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Read Chapter 16 case on page 1027-1028. Apply the concepts from Chapter 16, and briefly discuss how debit financing affects cash flow. How does equity financing affect cash flow? Why is it imperative for business owners to strictly manage their cash resources? Can students use some of the concepts in this chapter to manage their cash flow? Cash Flow Analysis Critical to Strategic Growth Calvin and Tina Su are siblings who have a taste for success. In 2011, the two partners launched Butter Avenue, an elegant patisserie/caf in Toronto that specializes in French macarons, a colourful, small, delicate, meringue-based confection. Each sibling brings a different skill set to the partnership, enabling them to establish a strong product with a committed customer base, experiencing steady growth since its inception. In establishing their business, effective cash flow management has been critical to Butter Avenue's continued growth and success. Tina is a French-trained pastry chef with a passion for perfection. She worked at several bakeries in France and trained at Le Cordon Bleu's Institute in Ottawa. The idea of opening a bakery sprang from her experiments with recipes for French macarons at home, serving her creations to her brother Calvin and his friends. Calvin had been searching for a business opportunity for several years, and he immediately knew her product was a winner. Together, they took the leap and opened up a Facebook page and an online shop to test the market. Relying on the power of social media, they started to get online orders and courageously decided to take the leap and open up their first location in Toronto. According to Calvin, the Butter Avenue brand is built on the foundation of Japanese perfection with a focus on Scandinavian style." They pride themselves on making products with natural ingredients without added artificial flavours or preservatives. Tina designs many varieties of French macarons, and creates exceptional flavours of cookies and cakes artistically topped with her famous macarons. As head chef, she has trained several sous chefs and bakers, most of whom bring with them impressive experience and credentials from Canada's top cooking schools. With a background in economics and experience in business, Calvin focuses his efforts on corporate sales and organizes partnerships with lifestyle brands, as well as special events with brands including L'Occitane en Provence and others. Because Calvin believes that "having different investors with different interests and goals can cause difficulties in enabling expansion," he recommends to "if at all possible, self-finance your business to avoid potential conflict and obstacles." In establishing a new business, "Planning is so important. You need to know your clientele, your product and marketing strategy and plan ahead. Analyze performance against the plan regularly." well as special events with brands including L'Occitane en Provence and others. Because Calvin believes that "having different investors with different interests and goals can cause difficulties in enabling expansion," he recommends to "if at all possible, self-finance your business to avoid potential conflict and obstacles." In establishing a new business, "Planning is so important. You need to know your clientele, your product and marketing strategy and plan ahead.... Analyze performance against the plan regularly." Photos courtesy of Calvin su, Co Founder Butter Avenue In January 2017 Butter Avenue's Yonge Street location was moved to a new headquarters in Markham, Ontario, Page 1028 which includes their accounting department and central kitchen for better product consistency, product development, and efficient management. In September 2017, they opened up Butter Baker, a new sister brand in the heart of downtown Toronto. They offer customers a beautiful array of French-inspired sweet and savoury pastries, including croissants, brioche, cakes, and danish as well as a selection of organic coffees. They also have launched an app to assist customers in placing orders and picking up their desired goods efficiently. With services such as Uber Eats and their own in-house delivery service, they have found that approximately 30% of their business comes from online a In January 2017 Butter Avenue's Yonge Street location was moved to a new headquarters in Markham, Ontario, Page 1028 which includes their accounting department and central kitchen for better product consistency, product development, and efficient management. In September 2017, they opened up Butter Baker, a new sister brand in the heart of downtown Toronto. They offer customers a beautiful array of French-inspired sweet and savoury pastries, including croissants, brioche, cakes, and danish as well as a selection of organic coffees. They also have launched an app to assist customers in placing orders and picking up their desired goods efficiently. With services such as Uber Eats and their own in-house delivery service, they have found that approximately 30% of their business comes from online purchases. The sibling duo have discovered that entrepreneurs face great challenges as they are stretched to make decisions in previously uncharted territory, such as selections over the interior design of their shops, branding, and packaging design. Having a keen understanding of each other's strengths and weaknesses and an impressive relationship rooted in trust and respect enables the siblings to focus on the best interests of the business as their main priority. Calvin receives monthly financial reports from his accountant. With his accountant, they then analyze actual performance compared to their detailed budget and assess the impact to cash flow. Certain costs, like the cost of almond flour imported from California, can fluctuate significantly with changes in exchange rates and the cost of almonds. Calvin maintains a fixed balance in the corporate cash accounts to manage the day-to-day operations and adjusts their decisions to maintain a healthy cash balance. He advises future entrepreneurs that "it helps to have a professional you can rely on to understand the numbers." Butter Avenue's success in their first two years led them to launch a second location on Queen Street West in downtown Toronto. What has been the siblings' key to their success thus far? In Calvin's words, "consistency, hard work, and strategic planning

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