Tools of the Trade: Cafe Cashflow Forecast

My business is managed on a daily basis using a cashflow forecast. I am constantly updating this set of spreadsheets with costs and sales information.

Use a cashflow forecast to plan marketing projects, new product development and capital expenditure. It will consistently keep the business on the right track financially.

Whether you are already up and running or are planning your cafe/coffee shop I seriously recommend getting this tool in place asap.

Set up a forecast, a super simple set of three spreadsheets, in just a few hours and plan out your cashflow for 6 -12 months.

You can open and download a version of my Cashflow Forecast here.

Cashflow Forecast – Initial Setup

I would recommend a weekly cashflow forecast (Mon – Sun) for our type of business. A longer period isn’t going to deliver the granular detail that we require.

Include payments in and out of the bank on either the ‘Cash In’ or ‘Cash Out’ sheet.

Cash In – Projecting Revenue

A cafe cashflow forecast

Record normal cafe sales as cash payments, card payments, American Express and Paypal. Record payments in the cashflow on the date they arrive in/leave the bank.

There are separate lines for other revenue streams such as catering sales or special events.

If you have it, include the revenue from the same week the previous year (‘Last Year’s Sales’) in a line at the bottom of the sheet. I add a fixed percentage increase that reflects the growth in revenue I am expecting to see the following year (I work on a 7% increase as standard).

This fixed percentage will be altered if there are periods where I feel we have hit a ceiling in terms of volume (due to limited seating) or during lower growth periods.

‘Uplifted Sales’ are shown in the line below ‘Last Year’s Sales’ and appear as ‘Projected Sales’. ‘Projected Sales’ decrease as you add the actual sales. If this information wasn’t present the spreadsheet would only be accurate once a week after you had entered all the sales.

As each week goes on I replace the projection with the actuals in each revenue stream. Once all of the revenue has recorded change the colour of the column to blue and delete the information in the cell in the ‘Projected Sales’ line.

Actual Sales vs Last Year’ shows you how you have performed each week.

Projecting Costs

The cost element of a cafe cashflow forecast

Split costs into a few areas; ‘Food Suppliers’, ‘People’, ‘Fixed Costs’ and ‘Finance’.

Each food supplier has their own line on the spreadsheet and I can estimate the bills then add actuals for payments out as statements come in. I mark payments made in yellow once they show as leaving the bank account.

Project the costs out on the dates you expect to pay the bills. Be as accurate as possible in the first instance and can then hone your figures each month.

Most costs of running a cafe/coffee shop have been included here. You will add more lines for your specific suppliers and to get the spreadsheet closer to how you prefer it.

Cashflow Summary

The result of this process is the cashflow summary. Add the ‘Closing Bank Balance’ each week once it becomes available from the bank. The worst case is that you are working from a balance that is only 1 week old.

I have included example figures for 1 quarter in my example. Try to and extend this out to 12 months.

At the end of the quarter the business has a balance of £5195 – a small increase of £195 from the starting balance. The business has pretty much broken even.

The way to use this forecast is as an early warning system to catch trends.

Regularly look at the sales figures and alter projections using the actuals. You can now better predict your income. This may allow you to save a reserve, invest in new equipment, staff training or develop new products.

A decreasing income might mean you need to change your offer, increase marketing effort or make efficiencies elsewhere.

Try planning out specific projects by adding them as a series of cost rows, and if needs be add a special line for the income attached to the project.

Conclusion

Since 2016 a cashflow forecast has saved my business from disaster on countless occasions.

Running a business can be a lonely pursuit at times. Tools like this one help to provide a sense of security and confidence in your business that in my opinion is absolutely invaluable. It helps you sleep more soundly at night, and I’m in favour of that.

If you have any questions about how to get the cashflow up and running don’t hesitate to ask them below or drop me a line info@paulrawlinson.co.uk.

Let me know if you have some improvements to this system too – I’m always looking to tweak and improve my own systems!

If you need to download the forecast it’s available here.

If you liked this post and want to take the next step beyond a cashflow forecast then check out our piece on costing your cafe menu. It’s a one of the most valuable activities I’ve conducted since opening my business.

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