# 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)
• 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

### 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.