Business Plan for Tea Bar - Case Study Example

BUSINESS PLAN --TEA BAR Company BTC Company is a non-alcoholic beverage company that provides different kinds of non-alcoholic beverages to residents of the greater London and its environs. The hotel industry has been among UK’s most expanding sectors in the recent past. This is the main reason why Tea Bar Ltd wants to take advantage of this and provide beverages to the city residents and the many tourists that come to London and the adjoining towns especially in winter. Mission statement BTC’s main mission is to establish itself as the one stop centre for all non-alcoholic beverages for all people. The company has done extensive research into people’s non-alcoholic beverage tastes and preferences and wants to fulfill this market needs. The company is dedicating its efforts and resources towards establishing better and lasting relationships with its clients through exemplary services and products and general hospitality. The main goal for this company is to develop progressively and become profitably within its third year of service. Products and services BTC has created a rich menu that has best brands of different kinds of non-alcoholic beverages for its clients. For those clients who will want to have tea, the various available types include tea alongside some steamed milk and vanilla syrup. This tea and its service go for £12. There is also tea which has cinnamon together with honey and steamed milk which will retail at £13. There are different ranges of iced tea whose prices range from between £11.2 and £15. For coffee beverages, there are also diverse options that clients can pick from. They include; coffee and steamed milk only which goes for £14, when the coffee is served with some chocolate and steamed milk, it will retail at £14.3. There is the famous Colorado coffee brand which comprises of coffee itself, some cinnamon, steamed milk and praline. This brand is loved by many clients and goes for £16. The rich menu has many other varieties which give customers a wide scope of choice. The wide menu has been created just to ensure that all customers are able to enjoy the value of their money. In addition to beverages, the company offers free wifi to all its clients in all its outlets. There is a friendly staff which is ready to listen and attend to its clients with professionalism and dedication. The logo of the company is as shown below; The name BTC is suggestive of trading companies that existed back in the 18th century. It gives the feel that we are bringing tea from abroad, an impression that we are a tea-trading company. This is true as we are providing global teas from across the ocean. The shield and the knight makes it look like a ccoat of arms / family crest or a regal / Royal, adding integrity to the brand. The kettle on the logo gives a lighthearted feel, showing that we actually we provide tea, but not only that, we provide the experience of sitting down and drinking tea which is one of the pleasures sometimes lacking from busy Londoners Market The hospitality and tourism industry have become very important to BTC Company. With the pace at which both industries are growing, the future looks good. The industries have generated in excess of £ 2.5 billion to the country’s GDP. London itself has been significant, the many tourists that visit the country year in and year out have proved vital for the growth of this industry. Excellent Tea bar also realized that the coming commonwealth games will be key for its growth. It is for this reason that the company has increased its outlets in London and the adjoining areas with an aim of cashing in on this and other events that happen in London. The products and service offered by BTC cuts across middle to high end markets. Being cosmopolitan, the London market proves to be important to future growth and expansion of the company. The government continues to welcome investors in various sectors of the economy so as to improve its GDP; this offers a good atmosphere for the development of the company. Competition My Business BTC Tea Bar Competitor 1 Canteen Competitor 2 The Landmark London Competitor 3 Park Plaza Sherlock Holmes Product Tea connoisseurs specializing in a wide variety of global teas. Provides afternoon tea and accompaniments such as cakes and macarons Traditional British meals in modern dining hall with addition of an afternoon tea menu Luxury hotel with a glass roof atrium on the 8th floor where the afternoon tea is served 4 star, 119 room hotel with a bar and grill dining, and afternoon tea Price £17.88 per afternoon tea (serves two) £9.90 per person with additional £5.50 for sparkling wine £2.15 per cup of tea Traditional Afternoon Tea is £40 per person; Chocolate Afternoon tea is £42 per person; Champagne Afternoon tea for £45 per person £14.90 per person £19.90 per person with a cocktail £2.75 per cup of tea Place Chiltern Street; 322m from Baker Street station 55 Baker St; 322m from Baker Street station 222 Marylebone Rd; 322m from Baker Street station 108 Baker St; 160m from Baker Street station Promotion Website Flyers Tube adverts Website Gift vouchers for afternoon tea, spa and overnight stays Website Website USPs Wide selection of professionally brewed world teas and unique tea-flavored accompaniments Traditional British fare in a modern setting Glass roofed atrium dining experience; offers eye-catching French pastries Afternoon teas named after Sherlock Holmes and John Watson Strengths Provides homemade tea-flavoured biscuits, macarons and ice cream A wide variety of exotic global teas Not including BTC, offers the cheapest afternoon tea Relatively affordable food High end hotel dining experience Beautiful infrastructure Awarded 2 AA rosettes for quality dining Offers French pastries Closest to Baker Street station Whimsical afternoon tea set names; more prone to attract Sherlock Holmes fans Weaknesses Newly start-up business Small location, but will expand as we gain more profit Does not specialise in afternoon teas, more on lunch and dinners Not located along Baker Street which is a tourist attraction on its own High price Specialises more on grills and dining Lack of advertisement of their afternoon teas In order to remain relevant in the market, the company looks forward to employing important strategies that will offer it a cutting edge in the competitive market; for instance, the company looks to bank on regular research and development so as to keep abreast with changing customer tastes and preferences. The company has also designed franchise schemes where people can contract to use its brand and sell its products. This is aimed at increasing its publicity and incorporating more and more people into promoting the company brand. In addition, the company wants to create and expand its online market and provide door to door services for its clients who may not feel like moving about or have jobs which they operate from the comfort of their homes. Due to this advantage in the niche market, BTC feels strong and well positioned to serve the market and respond to its changing needs. Being able to attend to both the low, middle and high end customers puts the company in pole position to outdo its rivals and establish itself as a household brand name. Research Before venturing into active marketing, the company was able to conduct a research which was aimed at providing a clear picture of what is to be expected in the actual process. The marketing research proved helpful according to the analysis of both primary and secondary research which was carried out. While conducting primary research, the company collected a physical count of the number of related businesses that were offering similar products and services as those of the company. There were other small ventures which totaled to about 100 in the capital London and almost a similar number in the areas adjacent to London. Findings from questionnaires revealed that people loved tea and coffee in winter and the specific menus which led to further research into the expertise that goes into their preparation and service. Observation and actual tasting of tea beverages in the existing hotels was able to help determine quality standards that were to be employed in making and serving of beverages to clients. To this effect, the company has bridged all the loop holes that were noted from this research. Secondary research sources revealed much about different company profiles and the effectiveness of their marketing strategies. Most company websites showed that online marketing is not actively incorporated as a marketing and sales strategy. There was little information about this important strategy which BTC wants to exploit to its advantage. It was clear from newspaper articles that the market for non alcoholic beverages remains largely untapped and that more investments were being called upon by the government. Alcoholic beverages have taken center stage in the beverage industry and in a bid to reduce alcohol consumption among the general populace; non-alcoholic beverage companies were being encouraged. The chamber of commerce and company registration statistics showed few people investing into this market compared to those who invest in alcoholic beverages. This gave the company a clear picture about the competitors and related rivals. All this research findings were vital in the decision to register the company. The company therefore feels strategically positioned to tap into this market and serve clients to the best of the industry professionalism and dedication. The legal structure The company has been able to acquire specific and relevant licenses that are required for proper operation. The company is operating as a partnership, this means that all the required documents have been formulated and deposited at the registrar of companies for licensing purposes. The company has fulfilled all health requirements and standards as required by legal procedures. It has obtained health permits which certify it as safe and secure for any client. The quality assurance department has been satisfied by standards which the company has laid down in its operation. In addition, all insurance policies have been taken care off for the company and its employees including all third party policies. Environmental requirements towards carbon levels have been sorted out and this sets a ground for full time activities for in company. Location BTC Limited is located in London at a place called Stratford. This place is very serene something that is considered a major attraction to many visitors who come to London, the company found the location suitable since it is easily accessible from other parts in the city. This means that people can easily drop by to have a cool drink on their way home or to work place. The size of land that has been occupied by the company is around 2 hectares with future plans of expanding it to accommodate many clients who are expected to grow as time continues. The company is looking forward to adding a 4,000 square feet building to add to its present buildings which have the main reception area, parking, administration and staff quarters. Human resources Name or title Key Responsibilities Qualifications Manager (3) Overseeing the daily activities in the various departments Bachelor’s degree in hospitality industry and relevant related qualification. Experience in similar position for at least five years Experience in financial management with at least bachelors qualification in finance and accounting Chief chef (5) Preparation of beverages from various recipes Bachelors degree in hotel and management Professional chef with experience of at least five years working in a busy restaurant I.T Specialist (2) Maintaining the company website and coordinating the e-marketing system Experience of at least five years in a similar position besides bachelors qualification in I.T and related field Supervisors (10) Oversee the daily operations in the company Bachelors qualification in human resource management or business administration Experience of five years or more in similar position in the same industry Attendants (10) Attending to customers and providing quality service Experience of at least two years in the hotel industry Excellent communication and computer skills Presentable and of high etiquette Additional information; The company plans to double the existing staff as the company expand and grow. RULES AND PROCEDURE Hours of operations 7 a.m – 8:30 p.m – Weekdays Number of employees 10 full time and five principle staff Vacation program Three week vacation for each employee annually Performance assessment Will be done on yearly basis. Remuneration and benefits Comparable to the existing wage rates in the industry, this is because there is a plan which is underway for a profit sharing agreement as the company grows As the company grows, there are plans to increase the workforce to make the company efficient in customer service. The appendix table provides a job specification criterion for hiring new employees in future. Finance About sources of finance, the company plans to acquire a loan from the Barclays bank or another bank that will offer favorable terms in order to finance the establishment process. This source of finance looks to be a good alternative in the short term. With the highly valued piece of land in Stratford, the company plans to use it as collateral to acquire start up financing. This will help it get started, with future plans of selling shares to members of the public. In addition, the company will buy debentures from potential sellers who will be in agreement with the terms and conditions that will be established. Debenture capital will be a better option for long term expansion and with the expected growth prospects; the company hopes to get many people who will be interested in taking debenture certificates. An outline of sources and use of funds is explained in the appendix table. Budget analysis There is a series of budgets that have been prepared to assist the company get along with its activities especially at the start up. For instance, the sales budget indicates the activities which will be done in order to purchase and make products for the customers. From the budget, sales promotion is the most important since it takes a greater percentage of the total of income needed. Legal expenses are also vital and that is why a substantial amount of money has been set aside for this process. The budget for expenses requires a lot of money since it details events and other important activities that the company will have to do in order to get started. During the course of operation, this amount will go on reducing. This is because as the scale of operation increase, the company will take advantages of the economies of scale to cut down on some costs. Research and development will be a continuous process since the market trends keep changing, not only for this industry but for all other industries and therefore remaining relevant means that the company does regular research. To make the goods, the company will require enough stock of the much needed tea and coffee imports. Most of these materials will have to be shipped from other countries that have world class tea and coffee brands. This is why shipment costs are taking a substantial amount of the production budget. Financial forecasts The break-even isa point in time where the company will be able to analyze if its operating at a profit or a loss (Accounting Coach, 2014, para, 1-3). The company expects to break even with forecasts of better profits in the process of operation. In order to break even the company will have to double its sells and motivate its staff in reasonable manner to attain the target. The break even chart in the appendix chart shows the point at which the company is expected to start making profits. The forecasts of cash flow as shown in the appendix table also show a clear indication that the business will require some additional financial injection. This will help to strengthen the financial position of the company and enable it to have surplus sales and increased revenue between the set periods of time. From the chart, the entire additional amount is assumed to originate from a bank loan, therefore a whole amount of the interest has been given for the amount during the entire period. However, the company will have to get financing from other sources so as to position itself in the best way to stay put in business. Excellent Tea Bar Limited SWOT analysis Strengths Weaknesses Opportunities Threats Quality and professional management Excellent IT experts that are working on the company’s marketing systems Prime location which offers a strategic position for clients Excellent internet infrastructure in free wifi connectivity will attract many clients something that most rivals do not have A stable growth pattern shown by increasing outlets will mean better profits and growth prospects for the company. The fact that it’s a new player in the market, some customer may be unwilling to give it a try Seasonal changes especially summer may reduce the demand for stimulants and hence lead to reduced tea and coffee beverage sales Being a new company does not offer a stable bargaining ground to enjoy quantity discount from large suppliers Excellent research will offer information towards changing market trends The large online platform remains an untapped market which the company hopes to exploit The growing industry due to tourism and other upcoming events in and around London will offer potential clients which will enable the company to grow Availability of strong and established competitors The stable competitors could easily steal away the experts the company enjoys due to the lucrative offers from long term operation The changing economic patterns with respect to inflation and exchange rates may reduce client’s motivation for spending The present and growing number of alcoholic beverages tends to reduce the number of clients who may prefer to taste non alcoholic drinks. Bibliography Accounting coach.2014.Introduction to Break-even Point. Available at; http://www.accountingcoach.com/break-even-point/explanation (Accessed March 2, 2014) APPENDICES Appendix 1. Interview Questionnaire for BTC competitors Wing Hoong Chia 1. Which time(s) of the day have the number of customer? 2 – 5 p.m 2. What is the most popular food or dish complimentary to your tea? Scones 3. Which medium of advertising is most successful? Hotel booking websites 4. How many cups or such mediums of containing the tea do you sell a day? Weekdays: 12 . Weekends: 20 5. How many of them are take away and how many are bought at the outlet? Most of them are sit-down teas 6. What is the price range of you tea(s)? Afternoon tea set is £14.90 per person but one pot of cup is £2.95 7. What is the average price of a tea? One cup is £2.95 8. Do customers mostly eat? Eat alone? With 1 other? Or with a medium or large group? Usually they come in with one other person. 9. What are the most popular age group and types of customers (e.g. locals, tourist, office workers and foreigners) purchasing tea coming into your store? Earl Grey 10. What sizes of servings do you provide? In millilitres. We offer a standard cup of tea which is about 236ml. Appendix 2. Key Stakeholders Tom Job Title Supervisor Description of daily responsibilities Event management Brews the tea Packaged tea and teapot sales assistant Cashier – money handling Serves tea and cakes Manages the Facebook page Contract agreements Full-time Wage, reasons why Standard wage £1,500 per month 5% profits for the first year 7% profits for the second year Nathan Jian Job Title Employee Manager Description of daily responsibilities Oversees the performance of each employee Manages employee timetable and duty roster Gives employee feedback & improvement advice Provides training for each employee Serves tea and cakes Contract agreements Full-time Wage, reasons why Standard wage £1,500 per month 5% profits for the first year 7% profits for the second year Seasonal Staff Job Title Waiter / Waitress Description of daily responsibilities Brews the tea Sales assistant for packaged tea and teapots Ensures the cleanliness of the cafe Serves tea and cakes Promotes the tea bar by handing out flyers Contract agreements Seasonal during peak months of May – Sept and Christmas break (November – Early January) Wage, reasons why Standard wage £8 per hour 5% commission on retail sales (packaged tea and teapots) Why? – £1 pound above minimum wage to attract workers – The wages are low as our business is relatively young – Wages will increase in the second year when the business generates sufficient profits Appendix 3. Job description/person specification criterion for future recruitments using SCQF Job Title: Reporting to: Location: Nature/purpose of the job role Main Duties Hours of work Salary Qualifications; Essential; Desirable; Knowledge and skills; Appendix 4. Financial Models Table 1.Sources and Use of Funds The total amount of money required for successful commencement is £84,500. Source of funds Equity financing Preferred stocks £ 12000 Debt financing Bank loan (Barclays) £35000 Other long term loans £10000 Short terms sources (owners’ equity, sale of assets) £5000 Easily convertible debts £8000 Investment from the principal owners £14, 500 Total £84,500. Capital expenditure Purchase of company properties £30000 Purchase of furniture and other important equipment £25000 others £20000 Total £75000 Table 5: Monthly Sales budget Activity Amount needed (£) % of the total amount Advertising 2000 2.37 Delivery costs 400 0.47 Supplies 500 0.59 Telephone calls 500 0.59 Other utilities 500 0.59 Legal fees 3000 3.55 miscellaneous 3000 3.55 Subtotal 9900 11.52 Table 6: Monthly Expenses / Costs budget. Activity Amount needed (£) % of the total amount Travelling 2000 2.37 Sales promotion 400 0.47 Depreciation expenses 500 0.59 Management salaries 500 0.59 Office salaries 500 3.55 Professional fees 3000 3.55 telecommunication 3000 0.83 Insurance and taxes 700 0.82 Bank charges 500 0.59 Interest on loans 200 0.24 Bad debts 600 0.59 Research and development 500 0.59 Others 300 0.36 Subtotal 12700 15.03 Table 7: Monthly Production Budget. Item Amount needed % of the total Branded tea leaves £ 1000 1.18 Branded coffee £ 1000 1.18 Milk £ 200 0.24 Additives £ 250 0.30 Snacks £ 300 0.36 Milk £ 500 0.59 Shipment costs £ 5000 5.92 Total £8250 9.76 Table 8: Break Even Chart Break Even Analysis of Britannia Tea Company Inputs £ Output Fixed Cost £ 12, 113.00 Sales 0 400 £800 £1,200 £1,600 £2,000 Variable cost per unit £ 3.99 Sales revenue £ £5,384 £10,768.00 £16,152.00 £21,536.00 £26,920.00 Sales price per unit £13.40 Total cost £0.00 £13.7160.60 £15,308.20 £16,905.80 £18,503.40 £20,101.00 Break even contribution £9.47 Fixed costs £12,113.00 £12.113.00 £12,113.00 £12,113.00 £12,113.00 £12,113.00 Break even point £1280.00 £ £12,113.00 £ £ £ £ £ Table 9. Cash-flow Forecasts for the next six months Projected Cash Flow Forecast Account of Britannia Tea Company For the next six months (2014) Jan Feb Mar Apr May Jun Opening Bank Balance 0.00 6824.67 13649.34 20807.85 25619.16 30734.07   Receipts Sales 23757.52 23757.52 24222.40 21822.40 23534.80 28334.80 Bank Loan 30000.00           Parents Loan 0% Interest 15000.00           Total Receipts 68757.52 23757.52 24222.40 21822.40 23534.80 28334.80   Payments Rent 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 Bills (Gas, water, electricity, telephone) 200.00 200.00 200.00 200.00 200.00 200.00 Insurance (Building Insurance) 161.70 161.70 161.70 161.70 161.70 161.70 Staff Cost 7500.00 7500.00 7500.00 7500.00 7500.00 7500.00 Stock 6691.56 6691.56 6822.60 6769.80 8178.60 8284.20 Parents Loan Repayment 250.00 250.00 250.00 250.00 250.00 250.00 Bank Repayment 629.59 629.59 629.59 629.59 629.59 629.59 Start up costs 45000.00         Total Payments 61932.85 16932.85 17063.89 17011.09 18419.89 18525.49   Closing Balance 6824.67 13649.34 20807.85 25619.16 30734.07 40543.38 Read More