Monthly Expenses Part II

[Pazzo_di_Pizza]

Ok I think I have a more complete list at this time. I still need to get a few numbers however (insurance etc.)

Does this look more complete? Anything else I missed? I know some number may look a little high, but I am using these for projections to determine my break even points and then 12 money cash flow.

GAS $1,000.00
ELECTRIC $312.50
WATER $375.00
SEWER $93.75
GARBAGE $125.00
PHONE $93.75
INTERNET $125.00
CABLE TV $125.00
PAYROLL $15,120.00
LEASE/RENT 1950sf $6,162.00
PAYROLL TAXES ???
WORKERS COMP INSURANCE ???
BUSINESS INSURANCE ???
LOAN PAYMENT $2,500.00
EMPLOYEE APPAREL $100.00
LICENSES/PERMITS $120.00
ACCOUNTING $150.00
SMALLWARES $50.00
MAINTENANCE $100.00
ALARM/SECURITY $50.00
MARKETING $325.00
CREDIT CARD DISCOUNTS 2.55% (used formula on Excel plug the number in based on sales $$)

 

[j_r0kk]

Pazzo,

I’ll be the first to tell you there are other “hidden” costs (i.e. restaurant supplies, cleaning supplies, equipment repair, mileage if you plan on delivering, bank charges if any, cash short, office expense, postage, equipment rental/contracts, corporate and professional fees, state income tax, federal income tax, payroll taxes… to name a few).

But, lets not look at those hidden costs and concentrate on the costs you have written:

1. There’s no way you’ll pay less for electric than water. You might as well jack that up to $450-$500/month.
2. If you only plan on spending .5% on advertising I STRONGLY recommend you reconsider. A minimum of 5% is “safe” advertising.
3. Store insurance will run you about $1,000/month
4. W/C and payroll taxes will run you about 2.5% of your net sales if you maintain labor costs in the 25% range.
5. If you’re running delivery you’ll need a minimum of 3 phone lines @ about $50 per line plus taxes. Count on an average of $180 for your phone bill.
6. Let’s say your salary is $600/week

Here’s a simple formula for you to follow to figure out what your break even will be:

BE = Fixed cost $ / (100%-variable cost %)

Your fixed costs in this equation (with the updates) total $15155.75
Your variable costs (taking into consideration labor% is around 25% and food% is around 30%) total 65.05%

BE= $15,155.75 / (100% - 65.05%)

BE = $15,155.75 / 34.95%

BE = $43,364.09

This means your store must average well over $10k per week JUST TO BREAK EVEN! Mind you this figure does not include the other “hidden” costs you neglected to put into your figures, nor does it include mileage paid to drivers. To be safe, count on a break even of $45,000/month.

Personally, I wouldn’t touch it with a 10,000 foot pole. But hope this information helps you regardless.

-J_r0kk

 

[Pazzo_di_Pizza]

I see the error in my marketing number. It was based on weekly sales of $6500 at 5% for marketing. On a monthly basis this should have been listed as $1300 not the $325.

No delivery to start, but something that will be added within 6-12 months (hopefully).

I think I need to run another list of numbers as these are so inflated it is throwing everything off. For example the labor is about $5000 over what I think it really will be, rent is $1000 etc.

$600 Salary was already included in the overall labor expense, should it be a seperate item?

Is you information helpful, you bet, always is. It makes it sound hard to make a buck in the biz and maybe it is time to let this dream do sown in flames!

 

[snowman]

j_rokk, shouldn’t the $600/week draw be counted against salary (25%) instead of fixed costs? That brings the number down to 12755.75. 30%+25% is 55% (not 65.05%), which would bring his BE to $28346.11, or under 7100/week.

Seeing as how you chose 65.05%, I have to assume that you are counting an extra 10.05% for something, just not sure what.

Can you please explain?

Pazzo:
If your rent is $1000, then you need to use $1000. Since J_rokk’s numbers assume 25% for labor, the $5k over doesn’t matter with his numbers. Rent is either $1000 or 6162. Which is it? If you can drop $5 off rent, then J_rokk’s numbers (not including what I’ve written above) drops your BE point under $29,800, or under $7500 per week.

 

[j_r0kk]

Snow,

No, salary is a fixed cost. It is not variable, nor does it fluctuate with sales. Therefore, you must include your $600/week draw against your fixed costs.

The variable costs I listed were:

25% Labor
30% Food
2.5% Payroll taxes/workers comp.
2.55% credit cards
5% Advertising

Hope this helps.

-J_r0kk

 

[Daddio]

I think you need to add some automobile expenses. Mine run at about $300 a month.

 

[Pazzo_di_Pizza]

Snow

Sorry I should have stated it differently, the exact rent is $5300 and my exact projected labor for a month is $11,700 including the $600 weekly owner salary.

My goal as J_r0kk has stated, make it work with $6500 weekly sales. If I can stick with this number in a realistic manner with expenses that are also accurate.