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  • #967052
    cakequeen
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    I have been operating a small home based business supplying sweet things (cakes, biscuits etc) to cafes for a few years. Absolutely passionate about cooking from scratch and have a few loyal customers who understand my product & appreciate it in comparison to mass produced stuff. Must confess I have been disappointed in my attempts to grow my business to date – so many cafe owners seem content with what I consider less than satisfactory products. But anyway, onto my dilemna!!! Passion for really really good coffee too has grown along the way, & I have come to believe there is a real gap in the market for a cafe which makes its own cakes, has an emphasis on quality coffee – locally & freshly roasted – even going down the road of having an everchanging weekly “speciality” coffee to try.
    An opportunity has presented itself to purchase a cafe on the edge of a thriving strip style shopping precinct – which has become run down because of loss of interest by owner.
    So… I start thinking about purchasing same & discover everybody says I need a business plan – especially from the point of view of approaching a bank which I will probably need to do – around the $25,000.00 mark. Hours of research & reading books etc., & I still don’t get it. From what I have read business plans seem to suggest i should set out for the bank my vision – to the point of detail of including menus, costs of same, average turnovers, cost of food, wages costs etc. How can I possibly predict how much I will sell??? How can any of this be predicted?? Even if I genuinely believe ‘x’ number of people will walk in the door, how can I predict how much they will spend? How can I cost out the food costs if I dont know how much I will sell? How can I estimate the wages costs if I don’t know how busy I will be & therefore how many hours I will employ them for?? Do people just make this stuff up & smile nicely & try to sell my vision to the bank or is it really based in reality. Even the food costs I try to put together are a changing affair – for example avocados cost $1.50 on average three weeks ago – now they are $4.00!!! What if this meant the difference between making a profit & not? Or do cafe owners just use a swings & roundabouts approach over the space of a year? Is there anyone out there who can help me with this level of detail – I’m drowning and beginning to believe I’m not smart enough to run a business after all….By the way the planned cafe is in the Geelong, Victoria region. Am I overthinking this.. I get the feeling to people I’ve talked to heaps of people just wing it – but nobody is brave enough to say that out loud!!

    #1022958
    Steven Hudson
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    Cakequeen

    WOW!!! that’s a lot of stuff as a hello…but welcome…. business plan…its mostly based on qualified assumptions (there are industry stats which will support most of these assumptions).

    Hard yards…..you will need to sit on the street and count passing prospects over 3 or 4 days, a week would be better. Try to understand if it is a Mon to Fri trade or Fri to Mon trade big difference in customer and their buying trends.

    Talk to other traders in the shopping area and get some numbers of how many customers who enter the shop, even better if it is a closely related type of business. If not possible guess what you will have to sit outside their shop and count.

    From these numbers you should be able to project a revenue forecast for a typical business type. The added value of your idea is the cream.

    Remember

    THINK……DO…..REVIEW…..NEXT

    Cheers

    Steven

    #1022959
    akagrp
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    Hello Cakequeen

    I really like your idea, and we have such a cafe/bakery in Sydney call Bourke St Bakery, great bread, pastries and cakes all made on the premises or at their larger premises. Google Bourke Street Bakery and you will see, they have
    but woth reading a write up of them http://www.vodafone.com.au/business/businesssense/cultureandleadership/bourkestreetbakerythesweetsmellofsuccess/index.htm

    With regards to a Business Plan I tend to say there is one you do for the bank to get the funding for your dream, and then after six month you do one for yourself. But at the same time do your research to see on a worse case can you afford to pay rent and loan repayments on say your current business income if you are way short then I would recommend speaking with a numbers oriented person to help you out.

    “To accomplish great things, we must not only act, but also dream, not only plan, but also believe” Anatole France

    That was my original business plan when I opened my business 12.5 years ago, I am still hear and going strong even though many said I was mad to give up a secure job and jump into a business with no clients, and limited savings. You say but your an accountant, the numbers are only a part of running a business, you learn the things as you go, I’m still learning.

    All the best.

    ps Add cupcakes to the menu and you will be blazing., run baking classes as well Australia is currently in Food Heaven mode they love all things food & coffee. Just make sure you get your pricing right on finished goods

    With regards sales to other cafes, this does not need to end, what you need to do is package and market it to the right cafes. Does your range include Gluten Free and organic?

    #1022960
    Anonymous
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    Hi cakequeen,
    I love your passion! Thanks for asking all your questions, you’ve already received some great advice there.

    I also recommend you read this article, by forum regular Craig Reid: http://www.flyingsolo.com.au/p309431586_The-7-deadly-sins-of-buying-a-small-business.html

    Craig runs a cafe consultancy too, so if you end up deciding to get expert advice on your business plan, he would be a good person to consider working with. His website is http://www.thecafeninja.com/

    All the best to you and your delicious cakes!
    Jayne

    #1022961
    CruzAccountant
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    Hi Cakequeen

    Is Cafe Hope the shop name you’re thinking, because I really like the name.

    Regarding financials, it can be very tedious, but they are just a measuring stick of your plans. You can think of many wonderful ideas, but the financials forecast can determine whether it’s worth pursuing or not.

    I have good Management Accounting experience from an ASX listed company, as well as servicing medium sized clients whilst I was in a 2nd Tier accounting firm. From my experience, your financials forecast can be benchmarked across your industry. Benchmarking is basically assessing key ratio’s across other similar businesses in the industry. Most cafe shops have the similar ratios, like rent to sales, labour costs to sales and gross margin. Another key item to know is the average sale (or revenue) per customer.

    You get out, what you put in, so if you take the time to understand the numbers in your business plan, then you’ll be better off in “keeping a pulse” on your cashflow.

    Richard

    #1022962
    Anonymous
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    Richard, you’re right, Cafe Hope is a lovely name :)

    But I was kinda *hoping* that the name would be CakeQueen! I love it!

    Either way, thanks for chipping in with your wisdom!
    Jayne

    #1022963
    Jake@EmroyPrint
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    cakequeen, post: 27102 wrote:
    Passion for really really good coffee too has grown along the way, & I have come to believe there is a real gap in the market for a cafe which makes its own cakes, has an emphasis on quality coffee

    This is so incredibly true. In my local area, there are 10 different coffee shops, none of which make quality coffee. It’s either too hot, too cold, bad beans etc. When I want a coffee (Which is about 3-4 times a week) I get in my car and drive 10 minutes to my favorite coffee shop, wait in line for at least 10 minutes and drive back. All because the coffee is so good =) If you make incredible coffee, trust me, once the word spreads, people will come!

    cakequeen, post: 27102 wrote:
    How can I possibly predict how much I will sell??? When I was first starting up and my suppliers were asking me roughly how much $ worth of work I would be sending to them, I jokingly said “Hmm, probably no less than a million, I’ll try and aim for around 5 though. It is my first year in business remember.” Obviously we both knew I was joking, but it was a good ice breaker. Worked well with the banks too =)

    Have you ever worked in a cafe before? It may be an idea to do some casual work to understand whats involved while your finalising your own arrangements.

    #1022964
    Karen Wardle
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    Hi Cakequeen

    Welcome to FS!

    First off

    I’m drowning and beginning to believe I’m not smart enough to run a business after all…

    ….I disagree!.

    From this post alone, it is obvious that you DO have the passion, attitude and attributes to make a success of it. No doubt you will have a huge learning curve ahead of you, but if you break it down into steps, as others here have suggested, then it becomes less overwhelming.

    I agree with Steve’s comments. He has also given you some tips on how to work out the passing trade etc

    business plan…its mostly based on qualified assumptions (there are industry stats which will support most of these assumptions).

    ps Add cupcakes to the menu and you will be blazing., run baking classes as well Australia is currently in Food Heaven mode they love all things food & coffee. Just make sure you get your pricing right on finished goods

    With regards sales to other cafes, this does not need to end, what you need to do is package and market it to the right cafes. Does your range include Gluten Free and organic?

    I think the above are great ideas. You need to offer more than your competition. Competing on price alone is usually not enough. So adding that ‘something extra’ that your competition doesn’t offer will be a huge bonus for your business.

    As far as a name, Cafe Queen or Cafe Hope, I like them both!

    To help you with your plan and your financials you might like to check out this catering business template. There are over 70 templates available for a range of businesses. You can use it to cement your ideas and figures and then take it to someone who can help you to ‘polish’ it.

    I personally think that it is better to invest a little time, and sweat, in compiling as much of your business plan yourself and then take that information to a professional if that is what is required. The more that you do of it yourself, the more knowledgeable you will become about your business. Preparing a business plan helps you to develop contingency plans and strategies that you may not have previously thought of.

    If you are not sure where to begin, or are still asking what is a business plan? I have some info on my website.

    I jokingly said “Hmm, probably no less than a million, I’ll try and aim for around 5 though. It is my first year in business remember.”

    I like that :)

    Cafequeen. You CAN do this. There are plenty of experienced people here in all sorts of industries. Learn from them. Best to do it and find out. Don’t give up because you will always be asking your self ‘what if’.

    Please let us know how you get on :)

    #1022965
    Steve_Minshall
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    Hi Cakequeen,

    Here is why I think a financial plan is not a waste of time.

    Making a profit is simply selling more than you spend.

    You can influence sales (marketing) but you can not totally control what comes in, spending in many cases can be directly controlled by the decisions you make.

    Ok so every financial plan is made up of assumptions and guesses. Even if that assumption is things will stay the same as last year. So why bother.

    A financial plan/budget allows you to layout a plan that theoretically works. If I sell $x and spend $y I will make $z. Now the goal of the business is to achieve or better this by generating more sales while controlling the spend.

    Once in place you can look at what is happening compared to what should be happening. This month my sales are down on the figure in my plan. So even though I have made sales and there is money in the till I have not achieved enough to make my plan work at the end of the year. So what levers can I pull to cut spending or increase sales?

    Every year your figures will get more accurate as you learn your market and the plan will be more useful as a tool to help you drive the business.

    An accountant can do all your reports for you at the end of the year/ quarter but that is after the event. With a good financial plan you will know what sales you need for this month and how much you are going to spend on each type of purchase and can do what ever you need to do to meet the targets ahead of time.

    In a small business the danger with ‘winging’ it is that you just get a feel for how well the business is going by how much cash you have. This can give a very false impression because the amount of cash you have is irrelevant to how successful a business is (as long as you have enough of it to pay your bills).
    I know in my business I feel wonderfully rich and successful at the end of January because I have had my 2 best months and I have loads of cash. However, I don’t go out and buy a Maserati because my financial plan tells me that at the end of Feb (my quietest month) I will have paid all my debts to the suppliers for the busy months, just paid the ATO for the last quarters debts, paid my staffs’ super, etc and I will be feeling quite poor again. Even though I know this is going to happen I still get the same emotions of feeling positive in Dec and down in Feb. But my financial plan helps me to see these months for how they really fit into the overall year and not make decisions because I am feeling flush (spend too much) or poor (cut back unnecessarily).

    Hope this helps a little.

    Good luck

    #1022966
    Karen Wardle
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    Great post Steve!

    Reading it reminded me that I need to go back and adjust a few figures.

    Cheers

    #1022967
    Dave@Perfectnotes
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    The whole business plan is not so very hard. You write a plan for the business… whenever you need numbers you make a likely (conservative ) guess on the basis of some research that gets you numbers. When you are looking for numbers (how many people will call in or whatever) look for credible sources… eg asking strangers.. counting.. checking other businesses.. not non credible sources. 20 of your friends do not correspond to a sample of the general public

    Have some contingency plans. What will you do if approached to supply someone or other with a lot of cakes on short notice? That sorta thing.

    For standing consts.. rent and the like you can get hard numbers. For staff.. materials.. etc its much fudgier but you can do reasonable guesses and so long as you can justify a guess and have some plan if its totally up the creek then its fair enoug

    And if I may make a suggestion. If you are anywhere near some desirable cycling route.. cater for cyclists as if your life depended on it. You are targeting a market there that eats and drinks coffee like there is no tomorrow.. and apparently a very wealthy bit of the population there. And one easy to organise parking for. Hell put a track pump behind the counter and sell some tubes. You could be on a real earner

    #1022968
    Karen Wardle
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    If you are anywhere near some desirable cycling route.. cater for cyclists as if your life depended on it. You are targeting a market there that eats and drinks coffee like there is no tomorrow.. and apparently a very wealthy bit of the population there.

    Dave is right. I have a friend who cycles and the above sounds like it was written about him…..and all of his cycling friends.

    #1022969
    NickHumphries
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    hey i dont know how much you work “in” your business, but maybe you should run it from the “outside” more, where you can spend more time on strategies making greater profit.

    READ the e-myth revisited, its a great book for a situation like yours!

    good luck, you can do anything!

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