Business Plan

Sweet Coffee Shop

Submitted by Job Thomas Roll No.8, Sem-5 MBA(PT)

School of Management studies Cochin University of Science and Technology Cochin, Kerala, India PIN 68 ! October 2012
Business plan of Sweet Coffee Shop by Job Thomas

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1.

Executive summary

Coffee shop is the flourishing business in Kerala. Coffee or Tea bar is a daily necessity for local coffee addicts, a place to dream many things, a place to escape the daily stresses of life and just a comfortable place to meet your friends or to read a book, all in one. With the growing demand for high- uality tea or coffee and great ser!ice, "weet Coffee shop will capitali#e inside "chool of $anagement "tudies %"$"&, Cochin 'ni!ersity campus to build a core group of repeat customers. The culture will offer its customers the best prepared coffee(tea in the area that will be complimented with pastries, as well as free books that its patrons can read to enjoy their !isit. The shop will operate a )* s uare foot coffee bar near to the entrance of "$" building. The identified place can be obtained for lease for one year possible to get e+tension in the upcoming years. The start-up funds a!ailable with owner is ,-. )*,***(-. ,t is e+pected that the remaining capital of .s.)*,***(- will be obtained through commercial loans from "tate bank of Tra!ancore. The business is e+pected to earn sales re!enue of ,-. /0),***(- in the first year. "weet Coffee shop will stri!e to maintain a high gross profit margin and reasonable operating e+penses. The projected sale and the profit are indicated in 1igure /.

/6*2 /5*2 4*2 3*2 *2 8ear / 8ear 5 8ear 9

"ale

$argin

7rofit

Figure 1. 7roject growth of sale and profit of "weet Coffee shop

Business plan of Sweet Coffee Shop by Job Thomas

2.

Business Description

The coffee and tea consumption in the campus is !ery high. "weet Coffee shop will ser!e students, teachers, ministerial staffs, laboratory staff and !isitors are the customers of the campus. ,t is e+pected that the people from "chool of $anagement "tudies and neighboring departments will be the loyal customers of the shop. :n opinion sur!ey conducted in "$" indicates that the proposed business plan is something people are waiting for. The uality and cleanliness will be the distincti!e feature of the !enture. The product share is indicated in 1igure 5.

Pro uct share

/02

/02

Coffee Tea "nacks "tationery

942

542

1igure 5. 7roduct share of "weet Coffee shop

!.

"ar#eting

The projection of daily sales of "weet Coffee shop for the gi!en in Table /. The total e+pected sale per day will be .s. /))**(- . The e+pected daily profit is about )* percent of the operating e+penses.

$a%le 1. Pro&ecte Daily sale

,tems Coffee Tea "nacks "tationery $'$() ;ay-time ,-. /,*** ,-. /,)** ,-. 5,*** ,-. /,*** *+, -.-// <!ening ,-. 5)* ,-. )** ,-. 0)* ,-. 5)* *+, 1.0-/ Total ,-. /,5)* ,-. 5,*** ,-. 5,0)* ,-. /,5)* *+, 0.2-/

"weet Coffee shop will offer its customers the best tasting coffee or tea be!erages in the area. This will be achie!ed by using high- uality ingredients and strictly following preparation guidelines. The store layout, menu listings and marketing acti!ities will be focused on ma+imi#ing the sales of higher margin espresso drinks. :long with the espresso drinks, brewed coffee and teas, as well as some refreshment be!erages, will be sold in the coffee bar. "weet Coffee shop will also offer its clients pastries, small salads and sandwiches. 1or the gourmet clientele that prefers to prepare its coffee at home, "weet Coffee shop will also be selling coffee beans. The menu offerings will be

Business plan of Sweet Coffee Shop by Job Thomas

supplemented by free books and maga#ines that customers can read inside the coffee bar

"ar#et share

/*2

/*2

"tudents 1aculty )*2 office workers =abstaffs !isitors

5*2 /*2

Figure 2 $arket analysis results of "weet Coffee shop "weet Coffee shop will focus its marketing acti!ities on reaching the 'ni!ersity students and faculty, people working in offices located close to the coffee bar and on sophisticated teenagers. The details of market sur!ey are shown in 1igure 5. The market research shows that these are the customer groups that are most likely to buy tea or coffee and snacks. The uality and cleanliness are other important factors to be used for marketing in well educated group of customers. "weet Coffee shop will cater to people who want to get their daily cup of great-tasting coffee in a rela+ing atmosphere. "uch customers !ary in age, although the location is inside 'ni!ersity campus, most of our clientele will be college students and faculty. >ur market research shows that these are discerning customers that gra!itate towards better tasting coffee or tea. 1urthermore, a lot of college students consider coffee bars to be a con!enient studying or meeting location, where they can read or meet with peers without the necessity to pay co!er charges. 1or "weet Coffee shop, this will pro!ide a uni ue possibility for building loyal client base.

1.

'peration

The "weet Coffee shop will be open with one working staff and one cashier cum accountant. The sweet coffee shop is planned to operate at )* s uare feet space room a!ailable in the ground floor of "chool of management studies, C'":T. The women labors are a!ailable in the locality to engage in the operation of the shop. The location of the shop is accessible to supplier?s deli!ery !an and waste remo!al. The start-up fund re uirement is gi!en in 1igure 9.

Business plan of Sweet Coffee Shop by Job Thomas

"tart-up funding
,-. 6*,*** ,-. 3*,*** ,-. 5*,*** ,-. * Total fund :ssets =iabalities ,n!estment

Figure !. "tart-up fund plan of "weet Coffee shop

-.

"anagement

"weet Coffee shop is owned by $r. @>B TA>$:", who holds a $asters ;egree in Business :dministration from Cochin 'ni!ersity. $r. Thomas has good management e+perience in owning similar shop near 'ni!ersity campus. Ae had conducted a study in !arious coffee shops, which is operating with significant margin. The customer feed back would be the prime consideration in the de!elopment of the business. The person who is working as cashier cum accountant will ha!e to manage the labour, ordering in!entory, dealing with suppliers, de!eloping a marketing strategy and perform other daily managerial duties. : profit-sharing arrangement for accountant will be considered based on the first year operational results. The personnel plan of "weet Coffee shop is gi!en in Table 5.

$a%le 2. Personnel Plan

7ersonnel Cashier Worker -umber of employees $'$() 8ear / ,-. 6*,*** ,-. 34,*** 5 1/2/// 8ear 5 ,-. 66,*** ,-. )5,4** 5 1122// 8ear 9 ,-. 05,6** ,-. )4,*4* 5 1!/32/

3.

Finance

"weet Coffee shop will capitali#e on the strong demand for high- uality coffee. The owners ha!e pro!ided the shop with sufficient start-up capital. With successful management aimed at establishing and growing a loyal customer base, the business will see its net worth doubling in two years. "weet Coffee shop will maintain a healthy )*2 gross margin, which combined with reasonable operating e+penses, will pro!ide enough cash to finance further growth. The profit and loss account is projected for upcoming three years. The sales, margin, e+penses and profit are gi!en in 1igure 3. ,t is e+pected that the proposed product is profitable in the first year. The profit is increasing in the upcoming years.

Business plan of Sweet Coffee Shop by Job Thomas

,-. 9,***,*** ,-. 5,)**,*** ,-. 5,***,*** ,-. /,)**,*** ,-. /,***,*** ,-. )**,*** ,-. * "ale $argin <+penses 7rofit 8ear / 8ear 5 8ear 9

Figure 1. 7rojected sale, margin, e+penses and profit of "weet Coffee shop The balance sheet is projected for the upcoming three years. The projected asset, liabilities and capital are gi!en in 1igure ). The growth of asset and capital is increasing significantly. The net worth of the business is increasing, which is the positi!e sign of growth of the business

,-. /,***,*** ,-. 4**,*** ,-. 6**,*** ,-. 3**,*** ,-. 5**,*** ,-. * :ssests =iabilities Capital 8ear / 8ear 5 8ear 9

Figure -. 7rojected assets, liabilities and capital of "weet Coffee shop

0.

Critical4,is#s

The neatness and the custom made coffee or tea would be core attraction of "weet Coffee shop. $ilma booth stall will definitely be one of the major competitors because of its established marketing and operational practices. Aowe!er, despite of $ilma booth stall entrenched market position, many customers fa!or smaller, independent establishments that offer co#y atmosphere and good coffee at affordable prices.

2.

5arvest strategy

"trategy will be focused at getting new customers, retaining the e+isting customers, getting customers to spend more and come back more often. <stablishing a loyal customer base is of a paramount importance since such customer core will not only generate most of the sales but also will pro!ide fa!orable referrals. "weet Coffee shop will position itself as uni ue coffee bar where its patrons can not only enjoy a cup of

Business plan of Sweet Coffee Shop by Job Thomas

perfectly brewed coffee but also spend their time in an ambient en!ironment. Comfortable sofas and chairs, dimmed light and uiet rela+ing music will help the customers to rela+ from the daily stresses and will differentiate "weet Coffee shop from incumbent competitors. To speed up the customer ser!ice, at least two employees will be ser!icing clients--while one employee will be preparing the customerBs order, the other one will be taking care of the sales transaction. :ll sales data logged on the computeri#ed point-of-sale terminal will be later analy#ed for marketing purposes.

6.

"ilestone sche ule

The milestones are guidelines for each of the members should stri!e to achie!e. The milestones of "weet Coffee shop is gi!en below.

"ilestones
,tem Customer delight :chie!e sale target ,mpro!ement in business Cuarter/ Cuarter5 Cuarter9 Cuarter3 DDDDDDDDDDDDDDDD DDDDDDDDDDDDDDDD DDDDDDDDDDDDDDDD

Business plan of Sweet Coffee Shop by Job Thomas

1/. (ppen ix
(1. Start4up ,e7uirements
Start4up Expenses =egal "tationery etc. Brochures Consultants ,nsurance .ent .emodeling >ther $otal Start4up Expenses Start4up (ssets Cash .e uired "tart-up ,n!entory >ther Current :ssets =ong-term :ssets $otal (ssets $otal ,e7uirements ,-. ),*** ,-. 5,*** ,-. 5,*** ,-. * ,-. ),*** ,-. /,*** ,-. ),*** ,-. ),*** *+, 2-./// ,-. /*,*** ,-. /*,*** ,-. * ,-. /),*** *+, !-./// *+, 3/.///

Business plan of Sweet Coffee Shop by Job Thomas

(2. Start4up Fun ing

"tart-up <+penses to 1und "tart-up :ssets to 1und $otal Fun ing ,e7uire (ssets -on-cash :ssets from "tart-up Cash .e uirements from "tart-up :dditional Cash .aised $otal (ssets )ia%ilities an Capital Liabilities Current Borrowing =ong-term =iabilities :ccounts 7ayable %>utstanding Bills& >ther Current =iabilities %interest-free& $otal )ia%ilities Capital Planned Investment ,n!estor / in!estor 5 :ll other in!estors :dditional ,n!estment .e uirement Total Planned Investment =oss at "tart-up <+penses $otal Capital $otal Capital an )ia%ilities $otal Fun ing ,-. 5),*** ,-. 9),*** *+, 3/./// ,-. 5),*** ,-. /*,*** ,-. * *+, !-.///

,-. 5*,*** ,-. * ,-. * ,-. * *+, 2/.///

,-. 3*,*** ,-. * ,-. * ,-. * ,-. 3*,*** %,-. 5),***& *+, 1-./// *+, !-./// ,-. 6*,***

Business plan of Sweet Coffee Shop by Job Thomas

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(2. Profit an )oss (ccount 8pro&ecte 9

*ncome Sales ;irect Cost of "ales%*.6)-.))& >ther $otal Cost of Sales :ross "argin Fross $argin 2 Expenses 7ayroll "ales and $arketing and >ther <+penses ;epreciation %*.9& .ent $aintenance 'tilities(7hone 7ayroll Ta+es >ther $otal 'perating Expenses 7rofit Before ,nterest and Ta+es <B,T;: ,nterest <+pense Ta+es ,ncurred %*.9& +et Profit +et Profit;Sales 8ear / *+, 1.01/./// ,-. /,/9/,*** * *+, 1.1!1./// ,-. 6*E,*** 9)2 8ear / ,-. /9*,64* ,-. 5*,*** ,-. 3,)** ,-. /,*** ,-. ),*** ,-. /,*** ,-. * ,-. * *+, 132.12/ ,-. 336,45* ,-. 3)/,95* ,-. 3,*** ,-. /93,*36 *+, !1!.201 /42 8ear 5 *+, 2.10-./// ,-. /,9*),*** * *+, 1.!/-./// ,-. 40*,*** 3*2 8ear 5 ,-. * ,-. 5*,*** ,-. 3,)** ,-. /,*** ,-. ),*** ,-. /,*** ,-. * ,-. * *+, !1.-// ,-. 494,)** ,-. 439,*** ,-. 3,*** ,-. 5)/,))* *+, -20.1-/ 502 8ear 9 *+, 2.31/./// ,-. /,39),)** * *+, 1.1!-.-// ,-. /,/03,)** 3)2 8ear 9 ,-. * ,-. 5*,*** ,-. 3,)** ,-. /,*** ,-. ),*** ,-. /,*** ,-. * ,-. * *+, !1.-// ,-. /,/39,*** ,-. /,/30,)** ,-. 3,*** ,-. 935,E** *+, 2//.3// 9/2

Business plan of Sweet Coffee Shop by Job Thomas

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(1. Balance sheet 8pro&ecte 9

(ssets Current (ssets Cash ,n!entory >ther Current :ssets $otal Current (ssets )ong4term (ssets =ong-term :ssets :ccumulated ;epreciation $otal )ong4term (ssets $otal (ssets )ia%ilities an Capital :ccounts 7ayable Current Borrowing >ther Current =iabilities Subtotal Current Liabilities =ong-term =iabilities Total Liabilities 7aid-in Capital .etained <arnings <arnings $otal Capital $otal )ia%ilities an Capital 8ear / ,-. 954,E94 ,-. 5E,)** ,-. /*,*** ,-. 964,394 ,-. /),*** %,-. 3,)**& ,-. /*,)** *+, !02.6!2 8ear / ,-. /),663 ,-. 5*,*** ,-. * ,-. 9),663 ,-. * *+, !-.331 ,-. 3*,*** %,-. /*,***& ,-. 9/9,503 *+, !1!.201 *+, !02.6!2 8ear 5 ,-. 6/6,459 ,-. 53,*** ,-. /*,*** ,-. 6)*,459 ,-. /),*** %,-. E,***& ,-. 6,*** *+, 3-3.22! 8ear 5 ,-. 5E,909 ,-. 5*,*** ,-. * ,-. 3E,909 ,-. * *+, 16.!0! ,-. 9*,*** %,-. /*,***& ,-. )40,3)* *+, 3/0.1-/ *+, 3-3.22! 8ear 9 ,-. 43*,69* ,-. /4,)** ,-. /*,*** ,-. 46E,/9* ,-. /),*** %,-. /9,)**& ,-. /,)** *+, 20/.3!/ 8ear 9 ,-. 3*,*9* ,-. 5*,*** ,-. * ,-. 6*,*9* ,-. * *+, 3/./!/ ,-. 5*,*** %,-. /*,***& ,-. 4**,6** *+, 21/.3// *+, 20/.3!/

Business plan of Sweet Coffee Shop by Job Thomas

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(-. ,atio (nalysis

1inancial ratios Current ratio ,n!entory turn-o!er ;ebt(-et worth .eturn on tangible net worth .eturn on :ssets 8ear / /*.99 94.93 *./* *.E/ *.49 8ear 5 /9./4 )3.94 *.*4 *.E0 *.4E 8ear 9 /3.34 00.)E *.*0 *.EE *.E5

Financial ratios
4* 6* ,atio 3* 5* * Current ratio ,n!entory turn-o!er 8ear / 8ear 5 8ear 9

Financial ratios
/.** *.4* *.6* *.3* *.5* *.** ;ebt(-et w orth .eturn on tangible .eturn on :ssets net w orth

,atio

8ear / 8ear 5 8ear 9

Business plan of Sweet Coffee Shop by Job Thomas

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