The University Cafe Management - Essay Example

?TOPIC: Business Plan – The Cafe XXXXXXXX XXXXXXXX XXXXXXXX XXXXXXXX XXXXXXXX Executive Summary The University Cafe embodies a students’ interaction internet market offering college students a chance to purchase, sell and deal college books, engage in auctions place sorted ads, give teacher assessments, and purchase merchandise. The target market comprises above 15.8 million college students whose expenditure is $200 billion yearly (National Association of College Stores, 2011, p. 68). The University Cafe currently at its start-up level. 1.0 Statement of the Problem Many higher education students find the cost new textbooks from the bookshops very expensive. They turn to the internet to seek for the most competitive prices only to find sites which offer brokerage services between buyers and sellers on textbook. Due to the high brokerage fees associated with monopolistic giants such as eBay and Amazon, the students ends up purchasing at high cost. Students or people who intend to sell their textbooks are also offered little money as the purchase price of their books (Seth, 2008, p. 56). Establishment of an online used textbook retailing website that has the confidence of students would come in handy to bridge the gap between seller and buyers of this important commodity. In classes with a large number of students, students find it hard to communicate about assignments and other education-related issues such as teacher evaluation. There is a need of a platform which will gives students a free and fair opportunity to interact and communicate with their student leaders. The monopoly in online textbook retailing industry segment can be broken down by an increase in competition in this industry. This will not succeed unless the online retailers receive utmost confidence from their users who are dominantly students. Therefore, formation of a business that is close and has the goodwill of students plays an important role in reducing the high cost of used textbooks. Creation of partnerships between the parties and stakeholders in the industry will serve well in reduction of operational costs. Reduction of the level of monopoly in this market will be beneficial to students who not only act as buyers, but also sellers of used textbooks (Steve and Stephen, 2010, p. 176), 1.1 Solution By-passing the colleges bookshops, students will be able to purchase sell and trade utilized textbooks directly to others. The seller can get more cash than the bookshop will pay by selling textbooks to other students and the buyer can spend less than the bookshop charges. Additionally, students can sell computers, used CDs, class notes and much more through an online market (William, 2006, pg. 90). The University Cafe will also extend services like teacher assessments, weblogs, classifieds, specialized content and retail. It will base itself as the topping online student interaction market by blending wide market oriented expertise on internet technologies to yield income while providing a win-win resolution for students. The University Cafe will attain dominance in the market by using a broad area knowledge, a local foundation marketing scheme, a special managerial team, advanced software, and shaping of strategic alliances and partnerships with other companies in the college market. 1.2 Market The college student market in the U.S. is a developing but underserved niche. As per the U.S. Department of Education, this market is expected to grow from 15.8 to 17.2 billion students in the coming five years. This year, college students are anticipated to spend above $200 billion according to Paul (Paul, 2009, p.211). 1.3 Opportunity At the close of every semester, college students seek to find means of acquiring “quick cash”. One of the means they use is the sale of old textbooks though this is operated by the college bookshop. The students only get a fraction of the book’s value due to college bookshops monopolizing the market. The bookshops receive supernormal profits by reselling these books to other students (Michael, 2009, p. 189). This situation benefits the bookshops only and students are therefore seeking convenient and cash preserving means of buying books and to get higher value when they re-sell textbooks. 1.4 Financial & Capital Requirements Based on the requisites and opportunities for the University Cafe depicted in the plan, we have ascertained these financial projections: Yield exceptional income by the end of first year. Account gains by the 9th month of business. Surpass a 1.5x sales increase and gains by end of third year. The business will need a start-up investment plus subsequent cycles of investment. The start-up capital will be for acquiring customers and marketing, website plus software developing. 1.5 Objectives The University Cafe endeavors to achieve these objectives: Reach 50,000 visits monthly. Draw 500,000 registered users in year one. Be the topping student interaction internet market. Establish sustainability in profits within year one. 2.0 Company Overview The University Cafe was established in July and is currently at its start-up level. University Cafe’s website has with limited functionality been operational since last year August. It is presently trial marketed at Georgia State University. 2.1 Company Locations and Facilities United Kingdom www.theUniversityCafe .com  www.theUniversityCafe .net  The University Cafe’s data center is maintained and hosted at Atl-Connect Internet Services which is based in London is where 2.2 Mission The mission of University Cafe is provision of worthy and unequalled source for information, goods and services. To achieve our mission, we commit to these philosophies: Product quality is a priority. No greed. Our employers are our customers. Ensure our employees’ happiness. 2.3 Ownership The University Cafe is owned solely by Gerald Owens its founder and is a Limited Liability. 2.4 Keys to Success Our capability to carry out our business model will be our key to success. We need to stress on the following areas in order to show the University Cafe as a profitable and prosperous business: Make and preserve a foundation marketing effort. Hire a highly specialized marketing and management team with broadly experienced in the college market. Provide advanced and unequalled products and services. Make strategic partnerships and coalitions with supplier companies in the college market (Cynthia, 2004, p. 125). 2.5 Management Summary The University Cafe’s management team’s strength originates from blended expertise in the technological and management areas. The enterprise acknowledges the need for additional staff to adequately carry out sales, marketing, and research plus support functions. The University Cafe is presently backed by three individuals experienced in graphic design, e-commerce strategies and web design. There may be a requirement of more employees in human resource, administration, customer support, senior level management, and vital operational posts. To fill non-vital positions such as local advertisement sales, regional campus marketing, among others, the University Cafe will use present college students. Board of Directors The University Cafe is currently searching for prospective members of the Board. They will comprise highly certified industry and business professionals plus the investment team members. These people will help our managerial team in making strategic alliances, making suitable decisions and choosing the most efficient process to be industry leader. 2.6 Management Team The team includes three devoted employees and two advisors (technical). They carry experience of over 30 years in marketing, e-commerce and internet technology. They also have a college domain experience of more than 30 years. Gerald Owens, Founder, Chief Executive / Technical Officer/Web Development  He has more than 12 years working experience comprising sales, programming and engineering. He is the successful founder of DCSi-Online which serves the building automation industry. Mr. Owens is a Bachelor of Science degree in Electrical Engineering holder from North Carolina State University plus an MBA concentration in E-commerce and Computer Information Systems from Georgia State University. He is also a participating member of Technology Association of Georgia (TAG) and Southeastern Regional Internet Society (SERIS). Brian Dupree - Advisor Mr. Dupree has experience in the technology industry of 20 years. He has broad experience in development and management of vital software systems for enterprise applications. He has of late acted as a senior consultant for a company dealing with e-business consulting where he took part in advanced web application plans. He is a Master’s Degree in Mathematics and Computer Science holder. He also holds an MBA concentration in e-commerce from Georgia State University. 2.7 Start-up Summary Our start-up expenses suppositions are illustrated in the table and chart below. The start-up expenses were funded by direct owner investment. Table: Start-up   3.0 Product Summary The University Cafe will provide students with a unique mix of products and services. It will sum products, players, services and substance to make a student interactive market and website aiming 15.8 million students. The revenue models are depicted below: 3.1 Textbook Exchange The University Cafe will provide practicality to enable students to purchase, sell and trade utilized textbooks with others. This textbook exchange functionality enables students place their books online for trade, indicate the state of the book and upload images (Daniel, 2010, p. 56). Those students seeking the used books can search for those on sale and trade in their locality or nationwide. There will be a fee for posting the books which may vary in accordance with the textbook’s asking price. Computer Science Engineering Marketing History Physics Business Accounting Political Science 3.2 Auctions The University Cafe will provide a high quality auction package. This auction functionality will be inclusive of many features like Blind, Dutch, Standard, Reverse and Multi Item auctions. It will also include Proxy Bidding and Flash Buy. There will be a fee charged on the items posted for auction. The fee structure will resemble that of e-Bay. Some sample auction categories comprise: Used CDs and DVDs Textbooks Tickets Class notes Electronics Old tests Computer equipment Games 3.3 Retail The products sold by the University Cafe target college students. The margins will range from 10% to 50% based on the product. Examples of product categories are: Textbooks CDs and DVDs Computer equipment Appliances Electronics Clothes 3.4 Future Products We conclude generally that our current services, products and strategies will be a basis for a solid market presence and continuous income growth. We will however examine new products and services on a regular basis to support demand as part of our growth model. Brick & Mortar Locations The University Cafe will consider opening retail outlets near the college campuses to complement the presence online. There may also be availability of franchise rights. Targeted Content The University Cafe will provide capacity and topics will include: What’s happening News Weather Wine and dine The Best of’s 4.0 Market Analysis Summary The college student market in the U.S. is a developing but underserved niche. As per the U.S. Department of Education, this market is expected to grow from 15.8 million in 2010 to 17.2 million students in 2008. A Harris Interactive study carried out in 2010 estimated college students’ expenditure to be $200 billion dollars annually. It approximated that as of 2011 college students were spending $1.4 billion online (John, & Arthur, 2011, p. 211) A conclusion made by John Geraci (to be the Vice President) at Harris Interactive was that “… a college consumer is easily overlooked since most information sources that marketers rely on for tracking consumer behavior tend to under-represent college students.  However, it is a consumer group that marketers should recognize as offering substantial opportunity.  Connecting with consumers during the college years can pay great dividends, both now and well into the future.” 4.1 Market Growth Based on the findings by the 360 Youth/Harris Interactive College Explorer Study it is estimated that the college market ion the U.S. will spend an estimated $200 annually (Kalakota. and Marcia, 2005, p.12). University Bookstores  U.K university bookshop sales were estimated to be $2.12 billion for the 2011-2012 academic year and online textbooks sales to be around $1.8 billion by The National Association of College Stores. University bookshops sell a range of products, varying from textbooks to toothpaste (Laudon, 2009, p. 23).  The table below shows the estimation of average product sales in the whole college bookshop market, from largest to smallest divisions:   Textbooks  The overall textbook/course essentials market is approximated to be around $7.8 billion on grounds of the sales information for the 2010-2012 academic year.  The textbook market is composed of three sections - new texts, used texts, and custom-published materials.  The percentage of total bookshop sales and approximated size of each section is given below. New texts 54.71% $6.2 billion Course packs 1.10% $0.2 billion Used textbooks 14.86% $1.4 billion Gross Course Materials 70.67% $7.8 billion (Source: National Association of College Stores, 2011, p. 61).  Online Retail  A forecast by Jupiter showed that online retail expenditure in 2012 will grow by 28 percent by $53 billion.  The research firm approximates that by 2013, online retail expenditure will reach $135 billion which will be accountable for 5.2%of all retail expenditure.  Jupiter approximates that the online retail will expand at a mean annual growth rate of 21 % in between 2011 and 2014 (National Association of College Stores, 2011, p. 78) NACS (2010-2011)  Participation by College / University Students on Leisure and Entertainment Activities Category of Spending Projected Annual Spending (‘000,000)* % of Students involved in the Past Year Going to an Amusement Park $457 41% Purchase Music CDs $2,748 76% Purchase of Videos $2,752 70% Vacation Travel $4,609 61% Purchase reading items $1,007 83% Music Concerts $790 49% Video Games $2,282 37% (Source: National Association of College Stores, 2011, p. 68). Projections based on 360 Youth/Harris Interactive College Explorer Study representing a partial list of groups for entertainment and leisure activities. According to the National Association of College Stores, (2011, p. 101). U.S. college store sales are estimated to be $11,120,009,287 for the academic year 2009-2010.  College shops sell a wide range of items, varying from textbooks to toothpaste. Table: Market Analysis (Source: National Association of College Stores, 2011, p. 138). 4.2 Competitive Analysis Our Competitors include online textbook retailers, traditional university bookstores, textbook exchange sites, online auction sites, textbook price comparison sites and content specific websites which target the college and university student market. 4.2.1 University Bookstores The main objective and strategy of these bookstores is to offer competitive pricing in addition to customer service.  The major strengths of these bookstores are the existing customer relationships and also the proximity to the university’s students.  Substantial weaknesses of these bookstores include the absence of value adding services which can be offered online and confined product selection. According to The National Association of College Stores, UK university bookstore sales are approximately 11.12 billion dollars for every academic year (National Association of College Stores, 2011, p. 238).. There are almost 5,840 university and college bookstores serving 5,182 institutions in Europe and North America.  Often, larger universities have a number of stores which serve students, small-sized schools in a local region may be serviced by a single bookstore, and a number of schools in an modernized urban community can share several retail outlets.  Even though many college stores tend to share a common mission, they have varying size, ownership, location, and customer base. Majority of stores are operated and owned by the universities they offer services to.  However, Off-campus stores are extensively privately owned. On-campus stores are majorly institutional, although they may be managed via contract, cooperatives or college student associations.  The level of Sales in college stores is affected by many factors. However, the greatest influence on sales is the size of the university or college served.  As per the Financial Report 2011 of NACS College Store, the average sale for every college store was $6,420,456. the median sales was $4,903,062.  The large proportion of college stores record less than $1,000,000 in sales every year. The NACS Report indicated that college stores had a mean net income of 37.3% of net sales and returned 50% of the profits to their institutions National Association of College Stores, 2011, p. 210). Membership of NACS by Sales Volume Volume of sales in US $ Member Stores below $1000000 56.0% $1000000 to $3000000 28.5 % $3000000 to $7 000000  8.8% Over $7 000000  6.8% (Source: National Association of College Stores, 2011, p. 68) 4.2.2 Retail Websites and Online Bookstore The main aim and strategy of online rival businesses is to uphold offer value added services, brand awareness, product selection customer service and order fulfillment.  The strengths of retail market sites and online bookstore are brand awareness and existing customer relationships.  The main weaknesses of these online competitors is the strong barriers to entry, shipping charges, security & fraud, returns processing and on-time fulfillment. Based on the 2011 Financial Report of the College Store Industry, gross online sales at college and university bookstores for period 2009-2010 are approximated to be around $150,000,000 or 2.41% of sales by college store (Laudon, 2009, p. 24). A university bookstore is in a position to provide the ease of web orders With a "click and mortar" strategy, in conjunction with: Convenience of returns The practicality to pick up commodities for immediate use shopping of One-stop nature Accurate information regarding the textbooks that students use for their courses The security and trust of purchasing from a popular source which has an on-campus location The table below lists several of the most competitive independent online retailers which are not associated with any university bookstore: Firm Model of the Business and services offered Amazon.com Online retailer Model Barnes & Noble.com Online retailer Model Bigwords.com This Allows student to purchase and sell textbooks Collegebooksdirect.com Purchases and sells both new and used books Collegeclub.com This uses an Integrated media and ecommerce Model and an Online retail Model Ebay.com Online Auction Model Ecampus.com Discount college textbooks Merchandise Model Limited content Model Efollett.com Online textbook retailer Model Network of university bookstore Model Half.com Online Auction Model JourneyEd.com student are offered discounts on software Lazystudents.com Online retail Model Assistance on Online research papers Studentmarket.com Online retail Model – various different college market merchandise TextbooksDirect.com An engine for Textbook price comparison Textbooksource.net Purchases and sells used books Offline buy-back Online trading TextbooksX.com Purchases and vends used and new textbooks Varsitybooks.com Purchases and vends used and new textbooks (Source: National Association of College Stores, 2011, p. 108). 5.0 Marketing Strategy The 15.8 million college students in the U.S. will represent University Cafe’s customers. This is a niche market section with no exclusive business entity that accounts for any substantial percentage of the total summation of college student purchases. The business model that is chief for University Cafe depends on the college students offering auctions, classifieds, textbooks and teacher assessments on that are available on the website. Our emphasis will therefore mainly be on the marketing strategy aimed at heightening student traffic and usage. The bulk of visitors and trades will in turn sustain the stock of products and services provided. The key to success is recognized by University Cafe as a broad promotional strategy to draw in users. The promotion and advertisement plan will be put into action once additional funding is obtained. 5.1 Strategic Alliances The University Cafe is seeking to create lasting relations with influential companies that are already established in the college student market. We will approach companies that deal with university products production or resale, local businesses, new and used books wholesalers and specialized content suppliers. 5.2 Marketing Programs The University Cafe will use a blend of conventional and online advertisement plans to make a foundational marketing campaign. The University Cafe will also enroll current college students for posts in local advertisement sales, campus marketing and since the bulk of the customers will be acquired as a result of direct promotion to local universities. The University Cafe will use the following promotional and advertisement channels: Posting links on related websites Sponsoring of campus and community based events Advertisement in the university and local paper Registering with every influential search engines Using sites with a substantial volume of traffic to place banner ads Using traditional media like radio, TV, magazines and direct mailings In and around campus posting of flyers Sponsoring recreational team sports 6.0 Sourcing The employed business model for The University Cafe depends on college and university students supplying the textbooks, classifieds and auctions which will be posted on the businesses website. Our focus therefore relies on our marketing strategy which will significantly increase usage and traffic and, successively, maintain our services and inventory of products. For the case of the retail business component partnerships with distributors that have direct drop-shipments services. This will minimize total annual costs. Students will be subject matter experts who will provide weblogs’ contents. For other value added service, with 3rd party vendors will be established for the business to provide a wide variety of services and while focusing on the key business elements; textbooks, auctions, classifieds and teacher evaluations. 7.0 Technology The website will be designed having the main focus being needs of the college student. The University Cafe is developed using Microsoft technologies to provide ease of expansion of products and service offerings. Initially, The University Cafe will host the website by the help of an external web-hosting vendor and hence, reduce initial start-up cost. Later on, The University Cafe may decide to make hosting in-house for efficient support and maintenance. Databases and The University Cafe website will be hosted by services of Atl-Connect Internet which assures 99% uptime. Atl-Connects also provides site statistical and monitoring performance metrics. 8.0 Financial Plan Below is the summary of points from the financial plan. • The University Cafe will generate self-assertive revenues before the end of the first year. • The University Cafe will start financial reporting of sustained profits within the 9th month of the initial year. • Profits and sales by year three are expected top 1.5 times that of year one. • The University Cafe will need an initial investment capital to fund the launch strategy and marketing campaign • The University Cafe will need more investment to finance additional Web maintenance and development, general operating expenses and sales and marketing efforts. 8.1 Start-up Funding For implementation of first phase of the launch strategy and marketing campaign, an initial seed investment of approximately $150,000 is necessary. An additional investment of $1000,000 will be required for purposes of operational expenses, additional website enhancements, continuing marketing campaigns support and maintenance Table: Funding for Start-up Start-up Funding Start-up Expenses $57,685 Start-up Assets $157,315 Total Required Funding $215,000 Assets Non-cash Assets $155,000 Cash Requirements $2,315 Cash Additionally Raised $0 Cash Balance $2,315 Gross Assets $157,315 Capital and Liabilities Liabilities Current Borrowing $5,000 Total Liabilities $5,000 Capital Intended Investment Owens Gerald $50,000 Powers Andrea $5,000 Mitchell Kelley $2,500 Allison Elliott $2,500 Surplus Investment Requested $150,000 Surplus Investment Requirement $0 Gross Planned Investment $210,000 Loss at Start-up (Start-up Expenses) ($57,685) Gross Capital $152,315 Gross Capital and Liabilities $157,315 Total Funding $215,000 8.2 Sales Forecast The charts and table below indicate the forecasts for costs and sales Table: Sales Forecast Chart: Sales Monthly Chart: Sales by Year 8.3 Personnel Plan The table below shows our forecasts for personnel.  Annual figures for three years are shown.  Monthly estimates for the first year are included in the appendix. Table: Personnel 8.4 Projected Profit and Loss The charts and tables below show the forecasted for the income statement for 3 years. Table: Profit and Loss Chart: Monthly Profit Chart: Yearly Profit Chart: Yearly Gross Margin Chart: Monthly Gross Margin 8.5 Projected Cash Flow The chart and table below show the cash flow predictions for three years Table: Cash Flow Chart: Cash 8.6 Balance Sheet Projection The following table details the projected balance sheet for 3 Table: Balance Sheet 8.7 Business analysis ratios for the three years of this plan are indicated below. Reference Cynthia, L. (2004), Is There a Special E-Commerce Ethics? Business Ethics Quarterly 14 (1):71 94, Print. Daniel, C. (2010) Digital Money: The New Era of Internet Commerce, Washington: John Wiley and Sons, Print. David, K. (2007), Understanding Electronic Commerce: How Online Transactions Can Grow Your Business, Boston: Harvard Business School Press, Print. John, H. & Arthur, G. 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(2008), Owning the Future: Inside the Battles to Control the New Assets--Genes, Software, Databases, and Technological Know-How--That Make Up the Lifeblood of the New Economy, Oslo: Houghton Mifflin, Print. Sonja, K. (2002), The Role of Consumers' Trust in Online-Shopping, Journal of Business Ethics 39 (1- 2):43 – 50, Print. Steve, K.and Stephen M. (2010), InstantAdvantage.com : Protocols, Winning Strategies for the online Economy, Boston: Harvard Business School Press, Print. William, H. (2006), Business (@) the Speed of Thought, Las Vergas: Warner, Print. Appendices Table: Sales Forecast Read More