Financial food for thought was presented by LSBDC and Accion in New Orleans. You want to understand how to prepare for business financial success learn here!

1. 3330 N. Causeway Blvd., Suite 422
Metairie, La. 70002
www.lsbdc.org
(504) 831-3730
Email: lsbdc-gnor@lsbdc.org
Grow Your Business:
NOLA Restaurateur Boot Camp
Financial Food for Thought
Presented by
Dianne F. Sclafani, Business Consultant-Food and Restaurant Specialist
LSBDC Greater New Orleans and Bayou Region
Jarrett Woods, New Orleans Regional Manager
Accion in Louisiana

2. Why are Financials Important ?
The many small businesses that have major
problems being successful are because of
• Weak Business Management in many areas
#1) Lack of financial management and
understanding

3. Cash Flow Statement
Example, LLC
Pro-Forma Cash Flow
Direct Method
Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14
Beginning Cash Balance 32,735 26,231 23,060 23,221 18,383 15,211 8,707 13,867 10,696 12,523 16,016 9,512
Cash Inflows
Cash Sales 24,900 33,200 41,500 29,050 33,200 24,900 53,950 33,200 45,650 49,800 24,900 20,750
Total Cash Inflows 24,900 33,200 41,500 29,050 33,200 24,900 53,950 33,200 45,650 49,800 24,900 20,750
Cash Outflows
Inventory Purchases 11,952 15,936 19,920 13,944 15,936 11,952 25,896 15,936 21,912 23,904 11,952 9,960
Sales Tax (% of Sales) 2,241 2,988 3,735 2,615 2,988 2,241 4,856 2,988 4,109 4,482 2,241 1,868
Merchant Account Service Fee (% of Sales) 710 946 1,183 828 946 710 1,538 946 1,301 1,419 710 591
Rent/ Lease 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815
Utilities 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475
Insurance 350 350 350 350 350 350 350 350 350 350 350 350
Repairs 50 50 50 50 50 50 50 50 50 50 50 50
Permits 45 45 45 45 45 45 45 45 45 45 45 45
Associations fees 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115
Advertisment 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915
Fuel/ Van repairs 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050
Owner's Salary 835 835 835 835 835 835 835 835 835 835 835 835
Wages & Salaries 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166
Payroll Taxes 633 633 633 633 633 633 633 633 633 633 633 633
Loan Payment 3,052 3,052 3,052 3,052 3,052 3,052 3,052 3,052 3,052 3,052 3,052 3,052
Dividends Paid - - - - - - - - - - - -
Total Cash Paid Out 31,404 36,371 41,339 33,888 36,371 31,404 48,790 36,371 43,823 46,307 31,404 28,920
Monthly Net Cash Flow (6,504) (3,171) 161 (4,838) (3,171) (6,504) 5,160 (3,171) 1,827 3,493 (6,504) (8,170)
Cumulative Net Cash Position 26,231 23,060 23,221 18,383 15,211 8,707 13,867 10,696 12,523 16,016 9,512 1,342

4. Cash Flow Breakeven
Definition: The point at which sales revenue
equals fixed and variable costs.
Management Question:
How much do I need in sales to cover all
expenses?
• The minimum level of activity required to stay
in business.

5. Cash Flow vs. Profit
Cash Flow: What have I paid vs. what have I made?
1. Include: Cash- in (Sales Revenue) and Cash- Out (all FIXED
and VARIABLE expenses paid)
2. Exclude: Accounts Receivable and Accounts Payable that
will not affect cash for this time period.
Cash Flow = ( Cash In - Cash Out )
Profit
Gross Profit = Sales (including AR) – COGS
Net Profit = Gross Profit – All other expenses (including AP)

6. Breakeven
Fixed Costs
$ Price – Variable Costs = Unit Cost
Fixed Costs (total monthly fixed costs- rent, insurance, utilities, etc.)
$ Price – Variable Costs = Unit Cost (Units/Sandwiches need to sell a month)
(Price of sandwich) – (Raw Food Costs) = How many sandwiches at that price you need to sell
Example:
$16,400
$9 -$3 = 2,733.333
2,733 X $9 = $24,600.00 Gross Sales needed to Breakeven

7. Profit & Loss (P&L)
Example, LLC
Pro-Forma Monthly Income Statement
SALES Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14
Food 9,960 13,280 16,600 11,620 13,280 9,960 21,580 13,280 18,260 19,920 9,960 8,300
Beverages 6,225 8,300 10,375 7,263 8,300 6,225 13,488 8,300 11,413 12,450 6,225 5,188
Festivals 6,225 8,300 10,375 7,263 8,300 6,225 13,488 8,300 11,413 12,450 6,225 5,188
Catering 2,490 3,320 4,150 2,905 3,320 2,490 5,395 3,320 4,565 4,980 2,490 2,075
Total Sales 24,900 33,200 41,500 29,050 33,200 24,900 53,950 33,200 45,650 49,800 24,900 20,750
COST OF GOODS
Food 4,781 6,374 7,968 5,578 6,374 4,781 10,358 6,374 8,765 9,562 4,781 3,984
Beverages 2,988 3,984 4,980 3,486 3,984 2,988 6,474 3,984 5,478 5,976 2,988 2,490
Festivals 2,988 3,984 4,980 3,486 3,984 2,988 6,474 3,984 5,478 5,976 2,988 2,490
Catering 1,195 1,594 1,992 1,394 1,594 1,195 2,590 1,594 2,191 2,390 1,195 996
Total Cost Of Goods Sold 11,952 15,936 19,920 13,944 15,936 11,952 25,896 15,936 21,912 23,904 11,952 9,960
Gross Profit 12,948 17,264 21,580 15,106 17,264 12,948 28,054 17,264 23,738 25,896 12,948 10,790
OPERATING EXPENSES
Sales Tax (% of Sales) 2,241 2,988 3,735 2,615 2,988 2,241 4,856 2,988 4,109 4,482 2,241 1,868
Merchant Account Service Fee (% of Sales) 710 946 1,183 828 946 710 1,538 946 1,301 1,419 710 591
Rent/ Lease 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815
Utilities 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475 1,475
Insurance 350 350 350 350 350 350 350 350 350 350 350 350
Repairs 50 50 50 50 50 50 50 50 50 50 50 50
Permits 45 45 45 45 45 45 45 45 45 45 45 45
Associations fees 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115 1,115
Advertisment 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915
Fuel/ Van repairs 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050
Owner's Salary 835 835 835 835 835 835 835 835 835 835 835 835
Wages & Salaries 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166 3,166
Payroll Taxes 633 633 633 633 633 633 633 633 633 633 633 633
Total Operating Expenses 16,400 17,383 18,367 16,892 17,383 16,400 19,842 17,383 18,859 19,351 16,400 15,908
Operating Profit (EBITDA) (3,452) (119) 3,213 (1,786) (119) (3,452) 8,212 (119) 4,879 6,546 (3,452) (5,118)
Depreciation 593 593 593 593 593 593 593 593 593 593 593 593
Amortization 451 451 451 451 451 451 451 451 451 451 451 451
EBIT (4,496) (1,164) 2,169 (2,830) (1,164) (4,496) 7,167 (1,164) 3,835 5,501 (4,496) (6,162)
Interest Expense 724 713 703 692 682 671 660 650 639 628 617 606
Net Income before tax (EBT) (5,220) (1,877) 1,466 (3,522) (1,845) (5,167) 6,507 (1,813) 3,196 4,873 (5,113) (6,769)

8. Profit and Loss
Gross Profit = Sales (including AR) – COGS
Net Profit = Gross Profit – All other expenses (including AP)
SALES:
Revenues:
Food Sales 50,000
Drink Sales 20,000
Other Revenues:
Catering 5000
Total Revenues: 75,000
COGS:
Food
Chicken 6000
Beef 7000
Seafood 8000
Vegetables 4000
Total Food Cost 25,000
Drinks
Soda 2000
Liquor 4000
Water 1000
Total Beverage Cost 7000
Total COGS 32,000
Gross Profit: 43,000
EXPENSES:
Labor
Servers 5500
Cooks 5500
Insurance 1500
Payroll Taxes 1000
Total Labor Expense 13,500
Operating Expenses
Laundry 500
Utilities 2800
Supplies 500
Gas 1500
Rent 6500
Accounts Payable 4000
Interest 200
Total Operating
Expense 16500
Total Expense 30000
Net Income 13,500

9. Chicken or the Egg?
1. Manage and Understand Your Numbers
2. Calculate Your Budgets

10. Budgeting
For Cash:
Projected Cash Sales vs. Projected Cash Expenses
• Helps control the timing of bill payment and
working capital cash position.
For Profit:
Projected Total Sales vs. Projected Total Expenses
• Helps form pricing and investment strategies

11. Keeping a Pulse on the Business
Because of the items discussed a business owner is able to:
 control their business because they know exactly where
they stand financially.
 increase sales, save money, and avoid bad situations.
 make informed decisions. Know when their business is
ready to expand.
 be bankable so that a bank will consider their business for
a loan as needed.
 make a budget to know how much and where they should
be spend their money, including marketing dollars.

12. 3330 N. Causeway Blvd., Suite 422
Metairie, La. 70002
www.lsbdc.org
(504) 831-3730
Email: lsbdc-gnor@lsbdc.org
Questions and Answers
Thank you for Attending
Financial Food for Thought
Presented by
Dianne F. Sclafani, Business Consultant-Food and Restaurant Specialist
LSBDC Greater New Orleans and Bayou Region
Jarrett Woods, New Orleans Regional Manager
Accion in Louisiana