Your uncle is considering buying a coffee shop in a small town. He is not worried about financing because he does not need to borrow money to buy this business. He is not worried about competition because this is the only coffee shop in that community, which has a very stable population. However, he is worried about controlling the shop’s three major expenses: coffee, wages, and rent. The coffee is imported from a supplier in South America. Most of the staff work parttime for minimum wage and will continue working at the shop if your uncle buys it. The shop operates in a new strip mall and, although the rent is reasonable, the lease is up for renewal in six months. The shop’s current owner has given your uncle the business’s financial statements and he has calculated ratios and determined that the shop is quite profitable.

Instructions
Your uncle realizes that financial statements have a historical perspective but he now wants your advice on what other data he should be analyzing before buying this business, specifically data regarding the three major expenses he wants to control. Provide this advice to your uncle.