Budgetting for Equipment and Leasehold Expenditures

Jakk

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Aug 6, 2014
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Hello - so far I've found these forums to be great, thank you. I'm in the midst of negotiating to buy a small turn key coffee shop in Canada and am just tweaking 3 years of projections to include with my business plan. I've been working with my accountant re budgeting and understand the correlation between depreciation being a non-cash item and the difference between a projected income statement and a projected cash flow statement. However, what I DONT KNOW is typically how much to budget for equipment and leasehold purchase and refresh each year?

Those of you in the biz - do you use your actual line item for depreciation as a *budget* for your capital expenditures (equipment, furnishings, refreshing/repairing the property) or do you typically use some other % factor of revenue? I know I'll certainly get a sense when I get in there and 'get working' but right now it's a bit of an unknown. And while I have 3 years of financials from the current owner, and I know they've kept equipment well maintained and/or purchased new, they have spent significantly less than the depreciation line, and you can see that result in the state of the property and furnishings.

Any advice on how you budget for those items, would be greatly appreciated OR pointing me to another thread if I'm over looking.

Thanks so much!
 
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