A Business Plan of Teahouse in Helsinki,

Finland

Xu Zelu

Bachelor’s Thesis

___. ___. ______ ________________________________

Bachelor’s degree (UAS)

SAVONIA UNIVERSITY OF APPLIED SCIENCES THESIS
Abstract

Field of Study
Social Sciences, Business and Administration
Degree Programme
Degree Programme in International Business
Author(s)
Xu Zelu
Title of Thesis
A Business Plan of Teahouse in Helsinki, Finland
Date 22.5.2013 Pages 49
Supervisor(s)
Pentti Markkanen
Client Organisation/Partners

Abstract

By studying what is a business plan, this paper introduces how to make a business plan with a real
life case, starting a teashop business in Helsinki, Finland. It was started by studying how to make a
business plan, which includes the structure of a business plan, such as operational planning,
marketing planning and financial planning. It is the internal and external analysis that determines
the corporate strategy, corporate strategy determines marketing strategy and operational strategy,
operational plan determines financial plan. A business plan should be made using this structure.

In the case study of a teahouse called Qi Feng in Chengdu China, its business concept is
introduced. In the practical part of starting a teahouse business in Helsinki Finland, in the external
and internal analysis, opportunity outweighs threat and strength outweighs weakness. Based on
this strategy the mission, vision and business goal are generated. After that follow the operational
plan and financial plan with detailed introduction and data analysis. In appendix, the whole
business plan of establishing a teahouse in Helsinki Finland is given briefly.

Keywords
Business plan, teahouse, environmental analysis
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TABLE OF CONTENTS
1 INTRODUCTION ....................................................................................................4
2 BUSINESS PLAN....................................................................................................5
2.1 Business plan features ..................................................................................6
2.2 Structure of business plan .............................................................................7
2.3 Summary of business plan ............................................................................8
2.4 Strategic planning .........................................................................................9
2.5 Operational planning process...................................................................... 11
2.6 Financial planning .......................................................................................13
2.7 Risks and risk management ........................................................................15
3 BUSINESS FIELD DESCRIPTIONS .....................................................................18
3.1 Coffee culture in Finland and café business in Helsinki ...............................18
3.2 Teahouse business environment in Helsinki ................................................19
3.3 Teahouse business culture and management .............................................20
3.4 Case of QF (Qi Feng) Teahouse .................................................................23
3.4.1 Introduction and background ................................................................23
3.4.2 Customers, products and services .......................................................23
3.4.3 Activities and promotion .......................................................................24
4 BUILDING PROCESS OF BUSINESS PLAN FOR TEAHOUSE IN HELSINKI......25
4.1 External and internal analysis .....................................................................25
4.2 Planning in main areas: (mission, vision, business goal, strategy) ..............26
4.3 Operational planning ...................................................................................28
4.4 Financial planning for 1st year ....................................................................31
4.5 Risks analysis .............................................................................................36
5 CONCLUSIONS...................................................................................................38
REFERENCES ........................................................................................................39
APPENDIX...............................................................................................................44
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1 INTRODUCTION

This paper is about how to make a business plan. It starts from what is a
business plan, in which the contents and purpose and functions of business plan
such as marketing strategy, operational and financial planning, risk and risk
management are introduced. In the next part the industrial information is
provided, such as the teahouse industry in China and Finland and the coffee
culture which is the main competitive industry of teahouses in Finland. In the end
of industrial information part is the case of a successful teahouse that is opened
in QF (Qi Feng), China, which introduces and specifies the business situation
from its products price and suppliers, timetable, customers, employees, market
analysis and finance.

The fourth part is about how to make the business plan for a teahouse in
Helsinki, Finland including how the business plan is processed and considered,
in appendix, the final business plan of which is given briefly. In this part, the real
situation of opening a teahouse in Helsinki is analyzed from as comprehensive
aspects as possible, for instance, the industry environment by SWOT analysis,
mission, vision, business idea, strategy operational plan including how to run
business in Finland in detail and financial plan reasonably. This paper wants to
analyze not only the business plan for a teahouse in Helsinki Finland but also the
basic principles on how to make a business plan.
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2 BUSINESS PLAN

Business plan is used by company or project unit for financing or developing

purpose. In the first place, it mainly introduces the academic research, research
analysis, collection and management of relevant information, based on certain
content standards and specifications, in order to show the company’s or project’s
current situation and potential development in the future. (Baidu 2012.)

Business plan is a project plan from comprehensive aspects, which starts from
internal personnel analysis, regulation analysis, organization analysis and
analysis of products, marketing and coming new business projects. Business
plan is a determining factor of successful financing and business running, which
also enables you to start new business activity or successfully ratio successfully.
(Baidu 2012.)

The business plan quality directly influences the views of investors of financing;
with a bad quality, the investors may consider the benefits and risks, and stop
reading. So, corporates should not blindly make business plan with no
consideration of targets and high-quality standards.

The content of business plan contains a large area, but basically includes business
concepts, markets, customers, comparative advantage, organization team, financial
forecasting and risks. There should be a clear description of the company’s own
strengths and weaknesses, your competitors and strategy. Regarding the
organization, there should be background and experience analysis of each unit
function. Financial forecasting is vital, based on operational plan. (Baidu 2012.)

But in fact, when analyzing business, most people are inclined to successful result. In
this case, there should be risk analysis and risk management to prove that you are
right to say that it will succeed. It is realistic to have risks but the key to the business
plan is to explain how to control or avoid risks. It is a determining factor for successful
business.

In terms of the benefits of business plan, firstly it helps you to know the capital flow of
your business. Then writing a plan will help you see how different parts of your
business change and influence each other. Because it helps you keep on track. It
takes much time from the owners to manage different emergencies or ordinary work,
but the fact is time is always insufficient. So the business plan helps you to plan
ahead or make records. Apart from this, it is always hard for owners to clearly
recognize one’s own situation objectively; there are always some subjective sectors.
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The function of business plan is to compare the results to the goals. (McKeever 2012,
7-8.)

2.1 Business Plan Features

It’s good to understand the features of business plan when we start to write it. The
purpose of business plan is to help real operation process work well and develop.
Business plan should be able to minimize business risk and increase profit. It is a
continuing process, three basic phases of which are data collecting, strategic
planning, and operational planning, which will repeat regularly. (Entrepreneur 2012.)

Three important objectives should be reached to create a good business plan. Firstly,
you should show the goals, and then consider the risks and achievable possibilities
related to this goal. Thirdly, the characteristics and sales plan should focus on how
you can achieve this goal.

There has been no evaluation standard about the quality of business plan till
now. At the beginning, there are two core objectives of business plan: one is that
the company makes clear to the business model and to operation planning;
another is for attracting investments. Thus, the quality standard is also evaluated
from these two objectives. Here are some issues that need to be highlighted:
clear and accurate introduction of own products and services, clear description of
business model used; target market share, oriented customer segment
orientation, skilled teamwork; reasonable funds application, detailed risk analysis
together with reasonable solutions, accurate language description with as few
mistakes as possible. (Entrepreneur 2012.)

The feature of a good business plan is that it should be able to reflect right
recognition of current situation or projects situation and how to succeed. It should
highlight the core competence, competitive edge, how to stand out in the market, how
to win larger market share and how to develop and expand. In a word, it should be
persuasive by explaining “how”, not just the expectations or long term targets.
(Entrepreneur 2012.)

Business plan is especially helpful to small businesses, as it is easier and quicker

than big businesses. (Small Business UK 2011.) It does not cost so much time to
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prepare and finish, which is in order to be adjusted to the market change and
own development. It also helps to consider new resources needed, new partners
or chances. (Phillips 2009.)

2.2 Structure of Business Plan

Every business plan for each company is special, with no totally the same content,
even if they may focus on the same customer segment, the same market, or the
similar products. Writing a business plan is to publicize your company, to impress
investors by showing your strength. A good business plan should be able to explain
how this business is able to succeed with specified analysis including important
aspects. (Smith 2013.)

However, it is not easy to write a qualified business plan, and harder to be an

impressive one. First of all, the structure of business plan should be clear and easy to
understand, as readers can check quickly by their interests. Following the written
standards of business plan and designing logically are the basic things to do; a good
financial plan and risk management may plus point for it. Different industries require
different business plans, but the basic structure is similar. (Blackwell 2008, 8.)

Summary: Summary is the key and highly generalization of the whole business plan.
To some extent, whether the investors have interests in your program mainly
depends on summary written. No good summary, no good investment. (Wisteria
2013.)

Program introduction: This section mainly introduces the basic situation of programs,
corporate important equipment and facilities, production engineering, productivity,
efficiency, together with quality control, inventory organization, after sales service,
research and development. (Chinacir 2011.)

Market analysis: This part focuses on market situation of products and services,
including market basic situation, market’s developing trend in the future, market
scale, target customer and purchasing power. (Wisteria 2013.)

Industry analysis: This section concentrates on the basic situation of the field which
the industry belongs to, and the position occupied of the corporate in the whole
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industry. This part will make comparison with the same type of enterprises by SWOT
analysis and show core competitive advantage of the enterprise. (Chinacir 2011.)

Marketing: Marketing section mainly describes corporate developing goal, strategy,

plan, and procedure, marketing strategy, risk analysis. (Wisteria 2013.)

Employee management: This part mainly introduces management concept, structure,

methods, and basic situation of key managers, consultants, employee arrangement,
and wage standards. (Wisteria 2013.)

Financial analysis: This part deals with assessment of corporate investment and cost
in following years, by making estimation of sales, cost, profit and loss statement, cash
flow, and accounting breakeven point, repayment period of investment, rate of return
on investment. (Blackwell 2008, 12.)

Risk analysis: This part mainly introduces the facing risks of this program and
specified procedures to deal with these risks.

Conclusion: Conclusion part is the whole inclusion of whole business plan.

Appendix: Appendix is supplement of main body of business plan. Because of limited

length of an article, some content is not proper to be described in the main body, so
the appendix is the information that you want to supply as reference for readers.
(Chinacir 2011.)

2.3 Summary of Business Plan

Executive summary is listed in the front of business plan and is the essence of it.
Summary should cover key points of plan and be easy to understand, so that the
readers could judge within short time. It should also attract investors and give more
information, leaving a longer impression. Although the executive summary is listed at
the beginning, it is written as the last part of business plan. Because only when the
whole plan is nearly finished, the most important and succinct details can be selected
from it. Those details are company’s internal situation, abilities and limitations,
company’s competitors, marketing and financing strategies, organization team and so
on. (Dahl 2010.)

In detail, the content basically concludes following issues: company introduction,

main area of products and services, market outline, marketing strategy, sales plan,
 9

production and organization plan, organizers and related departments, financial plan
and capital needs.

When introducing the enterprise, in the first place, you should illustrate the idea of
establishing a new company, and forming process, together with company’s goal and
developing strategies, then making description of corporate current situation,
historical background and business running area. In this part, you should make
objective assessment of former situation, no avoiding of historical mistakes, because
comprehensive and honest analysis is easier to win trust. At last, you should also
introduce the risks, entrepreneur’s own background, experience and specialty. The
characteristics of entrepreneur himself are also a determining factor to corporate
performance. (Dahl 2010.)

In addition, the business plan should also be able to answer following questions: the
industry field, properties and area that the company belongs to; introduction of main
products; market orientation, targeted customers and their needs; business partners
and investors; competitors and their influence.

In conclusion, the summary should be brief and vivid, especially specify the
difference of this company and success factors of this plan. The length of executive
summary should be short about a few pages. (Pirraglia 2013.)

2.4 Strategic Planning

Business plan should also include a main strategy plan, listing about how you plan to
design advertisement, sales promotion and public relationship, by specifying budget
and profit of each key activity. There should be a brief introduction of strategy
including: Choosing of external sales representatives or internal staff; choosing from
wholesaler, retailer or franchise; the type of sales training. Moreover, the details of
sales should be highlighted.

Strategy is the most challenging section in business planning. The determining

factors influencing strategies: characteristics of target customer groups, product
features; corporate current situation, market environment, marketing cost and
efficiency. The content of strategy should include following aspects: choosing of
market mechanism and market channel, pricing decisions, sales promotion and
advertisement strategies. (Friedman 2011.)
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For a started company, because of low popularity of product brand or company

name, it is really hard to enter stable sales chains of other enterprises in the
same industry. Therefore, at the beginning, corporates may have to use strategy
of high cost with low profit, for instance, bargain sales, high-cost advertising and
giving discounts for wholesalers or retailers. For a developing company, it can
use former sales channel; in other hand, it can also explore new sales channel,
for better adjusting to own development.

Strategy of product
In strategy of products, you could consider from all relevant details about
products or services, based on the researches carried out. This part should cover
some of following parts: development phase that the products belong to; its
speciality; sales channel; estimated customer groups and reasons for estimate;
production cost and price; product development plan in the long run. In language
description, you should write as brief as possible. The features of products and
the concept definitions should be exactly clear to the readers. (Friedman 2011.)

Strategy of competition
In strategy of competition, before giving the solutions, you should make specified
analysis of competitors from following aspects: Recognize your competitors,
recognize the way they operate, make clear of the similarity and differentiation
between your product and your competitors, the strategy of competitors ,
competitor’s sales account, net profit, total income, advantages of each
competitor and market segment. (Friedman 2011.)

Strategy of market forecasting

When a company wants to develop new product or expand to new market, they
should do market forecasting firstly. If the result of forecasting is not optimistic, or
the creditability is doubted, it will be riskier and unacceptable.

Market forecasting could start from forecasting the market needs: the existing
demands for this product; profit that the demand brings to the company; the scale
of new market; the trend of demand development in the future; the influencing
factors of demand. After that, the market prospects should also include the
description of competition, main competitors, market segment for your corporate
products, market share in forecasting, the competitor’s response if the company
penetrates their market. The market forecasting should cover the following
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content: current situation of market share; outline of competitors; target customer

groups and target market; market position of your company product; market
features and allocation. The forecasting of market should focus on accurate and
scientific market research. The market a company faces is always unstable and
elusory, thus, forecasting needs as broad information as possible and make
research of the business environment by scientific means. It should always be
kept in mind that the market forecasting is not imaginary, false understanding of
market situation is the most important factor of business failure. (Baidu 2012.)

Strategies provide a competitive plan if a company wants to achieve its goal and lays
down the vision, policies and goals, in order to supervise and modify the situation.
Categories of strategies may be divided in detail to product strategies, sales
promotion strategies, brand building strategies, international planning strategies and
recruitment strategies. In a word, the strategies are about how to implement business
in the future by forecasting. And it is also easy to check it at the end of one period
whether it is the right strategy, fulfill company need, and reach the goal. (Morden
1993, 80-81.)

The formulating process of strategies is differentiated by the company type, and there
are many methods that can be formulated. These methods can be used separately.
One is analysis of advantages, disadvantages, competitive edge, occasions, risks
and other general terms. Second is consulting consultative organization or experts
directly. Third is doing research by company itself. Next is to divide each functional
strategy task to each responsible manager or others. (Morden 1993, 83-84.)

2.5 Operational Planning Process

Your operational plan should be invulnerable. This part should identify following
issues: the way to push the product into the market, the way to design production line
and assemble products, the required materials and other sourcing, the production
and equipment cost, the equipment being purchased or rented, the fixed costs and
variable costs of warehouse and transportation.

Operational planning has a number of elements including:

Formulation process
In this section, you don’t need to focus on details but to make a meaningful frame.
The perfection of project plan is a continually improving process through the whole
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project lifecycle. Short term and long term plan should be connected together; the
short term needs comprehensive illustration, while the long term plan needs to give
direction and leadership. Firstly, the project manager should make the whole plan
according to its regulations, and then talk with project members in small groups to
allocate personal tasks. This participation will increase teamwork and members’
responsibilities, which is beneficial for carrying out the plan. The content should
include important information: organization structure, tasks and key positions of each
department. The project manager can understand the dependency relationship and
corporation mode among of all the departments through procedure document,
historical experience, limitation of costs and human resources and hypothesis of
carrying out plan. (Baidu 2013.)

Production plan
The production plan should illustrate the product manufacturing process in detail,
the related situation of suppliers, labour force, employees, production financing,
factory and real estate and so on. It should also describe new product
manufacturing plan, company’s current technology ability, quality control and
improvement, existing production facility and facility planned to purchase, current
production process and economic analysis of production.

The content of manufacturing plan covers: product manufacturing technology and

equipment, new product development plan, quality control and improvement;
factory and installation; supplier choosing and lead time; product lifecycle and
standards; sourcing plan and guarantee measures.

Entrepreneurs or supervisors should make the production plan more specified

and reliable, to increase the assessment value in front of the investors in
financing process.

Human resource plan

After production, the company needs a strong organization team. The effect of
corporate organization directly decides risks of running a business. Administrative
staff with high quality, together with a good organization structure is a promising
sector to a good corporate. The administrative staff should be complementary to
each other with strong teamwork spirit. A good corporate should possess experts
of product research and development, marketing, production operation, corporate
financing and similar aspects. In this part, the illustration of key positions and
their skills should be described, which includes their tasks, responsibility,
 13

historical specified experience and background. Moreover, there should be also

brief introduction of corporate structure: organization institution, functions and
responsibilities of each unit, person in charge, reward system, shareholders name
list, board of directors and their background. (Baidu 2013.)

To transfer an idea into a company, the key is to own a powerful organization

team. The team should have high professional knowledge, organization talent
and long working experience. In this part, you should firstly describe the whole
team and their responsibility, then introduce each administrator and his talent,
features and achievement and specially describe the contribution that the
company wishes from each of them. This part should also cover the organization
objectives and organization structure.

Detail specification
Your action plan should be impeccable. This part should specify the following
issues, the way for your product to penetrate the market, designing the production
line, assemble of products; materials needed for manufacturing, the setup fee of
production and equipment, buying or renting equipment, the situation related to
product assembly, storage, fixed costs and variable costs. Issues about financial
plan should also be specified from following aspects: expanding the product line,
production cost and price of each product, distribution channels, prospect costs
and profits, employees and wage budget. (Baidu 2013.)

2.6 Financial Planning

Financial planning needs a lot of time to be specified by cash flow statement, balance
sheet and account of business. Floating capital is the lifeline of one company, so
whether a company is in the starting or expanding period there should always be an
advanced plan and strict control in proceeding process. Account of business needs to
reflect the company’s profitability after a certain period of running a business.
Balance sheet reflects the running situation of business at that moment. Basically the
content of financial plan includes: hypothesis of conditions, forecast balance sheet
and account of business, cash flow analysis, financing and allocation. (Finch 2010,
90.)

A business plan is a summary of corporate plan in financing period, while the financial
planning is the support and illustration for it. Thus, a good financial plan is very
important for investors to assess the corporate’s capital demand, enhancing
 14

corporate’s success possibilities. If the financial plan is not well prepared, it will result
in bad impression of lack of experience and lowering investment value, and
meanwhile increasing risks linked to running a business. So to make a good financial
plan is very significant.

Firstly, you should forecast the growth speed and possible net profit, and persuade
readers with your imagination, organization team and financial model. After analysing
basic information of target market, there should be a plan for the sales scale of the
first year. What’s more, the financial plan should comply with other parts of business
plan. In fact, the financial plan is based on production plan, human resource plan and
marketing plan. (McKeever 2012, 85.)

There are four elements in the financial plan: profit and loss account, balance sheet,
cash flow forecast and funds flow. (Finch 2010, 90.)

Profit and loss account

Profit and loss account is easy to check and is the key points of a business. This
consists of a list of incomes and costs and sum or minus counting to get net profit or
loss. (Ward 2013.)

The expenses may include establishing expenses and running expenses, for
instance, costs of making agreement, getting different permissions from
governments, warehouse rental, factory building, property and machinery purchasing,
and other expenses related to collecting necessary resources.

Balance sheet
The balance sheet is based on the relationship of assets, debts and liabilities,
obeying a standardized classification and order, listing and organizing each related
program accurately. The balance sheet reflects the total scale and structure of
company’s assets, debts and liabilities. In this statement, the corporate always
presents the assets by mobility, which can be specified as active assets, long run
investment, fixed assets, immaterial assets and others. The debits are also listed by
mobility, specified as current debt and long term debt. The liabilities are specified into
called up capital, paid in surplus, surplus public accumulation, undistributed profit and
others. The difference between banks, insurance company, non-bank financial
intermediaries and common commercial and industrial enterprises on the content of
business, leads to specialness on the constitution. (Finch 2010, 100.)
 15

Cash flow forecast

To make the cash flow forecast the assessment personnel should focus on the
following issues: generating ability of corporate’s internal cash flow generating ability,
the short run financial responsibilities, cash that the corporate invests in its increase,
using the internal cash flow or the external financing, external financing that the
corporate relies on (stocks, short run debts or long run debts), the financing method
proper for managing risks. (Finch 2010, 93.)

The cash flow of floating capital investment and earnings before interest taxes is
used to check whether the company is able to create operating cash surplus;
operating cash flow of the earnings after floating capital investment is used to assess
how the corporate organizes floating capital; the cash flow of earnings before interest
taxes is used to assess the company’s ability to pay the interest taxes. (Finch 2010,
94.)

Flow statement of funds

Because the flow statement of funds reflects the capital flow and direction among
different departments, and the surplus and deficiency situation, so it owns the
functions that many other numerical statements don’t. With advantages of funds flow
statement data, we can directly analyze the relationship between income, deposit,
expenses and investment, analyzing the situation of each institution or department,
and fluctuation situation of finance market and debt, then find the problems and their
solutions. Thus, we can deeply research the economic situation by the use of funds
flow statement; adjust monetary policy and financial policy, in the light of
macroeconomic regulation and control. This method is applied to international area
comprehensively. (Finch 2010, 97.)

Do not borrow money from bank for big loss only if you have other choices. The
expenses of establishing a business should be covered by equity, which is
shareholder’s capital with no interests. Another choice is loan with payment of
interest in stable periods with no consideration to your current business situation.
The investors are absolutely the first providers of funding for starting business.

2.7 Risks and Risk Management

We often need to consider risk management when planning forecast part. Risk
analysis should be started after the business plan explains the new opinions. It does
not mean to give bad impression to the readers, but to persuade them that this
 16

business plan is trustworthy because every business has its risks. In fact, no partners
or shareholders will believe that business plan if you say it is with no risk. But you
need to explain how to deal with the worries and possible risks from reader’s point of
view. To some extent, it may increase the reliability of business plan. (Jeynes 2002,
108.)

There are several ways of dealing with risk. For example, you can demonstrate that
the probability of something happens is small, show that the impact of the event
would not damage the business seriously, explain how you would respond to adverse
circumstances. (Finch 2010, 109.) In the methods to solve risks, you also need to
explain why the risk won’t hurt the business seriously and the solutions to different
emergencies or fluctuations.

It is not good to list many possible risks, because normally there are only six or eight
important risks. It is good to analyze how to avoid the risks and good solutions when
it happens. Low profits, for instance, may be dealt with objective sales promotion,
changing the sales structure or adjusting prices.

But always remember that you may not lose more sales by adjusting the pricing
strategy. (Finch 2010, 109.) Another possible risk that needs to be mentioned is about
operational planning, for instance, inability to persuade business partners or essential
unrealized details, inability of production planning. You need to show how to get
permission or agreements, and who is alternative supplier and other resources.

Risk management can be done through four aspects: time, operation, people, and
budget.

Risk management of time

How to arrange timetable of operation: schedule activities needed in short or long
period, making clear objectives and specified timetable for measurement and
assessment of performance, making necessary financial planning with related
operation. (Jeynes 2002, 108.)

Risk management of operation

Operation covers the areas of deeper, skilled identification of possible risks, in a
specified schedule, arrangement of new equipment or evaluation of old equipment,
finding new resources from suppliers and preparing optional choices, better raw
materials with lower prices, arrangement of targeted employee training,
 17

supplementing of required employee, or improvement practice of centralized workers;

planning of financial situation. (Jeynes 2002, 109.)

Risk management of people

Human resources and tasks arrangement in operation: describe everyone’s tasks,
responsibilities, decision power and relationship with other jobs; every task should be
done, some task should not be repeated at the same time, everyone should be able
to do that task, the work is divided in equal amount, with clear responsibility and
flexibility; personnel development and motivation; every organization has a top power
holder, others will get defined decision power of their jobs or positions; authority to
use material or info resources or human resources; make contract or sign assignment
of organization. (Jeynes 2002, 109.)

Risk management of budget

The content of budget consists of two basic parts: activity budget and responsibility
budget. The activity budget is used to explain specified programs budget in the
future. For each marketing plan, the most reasonable way to present it is to list the
prospect income and related cost. The result is to describe future impersonally, to
make sure the balance among each activity, earnings rate and sales volume. Another
one is responsibility budget, which is explanation of annual plan according to
personal responsibility.

This is basically a monitoring tool of indicating target performance level. But this must
be controllable in the cost level of plan and report. Making budget for a certain period,
detailed and exact; combine the plans of all units or functions; divides the total
company budget up to parts; make clear of background information, such as,
mission, business ideas, strategies, goals, policies, tactics, and business situation;
often selling or marketing limits business and determines the budgets of other
functions in company. (Jeynes 2002, 110.)
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3 BUSINESS FIELD DESCRIPTIONS

3.1 Coffee Culture in Finland and Café Business in Helsinki

Coffee culture in Finland

The largest number of coffee consumption per capital is in Finland. Each person
consumes 10 kilos of coffee yearly. According to official report, Finn averagely drinks
4 or 5 cups of coffee daily. In contrast, consumption of American yearly per person is
4.2 kilos, ranking 25th in the world. There is even regulation of coffee break in
collective labor agreement. But even if there is no such regulation, Finn also used to
stop for a coffee break every day and enjoy this time with free conservation. (China
baike 2010.)

By comparison, the average consumption amount is twice that of the average EU

citizens. It’s obvious that Finns like coffee, espresso, mocha and normal coffee which
are popular all around Finland. It’s normal that you can see people take a tip of coffee
in any office in any work day. It is already a habit, something that you will feel
uncomfortable if you don’t do every day. They drink coffee in the meeting, or at home,
working or studying, discussing or watching TV. It is a pleasure of drinking coffee, but
also a good refresh for mentality at the same time.

In the past, the coffee in Finland is lack of strong flavor to some extent and more
expensive than now. But now the popularity is changed and the coffee of good quality
at acceptable price is easy to see in every supermarket or café. In every family and
offices, the coffee pots are always prepared. There won’t be lack of coffee in formal
meetings also. The dependence of coffee of Finns reaches a fever level. Finns
commonly choose café’ or coffee room as conversation place. People like to add
sugar or milk to coffee with deserts like pulla or fruit pies. (China baike 2010.)

Café business in Helsinki

In nearly every street of Helsinki, you could find café, with traditional or fashion style.
The most attractive ones are those around Senate Square and the Market Square.
During summer, the chairs and tables are set out of café, in order that customers
could enjoy bask in the sun and step on the grass. Along the coast line of Helsinki,
there are also cafés nearby, especially the ones near Kaivopuisto Park, in which you
could admire the views of seaside and islands. In the library and museum, there are
also cafés, for instance, in the Museum of Contemporary Art Kiasma, Ateneum Art
Museum or Design Forum Finland. You could also get internet connection in mbar
 19

café in the city center while taking a cup of coffee. (Invest in EU 2010-11.)

The café there commonly includes two parts: the place for coffee and snacks and the
place for breakfast or dinner, while the customers can choose catering service or self-
service. About the desserts, different cafés have their own prized ones in
differentiation, for instance, the café Ekberg has the Napoleon cake and the
Champagne Cork., but commonly there are sandwich made by long-shape bread with
cheese and vegetables inside, cakes with cream and fruit or fruit jam, multiply pies,
sliced pizza with varied flavors. The price of one dessert ranges from 2 to 4 euros.
The coffee drinks are commonly Espresso (2.5 euros), Cappuccino (3 euros), and
normal coffee (big size: 2.5 euros, normal size: 1.9 euros). The raw materials of
coffee are also purchased from local supermarkets and the desserts are handmade
in their own kitchen with raw materials locally in Helsinki. Its open hour is from 9:00 to
18:00 or even later, which is a little long compared with cafés in other places in
Finland. The reason for this may be the customer flow in Helsinki is much larger than
other Finnish cities. The number of workers in the café depends on the shop size and
location. According to my own research and analysis of Café Ekberg, Café Engel,
Cafe Aalto, and the cafés inside the museum or library, I get the results as following:
if the shop size is around 80 square meters, for instance, the cafés in library, there
are commonly 2 workers. If the shop size is around 150 square meters, there are
commonly 5 workers (2 workers in the kitchen, 3 waiters outside the kitchen). If the
shop size is around 200 square meters, commonly there are 8 workers (3 workers in
the kitchen, 5 waiters outside the kitchen). The wage of waiters is about 8 euros per
hour, while that of the kitchen workers is about 14 euros per hour. (Visit the Helsinki
2013.)

3.2 Teahouse Business Environment in Helsinki

Sweden is on the near west of Finland and the Russia is on the east. The Finnish
culture is both influenced from them. As the capital and biggest city of Finland,
Helsinki has over 500,000 inhabitants; the migration is also very large. According to
research, there is no teahouse in Helsinki till now. The Chinese Teahouse function is
relaxing and refreshing of customers, with possible choices of low or high level
consumption, which is good choice for those who want to save money or find a place
to rest. It’s also a good choice if travelers drank coffee already that day and want to
try something else. Sales of special deserts and drinks, warm and fresh internal
decoration may also attract return customers. (Nordics 2012.)

The main competitors of teahouse in Helsinki may be cafés. There are too much
 20

cafés in Helsinki, and their running model, open time and coffee deserts are so much
similar, so it is possible that either local inhabitants or the travelers will have curiosity
to teahouses, a total new kind of entertainment. And night time is still rush hour for
teahouse business. The important factors of teahouses are to find a good location,
which the size of shop may not be big, because location is very important to a service
industry.

According to Spetz, the big benefit of doing business in Helsinki is free from
corruption. Finland is one of the most integrity countries in the world. And Helsinki is a
very impressive city and attractive for foreign investors. It has a good business
running environment. Finland is already one of the developed countries with mature
scientific development and engineer industries. About the policy environment, it is
really safe and stable with highly respect of human rights. The infrastructure and the
networks of Helsinki are sufficient, including telecommunications, high technology
and transportation. It is said that Finnish technology is in the leading place in Finland.
Business is divided into several domains in Helsinki, with multiply choices of location
in different Finnish cities. Helsinki is a high developed city with sufficient public
infrastructure such as education, transportation and accommodation. The best thing
about Finland in terms of business may be the principles of fairness. Finland also
encourages of foreign direct investment, the amount of which keeps on increasing.
(Invest in EU 2010-11.)

3.3 Teahouse Business Culture and Management

Chinese teahouse culture and situation now

According to the results of statistics 2012, the number of different teahouses in China
is over 50,000, with the value of more than 10 billion euros. Chinese teahouses
mainly spread in Beijing, Shanghai, Hangzhou, Guangzhou, Chengdu and other large
cities or medium sized cities, and the number of which is increasing by 20% per year.
Along with the increased number of teahouses, the competition is also intensified,
which brings higher challenge for teahouse’s business industry. Teahouse industry is
called green industry, as it is mainly based on healthy and nature tea drinks, together
with services of entertainment. The location mostly chosen in people’s working area
and store-gathering area, as people may choose teahouses to talk business or just
have conservation with friends in the flow of workday. (Zhong 2011.)

To understand the culture of teahouse’s existence, we need to understand human

needs firstly. The first space of human beings is family, where is the place to live; the
 21

second place is company, where is the place to work; the third place is mental resting
place, such as bars and teahouses. The third space belongs to oneself, as a mental
need related to personality, achievement and differentiation from others. Secondly, for
thousands of years, coffee and tea are always in the leading place around the world,
no one can replace each other. Along with the fast growing speed of service industry,
the development of teahouses became possible. According to analysis of successful
teahouses, if there is no big problem, it can get profit in the second year. Teahouse
functions are varied as parties among friends, conservation with business partners,
special interests of customers, for instance, tea art performance, porker game.
(Zhong 2011.)

Only with sufficient customer flow, can the business be profitable. In fact, some
teahouses have crowded visitors, while some have so few customers, about two-
thirds teahouses are not running so well around China, one fourth of which nearly go
out of business. Apart from subjective reasons, how to make specialty of
management is the key factor. A company needs to own its own style, to attract the
customers. Admittedly, there are basic principles and rules. Many sectors need
expertise knowledge, and to find a good manager is essential as stuff management is
hard. There should be justified standards planned and presented to all stuff with clear
praise and punishment. (Zhong 2011.)

The location should fulfill the characteristics of good environment and sufficient
stream of people, which leads to a promising future. It’s not recommended to rent a
low-rental place. Only after locating, the decoration and installment inside can be
started. The organizer may design by him or consult from expert design company.
Anyway there are some essential issues to be noticed of design: fully to show its
specialty and function requirements, specification according to business objectives;
the final performance should fulfill expectation of customers; decoration should
always coordinate with functions. Do not blindly pursue decoration of luxury or
eccentric effects or in need of a long period to finish. Before imaging, the organizer
should also make sufficient researches, checking other teahouse experiences and
their successful styles.

Management
A good teahouse always needs a good name, which is also the first impression of
visitors. The name of teahouse in China always expresses the feeling of purity and
freshness, with the art of traditional culture and easy to remember. A good teahouse
also needs a good location. Location is chosen in convenient transportation area or
 22

store gathering area. It is easy to find that the shop size doesn’t have to be big, while
the customer flow may not be large too; nor too small, or it will lose the function of
teahouse. The location is mostly chosen besides big hotels, entertainment places, or
the gold zone. The interior decoration and design inside is special and artistic, for
instance, the nice tea-drink cups. The quality of tea types is above medium level.
According to Yun Tan Teahouse Menu (wenku, 2012), the products and their prices
are commonly as following: red tea(1 euro/cup, 2 euro/pot), green tea(1 euro/cup, 2
euro/pot), chrysanthemum tea(1 euro/cup, 2 euro/pot), chen picha(1 euro/cup, 2
euro/pot), jasmine flower tea(1 euro/cup, 2 euro/pot), hawthorn tea(1 euro/cup, 2
euro/pot), tea with milk(1 euro/cup, 2 euro/pot), Grapefruit Tea(1 euro/cup, 2
euros/pot), rose tea(1 euro/cup, 2 euros/pot), Pu'er Tea(1 euro/cup, 2 euros/pot),
Longjing Tea(1 euro/cup, 2 euros/pot), Biluochun Tea(1.5 euros/cup, 3 euros/pot),
Tieh-Kuan-Yin Tea(1.5 euros/cup, 3 euros/pot). The price of each small plate of tea
snacks is about 2 euros. There are varied tea snacks, but commonly the following
types are easy to see: Steamed bun stuffed with barbecued roast pork, chicken feet
with pickled peppers, pork ribs, radish tripe, pig’s knuckle, fried rice noodles with beef
and steamed vermicelli roll, shrimp dumplings, steamed dumplings filled with crab
and pork meat, stick rice with chicken and egg tart. (News dayoo 2009.)

The open time have three time intervals: morning tea from 6:00 to 14:00, afternoon
tea from 14:00-17:00 and nighttime tea from 20:00 to 2:00. Some teahouses only
have the morning tea, for instance, the Lianxiang Teahouse in Guangzhou and Hong
Kong. Some teahouses have both morning tea and afternoon tea. The nighttime tea
is rarely seen nowadays, but still can be found, for instance, Jin Tao Ju Teahouse in
Guangzhou. (News dayoo 2009.)

Many teahouses use half self-help service. Customers need to change cash into
shop’s own paper ticket with corresponding amount of cash. When the customer
wants to take a small plate of snacks, they need to give the paper ticket to the waiters
with same amount of cash. If the customers choose to take the lunch package with
certain price, there would be certain tea drinks for free. Otherwise, they need to order
separately and pay for it. (Baidu 2011.)

The marketing strategy is to analyze customers’ purchase behavior from purchasing

records, give discounts to frequent purchasers and lower the sales cost. In addition,
teahouse arranges activities regularly, for instance, Chinese painting show,
calligraphy exhibition or tea art show. (Baidu 2011.)
 23

The working dresses should be unit and clean all the time, unpermitted to ware high
shoe heels or use barbarian words. When customers enter the teahouse, the waiters
should send greetings firstly. During their enjoy time, the waiters should offer proper
help appropriately and answer all the questions if customers ask. The timetable of
workers differs from open hour the teahouse chooses, for instance, morning tea,
afternoon tea, and nighttime tea. The waiters should arrive half an hour before
opening hour. The kitchen workers may start from 4:00 am to prepare for morning tea
snacks. (Zhong 2011.)

3.4 Case of QF (Qi Feng) Teahouse

3.4.1 Introduction and background

The population of the city where QF Teahouse locates is 240,000, while people are
centrally distributed. But tea culture is not as famous as the past; it is hard to meet
customer expectation; it also needs much time to get return customers. (Baidu 2012.)

QF Teahouse is a fashion teahouse with concept of entertainment, which is

established in 2004, mainly provides Chinese traditional tea snacks in a modern
method. There have been many teahouses until 2010; facing this competition, the
owner of QF teahouse started her own exploration to develop competitive edge by
transferring old concept into new, which is the tea restaurant. Tea restaurant aims to
combine tea drinks and snacks, proposing green food which is made of less oil or fat
in a moderate price. The performance has proven to be good, as it attracts many
consumers. (Baidu 2012.)

QF teahouse is located in the center of the town, owning a large customer flow and
convenient transport. The competitive edges of QF Teahouse are high investment,
good tea quality, diversified flavors, new business idea, combination of tea drinks and
snacks. Apart from these, the local average income of the public is increasing:
consumption proportion is growing fast on the entertainment industry. (Baidu 2012.)

3.4.2 Customers, products and services

Customer segment: tea culture hobbyist; people aims to relax personally; people
aims to leisure and conservation with friends or family; people with regular drinking
and eating needs; people coming for festival celebration.

The tea product expresses the tea culture and different functions of tea drinks. It also
fulfills customer needs through tea and tea snacks. QF Teahouse employs good
 24

cooker in order to produce different tea snacks and of good quality.

Products and services of QF Teahouse can be divided into 3 categories: tea drinks,
tea gifts and tea snacks. The tea drinks and tea gifts have the same classification of 2
large categories, which are dark tea and black tea. In specification, the dark tea
includes Anhua tribute tea (purchased from Anhua), Hubei old tea (purchased from
Hubei), and Guangxi Liubao tea (purchased from Liubao, Guangxi). The black tea
sold consists of 4 categories: Keemun black tea (purchased from Huangshan City
Qimen red drunk tea trade Co., Ltd), Yunnan Dianhong (purchased from Baoshan,
Yunnan), Fujian Lapsang souchong (purchased from Fujian tea pavilion tea industry
limited company), and Guangdong Yingde black tea (purchased from Guangdong).
The price of each kind of dark teas is 2 euros per cup and 6 euros per pot. (Baidu
2011.)

3.4.3 Activities and promotion

Good mile should be on the first place when selecting site. QF Teahouse made
district business investigation on attractive areas before opening. The marketing has
been considered from consumption groups, gift consumption, leisure consumption
and bind consumption. Based on own specialty, QF teahouse makes product
differentiation of tea drinks of about 20 categories, meanwhile developing food quality
and expanding product functions from tea drinks to tea gifts. The decoration is
chosen from Tan Dynasty Style to make a traditional and artistic circumstance. There
are high requirements for workers with clear worker regulations. In addition, they also
organize activities in special periods, for instance, spring festival and summer
vacation, with activities of 8.8 discounts of certain products. (Baidu 2011.)
 25

4 BUILDING BUSINESS PLAN FOR TEAHOUSE IN HELSINKI

4.1 External and internal analysis

It is good to analyze the industry and market from external and internal environment.
SWOT analysis is chosen as opportunity and threat are from the external
environment; strength and weakness are from the internal environment.

Strength
Firstly, the main products of teahouse are tea drinks. For thousands of years, coffee
and tea are always in the leading place around the world, no one can replace each
other. Secondly, Teahouse is a service industry, aims at relaxing and refreshing, with
both choices of high and low consumption levels. So it is attractive to those who want
to save money or find a place to sit and break. It is also a good choice for those who
already have much coffee that day and want to try new drinks or deserts. The third
strength is the tea snacks, which has a long history with successful popularity in
China, while Chinese food has proved to be welcomed around the world.

Weakness
Firstly, it is hard to evaluate that whether tea drinks will be successful in Finland, as
Finnish prefer coffee mostly. Secondly, it is hard to gain trust of the customers to the
quality of tea. Thirdly, the management of teahouse is quite challenging to managers
with no same business in Helsinki to consider as there is no teahouse established in
Helsinki till now.

Opportunities
Firstly, along with the fast growing of service industry, fashion and innovation is
becoming more important. There is no teahouse in Helsinki till now. But there are
super large amount of cafés, the innovation is in need. Secondly, There may be
people who want to try Chinese tea with good quality, and the teahouse supply for
them so that they don’t have to go to China to try what they want. Secondly, there is a
central agency called ‘Invest in Finland’ that helps foreign investment, the basic goal
of it is to help foreign investors to find available choices in different areas in Finland
concluding Helsinki. It also provides information and guidance to set up business in
Finland. In addition, all the services provided by ‘Invest in Finland’ are free and the
assistance provided is for comprehensive demand. This is a good channel for
teahouse investors to make research and build business plan. (Smartclip Nordics.)
 26

Thirdly, as Helsinki is the capital of Finland, the migrating population is super large,
and the people are under pressure to some extent. There are needs of a mental
resting place, such as bars and teahouses. This mental place belongs to oneself, as
a mental need related to one’s personality, achievement and differentiation. Teahouse
is a good place for resting and a new experience of different culture through interior
decoration and products. In this way, it may be in need as a mental resting place.

Threats
The first threat is Finnish coffee culture. As Finland has the largest number of coffee
consumption per capital worldwide, each person consumes 10 kilograms of coffee
yearly. According to official report, Finns averagely drink 4 or 5 cups of coffee daily.
There is even regulation of coffee break in collective labor agreement. But even if
there is no such regulation, Finns also used to stop for coffee break every day. As
coffee culture is so deep in Finland, it will strongly influence people’s acceptance of
tea drinks. Secondly, in nearly every street of Helsinki, there is café in traditional or
fashion style; those around Senate Square and the Market Square are even very
famous. The large amount of cafés is definitely another threat of teahouse in Helsinki.

In other aspect, the Asia shops, Chinese shops, Thai shops may also become
teahouse’s competitors. Because if the teahouse gets good sales of some kind of tea
or tea snacks, it is quite possible that those Asia shops start to import those products
too and sale with lower price than teahouse.

4.2 Planning in main areas: (mission, vision, business goal, strategy)

Mission
As the teahouse aims at customers’ refreshing, with both consumption choices of
high and low levels. The customer orientation is those who want to save money or
find a resting place; who already have coffee that day and want to try drinks or
deserts differ from cafés. So, the mission of teahouse is to supply drinks and deserts
differ from cafés in Helsinki.

Vision
Although the coffee culture is the most popular in drinks industry, it doesn’t mean that
the other drinks culture won’t survive. As the tea culture is so famous and successful
for thousands of years in China, there should be reasons for this culture. Chinese tea
differs from European tea, variation in flavors and production places. Service industry
and fashion always need innovation. So the vision of teahouse in Helsinki is to make
Finnish people accept Chinese tea culture, which aims at diversification and
 27

innovation in drinks industry.

Business goals
Service industry should dare to make innovation. As Finnish people are familiar with
pizza shop, cafés and Chinese restaurants already, the goal of teahouse is to be
another choice of entertainment with both consumption of high and low levels, in
order to achieve wider customer groups.

Strategy
The method I suggest is that: firstly, use Finnish stuff; secondly use glass wall of the
kitchen to show how those tea snacks are made, as it is also a good advertisement
itself; thirdly, choose famous tea brand or successful tea brand in China already, thus
would also saves a lot of time and cost to introduce to customers.

Apart from this, the target customer groups are different in age groups in different
demand. Because of this difference, there should be targeted services and products
to fulfill needs of each customer group. For instance, teahouse could set up varied
themes, for instance, literary type, composite type, and fashion type. There should be
a determining factor to lead the business image, for instance, time leadership, service
leadership, cost leadership, or value leadership.

On the other hand, the teahouse could aim at internal circumstance of culture and art
from decoration, interior display and waiter dresses, using traditional three-piece tea
cups set, posting tea paintings, making original tea snakes, so that the visitors could
enjoy this special culture with added value.

What’s more, it should design product with cultural connotation: A new brand is the
innovation of product, so teahouses should have its own special snacks, like a
company needs its own brand. Based on the marketing strategy of products,
teahouse products should concentrate on core product, tangible product and
extended product. Consumers concern about tea quality will put high attention on tea
standards. Teahouses could set up tea exhibition, sales counters to sell high level
teas. But to attract the popularization of customer groups, you need to put forward
more choices for them in the price choices. Pricing strategy is an important factor in
competition, as there are so many competitors in Helsinki.

The background music should express Chinese traditional classic music, for

example, koto erhu lute and so on. Teahouse could also add drama as the
 28

extended products. For the teahouse service we provide personality requirements,

and waiters could also recommend varied tea brands according to customer
favorites.

4.3 Operational planning

Introduction of main products and suppliers:
A new brand is the innovation of product, so teahouses should have its own special
snacks, like a company needs its own brand. Based on the marketing strategy of
products, teahouse products should concentrate on core product, tangible product
and extended product.

The teahouse will supply delicious tea snacks with low price which has successful
sales experience in China for thousands of years but rarely seen in Finland. The
types I suggest are:
Steamed creamy custard bun: this is a traditional Chinese teahouse dessert, which is
made by milk, butter, sugar, egg and flour. The main tool used is a big pot for
steaming. These raw materials and tools are easy to find in local supermarket in
Helsinki.

Apple crisp: this is made by apple, butter, cheese and flour. The character of it is crisp
and fragile. The main tool used is a pan. These raw materials and tools are easy to
be found in local supermarket in Helsinki.

Sticky rice in lotus leaf: these is the most common tea snack in Hong Kong teahouse
with abundant materials of food inside lotus leaf, for instance, chicken, mushroom
and Asian jasmine rice. The main tool used is a big pot for steaming. Chicken,
mushroom and big pot are easy to find in local supermarkets in Helsinki, while Asian
jasmine rice and lotus leaf needs to be purchased from Asian shop in Helsinki. The
Asia shop I suggested is called Dong Fang Hang.

Egg Tart: This is typical western dessert, but also familiar in Chinese teahouses
nowadays. The basic materials are butter, egg, flour, milk. There are varied types of
egg tarts with adding other materials, for instance, chocolate and raisin. Egg tart
needs to be roasted in oven using silver paper. These raw materials and tools are
easy to be found in local supermarket in Helsinki.

The tea brands I suggested are chosen from the case of QF teahouses in chapter 3:
Keemun black tea (purchased from Huangshan City Qimen red drunk tea trade Co.,
 29

Ltd), Fujian Lapsang souchong (imported from Fujian tea pavilion tea industry limited
company, China), Guangdong Yingde black tea (imported from Guangdong, China),
Fujian Lapsang souchong (imported from Fujian tea pavilion tea industry limited
company, China). In the case study, the price of each kind of these teas is about 2
euros per cup and 6 euros per pot. But these teas have to be imported from China.
Considering the transportation fee by shipping from China to Finland and adding VAT
fee, the price will be a little higher.

Opening hour
As research on internet, in Helsinki, the department stores and shopping centers
open on weekdays 9am-9pm, Saturday 9am-6pm and Sunday 12noon-6pm (9pm).
Smaller shops are usually open weekdays 10am-6pm and Saturdays 10am-2pm.
(Arrival guides 2005-2013.) The average working hour for Finnish workers is 160
hours from Monday to Friday (8 hours per day). If the shop opens on Weekends, the
tax and salary for workers would be a little higher and more complicated to calculate
in financial plan. So I suggest the teahouse to make change of the timetable of
department stores and shopping centers in Helsinki: open on 10am-6pm from
Monday to Friday. The total working hour of employees is 8*5*4=160 hours/month. It
is proper to assume that there are 1 manager, 3 waiters and 2 cookers in this
teahouse. In addition, according to Finnish working holiday regulations, the teahouse
also has 4 weeks holidays in summer and 1 week holiday in winter.

Interior decoration
Teahouse could set up varied themes, for instance, literary type, composite type, and
fashion type. The teahouse should attract customers by improving internal
circumstance of culture and art. I suggest the classic Europe-style interior decoration,
because of shortage of Chinese decoration materials in Helsinki. The goal is to build
a good entertainment and relaxing place for large customer groups. The cups for tea
drinks should be traditional Chinese tea set. And it is good to post tea paintings on
the walls. The background music should express Chinese traditional classic music,

for example, koto erhu lute and so on. For the teahouse service, waiters should be

able to introduce and recommend the tea sold to customers.

Promotion activities
As the core product of teahouse industry is good tea. Consumers concern about tea
quality will put high attention on tea standards. Teahouses could set up tea exhibition
in order to introduce the tea drinks. Pricing decision should be made by comparing
with its competitors as there are so many cafés here in Helsinki.
 30

About pushing product into the market: the design of products will be involved with
market trend, adopting diversified product categories and pricing strategies. Apart
from very few high level tea brands, the pricing of others will be in a medium or low
level, for instance, common tea drinks and tea snacks. If the cumulative consumption
is over 60 euro in one week, there will be a silver card of 10% discount; if the
cumulative consumption is over 160 euro, there will be golden card of 20% discounts.

The sales promotion plan includes advertising on Internet, to enlarge popularity of

new open shop. In the starting period and festivals, there will be favorable activities,
the content may include 30% discount for first 50 customers, and other customers will
receive a sample package of tea. If possible, the owner could make long term
contract with tourist groups; there would be a discount of 10% for the travelers they
recommended.

Starting a business in Finland

If this teahouse wants to register, there are some procedures. Firstly, to open a bank
account, the shop must have following documentation: the memorandum of
association; the Board of Directors concluding a resolution to open a bank account
and the persons authorized to withdrawal from the account; a description of future
banking transactions; a specified description of the company business field.
Secondly, the start-up notification forms to NBPR (National Board of Patents and
Registration) and the Tax Administration. In detail, a basic form to the Trade Register
must be filed in Finnish or Swedish according to certain standards. If the company
has employees, the company must have the Employer Register. (Doing business
2012.)

Thirdly, there should be insurance payment. An employer must pay for his employees
the pension insurance, accident insurance, unemployment insurance and group
insurance. Supplemental pension insurance is optional. (Doing business 2012.) Apart
from this, a shop may choose to buy the shop running insurance; generally, there are
four main types, vehicle insurance, personnel insurance, building and content
insurance and public liability insurance.

Employee expenses of shop owner

The boss need to pay 6 different bills because of employment, five of which will be
paid to government for the employees, and the left one is to the employees. The five
bills to the government are social security fee, pension insurance, accident insurance
 31

payment, unemployment insurance payment and group insurance payment. The one
bill to the employees is salary. In this part, I will calculate three bills: the social
security payment, employment pension and salary, as the accident insurance
payment, unemployment insurance payment and group insurance payment will be
introduced in another part called general insurance. (Vero 2013.)

4.4 Financial planning for 1st year

Rental payment
By research of renting a shop in Helsinki on internet, it is estimated to prepare
oneself for about 20+ euros for per square meter in the center. Better spots in the
center will go up to 30 €. (Finland Forum 2008.) I suggest a shop size of 150 square
meters, which rental is 25 euros*150= 3750 euros/per month.

Rental deposit
The rental deposit is about one month rental payment, which is 3750 euros in this
case.

Decoration tools and other equipment

I suggest teahouse owner buying raw materials from decoration shop in Helsinki or
other places in Finland according to personal understanding and design. I suggest
interior decorating shops in Punavuori and Kamppi districts. (Arrival guides 2005-
2013.) It is estimated that shop lighting tools cost 200 euros; wall painting costs 400
euros; 8 tables and 32 chairs cost 2000 euros; 32 Chinese tea cups suits purchased
from Asia shop-Dong Fang Hang costs 600 euros; kitchen equipment consists of 6
ovens, 3 refrigerators, 1 chopping table, 2 cupboards, 2 microwaves, 1 cleaning pool
and pans, pots, plates, floor board are easy to find in local supermarkets, with
estimated total cost of 8000 euros. In total, decoration and other equipment cost is
11200 euros. After adding VAT of 24%, it is 11200*1.24=12540(euros/month).

Depreciation (reduction in value)

Equipment is to be depreciated at a rate of 20% yearly and depreciation of ADP-
programs is calculated by using straight-line depreciation method: acquisition cost of
the equipment is 11200 euros, so the depreciation yearly is 11200*20%=2240

(euros/year) 2240/12 187(euros/month).

Expenses of employees
As introduced in operational plan, the open hour is on weekdays 10am-6pm (8
hours), the total working hour of employees is 8*5*4=160 hours/month.
 32

In Helsinki, the average salary is 4500 euros/month for manager, 1688euros/month

for waiter, 2121 euros/month for cooker. (Palkkavertailu 2013.) As the salary for
manager is too high, I suggest that the shop owner himself to be the manager and do
the bookkeeping by himself as this is only a small teahouse. So I suggest that there
are 3 waiters and 2 cookers in this teahouse. As160 are average working hours for
Finnish workers, so the salary in this teahouse is: 3*1688 euros/month for 3 waiters,
2*2121 euros/month for 2 cookers. The salary cost of all employees is:
1688*3+2121*2=9306(euros/month).

In Finland 2013, the social security payment is 2.04% of the salary if the employee is
from 16 to 67 years old and the pension payment is 17.35% of the salary. (Vero
2013.) There is also unemployment insurance and accident insurance which is varied
in price, depending on the industry characteristics. As teahouse is not a business in
high danger of accident, I suggest that the unemployment and accident insurance are
together 6% of the total salary. Thus, the all other employee expenses except for the
salary is about 25% of the total salary: 25%*9306 2327 (euros/month).

Raw materials purchasing cost

There are four kinds of tea snacks suggested: steamed creamy custard bun, apple
crisp, sticky rice in lotus leaf and egg tart. I suggest that the average cost of tea
snacks should be controlled in 1.5 euro. By asking of the desserts’ cost in cafés in
Helsinki, the cost is around 1-1.5 euros. So it is quite possible for tea snacks too, as
the raw materials used are similar. On the other hand, the average total cost of tea is
30 euros per kilogram. The amount of tea used per pot is about 15 grams, so the
average cost is 1 euro per pot. In assumption that they sell 6000 tea snacks and
2000 pots of tea monthly, then the purchasing cost without VAT is
1.5*6000+1*2000=11000 (euros/month). After adding VAT of 14%, it is
11000*1.14=12540(euros/month).

Electricity fee
According to Helsingin Energia report on 1.1.2013, the general electricity fee is: basic
charge is 2.80 euros/month; electricity is 6.81c/kWh. The general electricity means
the electricity sold to contract-based sites, where the size of the main fuse is max. 3*
63A and the annual consumption of electricity is less than 100,000 kWh. (Helen
2013.) According to research, the electricity consumption is 300W/square meter of
the kitchen and 150W/square meter outside kitchen in a restaurant. In my suggestion,
 33

the shop size is 150 square meters including a kitchen of 40 square meters. In the
calculation before, the open hour of the teahouse is 256 hours/month. So the
electricity consumption per month is
256*6.81*(40*0.300+110*0.150) =497(euros). The total electricity consumption
without VAT is 497+2.80 500 (euros). After adding VAT of 24%, it is
500*1.24=620(euros/month).

Water fee
According to HSY, the water fee is based on the consumption, which is estimated to
be 400 euros of a 150 square-meters teahouse. (HSY 2013.) After adding VAT of
24%, it is 400*1.24=496(euros/month).

Advertising
I suggest the advertising on Expat Finland, launched in July 2004. Expat Finland is a
prominent information resource, with steady traffic and search results. Typical visitors
actively seek the information on the Expat Finland pages they visit, and using it. For
companies and organizations seeking a targeted audience, advertising on Expat
Finland is an effective medium. It is estimated to spend 70 euros per month to
promote products to our customers per year to set up ads on the left of the front
page. (Expat-Finland 2013.) After adding VAT of 24%, it is 70*1.24 87 (euros/month).

Shop registration
According to Doing Business 2012 in Finland, there is clear introduction that the start-
up registration fee is 350 euros, includes the notification fee related to establishment
of a limited liability company. (Doing business 2012.)

Inventory
In assumption, the shop owner has the inventory of raw materials or equipment
worthy of 1000 euros. After adding VAT of 14%, it is 1000*1.14=1140(euros/month).

Unexpected cost
There are always uncertain expenses, which is random cost. In this case, we assume
that the unexpected cost is 200 euros monthly.

Floating capital
We assume that the floating capital prepared for opening a teahouse is 20000 euros,
which comes from owner’s own pocket.
 34

Sales analysis
The average raw materials cost of tea is 30 euros per kilogram; the amount of tea
used per pot is about 15 grams, so the average cost is 1 euro per pot. I suggest that
the sales price of each pot is 16 euros and each pot equals to 8 cups of tea, thus, the
price of each cup is 2 euros. (Wenku 2010.) The average cost of tea snacks raw
materials is 1.5 euro, and the average sales price is 3.5 euros. (Wenku 2010.)

Total sales(net turnover): In calculation in products’ purchasing cost, I assume that

they sell 6000 tea snacks and 2000 pots of tea monthly, so the total sales with VAT is
6000*3.5+2000*16=53000(euros/month). The VAT is 14% of sales in 2013 Finland.
So the VAT payment of sales is 53000*14/114=6509(euros/month). The net sales are
53000-6509=46491(euros/month).

Financial plan by tables

Table 1: Profit and loss account
PROFIT AND LOSS ACCOUNT 1st 1st year
month € €
Sales 53000 636000
- VAT 14% 6509 78105
Net Sales 46491 557895
Variable costs
Raw materials purchases 11000 132000
Increase in inventory 1000 10000 1000 131000
Gross margin 36491 426895
Fixed costs
Wages and salaries 9306 111672
Social security, pension and 2327 27924
insurance
Depreciation 187 2244
Rental payment 3750 45000
Electricity 500 6000
Water 400 4800
Advertising 70 840
Shop registration 350 4200
Unexpected costs 200 2400
Profit(loss) for the 1st financial 19588 224059
year
 35

Table 2: Start-up finance

START-UP FINANCE €
Rental payment 3750
Equipment investment 13888
Wages and salaries 9306
Social security, pension and insurance 2327
Raw materials purchases 12540
Electricity 620
Water 496
Advertising 87
Shop registration 350
Inventory 1140
Unexpected costs 200
Rental deposit 3750
Total financing 48454
 36

Table 3: Financial budget for the first month

FINANCIAL BUDGET FOR THE FIRST MONTH
Receipts
Sales 53000
Owners' investment 48454
Total of receipts 101454

Payments
Raw materials purchases 12540
Inventory 1140
Salaries and wages 9306
Social security, pension and insurance 2327
Rental payment 3750
Electricity 620
Water 496
Advertising 87
Shop registration 350
Rental deposit 3750
Equipment investment 13888
Total of payments 48254
Monthly net cash flow 53200
Opening balance 0
Closing balance 53200

4.5 Risks analysis

To open a teahouse in Helsinki, there are 2 main risks: culture risks and strategic
risks.
Culture risks
The largest number of coffee consumption per capital is in Finland. Each person
consumes 10 kilograms of coffee yearly. According to official report, Finns averagely
drink 4 or 5 cups of coffee daily. In contrast, American yearly consumption of coffee is
4.2 kilograms, ranking 25th in the world. There is even regulation of coffee break in
collective labor agreement. But even if there is no such regulation, Finn also used to
stop for a coffee break every day and enjoy this time with free conservation. In
nearly every street of Helsinki, there is café, with traditional or fashion style. The most
attractive ones are those around Senate Square and the Market Square. This is
definitely one risk of this teahouse.
 37

Strategic risks
It is hard to enter a new country with no experience before, because the culture and
the custom are so different. How to gain trust of the customers to the tea quality is
even hard in China. The method I suggest is that: firstly, use Finnish stuff; secondly
use glass of the kitchen to show how those tea snacks are made as much as
possible, as it is also a good advertisement itself; thirdly, choose famous tea brand or
successful tea brand entering Europe or America already, thus would also saves a lot
of time and cost.
 38

5 CONCLUSIONS
This paper made two achievements. The first was how to make a business plan,
which included the normal structure of a business plan, such as operational planning,
marketing planning and financial planning. The internal and external analysis
determined the corporate strategy, corporate strategy determines marketing strategy
and operational strategy, operational plan determines financial plan. It was based on
this rationale a business plan should be made. In the practical part of starting a
teahouse business in Helsinki Finland, in the external and internal analysis,
opportunity, threat, strength and weakness were analyzed. Once this strategy was
determined, all of other plans such as marketing plan, operational plan and financial
plan were based on this strategy. The operational plan was given from
comprehensive aspects such as products, equipment, suppliers, decoration,
employee arrangement, timetable and general regulations of how to start and register
a business in Finland. The financial plan was based on the operational plan and was
made by estimated data reasonably, in which, the profit and loss account and
financing budget were given. After financial plan, the risk and risk management was
also analyzed as business always runs with risks.
 39

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 44

APPENDIX

Business plan for teahouse in Helsinki

Summary
The Teahouse in Helsinki aims at relaxing and refreshing, with both low and high
level consumption, which is very attractive to those who want to save money or find a
place to sit and break. This business plan is going to analyze from industry and
market, main products and suppliers, time schedule and other specifications. Based
on that analysis, the financial plan of investment and profit is build. The aim is to find
out whether this teahouse in Helsinki is possible to make profit.

Industry and market analysis

The Teahouse in Helsinki aims at relaxing and refreshing, with both low and high
level consumption, which is very attractive to those who want to save money or find a
place to sit and break. It is also a good choice for travelers who already have coffee
that day and want to try some other drinks, with no repeated deserts from cafés in
Helsinki.

Strategic planning
As Helsinki is the capital of Finland, the migrating population is super large, and may
lead to the lack of sense of belonging. The mission is to make customers enjoy
different snacks and drinks. The business goal of teahouse in Helsinki is to be an
entertainment place combining high level and low level consumption, to achieve wide
customer groups.

Introduction of main products and suppliers

Tea snacks: Steamed creamy custard bun; Apple crisp; Sticky rice in lotus leaf; Egg
Tart.
Tea brands: Keemun black tea (purchased from Huangshan City Qimen red drunk tea
trade Co., Ltd); Fujian Lapsang souchong (imported from Fujian tea pavilion tea
industry limited company, China); Guangdong Yingde black tea (imported from
Guangdong, China); Fujian Lapsang souchong (imported from Fujian tea pavilion tea
industry limited company, China).

Opening hour, staff and service

Open on 10am-6pm from Monday to Friday. I suggest that the shop owner himself to
be the manager and do the bookkeeping by himself as this is only a small teahouse,
and there are 3 waiters and 2 cookers in this teahouse.
 45

Interior decoration
The whole style is classic Europe-style interior decoration, while the cups for tea
drinks should be traditional Chinese tea set. And it is good to post tea paintings on
the walls. The background music should express Chinese traditional classic music,

for example, koto erhu lute and so on.

Facilities list
Shop lighting tools, wall painting, 8 tables and 32 chairs, 32 Chinese tea cups suits, 6
ovens, 3 refrigerators, 1 chopping table, 2 cupboards, 2 microwaves, 1 cleaning pool
and pans, pots, plates, floor board.

Promotion activities
Teahouses could set up tea exhibition in order to introduce the tea drinks. The pricing
of others will be in a medium or low level, for instance, common tea drinks and tea
snacks. If the cumulative consumption is over 60 euro in one week, there will be a
silver card of 10% discount; if the cumulative consumption is over 160 euros, there
will be golden card of 20% discounts. The sales promotion plan includes advertising
on local newspapers, to enlarge popularity of new open shop. In the starting period
and festivals, there will be favorable activities, the content may include 30% discount
for first 50 customers, and other customers will receive a sample package of tea. If
possible, the owner could make long term contract with tourist groups; there would be
a discount of 10% for the travelers they recommended.

Financial plan by tables

 46

Table 1: Profit and loss account

PROFIT AND LOSS ACCOUNT 1st 1st year
month € €
Sales 53000 636000
- VAT 14% 6509 78105
Net Sales 46491 557895
Variable costs
Raw materials purchases 11000 132000
Increase in inventory 1000 10000 1000 131000
Gross margin 36491 426895
Fixed costs
Wages and salaries 9306 111672
Social security,pension and 2327 27924
insurance
Depreciation 187 2244
Rental payment 3750 45000
Electricity 500 6000
Water 400 4800
Advertising 70 840
Shop registration 350 4200
Unexpected costs 200 2400
Profit(loss) for the 1st financial 19588 224059
year
 47

Table 2: Start-up finance

START-UP FINANCE €
Rental payment 3750
Equipment investment 13888
Wages and salaries 9306
Social security, pension and insurance 2327
Raw materials purchases 12540
Electricity 620
Water 496
Advertising 87
Shop registration 350
Inventory 1140
Unexpected costs 200
Rental deposit 3750
Total financing 48454
 48

Table 3: Financial budget for the first month

FINANCIAL BUDGET FOR THE FIRST MONTH
Receipts
Sales 53000
Owners' investment 48454
Total of receipts 101454

Payments
Raw materials purchases 12540
Inventory 1140
Salaries and wages 9306
Social security, pension and insurance 2327
Rental payment 3750
Electricity 620
Water 496
Advertising 87
Shop registration 350
Rental deposit 3750
Equipment investment 13888
Total of payments 48254
Monthly net cash flow 53200
Opening balance 0
Closing balance 53200

Risk analysis
Culture risks
The largest number of coffee consumption per capital is in Finland. Each person
consumes 10 kilograms of coffee yearly. According to official report, Finns averagely
drink 4 or 5 cups of coffee daily. There is even regulation of coffee break in collective
labor agreement. But even if there is no such regulation, Finn also used to stop for a
coffee break every day and enjoy this time with free conservation. In nearly every
street of Helsinki, there is café, with traditional or fashion style. The most attractive
ones are those around Senate Square and the Market Square. This is definitely one
risk of this teahouse.

Strategic risks:
It is hard to enter a new country with no experience before, because the culture and
the custom are so different. How to gain trust of the customers to the tea quality is
 49

even hard in China. The method I suggest is that: firstly, use Finnish stuff; secondly
use glass of the kitchen to show how those tea snacks are made as much as
possible, as it is also a good advertisement itself; thirdly, choose famous tea brand or
successful tea brand entering Europe or America already, thus would also saves a lot
of time and cost.

Conclusion
The mission of Teahouse in Helsinki is to make customers enjoy different snacks and
drinks. The business goal of teahouse in Helsinki is to be an entertainment place
combining high level and low level consumption, to achieve wide customer groups.
By analysis from tightly related aspects of running business, it is possible to say that
the teahouse in Helsinki can survive, while there are still some culture and strategy
risks.