Pro Forma Budget
COSTS
Costs in a business are usually affixed with two types – Fixed Costs and Variable Costs. These costs determine the business’s good standing, should there be a report on it. Fixed costs are generally costs that do not change with an increase or decrease in goods and services. Variable costs are costs which change in proportion to the activity of a business. In this case – our business – we have identified the different types of fixed and variable costs which are associated with it.
FIXED COSTS
Laptops and/or computers – Having proper computing equipment is essential to our long-term customers (particularly users who will use our internet café to play videogames, process large files, and/or watch films on the computer/laptop)
Air-conditioners – A must if the weather is too hot i.e. summer season. They can also be used to heat up the room if it is cold during winter
Printers, Scanners, Binding/laminating, CD/DVD burning – Handy for people who want to print any important documents, laminate, replicate CDs or DVDs, and so on. A certain fee will be enforced to cover some costs.
Furniture – Adequate furniture for the comfort of long-hour players (including computer desks and chairs)
White Goods – This includes the fridge, microwave and coffee machine (as a part of kitchen expenses)
Rent – Rental expenses for the shop space used in the Lakeside shopping centre complex
CCTV (Surveillance Cameras) – Used for security reasons and the safety of the business’s assets
VARIABLE COSTS
Utility Bills – Water and Electricity are two main expenses which will be consumed heavily for the duration of the business period
Internet Charges – The monthly fees as required
Food & Drinks Expenses – Expenses to cover for maintaining the food and drinks section (including use of cutlery, crockery and dishwashing liquid, tea towels, etc.)
Stationery Expenses – (includes items such as pens and staplers) Mainly for office use, or if, anyone needs them.
REVENUE
Revenue in a business refers to income received from business operations. It is the most important financial asset if a business wants to survive. Another way of explaining this is that it measures the business’s life in terms of the inflow of cash received from customers. In our business, we have identified the most likely revenue:
Relatively high internet usage fee (per hour)
This is necessary to cover the expenses for using the internet excessively. It will allow us to compensate for providing high-speed internet and WiFi services as well as other operational costs.
Offer competitions
This activity will encourage attendance from the gaming percentage of our target market through the rewards system we will put in place to benefit the winner of any competitions. Attracting people will lead to an increase in revenue and therefore increase the viability of our business.
Low cost for food and drinks
We will place a price ceiling on the provision of food and beverages in order to encourage patrons to stay in our internet café for longer and build a preference for our café compared to our café competition primarily located in the Lakeside food court. It will also justify the high costs enforced for internet usage in our business.
Café promotion
Through advertising with leaflets, posters, magazine and newspaper adverts, billboards and pamphlets, advertising on virtual social media networks, a primary website and some sub-sites, negotiating with allied businesses, employing teenage mascots and offering special promotions and deals: people will become informed of our business and hopefully visit our internet cafe.
Provide membership for loyal users
By providing membership for continuing customers, we can be sure that they will appreciate the services of the business and reflect this appreciation through investing more of their money in the services we will provide. This will also our long-term revenue.
Costs in a business are usually affixed with two types – Fixed Costs and Variable Costs. These costs determine the business’s good standing, should there be a report on it. Fixed costs are generally costs that do not change with an increase or decrease in goods and services. Variable costs are costs which change in proportion to the activity of a business. In this case – our business – we have identified the different types of fixed and variable costs which are associated with it.
FIXED COSTS
Laptops and/or computers – Having proper computing equipment is essential to our long-term customers (particularly users who will use our internet café to play videogames, process large files, and/or watch films on the computer/laptop)
Air-conditioners – A must if the weather is too hot i.e. summer season. They can also be used to heat up the room if it is cold during winter
Printers, Scanners, Binding/laminating, CD/DVD burning – Handy for people who want to print any important documents, laminate, replicate CDs or DVDs, and so on. A certain fee will be enforced to cover some costs.
Furniture – Adequate furniture for the comfort of long-hour players (including computer desks and chairs)
White Goods – This includes the fridge, microwave and coffee machine (as a part of kitchen expenses)
Rent – Rental expenses for the shop space used in the Lakeside shopping centre complex
CCTV (Surveillance Cameras) – Used for security reasons and the safety of the business’s assets
VARIABLE COSTS
Utility Bills – Water and Electricity are two main expenses which will be consumed heavily for the duration of the business period
Internet Charges – The monthly fees as required
Food & Drinks Expenses – Expenses to cover for maintaining the food and drinks section (including use of cutlery, crockery and dishwashing liquid, tea towels, etc.)
Stationery Expenses – (includes items such as pens and staplers) Mainly for office use, or if, anyone needs them.
REVENUE
Revenue in a business refers to income received from business operations. It is the most important financial asset if a business wants to survive. Another way of explaining this is that it measures the business’s life in terms of the inflow of cash received from customers. In our business, we have identified the most likely revenue:
Relatively high internet usage fee (per hour)
This is necessary to cover the expenses for using the internet excessively. It will allow us to compensate for providing high-speed internet and WiFi services as well as other operational costs.
Offer competitions
This activity will encourage attendance from the gaming percentage of our target market through the rewards system we will put in place to benefit the winner of any competitions. Attracting people will lead to an increase in revenue and therefore increase the viability of our business.
Low cost for food and drinks
We will place a price ceiling on the provision of food and beverages in order to encourage patrons to stay in our internet café for longer and build a preference for our café compared to our café competition primarily located in the Lakeside food court. It will also justify the high costs enforced for internet usage in our business.
Café promotion
Through advertising with leaflets, posters, magazine and newspaper adverts, billboards and pamphlets, advertising on virtual social media networks, a primary website and some sub-sites, negotiating with allied businesses, employing teenage mascots and offering special promotions and deals: people will become informed of our business and hopefully visit our internet cafe.
Provide membership for loyal users
By providing membership for continuing customers, we can be sure that they will appreciate the services of the business and reflect this appreciation through investing more of their money in the services we will provide. This will also our long-term revenue.