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Permalink Reply by John P on June 11, 2013 at 9:29am

Rebecca,

There are too many factors that are unique to you and your area and what (you believe) will be your business model. How large of space, percentage of stay and to go customers, LOCATION, pricing, menu, beverage mix, types of coffee sold/roasted... all in comparison, contrast to other similar local businesses taking into account that they are likely established and you will be building a base and so "established" numbers have no relevance in the beginning.

If this is for financing, all you can realistically do is spend time at various local cafe/roastery or one that closest fits your model then stay, have a few drinks, and count heads, bags, drinks etc. From there you have some basis in reality you can alter based on your menu, expected foot traffic, etc. etc.

The reality is: It's a guessing game. 

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Permalink Reply by Michael Arnovitz on June 11, 2013 at 11:35am

Rebecca –

This is something I did myself last summer/fall. For what it’s worth, here’s some advice:

Take a breath. A good business plan takes a while, and that’s as it should be. Just take your time with it and get the most you can out of the process. There is no deadline other than what you set for yourself, and when it comes to starting a business, especially your first one, you want to do it well, not fast.

Also, many people misunderstand the point of the business plan. They think that a BP is for financing, just something to give the money guys. This is wrong. The BP is mostly for YOU, and the more you work on it the more you’ll realize just how much it’s benefiting your project. Projects that start with a business plan are significantly more likely to succeed, and there’s a reason for that. (Related note: while the projected expenses and sales are important, they are not the most important part of your BP)

As for projecting expenses, it’s not nearly as tough as projecting sales. You just have to break it down, and IMO three years is fine. Others here may have differing opinions, but I would suggest separating your startup costs from your ongoing operational costs. Your startup costs will be significant, but they are (for the most part) one-time expenditures. Keep an ongoing list of the equipment you’ll need, adding to it as you think of more things. There’s research involved there, but it’s not tough. Estimating your build-out costs is significantly more tricky, and you’ll benefit there from some professional advice. Do you have a design/build team? Get one.

Once you have your startup expenses taken care of, it seems to me you might divide your ongoing expenses into three categories: labor, product and operations. Labor: how many shifts, how many people on each shift, what is their pay rate, etc. Operations: rent, utilities, insurance, debt service, and all the little monthly payments for wifi, music, waste removal and anything else you’ll need.

Product cost is a different animal, since (at least in theory) you will only have as much expense for product as you sell. So for myself, I estimate monthly sales and then base my product cost on my estimated margin. And don’t forget waste and “shrinkage”. Some people include paper goods in the product cost, while others separate it out. Either way, do not forget paper cost because it’s a big one.

In the end Rebecca just try to include every expense you can think of. When in doubt, assume you’ll spend MORE rather than less. The numbers can get a bit scary when they’re all in front of you like that, but this is a good thing.

As for online business plan services, I would recommend this one: http://www.liveplan.com

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