Cash Flow Forecasting

Lena Carter’s New Café Venture 

Lena Carter is opening a small café specializing in organic pastries and specialty coffee. She understands that managing cash flow is essential to avoid financial difficulties, so she prepares a cash flow forecast to identify potential issues in the first four months of business (June – September).

Lena has secured $75,000 from a bank loan and personal savings to fund the business, and this amount will be available in June.

• The café lease costs $30,000, which must be paid upfront in June.
• Lena expects an opening cash balance of $2,000 at the start of June.
• She anticipates steady increases in daily sales as customers become more familiar with the café. Her forecasted monthly cash sales are $5,750, $7,500, $8,475, and $9,215 for June to September.
• Additionally, a local event catering company has placed an order worth $10,000 for custom pastries, but they will only pay in September. Lena will need to purchase the ingredients in June to fulfill this order.
• Each month, Lena restocks ingredients and café supplies. The forecasted costs for these purchases are $59,000, $4,500, $5,000, and $6,100 for June to September. June’s costs are higher as Lena must stockpile essential ingredients and buy supplies for the catering order.
• Lena must pay wages for herself and a part-time barista, costing $1,500 per month.
• Other operating expenses (rent, utilities, and maintenance) are $1,500 in June and July but slightly increase to $1,605 in August and $1,630 in September.
• Marketing expenses for promotions, social media ads, and flyers are $2,500 in June, $1,500 in July, $975 in August, and $400 in September to attract customers.