Financial Planning Before Opening a Shop: Capital, Profit, Break-even
Do the maths before opening a shop: startup capital, true unit cost, pricing, break-even and cash flow, with worked hypothetical examples and a pre-launch checklist.
Many people open a shop on confidence in their product, then get a shock later: sales look good, yet the bank balance shrinks every month. This usually is not about the product. It comes from not working out the key numbers before putting money in. This article walks through 5 numbers to know before opening a shop, online or physical.
What financial planning before opening a shop means
It means answering 3 questions before you start: how much money you need to open and survive the early period, how much real profit each sale makes, and how much you must sell not to lose money. These numbers do not need to be perfect, but you need them, because they are the map that shows where you are heading.
1. Startup capital
- First stock: how many units and variants. Start small to test the market.
- Sales channel setup: platforms, a website, or rent and fit-out for a physical store.
- Equipment: boxes, mailers, a label printer, scales.
- Early marketing: ad budget and content costs.
- Reserve fund: several months of running costs for the period before sales pick up.
A common mistake is counting only product costs and forgetting the reserve. Many shops do not close because they cannot sell. They close because the money runs out before sales grow.
2. True cost per unit
True cost is not just the purchase price. It includes packaging, any shipping the shop pays, platform fees and average ad cost per unit.
Hypothetical example: you buy a product for 100 baht, packaging is 10 baht, shipping the shop covers is 30 baht and platform fees come to about 25 baht. The true cost is about 165 baht, not 100. For actual fee rates, check each platform's seller centre, because they vary by category and policy.
3. Selling price
Set the price from three things together: true cost, the profit you want and what the market will accept. If profit per unit is very thin, you have no room for promotions or rising costs. Ask yourself: if I discount 10 percent in a campaign, do I still make a profit?
4. Break-even point
Formula: monthly fixed costs divided by profit per unit equals the number of units you must sell per month.
Hypothetical example: fixed costs of 15,000 baht a month and a profit of 100 baht per unit means selling 150 units a month, or about 5 a day, to avoid a loss. This tells you whether your daily target is realistic.
5. Cash flow
A shop that is profitable on paper can still run out of cash, because money is tied up in stock, business customers pay on credit, or platforms release payment some time after delivery. To prevent this, keep a weekly cash in and cash out table separate from your profit view, and do not order large stock batches until you know which products really sell.
Common mistakes
- Not counting your own labour: if you work full time in the shop without paying yourself, the profit you see may not be real profit.
- Mixing shop money with personal money: you can no longer tell whether the shop is making or losing money.
- Spending on ads before knowing your costs: sales go up, but every order loses money.
- Ordering big batches for a lower price: unit cost does fall, but your cash ends up sitting in the warehouse.
Dream big, but calculate the numbers carefully.
Checklist before you invest
- Total your startup capital, including several months of reserve.
- Work out the true unit cost of every main product.
- Set prices that stay profitable even with promotions.
- Calculate break-even as units per day.
- Build a cash flow table for the first 3 months.
- Separate the shop's bank account from your personal account.
This is general guidance. For tax and business registration, consult an accountant or professional. Read the basics in registering a company or staying a sole proprietor and simple DIY bookkeeping for your shop.
Courses on Plants.work Learn to go further: Financial planning for your dream shop, Principles of cost calculation and How much capital to register a company.