'Cash sales' means all income from your main business activity which is received at the time of sale. Although many customers will pay you in cash, remember that Cash sales also include:
- debit and credit card payments
- cheques, if you decide to accept them (many retailers no longer do, but if you have any trade customers you're likely to allow them to pay in this way)
- payments made using alternative methods like Paypal if you decide to sell meat and meat products online
To prepare your cash flow, you will need to estimate how much income you will receive from Cash sales over the next 12 months (including VAT where appropriate). To do this you will need to work out how much meat and other items you are likely to sell and at what price.
There are a number of things to consider when you make your estimates:
Type of business
- who will your customers be. Will you target only members of the public or will you aim to supply local shops (for example a corner shop with a small fresh meat section) and other businesses such as restaurants and hotels
- will you have more than one retail outlet or perhaps a mobile shop or market stall
- will you sell online or by mail order as well as from your shop premises
- will you offer a delivery service. If you have trade customers they are likely to expect you to deliver, and you may decide to offer this service to retail customers within a certain radius as well
- where will your premises be. Unless you plan to operate as a wholesale catering butcher, the majority of your sales will be made to the general public so a high volume of passing trade is likely to be essential (unless you plan to focus on selling your products online)
- what range of meat and other products will you stock
- will you offer organic and other speciality meats, such as heritage breeds
- how much of each type of meat will you prepare each day
- will you offer pre-cooked pies, sausage rolls, sandwiches and so on. Bear in mind that if you sell ready to eat products as well as raw meat, you need to make sure that they are completely separate to avoid cross-contamination
- along with meat you butcher yourself, how much in the way of pre-prepared goods will you buy in (if any at all)
- will you offer convenience products such as pre-sauced meat, burgers, kebabs and so on
- will you aim to introduce new products on a regular basis - for example you might look to capitalise on promotions of certain meats by television chefs
- how will you monitor which are popular/unpopular lines
- what will you do with unsold goods at the end of the day
- are you likely to sell more goods at certain times of the year
- will you offer seasonal goods such as turkeys and geese
- if you operate as a wholesale catering butcher, will you offer products tailored to the requirements of individual trade customers
- what will your pricing policy be (don't forget, you must be able to cover your costs, overheads and drawings)
- will you try to compete with local supermarkets by offering meat at low prices or will you justify higher prices with excellent quality meat with an outstanding provenance, added-value products and friendly, knowledgeable service. Customers are prepared to pay more for quality meat with assured provenance.
- how much discount will you offer to your trade customers
- will you have to employ trained butchers and if so, will you be able to find suitably qualified staff in your area
- what will your policy on staff discounts be
Most butchers face very strong competition from supermarkets which offer most of the popular types of meat in easily identifiable wrapping. The packaging may also have cooking instructions and serving suggestions. Most large supermarket outlets will also offer products like ready-marinated cuts of meat or specifically branded 'lifestyle' products like barbecue packs of meat. The rapid roll-out in the High Street of the supermarkets' convenience outlets such as Sainsbury's Local, Tesco Express and Morrisons M Local has added a further layer of competition as these generally stock a small range of pre-packed meat. Nearly 80 per cent of fresh meat sales are through supermarkets and symbol shops, with only about 9 per cent through butchers and market stalls. Sales through butchers continue to decline.
You will also face competition from any other specialist butchers in your area and also from the growing number of online suppliers of meat products.
All of this makes it very hard for independent butchers to compete. So it's important that you do everything you can to differentiate yourself from your supermarket competitors and to attract customers to your shop.
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.