Business Plan

Sweet Coffee Shop

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

School of Management studies

Cochin University of Science and Technology
Cochin, Kerala, India
PIN 682022
October 2012
Business plan of Sweet Coffee Shop by Job Thomas

1.

Executive summary

Coffee shop is the flourishing business in Kerala. Coffee or Tea bar is a daily necessity
for local coffee addicts, a place to dream many things, a place to escape the daily
stresses of life and just a comfortable place to meet your friends or to read a book, all in
one. With the growing demand for high-quality tea or coffee and great service, Sweet
Coffee shop will capitalize inside School of Management Studies (SMS), Cochin
University campus to build a core group of repeat customers. The culture will offer its
customers the best prepared coffee/tea in the area that will be complimented with
pastries, as well as free books that its patrons can read to enjoy their visit.
The shop will operate a 50 square foot coffee bar near to the entrance of SMS building.
The identified place can be obtained for lease for one year possible to get extension in
the upcoming years. The start-up funds available with owner is INR 50,000/-. It is
expected that the remaining capital of Rs.50,000/- will be obtained through commercial
loans from State bank of Travancore.
The business is expected to earn sales revenue of INR 175,000/- in the first year. Sweet
Coffee shop will strive to maintain a high gross profit margin and reasonable operating
expenses. The projected sale and the profit are indicated in Figure 1.

Figure 1. Project growth of sale and profit of Sweet Coffee shop

Business plan of Sweet Coffee Shop by Job Thomas

2.

Business Description

The coffee and tea consumption in the campus is very high. Sweet Coffee shop will
serve students, teachers, ministerial staffs, laboratory staff and visitors are the
customers of the campus. It is expected that the people from School of Management
Studies and neighboring departments will be the loyal customers of the shop. An opinion
survey conducted in SMS indicates that the proposed business plan is something people
are waiting for. The quality and cleanliness will be the distinctive feature of the venture.
The product share is indicated in Figure 2.

Figure 2. Product share of Sweet Coffee shop

3.

Marketing

The projection of daily sales of Sweet Coffee shop for the given in Table 1. The total
expected sale per day will be Rs. 15500/- . The expected daily profit is about 50 percent
of the operating expenses.

Table 1. Projected Daily sale

Items
Coffee
Tea
Snacks
Stationery
TOTAL

Day-time
INR 1,000
INR 1,500
INR 2,000
INR 1,000
INR 5,500

Evening
INR 250
INR 500
INR 750
INR 250
INR 1,750

Total
INR 1,250
INR 2,000
INR 2,750
INR 1,250
INR 7,250

Sweet Coffee shop will offer its customers the best tasting coffee or tea beverages in the
area. This will be achieved by using high-quality ingredients and strictly following
preparation guidelines. The store layout, menu listings and marketing activities will be
focused on maximizing the sales of higher margin espresso drinks. Along with the
espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will
be sold in the coffee bar. Sweet Coffee shop will also offer its clients pastries, small
salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee at
home, Sweet Coffee shop will also be selling coffee beans. The menu offerings will be

Business plan of Sweet Coffee Shop by Job Thomas

supplemented by free books and magazines that customers can read inside the coffee
bar

Figure 2 Market analysis results of Sweet Coffee shop

Sweet Coffee shop will focus its marketing activities on reaching the University students
and faculty, people working in offices located close to the coffee bar and on
sophisticated teenagers. The details of market survey are shown in Figure 2. The market
research shows that these are the customer groups that are most likely to buy tea or
coffee and snacks. The quality and cleanliness are other important factors to be used for
marketing in well educated group of customers.
Sweet Coffee shop will cater to people who want to get their daily cup of great-tasting
coffee in a relaxing atmosphere. Such customers vary in age, although the location is
inside University campus, most of our clientele will be college students and faculty. Our
market research shows that these are discerning customers that gravitate towards better
tasting coffee or tea. Furthermore, a lot of college students consider coffee bars to be a
convenient studying or meeting location, where they can read or meet with peers without
the necessity to pay cover charges. For Sweet Coffee shop, this will provide a unique
possibility for building loyal client base.

4.

Operation

The Sweet Coffee shop will be open with one working staff and one cashier cum
accountant. The sweet coffee shop is planned to operate at 50 square feet space room
available in the ground floor of School of management studies, CUSAT. The women
labors are available in the locality to engage in the operation of the shop. The location of
the shop is accessible to suppliers delivery van and waste removal. The start-up fund
requirement is given in Figure 3.

Business plan of Sweet Coffee Shop by Job Thomas

Figure 3. Start-up fund plan of Sweet Coffee shop

5.

Management

Sweet Coffee shop is owned by Mr. JOB THOMAS, who holds a Masters Degree in
Business Administration from Cochin University. Mr. Thomas has good management
experience in owning similar shop near University campus. He had conducted a study in
various coffee shops, which is operating with significant margin. The customer feed back
would be the prime consideration in the development of the business. The person who is
working as cashier cum accountant will have to manage the labour, ordering inventory,
dealing with suppliers, developing a marketing strategy and perform other daily
managerial duties. A profit-sharing arrangement for accountant will be considered based
on the first year operational results. The personnel plan of Sweet Coffee shop is given in
Table 2.

Table 2. Personnel Plan

Personnel
Cashier
Worker
Number of employees
TOTAL

6.

Year 1
INR 60,000
INR 48,000
2
108000

Year 2
INR 66,000
INR 52,800
2
118800

Year 3
INR 72,600
INR 58,080
2
130680

Finance

Sweet Coffee shop will capitalize on the strong demand for high-quality coffee. The
owners have provided the shop with sufficient start-up capital. With successful
management aimed at establishing and growing a loyal customer base, the business will
see its net worth doubling in two years. Sweet Coffee shop will maintain a healthy 50%
gross margin, which combined with reasonable operating expenses, will provide enough
cash to finance further growth.
The profit and loss account is projected for upcoming three years. The sales, margin,
expenses and profit are given in Figure 4. It is expected that the proposed product is
profitable in the first year. The profit is increasing in the upcoming years.

Business plan of Sweet Coffee Shop by Job Thomas

Figure 4. Projected sale, margin, expenses and profit of Sweet Coffee shop
The balance sheet is projected for the upcoming three years. The projected asset,
liabilities and capital are given in Figure 5. The growth of asset and capital is increasing
significantly. The net worth of the business is increasing, which is the positive sign of
growth of the business

Figure 5. Projected assets, liabilities and capital of Sweet Coffee shop

7.

Critical-Risks

The neatness and the custom made coffee or tea would be core attraction of Sweet
Coffee shop. Milma booth stall will definitely be one of the major competitors because of
its established marketing and operational practices. However, despite of Milma booth
stall entrenched market position, many customers favor smaller, independent
establishments that offer cozy atmosphere and good coffee at affordable prices.

8.

Harvest strategy

Strategy will be focused at getting new customers, retaining the existing customers,
getting customers to spend more and come back more often. Establishing a loyal
customer base is of a paramount importance since such customer core will not only
generate most of the sales but also will provide favorable referrals. Sweet Coffee shop
will position itself as unique coffee bar where its patrons can not only enjoy a cup of

Business plan of Sweet Coffee Shop by Job Thomas

perfectly brewed coffee but also spend their time in an ambient environment.
Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the
customers to relax from the daily stresses and will differentiate Sweet Coffee shop from
incumbent competitors. To speed up the customer service, at least two employees will
be servicing clients--while one employee will be preparing the customer's order, the
other one will be taking care of the sales transaction. All sales data logged on the
computerized point-of-sale terminal will be later analyzed for marketing purposes.

9.

Milestone schedule

The milestones are guidelines for each of the members should strive to achieve. The
milestones of Sweet Coffee shop is given below.

Milestones
Item
Customer delight
Achieve sale target
Improvement in business

Quarter1 Quarter2 Quarter3 Quarter4

XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX

Business plan of Sweet Coffee Shop by Job Thomas

10. Appendix
A1. Start-up Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance
Rent
Remodeling
Other
Total Start-up Expenses
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
Total Requirements

INR 5,000
INR 2,000
INR 2,000
INR 0
INR 5,000
INR 1,000
INR 5,000
INR 5,000
INR 25,000
INR 10,000
INR 10,000
INR 0
INR 15,000
INR 35,000
INR 60,000

Business plan of Sweet Coffee Shop by Job Thomas

A2. Start-up Funding

Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Total Assets
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
Capital
Planned Investment
Investor 1
investor 2
All other investors
Additional Investment Requirement
Total Planned Investment
Loss at Start-up Expenses
Total Capital
Total Capital and Liabilities
Total Funding

INR 25,000
INR 35,000
INR 60,000
INR 25,000
INR 10,000
INR 0
INR 35,000

INR 20,000
INR 0
INR 0
INR 0
INR 20,000

INR 40,000
INR 0
INR 0
INR 0
INR 40,000
(INR 25,000)
INR 15,000
INR 35,000
INR 60,000

Business plan of Sweet Coffee Shop by Job Thomas

A2. Profit and Loss Account (projected)

Income
Sales
Direct Cost of Sales(0.65-.55)
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation (0.3)
Rent
Maintenance
Utilities/Phone
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred (0.3)
Net Profit
Net Profit/Sales

Year 1
INR 1,740,000
INR 1,131,000
0
INR 1,131,000
INR 609,000
35%
Year 1
INR 130,680
INR 20,000
INR 4,500
INR 1,000
INR 5,000
INR 1,000
INR 0
INR 0
INR 162,180
INR 446,820
INR 451,320
INR 4,000
INR 134,046
INR 313,274
18%

Business plan of Sweet Coffee Shop by Job Thomas

Year 2
INR 2,175,000
INR 1,305,000
0
INR 1,305,000
INR 870,000
40%
Year 2
INR 0
INR 20,000
INR 4,500
INR 1,000
INR 5,000
INR 1,000
INR 0
INR 0
INR 31,500
INR 838,500
INR 843,000
INR 4,000
INR 251,550
INR 587,450
27%

Year 3
INR 2,610,000
INR 1,435,500
0
INR 1,435,500
INR 1,174,500
45%
Year 3
INR 0
INR 20,000
INR 4,500
INR 1,000
INR 5,000
INR 1,000
INR 0
INR 0
INR 31,500
INR 1,143,000
INR 1,147,500
INR 4,000
INR 342,900
INR 800,600
31%

10

A4. Balance sheet (projected)

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

Year 1

Year 2

INR 328,938
INR 29,500
INR 10,000
INR 368,438

INR 616,823
INR 24,000
INR 10,000
INR 650,823

INR 840,630
INR 18,500
INR 10,000
INR 869,130

INR 15,000
(INR 4,500)
INR 10,500
INR 378,938
Year 1
INR 15,664
INR 20,000
INR 0
INR 35,664
INR 0
INR 35,664
INR 40,000
(INR 10,000)
INR 313,274
INR 343,274
INR 378,938

INR 15,000
(INR 9,000)
INR 6,000
INR 656,823
Year 2
INR 29,373
INR 20,000
INR 0
INR 49,373
INR 0
INR 49,373
INR 30,000
(INR 10,000)
INR 587,450
INR 607,450
INR 656,823

INR 15,000
(INR 13,500)
INR 1,500
INR 870,630
Year 3
INR 40,030
INR 20,000
INR 0
INR 60,030
INR 0
INR 60,030
INR 20,000
(INR 10,000)
INR 800,600
INR 810,600
INR 870,630

Business plan of Sweet Coffee Shop by Job Thomas

Year 3

11

A5. Ratio Analysis

Financial ratios
Current ratio
Inventory turn-over
Debt/Net worth
Return on tangible net worth
Return on Assets

Year 1
10.33
38.34
0.10
0.91
0.83

Year 2
13.18
54.38
0.08
0.97
0.89

Year 3
14.48
77.59
0.07
0.99
0.92

Business plan of Sweet Coffee Shop by Job Thomas

12