Tips for coffee shop owners from 800FUND.COM
If you’re looking for a merchant cash advance for your coffee shop, you need to understand that there is a lot of misinformation and myths associated with them. The myths are that merchant cash advances are just for low-income customers and misconceptions that they are only to be used as a last resort. Both are not true. Anyone can get this type of loan, and if they are managed properly, they are very convenient. Merchant Cash advances may be what you need if you are currently short on funds.
Our team at 800fund.com, is prepared to educate you on the various products we offer, as well as help you understand the benefits of alternative lending as opposed to a traditional loan.
Positive cash flow is imperative to the success of any small business but it’s particularly important for coffee shop owners. Without sufficient cash, you can’t cover payroll for your staff, fund a marketing campaign in anticipation of seasonal sales peaks, or pay the array of vendors that supply you with necessary goods and key ingredients for your menu creations.
Coping with cash flow crunches in your coffee shop begins with recognizing how to manage them. If you’re tired of the feast or famine cycle where your cash reserves are concerned, check out these tips for getting on the right track.
Sourcing working capital for your Coffee Shop
There are some instances where a cash flow crunch may be unavoidable. Alternately, you may be in a position to grow your restaurant but you’re not comfortable draining your cash reserves to do it. In either situation, you may look at outside sources to fill the gap. The options are varied and all come with pros and cons. Merchant cash advances, for example, tend to be a popular choice among coffee shop and restaurant owners who have strong credit and debit card sales. This type of financing can put cash in your hand in as little as one to two days, but the tradeoff is dependent on various factors. A term loan, on the other hand, typically has more favorable interest rates and repayment terms, but you may need a higher credit score, a minimum amount of revenue or a longer operating history to qualify.
Tapping working capital, should make your cash flow easier to manage—not more difficult.
Reevaluate your menu
Your menu can impact your cash flow in more ways than one, especially with respect to pricing. If inventory costs have been increasing but prices haven’t moved in tandem, you’re essentially narrowing your profit margin on those items. Keeping expensive-to-prepare but poorly selling items on the menu is just as problematic. Raising prices or removing slow-moving dishes altogether can help curb cash flow leaks.
In addition to pricing, you may also want to consider redesigning your menu. Are high-margin dishes selling at a faster pace? Are the descriptions for menu items bland or full of flavor? Looking at your menu from a customer’s perspective can help identify opportunities to increase profits.
Track cash flow weekly to identify trends
Monitoring your restaurant’s cash flow from week to week serves two purposes. First, it allows you to see your sales, and the corresponding cash flow over time. That in turn, makes it easier to create an accurate forecast of your sales and cash flow projections.
For example, performing a cash flow analysis in December may reveal that your sales peak in the two weeks before Christmas, then drop off sharply once the holidays are over before climbing again towards the end of January. Understanding these trends can help make your cash flow more predictable so you can adjust your spending accordingly.
Promote multiple sales – A coffee shop will never make enough money to pay the bills from coffee sales alone. Coffee may be the prime motivator for customers coming to the business, but they must leave with multiple sales if you are going to be successful. As a target, coffee should be no more than 40% of your weekly sales and two item sales per customer transaction means you are getting it about right. So make sure the traditional coffee accompaniments (muffins, cookies, cakes) are close by at the point of sale, and the coffee shop offers cold food, cold drinks, and hot food to ensure the best chance of multiple sales.
Merchandise your margins – Price according to perceived customer value, not according to accounting determined markups. For some well-known items you will need to be at (coffee) or even below market price (coke can), and this loss should be made up with high margins on other items that are exclusive to you or in the ‘don’t-care and addictive’ mindset of your customers.
800fund is a leading merchant cash advance and short-term alternative lender to small- and medium-sized businesses. It is headquartered at 30 Broad Street, New York, NY. For business owners interested in information on alternative funding services, please visit 800Fund.com. After over a decade of finding ways to approve business owners that have long faced the struggles of securing funding through banks and other lenders, 800fund.com prides itself in its “1 to 1” program that starts at just $1,000 and advances up to $1 million with working capital repayment terms from 30 days to 24 months. In addition to this specially designed program, 800fund.com simplifies and expedites a traditionally lengthy process with swift decisions and same- or next-day financing in order to meet the needs of today’s small to medium-sized businesses.