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
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.
