If you're an early-stage company or idea (pre-seed or seed), costs are probably the only thing you'll be able to create with any degree of control or understanding.
￼“You can’t predict your revenue with any kind of precision, but you should be able to manage your expenses exactly to plan.”
- Brad Feld and Jason Mendelson, Venture Deals
Start with a hiring plan
Start with your employee costs, because your hiring plan is often the most important decision you have to make, and for most early-stage companies it's the biggest component of your costs.
It's easy to start building your hiring plan. Use a free template like the Runway and Cash Forecasting Tool or create a new Excel workbook or Google Sheet. Start by creating a time scale for your forecasts, likely listing out the months you want to model in columns across the top, and then start writing down in the rows the people you'll need to hire.
As a general rule, there's usually a simple, manual way to model things, and a more complicated, automated way. In my models, I tend to use the simpler method by using one row per employee hired, and then just typing in their monthly salary per month. I usually just type their monthly salary in the first month they are hired, then create a simple formula so that all future months use the same salary. 
After starting your hiring plan, complete it by typing in all the different roles you think you'll hire for, and carry your estimates out for 12 to 36 months. Twelve months is probably the max you can grasp right now, but some people (investors and others) will often ask you what your 2, 3, 5, and 10 year plans are. If you're fundraising from experienced early-stage investors, they probably won't expect detailed financials or estimates for over 12-36 months. As always, depends on the person, but remember that what a person asks for says a lot about what they care about. 
Forecast operating costs
After a hiring plan, move on to estimating your primary cost areas, using the same simple methodology of one row per cost, and type in the costs per month in the relevant months. This could include:
- Non-employee contractor costs, if you didn't include them in your hiring plan
- New employee costs like furniture, computers, cell phones. etc.
- Office rent, office utilities, business insurance
- Monthly infrastructure costs, like payroll management, accounting, any monthly SaaS services you use to run your business
- Marketing costs, if you're going to spend on direct advertising, email marketing, Facebook ads, etc. (remember this, for when we start estimating user acquisition)
- Lumpy costs like conferences, employee travel, etc.
- One-time costs like legal, company formation
- Outsourced costs, perhaps outsourced product development
- Purchasing of materials, supplies, or products for sale
- Payment processing (Stripe, Braintree, PayPal, etc.)
I usually start by typing in all the costs, then working through the proper accounting treatment to segment the costs into Selling, General, and Administrative (SG&A) and Cost of Goods Sold (COGS). That way, we focus on cash without worrying about accounting statements yet, and we can segment them into proper accounting treatment when it comes to create financial statements.
Where do you find benchmarks for costs? Finding good data is tough. Ask fellow founders and friends to start. I find Quora to be one of the best sources for benchmark data on the web. Joe Stump put together an outline a few years ago that's still relevant. Just remember that one person's experience will not necessarily be yours, and that the costs can vary drastically depending on your business, competition, goals, funding stage, what you need to prove to hit your next milestones, and many more factors.
Sum up the expenses
At the end of this, you'll have a hiring plan and an outline of operating expenses. The next step would be to sum these up into SG&A and COGS expenses, so that you can understand the degree to which your expenses are fixed or variable, and start to think about the gross margin (revenues less cost of goods sold) and unit economics of the business.
If you are fundraising, typically we would create a Sources and Uses chart at this stage. A Sources and Uses chart is typically a simple summary of the funds being raised (the sources) and the major cost areas where the funds will be spent (the uses), and it's often a table and a pie chart to give some detail and a quick overview.
For more on sources and uses, see sources and uses ›
The big picture
For many early-stage financings, this will be the majority of your financial modeling, in the sense that your cost budget will be the most scrutinized aspect of your financial plan because it gives a look into how you are thinking about operationally growing the business and allocating investment capital. It's a plan you're laying out to an investor, and it's important that it reflects how you're truly looking to build the business.
As hard as forecasting costs is, forecasting revenues is much harder. That said, it's often not as important. Depending on the background of the investor, convincing an early-stage investor about the potential for the business is often more about convincing them about the market size and your ability to capture a significant share of the market more than a specific revenue forecast. That's why I start out forecasting revenues by estimating market sizes. Read Modeling Revenues to learn more about that.
In most of my templates, I add in formulas to automatically factor in an optional annual salary increase, and then layer in benefits, payroll taxes and other staffing-related costs. Additionally, I usually create a way to denote each person as an employee or contractor (for benefits-related costs and headcount reporting) and assign them to a category, like product, engineering, sales, marketing, and more, for summaries that help you understand and demonstrate what functional parts in the company are being invested in through hiring. And in the Standard Model and above, I have a number of optional sections that calculate additional hires automatically based on % of revenues spent on certain categories of hires or N number of customers / clients / users acquired. More about that here › ↩︎
For early-stage companies, 1 year or 3 year projections are likely sufficient, and it's often fine to do them on a monthly basis for the first year and quarterly or annually for years 2 and 3. For later-stage, more mature companies, 5 year projections are the default. Some investors will ask for 5 year forecasts even for early-stage companies, usually investors that come from more of a big company or Wall Street background instead of an early-stage, venture background. My Runway & Cash Budget Tool and Starter Financial Model cover 3 years, done at a monthly, quarterly, and annual basis, while my Standard Financial Model and above cover 5 years, also done at a monthly, quarterly, and annual basis. ↩︎