ATAR Example for a Small Business

 

ATAR Forecast Example for a Small Business

In this ATAR forecast example, we will consider a small business. In this example, there is a coffee shop in a local area. Their new product is a service – they plan to renovate their store and add a small bookshop area. This area will co-exist within their coffee store. Their plan is to generate book sales, in addition to their current coffee/cake sales.

Here are their ATAR assumptions:

  • Local population = 100,000 people
  • Awareness = 80% (using a $50,000 local promotion, plus their store in in the main street)
  • Trial = 10% (as they only expect a small % of the customers to also be interested in buying a book)
  • Availability = 100% (as they run and control the store)
  • Repeat = 50% (just an estimate – they aren’t sure about this one)
  • Loyalty = 80% (current loyalty of their coffee store)
  • Upfront cost = $250,000 (to redesign the store)
  • Book sales = 4 per year
  • Average book price = $25
  • Average book cost = $15
  • Promotional support = $50,000 in year 1, then $10,000 pa ongoing

ATAR Financial Forecast looks good

atar small business example

Key ATAR Results

  • Break-even (pay-back) in year 2
  • Sales units pa = 35,000 (100 books per day – they are open 7 days)
  • Additional profit contribution of $190,000 in year 1, growing to over $300,000 pa

Therefore, on this basis the proposed new product/service looks financially viable.