You need to understand the numbers. This is the part of the business that isn't romantic, but it's essential. Because without numbers, you're flying blind.
Here are the numbers you need to know:
Gross Revenue. This is the total amount of money you take in before any expenses. It's a top-line number.
Net Profit. This is what's left after all the expenses. This is the bottom line. It's why you do this.
Cost of Goods Sold (COGS). This is the cost of the products you sell—coffee, milk, pastries, etc. Your COGS should be around 30-40% of your gross revenue. If it's higher, your prices are too low or your waste is too high.
Labor Cost. This is what you pay your employees. Your labor cost should be around 25-35% of your gross revenue. If it's higher, you have too many employees or you're overpaying.
Rent. Your rent should be about 10-12% of your gross revenue. If it's higher, you have a rent problem.
Utilities. Electricity, water, gas, internet. They should be about 5% of your gross revenue.
Marketing. Your marketing budget should be about 3-5% of your gross revenue.
Profit. After all these expenses, you should be left with 3-5% net profit on a good year. That's it. That's your reward for all that work.
Break-even Point. How much revenue do you need to cover all your fixed costs? That's your break-even point. If you're below it, you're losing money. If you're above it, you're making money.
Average Ticket. The average sale per customer. If you can increase this by $0.50, you're increasing your profit significantly.
Customer Count. The number of customers you serve per day. This, combined with average ticket, determines your revenue.
I check these numbers weekly. I know my COGS, my labor cost, my rent, my utilities, my profit. I know what's working and what's not. And I adjust accordingly.
Because the numbers tell the story. They tell you what's going on. They tell you what's working and what's not. And if you don't know the numbers, you're just guessing.