Small Business: Mission Statement - Essay Example

Small Business: Mission Statement Executive summary Objective The business will be established in UK market and its target customers shall be youth. Coffee Corner would target only youth customers and its main focus shall be on increasing customer base. The major objective of this business is to create such an environment where customers can relish their order and enter into a peaceful conversation. Coffee Corner aims at developing a friendly atmosphere within the store and this would be its competitive advantage. It even targets to expand on its business across UK markets and retain a loyal base of customers. Mission Statement The mission statement of the company is – “to deliver high quality products and services to all customers.” Coffee Corner is going to be established in such location that it can attract majority youth customers. Their mission is to maintain product quality standard and deliver appropriate services to all its customers. It can be stated that competitive advantage can be gained by Coffee Corner by evolving as the most favourite coffee joint for all youth customers. Company Summary Given the small budget and the growth prospect of coffee market it would be profitable to open a coffee shop. The coffee shop would be opened in a place where there are colleges nearby or near a business area. The main target customer of the coffee shop is young generation (Meyer and Crane, 2010). The coffee shop would not only serve as a venue for people to enjoy coffee but also socialize amongst them. The SWOT analysis of the coffee shop is Strength Close to college campus- an ideal place to hangout Nice cosy and homely atmosphere Good quality coffee and good quality staffs Weakness Lack of customer base Lack of Brand recognition Lack of funds Opportunity Product line expansion encompassing wide array of products Market diversification – company can establish store outlets across the globe Product customization - enhancing customer loyalty and satisfaction Threat Increased number of players in the market place Rapid growth of substitute products Decreasing disposable income of people Analysis of Customers and Competitors The coffee market in UK is one of the markets which have shown steady growth over the past 15 years. This market has grown even in the recession period at the rate of 5 percent per annum even in the most economically challenged parts of UK. However, the startling fact is that consumption of coffee per capita has actually decreased than levels that were in 2006. If we look at different countries in the Europe we find that Britons consume only 2.8kg coffee per head. Compared to this figure Germans consume about 7kg of Coffee per head, Sweden consumes 7.1 kg/ head and France consumes 5.5Kg/ head. Coffee consumption across Europe (Source: Thomas, 2014) Despite this coffee sales are increasing year on year and there is no sign of slow down. The sales growth rate in 2013 was 6.4 percent more than the previous year. New coffee shops are coming up at a rapid pace with some roads like the Holloway road boasting of having 24 coffee shops and Gloucester road in Bristol having 23 coffee shops (Neate, 2012). In 2013 there were 16,501 coffee shops across the country by year end. Now the question that arises is if the per capita consumption of coffee hasn’t increased what is driving the increase in sales? The fact that is driving the increase in coffee sales is people are no days increasingly socializing around a cup of coffee. Previously Britons favourite place for socializing used to be the pubs. People, mainly men used to go to pubs at night to socialize around a mug of bear or a glass of whisky or wine. However, the advent and growth of online shopping has meant that people now days can shop from the comfort of their home. This leaves them with a lot of free time which they can effectively use to shop. Secondly the matter of fact that has boosted the growth of coffee shop is the growth of female independence and female spending power. This new community of women along with men are flocking more and more to coffee shops to socialize to interact and to spend their moments of leisure fruitfully. So the Britons who once upon a time used to get satisfied with a cup of Nescafe at their work table are now moving to coffee shops. The growth of coffee shops has also meant the decline of pubs. Amidst the rise of popularity of coffee shops the pubs are losing their foot hold. Pubs are closing in the UK at the rate of 31 per week. The Coffee shop has experienced tremendous growth and that has not meant the growth in coffee consumption per capita. The growth of coffee shop has actually means the people are now visiting coffee shops to have their coffee where earlier they would have the coffee at home or workplace. The coffee culture is finding greater popularity amongst youth. 14 percent of people in a survey have responded that they spend up to £10 per week on coffee. However if one looks at the percent for the age group 16-24 then it comes out that this percentage 28%. A 5th of this age group spends up to £20/ week on coffee shops- which is 5 times the average across all age groups. Not only people have increased their love for coffee but for having a cup of coffee at morning people are sacrificing their breakfast, brushing their teeth, reaching their workplace on time, etc. Spending on Coffee by different age groups (Source: Davidson, 2014)  The coffee culture in UK is however not new. Coffee was introduced in UK about 360 years ago. Coffee was introduced in the UK in 1652 by Pasqua Roseé. Coffee soon became a popular attraction in UK and people used to hang out in Coffee shops. Coffee was seen as an antidote to drunkenness, violence and lust. It was seen a drink which helped in stimulating the intellect and a catalyst helping in the cultivation of pure thought, sophistication and wit. So the coffee shops often saw an environment where strangers would gather to either discuss around a new piece of literature, or discuss political issues shaping the country etc. Coffee houses at that point of time did not clone each other and many of them sported their own culture (Green, 2012). However, unlike today the coffee shops at that time was mainly a meeting and barnstorming place for the men. Normally females would not be found in the coffee shops. The main coffee shops that are in operation in the UK are Costa coffee, Starbucks, caffe Nero and AMT coffee. Among this Costa Coffee is the market leader having 46.5% market share. Starbucks comes second with 27 percent market share, Caffe Nero has 13.8 percent market share and AMT Coffee has market share of mere 1.4 percent. The rest of the market share that is 11 percent market share is captured by other small market players. Costa coffee added 76 more shops to its coffee shop chain taking its tally to 1831 in the UK. Costa coffee plans to continue on the growth and wants to add 2000 more shops by 2018. Costa Coffee began its journey in 1971 when two brothers Sergia and Bruno Costa started selling their special blend of coffee to local caterers. Costa Coffee had got 7.3 % increase in sales in the 11 weeks to August 2014. Competitive advantage In the recent years UK market has witnessed tremendous growth in Coffee shops. The growth has been specially fuelled by the young generation who have taken to coffee shops in order to socialise and spend some quality time with friends and unknown. The coffee culture in Europe is known for long and coffee is seen as a drink which boosts intellect and creative thinking, removes drink addiction and promotes clear thinking. The coffee shops has long been seen as a meeting place for the intellectuals and other common people to discuss on a range of topics ranging from new piece of literature to political situation in the country. Considering the above facts and figures the new business venture has been planned not just as a coffee shop but to act as a place where people will meet each other, engage in stimulating discussion, have some snacks and enjoy their favourite cup of coffee as well. The USP of this new business would be its informal atmosphere facilitated by special arrangement of the desks, special building materials used to make them so as to stimulate discussion and the special location of the shops. The shops (of course there would be just one shop to begin with) will especially be located near college campuses, office buildings, and crowded market place where people, especially young generation will come frequently to engage in stimulating discussion. A news paper stand containing the major news papers of the day and a bookshelf is also planned to be placed inside the premises so that people can always read their favourite news paper or flip through the pages of their book while they gulp on the Coffee. This arrangement of keeping books and news papers is also kept so that people’s stay in the premises can be increased which might have a positive impact on the sales figures. Another factor which might contribute to the competitive advantage of the new coffee shop is that the new coffee shop will be opened by a group of young people who will be able to match in mentality with the needs and demands of the customers and change in market trends along with changing time. Another point which will contribute to the competitive advantage of the new venture will be the staffs and people who will serve the drinks to the people. Staffs are a very important part of the business since it is a service oriented business and the people will contribute to the intangible benefits in terms of the experience and the interactions that the customers will have with the staff. To contribute to the competitive advantage and be a strategic resource for the firm, the staffs will be trained in order they become adept not only at serving coffee with a smile but also can engage in stimulating discussion with the clients if and when required. The most important ingredient and the pulling factor of the coffee shops are bound to be good food and coffee. The main focus of the new venture would be to provide good food along with good coffee to its customers so that they are pulled to the coffee shops again and again and cannot leave the coffee shop without at least having 3 cups of coffee. The coffee shop will also have attached touch screens with the desks as a future addition. In that touch screen people will not only be able to order coffee but also will be able to connect to facebook and other social networking sites so that they stay connected with their friends while they drink their favourite coffee. This facebook app will also help them post their experience live to their friends and followers who will also be attracted to try out the new venture. Additionally the coffee shop may have a big screen in its interiors where authors and celebrities will be visible and the customers can interact with these celebrities and share their ideas or discuss and provide constructive criticism to the new book. The coffee shop may also host occasional book opening ceremony for new books by new and young generation authors at the started and reputed authors after some years. Financial projection To make a business or to start a business the first and foremost thing that is required is capital. Ultimately the purpose of any business is to generate capital and the resource on which a business stands in capital (Harper, 2005). To make a business viable and to analyse whether it is really worth to go forth with the business idea, one needs to analyze whether the business will be able to generate any profit. For most of the business the entrepreneurs most of the time does not have enough fund available with them. They need to borrow fund from either investor or bank. To get an investor invest in his business, the investor must be able to explain to the investor the viability of the business and how quickly will the investor get back his invested money. So, the entrepreneur must first of all do a financial forecast in order to analyze the future revenue stream or profits for his new business venture. The financial forecast can start by forecasting sales or forecasting costs and then reaching from either way to profit calculation (Burns, 2014). In this coffee shop business the costs have been forecasted. There have been some assumptions that have been made in the calculation. These assumptions are as follows: The hourly wage rate is considered as £20.9 pound and a day is consumed to be 7 hours long. It is assumed that there will be three coffee vending machines each costing £3000. The rent for the premises is considered to be around £400 per month. Each bag of Coffee of 1kg costs £12 and 145 cups of coffee can be made from a bag. The shop will sell more items and not only coffee but for simplicity in calculation only coffee sales are considered. First year Fixed Costs Amount/ year Coffee vending machine 9,000 Rent for office premises 4,800 Cost of building the shop 100,000 Gas and electricity cost 30,000 Total fixed costs 143,800 Variable costs   Cost of raw materials 8760 Wages 106799 Cost of goods sold 10,000 Total variable costs 125559 Total costs 269,359 Sales figure in 1st year 290 cups daily *365 105850 Total amount @£1.83 per cup 193705.5 Second year Fixed Costs Amount/ year Coffee vending machine 9,000 Rent for office premises 4,800 Cost of building the shop 100,000 Gas and electricity cost 30,000 Total fixed costs 143,800 Variable costs   Cost of raw materials 17,520 Wages 213,598 Cost of goods sold 10,000 Total variable costs 241118 Total costs 384,918 Sales figure in 2nd year 580 cups daily *365 211700 Total amount @£1.83 per cup 387411 Third year Fixed Costs Amount/ year Coffee vending machine 9,000 Rent for office premises 4,800 Cost of building the shop 100,000 Gas and electricity cost 30,000 Total fixed costs 143,800 Variable costs   Cost of raw materials 25,000 Wages 213,598 Cost of goods sold 10,000 Total variable costs 248598 Total costs 392,398 Sales figure in 3rd year 800 cups daily *365 292000 Total amount @£1.83 per cup 534360 Market share and revenue growth 1st year 193705.5 2nd year 387411 3rd year 387411 Break even period Break even period Total fixed cost/(Total revenue - Total variable cost) 2.110159729 Operating resources Marketing plan The company’s marketing plan would be centred towards making its store outlets most attractive for all its customers. Their target market is youth base of UK market. There are different marketing strategies that can be adopted by a new start-up business. Coffee Corner after its launch shall undertake sales promotion activities. This would be done through offering discounts to customers on every purchase. Sales promotion campaign would even encompass offering free gifts to all its customers (Cheverton, 2005). Marketing activities of Coffee Corner will also comprise of advertisement campaigns. These campaigns showing its product line shall be broadcasted in radios, television, social media and newspapers. Banners and billboards would be given across the market place. Coffee cups being offered at Coffee Corner would have a brand logo. This shall influence customers to visit Coffee Corner on a regular basis (Batey, 2012). On the other hand brand image would also be highlighted through such activity. Descriptions of staffing Staffing is related to effectively managing human resources in a company. Coffee Corner would encompass wide array of talented individuals. A proper recruitment process will be implemented in order to select group of talented people. The staffs would be divided into three segments – first segment shall include members in managerial positions, second would be responsible for managing kitchen operations and third will be trained for delivering exceptional customer service. On-job training program would be provided to staff base. This shall help team members to perform their job as well as gain required knowledge or skills. On the other hand, diverse cultural background would also be maintained within staff base. This in turn shall initiate higher work efficiency and greater productivity levels. Rewards and appraisals will also be managed appropriately so as to motivate staff base. Identification of material risk and contingency planning Material risk of the business is associated with other businesses capturing the market share and the new venture not being accepted by the youth and the persons of the new millennia (Spinelli and Adams, 2011). In worst case scenario the business venture may not be at all accepted by the youth and the customers. Other risks may involve banks not ready to give loans for the business. At the worst case scenario the entrepreneurs may not be able to pay wages to the employees. Other risk may include the supplier going bankrupt the sales force going sick or being demotivated. To mitigate the different risks that may arise in the coffee business the most important thing is to identify what are the key elements of the business. Of course one of the key elements would be the work force. In order that the workforce may not get demotivated the training should be provided to the workforce. Another key element of the coffee business would be the supply of coffee. The coffee shop should keep a backup of different suppliers who are ready to supply coffee in case one supplier fail. There should be different coffee, milk, sugar and other raw materials suppliers who will provide backup raw materials if one of the suppliers fails for some of the reasons. References Batey, M., 2012. Brand Meaning. USA: Psychology Press. Burns, B. 2014. New venture creation: a guide to entrepreneurial start ups. Basingstoke: Palgrave Macmillan. Cheverton, P., 2005. Key marketing skills: strategies, tools and techniques for marketing success. Great Britain: Kogan Page Publishers. Davidson, L. 2014. Being on time for work, and other things we sacrifice for our morning coffee. [Online]. Available at. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11149094/Being-on-time-for-work-and-other-things-we-sacrifice-for-our-morning-coffee.html. [Accessed on 30th December 2014]. Green, M. 2012. London cafes: the surprising history of London's lost coffeehouses. [Online]. Available at. http://www.telegraph.co.uk/travel/destinations/europe/uk/london/9153317/London-cafes-the-surprising-history-of-Londons-lost-coffeehouses.html. [Accessed on 30th December 2014]. Harper, S. C. 2005. Extraordinary entrepreneurship: the professional's guide to starting an exceptional enterprise. NJ: John Wiley and Sons. Meyer, M. H. and Crane, F. G. 2010. Entrepreneurship: an innovator's guide to startups and corporate ventures. London: Sage Neate, R. 2012. Coffee shop revolution continues to stimulate the high street. [Online]. Available at. http://www.theguardian.com/business/2012/jun/22/coffee-shop-revolution-continues. [Accessed on 30th December 2014]. Spinelli, S. and Adams, R. 2011. New venture creation: entrepreneurship for the 21st century. NY: McGraw-Hill Education Thomas, N. 2014. Why coffee shops are replacing pubs in Britain. [Online]. Available at. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/11084328/Why-coffee-shops-are-replacing-pubs-in-Britain.html. [Accessed on 30th December 2014]. Read More