new business module

ESTIMATING INCOME, COST AND PROFIT 85
1.3 Estimating income – a case study
The following case study uses Berthe’s small business selling
tea and juices to show how income can be estimated.
Berthe’s tearoom – a case study, part 1 (see Hand-out 30)
Berthe is planning to open a tearoom in the district she lives in. She wants to serve tea and juices
to the people of her district and to passersby. Her customers will have the possibility to sit down
and enjoy their beverage. They will also be able to read the local newspaper, which Berthe plans
to provide for free.
Berthe also plans to sell juice over the counter. She intends to give customers not consuming
their beverage in her tearoom a 10% discount on her sales price.
Berthe wants to assess the financial viability of her business idea. Having followed a business
skills training course, she knows that the first step is to estimate income. She figures the best
way to do this is to talk to people who run similar businesses in other districts of town and ask
them how many customers they serve and at what price they sell their products.
Berthe’s market assessment showed that the typical tearoom:
• Served between 30 and 50 customers per day from Monday to Thursday
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About half of the customers consume tea – typically 2 cups
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About half of the customers consume juice – typically 1 bottle
• Served between 80 and 100 clients per day on Fridays and Saturdays
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Most of the customers consume tea – typically 5 cups
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Few customers consume juice – typically 3 bottles
• Was closed on Sundays
• Sold over the counter from Monday to Friday
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Between 50 and 100 bottles of juice per day
• Doubled sales during the months of July and August (in the tearoom and over the
counter) owing to the good weather, festivities, and the holiday season
• Had stable prices throughout the year
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Soft-drinks $10 – 15
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Cup of tea $2 – 4
The following box shows one way to estimate Berthe’s income.
It is by no means the only way, as assumptions have to be made
about how Berthe thinks she will perform in comparison to the
tearooms she investigated during her market assessment.