All those numbers we’ve been promising you
For all of you number-hungry transparency-loving followers, we owe you an apology for not sharing as many numbers on this blog as we should (though we certainly share more than your average business).
We’ve more or less finished wrapping up our books for 2011, so this would be a good time to do a year-to-year numbers analysis. Here are some rounded numbers:
| 2008 | 2009 | 2010 | 2011 | 2012 (projected) | |
|---|---|---|---|---|---|
| Sales | $49,000 | $298,000 | $465,000 | $613,000 | $778,000 |
| Inventory | $49,000 | $249,000 | $368,000 | $480,000 | $518,000 |
| Expenses | $51,000 | $75,000 | $140,000 | $166,000 | $156,000 |
| Profit | -$51,000 | -$26,000 | -$43,000 | -$33,000 | $104,000 |
FAQ:
What do those words mean? Sales are sales — money coming in. Inventory is what we pay to get food in and out of the store: the purchase price, freight, and credit card transaction fees. Expenses are everything else: rent, payroll, new equipment, interest on debt, paper towels. Subtract Inventory and Expenses from Sales, and you get Profit. Profit is how much money we made (or lost). As you can see, we’ve lost money every year, but this year should be different!
What about debt? We have about $153,000 of losses to pay back, so even if we make $104,000 in 2012, all of that and more is promised to creditors. A lot of our debt is structured into 5-year loans, so we’ll only pay a portion back this year.
Why are Inventory costs so high in 2008 and 2009 relative to Sales? We were massively building our inventory during the first 18 months we were open. In some months, we actually spent more on inventory than we made in sales! While we are still tweaking things here and there, we are probably not going to expand our inventory by any great amount, so Inventory should grow or shrink with Sales.
Why did expenses go up so much between 2010 and 2011 Good question! Short answer: payroll. Long answer: In November 2008 we laid off our entire staff because we ran out of money — Andrew and I ran the store entirely by ourselves. In March 2009 we hired one part-time person (someone we had laid off) and slowly started fleshing out more hours with hired staff, even paying some of them marginally above minimum wage. By October 2011 we had a full-time manager and all store hours covered by at least one clerk. Now we have two full-time managers, two full time clerks, and 3 or 4 part-timers. Plus me. All of this labor is required because we are moving 4 or 5 times as much food through the store in any given week than we were in 2008, and because I don’t want to work 15-hour days 6 days a week anymore.
What about one-time expenses? Those are included in Expenses. In 2008 we bought a lot of stuff as part of opening. In 2011 we replaced our floor and bought some new freezers, that was about $12,000. In 2012 we upgraded our electrical supply line from 100amp to 200amp, that cost $9,000. Those are the big ones, everything else is less than $3,000.
$153,000 in losses…where did you get enough money to cover that? Well, given that our original business plan only accounted for needing $9,000 in start-up capital, we have been aggressively scrounging for more money every since we opened. A summary of where that capital came from will be the subject of a future post.