Think of business planning as a process, instead of a document

Think about business planning as something you do often , rather than a document you create once and never look at again. If you take the time to write a plan that really fits your own company, it will be a better, more useful tool to grow your business. It should also make it easier to share your vision and strategy so everyone on your team is on the same page.

Adjust your plan regularly to use it as a business management tool

Keep in mind that businesses that use their plan as a management tool to help run their business grow 30 percent faster than those businesses that don't. For that to be true for your company, you'll think of a part of your business planning process as tracking your actual results against your financial forecast on a regular basis.

If things are going well, your plan will help you think about how you can re-invest in your business. If you find that you're not meeting goals, you might need to adjust your budgets or your sales forecast. Either way, tracking your progress compared to your plan can help you adjust quickly when you identify challenges and opportunities—it's one of the most powerful things you can do to grow your business.

Prepare to pitch your business

If you're planning to pitch your business to investors or seek out any funding, you'll need a pitch deck to accompany your business plan. A pitch deck is designed to inform people about your business. You want your pitch deck to be short and easy to follow, so it's best to keep your presentation under 20 slides.

Your pitch deck and pitch presentation are likely some of the first things that an investor will see to learn more about your company. So, you need to be informative and pique their interest. Luckily, just like you can leverage an example business plan template to write your plan, we also have a gallery of over 50 pitch decks for you to reference.

With this gallery, you have the option to view specific industry pitches or get inspired by real-world pitch deck examples.

Ready to get started?

Now that you know how to use an example business plan to help you write a plan for your business, it's time to find the right one.

Use the search bar below to get started and find the right match for your business idea.

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Small Business Start Up Costs

No matter what kind of business you intend on owning, it is a good idea to estimate your business startup expenses prior to jumping in. Whether you plan on starting a small business or a larger franchise, you may be surprised at the total start up cost. Nearly all new business owners underestimate the cost of starting their business, leaving it exposed to the risks of being underfunded. To help you avoid this common mistake, use our Free Business Start Up Costs Template to help you determine how much money you need to get your start up business up and running safely. See below for additional information, tips and resources.

Calculating business start up costs should be a part of starting any business. An entrepreneur is usually required to put these costs together as part of a business plan , loan or grant application. They are also helpful when putting together proforma financial statements.

Business Start Up Costs Template

Other versions.

License : Private Use (not for distribution or resale)

"No installation, no macros - just a simple spreadsheet" - by Jon Wittwer

Description

This Excel workbook will help you put together an estimate of costs and funding required to start your business. It is pre-populated with expense categories common to many small businesses and home-based businesses, so it can be very useful in helping you identify all of your start up costs, including many you may not have considered.

As you add your own costs or expense categories, the template will help you understand whether you have adequate funding. Once you have your funding secured and you pull the trigger, use the worksheet to track your actual expenditures to help you keep your costs under control.

As you get your business going, you may want to consider using a more detailed business budget and other financial statements .

Starting a restaurant? This free template also includes a customized start up cost sheet with many cost categories specific to owning and operating a restaurant. Perfect for helping you capture all of those Restaurant Start up Costs.

Starting a franchise, web business or home business? Continue reading below for some help with costs specific to these types of businesses as well as links to other helpful resources.

Start Up Costs for Different Businesses

Restaurant business start up costs.

Starting a restaurant can be expensive because of the specialized equipment and facilities that are required. Luckily, there are usually leasing options available for the expensive items and many landlords will work with you on leasehold improvements. Use the Restaurant specific worksheet in the Business Start up Cost Template to help you consider other expenses such as cleaning costs, uniforms, menu development and supplier sourcing costs.

Home Business Startup Costs

The nice thing about a home based business is that you can forgo many of the typical expenses of a startup. Things like internet, office space, furniture and utilities are already taken care of. Better yet, if you qualify for the home office deduction, now you can write some of these items off as business expenses. Simply put $0 in the template or delete the rows for those expenses already covered. If you are starting a home-based internet business , continue on to the next section.

Internet Business Startup Costs

A web based business may be one of the least expensive businesses to start, especially if you can do the web development work yourself. Use the basic template and decide which expenses apply to you – simply delete the rest. You may also want to consider some items not listed, such as custom web page design and development work, custom database development and scripting, search engine optimization (SEO) and advanced hosting services to name a few. Also, if your business is retail, don't forget to include all of the referral and usage fees for selling through storefronts like Amazon and Ebay.

Franchise Business Start Up Costs

Our Business Start up Cost Template will also help you if you are looking for a start up franchise opportunity or looking for franchises for sale. Along with all of the regular costs of starting a business, the template also includes categories for fixed franchise fees as well as monthly franchise dues and marketing co-op fees. You may also want to check with the franchise corporate offices. Many of them provide tools to help you estimate your start up and operating costs.

How to Use the Business Startup Cost Template

The key to putting together accurate numbers is to get into the details. This requires doing detailed research by calling suppliers and providers, searching the internet and listing any and all costs that may be applicable. To help you, the business cost template comes pre-populated with many of the most common expense categories. It also contains additional suggestions and tips for each category to help you make sure you considered everything. Feel free to add additional line items that are unique to your business.

Funding Sources

Start by listing the sources of funding that you believe will be available to you in the Estimated column. This would include money supplied by owners and investors, funds available from bank loans or other lines of credit. In some cases you may be pursuing other sources of funds such as grants, endowments or sale of assets.

Fixed Costs

After all your funding sources have been outlined, start putting in the estimated fixed costs. These costs are one-time costs associated with getting your business up and running. This includes things like leasing space, purchasing assets, stocking up on inventory and getting your legal and marketing issues in order.

Two key parts to the fixed costs are the Working Capital and a Reserve for Contingencies – these can be significant. Any startup is advised to have a Contingency Fund as there are always last minute surprise costs and fees. Consider the risks of your business and set aside sufficient funds accordingly.

Be sure to include enough Working Capital to fund your normal business operations as you grow. Remember that there can be a significant amount of time between when a sale is made and when you actually receive payment. Sufficient working capital is needed to allow you to continue to purchase inventory and pay bills while waiting for payment. More than one growing business has failed because it lacked sufficient working capital.

Monthly Costs - Until Profitable

Many entrepreneurs fail to understand that businesses are seldom profitable the first day. In order to have a clear picture of actual cash required, it is important to estimate your monthly operating costs as well as how many months it will take you to move from the red to the black. The template is setup to assist you in determining these important costs. Simply identify how many months you believe it will take to get up and running and fill in the estimated monthly costs.

Ready, Set, Go

As a time window is provided and all the sources and costs are identified, the spreadsheet will calculate whether you have a surplus or deficit in funding. If you have a deficit, then you will need to figure out if there are ways to scale back your costs or look for additional funding. If you have surplus and are confident in your numbers, you may be good to go.

Keeping Things in Check

The excitement of starting the business can cause entrepreneurs to spend more than they planned. Use the template to keep you grounded. As you collect funds and begin to spend money, record the Actual amounts next to the Estimated numbers. The spreadsheet will calculate whether you are running over or under you estimated numbers so you can make adjustments as you go.

Additional Business Startup Expense Tips

• Securing lines of credit can take some time. Be sure to have them in place before they are needed.
• Be aware of credit card processing fees. These can be 2% to 5% of the total.
• Little items may not seem like much, but they can add up quickly. Don’t overlook them.
• Business Startup Costs are only part of the financials that any new business owner should put together. Consider putting together a proforma cash flow statement and balance sheet.
• If you are searching for funding, odds are you will need a business plan. Business plans can be a great way to concentrate your thoughts and to really put together a game winning strategy as well as get feedback from mentors and associates.

References and Resources

Below are a number of great references that can help provide you with more information and direction on starting your own business.

Startup Costs For Different Businesses

• Estimating Startup Costs at sba.gov - Information on estimating start up costs from the U.S. Small Business Administration (SBA) office.

Business Startup Loans and Grants

• Small Business Loans and Grants at sba.gov - Information and assistance on understanding the various Business Startup Loans and Start up Business Grants available to small businesses.
• Official Site of U.S. Grants - Official site for finding and applying for U.S. Grants including Business Startup Grants.

How to Start a Business

• Starting and Managing a Business at sba.gov - Helpful information from the SBA on starting and managing a business.
• Starting a Business at entrepreneur.com - Many different articles and tips on starting your own business.
• 10 Steps to Starting a Business at business.gov - Detailed information from the U.S. Government on the 10 steps for starting a business.
• Writing a Business Plan at sba.gov - SBA information about how to put a solid business startup plan together.
• Business Plan Software at paloalto.com - Great software for putting together a business plan. Will guide you through the process and has hundreds of industry specific examples.

Small Business Information and Assistance

• Online and face-to-face Mentoring at SCORE - SCORE,a non-profit organization, partners with the SBA to educate entrepreneurs and help small businesses.
• Minority Business Development Agency at mbda.gov - Tools, information and help for those starting Minority Owned Businesses.
• Small Business and the FDA at fda.gov - Great information for those who are launching business under the purview of the FDA.
• Federal Business Opportunities at fbo.gov - Official government site for identify and bidding on opportunities to do business with the U.S. Government. Can even use it to come up with Business Startup Ideas.
• Information for Entrepreneurs at startupnation.com – Site dedicated to helping entrepreneurs to build a business.

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Project Management

How to create a cost breakdown structure (with examples).

May 9, 2024

‘How much will this project cost me?’

This is probably one of the most common but important questions that any client or internal stakeholder will ask you. And if the estimate you provide is not accurate or even close to realistic, it can put the project at risk. 

Of course, a cost estimate can’t always be accurate to the last dollar, but imagine quoting X for a project, only to realize you will require 2X the budget when the project actually begins.

Not a situation you want to find yourself in.

This is where a Cost Breakdown Structure (CBS) can help you get a clear picture of your project finances. It breaks down all the anticipated costs into manageable categories, giving you a clear picture of where your money goes. This empowers you to make informed budgeting decisions and manage project costs efficiently.

Plus, it will also help you track your project for potential cost overruns early on, helping you deliver the project on time and within the stipulated budget.

But what exactly is a CBS, and how does it differ from a work breakdown structure (WBS)?  We’ll explore these questions and more in this guide.

Why is cost breakdown structure important?

Difference between cost breakdown structure and work breakdown structure, 1. work breakdown structure, 2. identify costs involved in each activity, 3. understand cost opportunity, step 1: know all the activities and resource requirements, step 2: identify cost categories, step 3: estimate the cost of work, step 4: build a contingency plan for your cbs, step 5: sense check, cost breakdown structure analysis: a critical tool, implementing cbs with clickup, ace your project budget plan with clickup, frequently asked questions (faq).

What is a Cost Breakdown Structure in Project Management?

Project management involves managing multiple aspects of a project, including the scope, time, and cost. While keeping your project on track and meeting deadlines is crucial, staying within budget is equally important. This is where a cost breakdown structure (CBS) becomes an essential tool.

CBS is a document that details all the costs that will be incurred in a particular project. Each line or row in the CBS stands for a cost item associated with the project. It breaks down these costs into clearly defined categories, providing a detailed roadmap for your project finances.

In any project management lifecycle , the most critical part is ensuring that the project is delivered on time and within the stipulated budget. If either goes awry, there can be complications to the project’s overall success. With cost breakdown structures added to your project management strategy, you can:

• Improve budgeting and cost estimation by identifying all potential elements of the cost structure upfront. This allows you to avoid unpleasant surprises down the road and minimize the risk of expenses growing beyond a specific limit
• Plan your project more accurately , as you can identify potential project cost risks and activities early on, ensuring you can develop mitigation strategies or minimize the impact of these risks
• Clearly communicate the expectations of a project to all stakeholders, including clients, sponsors, and team members. This ensures transparency and ensures everyone is aligned on the project’s goal

Cost breakdown structure can seem a lot like work breakdown structure (WBS) since we list all the activities and stakeholders involved in both. However, while CBS focuses on cost control or managing project expenses, WBS is about understanding all the activities needed to deliver a successful project. 

Some of the subtle differences include:

Breaking Down the Cost Breakdown Structure

The cost breakdown structure is created using multiple components, including:

The foundation of your CBS is your WBS. This document outlines the project deliverables and tasks that make up your project. Think of it as a blueprint of what needs to be done.

For any CBS, there are four main cost categories to consider:

• Labor costs: Salaries, wages, and benefits of team members assigned to the task. Think of it as the cost of human effort
• Material costs: The raw materials, supplies, and equipment needed to complete the task. This could be anything from printer ink to lumber, depending on your project
• Equipment costs: Rentals or purchases of specialized equipment required for the task
• Indirect costs : These are factors other than the direct costs that can add up to your project budget. These include office rent, utilities, insurance, administrative costs, and more

CBS plan doesn’t just help with cost planning; it also helps you to understand potential courses of action. For example, if you have to create a website for a client.

If the cost of hiring external resources is much higher than expected, you can make proactive decisions like completing some tasks in-house. This helps minimize overall project costs and helps you take control over the project’s quality. 

How to Create a Cost Breakdown Structure

Now that you understand the power of a CBS, let’s delve into the practical steps involved in creating one. You can create detailed cost breakdown structures using project management software or a tool that helps you analyze or monitor all the activities and resources involved in a certain project. To create a detailed and accurate CBS, you can follow the steps below:

The first step to successful project planning and cost estimation is knowing the activities and resources needed for your project. This typically involves:

• Project scope document: This document outlines the project goals, deliverables, and timelines. It serves as the foundation for both your WBS and your CBS
• Work breakdown structure (WBS): A well-defined WBS is essential for your CBS. It provides the framework for identifying cost elements associated with each project task
• Cost estimation tools: Various cost estimation tools are available, ranging from simple spreadsheets to more sophisticated software. Choose a method that best suits your project’s complexity and budget

The next step is estimating the required cost for each task, activity, or resource. These tasks can be divided into multiple aspects depending on their impact and work area, such as:

• Labor costs: Salaries, wages, and benefits of team members assigned to the tasks.
• Material costs: Raw materials, supplies, and equipment needed to complete the tasks.
• Equipment costs: Rentals or purchases of specialized equipment required for the tasks
• Office rent and utilities
• Administrative costs
• Software subscriptions

By considering both direct and indirect costs, you minimize the risks of any unknown task or cost factor being added to your budget. 

Once you have factored in all the cost factors that will impact your budget, it is time to start estimating the cost of completing a particular action item . For example, if you want to conduct X task, how much time do your team members take to complete it? How many resources will they need to complete it? These answers allow you to factor in the overall budget needed to complete X task.

Once you have done this for all the tasks in your project, it can be used to provide a final cost for the project. This is a crucial process, especially when estimating the budget for large-scale projects like construction projects. 

By closely tracking the tasks and resources required for a particular project and other impacts using construction management software , you can ensure that your projects get completed within the defined timeline and budget. 

Even after meticulous planning, unforeseen events can add to your project costs. For example, if you have to purchase materials from a supplier and they are out of stock, you may need to procure them from another source. The cost for these can be higher, or you may even have to pay extra to the same supplier if the materials you need are low on stock. 

To mitigate these risks, include a contingency margin in your CBS. This is a buffer allocated for unexpected expenses that might arise during the project. The size of your contingency margin will depend on the inherent risk factors associated with your project.

To jump-start your planning, use the ClickUp Contingency Plan Template and keep your business safe and secure.

This template offers you both list and board views, helping you draw your Contingency Plan and use it effectively for your projects. It helps you create a clear roadmap for unexpected events by:

• Analyzing potential risks and their impact on your operations
• Identifying necessary resources and personnel
• Testing alternative scenarios to ensure the best-case outcomes

The last step in creating a cost breakdown structure is thoroughly reviewing your plan. Look for any inconsistencies or missing information. Share your CBS with key stakeholders for input and finalize the document after incorporating their feedback.

For any project, delays are often costly. For example, if we were a construction firm, a small delay in procuring resources could mean stalling of work, and this would end up increasing the expenditure of the overall project. This is why using CBS analysis is crucial for organizations. 

With regular cost breakdown structure analysis, you can ensure that your project financials and timelines are constantly monitored, helping eliminate cost risks . This also helps with:

• Proactive cost management, as you can identify cost overruns early on and take corrective actions, such as adjusting resource allocation or negotiating with suppliers, to stay within budget
• Improving project control and management, as you can monitor aspects of WBS when analyzing your CBS documentation
• Identifying potential risks , including cost or resource planning, enabling you to minimize their impact on your overall project

When conducting a CBS analysis, make sure you look for standard impacts to your project, such as:

• Cost variances: Track any deviations between budgeted costs and actual costs incurred. Analyze the reasons for these variances and take corrective actions as needed.
• Project milestones: Conduct a CBS analysis at key project milestones to assess financial performance and identify areas for course correction. Use Milestones in ClickUp to visualize your goals at a glance and ensure you are well on track to achieve them.
• Project scope changes: Any changes to the project scope can impact costs.  Analyze your CBS to understand the financial implications of scope changes and ensure they are aligned with the overall budget.

To get the most accurate estimate for your project, you need to be able to break down all the tasks, including all the resources, actual costs, logistics costs, and every activity involved. For most companies, this often proves to be difficult as all their activities and teams work in silos and on different platforms.

This is where an end-to-end project management software like ClickUp can help make things much more streamlined and efficient. 

ClickUp goes beyond basic task management, offering a robust suite of features that perfectly complement your CBS needs. With it, you can:

• Break down project deliverables into manageable tasks and subtasks, creating a clear visual roadmap. This enables you to better estimate the project budget based on the activities and resources involved
• Track associated costs by assigning estimated costs to each task, categorize expenses, and track actual costs incurred. This provides a centralized location for managing all project finances
• Visualize cost breakdowns by category, track budget variances, and gain valuable insights into project financials
• Share your CBS document with team members, assign tasks with cost estimates, and keep everyone informed on project finances through real-time updates

With ClickUp Project Management , you get advanced features that can help you:

• Plan and prioritize all your project details with ease, helping your entire team get a clear understanding of the scope, allocation, and activities
• Leverage ClickUp Brain , an AI-based project management assistant, to simplify your day-to-day work.  It can automatically generate action items and subtasks, summarize comment threads, create data tables, find relevant details within ClickUp and connected apps, and create and share automated progress updates. Use it as your AI project manager
• Gain consensus faster and kickstart projects with clarity using a single platform to collaborate on your project vision, estimate costs, and deliver projects faster and on budget

It also provides ready-to-use, fully customizable estimation templates to help you get started with CBS and WBS project estimations instantly. For instance, the ClickUp Project Budget with WBS Template makes cost tracking easy and simple by breaking your project into tasks.

Using this template, you can simplify project budgeting activities as it allows you to:

• Map out activities and cost estimates
• Organize all your project data in one place
• Track your spending continuously so you do not go over budget

It includes a detailed work breakdown structure (WBS), including:

• Custom Statuses: To mark task status as Cancelled, Done, In Progress, On Hold, and To Do
• Custom Fields: To categorize and add attributes to manage your tasks and easily visualize your project activities and budget
• Custom Views: To visualize your information in multiple views for project tracking and management
• Project Management: Improve project budget and WBS tracking with time-tracking capabilities, tags, dependency warnings, emails, and more

These templates provide a pre-defined structure for your WBS, cost estimation fields, and budget tracking functionalities without having to do all the tasks manually or start from scratch.

So here’s the ultimate guide to help you ace project planning and estimate project budgets. It provides a clear and comprehensive picture of your project finances, empowering you to make informed budgeting decisions, identify potential cost risks proactively, and ultimately deliver projects on time and within budget.

With ClickUp, you can make your entire project management process much more effective and track budgets and tasks on the same platform.

Whether it’s project managers or your finance or commercial department, they can all work together, plan projects, and collaborate as required. Or, as Michael Scott would say, it’s a triple WIN.

The all-in-one project management software lets you manage workflows, documents, real-time dashboards, and more, helping your team move faster, work smarter, and save time.

Ready to take control of your project costs? Sign up for ClickUp today and experience the benefits of a streamlined and collaborative CBS approach!

1. What is included in a cost breakdown structure?

A cost breakdown structure (CBS) includes all the costs incurred in a certain project. This includes four main cost categories:

• Labor costs : The money spent on the people who will execute the project
• Material costs : Any materials that the business buys, including raw materials, parts and components, manufacturing supplies, insurance, and freight
• Equipment costs: The actual equipment
• Overhead costs or indirect costs: Expenses not directly allocated to a specific cost, such as office space, utilities, benefits, and taxes

2. What is the cost breakdown method?

The cost breakdown method refers to the process of creating a cost breakdown structure. This involves identifying all project activities from the Work Breakdown Structure (WBS), assigning costs to each activity, and summing them up to get the total project budget.

3. What is the difference between a cost breakdown structure and a work breakdown structure (WBS)?

A Work Breakdown Structure (WBS) outlines the project deliverables by breaking them down into smaller, more manageable tasks. A CBS focuses on the financial aspects of the project, assigning costs to each element of the WBS. Together, they provide a comprehensive view of project scope and finances.

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Project Cost Analysis Template

Identify the project scope, establish the project objectives, list all tasks needed for project completion, estimate time required for each task, calculate cost of each task, identify required resources for each task, estimate cost of resources, identify possible risk factors, estimate the contingency cost, calculate the total cost, approval: finance manager for total cost.

• Calculate the Total Cost Will be submitted

Identify Budget Constraints

Compare budget with total cost, identify possible cost reduction measures, revise project scope if necessary, recalculate the total cost, approval: project sponsor for revised cost.

• Revise Project Scope if Necessary Will be submitted
• Recalculate the Total Cost Will be submitted

Prepare Final Cost Analysis Report

Take control of your workflows today., more templates like this.

Home Blog Business Value Chain Analysis: A Guide for Presenters

Value Chain Analysis: A Guide for Presenters

Successful businesses add value every time they sell something. Adding value means customers get what they want and are happy with their purchase, and the business owners earn revenue. Companies that give their customers more value make more profit than those that do not.

Therefore, understanding a business’s value chain is important for finding out how much value is added. This article highlights what a value chain is and why it matters. It will further guide you with a case study on how you can analyze yours to help your business keep more of the value it creates from sales.

Table of Contents

What is a Value Chain?

Elements of the value chain, advantages of value chain analysis in business, what is the difference between supply chain and value chain, how to create a value chain analysis, recommended ppt templates for value chain analysis presentations, final words.

Value chain refers to all the business processes that make a product or provide a service. This chain includes everything from coming up with ideas to selling the final product. Michael Porter introduced it to help the company break down its tasks into activities and focus on where it can be better than its competition [1] . These activities either make the product worth more to customers or cost less to produce.

Porter’s value chain is not just about what a company does. It is also about the other companies it works with, like suppliers and distributors. You can imagine it as a series of steps. Each step adds something meaningful to the final product or service.

Analyzing the value chain is like focusing closely on each stage to identify opportunities for improvement.  By looking closely at each part of the process, businesses can find ways to make things more efficient [2] . This saves money and helps become more competitive in the market.

Activities of the value chain are divided into two categories.

Primary Activities

Inbound logistics.

It involves all the activities related to logistics. We are all aware that logistics in a business is all about receiving, storing, and distributing inputs required for the production process [4] . We will perform tasks such as sourcing raw materials, handling inventory, and managing suppliers.

These activities directly convert inputs into finished products or services. This stage includes the manufacturing, assembly, packaging, and testing processes.

Outbound Logistics

Once the products or services are ready, outbound logistics focuses on efficiently getting them to the customers. This includes order fulfillment, warehousing, transportation, and delivery.

Marketing and Sales

This section covers all activities related to promoting and selling products or services to customers. It includes market research, advertising, sales strategies, pricing, and distribution channels.

After-sales service is crucial for maintaining customer satisfaction and loyalty. This includes installation, repair, maintenance, customer support, and warranties.

Secondary Activities

Procurement.

It is sourcing and purchasing raw materials, equipment, and other resources required for production. Effective procurement practices can help to improve the quality, cost-effectiveness, and reliability of the inputs.

Technology Development

Innovation and technological advancements also improve efficiency and competitiveness. This includes research and development (R&D), technology acquisition, and innovation processes.

Human Resource Management

People are the driving force behind every business. Human resource management encompasses recruitment, training, performance management, and employee relations to ensure a skilled and motivated workforce.

Infrastructure

Infrastructure refers to the organizational support systems and facilities required to support the value-adding activities. This includes IT systems, communication networks, facilities management, and other administrative functions.

Value Chain Analysis helps businesses make intelligent decisions and improve their actions [5] . For example, companies can use it to find where they’re wasting time or money and fix those areas. It also allows businesses to understand their unique value from competitors in the same industry. Plus, it’s beneficial for ensuring everything runs smoothly in their supply chain, so they always have what they need and when needed.

The supply chain and the value chain are related but have different jobs. The value chain mainly focuses on the activities within a single company. It adds value at each stage of a product’s journey, from creation to customer satisfaction. This includes production, marketing, and customer support [3] . On the other hand, the supply chain has a broader scope. It involves acquiring materials from suppliers, manufacturing goods, and delivering them to customers. It coordinates with various partners to ensure smooth operations and minimize costs [3] . At the same time, the value chain focuses on value creation. Thus, the supply chain is more about efficiently moving goods and minimizing production and transportation costs.

NB: This case study simplifies the Value Chain Analysis process for easier concept understanding. Due to the depth required for this kind of study, value chain analysis is performed at large-scale organizations as a tool.

Step 1: Identify Value Chain Activities

First, you separate the business operations into primary and support activities. Primary activities directly relate to creating and delivering a product or service. Conversely, support activities assist and enhance the efficiency and effectiveness of primary activities.

Café Delight maps out all its activities, from sourcing ingredients to delivering the final cup of coffee. Its focus on high-quality ingredients and exceptional customer service are critical to its brand identity.

Primary Activities for Café Delight include

Inbound Logistics : Procuring coffee beans, milk, and bakery items.

Operations : Brewing coffee and preparing food.

Outbound Logistics : Serving customers in-store or delivering orders.

Marketing & Sales : Promotional campaigns and loyalty programs.

Service : Customer service and after-sales feedback handling.

Support Activities might involve

Procurement : Sourcing high-quality ingredients.

Technology Development : Implementing order management systems.

Human Resource Management : Training baristas and staff.

Infrastructure : Managing cafes and administrative tasks.

Step 2: Determine Activities’ Values and Costs

Here, you evaluate each identified activity to understand its cost structure and the value it adds to the final product or service. This involves assessing how each activity contributes to customer satisfaction and competitive advantage and pinpointing where costs are incurred.

In this crucial step, the focus shifts to analyzing the utility or value of each activity within Café Delight’s operations. It is identifying areas where costs can be reduced to enhance profitability. Let’s break down this step further.

Value Analysis

• Café Delight’s team conducts a thorough examination of its operations. It focuses on functions that directly impact customer satisfaction and operational efficiency. For instance, they identify that the primary function of serving quality coffee promptly to customers significantly enhances satisfaction.
• Café Delight offers a variety of specialty coffee blends sourced from exotic locations, priced at $4.50 per cup. Customers highly value the unique flavors and quality of the coffee.
• Secondary functions, such as the ambiance and customer service, are also evaluated for their contribution to customer experience and loyalty.
• Additionally, the café provides a cozy and inviting ambiance, with comfortable seating areas and aesthetically pleasing décor. This ambiance enhances the overall customer experience and encourages repeat visits.

Cost Analysis

• The team also examines the costs associated with each function, including procurement, labor, and operational expenses. For example, they find that high-quality coffee beans and skilled baristas contribute to higher procurement and labor costs.
• Additionally, they identify areas where costs could be reduced without compromising quality, such as optimizing inventory management or streamlining operational processes.
• Procuring high-quality coffee beans from international suppliers incurs significant costs for Café Delight, averaging $25 per pound. However, the café justifies this expense by offering premium coffee blends with higher prices and customer loyalty.
• Skilled baristas are essential to maintaining the café’s reputation for exceptional coffee. With an average hourly wage of $18 per barista and a team of 10 working 40-hour weeks, labor costs constitute a substantial portion of the expenses of Café Delight.

By conducting a thorough value and cost analysis, Café Delight also identifies areas for cost optimization without compromising its commitment to quality and customer satisfaction. For instance:

• The café explores alternative suppliers or bulk purchasing options to negotiate better prices for high-quality ingredients, such as coffee beans and bakery items.
• It implements efficient labor scheduling practices and training programs to maximize productivity and minimize labor costs while maintaining service excellence.

Step 3: Identify Competitive Advantage Opportunities

Here, it analyzes the information from the first two steps to uncover opportunities for gaining a competitive advantage. This could be through cost leadership (making activities more efficient to reduce costs) or differentiation (making products or services unique to enhance value).

For Café Delight, potential competitive advantages could include:

Product Innovation and Differentiation

Café Delight can make its menu more interesting by adding new coffee blends. They can even create unique blends for different times of the year. They will introduce exclusive limited-edition blends or seasonal flavors. This keeps customers excited and coming back for more.

Operational Excellence and Efficiency

While maintaining a commitment to quality, Café Delight can improve its operations to streamline processes, reduce costs, and enhance overall efficiency. It will implement technology solutions, such as inventory management software and automated brewing systems, to enhance workflow and minimize waste, which will help it save money and time.

Customer-Centric Service Excellence

Café Delight sets itself apart by providing top-notch customer experiences. This helps build customer loyalty and generates positive word-of-mouth recommendations. Prioritizing employee training programs that offer individualized and attentive service is crucial. They can significantly impact their staff by preparing to predict customer preferences, handle problems effectively, and establish meaningful connections.

Brand Storytelling and Community Engagement

Café Delight can tell customers where their coffee comes from and why it’s unique. They will engage in storytelling through social media, blog content, and in-store experiences, highlighting the journey from bean to cup and the impact of supporting local farmers. This makes customers feel good about coming to Café Delight.

If you are short on time and need to make a quick presentation, we recommend you use a value chain analysis template. Using PowerPoint templates from SlideModel or similar platforms can significantly enhance the clarity and impact of your presentation. Choosing a template that visually aligns with the depth and complexity of your analysis is very important. At the same time, creating a presentation from scratch can be time-consuming as well. Therefore, SlideModel Templates provide a structured starting point. These templates allow you to focus on customizing content rather than designing slides from the start.

1. Value Chain Analysis PowerPoint Template

You can present a value chain analysis sample in either an all-in-one format or slide-by-slide using this creative value chain PPT template. The diagram is featured in full format on the first slide, whereas the second slide attends to the primary activities and the third to the secondary activities. Get creative and customize this best PPT template for professional-looking presentation slides.

Use This Template

2. Competitive Analysis Slide Deck for PowerPoint & Google Slides

A slide deck intended for any kind of competitor analysis we need to create. Featuring 21 slides, we can perform an industry analysis, discover competitors, perform a competitor segmentation study, analyze competitor’s review data, create a SWOT analysis and more.

3. Key Diagram in 5 Steps

This key-inspired diagram slide makes it easy to express 5-step processes. It highlights each phase in a 5-step process, building the idea of the key components of any kind of process.

4. Value Chain Diagram Slide Deck for PowerPoint & Google Slides

Optimize operations management and any kind of logistics presentation by using our value chain model slide deck. 3 different diagram layouts in light and dark themes. Check them out!

5. Cost Reduction Plan PPT Template

As we’ve seen in our case study, this Cost Reduction PPT template helps us illustrate the different tactics driven out from the value chain analysis and cost analysis. Make your presentations more effective by summarizing your cost reduction plan with this versatile PPT template in light and dark themes.

6. Gradient Value Chain Framework Primary Activities

You can edit this 5 Steps Gradient PowerPoint Model and describe the 5 main activities of the Value Chain Framework. If your presentation requires to introduce the audience to the model, before getting deeper into the findings, it is recommended to explain the structure before, and set the context of the value chain analysis. Using impacting diagrams will help the audience engage, and remember the concepts you will use later.

7. Comparison Slide Value Chain Analysis Pros & Cons

For larger-format presentations, users can introduce the pros & cons of a value chain analysis with this colorful PPT template. Just add the information in the placeholder text areas and articulate your speech to discuss each one of the points.

Value chain analysis is crucial for businesses to improve efficiency, maximize value, and gain an edge over competitors. By carefully examining primary and support activities, along with costs and values, organizations can identify areas for improvement and innovation. This helps streamline operations, make products and services stand out, and focus on customer needs. Overall, value chain analysis empowers businesses to boost performance, foster innovation, and achieve sustainable growth in a competitive market.

[1] The Value Chain – Institute for Strategy and Competitiveness. Harvard Business School. https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-value-chain.aspx

[2] What is a value chain analysis? 3 steps: HBS Online (2020) Business Insights Blog . https://online.hbs.edu/blog/post/what-is-value-chain-analysis

[3] https://ecampusontario.pressbooks.pub/globalvaluechain/chapter/1-4-learning-objective-3/

[4] https://www.researchgate.net/figure/Value-Chain-Analysis-A-Primary-Activities-Inbound-Logistics-the-company-receives_fig2_341070011

[5] https://www.aicpa-cima.com/resources/article/value-chain-analysis

[6] What Is A Value Chain Analysis? 3 Steps https://online.hbs.edu/blog/post/what-is-value-chain-analysis

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