When Should Your Juice Bar Be Profitable?
There are three things to look at here:
1) Your Cashflow
2) The initial investment you made
3) Building an asset
1) What is a normal amount of time for you to run a negative cash flow for?
On average we would say you will run negative for 6 months or maybe even 8 months, however, anything over this would probably indicate there are some issues that need addressing.
Ideally, we would like to see you starting to run positive cash flow between 4-6 months. This is the average we see with our clients.
2) Recouping your initial investment
Now, how long should it take for you to make your money back from your initial investment?
Most of our clients are investing 200k, and we would expect them to make their money back within 2 years, sometimes a year and a half.
Do the math, how much do you need to net each month to have your initial investment paid off. If you invested $240k, then you would need to be making $10k net a month to break even within 2 years. OR make $20,000 a month for 1 year or something in between.
To ensure you are successful, we would strongly recommend doing your analysis. You need to make sure you are in a market that can support the amount of income based on your rent and the demand in your area, etc.
3) Remember you are building an asset
Once your cash flow is positive, your business has value and you could be able to sell this at a profit.
As long as you can show consistent positive cash flow (6 months would probably be the minimum) you have built your business that may be very attractive to potential buyers.
Usually, Juice or Smoothie Bars are valued at 2-4 x multiple which means that if your business makes $100k per year, 2 x multiple means it would be worth $200k, 3 x multiple $300k and so on.
The longer your business has been established, the more it is usually valued. If it’s only been open for 6 months it would be considered riskier but if your business is solid in terms of cash flow expenses and the way you are managing it, you still have an asset.
With the right tools, like all the content on our website and social channels, a mentor, or using our consultancy service are all things that can substantially accelerate your growth.
If you are interested in getting to your goal of positive cash flow faster, want to know how to put all the necessary systems and operations in place, reach out to us.