Table of Contents
|Serial No.||Topic||Page No.|
|A2||Mission Goals And Objectives||4|
|A3||Keys to Success||4-5|
|B2||Legal Form of Ownership||6|
|B3||Location and Facilities||6-7|
|B5||Products and Services||8-9|
|F||Financial Statements and Projections||21-26|
|F1||Revenue and Cost estimate||21-22|
|F2||Forecasted Profit and Loss Statement||22-23|
|F3||Forecasted Balance Sheet||23-24|
|G1a||Break even point||25-26|
A. Executive Summary:
A1. Business Identification
The business plan is a medium-sized coffee shop for Eat, Sip and Read that will also deal with coffee shops in the posh area near Santa Cruz University of California. Eat, Sip and Read will give customers a pleasant atmosphere in the restaurant where they can taste the favorite variety of coffees and food, as well as access to the coffee shop’s books. The main attraction of it will be the book store inside the outlet where the customers can either read the books inside the shops and may also purchase them if they wish. The ambience of the shop is aimed at providing an atmosphere where the users can concentrate on their readings as well as enjoy a wide range of cuisines.
The coffee shop business plan is aimed at highlighting the framework of the new business which is to be set up including the goals, strategies and the process of the implementation of the plans. The business plan also can help as a tool which could be used in the decision making process and in the evaluation of the performance of the business. Both operational and tactical planning is being done by the business plans and helps in devising ways for implementation of the overall goals of the business in the daily activities (Standard Business Plans, n. d).
A2. Mission, Goals and Objectives
The mission for the organization is to provide a coffee shop for the customers where they can also enjoy their reading habits. Gaining fair amount of profit for the organization is also a primary mission so that the owners are also satisfied. Another mission of Eat, Sip, and Read is to provide a workplace for the employers where they will be kept on motivating to perform their best and will be rewarded based on their performance.
The objectives of Eat, Sip, and Read are to become a popular brand name among its customer which will comprise of a large section of the youths. A considerable amount of sales is targeted in the first year near about $ 500 k and to increase the margin of the profit in the second year. The long term objective of the organization should also include the expansion of the units in different states of the United States of America and based on the response should also consider the idea of international expansion.
A3.Key to Success:
The quality of service which will be delivered to the customer will be one of the primary factors for the success of the organization. The organization will have to be critical in the choice of the food in the menu. As the facility of reading is one of the prime attractions for the shops the choice of books in the store will also be critical for attracting the customers in the store. The marketing strategy of the business and the ability to adopt the change and to undertake transformation in the areas required will also be crucial in the success of the organization. The efficiency of the management in choice over the policies and their nature of implementation hold the key regarding the future of Eat, Sip and Read.
B. Company Summary:
B1. Industry History:
The fast food industry is one of the rising businesses in the United States of America. According to a report, the consumers in USA spends about $110 billion on the fast foods in the year 2000 which depicts the huge amount of success which the industry has encountered. In the year 2005, the sales increased by more than 5% of the previous year. The likeliness of the fast food by the majority of the population based in USA has been identified by the market players and has been considerable in the overall success of the industry. The success of the industry also lies in the fact that it has provided huge openings for employment throughout the country. The figures published by the U. S. Bureau of Labor Statistics reflect that nearly 2.7 million workers are employed in this sector of the economy. The industry also has provided average growth to the employees over the years and it provides excellent opportunity to the population in matters of employment. Across the country there are more than 200,000 fast food restaurants and generates sales of more than $120 billion. The industry also suffered a difficult period since the year 2006, as the food and the energy price increased significantly all over the country. The economic downturn also brought a change in the overall pattern of sales in the country as the consumers were left with little amount of money to spend on the restaurants and the fast food. The industry has undergone massive change over the years and every day new practice and products are offered to the customers by the organizations dealing in the industry. Innovations are also being made to introduce foods which are much healthier and contain lesser calories. The industry over the years have catered efficiently towards the changing demands of the customers and have responded to the needs in their best possible ways which have contributed to the success of the overall industry. The industry has also faced many controversies over the years regarding of food served to the people. Much of the food prepared by the fast food units throughout the country contained high amount of fat and contributed a lot towards the increase of body weights. Awareness was raised among the people and much organization took this matter seriously and reacted accordingly to respond to the needs.
B2.Legal Form of Ownership:
As the business is aimed to be operated in the national market, and has no previous experience of operations, the best form of ownership for it is the Corporations. The business will be registered as the C Corporation which is the classical legal entity for the majority of the organizations based in USA. The structure of the C Corporation is best suited for shielding the personal liability of the owners and also provides a considerable benefit apart from taxation to the owners. The tax of the organization is separated from the tax of the owners. In matters of license and permits the business will undertake clarification from the zoning laws and will also consult the Chamber of Commerce or Small Business Development center. In matters of legal issues which the business can face, Eat, Sip, and Drink needs to be careful of the environmental regulation which can arise by opening up the fast food units near the university. Further as some of the foods delivered to the customers will be the products of the animals, objections can be raised by environmentalist in such steps and the organization will need to adhere to the rules prescribed by the environmental regulation so that legal proceedings can be avoided in the future (Fish & wildlife, n. d). The selling of the books in the store is another matter which can arise legal problems. In order to avoid controversy Eat, Sip and Drink should seek prior permission from the publication houses.
B3.Location and Facilities:
Eat, Sip and Drink is expected to open up the unit in the adjacent area near the University of California. As the prime attraction of the business is in providing a coffee shop where the customers can come enjoy their food and at the same time spend time on reading books, the geographical location of the outlet will be an added advantage. The shop being in close adherence to the university will be able to attract more number of students and they are expected to enjoy the facility of reading as well as spend quality time with their friends over the foods served. Other than the large section of the students, the business will also be flourished by local people living in the posh area and is expected to visit the shop on a regular basis. In matters of the production of the food, it will be prepared in the kitchen of the store itself and the items for the preparation of the food will be purchased from the local market and will save a considerable portion of the transportation cost for the purpose. Opening of the unit in a close distance to the university will also help the store to decide on the selection of views as proper ideas and up to date preferences of the customers can be known from the better informed students.
The overall management of the organization will be headed by the CEO of the organization. Other positions which will play a vital structure in the organization will be the HR manager, the marketing manager, the production manager, and the marketing manager. The personnel appointed in these positions will be in charge of the respective departments and will monitor the performance of the departments. The person in leading positions of the department will also observe the changes and will recommend changes to the higher authority. The persons in charge of the managerial roles need to have clarity in their roles and responsibilities so that they can transfer their ideas to the subordinates in the proper fashion. Eat, Sip and Read will focus on the optimal organizational structure while maintaining grouping and linking. The process of grouping focuses on the differentiation and the aggregation of the people, process and the functions and helps in the optimization of the flow of information within various groups. On the other hand linking will involve the mechanism of integration in the process of coordination and will help in sharing vital information across various groups. The organization will be based on the functional model which will be crucial in the development of the skills for the individual departments. It also helps in the promotion of functional innovation and keeps the costs in the lower ends. As the business has no previous experience of carrying out operations, this model becomes simple and easy for the departments to understand and keeps the employees accountable for the performance. The overall coordination of the process also becomes quite easy and flexible in the adherence to the functional model. The wide nature of the duplication of various activities can also be reduced if Eat, Sip and Read incorporate the model appropriately. Another strategy which is to be maintained by the organization in its overall structure is the departmentalization. The process of departmentalization involves the division of jobs in smaller activities and then grouped together to attain coordination between them. The overall process of departmentalization will help in the span of control and help in development of the manager to reach the organizational goals and objectives (ORGANISATION STRUCTURE AND EFFECTIVENES, n. d)
B5.Products and Services:
The primary products which Eat, Sip, and Read will offer to the customers are a huge variety of coffees and food items which will include primarily Pizzas, Burgers. The menu will be differentiated under three broad headings which are the Small treats, big treats, Sweet treats, and cakes and Pastry. Under the small treat section, Sandwiches and Calzones will be offered, whereas the big treat will contain items like Burgers and Pizzas of a considerable variety. Under the sweet treat section pastries and Brownies will be offered which is one of the popular items in the local market. One important characteristics of the food served to the customers will be that in the ordering of the Pizzas and Burgers the customers can customize their choice and preference and thus the order can be served based on their preference. The most significant part of the coffee shop as discussed before is the facility to read and buy books which will be present in the outlet itself. The types of books will be changed constantly and more priority will be set in providing the books of current interest to the readers. In festive seasons more number of books will be kept which focuses on the tradition of the country and will also contain travelogues and photography books. Thus the type of books at the shop will vary from time to time and will try to provide information to the readers on topics of current interest. In matters of attaining customer satisfaction, high quality of service will be provided to the customers so that they do not face any difficulty inside the outlets. A dedicated person per table inside the shop will address the needs of the customers. The service people will be provided with proper training so that they may gain expertise in handling the customers in a proper fashion. The queries of the customers will be dealt in a polite manner and all necessary information will be provided to them. The overall product and the quality of the customer service are provided serious attention by Eat, Sip and Read.
C. Coffee Shop Market Analysis:
C1. Target Market
The market analysis of Eat, Sip and Read reflects the fact that as all the strategy makers for the organization are from the local areas so better analysis of the market can be undertaken by them. In order to correctly identify the target market, the overall market segmentation is required by the organization. As the shop is located outside the university the students section will comprise a segment of the customers. The shop being located in the posh locality will also involve the footfalls of families on weekends. Based on the classification of the age of the probable customers, it has been apprehended that the majority of the customers will be young and middle aged. The market segmentation also reveals the fact that it would be much more profitable for Eat, Sip and Read to concentrate on the market segment of students and devise their strategies targeting this particular segment of the society. Study of the trends in the coffee industry also suggest that the student class attributes to be the largest section among the consumers of the fast food, and the presence of the shop in close proximity to the University can prove beneficial to them in gaining more number of customers. Considering the main attraction of the stores, the organization should target the portion of the society who has considerable interest in reading books of various subjects. As a result the students and teachers will be the primary target of Eat, Sip and Read. However proper attention also needs to be focused on the other segment of the market as proper marketing efforts towards them could also help the organization in building up the customer base in the initial days. Based on the demand forecast, the products of the organization which includes fast foods and books is expected to be popular among this section of the society and will also be a matter of interest for other people who fails to deploy more time in matters of entertainment and will consider it as an option when they manage to extract some time from their busy schedule.
The overall market of fast food has been impressive in the United States of America over the years. The industry has been one of the highest revenue gainers in the country and the organizations operating in the industry has its presence throughout the country with dominance in the urban part of the country. The saturation of the industry has led to the rapid change of the taste and preference of the customers along with the nature of the operation of the organizations. In the recent years a trend has been noticed in the preference of the customers towards the service provided by the outlets along with the quality of foods. The type of food quality has also changed massively. Earlier the customers were less concerned about their health and had preference over the spicy foods, but in the present generation, the customers prefer foods with low calories because of the increased concern towards health. The increased attention of the customers towards the service, have caused the popular fast food restaurants in the country to undertake massive transformation and they look in enhancing the quality of the service they deliver to the customer in a minute manner. The decoration and the refurbishment is another modern trend associated with the fast food chains as the presence of a good ambience helps to imbibe a positive feeling among them and increases the overall satisfaction. The key to retain customers is through the development of a sense of brand loyalty. In the process of creation of brand loyalty, the organizations tend to offer more elements which drive the customer satisfaction. The rise in competition is also forcing the organizations to innovation a daily basis and has been a regular trend. The overall success of the industry can be contributed to the customers who have their preference over fast foods and this has caused the industry to expand on a large scale. The overall expansion of the industry has also opened new sources of employment opportunity and specialized professional in various divisions of the industry has developed over the years and has contributed significantly to reduce the rate of unemployment in the country. The industry is expanding daily and this is a positive sign for the overall economy of the country, however it brings a fair amount of tension for the management of the organization in framing strategies to stand tall among the mammoth competition (Fast Food Industry Report 2011, n. d)
The fast food industry in USA is overcrowded with big players in the market and sufficient market share has been gained by them over the years. The biggest market has been occupied by Mc Donald’s. Mc Donald’s has a huge presence throughout the country and has its presence in almost every locality. In the initial days Eat, Sip, and Drink may face little difficulty in gaining a huge customer base as it will be difficult for them to turn the loyal customers of Mc Donald’s towards their shops. Beside the threat from the presence of Mc Donald’s, the fast food industry is saturated with a large number of local and global players ad will face difficulty in market penetration unless a proper strategy is adopted by them. Over the years the quality of foods supplied by Mc Donald’s and KFC has really satisfied the customers and Mc Donald’s have in turn appeared to be the largest seller of hamburger in the country. Various popular coffee shops in the country and particularly in the place of operation of Eat, Sip and Read are highly popular. Because of the large number of organization operating in the same field as that of the proposed business set up, the number of suppliers in the area is also large in number and this increases the bargaining capacity of the suppliers. Another important characteristic of this industry is that as the entry to this industry is relatively short of barriers and involves lesser capital than the other industries, the industry is preferred by most of the business in matters of setting up their units. The infrastructure of key organization of the industry like KFC and McDonalds is huge and Eat, Sip and read can provide no competition to them unless the market of the organization takes a huge expansion. Other than the presence of internationally renowned brand in the food industry various small to large scale coffee shops have also gained a considerable share of the market and has been popular among the customers because of their products and service. Apart from this the target market of the Eat, Sip and Read can also be affected considerably owing to the preference of the university youths towards the big brand names. Unless and until the standard of the product and service provided by the organization is up to the desired level, it will be thoroughly difficult for them to sustain Owing to the stiff competition in the market, The strategies needs to be effectively planned out and the organization should focus on their short term realistic goals which are achievable rather than setting goals which are almost difficult to achieve. The profitability desired by the organization in the initial years of operation should also be low and once the business gains some sort of stability and momentum in this competitive market, huge amount of profit can be desired by them. The presence of a huge number of competitors in the market should in turn motivate them to perform and reach their standards rather than getting discouraged. The competition of Eat, Sip and Read should focus on the local players in the market and they should aim to attract the customers of local organization towards them rather than trying to enter into any sort of competition with the multinational houses.
D. Coffee Shop Market Strategy:
The market strategy of coffee shop Eat, Sip, and Read will focus on the strategies which the organization will consider for the pricing of the product, along with the distribution and the promotion. In matters of pricing of the product, organization should at first conduct a market study regarding the price offered by the competitors dealing with similar products. The organization cannot charge too high price for the products as this will be the wrong strategy to adopt in the initial days. Eat, Sip and Read should comprise their profit margin in the initial days and should set a price which would be just be ideal to gain considerable profit. However in the later period, depending on the amount of popularity it achieves in the market, prices can be adjusted. The pricing of the products should have some unique features like offering discounts and offers so that it may attract the customer’s attention significantly. Special offers should be provided in the hours in which the sales is not expected to be high, so that customers may come in that particular time also and increase the overall sale of Eat, Sip and Read. In matters of selling the books which is a prime feature of the coffee shop, the organization will sell the books at a price lower than it is sold by the publishers by offering a discount. The discounted sell of the books will create an interest among the customers to purchase the book from the shops. The discount on books provided by Eat, Sip and Read, means that the organization also needs to lower the profit margin on the sale of the books. In matters of promotion of the business, the organization needs to plan extensively and try every means of promotion and advertisement so that a considerable number of populations become aware regarding the opening of the shop. As the main target segment of Eat, Sip and Drink comprises of youths, the organization should also focus on the advertisement through the help of the web sources. Social networking sites can also be used as a platform to promote about the products and services offered by opening up a dedicated web page in the sites. Eat sip and read should also open up their dedicated websites where detailed information regarding their outlet should be provided including the pricelist of the products served by them. Careful attention should be provided in the designing of the website so that it seems user friendly and the users can access the website at ease. As the location of the coffee shop is near the University of California, so the organization should promote about the shops in a large way among the college students and distribute leaflets among the students. Advertisement through the local media is also a useful technique to raise awareness among the local people. Televisions, radio and local newspaper should be effectively used for the purpose. Advertisement through the internet in the form of pop ups and emails will also be helpful in reaching to individuals. The advertisement campaign should be continued for a significant period of time and regular offers and discounts also needs to be promoted along with the products so that an impression can be created in the minds of the customers on a regular basis. The overall dedication of the marketing team is crucial for the success of Eat, Sip and Read and should be effectively carried out. In matters of distribution of the products, the organization will not have to incur any additional cost over it as all the products are to be sold form the stores only. The savings in terms of the distribution cost should be invested I n strengthening of the marketing activities to gather interact among the customers and significantly drive them towards the shops. The ambience inside the outlet also needs to be renovated during special occasions of the years to imbibe that feeling among the customers when they are enjoying the service of the products.
D2. Price List
The below table shows the price list of few of the product which will be served by Eat, Sip and Read. However the prices of books have not been included in the section as the books are not the direct product of the organization and are sold at a price which is marked by the publishers.
|Small Sized Burger||17|
|Medium Sized Burger||25|
|Burger with extra toppings||30|
D3. Selling Strategy:
Eat; Sip and Read will have to undertake the direct selling strategies as the sales will takes pace directly from their shops or outlets. In matters of direct selling the most important criteria is the physical presence and maintaining a good customer relation. The good customer relation signifies addressing the needs of the customers on a regular basis and solving the queries of them in a prompt manner. The person in charge of the customer handling should have a suitable knowledge regarding the products available in the store in order to answer the queries effectively. The customers should be treated in a polite manner in answering to their queries. As direct selling provides the opportunity to build rapport with the customers, Eat, Sip and Read should also focus on this perspective. The reviews from the customers during the initial days of operation is a vital part in the selling process as the reviews will help in the identification process of the needs and the demands of the customers and the customers will also feel that their views are valued by the shops and will pay a further visit to notice any changes incorporated by the shop. Eat, Sip and read should provide importance to the preference of the customers and should never try to impose their own preference over the customer’s choice and should provide a view of their own decision only when they were asked to do so. Every customer should be provided the same privilege and no biasness should creep in the process of sales offered by the coffee shop. In order to attract more sales, the organization may adopt the strategy of providing a considerable discount to the very first person who approaches the store each day. Pricing strategy along with the customer service needs to be carefully implemented to derive the correct selling strategy for the organization. In the technological era, Eat, Sip and Read should focus on the importance of online orders and should also provide the opportunity to the customers to order their products online and arrange for free delivery of the foods and the books. In matters of achieving sales the organization should aim to reach sales figure of $600,000 in the first two years and then look to achieve a sales target of $1million for the consecutive years. Eat, Sip and Drink should set the sales figure of big players like Mc Donald’s as their benchmark for the next five years if it becomes successful in becoming a popular outlet among the local people. Based on the performance for the subsequent five years, plans for international expansion should be opted and sales target in figures of $ billions may be targeted. In order to deliver according to the plans, Eat, Sip and Read should maintain coordination between the various departments with a prime focus on the customer attention and should be flexible enough to spot any change and respond accordingly. The overall selling strategy of the organization also depends on the quality of the products and they should not make any comprise with it.
D4. Sales Forecast
|Amount in 1000$||23||25.85||31||36||39||45||48||51||53||57||63||69|
The sales forecast of Eat, Sip and Read reflects that the sales of the organization are expected to increase gradually with the passage of time as it becomes popular among the customers. For the first year the sales figure suggests that the organization has a good prospect for the future days.
E. Implementation Strategy:
E1. Overall Strategy:
The strategy adopted by Eat, Sip and Read needs to be implemented in the right fashion so as to gain the operational efficiency. In setting up of a new business unit it is to be understood that the implementation of proper strategies is as important as the framing is. In the proper implementation of the strategy, the management of the organization must take initiatives in placing the things in correct order. The first stage in the implementation of the strategy as planned is the selection of correct workforce who is ready to dedicate their best for the sake of the organization. The selected personnel should be provided with proper knowledge of the products and should be trained to respond in a proper way with the customers and respond their needs immediately. Special attention needs to be focused on the products and the raw material required for the products should be well chosen so that the product can reach the desired quality. In matters of delivering the right products to the customers, proper research will be conducted to identify the taste and preference of the customers. The pricing strategy of Eat, Sip and Read should also be framed based on the market survey of the price of the similar products. The strategic plan of the organization should be linked with that of the operational plan during the implementation process to gain maximum benefit. Another way for successful implementation of the strategies is that the individual department of the organization should develop its own set of actions in adherence with the organizational goals. As a result inter departmental communication will also be encouraged and the strategy for the overall integration of the organization will also be achieved at ease.
The overall implementation strategy of Eat, Sip and Read is to be applied in the business. The strategy should be in close adherence with the business objectives, and goals. The overall strategy can be depicted with a help of timeline and the dates reflect the probable period within which the set of tasks are to be carried out.
|Market research regarding customers Preference||20.2.2020|
|Initial marketing activities||25.2.2020|
|Selection of food items and pricing||28.2.2020|
|Opening of the store||15.3.2020|
|First round of monitoring of performance||15.4.2020|
|Implement changes based on monitoring||1.5.2020|
|Estimation of sales figure||15.7.2020|
|Setting target for the next Quarter||30.7.2020|
E3. Control Plan:
The control plan of the business will involve extensive monitoring of the products, services and the customer satisfaction. The overall performance of the organization should be reviewed to find out whether the performance achieved by the organization is on the verge of meeting the organizational goals or not. The monitoring of the tactical plans should also be done carefully. In the monitoring process, the organization should be careful to find out the products and services which are most preferred by the customers and which are the things they are least interested. The monitoring process should be carried out on a regular basis to analyze the trend of the customers and the overall market situation. After the careful monitoring of the crucial factors, Eat, Sip and Read should try to improve in the areas which have not been able to gain popularity among the customers by emphasizing on their strengths. In order to get a complete view of the customer’s perspective, the organization may ask the customers to fill in a feedback form so that a transparent idea regarding the likes and dislikes of the customers can be gained. Based on the views of the customers, the organization should not undertake a massive change of strategy in the very first year but should clearly try to improve the products and services hinted by them. In the control plan the views of the employees in direct interaction with the customers is also useful and should be consulted by Eat, Sip and Read. The performance of the employees should also be closely monitored by the HR team and an appraisal of the performance also needs to be done during the process of monitoring of the business.
F. Financial Statement and Projection
F1. Revenue and Cost Estimate
|Revenue & Expenses||January||February||March||April||May||June||July||August||September||October||November||December|
|General and Admin Expenses||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000|
|Marketing and Sales Exprense||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000|
F2. Foerecasted Profit and Loss Statement
|Monthly Profit and Loss||January||February||March||April||May||June||July||August||September||October||November||December|
|General and Admin Expenses||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000|
|Marketing and Sales Exprense||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000|
|Total Operating Expenses||14100||14100||14100||15100||15600||15600||15600||15850||16850||16850||16850||16850|
|Total Operating Expenses:|
|Profit before Interest||8900||14400||16900||20900||23400||29400||32400||35150||36150||40150||46150||52150|
|Net Profit (Loss) – Monthly||8455||13680||16055||19855||22230||27930||30780||33575||34343||38143||43843||49543|
|Net Profit (Loss) for year||338429.50||338429.50|
F3. Forecasted Balance Sheet
|Projected Balance Sheet|
|Other Assets||$ 18,000.00|
|Total Current Assets||$ 188,000.00|
|Long Term Assets:|
|Long Term Assets:||$ 600,000.00|
|Accumulated Depreciation||$ 59,571.00|
|Total Long Term Assets|
|Total Assets||$ 728,429.00|
|Accounts Payable||$ 25,500.00|
|Other Current Liabilities|
|Long Term Liabilities:|
|Total Liabilities||$ 25,500.00|
|Paid in Capital||$ 500,000.00|
|Retained Earnings||$ (135,500.00)|
|Total Liabilities and|
|Owner’s Equity||$ 728,429.00|
G1. Financial Projection:
G1a. Breakeven point
In the calculation of the breakeven point the fixed cost has been assumed to $4500 and the production cost of each item has been taken as $35. The average selling price of each item is $50.
Number of units required to sell By Eat, Sip and Read is Q = 4500 / (50-35) = 300 units, where Q refers to the sales per month. So by achieving a sales figure of $ 300 a month the organization will be in a no profit or no sales condition
G1B. Financial Position
Based on the expected figures of the revenues and expenses, Forecasted profit and loss statement and the forecasted Balance it can be comprehended that Eat, Sip and Read is expected to perform satisfactorily in the first year of operation. As much strength is given on the promotional and the marketing activities and the business is starting newly, so the sales figure of $5, 43,500 seems promising for the future days. The projections also reflect the fact that the business will encounter a profit of $3, 38,429.50 in the first year based on the projected revenue and the operating expenses. In the calculation of the profit, an assumption has been made regarding the rate of interest and an overall interest rate of 5% has been considered in the calculation. The net profit to sales ratio is low for the first year however it is expected to increase rapidly for the coming two years. In the calculation of the operating expenses an assumption has been made that the organization will incur same cost over the general and administration look out as the business is new and major changes are unlikely to happen. The sales and marketing expenses of the organization are also taken to be constant for the first year of operation along with the accounting expenses. The business is assumed to pay insurance cost of $200 for the first year for the building on which the coffee shop will be structured. The figures from the projected Balance sheet reflects that in the first year the business has assumed to have no long term liability which appears very promising for the future. The capital required for the business can be managed by the owner or by arranging for the midterm loans offered by banks at flexible rates of interest. The profit before interest and tax is also on the higher side of the organization and it should look to minimize the debt or finance the loan at lower rate of interest so that it may achieve a higher rate of profit. The overall financial aspect of the organization depends a lot on the overall performance of the marketing team and the type of products and services it deliver to the customers. Unless those aspects of the business are strengthened, the financial aspect may not be able to flourish. Based on the projections and the strategies adopted by Eat, Sip, and Read, the prospect of the organization seems to be motivating
G1C.Capital/ Investment Needs
Along with the startup cost for the organization to operate, the business will be in the need for the equity contribution as the equity contribution will strengthen the overall financial position of the organization and it will also prevent the business in search for loan option in order to finance the needs. If the business faces any tough situation in the future, the strong equity base will also prevent the organization for becoming insolvent. However in terms of adequate capital structure, Eat, Sip and Read should also try to maintain an adequate amount of debt portion in the formation of the capital and in matters of investing in the business. The presence of adequate capital structure also raises interest among the public to purchase share of the company and in future if Eat, Sip and Read decides to list them on the stock exchange it will be significant in gaining the attention of the investors.
- Fast Food Industry Report 2011, (n. d), franchiseehelp, retrieved on January 28, 2012, from: www.franchisehelp.com/industry-reports/fast-food-industry-report
- Fish & wildlife, (n. d), sba.gov, retrieved on January 28, 2012, from: www.sba.gov/content/fish-wildlife
- ORGANISATION STRUCTURE AND EFFECTIVENES, (n. d) people learn, retrieved on January 28, 2012, from: peoplelearn.homestead.com/MEdHOME/MANAGEMENT/Organz.Structure.pdf
- Standard Business Plans, (n. d), bplans, retrieved on January 28, 2012, from: bplans.com
Company’s Name: Eat, Sip and Read
Business Plan Author’s Name
Title: Business Plan
3/1 Santa Cruz.003
Company email address