I.

THE EXECUTIVE SUMMARY

A. PROPONENT DESCRIPTION
The proponents of the study are MMBM students of the University of the
Philippines Visayas.

This study aims to find out the feasibility of West Avenue, a

coworking cafe space, in the city of Iloilo. West Avenue is a partnership type of business
owned by the partners Ms. Mary JE Cunada, Ms. Cristine Marie Sedigo, Mr. Elvis
Sevilleno, Mr. Lynnard Philip Panes and Mr. Romelo Aguilar. They will outsource the
services of Ms. Sheila Medianesta as their external accountant to keep and maintain
their accounting and financial records. The business is primarily engaged in offering the
emerging coworking place on a unique cafe concept wherein customers can study, do
office work, chill, meet, or interact with other people in a cozy environment. On top of
the primary service, the business also provides quality food, premium coffee and drinks
which is all locally produced and organic having no flavor enhancers or fertilizers used
which makes our food choices not only delicious but most importantly nutritious.

B. DESCRIPTION OF THE PROJECT

West Avenue is a coworking cafe concept where in customers have all the school
and office amenities they need can study, do office work, chill, meet, or interact with
other people in a cozy environment that serves mouth-watering dishes that ranges from
local, foreign, to healthy options that can satisfy your cravings on a fun and comfortable
environment in Iloilo City.
Coworking space, by definition, is a shared working environment designed to
maximize the productivity of its tenants. Unlike the traditional office model, coworking
space encourages interaction and collaboration between different professions. West
Avenue is designed more like of a lounge or coffee shops but provides students and
young professionals an environment that is conducive to productivity and free of

distractions. It is an attractive venue where students and young professionals can be

comfortable, relaxed, and feel welcomed.

West Avenue provides a study place or

workspace needs that is comfortable, relaxing, collaborative study/working environment,

and bring some fun and learning to its members/customers.
Staffs at West Avenue Coworking Caf is committed to help its customers in
fueling-up their passion and create an environment where everyone collaborates and
shares their ideas and skills. It supports students and young professionals needs
through provision of flexible and low cost study and work place where there are
dedicated power plugs, fast and stable internet connection wherein customers can
choose from a cubicle flexidesk or tables in the middle of the space, and lounge out at
the chill-out corner on a well-lit and airconditioned area.
. West Avenue also provide professional staff assistance as well as projector
rentals, printing, scanning, photocopying and other essential business services to be
ableto increase the productivity of its customers. It intends to foster students
development through collaboration, creativity and innovation. West Avenue will include
features that encourage collaborative learning.

Peer-to-peer support is also

encouraged at West Avenue wherein the customers have the opportunity to share ideas
or help each other. They can offer tutorial to other student customers in the hub.

C. PROJECT TIMETABLE
Prior to its launching/opening in January 2017, the proponents will focus on
building its brand awareness by joining local trade and school fairs and by engaging
with its social media followers on making the place more suitable for their needs.
Shown in Table 1 below are the target implementation dates and activities of West
Avenue in the first six months.

Figure 1. Gantt Chart of Project Implementation.

D. SOCIAL DESIRABILITY
For about a decade now, coworking spaces started to emerge and is growing
significantly all over the world. In the United States, where it first originated, coworking
spaces can be seen almost everywhere and are attracting various kinds of people like
students, young professionals and businessmen.
In the Philippines, apart from working at home and in the traditional offices, it is
common to see Filipinos working on their laptops in coffee shops to grab some coffee
and get free internet access. Majority of these people are students doing their school
stuffs, young professionals meeting with clients, freelancers who refuse to do their work
at home or start-ups meeting for business appointments. However, these public spaces

tends to limit the productivity of these people, hence, prompted the beginning of work
hubs like coworking spaces.
West Avenue is a coworking cafe concept that will provide a place where
students can study, young professionals can do office work, and start up businessmen
can meet for client meetings.

West Avenue will cater the need for a comfortable,

relaxing, and friendly coworking environment with complete amenities that will support
the needs of its customers.

II. THE MARKET STUDY

B. SUPPLY AND DEMAND OF OUTPUT PRODUCTS/SERVICE

The shared office or coworking trend is a new trend in Iloilo City and currently
there are only few identified players in the market. Coffee shops are also visible within
the area; however, these places are not designed for studying and coworking. With the
increase in number of millennials nowadays, the demand for this type of service is
increasing given the fact that they are more independent and always want freedom.
Student population and the number of young professionals in Iloilo City has also
increased hence there is significant opportunity for coworking concept. The University
of the Philippines College of Management undergraduate students alone reaches 1072
in the second semester of 2015-2016 and the graduate population reaches 148 in its
third trimester in the same school year.
In order to find out the demand for coworking space, the proponents of the study
conducted an accidental or convenience sampling where subjects are selected because
of their convenience accessibility and proximity to the researchers. It was conducted
within the 0.5 km radius from the prospective location of the business. A total of fifty-one
(51) respondents were collected and analyzed. Respondents include graduate students
and young professionals within the proximity of the prospective location. As shown in
Figure 2, results showed that 80% of the respondents go to coffee shops.

Figure 2. Percentage of Coffee Shop/Cafe Goers

Among these respondents who go to coffee shops, 27% visits twice a week, 24%
visit only once a week, and 44% visits occasionally. Fifty-six percent of those who go to
coffee shops do so to relax, 23% meet up with friends, and 19% to study.
The survey also showed that 45% of the respondents go back to coffee shops
because of the ambience, 30% is because of the food, 21% is due to the affordable
rate, 2% is because of the people, and another 2% caused by other factors.

Figure 3. Reasons of Going Back to Coffee Shops/Caf

Asked if they are interested in a coworking space concept, 96% of the

respondents responded yes and only 4% are not interested.
Figure 4. Percentage of Interest in a Coworking Caf Concept

Results showed that top five amenities and support needed by the respondents
include food, beverage/drinks, computer/WiFi, books, and coffee.
Figure 5. Factors identified by the respondents that will make them go back to a
coffee shop.

C. COMPETITOR ANALYSIS
The proponents have identified two direct competitors with the same product offer; DoJo8 located in General Luna
Street, Iloilo City and Book Latte located in Ledesma Street, Iloilo City. Coffee shops, restaurants, bars, libraries and
customers homes were considered indirect competitors. As shown in the matrix below, West Avenue has competitive
advantage amongst other players in the market.
Figure 6. Competitor Matrix

West Avenue offers a professional and relaxed place on a learning enabled

environment for customers to study, meet clients or do office work. Customers will be
more productive in West Avenue because it guarantees a relaxed space, noise-free
environment, better internet connectivity, and provides value for money.

It is

strategically located and is very much accessible to its target market.

D. MARKETING STRATEGIES (MARKETING MIX)

1. Product/Service
West Avenue is a coworking cafe concept wherein customers can study, do office
work, chill, meet, or interact with other people. Coworking space, by definition, is a
shared working environment designed to maximize the productivity of its tenants. Unlike
the traditional office model, coworking space encourages interaction and collaboration
between different professions.

West Avenue will provide students and young

professionals an environment that is conducive to productivity and free of distractions.

It is an attractive venue where students and young professionals can be comfortable,
relaxed, and feel welcomed. West Avenue will be promoted to students and young
professionals by utilizing its social media channels in Facebook, Twitter and Instagram.
Food and beverage choices are also offered to meet the needs of our customers. As
part of its marketing strategy in capturing the customer's attention, its menu is placed in
blue book (Figure 7) themed page which is common to students.

West Avenue

provides a study place or workspace needs that is comfortable, relaxing, collaborative

study/working environment, and bring some fun and learning to its members/customers.

Figure 7. Menu List

2. Price
Whether you need to get out of the house, have outgrown your current space, or
need a satellite office for your expanding company, youll find the space and resources
you need at West Avenue at an affordable rate. West Avenue offers an exclusive or
more private space for studying or for your office activities. Shared workstations are
available for those who desire a more open environment and our coworking space is
always available for those who crave the hustle and bustle of the coffee shop
atmosphere.

Regular rate at West Avenue will be P150. This is composed of three-hour stay at
the coworking area that offers free wifi and charging of devices. This also includes free
brewed coffee, tea and water and P50 worth of voucher that can be used in purchasing
food and beverage items at the cafe. Prices of our food offerings are found in the figures
below.

Figure 8. Food and Beverage Rate

Figure 9. Rate of other Services.

Prices at West Avenue are set at an affordable rate to be able to satisfy the
needs of its customers without sacrificing its costs.

3. Place
West Avenue will be strategically located in Soriano Building, along Infante St.,
West Ave., Molo, Iloilo City. The ground floor (Figure 10) will serve as the caf area that
will cater to walk in customers. Amenities like printing services, scanning, comfort room
and pantry is located also in the ground floor. The second floor (Figure 11) will serve as
a more exclusive venue for those who availed the coworking space.

Figure 10. Ground Floor Perspectives.

Figure 11. Second Floor Perspectives.

4. Promotion
The Internet links individuals and businesses of all types to each other and
having an active website and social networking sites for West Avenue is essential for it
to reach its target market.To be able to create brand awareness at minimal promotional
expenses, West Avenue will launch its marketing campaigns through the social media
like Facebook, Twitter, and Instagram. It will be promoted using its tagline Where
Great Minds Hang Out.

It will focus around on providing a place that brings and

supports students and young professionals needs at the same time increasing their
productivity.
Banners and signage will also be installed outside the premises to capture
attention of target market and potential customers. The name West Avenue with its logo
and the tagline will be visible.

Figure 12. Signage Design

As an additional promotional support, posters, flyers and brochures will be

distributed to students of surrounding schools as well as to employees of nearby
business establishments. Business cards will also be provided and distributed.
West Avenue will also engage in activities of school organizations so that it can attract
more customers.

III. THE TECHNICAL STUDY

A. DESCRIPTION OF THE PRODUCT/SERVICE
West Avenue is a coworking cafe concept where in customers can study, do
office work, chill, meet, or interact with other people in a cozy environment that serves
mouth-watering dishes that ranges from local to healthy options that can satisfy your
cravings on a fun and comfortable environment in Iloilo City.
Coworking space, by definition, is a shared working environment designed to
maximize the productivity of its tenants. Unlike the traditional office model, coworking
space encourages interaction and collaboration between different professions. West
Avenue is designed more like of a lounge or coffee shops but provides students and
yuppies an environment that is conducive to productivity and free of distractions. It is an
attractive venue where students and young professionals can be comfortable, relaxed,
and feel welcomed. West Avenue provides a study place or workspace needs that is
comfortable, relaxing, collaborative study/working environment, and bring some fun and
learning to its members/customers.
Moreover, to supports students and young professionals needs through
provision of flexible and low cost study place or workspace with amenities. It intends to
foster students development through collaboration, creativity and innovation. West
Avenue will include features that encourage collaborative learning and increased

productivity of its customers.

Peer-to-peer support is also encouraged wherein the

customers have the opportunity to share ideas or help each other. They can offer tutorial
to other student customers in the hub.

Target Market:
Students and Young Professionals of Iloilo City

Tagline:
Where Great Minds Hang Out.

Mission:
To create a fun, educational, and friendly environment for students and young
professionals seeking a good venue outside their schools and workplaces.

Vision:
A study and workspace cafe operating to be the best in providing excellent learning and
fun experience to all our clients by 2018.

Core Values:
Learn
Explore
Adapt
Productivity

At West Avenue we encourage our customers to:

LEARN lifes values,
EXPLORE all their creativity and be able to
ADAPT to change and their resources in order to become more
PRODUCTIVE.

Facilities/Amenities

Workspace/Study Place

Meeting rooms

Comfort Room

Audio visual equipment

Dedicated events space

Office facilities (Printer/Scanner/Photocopier)

Tiangge Corner

Registered Business Address

Food and Beverage

Standby generator

Security Cameras

Parking Space

Easy Access to Public Transportation

Building Security Personnel

White Board

Services/Technology

High speed internet/Wi-Fi

Free Charging (Laptop/Phones)

Printing

Copying

LCD projector

Inter-customer tutorial/Peer-to-peer Support

Autoload/e-load services

Foodstuff

Specialty Coffee

Native Choco

Tea

Taho Ginger Ale

Soda

Cold Beverage

Baked Lasagna

Baked Carbonara

Cheesy Macaroni

Sandwiches

B. PROJECTED SPACE CAPACITY AND GROWTH

West Avenue has a total area of 30 square meters in its ground floor and 30
square meters on its second floor. Maximum capacity of customers will be 150 persons
at full capacity per day given the total number of chairs available for every three hours.

C. LIST OF RAW MATERIAL REQUIREMENTS

Products offered by West Avenue will be sourced from identified suppliers at a
consignment basis.

Food and beverage will be consigned from Saneths Catering,

while the cakes and pastries will be provided by Sweet creations by Glenda. Only
coffee beans and tablea will be sourced from Tiolas Multipurpose Cooperative on a
cash basis. To ensure quality and affordability proponents will be hands on in checking
suppliers products that it follows set standards. Perishable goods like lasagna, baked
carbonara, baked macaroni and the likes will be ordered depending of the consumption
of the customers. Shelf life of perishable items will only be within 5 days. A day after,
not sold items will be returned to the suppliers and only consumed goods will be paid.

Table 13. Weekly Food & Beverage Estimates

Total construction costs estimated by SPS Builders will be at P2,360,515.00.

Table 13. Construction Estimate

.
D. PLANT DESIGN
The ground floor of West Avenue will have the amenities such as the receiving
area, service center, toilet, and the common caf area. It is also where the display of
food and beverage products can be found. The comfort room and pantry can also be
found in the ground floor. The second level on the other hand will serve as a more
private place where customers can spend time in group studies, meet with clients or
arrange for team meetings.
Figure 5. Floor Plan.

E. PROPOSED OPERATIONS:
West Avenue is open Mondays to Saturdays from 7AM to 11PM and on finals
week or the Hell Week of students we will open on a 24-hour 7 days a week basis.
Prior arrangements can also be made on requested events. Extended operating hours
is offered to cater customers demand and viability.
There will be two shifts with 1 hour break for each shift. Shift schedule will start
6AM to 12 midnight.
Figure __ below is the diagram showing the flow of transactions that occurs upon
acceptance of a customer in the place.
Figure ___. Transaction Flow in West Avenue.

Upon entering, the customer approaches the counter and staff greets and asks
for what the customer need. After the transaction, the customer pays for his/her bill and
proceeds to the available space. If food and beverage were ordered, barista prepares
for the items and is served by the cafe assistant after it is completely prepared. After
staying in the place and after the customer has left the place, the cafe assistant cleans
the space and prepares it for the next customer.
F. LOCATION AND JUSTIFICATION
West Avenue will be located in Soriano Building, along Infante St., West Ave.,
Molo, Iloilo City (see Figure 1). The area will be in a 2-storey building having an area of

30 square meters on each floor with a total area of 60 square meters. Monthly rental for
the space is P16,000.00.

It is strategically located near the citys economic

development triangle and is very accessible to its target market, the students and young
professionals.

It has easy access to public transportation and it is just a walking

distance from major schools like the University of the Philippines in the Visayas, Iloilo
Doctors College, John B. Lacson Maritime University, and St. Therese College. It is
also a 3 minute jeepney ride from the University of San Agustin, another major
university in the city. Iloilo Doctors Hospital is also a minute walk to the place as well as
the Medicus Medical Center Hospital. One of the biggest BPO offices, Callbox is also a
few minute walk to West Avenue.
Figure 6.Location Map.

IV. THE MANAGEMENT STUDY

A. FORM OF BUSINESS
West Avenue will be a partnership form of business. It will be owned by Ms.
Mary JE Cunada, Ms. Cristine Marie Sedigo, Mr. Elvis Sevilleno, Mr. Lynnard Philip
Panes and Mr. Romelo Aguilar. Owners have excellent management experiences in
their own endeavors. They will also engage the service of Ms. Sheila Medianesta as
their external accountant for accounting management activities.
B. THE ORGANIZATIONAL STRUCTURE
The co-working cafe will be led by the owners with 6 employees. The operation
will employ two shift works consisting of supervisor, barista and cafe assistant, as
shown in the figure below. First shift will start from 6:00 a.m. to 3:00 p.m. and the
second shift will be on 3:00 p.m. to 12:00 p.m.
Figure 7. Organizational Chart.

Positions and Job Description

Owners/Managers
- Oversee the overall operation of the business
- Make final decisions on all functions of management
- Ensure compliance to government regulations
External Accountant
-

Compile and maintain accounting and financial records

Prepare and analyze accounting and financial reports such as income statement,

balance sheet and cash flow

Reports and communicates to owners/managers any and all accounting concerns and
issues
Supervisor / Cashier
- Ensure the effective and efficient operation of the coworking cafe everyday
including staffing, managing inventory, and ensuring proper operation
- Provide detailed description of West Avenue, services, facility features, food and
drinks offered, hours of operations, packages, and promotions or discounts
available
-

Build good rapport to all customers and provide a friendly, hospitable and

efficient service at all times

- Attend to customers needs, take meal orders, and answer the phone promptly.
- Handle all courses of reservations on space and ensure that reservations and
cancellation are recorded accurately and processed efficiently.
- Responsible on processing services and orders on a register system and incharge in balancing the cash register at the end of the shift
- Report and communicate to owner any and all issues and concerns in the hub
including customers feedback, and activities that needs attention
- Submit all accounting related transactions to the external accountant
-

Deal and resolve customer complaints or issues to maintain good quality of

service
- Maintain a clean, safe, and well organized work area

- Fill in any position for last minute absences

Barista
-

Build good rapport to all customers and provide a friendly, hospitable and

efficient service at all times

-

Attend to customers needs, take meal orders, and answer the phone promptly

Provide detailed description of coffee, drinks and food offered

Prepare and serve quality coffee, drinks and food

Maintain standards in food handling and sanitation

Monitor and maintain the stocks of all ingredients and food items

Assist in the preparation of supply order and receives delivered stocks and

supplies
-

Ensure that all items meet or exceed food safety standards

Responsible for maintaining the equipment in good condition and thoroughly

cleaning at the end of each day

-

Maintain a clean, safe, and well organized work area

- Report and communicate to supervisor any and all issues and concern in the
kitchen including maintenance of equipment, coffee beans and other ingredients
low stock level, and concerns that need attention.
-

Perform other job-related duties when required and as requested by the

management
Cafe Assistant / Runner
-

Build good rapport to all customers and provide a friendly, hospitable and

efficient service at all times

-

Assist in attending customers need and taking all meal orders

Assist the Supervisor/Barista with various task

Clear tables of used glassware and dishes and ensure cleanliness in all areas

of coworking cafe

Report and communicate to supervisor any and all issues and concerns in the

hub including maintenance, or cleanliness problems, customers feedback, and

activities that needs attention
-

Perform other ad-hoc duties when required and as requested by the

management

C.

PERSONNEL REQUIREMENTS AND QUALIFICATIONS OF MANAGEMENT

STAFF

Position

Number of Persons Total Number of Full-time

per Shift

Persons

Part-time

Owner

Supervisor

Full-time

Barista

Full-time

Cafe Assistant / 1

Part-time

Runner

Qualifications of Management Staff

External Accountant
-

Must have a degree in accounting, CPA is preferred

At least two years of experience in handling accounting operations
Strong analytical and accounting skills
Supervisor / Cashier

- Any course, or preferably from Marketing, Hotel and Restaurant Management,

Business/Finance Management or other related course
-

Male or Female, 26-35 years old

Have experienced in food establishment, retail stores or other related

hospitality services preferred

-

High level of interpersonal skill, leadership skill, administrative skill and a team

player
-

Professional, polite and reliable

Possess excellent customer service skill

Barista
- Any course, or preferably from Marketing, Hotel and Restaurant Management,
Business/Finance Management or other related course
-

Male or Female, 21-35 years old

Has previous Barista experience

Skills in the use of cafe/kitchen machinery

Can handle multiple task at a time

Professional, polite and reliable

Good communication, listening and computer skills and a team player

Cafe Assistant / Runner

-

Minimum High school graduate / Vocational course related to hospitality

services
-

Male or Female, 19-29 years old

Can handle multiple task at a time

Able to communicate effectively with customers

D. TRAINING PROGRAM
Employees will undergo one day orientation and start-up training. Orientation will be
done in the morning where the owner will present all about the business, discuss the
functions and responsibilities, formulated basic rules and ethics, compensation and

other related aspects in staffing. In the afternoon, start-up training will be conducted.
This includes the daily operation and service flow, customer service, communication
and sanitation and cleanliness. Coaching will also be applied as needed. Amounting to
P 7,200 annually is allotted to training programs.

E. SALARY STRUCTURE/COMPENSATION PLAN

POSITION

MONTHLY / HOURLY/ DAY ALLOWANCE

RATE

Supervisor / P
Cashier

10,000.00

AND

OTHER BENEFITS
per

month Leave credits (Sick

(inclusive of SSS, PhilHealth, leave,

HDMF)

vacation

leave)
Overtime pay
Night Differential ( for
2nd shift)

Barista

P 300 per day (inclusive of Leave credits (Sick

SSS, PhilHealth, HDMF)

leave,

vacation

leave)
Overtime pay
Night Differential ( for
2nd shift)

Cafe

P 25.00 per hour

Assistant

Overtime pay

Runner

V. THE FINANCIAL STUDY

A. PROJECTED FINANCIAL STATEMENTS
Co-working spaces were created to help students and young professionals to
structure their ideas and benefit from a friendly and innovative environment. It consisted
in renting a desktop in an open space for a very flexible period. West Avenue is a
partnership of Ms. Mary JE Cunada, Ms. Cristine Marie Sedigo, Mr. Elvis Sevilleno, Mr.
Lynnard Philip Panes and Mr. Romelo Aguilar. The business recognized revenues
mainly from the use of coworking space, sale of food and beverages, use and rent of
facilities such as photocopier, scanner, projector, meeting rooms, and other services
such as auto load/e-load services and tutorial services. Considering the studies
conducted and in order to have a clear idea of the position and performance of the
business, a three year projected financial statements, balance sheet and income
statement, were prepared and analyzed vis--vis to determine the viability and
sustainability of launching the business in the market.

Income Statement and Balance Sheet for the year ended December 31, 2017, 2018
and 2019 were illustrated below.
Gross receipts of West Avenue were broken down into Food & Beverages and
Facilities and Other Income. Gross receipts of food & beverage and facilities were
computed by multiplying the average amount spent per customer amounting to P
150.00 by the average number of customers per day which is 150. The average amount
of P 150.00 resulted from the survey conducted showing that the customers were willing
to pay more than P100.00 for the service. The business is operating from Mondays to
Saturdays for 17 hours per day. For the first 6 months of its first year, it is expected that
50% of the gross receipts would be realized and 60% for the last six months. Cost of
sales relative to food & beverages and facilities is expected to be 70% of the gross
receipts. Moreover, rental expense, light, water & communication and depreciation
expense also form part of the cost of sales. Operating expenses included salaries &
incentives, taxes & licenses, advertising, maintenance & repairs, supplies and
miscellaneous deemed necessary in the businesss operation. Net income for its first
year of operation was expected to be P 602,661.83 or 14% of the realized gross
receipts. On its second year of operation, the first half and last half was expected to be
60% and 70% of its gross receipts respectively resulting to an 18% increase in realized
gross receipts. Net income at the end of 2018 is projected to be P 1,011,361.83 or 17%

of the realized gross receipts. On the third year, the business projected that 90% of the
gross receipts will be realized and increasing the realized gross receipts by 18%. At the
end of the year 2019, it is expected that 19% of the realized gross receipts will
comprised the net income or in the amount of P 1,326,261.83.
The three year projected Balance Sheet of West Avenue as of the December 31,
2017, 2018 and 2019 is presented above. Projected net income amounting to P
602,661.83, P 1,011,361.83 and

P 1,329,261.83 for the years 2017, 2018, and

2019, respectively, were added to the capital beginning to get the ending capital less
drawings made by the owner. Total assets comprised cash and cash equivalents and
property, plant & equipment (PPE) which comprised the cost of the building, office
equipment, machinery equipment and furniture & fixtures. The business will use straight
line method in computing for the PPEs depreciation; Building 10 years, Office and
Machinery Equipment 5 years and Furniture & Fixtures 3 years.
Gross Profit rate for the years 2017, 2018 and 2019 were 26%, 27% and 27%,
respectively. On the other hand, Net Income rate for the same years were 14%, 17%
and 19% respectively.
Payback Period for the net investment amounting to P 2,562,615.00 will be recognized
within 2 years and 9 months.

Return on investment (ROI) is computed by dividing net income by the total cost
of investment. The total cost of investment amounted to P 2,562,615.00 for the year
2016, resulting to a ROI of 24%.

Estimated Total Project Cost for West Avenue amounted to P 2,884,539.85 which
included Fixed Assets comprised of Building, Office Equipment, Machinery Equipment
and Furniture & Fixtures. Moreover, operating requirements included direct materials &
labor, fixed overhead costs and administrative expenses. This will be solely financed by
the owners equity based on the implementation table. In case fund will be limited, the
owners will opt to borrow funds from financial institutions.

V. THE FINANCIAL STUDY

A. PROJECTED FINANCIAL STATEMENTS
Co-working spaces were created to help students and young professionals to structure
their ideas and benefit from a friendly and innovative environment. It consisted in renting a
desktop in an open space for a very flexible period. West Avenue is a partnership of Ms. Mary
JE Cunada, Ms. Cristine Marie Sedigo, Mr. Elvis Sevilleno, Mr. Lynnard Philip Panes and Mr.
Romelo Aguilar. The business recognized revenues mainly from the use of coworking space,
sale of food and beverages, use and rent of facilities such as photocopier, scanner, projector,

meeting rooms, and other services such as auto load/e-load services and tutorial services.
Considering the studies conducted and in order to have a clear idea of the position and
performance of the business, a three year projected financial statements, balance sheet and
income statement, were prepared and analyzed vis--vis to determine the viability and
sustainability of launching the business in the market.
Projected Statement of Financial Performance for the year ended December 31, 2017,
2018 and 2019 is illustrated below. Moreover, Monthly Projected Statement of Financial
Performance is shown in the annex part of this paper.

Figure ____: Gross Receipts for the Years 2017, 2018, and 2019.

Gross receipts of West Avenue were broken down into Food & Beverages and Facilities
and Other Income. Gross receipts of food & beverage and facilities were computed by
multiplying the average amount spent per customer amounting to P 150.00 by the average
number of customers per day which is 150, maximum capacity of persons catered per day is 30
multiplied by the average turnover of 5 in the 16 hours of operation. The average amount of P
150.00 resulted from the survey conducted showing that the customers were willing to pay more
than P100.00 for the service. The business is operating from Mondays to Saturdays for 16
hours per day. On the first quarter of its first year of operation, it is expected that 50% of the
gross receipts would be realized, on the second quarter 60%, third quarter 70% and 80% for the
last quarter. Cost of sales relative to food & beverages and facilities is expected to be 60% of
the gross receipts. Operating expenses included salaries & incentives, taxes & licenses, rental
expense, light, water & communication, advertising, maintenance & repairs, supplies,
professional fee, insurance, kitchenware, trainings & seminars, depreciation and miscellaneous
deemed necessary in the businesss operation. Net income for its first year of operation was
expected to be

P 1,325,179.76 or 26% of the realized gross receipts. On its second and

third year of operation, gross receipts are expected to be realized at 90% resulting to a 38%
increase in realized gross receipts. Net income at the end of 2018 and 2019 are projected to be
P 2,219,363.76 and P 2,397,842.16 or 31% and 33%, respectively.
The three year projected Balance Sheet of West Avenue as of the December 31, 2017,
2018 and 2019 is presented below.

Total assets comprised cash and cash equivalents and property, plant & equipment
(PPE) which comprised the cost of the building, office equipment, machinery equipment and
furniture & fixtures. The business will use straight line method in computing for the PPEs
depreciation; Building 15 years, Office and Machinery Equipment 7 years and Furniture &
Fixtures 5 years.
Projected net income amounting to P 1,325,179.76, P 2,219,363.76 and P 2,397,842.16
for the years 2017, 2018, and 2019, respectively, were added to the capital beginning to get the
ending capital less drawings, if any, made by the partners.

Total Project Cost is estimated to be P 3,500,000.00. Fixed Asset requirements

comprised the cost of building, office equipment, machinery equipment and furniture & fixtures

amounting to

P 2,562,615.00 or 73% of the total cost. On the other hand, initial

operating cost amounted to

P 782,740.00 or 22% of the total cost comprised direct

materials & labor, fixed overhead cost and administrative expenses. A contingency fund
amounting to P 154,645.00 or 5% of the total cost will also be allocated. A summary of the
estimated total project cost is presented below.
Figure _____: Estimated Total Project
Cost

To finance the estimated total projected

cost of P 3,500,000.00, the 5 partners
agreed to contribute a total of P 700,000.00
or 20%. The same percentage will also be
used to determine the profit and loss
sharing.

Considering

the

agreed

distribution, each partner will have its

capital by the end of 2019 amounted to P
1,888,477.14, that is if no drawings will be
made for the three year operation. Also,
the partners agreed to appropriate a
portion of the yearly earnings for possible
expansion and/or acquisition.
Gross Profit rate for the years 2017, 2018 and 2019 were 47%, 47% and 48%,
respectively. On the other hand, Net Income rate for the same years were 26%, 31% and 33%
respectively.

A Three Year Projected Cash Flow Statement is presented above. Taking into
consideration the activities transpired in the projected 3 year operation, net cash flows for first,
second and third year resulted to a negative P 1,048,339.00, positive P 2,408,460.00 and
positive P 2,586,938.00.
Payback Period for the net investment amounting to P 3,500,000.00 will be recognized
within 2 years and 10 months.

Return on investment (ROI) is computed by dividing net income by the total cost of investment.
The total cost of investment amounted to P 3,500,000.00 for the year 2017, resulting to a ROI of
38%.