Expectations vs. Reality

Way back in the summer of 2006, Tracy and I were putting together our business plan for Nemo’s Coffee. Tracy had been a manager for Starbucks, and as a result, had access to the budget and P&L information for all 14 Starbucks stores in her district. The store with the lowest sales was the Citadel Mall food court, which was doing about $8000 per week. The busiest stores were the drive through stores in town, which were doing $25,000+ per week. Knowing that we were a new startup with no brand name and no market recognition, we set our business plan to be operating at approximately 75% sales of the slowest Starbucks store in town after one year. That would put us at about $6000 per week. Those seemed like realistic expectations, considering our superior product quality, environment, and customer service.

Well, we are a little over 9 months into this and we are operating at a little over $3000 per week in sales. Now that is very encouraging, considering many startups do not perform so well so fast. But compared to our projections, we are way behind schedule. Welcome to reality! We thought we would not only be profitable by now, but that we would also be paying ourselves an income.

If you are thinking of starting a business, or are in the early stages of starting a business, I hope our numbers can help you set some initial projections. We thought it would be no problem whatsoever to get a stable 300 daily regulars in the first year, just by word of mouth. We are finding out that it is much more difficult than that.

Don’t look at this as complaints or us being discouraged, because we are not. We are thrilled with how things have gone, and the feedback we have received from other shop owners locally, and around the country, is that we are doing great. We are just looking forward to achieving $6000 in sales per week! Wish us luck and keep us in your prayers!

We have not formally hired a bookkeeper or accountant yet. We have utilized an accountant to complete our quarterly reporting for Q2 and Q3, and I did our Q4 reporting. I also researched processing W-2 forms for our employees, and I was able to complete that task myself. I think I’m ready to send the white flag up the pole, though, and hire a bookkeeper and accountant. There are some bookkeeping tasks that still need to be completed for 2007 records before we can proceed with taxes. I’m ready to punt… I feel confident in my abilities to research these required tasks and get them done correctly, but I just don’t have the time. I have an allotment in our budget for professional services to cover accounting/lawyer needs, and I think it is time go in that direction.

The Photography Group is having a meeting at the shop/studio tonight. I will be providing coverage from 6:30pm until 9:00pm, and then I will go to Intel to complete my water testing. Today will be another long day…

We signed a contract with our realtor yesterday and the rental house is officially on the market. They have already put up their signs. I have gone over there twice to move my tools out of the house/garage and into the shop. I have approximately $30,000 in woodworking equipment and tools. I don’t have room for them at our residence, but I’m going to have to figure out something soon. I may have to put them in storage until I can get a shop built at our house. To have a 26 x 26 shop built by contractors would cost approx $45,000 to $50,000, based on estimates provided by the previous owners who had looked into it. I can build it myself for about $18,000. I’d rather wait and do it myself when I have more time. It is going to be weird to not have access to wood shop for awhile….

Gotta run,
Everybody take care.
JD