'Cash sales' means all income from your main business activity which is received at the time of sale. While a large number of your customers are likely to pay you in cash, remember that Cash sales are also very likely to include debit and credit card payments as well as cheques (for example from customers hiring out your club for an event).
To prepare your cash flow, you need to estimate how much income you will receive over the next 12 months, including VAT. To do this you will need to work out how much you will take in entry fees and from bar and food sales. Think also about other possible sources of income (such as a payphone and non-tobacco vending machines) and estimate how much these are likely to be.
There are a number of things to consider when you make your estimates:
Type of club
- who will your customers be? Will you target a specific market such as young adults, mature clubbers or teenagers, or aim to attract different age groups on different nights?
- where will your club be located? If you're starting from scratch are you confident you will be able to get a licence?
- how large will the club be and how many clubbers will you aim to accommodate? Bear in mind that your local fire authority will set a maximum capacity for your club that may be considerably lower than the amount of people you think that it can hold
- what will your opening hours be and what will the last entry time be?
- how many days of the week will you open?
- will you hire out all or part of the club for private parties?
Your facilities and services
- what type of music will you play?
- how many resident DJs will you have? Will you also have visiting, well-known DJs who play on an occasional basis?
- will you engage local bands and other live acts?
- what type of catering will you offer? This might range from a fully equipped restaurant to snacks such as pies or pasties, or none at all
- will you install attractions such as pool tables, big screen TV or amusement machines?
- which brands of beer, wine and other alcoholic drinks will you stock?
- how will you monitor wastage, theft and other stock losses? These can be a real problem in the licensed trade
- what will your pricing policy be? Decide on how much you will charge for drinks, food and snacks and how much your entry fees will be
- if you plan to hire out all or part of the venue to private parties, will you require a deposit and impose a minimum charge?
- will you offer entry discounts, for example to students or to those coming into the club before a certain time?
- will you have 'ladies nights' when female clubbers get in free?
- are you planning to offer promotional discounts on drinks? Bear in mind that mandatory licensing conditions ban the use of irresponsible promotions
The late night economy is highly competitive and your night club may face competition from:
- other clubs in the area
- pubs and bars that have entered the late night market by extending their opening hours on certain nights of the week
- other entertainment venues like bowling alleys, cinemas, theatres and so on
The differences between pubs, which traditionally closed at 11 pm, and clubs, which stay open till the early hours, have become blurred, with pubs now able to apply for 24 hour opening throughout the week. A large number of pubs have extended their opening hours on Friday and Saturday nights - the busiest nights in the week. Give some thought to how you will set your club apart from your competitors - this may need to involve considerable expenditure on creating an innovative, stylish and exciting environment.
To help with your decisions, click on the checkpoints for guidance. Once you have worked out a Cash sales figure add it to the relevant field in your cash flow forecast.