My start up costs are just needed at the fist month of my business, power and water is due every 3 months and I just need to buy one food license and it can last a period of time.
I have got a start up cost of £134300 in my starting up cost page and using the costs from the Peking Restaurant, I have got £2500 of food stock each month, £3000 of power bill which is due in every 4 months, £1500 of water bill which is also due in every 4 months. I have got a rent of £8000 a month, interest rate of £2500 each month, a food license on the first month of £1000 and the delivery cost of £300 each month. That leaves me with a closing balance of 60650. And a closing balance in the end of 12 months of 52100, so I have not predicted a cash flow problem here and I am making good progress. The predicted cash flow is falling for the first month and rising for the next to then fall again then rise and fall and rises until the end.
Break Even Analysis
I will need to calculate my break even point for a month because as my business will be small I will need to know when can I start to make a profit and I will have to set that as a target.
According to my break even calculations, I have a fixed cost of £12500 and variable costs of £2800. If 1500 people as I have predicted will come to my shop each month and spend an average price of £12.50, then the variable cost for serving each people will be about £2. Which leaves a contribution which is selling price – variable cost and it is £10 and the break even point which is fixed costs divided by contribution leaves 1176 which means I will need to serve 1176 customers to cover my costs.
But my estimated customer will be 1500 so I will make a profit. 324 people more will come on top of my break even “customers”
The figures may well be inaccurate because I have just asked 30 people out of the 3000 it is just 1% of the whole population in Ripponden, I estimated 3000 people are living in Ripponden, and in those 30 people I have asked more than half of them said they are going to come more than 2 times, so maybe 1500 people in the 3000 will come but I need 1176 customers to break even so I think it will be fairly easy.
