By using a cash flow forecast template you can work out if your UK small business idea has legs. We’ve had a lot of small business ideas over the years. Some have been good, some have been bad. Knowing when to walk away is key to developing a successful small business. It’s absolutely essential that you do your homework and know your numbers! One way of doing this is by using a cash flow forecast. So let’s take a deep dive in to this.


Cash flow forecast template for UK businesses

It’s quite easy to build your own cash flow forecast template spreadsheet for Excel. To save you the trouble I’ve created one for site members to download – links at the bottom of this article. Membership is a small investment for your business and gives you access to a whole load of extra downloadable content. Most downloads are in both Excel and Open Document format so should work with just about any spreadsheet application.

Cash flow forecast template UK
Cash flow forecast template for a UK startup business

Predicting the future – why is cash flow important?

Are you thinking of setting up a new small business? Perhaps you want a lifestyle business to take you through to retirement? Perhaps you want to build the next Costa or Starbucks? Well one of your first tasks is to assess whether your business idea is even viable. I’ve seen too many people lose a LOT of money by not taking these basic steps seriously.

What is a CASHFLOW forecast?
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Why we DIDN’T open a coffee shop?

So here’s a real world example for you. Many years ago, when I left the world of corporate IT, me & Mrs Mac came very close to opening a coffee shop in the UK. There was a bit more to it than that but a core part of the business was selling cups of coffee. At first glance it was a great business idea as the coffee shop would be combined with another business creating quite a unique customer offering. It only costs around 20p to make a cup of coffee that can be sold for around £3. It’s an inherently simple business model – what’s not to like?

How much do coffee shops make in the UK?

At the time we had absolutely no idea how much money coffee shops made. The resources just didn’t exist on the internet and YouTube was still in its infancy. So one day we grabbed our notebooks and headed out to conduct a bit of market research.

Cups of coffee
We drank a lot of coffee!

We sat in a high street coffee shop for an entire day and counted exactly how many customers they were getting per hour. We tried to keep an eye on how much they were spending but that proved to be a bit more difficult. We repeated the task on a few different days in different areas. Eventually we had a reasonable guess as to how much coffee people actually buy.

In our very unscientific tests around 15-20 cups of coffee were sold every hour on a weekday. Averaged over a day and accounting for quiet and busy periods that’s 100-150 cups per day.

If you search online for coffee consumtion stats you’ll see estimates closer to 200-300 cups per day. However a lot of these estimates are coming from franchise sellers looking for people to buy coffee businesses. Of course their estimates will be optimistic. I think ours are a bit more realistic. We set 100 cups as our baseline. If we sold more, great.

How much do retail premises cost for a coffee shop?

We also visited many, many retail premises. Some had been sitting vacant for years so we thought there could be bargains to be had. No such luck. There were almost zero negotiations on price and any modifications to the general terms often resulted in a higher rent. Many had specific clauses excluding coffee shops. The words of one estate agent: “What use do you want to put the unit to? We are not able to consider any fast food, coffee shops, or financial and professional service uses.”. I suspect this was since the shopping centre in question already had a large chain coffee shop and they’d been granted exclusivity.

For sale sign on a building
We looked at a LOT of retail premises!

Retail premises suitable in size for what we were after were in the region of £30,000-£40,000+VAT per year to rent. Premises in shopping centres often came burdened with services charges of over £10,000+VAT per year. Not to mention business rates, utilities, staffing costs and everything else. You might as well say the base running costs were £100,000 per year. That’s a lot of cups of coffee!

Empty shop unit for a coffee shop.
The rent for this larger bare unit was £61,200 per year including VAT and service charges.

How many staff do you need for a coffee shop in the UK?

So this is a tricky one. I know of coffee shops operated by a single person. It’s not easy but it can clearly be done as a lifestyle business. However that’s not a viable operation. It’s entirely dependant on the single owner / manager. Unless it’s extremely profitable it’s very unlikely a business like this could ever be sold, simply due to the complete reliance on that one person.

Most coffee shops will need at least 2 members of staff to be on-site at all times. This allows for lunch breaks, toilet breaks etc. not to mention the possibility to open longer hours. You can read about the legal requirements for rest breaks at work here.

We wanted to be open from 8am to 8pm. So don’t forget that means having someone on-site from 7am to 9pm to open up / lock up and do all of the behind-the-scenes preparation work. The UK has stringent working time regulations meaning generally speaking you can’t make people work more than 48 hours per week. More about the UK working time directive here.

How many days holiday to UK workers need?

Then there’s holidays and staff sickness. Lordy, this is getting complicated. We wanted to be open pretty much every day with the exception of a handful of bank holidays. We worked that out as 360 ‘working days’ per year. How do you staff that? How do you allow for time of? Generally speaking UK workers are entitled to 28 days paid holiday per year. You can read more about that and there’s a holiday entitlement calculator here.

With all that in mind, unless you want to staff the shop yourself and have no time off…ever, then you’re probably going to need a minimum of 4-5 members of staff. This includes:

  • 1 x business manager as the main person in charge
  • 1 x deputy manager to run the shop when the business manager isn’t around
  • 2-3 x shop assistants / baristas

The business manager could obviously be yourself. They’re effectively in charge of general operations for the store, looking after everything from staffing and accounting through to materials ordering and building maintenance. Buck stops with them. You then need a deputy manager to take over during holidays and sickness.

You would need a minimum of 2 members of staff on-site every day to cover the 14 hour rota. They would both be entitled to time off so you would also need some general shop assistants / baristas. Obviously some of these could be part-time but it’s a challenging rota.

Apparently the average salary of a coffee shop manager is £33,000 per year in the UK. Expect to pay £22,000 per year for a barista with more experienced staff demanding £26,000+. The costs quickly add up and staffing is likely to be your biggest hurdle. Let’s very optimistically pretend we can get by with the following:

  • Business manager – £33,000pa
  • Deputy manager – £19,200pa
  • Shop assistant – £15,000pa

If you include employer’s National Insurance contributions and pensions that’s an annual staffing bill of nearly £75,000. If you’re selling coffee at £3 per cupt that’s 25,000 cups of coffee just to cover the wage bill. No premises and no actual coffee. Just the wages. And as I say, good luck with that rota. It ain’t going to be simple keeping the shop open for 12 hours per day, 360 days per year with just 3 staff. If you’re a website member you can download a rota template from here.

Coffee shop capital costs

On top of everything else we haven’t even touched on capital costs. Some of the units we visited just had bare concrete walls. They looked like they’d never been rented out, ever. The costs of a full fit-out for a unit in this state can be huge. A basic refurbishment for a coffee shop will set you back around £20,000 including equipment and furniture. If you’re starting with bare block walls you could be looking at £100,000+ just for the initial fit-out, equipment, furniture, signage etc. We haven’t included capital costs at all in our example spreadsheets.

Espresso coffee machine
Commercial espresso machines cost around £3,000

Member Downloads – Cash flow forecast template UK

Using a cash flow forecast spreadsheet can help you with this entire process. For website members I’ve made a few you can have a play with – click here to join. The sample version includes a lot of the figures we’ve talked about and there’s also a bare version for you to fill in yourself- both are in Excel and Open Document format. Please take the sample data with a pinch of salt – it’s just a very rough example of how the spreadsheet can be used.

How to use our cash flow forecast template for the UK?

The spreadsheets above have 3 main tabs. By default you can enter your own data in the white boxes. Grey boxes auto-calculate but you can unprotect the sheets and change anything you need to suit your own business.

Daily Sales Estimate

The daily sales estimate allows you to break down exactly how many units of ‘whatever’ you plan to sell per day. It also allows you to plan for when you’ll be open, how many working hours there will be etc.

Cash flow forecast template UK
Sales estimate using a coffee shop as an example

Staffing Cost Estimate

Use this to plan your staffing needs and how much this is likely to cost your business. You can use HMRC’s own NI calculator to help with some of the figures. At the time of writing you’ll be paying employers NI at a rate of 13.8%. I’ve also catered for a 3% pension contribution from the employer – obviously up to you how you want this side of things to work.

Cash flow forecast template UK
Staffing cost estimate spreadsheet

Cash flow Forecast

Then we have the main cash flow forecast. Relevant information from the Daily Sales Estimate and the Staffing Cost Estimate will automatically be populated. Obviously feel free to unprotect the sheets and change anything you like. Add your cash out-flows, such as rent, rates etc. Then just keep an eye on the monthly cash movement (net movement) and monthly closing balance.

Cash flow forecast template UK
Cash flow forecast template for a UK startup business

I’ve also added a gross and net margin calculation. You wouldn’t normally include these as part of a cash flow forecast but I think they’re useful to keep an eye on. Also bear in mind that VAT isn’t catered for at all. You will almost certainly be charging VAT to your customers and reclaiming VAT on your purchases. VAT is generally paid quarterly so allow for this when you’re in the planning stages. To be on the safe side set aside 20% of everything you earn to pay your VAT bill. We haven’t even touched on Corporation Tax – at the moment that starts at 19% of profits but could be as high as 25%.

Don’t be put off!

In the end we decided not to go ahead with our coffee shop idea. We just couldn’t make the numbers work. Please don’t let this article put you off though! You just need to be realistic and perhaps modify your plans to suit the market and your budget. Taking risks are all part of running a business. However you can lose a LOT of money very quickly if you don’t go in to this with your eyes wide open. Do your homework. Know your numbers. Then the fun starts.

If you spot any errors in this article please get in touch. Don’t forget to subscribe on YouTube and remember you can get access to extra useful content by becoming a site member. Please also join our mailing list so we can keep in touch with you outside the world of YouTube. We are 100% privacy focused and you can unsubscribe at any time.

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Last Updated on 29 July 2023 by Andy Mac