Yearly profit/expense increase/decrease

[laradder]

I am in the process of creating a business plan to submit to the SBA to get a loan to open a coffee shop/tanning salon. I have estimates from all suppliers and have figured my 1st year profit and operating expenses but I am not sure how much to increase expenses (%) and profit for the second and third year estimates? Is there a general rule of thumb for yearly percentage changes?

 

[ElPugDiablo]

It is very hard to estimate those numbers, just put in your best WAG...can you please explain your concept of coffee shop/tanning salon?

 

[John P]

Hey,

if you lie in a bed of beans, you can roast and tan at the same time.

 

[caffe biscotto]

I'll take the FC+ tan please......

 

[PinkRose]

Hello,

Yes, I'd like to hear about the concept of a coffee shop and tanning salon too.

I could just picture me saying .....I'll have a cup of nude Guinea please....oops I mean New Guinea!

Rose

 

[lizzy]

lol..
I've always thought a laundromat and coffee shop would be a good combo. can you heat muffins in the tanning beds?

 

[PinkRose]

Hello,

I'm not sure if putting a laundromat and coffee shop together in the same store/building would be a good idea, (can you imagine the lint dust...along with all the extra heat and bleach smells) but putting them right next door to each other would be great a idea. A person could throw his or her wash into the machines and then run next door for coffee and a muffin. Laundromats are such boring places .... a coffee shop next door would help make that chore bearable.

Rose

 

[laradder]

Tanning/Coffee

A friend of mine used to work in a salon that had a coffee bar, tanning, stylists, and manicures. I have the opportunity to buy all of their inventory and thought I'd give the tanning/coffee combination a shot.

Thanks for all the cute advertising slogans! Do I owe anyone royalties?

 

[caffe biscotto]

No royalties, advice and slogan suggestions are free here.

As far as 1st, 2nd and 3rd year estimates, I can only make some general and obvious points.

1.) If it's an existing business you're buying, its easy, the prior owner can help you figure your expense increases and potential profit margins.

2.) If it's a new business, sales will increase year to year for the first few years, at much higher rates, then start to come down to a reasonable annual increase.

3.) A new small business, just starting out, could experience this trend:
1st yr sales $100,000
2nd yr sales $120,000 (20% increase from first year)
3rd yr sales $132,000 (10% increase from 2nd year)
4th yr sales $142,000 (8% increase from 3rd year)
After that, it's reasonable to assume that your annual gross sales should eventually come down to just above inflation, say 5% or so.

Once you've settled in your niche and have established your customer base, sales will stabilize to a more reasonable level. Every business is different though and the above is only an example of potential annual gross sales for the first 4 years, just to give you an idea. If your business was less stable, a tech business for example, things could be much more difficult to predict.

The costs of running a business is another animal altogether.
You'd have to factor in annual increases of: rent, utilities, advertising, salaries, ingredients, materials, equipment & supplies, etc.