Table of Contents
Objectives of preparing a budget for Fleet Highlands Café. 2
Forecasting and decisions making process. 3
Report on the company’s revenue and spending variance. 3
Recommendation to the café for improving financial performance. 5
Objectives of preparing a budget for Fleet Highlands Café
The main objectives of Fleet Highlands Cafe are to make an excess of income over operating costs in income maximization. But it is not a substance of the dream of choice. Hence there is no magic formula for boost the profit figure suddenly. Thus the concept of budgeting can try to add to the chances of marketing profits with the environment given. Hence based on the action plan estimation of the takings and expenses can try to provide the organization in forecasting and its overall verdict manufacture process. Therefore all these notable aspects can try to mitigate the overall budget values.
Hence the main objectives of the budgets of the business of this café are as follows –
Income and expenses estimation
A financial plan provides a sensible approximation of the profits and operating cost of the period and the financial position at the shut of the era.
Action plan
The financial plan provides a synchronized method of the action designed to attain the significant commercial estimate reflected in the budgets (Hayati, 2019).
Comparison of the results
There are other objectives of the budget that can try to give a contrast of the real consequences which those have been budget and the analysis as well as an understanding of deviation by the area of responsibilities to point to the courses of the corrective action planning. The same aspect can try to lead specific development in the prospect tactics.
Providing guidance
The budgets can help in guiding the making the organization decided to adjust the plans and the primary business objectives if there is an unmanageable change in the conditions as a whole (Mustika and Santosa 2019).
Forecasting and decisions making process
The significant process can try to provide an essential decision-making process in adjusting the plans and the primary business objectives if there has been an uncontrollable change in the overall business decision making process for the day to day decision making (Kempa and Setiawan 2019).
Report on the company’s revenue and spending variance
Source: created by the author
From the significant report of companies’ income and expenditure variance for the month end of March. Hence, the overall budgeted analysis, it can be seen that the café has made defined two prospects while preparing their budget. Someway it is found that their actual budgeted amount has exceeded their planned amount and valuation. For example, the wages and salaries for their workers have counted less than the planned one. Therefore the variances have also showcased negative value.
On the other hand, the café had made more expenses towards facilities, insurance of the assets, and fuel for preparing the food regularly. However, the actual income had been quite less than the planned operation income. Therefore as a financial planner, it is seen that the company had not able to meet up the profit margin since they had acquired less amount of raw materials, paid less amount of rent, and did not adequately use their overall utilities as a whole.
On the other hand, in a case determining the profit percentage, the dissimilarity between the real amount and the planned budget amount is divided by the scheduled amount to convert it into a preferred percentage value. Hence, from the overall analysis of the budget, it can be said that the company had not made a proper amount of hundred percent profit since the variances had gone negative in some cases. This had also created an immense impact on the overall net in service returns of the café. It is seen that the company had been able to gain only 70 percent profit out of a hundred percent in the month ended. Thus for a financial manager, this has to be the most significant concern area for the café going forward. Therefore all they need is to develop an effective plan that can ensure sustainability and effectiveness in the organization planning for a long time. Furthermore, in the negative areas, the café needs to provide more concern as a whole (Link, 2019).
The primary concern for the budget variance
A favorable budget variance is an actual amount that can be differed from then estimated budgeted amount. Hence this value is considered to be highly beneficial for any sort of business industry. It means that the overall actual revenue has recorded more than the expected variance. Here the actual expenses and costs are recorded less than that has been expected actually. On the other hand, an unforgettable budget variance is just the opposite. Here a difference from its budgeted amounts has effectively created a negative valuation among them. On the other side, from this overall estimated budget, there are two types of variances that have been founded for causing the difference in the café. Therefore from the whole analysis point of view, it is essential to create a better specific understanding based on the overall budgeted efforts. Thus in case of satisfying unfavorable budgeted experience, it is vital to overall determine the primary sources where these changes have been happening for this café (Leach and Newsom 2019).
In this above-budgeted table of this café, there are a couple of areas where the cafe lacks its opportunities, which has reduced its revenues. Thus, the month’s reduced revenue reduction had caused them to reduce their total operating income as a whole. Here the changes are determined as follows-
- The budgeted meal value had been estimated to be 20000 pounds, where the actual investment had been recorded at 18000 pounds. Hence, in this case, the shortage of 2000 pounds had caused the company revenue loss. Thereby the revenuer had also decreased by 10000 pounds. Thus management needs to ensure stable usage of products by maintaining the meal quality (Prabawa et al. 2019).
- Secondly, in the case of raw material, the café fell short also since the actual expense had been less than the planned cost. This had caused a loss of 5000 Euros in the restaurant. Therefore the café needs to ensure practical usage and sourcing of raw materials as a whole.
- The issues in providing wages to workers and staff salary had also been less than the planned estimate. It had happened since the company might have changed its salary structure or might have sacked employees, which effectively caused the loss for them.
- Usage of utilities has recorded 100 pounds loss to them. Although this is not a significant cause, the company still needs a planned usage of all these. Other than that, the café can also try to implement specific effective and efficient business planning or strategic changes based on business prospects. Therefore, the café management needs to endure the practical usage of all these providers to the fullest.
Recommendation to the café for improving financial performance
Below are certain aspects that Fleet Highlands Café can try to improve in the future to improve their overall business as well as financial efficiency that can effectively ensure profit-making, and these can also increase the economic efficiency and business sustainability (Blake, 2019). These are as follows-
Treating it as a business
Treating the coffee shop as a business has to be done to make good profits. It does not mean to cut costs for ensuring every opportunity but to ensure making it worthy. The café needs to come up with a perfect business plan by putting aside thee personal preferences. Hence all these aspects can be counted upon in performing the business overall. On the other hand, if the café is having its USP products but sells less than the natural product, then the restaurant must focus on natural products rather than the USP product making. On the other hand, the restaurant manager needs to keep track of all the financial transactions and other business aspects that can help them make positive decisions(Lagrosen, 2019)
Keeping focused
In the case of a cafe, the owner should not try to indulge himself in other works and must invest time in the café more. According to different cafe owners, it is seen that most people do not spend their time in the business. Hence they do not get to know the business requirements required uplifting their business; sometimes, the workers also face issues relating to the company. Therefore, if the management does not pay attention to them, it is evident that the café will lose business and cause severe loss(Tan, 2019).
Right investment
The perfect sort of investment is considered to be an utmost priority for the café. Hence the management of Fleet highlands café needs to make excellent and effective business decisions. The owner needs to spend more time researching and choosing the tools and equipment that can suit the café more. The choice of the cheapest option can take a long time to meet losses. Hence the owner of the café needs to be optimistic while choosing the best for business decisions. For example, the owner can invest in ceramics that can last or even can invest in employee training or purchasing a well-branded coffee. Moreover, the owner can maintain integrity, value, and collaboration in this case. Therefore, it is expected that if the owner takes care of these aspects, the café will ensure long-term sustainability and financial performance.
References
Blake, L.J., 2019. How agile is my competitor? Can strategic agility attenuate latecomer challengers? The case of Café Coffee Day (CCD) in India. Journal of Management, 7(2), pp.1-10.
Hayati, F., 2019. The Creation of Campus Cafe in Getting Profit. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 2(1).
Kempa, S., and Setiawan, T.G., 2019. The Effect of Entrepreneurial Orientation on the Competitive Advantage through Strategic Entrepreneurship in the Cafe Business in Ambon (Doctoral dissertation, Petra Christian University).
Larsen, Y., 2019. The Quality Café: developing the World Café method for organizational learning by including quality management tools. Total Quality Management & Business Excellence, 30(13-14), pp.1515-1527.
Leach, R., and Newsom, P., 2019. LAURENS STREET CAFÉ. Global Journal of Business Pedagogy, 3(1), p.78.
Link, J., 2019. Strategic CEM: Café Experience and Social Media.
Mustika, N.R. and Santosa, H., 2019. The Effects of Store Atmospher Cafe Interior to Purchase Intention on Cafe My Kopi O! Malang. Jurnal Mahasiswa Jurusan Arsitektur, 7(2).
Prabawa, B., Majid, A., and Widiatmoko, D., 2019, June. How is Customer Value Created through Design Strategy? Case Study of Serasa Salad Café. In 5th Bandung Creative Movement International Conference on Creative Industries 2018 (5th BCM 2018). Atlantis Press.
Tan, J., 2019. Route 88: Bike Café: From Planning to Operations and Entrepreneurial Finance.
Appendix
Appendix 1
Source: created by the author