1. Startup Finance

2. Setup Costs
Legal Costs
Electrician
Bond on Lease
Council Fees
Plumber
Bonds for Utilities
Goodwill & Equipment
Working Cash Initial Promotion
Builder Food & Liquor Stock Website
Staff Recruitment
Table & glassware Bad Hires
Training
Furniture
Refrigeration Greasetrap
Bar & kitchen equipment
Tiling & building Sound system

3. $ources of Finance
Bank: if you have Vendor finance: payment
real estate equity terms from person selling
Lease finance Working partner
for equipment
Credit Card
Friends and family
advance
Silent partner: expect
Rich admirer...
a very good % return

4. Understanding Breakeven Point
Cost of Food
& Beverage
$A0.25 $A0.25
$1
Contribution
Margin
$A0.15
Staff Costs:
Other Variables: $A0.35
• Wages
• Phone
• Superannuation
• Repairs
• Workers Comp
• Cleaning
• Uniform
• Paper etc

5. Fixed Costs
Rent
Insurance
Loan
Interest Cost of Food
First
Leasing & Beverage
$A0.25 $A0.25
$1
Contribution
Margin
$A0.15
Staff Costs:
Other Variables: $A0.35
• Wages
• Phone
• Superannuation
• Repairs
• Workers Comp
• Cleaning
• Uniform
• Paper etc

6. Fixed Costs
Profit
Rent
Insurance
Second
Loan
Interest Cost of Food
First
Leasing & Beverage
$A0.25 $A0.25
$1
Contribution
Margin
$A0.15
Staff Costs:
Other Variables: $A0.35
• Wages
• Phone
• Superannuation
• Repairs
• Workers Comp
• Cleaning
• Uniform
• Paper etc

7. Q: How many sales
Fixed Costs
Profit dollars do I need
Rent to pay for Fixed
Insurance Costs of $1000?
Second
Loan A: $4000 - this is
the Breakeven Point
Interest First
Leasing $A0.25 $A0.25
$1000
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.15
Other Variables: $A0.35
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

8. Q: How many more
Fixed Costs
Profit sales dollars do I
Rent
$1000 need to make
Insurance
$1000 Profit?
Second
Loan A: Another $4000
Interest First
ie $4000
Leasing + $4000 = $8000
$A0.25 $A0.25
$1000
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.15
Other Variables: $A0.35
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

9. Q: What’s a quick
Fixed Costs
Profit way to work out
Rent Breakeven Point?
Insurance A: use the Formula
Second
Loan BE = FC/CM
Interest BE = $1000/.25
First
= $4000
Leasing $A0.25 $A0.25
$1000
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.15
Other Variables: $A0.35
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

10. Fixed Costs
Profit Q: My Fixed Costs
Rent are high - $2500 pw
Insurance What’s the BE?
Second
Loan A: BE = $2500/.25
Interest = $10,000
First
Leasing $A0.25 $A0.25
$2500
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.15
Other Variables: $A0.35
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

11. Fixed Costs
Profit Q: What if my
Rent wages are only 20%?
Insurance A: Excellent!
Second
Loan BE = $1000/.4
Interest = $2500
First
Leasing $A0.25
$1000
$A0.40
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.20
$A0.15
Other Variables:
Staff Costs:
• Phone
• Wages
• Repairs
• Superannuation
• Cleaning
• Workers Comp
• Paper etc
• Uniform

12. Q: How do I check
Fixed Costs
Profit potential profit of a
Rent
new business?
Insurance
A: BE = $1500/.25
Second
Loan
= $6,000
Interest First
If sales = $10,000...?
Leasing $A0.25 $A0.25
$1500
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.15
Other Variables: $A0.35
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

13. Q: If I can cut F&B
Fixed Costs
Profit costs to 20%?
Rent
A:
Insurance
BE = $1500 / .3
Second
Loan
= $5,000
Interest First
If sales $10,000...?
Leasing $A0.20
$1500 $A0.30
$1
Contribution Cost of Food
Margin - CM & Beverage
$A0.15 $A0.35
Other Variables:
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

14. Fixed Costs
Profit Q: To make $1000,
Rent how many customers?
$1000
Insurance A: $8000pw sales
Second
Loan = 1000 x $8 each
Interest Or 200 x $40 each
First
Leasing 25% 25%
$1000
$8000
Contribution Cost of Food
Margin - CM & Beverage
15%
Other Variables: 35%
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

15. Q: Crazy food, high
Fixed Costs
Profit wages, no control
Rent
A:
Insurance
Second
BE = $2500 / .1
Loan First
= $25,000
Interest FOR SALE!
$A0.10
Leasing
$2500 $A0.15 $A0.36
$1
Contribution Cost of Food
Margin - CM & Beverage
Other Variables: $A0.39
• Phone
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

17. Fixed Costs
Profit Q: Breakeven for
Rent Cafe X ?
$994
Insurance A:
Second
Loan eg BE = $960 / .32
Interest = $3000
First
Leasing
26%
$960 32%
$1538
$6000
Contribution Cost of Food
Margin - CM & Beverage
10%
Other Variables: 32%
$610
• Phone
$1898
• Repairs
Staff Costs:
• Cleaning
• Wages
• Paper etc
• Superannuation
• Workers Comp
• Uniform

18. Classifying some wages
as a fixed expense.

19. Thanks!
Ken Burgin
ProfitableHospitality.com