Idea for Wisconsin University Coffee Cart - Business Plan Example

Coffee shop name: Wisconsin University Coffee Cart Student’s Name: Instructor’s Name: Course Code and Name: University: Date Assignment is due: Contents Contents 1 Section1. Executive summary 3 Business idea and goals 3 Marketing 4 Operations 4 Finance 4 Section2. Background 5 2.1 Mission statement 5 2.2 Company history 5 2.3 Business goals 6 Section3. Marketing 6 3.1 Market research 6 3.2 Market analysis 7 3.3 Market plan 8 3.4 Evaluation of marketing 10 Section4. Operations 10 4.1 Legal and licensing requirements 10 4.2 Management details 10 4.3 Organizational structure and staffing 11 4.4 Professional advisers 12 4.5 Insurance and security issues 12 4.6 Business premises 12 4.7 Equipment required 13 4.8 Production processes 13 4.9 Critical risks/contingency plans 15 Section5. Financial projections 15 5.1 Basic assumptions and information 15 5.2 Analysis of financial forecasts 15 Section6. Implementation timetable 2013 20 List of References 21 Section1. Executive summary Business idea and goals Wisconsin University Coffee cart, Inc. provides coffee services to university students and residents of the Great Lake region. The service industry, in particular the food industry is a fast growing sector of the economy and the Wisconsin University Coffee cart, Inc. seek to capitalize on the successful nature of the industry. This will be enhanced by taking advantage of the food processing opportunity in the Great Lake region. The president of the Wisconsin University Coffee cart, Inc. has vast knowledge in coffee processing. The president of the Wisconsin University Coffee cart, Inc. has been an employee and previously a senior manager in a leading coffee shop in the country. In addition, the Vice chairperson is the sales and marketing manager. The responsibility to create awareness and harness the viable clientele is bestowed on the sales and marketing manager. Previously, the Vice chairperson has held the same position in various reputable businesses in the country exhibiting reputable performance. The core or fundamental nature of the Wisconsin University Coffee cart, Inc. will be to sell coffee products to Wisconsin University fraternity and the residents of the Great lake area. The future of the business certainly seems promising evidenced from the skills of the management team and the lucrative nature of the food processing industry currently in the country today. Marketing Wisconsin University Coffee cart will have customization of products as one of the ways through which it would market its products. Moreover, the strategic position it is located is effective in reaching several customers, who are the students, workers and visitors getting and out of the institution. Advertising is another method the business will use in reaching as many customers as it possible. Furthermore, offering of quality products would attract and maintain customers. Operations The business will be located at the gate of the university. The available space will be divided into a sitting place, kitchen and three offices. People employed include the president, vice president, financial manager, procurement officer, food and beverage manager, stewards, chefs, waiters, assistant sales and marketing manager messengers and two clerks. Drinks will be prepared as it is ordered. Payments will be made when customers finish their drinks. Finance The financial plan will entail a 12 month projection of a profit and loss besides a balance sheet projection. A break even calculation depicts that the company will be able to meet the expenses from the generated revenue. A projected cash flow also will indicate the company’s ability to meet the pending obligations as they fall due. There is a projection of profit even during the first year of operation despite there being a loan acquired from a bank. Consequently, the business is viable and would run indefinitely in the subsequent years, meeting its objectives. Section2. Background 2.1 Mission statement The mission of the Wisconsin University Coffee cart, Inc. is to acquire premier status in the coffee industry and provide professional services to clients. Wisconsin University Coffee cart, Inc. is committed to acquiring and maintaining a cordial and long term relationship between the business and the clients. This will be enhanced through engaging the staff to undergo training to enhance their capabilities in offering quality services and appropriate customer support. This is due to the fact that Wisconsin University Coffee cart, Inc. wants to be recognized as the leading coffee cart in the Great Lake region. The company’s key objective is to progressively break-even and grow becoming lucrative and profitable in the second year of operation. Customer satisfaction and loyalty will greatly help to attain the above objective. 2.2 Company history The business is commencing its operation and will be owned by Patterson Green. He is also the president to the business. He has the responsibility to provide capital as well as make the key decisions. However, the business requires more capital than the cash he has, and he needs some finance from banks. As a result, he needs a loan from the bank. Moreover, as the business expands, the administrative duties increase. Extra capital is needed. Eventually, the business needs to have decentralised leadership. Franchising is the preferred method through which this will be effectively achieved. In addition to the above advantages, franchising will lead to reduction in some costs like advertising, as well as increased customisation of both products and marketing. Therefore, during the second year of the business’ operation when it is expected to have other branches, there will be applications to assess the most effective franchisees. 2.3 Business goals Wisconsin University Coffee cart, Inc has an aim to offer customers with quality coffee products of their choice to their satisfaction. Moreover, it aims at maximising profit as well as shareholders’ wealth. In addition, it targets at providing employment opportunities. Ensuring a national economic growth by promoting money circulation is the other aim of the business. Finally, it aims to grow and develop by opening other branches as well as expanding the space it originally has in the university. Another way in which the business wishes to expand is by providing some organisations with drinks. For instance, it is targeting to apply for the provision of daily drinks to the university staff in the offices. Section3. Marketing 3.1 Market research There are hundreds of people who get to the institution on a daily basis, with most visiting during weekdays. Moreover, there are people who stay around the university. These are mostly workers, teachers, students and other people who are indirectly involved in the university’s operations. This provides thousands of people as the potential customers to the coffee cart. The market of the Wisconsin University Coffee cart, Inc. is segmented into three separate client groups. The first is the student segments who take coffee for the passage of time. The second segment contains all the members of the University of Wisconsin who take coffee as a substantial meal and hence occupies a large portion of their diet. Finally, the residents of the Great lake area who take coffee as a culture hence do it occasionally. Both the residents of the Wisconsin area and the University fraternity excluding students are more likely to appreciate the quality. Both are overwhelmingly potential considering their constant urge or desire for coffee. This is because, for the university fraternity, coffee is a meal. The residents take coffee when they eat out. Also, Wisconsin University Coffee cart, Inc. takes coffee during free time or when seeking relaxation. 3.2 Market analysis Wisconsin University Coffee cart, Inc. faces stern competition from various stakeholders in the industry. The toughest competition is derived from the Allan Brothers. The company is in the mainstream coffee industry hence avails decent quality at competitive prices. The second competitor is Caffetto. However, the marketing edge acquired by Caffetto is due to low quality and low price point. The company seeks to attract price sensitive consumer that are not particular to the quality. The other various competitors offer mid price point levels in both quality and price. This implies that the competition derived mainly emanates from the mid producing coffee parlours. In Wisconsin, the coffee buying pattern is mainly dictated by price, quality and convenience. Some clients particularly students are willing to pay more for attaining convenience and are hence willing to pay more to attain individual sized servings. In contrast, the other clients though having a purse for quality view coffee as any other product in the menu list (Ferrell & Hartline 2011, pp. 206-217). Wisconsin University Coffee cart, Inc. further targets a niche that is yet to be exploited. With the stern urge to pursue quality enhancement in the region, the student’s clientele will be nabbed. As for the residence, the service delivery offered by staff will ensure customer loyalty thus enhancing the company with a competitive edge. 3.3 Market plan 3.3.1 Products/ services and target market A variety of products will be sold. Coffee will be mixed in a way to fit each customer’s taste. This concurs with the production as per ordered by the customer. As a result, all the people targeted will find the product of their choice in Wisconsin Coffee Cart. Moreover, services will be excellent. Quick delivery of products to customers will be highly provided by the espresso machine, which is fast in mixing, and the cookers that will be fast and always ready for any imminent order. Workers will additionally be trained to enhance speed. They will be required to undergo some speed and courteous customer service tests before they are incorporated into the business. Regular monitoring will be conducted to facilitate this. 3.3.2 Placement Wisconsin University Coffee cart, Inc. has chosen to move away from the classical approach of acquiring an already made coffee cart. Instead, Wisconsin University Coffee cart, Inc. will develop a coffee cart of its own preferred design that will be of desired size that will accommodate all the equipments necessary (Rogers 2001, pp. 115-126). The clients will be accorded a shield to protect from sunshine or the rainfall. The coffee cart will have adequate lighting, track lighting both of low voltage thus low consumption. Wisconsin University Coffee cart, Inc. will be located opposite the University gate. This will provide publicity for the company to the entire University fraternity. 3.3.3 Promotions and advertising There will be promotions especially during the commencement of the business’ operation. A road show will be conducted in and around the school to sensitize people on the provisions of the coffee cart. During the first day of operation, the prices will be halved so that it will attract several people to taste the products. Other methods that will be used in creating awareness and attract customers to the business will include posters and internet. Products offered, and customers’ testimonials will be posted in these forms. Joining social sites will enable the business reach several people. Moreover, the business can start a social responsibility by partially sponsoring some students in the university who perform excellently but are financially challenged. In addition, the company has a strategy to prepare adverts in the local media publications. Also in the local media houses, an advert will be cast thus creating awareness to the locals about the products of the Wisconsin University Coffee Cart Inc. The promotional budget is hence not expected to be exorbitant, and as such will not consume much of the capital investment (Shankar & Carpenter 2012, pp. 86-91). 3.3.4 Pricing policy One of the efficient ways through which products will be priced is depending on the prices competitors are offering for similar products. In order to gain as many customers as possible, the business will have its prices lower than those of competitors without compromising on quality. In addition to this pricing strategy, a formula that involves costs incurred when making a product as well as the profit expected will give the minimum amount at which a product can be sold. 3.4 Evaluation of marketing Semiannual evaluation of the marketing strategies will be conducted. The most effective strategies will be capitalised. In addition, some changes will be made considering the changing business environment, and customers’ changing trends (Cooper & Nakanishi 1988, pp. 210). Section4. Operations 4.1 Legal and licensing requirements The business requires health license from the local authority. Moreover, an operation license is to be acquired from the same authority. The president will oversee the provision of these two necessary documents. Additionally, medical certificates for each employee are needed considering this is a public food provision business. 4.2 Management details Management will be done by the president, who will be in charge of all operations. Some assistants will facilitate the responsibilities bestowed on the president. A vice president will compliment as the sales and marketing manager. A food and beverage manager will be in charge of the production, with the kitchen and service staff being under the department. Moreover, procurement manager will be responsible for procuring materials and equipment for the entire business. A financial manager will be responsible for monitoring cash flow, as well as link with other managers to ensure minimisation of costs and maximisation of revenue. The manager will ascertain there is liquidity continually. One of the responsibilities the mangers will collectively have is quality management. Each will ensure excellent quality in the department assigned (Ellis 2005, pp. 232). 4.3 Organizational structure and staffing There are 4 chefs under the food and beverage manager responsible for cooking. They will be working in shifts, two per time. Stewards will assist chefs in the kitchen, with one working as a supportive workforce during the prime hour. One steward can comfortably work during hours when the business as a low customer turnout. 8 waiters will be employed to serve customers. They will be delivering products to customers as well as explaining the products to customers in the cart. Three waiters will be adequate to serve at any one time. There will be two shifts corresponding to the chefs’. The first will start at 6am running for 8 hours, and the second running from 2pm up to 10pm. The remuneration rates for employees shall be based on some factors. Experience is one of the considerations. Moreover, the amount that other organizations are offering will assist in determining the amount to be charged. The president will be in charge of assessing performance of the vice president, as well as other managers. Being a small organization during its initiation, it does not require several employees. However, additional employees will be incorporated as the business expands (Aswathappa 2005, pp. 274). 4.4 Professional advisers A quality management task force will be outsourced. They will periodically monitor the quality of products and delivery, and advice on regulations to be practiced to ensure outstanding quality is achieved. Fantastic Quality Assurance is a company fit to perform this given its considerably cheap charges and trust it has gained with other companies (Project 1966, pp. 234). In addition, the business needs Weston Lawyer Firm to assist in legal matters. Similarly, the competence and low cost of the firm’s services qualifies it as the best provider. 4.5 Insurance and security issues There are expensive equipments in the business that are vulnerable to some risk. Equipment could be stolen or damaged by fire. Workers would also need to be compensated for any injury that happens in their line of duty. This would create extremely high losses. As a result, the business would wish to insure the property with AIG. This company offers insurance at considerably low prices, and the indemnity period is usually short. Moreover, the company would have alarms installed. These would be sensitive to smoke and vulgar. The secure institution environment will facilitate against theft (Insurance Information Institute 2008, pp. 18). 4.6 Business premises The business will have a kitchen, a serving area and some office space. Since the raw materials are not bulky, they can be stored in the kitchen. Office could be shared among the managers, with the president and the vice president having separate offices each. The restaurant will be at the front, with the kitchen being immediately after it for efficiency. The three offices could have a common door leading to them, but each of them is to have another door leading into it. 4.7 Equipment required Equipment Purpose 30 chairs For sitting by the customers as they have drinks 10 tables Placing drinks Espresso Blending coffee 70 coffee cups Serving coffee Kitchen table Placing on drinks for waiters to pick Enhance in preparation by placing on other commodities Kitchen cabinet Will act as a store where raw materials are kept ready to be prepared 8 computers Assist in record keeping and manipulation of data Office furniture To be used by the managers in administrative duties Other utensils Facilitate in preparation and service of drinks 4.8 Production processes When a customer gets to the premises, they are welcomed to seats. A menu on which the products offered and the prices against each item are listed and the waiters would assist in marketing all the products, explaining in details the components and differentiation of each product. Many food products are prepared based on customer order. Wisconsin University Coffee cart, Inc. is no different and as such deems it convenient to prepare coffee by order. The system might be slow due to frequent backlogs on queue system. However, the company policy is to ensure quality is not compromised, and waste levels are greatly maintained at minimum hence fostering low production costs. After ordering, the customer would have to wait for the product depending on the time expected for it to be prepared. The time taken is initially notified to the customer immediately after ordering in order to make them aware, and create patience. However, despite the customer being given a range of the time taken, the minimal time possible is used in the preparation. Chefs will keep a record of everything ordered. Then the customer is served by the waiters when the product is ready. After taking the drink, a customer is given the bill charging for the consumed food. A customer would leave at their own pleasure after paying. Money collected by waiters is then given to the clerks who compare if the amount is correct by comparing with the quantity of each brand of drink prepared from the kitchen record. This will help in making daily journals and other financial statements (Blech 2008, pp. 76). 4.9 Critical risks/contingency plans One of the critical risks involves a low customer turnout during times when the university closes. Moreover, there are expected to be few customers during the extreme summer season, when they would rather prefer soft drinks. However, the coffee cart will offer cold varieties drinks to ensure the number of customers does not drop by far. Another risk likely to be faced is the rising cost of labor. An increasing cost in labor is observed globally. The business will counteract this by transferring the risk to customers to a certain extent, and maximise on the use of machines. Section5. Financial projections 5.1 Basic assumptions and information The business will involve cash payments for individuals. However, it will be selective on any organisation it would involve in as a customer. As a result, there is no expectation of bad debt. In addition, depreciation is assumed at 10% and calculated using the straight line method. The loan is expected to be fully settled during the first year of operation. The president is entitled to a salary, just like other employees. However, his salary is to be lowered during times of low sales. The projections are based on the minimum revenue expected and the maximum costs to be incurred. There are no inflation considerations, considering that this could be directly transferred to the price of products. 5.2 Analysis of financial forecasts Net profit margin is one of the ratios that would be used to analyse the profitability of the business. Given the projections, net profit margin could be calculated from the net profit before tax and sales turnover (Gibson 2012, pp. 324). Net profit margin =  =  = 1.30 This is a high ratio considering this is the first year of operation. However, it might change due to changing trends in the market. The marketing strategies employed would ensure that the ratio does not decline beyond some certain point in order to maintain profitability that would ensure liquidity and continuity of the business. 5.2.1 Sales mix forecast An average of the prices of commodities, cost in production and number to be sold are taken to estimate the sales for the first year. There is expected to be a rising trend in amounts sold as the business gains more popularity. However, is expected a drop during the hot season. January February March April May June July August September October November December Total Number sold 1500 2500 2950 3100 3150 3300 3350 3300 3200 3100 3300 3350 36100 Selling price $4 $4 $4 $4 $4 $4 $4 $4 $4 $4 $4 $4 Total sales income $6000 $10000 $11,800 $12400 $12600 $13200 $13400 $13200 $12800 $12400 %13200 $13400 144,400 Cost of goods per item $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 Total cost of goods sold $3750 $6250 $7375 $7750 $7875 $8285 $8375 $8285 $8000 $7750 $8250 $8385 $90250 5.2.2 Cash flow forecast (projected profit and loss statement) Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Total Income Sales revenue $6000 $10000 $11,800 $12400 $12600 $13200 $13400 $13200 $12800 $12400 $13200 $13400 $144,400 Capital $20,000 Total Income $26,000 $10000 $11,800 $12400 $12600 $13200 $13400 $13200 $12800 $12400 $13200 $13400 $164,400 Expenses Costs of goods sold $3750 $6250 $7375 $7750 $7875 $8285 $8375 $8285 $8000 $7750 $8250 $8385 $90250 Legal/consultancy fees $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1200 Advertising $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $600 Bank fees $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $120 Equipment purchase $15,000 Insurance $2,500 Loan repayment $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4800 Miscellaneous expenses $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3000 Total expenses $22060 $7060 $8185 $8506 $8685 $9095 $9185 $9095 $8810 $8560 $9060 $9195 $117550 Profit/Loss $3940 $2940 $3615 $3840 $3915 $4105 $4215 $4105 $3990 $3840 $4140 $4205 $46850 5.2.3 Owner’s personal expenses Commitment Annual cost in Australian Dollars Food 4800 Health 1200 Clothes 400 Entertainment 2400 Transport 1440 Education 2000 House Payment 0 Car payment 0 Electricity 480 Telephone 400 Personal income tax 10800 Credit card 100 Others 1200 Total 25220 5.2.5 Owner’s personal assets and liabilities Entry Amount in Australian Dollars Assets Own House (Market Value) 850,000 Other real estate (Market Value) 500,000 Motor vehicle (Insured value) 30,000 Cash (on hand and in bank) 10,500 Furniture and personal effects (Insured value) 32,000 Superannuation 90,000 Total Assets 1,512,500 Liabilities Outstanding mortgage 421,500 Personal loans 50,000 Credit cards 0 Current bills 600 Other debts 0 Total Liabilities 172,100 Personal Worth 868,300 The financial analysis has shown that the business will make some profit. In addition, the owner has been observed to have sufficient cash that would ensure his personal liquidity. Consequently, the business is not expected to have strains due to withdrawal of money for personal use. Moreover, personal expenses are below the annual profit earned. The extra amount would be used in expanding the business. Another observation is the entrepreneurial skill observed with the president from the estates, which show he is determined to business generating activities. Others include his competent spending and saving skills. Section6. Implementation timetable 2013 January 2013 Apply for licenses Open a business bank account Prepare letterheads, business cards Send copy of business plan to lending bank, lawyer and quality assurance firm Staff recruitment February 2013 Acquire a loan Equipment acquisition March 2013 Obtain all relevant insurance policies Start direct mail campaign Make a business website April 2013 Start compiling operations manual Incorporate Fantastic Quality Assurance May 2013 Prepare and print promotional posters and brochures June 2013 Review business plan Review efficiency of marketing plan and assess sales Review operations manual August 2013 Attend Small Business Development lessons on managing business growth September 2013 Consult Fantastic Quality Assurance for any amendments required November 2013 Update website December 2013 Write a business plan for 2014 Review and write new marketing plan The business has shown beyond any reasonable doubt that it is profitable and serves the need of community around. There have been several strengths associated with the business, including competence of managers, availability of sufficient capital and the strategic position on which it is situated. Moreover, there are some opportunities observed from the decreasing time people have to prepare their meals, in addition to people working far from where they stay. There have been marketing strategies fit enough to make the business have an increasing trend in sales turnover, providing for expansion. As a result, the business is eventually expected to meet its preset objectives, and have higher targets for the subsequent years. Therefore, the business can be accorded with any assistance as need be for its initiation and running. List of References Aswathappa, K 2005, Human resource and personnel management: text and cases, Tata McGraw-Hill, New Delhi. Blech, ZY 2008, Kosher food production, Wiley Blackwell, Oxford, UK. Cooper, LG & Nakanishi, M 1988, Market-share analysis: evaluating competitive marketing effectiveness, Kluwer Academic Publishers, Boston. Ellis, CW 2005, Management skills for new managers, AMACOM, New York. Ferrell, OC & Hartline, MD 2011, Marketing strategy, South-Western Cengage Learning, Australia. Gibson, CH 2012, Financial Reporting and Analysis + Thomsonone Printed Access Card, South-Western Pub., Australia. Insurance Information Institute 2008, Insuring your business: a small businessowners' guide to insurance, Insurance Information Institute, New York. Project (Ind.) 1966, Application of statistical quality control procedures to production of highway pavement concrete, Purdue University, Lafayette. Rogers, SC 2001, Marketing strategies, tactics, and techniques: A handbook for practitioners, Quorum Books, Westport, Conn. Shankar, V & Carpenter, GS 2012, Handbook of marketing strategy, Elgar, Cheltenham. Read More