Business Planning Help Please!

ScottySmog

Hi Everyone,

I'm thinking of starting my own business and I'm in the process of drawing up a business plan. Whilst I'm finding it easy to estimate my overheads, it's a bit trickier to estimate my turnover and gross margin. Does anyone know of any websites (HMRC?)that show typical expected gross margins for certain types of businesses (food retail in this case)? (Otherwise, it would be quite a lenghty calculation with over 400 product lines!) Other than a crystal ball, is there a more accurate method of estimating turnover ?

Any comments gratefully received.

SS

ScottySmog

Mods,

This was my first post. Please move to the "Small business start up" sticky thread if it's more appropriate to be in there. I've just spotted it

WHA

You'd be better doing some research into the products you are intending to sell. Gross profit percentages vary enormously in retail, from under 5% on some items to over 50% on others. Convenience/Grocery/Newsagent type shops can easily vary between 15% and 25% gross profit, but some are less and others more, depending on their product sales split. Specialised retailers could easily be making 50% or 100% gross profit.

You need to break down your sales in your business plan into several product types, apply different margins to each, and then change the split of total sales between product lines. Presumably if you have got so far as doing a business plan, you'll have a fair idea of the products you intend to sell, where you will be buying them from, purchase price and selling price. If you don't already know, contact your suppliers/wholesalers for their prices for a sample of products.

I would say that taking industry averages or other similar statistics is quite a dangerous way of proceeding - you are far better doing the detail yourself to make sure you fully understand the dynamics of your proposed product mix.

ScottySmog

Thanks for the reply WHA.

I suppose I knew what you have suggested is the way forward. Maybe I was trying to find a shortcut but I suppose the hard work will pay off in the end and give more accurate results.

Thanks again :beer: