How do I write a business plan's financial statement?
I am writing the business plan for a coffee shop, but I don't know what to do about the financial statements. Where can I go to get help on writing them? More specifically I have questions like - for cost of goods sold do I need to figure out the cost for every specific item (i.e. latte, drip coffee, whole bean coffee, etc.) or is there an accepted ratio related to total sales or average ticket price? Also, how can I get estimates on utility costs if I don't have a location selected yet?
Replies to This Discussion
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Permalink Reply by Brady on
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Good resources at the SBA website here. Try also contacting your local SBA office. There are also non-government organizations that have resources for potential business owners - SCORE, etc.
We've found it useful to have all of our menu items broken down to the ingredient level, though you might not need to go to that level of detail for initial planning purposes. I'd definitely recommend that prior to establishing menu prices and selecting suppliers, though - its hard to know how to price things unless you know what they cost.
For rough planning purposes, you can use an estimated COGS. Something in the 30% ballpark is a commonly-recommended starting point, though you should wait for other responses and do a little research elsewhere before picking your number.
For a feasibility study, it might be smart to assume a little higher COGS to account for waste, discounts, comps, etc... as high as 40% isn't a bad assumption. You'll still price your menu using a 25% average COGS though.
That was probably not as clear as it could be... hopefully someone else will jump in here to correct/explain things further.
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Permalink Reply by christopher myers on
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Hey Paul, I just finished my own business plan using this google docs template: http://docs.google.com/Doc?docid=0AcGR9AZtIqOoZGhjZnJjNm1fMGRuNnBwc...
I know you just asked for the financial statement, but I thought this might help walk you through it. Google docs also has some other nifty charts that you can use or tweak to your purposes. Plus if you need to show other people, you can just link them to the page.
Like Brady said, you don't need to have a completely broken down list of every ingredient for the business plan, but you should make one just so you're confident in knowing exactly how much everything will cost.
These are the sheets I used: "Monthly Operating Costs" showing only costs broken up into categories like "direct sale" (drip coffee, bagels pastries, etc), "goods" or COGS (produce, sandwich ingredients, coffee cups etc), "fixed costs" (payroll, rent, utilities etc.) and a Misc. category.
You'll also want a 6 month, 1 year, and 5 years projected income chart.
A spreadsheet showing the profit margins for a few of your major items. There's a handy google doc for this that calculates how much you should charge given what you pay for the ingredients. It's a pain in the ass trying to figure this out, but worth it since it'll be useful as well as show that you know what you're doing. I think you'll find it if you search "profit margin calculator" or something.
Break Even analysis: http://spreadsheets.google.com/ccc?key=0AsGR9AZtIqOodHFmemotNGdKZ0t...
And debt repayment schedule (if you're borrowing money, which I assume you are if you're making this)
I also included a list of things that we would use to maximize income, and a few things that we planned on adding at a later date to "expand" business. They like to know that you're looking far ahead and are confident that your business will grow.
Hope we helped. Good luck! I'm so glad I'm done with mine, it's such a headache.
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"Also, how can I get estimates on utility costs if I don't have a location selected yet?"
For unknown variables, I think it's safe to take a survey of places in your area and use an average. Same goes for rent. Business brokers use averages like this to estimate how much a business is worth, so there shouldn't be a problem with you doing it too. Using other cafes or restaurants in the general area should get you a good number.
christopher myers said:Hey Paul, I just finished my own business plan using this google docs template: http://docs.google.com/Doc?docid=0AcGR9AZtIqOoZGhjZnJjNm1fMGRuNnBwc...
I know you just asked for the financial statement, but I thought this might help walk you through it. Google docs also has some other nifty charts that you can use or tweak to your purposes. Plus if you need to show other people, you can just link them to the page.
Like Brady said, you don't need to have a completely broken down list of every ingredient for the business plan, but you should make one just so you're confident in knowing exactly how much everything will cost.
These are the sheets I used: "Monthly Operating Costs" showing only costs broken up into categories like "direct sale" (drip coffee, bagels pastries, etc), "goods" or COGS (produce, sandwich ingredients, coffee cups etc), "fixed costs" (payroll, rent, utilities etc.) and a Misc. category.
You'll also want a 6 month, 1 year, and 5 years projected income chart.
A spreadsheet showing the profit margins for a few of your major items. There's a handy google doc for this that calculates how much you should charge given what you pay for the ingredients. It's a pain in the ass trying to figure this out, but worth it since it'll be useful as well as show that you know what you're doing. I think you'll find it if you search "profit margin calculator" or something.
Break Even analysis: http://spreadsheets.google.com/ccc?key=0AsGR9AZtIqOodHFmemotNGdKZ0t...
And debt repayment schedule (if you're borrowing money, which I assume you are if you're making this)
I also included a list of things that we would use to maximize income, and a few things that we planned on adding at a later date to "expand" business. They like to know that you're looking far ahead and are confident that your business will grow.
Hope we helped. Good luck! I'm so glad I'm done with mine, it's such a headache.
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Permalink Reply by Jeremy Perrine on
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Once you got some good numbers you can get a traffic count and see what percantage of that you can expect to get in your shop.
For instance once you figure out your forecasted average transaction (probably going to be around $2.5-$3) you can see how many transactions you need to break even on a daily/monthly basis.
You can then use the traffic count and see how the two number meet up.
For instance, if you're on a busy street, you might only need .5-1% (totally made up number) of the cars driving by to stop in your store on a daily basis to break even.
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I agree with Brady 100%
The more detailed you get with cost of goods, the better your plan will be. Especially if you are using it to get investment money.
If gaining investment money is your goal you should know how much everything costs. EVERYTHING.
If your purchasing roasted coffee from somewhere else: How much does it cost to get it to you? How much can and will you sell it for?
Use the simple equation 2grams of coffee to every ounce of water to calculate cost of drip coffee. Espresso should be pretty easy to figure out. Use the grocery store price to figure out milk cost because that is most likely what you'll be paying, surprisingly enough. Cups, sleeves, lids, etc.
Excel could be your friend.
You may not need the specifics in the plan itself, but the person giving you money may want you to back it up, so have it ready.
Should look something like this:
Lattes 8oz 12oz 16oz
Cups $0.06 $0.07 $0.09
Lids $0.05 $0.05 $0.05
Sleeve $0.06 $0.06 $0.06
Milk $0.09 $0.18 $0.27
Espresso $0.14 $0.14 $0.14
Total Cost $0.39 $0.49 $0.60
Price $2.31 $2.77 $3.37
Margin $1.92 $2.28 $2.77
Percent 489% 462% 459%
After Tax $2.50 $3.00 $3.65
Competitors $2.65 $3.35
Comp after Tax $2.87 $3.63
Your business plan may only say actual cost, price, margin or percentage.
Try hard to figure even the equations out, the more you know now the better. Once you open there are so many more things to worry bout.
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Permalink Reply by Paul Swanson on
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Thanks for the suggestions. I'll be sure to look up my local SCORE office because I'm sure I'll need someone to walk me through this. I see a blank balance sheet and my mind locks up. Still this info is a good start!
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Hey, so I keep getting requests to view the business plan because apparently I linked to the one on "my" page. I could open it to everyone, but then you would all be editing the same one. So instead, click here http://docs.google.com/templates?hl=en&q=business%20plan. I think the first one is the best, but check out the others too. Glad to know so many people are thinking about opening their own shops.
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Permalink Reply by Marek on
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The only variable relative to your utilities would be your air conditioning/heating. All your equipment costs would be the same regardless of where they were located. Your financials are within reason, a good guess... so to some degree you can generalize some of your expenses. For the sake of argument assume an average ticket of $3.00 and a gross margin of 35%... so $1.05 per order, falls to the bottom.
Now take your fixed costs, labor, utilities ... add em up... divide by $1.05 and that's how many customers per day you need to get to ... zero...
As I said, it's pretty much a good guess.
All the best and good luck with your project.
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Exactly. I used this one:
http://docs.google.com/templates?q=break+even+analysis&sort=hot...
And this is a very useful profit margin calculator, it calculates how much you should charge for X production cost. It's a good place to start, and then modify based on how labor intensive it is, or how much trouble it is to get the ingredients or whatever: http://docs.google.com/templates?q=profit+margin+sheet&sort=hot...
This is a simple pie chart, which you could probably generate on your own. But this is nice and easy, and perfect for showing the ratios of your various costs. http://docs.google.com/templates?q=simple+pie+chart&sort=recent...
This is useful for charting your debt payments over time: http://docs.google.com/templates?q=how+much+your+debt+costs&sor...
I love google docs, can you tell?
Marek said:The only variable relative to your utilities would be your air conditioning/heating. All your equipment costs would be the same regardless of where they were located. Your financials are within reason, a good guess... so to some degree you can generalize some of your expenses. For the sake of argument assume an average ticket of $3.00 and a gross margin of 35%... so $1.05 per order, falls to the bottom.
Now take your fixed costs, labor, utilities ... add em up... divide by $1.05 and that's how many customers per day you need to get to ... zero...
As I said, it's pretty much a good guess.
All the best and good luck with your project.
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