Welcome to The Money Diaries with Sage, where we dive into the finances of business owners and discover how they deal with money matters on a daily basis.
We’re asking entrepreneurs how they’re managing their finances over a seven-day period, to give you a picture of what incomes and outgoings really look like from their perspective.
Today is the turn of a café owner balancing bakes and rising energy bills.
And make sure you check out Reader’s Response at the end of this article, where accountant and best-selling author Carl Reader reveals his thoughts and shares some top tips for our entrepreneur.
Here’s what we cover in this article:
Meet our entrepreneur and check out their Money Diary
- Date: w/c 2 May 2022
- Industry: Hospitality/Retail
- How long you have been an entrepreneur? Two years
- Day job: This is my full-time job
- Location: Sunderland, UK
- Salary: £19,200
- Household: I live with my partner
Day 1 – Monday
Mondays are my day off in the shop and are typically quieter than the rest of the week.
Our biggest sellers during the week are hot drinks and cakes, so I try to make sure that the cake section is fully stocked.
My partner makes the bakes and each bake is £3 and costs approximately 90p to make, not including the time taken to make them because I don’t pay us for the labour.
Though I didn’t need to buy any ingredients today, I will need to replenish stock later in the week.
From Monday to Thursday, I aim to make £200 a day.
The café is in a busy area in the city centre, and trade is massively affected by events, concerts, and shows that have restarted since the coronavirus restrictions lifted. When shows are on, I regularly meet those targets.
I have a milk delivery that arrives on a Tuesday and Friday, and I order enough to fully stock our fridge.
However, because the weekends are so busy, we always run out on a Sunday or a Monday and have to buy some more. | purchased four extra bottles of milk on Monday, and that cost £5.
Not working in the shop on a Monday and Tuesday means I can do jobs that I can’t do while in the shop, for example going to the bank, doing a stock take, or restocking the shop.
On those ‘days off’ I’ll work approximately three hours. My partner works approximately four hours on a Monday and Tuesday to get on top of the stock.
Today was generally quiet. There’s not a lot happening in the area today so that was understandable. Slightly disappointing, but I know it’ll pick up later in the week.
Money earned: £111.80
Money spent: £5
Day 2 – Tuesday
Today I need to bank the cash taken from the past week. Cash takings dramatically reduced in the height of the pandemic however I’ve seen a steady increase over the last six months. Today I banked £346.60.
I complete small tasks like the banking, and collect anything my colleague needs from our stockroom which is at a different site.
Generally I try to totally relax on a Tuesday before physically going back to work the following day.
So today, my partner and I will spend the day together, going for food or a drink.
My colleague says today was a really good day, and we sold out of bakes. Although we didn’t meet our target, I’d still say it was a really good day.
Money earned: £159.69 + £346.60
Money spent: £0
Day 3 – Wednesday
Wednesday is my first working day of the week. I set up the shop as normal and then work through emails, bills, and invoices.
This has become more of a task recently because energy bills have increased dramatically, so I have to balance invoices that have 30 days to pay against our energy bills.
Because of the ever-increasing prices of energy and our suppliers, I recently had to raise our prices. All hot drinks have increased by 20p.
This week our milk supplier got in contact to say invoices for the milk need to be paid. For two months of supply, we owed £250.20, which I paid today.
Today is also the day that I send our hours to payroll. I work 40 hours a week and my colleague works 20.5 hours. Payroll receives our hours today, but we get paid every Saturday.
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In comparison to other businesses, our wage bill is very small. This means we have more money to spend on stock.
At the minute all the money we earn gets put back into improving the shop. We are constantly changing, adapting and trying to make it the best it can be.
I think that is the reality of having a small independent business.
I have direct debits for HMRC and rent that come out every Wednesday. These come to £200 all together. I expect these payments to come out every week as they are, of course, a necessity.
I choose to pay the rent weekly, which spreads the cost throughout the month.
Money earned: £148.25
Money spent: £450.20
Day 4 – Thursday
First thing this morning I had to go to our wholesale supplier for cleaning products, soft drinks, alternative milks, and ingredients for bakes.
I don’t have to go here every week; normally it’s once every two weeks.
Today I spent £157.20. This is an invisible cost of the business; for example I don’t pay us back for petrol or time spent making bakes.
This ensures as much money as possible can be put back into the business, and means we can keep improving and growing.
I have a direct debit set up with our supplier and pay monthly.
This invoice was due today and is automatically taken from my account. I owed a total of £797.50.
I normally have one large invoice or bill to pay each week. Last week it was the electricity bill, this week it’s coffee.
Most suppliers give us 30 days to pay and this really helps us manage our accounts.
Money earned: £261.90
Money spent: £954.70
Day 5 – Friday
Towards the end of the week is when I place a coffee order.
I’m away on holiday next week so the order is larger than normal. This means I won’t have to place another one until I return.
As I mentioned yesterday, this is paid monthly, so no money will have been spent today but the invoice for this week is £247.96.
Today is a busy day in the city centre as it’s match day.
Events like the match can affect our trade but so can the weather. Unfortunately, today was rainy and a little cold. I can guarantee a busy trade if it’s a sunny day.
On Fridays and Saturdays, our target increases to £500.
I also see alcohol sales massively increase on the weekend, for obvious reasons. Throughout the lockdowns, alcohol was our biggest seller, and I had to adapt the business as hospitality reopened and people returned to the pubs and bars.
I try and make sure the alcohol section is fully stocked for the Friday. This means myself or my partner will have to restock the shop. This is another job that cuts into our own time.
I find that there are quite a lot of these invisible costs while running your own business. On a Friday, we spend at least three or four hours doing work for the business that cuts into our own time.
I’m close to meeting our target today so generally I am pleased with how much we have taken.
Money earned: £414.90
Money spent: £0
Day 6 – Saturday
Today we placed an order with a beer supplier. I’ve ordered eight different beers; some are full cases of 24 and some are 12 or 18.
It’s really helpful when breweries offer smaller cases. This means it’s cheaper and we can offer customers more variety. Today the order came to £349.20, and we won’t need to pay this until next week.
Saturdays are also considered a busier day so I don’t have time to do a lot of extra jobs.
Generally, I’m making coffees and serving all day.
The café has a webstore so we can sell alcohol online. We offer pick up as well as local and national delivery. I do the local deliveries personally and again this is another invisible cost that I absorb.
I get charged monthly by the business who helps create and run our webstore. This is approx $70 (£56).
Therefore I spend quite a bit of my spare time in the shop, updating the webstore, making sure it’s accurate, and adding any new inventory.
Since I have to pay large invoices sometimes, like on Thursday, there will be a few days in the week where both of us will try and spend no money at all.
That’s the case today and yesterday. This helps build up the cash reserves for the week and ensure we aren’t overspending.
We were a bit under target today, however I’m not too disappointed because there were a lot of smaller sales and not many people buying larger ticket items.
Today is the day we pay wages and overall it comes to £534.98.
Money earned: £332.55
Money spent: £534.98
Day 7 – Sunday
We don’t set a target for Sunday because it can be hit and miss, it’s really difficult to predict.
Today was the Sunderland City Runs half marathon and 10k.
We, luckily, were on the route to the start line for the runners, meaning it was a really busy day, selling out of all bakes we had to offer and having to replenish the milk twice.
We have limited opening hours on a Sunday and it is a really pleasant shift, especially when we see so many new faces in the shop, like today.
I try and limit the amount of additional work on a Sunday, so we can be a little bit more chilled.
Money earned: £360.96
Money spent: £8.50
Total money earned: £2,136.65
Total money spent: £1,953.38
Final thoughts on the week
Overall, it was an OK week. It could have financially been better on some days but I’m not disappointed by the figures.
I had a large invoice come out and I had to go to the wholesalers this week so I spent quite a lot.
I’ve learned that we both actually spend a lot of time doing invisible jobs, but it’s a necessity and comes with running the business.
I’ve learned that I spend a lot of time balancing invoices, which give us 30 days to pay and by doing that, it allows me to keep ordering stock.
Managing finances can be difficult and my advice is don’t be tempted to over spend.
Try and set yourself targets and make changes to help meet them.
- Something I bought to treat myself: Went out for a meal with my partner.
- An unexpected cost that cropped up: The large invoice for the coffee order. I know it comes out every month but it slipped my mind that it was this week.
And to wrap up… what are Carl Reader’s thoughts on the financial habits of our café owner?
Check out the video below to find out…