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Case Study: How We Helped Nightingales Coffee Understand the Numbers

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How it Started

Nightingales Coffee, a small independent café in Liverpool run by a couple, Charlotte and Matthew, came to us with a mission: to build their finance function from the ground up so they had an understanding of the numbers from day one. They needed more than just compliance, they needed proactive, strategic financial guidance to help them protect what they’d built, gain clarity over their numbers, and plan with confidence for the future.

The Challenge

Before working with us, Charlotte and Matthew from Nightingales Coffee were understandably cautious about their finances after seeing lots of similar businesses struggle. As a result, they wanted to have a complete picture of their tax bill, and how much they were making each month so they could properly plan for the future. Their former accountant had taken a passive, once-a-year approach that failed to flag major issues, particularly their accidental breach of the VAT threshold, which led to a large, unexpected VAT bill and ultimately forced them to shut down. Now, with their new cafe gaining momentum, they wanted to avoid repeating the same mistakes. They were wary of VAT, unclear on key figures like break-even sales, and operating with low margins that left them slightly in the red each month, even before accounting for upcoming tax obligations.

Financial Forecasting

Our Approach

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Built an Accurate Financial Baseline

We reviewed six months of financial data to calculate their monthly average for: Sales, Costs, Overheads, Director withdrawals and Net cash movement.

We mapped this against their profit and loss (P&L) to uncover the true impact on their cash flow. Crucially, we identified that while they were technically profitable on paper, cash was still leaving the business due to dividend withdrawals and untracked liabilities like corporation tax.

Identified Margin Shortfalls

Their average gross profit margins were far below the 75% industry benchmark for cafés.

Basically, their pricing was too low, partly driven by the belief that their off-high-street location required them to undercut competitors to attract footfall.

However, their pricing was ultimately holding them back in some ways, despite the fact they thought it was a differentiator.

Rebalanced Pricing and Margins

We recommended, and supported them through, a 20% price increase. Pricing is difficult for most businesses, and it’s common that business owners worry that putting prices up will affect demand. We gave them the confidence and empowered them to put their prices up.

Not only did this improve their margins, but it also positioned them competitively (still slightly cheaper than high street chains). They also began roasting their own coffee, reducing input costs and increasing margin control.

VAT Strategy and Registration

Approaching the VAT threshold again, they were understandably anxious. To avoid past pitfalls:

  • We enrolled them in the VAT flat rate scheme (12.5% for cafés), which simplified compliance and protected their cash position.
  • We helped them avoid the full 20% price hike typically required under standard VAT rules by timing the increase pre-registration and ensuring their pricing strategy absorbed VAT impact without alienating customers.
Introduced Forward Planning

We established a structured plan for monthly tax provisioning, covering both VAT and corporation tax, so they could set aside manageable amounts each month.

This removed surprises and created a clearer picture of the true cash available for personal withdrawals and reinvestment. That way, they could still be prepared for the tax bill at the end of the year.

The Outcome

From fearing VAT registration and running at a monthly deficit, Nightingale Coffee now operates with:

  • Industry-aligned margins
  • Predictable monthly profit
  • Structured tax planning
  • Cash surplus each month after all obligations are met

They are confident in their business model, no longer overwhelmed by financial uncertainty, and able to make informed decisions with clarity.

 

Before:

  • No visibility of break-even sales or tax liabilities
  • Operating in the red
  • Scared of VAT due to a past negative experience
  • Margins below industry standards

 

After:

  • Aligned pricing and margins to industry best practices
  • Clear monthly tax provisioning
  • Successfully VAT registered under the flat rate scheme
  • Monthly cash surplus to be reinvested in growth
  • Business which supports their lifestyle and has the potential to grow

 

“They started the call cautious and ended it with clarity and confidence. That’s what we’re here for.”
— Sam Millward, Hospitality Accounting Lead

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Our Business Acquisitions Team

Meet Sam: Our Hospitality Expert

Meet Sam Millward, our inhouse specialist with over 10 years’ experience helping business in the hospitality sector get a hold of their numbers and plan for the future. Sam’s passion lies in helping business owners, whether that’s helping with tax planning, preparing for growth, or improving their margins. Accountants truly hold the power to help business owners sleep at night, and Sam lives and breathes this concept. If you’d like to have a free no-obligation call with Sam to find out more, get in touch today. 

Meet Neil Nichols: Corporate Finance Specialist in Business Sales & Acquisitions

Neil Nichols, Founder of Accounts and Legal set up the business after successfully growing and selling his previous company, Portico, which he ran alongside his brother Robert Nichols. During the process of selling, Neil was taken aback by the unnecessary friction between accounting and legal functions, and this is where the seeds were sewn for Accounts and Legal. After surveying other business owners, Neil found that the majority stated their accountants weren’t wholy useful past the necessary compliance work. Armed with this information, Neil set up Accounts and Legal to be genuinely useful to business owners, providing the services they need in one place. 

 

Neil Nichols, Founder of Accounts and Legal

Meet Neil Ormesher: Tax Planning Expert for Business Sales & Acquisitions

As CEO of Accounts and Legal, Neil Ormesher brings over 25 years of experience in accounting, tax planning, and business strategy. A fully qualified accountant, Neil has helped countless business owners navigate the complexities of buying and selling businesses while maximising tax efficiency.

In his previous role, Neil played a key part in growing the Danbro Business Brand from zero to 1,500 clients, building a high-performing team and a service offering dedicated to helping entrepreneurs achieve their goals.

Most recently, Neil was instrumental in structuring the Westland Asset acquisition of Direct Sameday Services (DSS) to ensure a tax-efficient deal, helping the buyer minimise liabilities and maximise post-sale profitability.