From the course: Finance Essentials for Small Business
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Cash flow example
From the course: Finance Essentials for Small Business
Cash flow example
- Let's tie this together in one example. Let's suppose that I forecast customer demand for my fast food restaurant over the next three months to be in month one, 4,000 customers, in month two, 4,500 customers, and in month three, 5,000 customers. Let's also assume that I have $10,000 in the bank right now. I also estimate my fixed costs to be $16,000 per month, and my average selling price and estimated variable costs to be as follows. I estimate my average selling price to be $7 per customer in month one, $7.50 per customer in month two, and $8 per customer in month three. The reason for the lower selling price in month one is to entice customers to come in and give my business a try. As word gets out and my business earns its reputation, I forecast being able to increase the average selling price per customer. I also estimate that my variable cost will be $4.30 per customer for the first two months, and increase to…
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