If your café business plan will be used to acquire investment, it is likely that investors will request three to five years of financial projections. These are typically compiled in the form of an income statement, balance sheet, profit
& loss table, and cash flow forecast. The most effective method of forming such forecasts is to base them off of your historical operating performance. For instance, take the percentage growth rate of your past three years and
extrapolate them at the same rate into the future. The other method of performing the projections is to base them off the sales of similar cafes.
If your café is new to the market, it is often challenging to compare the projections to other more established ones. It is highly unlikely that one with five
years of operating history was just as profitable in year five as it was in month five. Therefore, you will need to make several assumptions in order to account for the variance in sales performance. For instance, being conservative
about revenue during the first year and over-forecasting expenses to ensure that you do not experience liquidity issues later on.