ballpark figure needed for net profits?

[Goodegging]

will someone please tell me what they think the net profits would be on a milkshake parlour in a university town with 150,000 residents with 20,000 being university students? and with regards to the current state of economy and it would be the only milkshake parlour in the town.

location also satisfactory.

 

[deniser]

Do Uni students really drink milkshakes? I would have thought cheap alcohol was more their thing.

In our town the milkshake parlours are situated near the secondary schools (in fact the kids from 4 out of 5 of the town's secondary schools have to walk past to get to the town centre) as it's only the school kids who are the consumers of milkshakes and smoothies here.

 

That question is bit of a cow to answer.

Please supply futher information:

Will the sun be shinning.?

what is the towns average cholesterol level.?

What flavours will you be providing.?

Earl

 

[movietub]

Is this a wind up?

Its impossible to work out profits if you don't work out costs. And the costs are many and your post is woefully short. In fact its just a one line question that would usually follow a 60 minute presentation.

Sod it, I'm so clever I can answer anyway. You will make approx £1m in the first quarter - I'm certain of that much. Better get cracking.

 

[office man]

I have done a few calculations and i make £14,067,986.18p - can someone double check my sums please?

 

I have done a few calculations and i make £14,067,986.18p - can someone double check my sums please?

Hm sounds like your trying to milk the company to me.?

I made it £14,067,984.16p.

Earl

 

[movietub]

Hm sounds like your trying to milk the company to me.?

I made it £14,067,984.16p.

Earl

School boy error! £14m is the GP! he asked for NET, definitely £1m. There are many costs and taxes associated with the milkshake purveyance that I fear you have not taken into account

 

[Mattonella Tile Studio]

Do Uni students really drink milkshakes? I would have thought cheap alcohol was more their thing.

In our town the milkshake parlours are situated near the secondary schools (in fact the kids from 4 out of 5 of the town's secondary schools have to walk past to get to the town centre) as it's only the school kids who are the consumers of milkshakes and smoothies here.

Location could be critical. Uni students drink milkshakes the morning after they've had cheap alcohol. If it's not too much effort to get there, and near something else that students would want (papershop for example), it could be worth investigating.

 

[movietub]

Students do like milkshakes but surely McDonalds picks up most of the business? I'm 26 and I still enjoy them. Shamefully of course.

I thought that smoothies were the latest thing anyway? I've seen several carts and small shops open up selling them on my travels.

 

[Moneyman]

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It is just the sort of little £3 thing that people cut down on in a recession.

 

School boy error! £14m is the GP! he asked for NET, definitely £1m. There are many costs and taxes associated with the milkshake purveyance that I fear you have not taken into account

Ooops I forgot to ask how far the cows were from the business premises.?

Only a million sounds a bit shaky to me.

Earl

 

[Moneyman]

dont be nasty. Boy has he asked an open question with so many variables that it is impossible to answer.

Personally i would go to a franchise site and look for a milkshake/smoothy franchise (i think there must be one or two) and ask loads of questions. then base your figures on that.

 

[Goodegging]

That question is bit of a cow to answer.

Please supply futher information:

Will the sun be shinning.?

what is the towns average cholesterol level.?

What flavours will you be providing.?

Earl

sun will ne like normal british weather but always shining in my shop (my cup is full - not half empty)

i dont know about the towns health but my sister reckons the business plan will be right up the street of the residents and students.

flavours will be over 100 and freshly made, although can combine two flavours so could have 150 good tasting mixed flavours liked mars bar and fresh banana.

i also dont think if students can get smashed out of their faces on booze they will worry about a milkshake after a seminar - good motivational reward - do your homework and treat yourself to milkshake - i will maybe market it as a shop like that too - like dangling the carrot in front of the donkey.

there is also a milkshake parlour in leeds near the uni' and they are saying business is good and are into the next stage which is alcoholic milkshakes - maybe i will take a leaf out their book.

 

[Goodegging]

Is this a wind up?

Its impossible to work out profits if you don't work out costs. And the costs are many and your post is woefully short. In fact its just a one line question that would usually follow a 60 minute presentation.

Sod it, I'm so clever I can answer anyway. You will make approx £1m in the first quarter - I'm certain of that much. Better get cracking.

the reason i ask is because if you go to the careers office for advice they have an occupations book which highlights some business areas like hair dressers, restaurants, police sercive etc with thousands of different occuaptions in the book. the book also states the income from each; so as a restaurant manager you could earn £15-20k per year.
the problem is they dont have a section for milkshake parlours.

i was thinking about doing a profit loss account or cash flow forecast and doing a sales forecast; or a break even analysis - how many milkshakes i need to sell a day to break even and then doing a estmatted sales forecast.

i thought it might be easier though for someon who might know someone within that profession and their net profits; so i could use as a guide to that sort of business.

 

[Goodegging]

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It is just the sort of little £3 thing that people cut down on in a recession.

intersting point you raised their but i am under the impression young peoples spending habits are different to their parents who have all manners of bills to pay.

their was some article in the newspaper about some dad who was very surprised their daughter was going on holiday at christmas. her reply was 'daddy i work all year, if i cant get two weeks in the sun whats the point'.

i also dont thing all students have excellent budgetting skills, if they get a student loan then i am sure they will treat them selves to a shake. there is also 150,000 residnets, day trippers, holiday makers and a large further education student population. so at a guess their could be over 300,000+ people within the target audience. also there is about ten coffee shops in town centre and are all surviving.

so if am the only shake parlour then i have cornered a massive gap in the market with very little direct competition.

i was gusessing somewhere along the lines of £10,000-13,000 per year being net profits - maybe £8-9k for first year or two but after that up to the higher bracket, and beyond.

the other shake shops in other towns are doing well. also expanding and not everyone is on a health tip - i go to the gym and loads of guys knock back protein shakes - i would also do protein shakes and more.

 

[movietub]

the reason i ask is because if you go to the careers office for advice they have an occupations book which highlights some business areas like hair dressers, restaurants, police sercive etc with thousands of different occuaptions in the book. the book also states the income from each; so as a restaurant manager you could earn £15-20k per year.
the problem is they dont have a section for milkshake parlours.

i was thinking about doing a profit loss account or cash flow forecast and doing a sales forecast; or a break even analysis - how many milkshakes i need to sell a day to break even and then doing a estmatted sales forecast.

i thought it might be easier though for someon who might know someone within that profession and their net profits; so i could use as a guide to that sort of business.

I understand now!

I remember seeing those sort of guides/books regarding what you can expect to earn as you work your way through different proffesions.

The problem is those books don;t relate to a person who sets up and runs a business. For example a qualified interior designer could work for a big firm and expect 30k pa, but if they set up their own business, in the wrong area and market it badly, they could end up making no money at all.

Conversley if someone works in a milkshake shop (or any other fast food/drink type place) your book would probably say they could look forward to the minimum wage! But if you setup and own a succesful milkshake shop you could make a fortune.

Books and guides are useless when it comes to telling you how much money you can make from different industries. The bottom line is some people make a fortune out of something very simple, other try for years in an industry you would expect was very profitable and end up bankrupt.

There is no average amount a business owner will make from anything. You need to research your idea, work out the market demand, the costs to setup, the operational costs and how much profit (after ingredients) youw will make per shake.

Only with all these figures can you, or us, have any idea if the business is even possible, let alone profitable.

If you want some serious answers I suggest you get some basic costs together and post them here. I'm sure they will be a little shaky but if we have something to work on we can maybe move forwards

 

[movietub]

Oh nd change ur signitur, txt spk dsnt m8k u luk gud nd ppl will think ur not serious.

 

[Goodegging]

Oh nd change ur signitur, txt spk dsnt m8k u luk gud nd ppl will think ur not serious.

i did originally try to do a full signature but for some reason they forum would not let me do it in full english - some limit on length - so i had to make it txt spk - ssssoooorrrryyyyyyy!

 

[LINGsCARS]

flavours will be over 100 and freshly made, although can combine two flavours so could have 150 good tasting mixed flavours liked mars bar and fresh banana.

Are you sure that's not FRESH Mars Bar and banana? Why suggest the banana is fresh and the Mars Bar isn't? I'm confused. If you made it from dried banana it would be crunchy.

If you can do maths, combining 2 shakes (from a choice of 100) means 10,000 good tasting different flavours. Makes a chinese takeaway menu look concise. They are all sugar and fat. That is why they all taste good. Trouble is, people would take about a day to go through the combinations and choose.

Your signature looks better, but I'm sure it didn't have the spelling error in the book you got it from - and even if there wasn't a mistake it just doesn't make sense.

 

[LINGsCARS]

i was thinking about doing a profit loss account or cash flow forecast and doing a sales forecast; or a break even analysis - how many milkshakes i need to sell a day to break even and then doing a estmatted sales forecast.

i thought it might be easier though for someon who might know someone within that profession and their net profits; so i could use as a guide to that sort of business.

However, you spoil your inspirational (if confusing) signature, by then saying above you "thought it might be easier" if you can just use someone else's figure as a guide. What happened to all these obstacles being good? You can't just nick someone else's figures and say you have proven your own model.

You should really do more than just "think" about doing "a profit loss account or cash flow forecast and doing a sales forecast; or a break even analysis"

 

[Moneyman]

Ling is right (god i never thought i would hear myself say that.
It may all look great but. hwo many milk shakes can you make in the half hour breaks or whatever. catering is not averaged over a day just a few hours. You might need 50 one hour and 0 the next...staff etc. it sounds easy but it is very very tricky to get right. How many rich people have sandwich shops? the guys with the cash are selling the franchises not owning them..that should tell you something.

 

Goodegging...

One way to attempt to answer your question is go find businesses for sale of your type around the UK (eg daltonsbusiness, businessesforsale etc)

If you cannot find a similar business, be very wary of entering the sector: It could mean that the business model doesnt work that well.

If you can find similar businesses you may begin to find a pattern in the figures they are reporting

I too, doubt the viability of a "milk shake" only business......sandwich businesses often survive by having a business delivery round, that prevents them being lunchtime demand only

 

[movietub]

Just out of interest...

Is there any tangible reason that you are thinking of a milkshake bar?

Rather than say, a smoothie bar or a dougnut bar... What I'm geting at is why do you believe that right now, in your location YOU are in the best position to open this sort of business? I mean I could put together an argument that anything 'could' be sold to students. The problem is to make a success at any one type of business you really need to be in preferential position to start with. Maybe your dad runs a dairy farm and you can get cut price milk? Or maybe your brother runs a sandwich delivery firm and there is the potential to cross sell. Needs to be something real that puts you in a good position to make this worth looking at.

I'm genuinly interested in hearing more. After some of the mocking I expected you would go away, but no. So you must have something driving you!

Maybe the first brief flash of mishandled tycoon spirit?

 

[Goodegging]

After some of the mocking I expected you would go away, but no.

any mocking is considered an obstacle to me and one i can leap over with gigantic steps because i am not going to let them hamper my financial goals - what ever the business.

if you think i am going to give up being a business manager over a little mocking you hav another thing coming.

i am perservering, dedicated and so forth. my swot analysis ticks all the right boxes.

 

[Moneyman]

any mocking is considered an obstacle to me and one i can leap over with gigantic steps because i am not going to let them hamper my financial goals - what ever the business.

i am perservering, dedicated and so forth. my swot analysis ticks all the right boxes.

Good on you...but finance is everything. SWOT analysis tells you what you want to know. Personally i think they are completely pointless and invented by business consultants to sound clever. Never, ever rely on them, they are only an analysis and dont have any emphasis. Right product, right market, right time will not beat wrong financial forcasts and wrong income. They are never anything better than a business plan padder outer.

 

[movietub]

any mocking is considered an obstacle to me and one i can leap over with gigantic steps because i am not going to let them hamper my financial goals - what ever the business.

if you think i am going to give up being a business manager over a little mocking you hav another thing coming.

i am perservering, dedicated and so forth. my swot analysis ticks all the right boxes.

Goodegging,

I'm started to get fruustrated by your posts. And thats a problem for you because I'm not the only one!

A few posts back I asked you some serious and progressive questions. You have chosen to ignore those questions but still found the time to respond with the waste of words above! Do you have any idea how insulting that is?

It gives the impression that your in love with the idea of being a businessman and are prepared to talk the talk without any experience of 'walking the walk'.

For instance what have you done a SWOT analysis of? Yourself? A proposed business? A new project? Using a fancy acronym without any sense of context or rellavence makes me cringe!

It's clear you love the idea of being a businessman. I get that - and its important to feel that way. But you are stabbing yourself in the foot eveytime you pass up an opportunity for discussion or advice in favour of trying to make yourself sound clever. And you will fool no-one thats woth fooling.

 

[Barnie]

do these still fall as vat free when not consumed on premesis

 

[Goodegging]

Goodegging,
A few posts back I asked you some serious and progressive questions. You have chosen to ignore those questions but still found the time to respond with the waste of words above! Do you have any idea how insulting that is?

sorry, about that old chum (movie tub) I thought they were rhetorical questions. I will get back to you in good time, and reread the posts where you can help me and then I can get back to you.

who else do you think I stole the jam out of their donut from?

 

[Draugen]

I think you need to look at this whole opportunity a little more closely.

From your posts, it seems that you want to target the students and will rely on them to be the backbone of your customer base. The issue here is that those students will all disappear for three months over the summer! I'm no expert on the milkshake business, but I would imagine that milkshakes sell like hotcakes during the summer, but slow down when the winter comes. If your business will be concentrating on milkshakes, can you really afford to lose your customers during what should be your busiest time of year?

I know a number of people who own businesses in a university town of 150,000 with 20,000 students, no idea if it's the same one you're talking about, but it's near Leeds. They all do good business and two franchise the same QSR brand as myself, they both find business wanes significantly over the summer, especially at the town centre locations. As sales aren't great for them at the moment, if they drop the same number of sales over next summer, I can see it causing them difficulties. I don't operate in a student area, and am not affected by the same problems.

I can see a milkshake bar working well in central London, Manchester, Edinburgh etc, but I feel you may need to diversify your product significantly to make it a success in a smaller town.

 

[Goodegging]

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It is just the sort of little £3 thing that people cut down on in a recession.

I can understand your point of view but if its the only milkshake parlour in the town then surely that should be an advantage? In comparrison to say coffee shops where every other shop sells it from B & Q (little sandwhich bar) to Cafe Nero and your supermarket cafe and its free down at Business Link seminars. There must be at least ten coffee shops in my town centre alone.

I see it like this:
scene 1
say 90,000 people like coffee shops and there is ten shops in town centre then thats 90,000 / 10 = 9000 people per shop.

scene 2
In comparison to 30,000 students (uni and further education) of whom 20,000 like milkshakes and there is one shop then thats 20,000 / 1 = 20,000 customers.

Obviously, there are other parameters and elements to the equation I was just using these figures as a guide.

therefore my calculations show that I get 11,000 more customers than a coffee shop who has to share the publics disposable income with the other 9 shops.

I will also aim to provide the same standard of coffee and also offer more choice so my milkshake parlour will actually win over some of the coffee shop goers.

 

[Goodegging]

I am hoping (draugen) that the residents of the town who go away to other towns for university courses will come back for the summer and visit the shop.

There are also the other residnets of the town who fall into the same age bracket but not at Uni' so can use their custom too. then there is also 2-3 further education colleges in my town which must house at least 15,000 people, of whom at at guess +50% will like milkshakes.

In the summer though there will also be day trippers, holiday makers, tourists and more so can rely on them. Yes, there will be probably a dip in sales, and thanks for raising that point, so I suppose part of the business plan will involve targetting the uni' students when they are in the town.

Diversisfy, yes, I would be doing that too - coffee, tea, hot choc, snacks, sandwhiches etc. And a few other tricks up my sleve.

 

[Draugen]

I am hoping (draugen) that the residents of the town who go away to other towns for university courses will come back for the summer and visit the shop.

I would be careful about relying on that. In theory it's true, but those that do return may be working over the summer and have less free time, or may limit their spending until September's student loan comes in. People who don't live in the town all year round will also have fewer loyalties to local businesses and as I suspect this line of business relies a fair bit on "regulars", it may be hard to convert part-time residents into customers.

Day-trippers and tourists could be good business for you, especially if you're offering an interesting product. Are you able to say which town you are planning to set up in?

Diversisfy, yes, I would be doing that too - coffee, tea, hot choc, snacks, sandwhiches etc.

All sounds good, but I would be careful that this doesn't detract from the milkshake bar concept. I feel that offering coffee and sandwiches etc could dilute a potentially unique offering. What if people start coming to your store for coffees and sandwiches, but don't bother with the milkshakes? Will you revert to just a coffee shop or sandwich bar? There's also a danger of becoming seen as just another coffee shop or "place to go", which is fine, but probably not what you're trying to do!

I've seen a few smoothie bars offering homemade soups in the winter, presumably as not many people fancy a fruit smoothie on a cold winter's day! Could probably work well to compliment milkshakes to! By all means offer good coffee, but I think it's important to ensure that your signature products remain the focal point of the business.

 

[Goodegging]

Draugen would it be possible to retreat back to the original reason why this thread was posted about net profits. and yes taking into account the fact that my target audience, sob, sob, will sadly disappear for 3 months during summer holidays.

Anyhow further to your point, which is valid, yes, about them going home but surely if its a university town then the same goes for all the bars, coffee shops, clubs and rented accommodation? they are all making profits. I suppose i could just adjust my projected sales to lower them whilst summer here but increase them when here.

I was guesssing about £8-9k per annum for first 5years. (net profit)

although, i do like your input, so thanks for that too.

in response to your question about retracting from the original concept, i am happy to set up shop as milkshake parlour and diversify and if the coffee and sandwhich sales really kick off then because the business plan is organic i shall modify as necessary, and have milkshakes as a alternative, or have as specialaising in two areas - double pronged approach. let customers lead the way.

 

[Goodegging]

Isn't a sales forecast a good idea to work out net profits?

I thought their was several sales forecasts you can do like:
pesimistic sales forecast
realistic sales forecast
desired sales forecast

So I suppose with these forecasts it would be a good idea to work along the realistic sales forecasts.

Somehow from the forecasted sales for the first 6-12 months work out the net profit margin for the main product sold and then from there get a ball park figure of net profits. I think I managed to solve this little challenge myslef.

Does everyone do a sales forecast before seting a shop up anyway?

How would a newsagent do a sales forecast for all the papers, stamps, groceries, cigarettes, ,magazines and everything else. Surely the shop would not sit down and do a sales forecast for every single item the shop sells.

Yes, moneyman, I think you maybe right about people cutting back on the £3 shake during recession but was wondering how much of an impact the recession would have on the net profits. 10% drop in sales?
20%?
25%?
50%?
Or worst case scenrio - not enough sales to break even?