Euromonitor International - Example

Business Plan Name Name of Institution Table of Contents 1EXECUTIVE SUMMARY 3 2THE BUSINESS 4 2.1Background and Description of the Business Concept 4 2.2Vision Statement 6 2.3Mission Statement 6 2.4Objectives 6 3INDUSTRY ANALYSIS 6 3.1Trends and Characteristics 6 3.2Gaps in the Market 8 4THE MARKET 9 4.1Market Description 9 4.2Customer Segments 9 4.3Competitors 10 4.4SWOT 10 4.5Marketing Strategies and Differentiation 11 5THE ORGANISATION 14 5.1Legal and Organisational Structure 14 5.2HRM and Key Personnel 15 5.3Key Suppliers 16 6THE FINANCIALS 18 6.1Start Up Costs 18 6.2Sales Forecast and Break Even 19 6.3Cash Flow Forecasts 20 6.4Pro Forma Income Statement 22 6.6Balance Sheet 23 6.7Critical Risks 25 6.8Assumptions 25 7APPENDICES 28 7.1Owners Resume 28 Business Plan 1 EXECUTIVE SUMMARY Café Hideaway will be a differentiated café that will serve the best blended and single source coffee in Adelaide. The business will compete on quality and innovation instead of price. Coffee will be served in smaller cups, and the chef will specialise on a limited menu that is easy to select from. There will be “Specials of the Day” with loyal customers being invited to coffee tasting sessions that will be similar to wine tasting sessions. Pricing will be value based, and residents of the CBD will have the opportunity to get deliveries. When it comes to the market, Adelaide’s CBD will have a resident population of 23,566 in 2016 and 28,080 by 2021 due to young professionals and empty nesters preferring to live in the city. The population of Greater Adelaide is also on an upward trend. The barriers to entry to Australia’s café and bar market are low, there is a strong coffee culture, and coffee enthusiasts prefer independent establishments to chained cafés. The target market segment will be young professionals and empty nesters who are from the middle and upper class and are highly educated. The internet, social media, brochures, sales promotion, and word of mouth will be the preferred methods of promotion. The café will operate as a partnership of three members. The general manager is Ms Zhang, and she will bring a wealth of knowledge in entrepreneurship and managing hospitality organisations. Mr Smith, an experienced barista, will oversee the Front of House and day to day operations of the business. Ms Shah will be in charge of marketing. The start-up costs will amount to 270,750. The partners will contribute 150,000 in capital from personal savings. The business will get a loan of $120750 from a retail bank and repay the loan over a three-year period. The projections are that the business will make $51,468 in net profit in the first year, $62,433 in the second year, and $93,650 in the third year. 2 THE BUSINESS 2.1 Background and Description of the Business Concept Background Café Hideaway is a café that focuses on serving non-alcoholic beverages and food. Unlike typical cafés, it will be uncommon for the clients to only order drinks as there will be a limited menu of snacks and meals that are easy to pick and consume on the go. The concept behind the café will be its small size and limited seating space that will ensure that clients do not get mass-produced beverages as is the norm in larger chains. Additionally, the café will focus on selling coffee in a smaller cup owing to the trend away from large milky coffees. This will allow clients to experience the uniqueness of each serving of single origin or blended coffee. The selling point of the business concept will be its small size in the middle of Adelaide that will allow personalized services to a loyal customer base. The smaller, high-quality coffees will also attract coffee purists who reside and work in Adelaide’s central business district. Location The café will be located on King William Street in Adelaide’s central business district. The CBD is selected because of the ongoing trend where young professionals are opting to stay in the city instead of the suburbs. Additionally, there is the trend where empty nesters are abandoning their large suburban homes and downsizing to the significantly lower maintenance life in the city (Urban Developer 2015). The location will be strategic because it will serve those who work in the CBD during the day as well as the increasing number of people who are opting to live in the city. The size of the café will be approximately 70 square meters to cater to the clients who will walk in or take away the drinks or meals. Products Café Hideaway’s main product will be the great coffee that will be offered in smaller cups. The café will offer a wide range of coffee blends as well as single origin coffee from nations like Ethiopia, Columbia, Honduras, and Tanzania. The café will also attempt to identify the specific farms where the single origin coffee will originate. This will be done to guarantee that the coffee is produced in a certified farm that adheres to responsible practices in areas such as the treatment of employees and respect for the environment. It is worth mentioning that the café will also offer other beverages apart from coffee. These will include afternoon teas that will attract a wider client base. Menu Café Hideaway will offer a limited selection of meals that will be easy to pick and consume. The rationale will be to offer a small selection that matches or surpasses the quality offered at full-service restaurants. The restaurants will also offer daily specials that will offer meals that are not included in the main menu. The meals will expand the café’s hours of trade beyond breakfast, brunch, and lunch and allow it to earn significant amounts from the evening meal segment. 2.2 Vision Statement Café Hideaway seeks to be the cosmopolitan and social café in Adelaide where the young and old individuals from different cultures can meet and create lasting relationships over quality beverages and meals. 2.3 Mission Statement Café Hideaway’s mission is to guarantee that every customer receives prompt, friendly, and professional service at a comfortable and clean environment. The café will offer fresh, delicious beverages and meals that are nutritional and prepared using the best ingredients. 2.4 Objectives Café Hideaway’s objective is to break even and generate $50,000 in net profits within the first year of operations. 3 INDUSTRY ANALYSIS 3.1 Trends and Characteristics Australia’s coffee market is worth $4.3 billion, and it is expected to grow at a rate of 3.2% over the five years starting from 2014 (Robb 2014). A unique characteristic of the industry is the fact that consumers prefer independent cafés and coffee shops over chained establishments. For instance, the US chain Starbucks faced a lot of challenges operating in Australia and had to be sold off. The largest players in the industry include Gloria Jeans, Michel’s Patisserie, and the Coffee Club, with none of them controlling more than 5% of the segment of the hospitality industry (Robb 2014). Other features of the industry are low barriers to entry with the over 6700 businesses in the coffee industry generating over $250 million in profits (Heffernan 2015). It is worth mentioning that the independent culture is concentrated in Sydney and Melbourne (Robb 2014). Café Hideaway seeks to take advantage of the low entry barriers and to take part in the development of a coffee culture that is as strong as the one found in Melbourne and Sydney. The early entry should allow the business to gain a competitive advantage and meet its objective of breaking even and generating profits within the first year of operations. The café and coffee shop market in Australia has responded positively and grown significantly over the past five years as a direct result of Australia’s lively coffee culture (IBISWorld 2015). The lively culture has allowed cafés to emerge from the global financial crisis and generate higher revenues than they had before the crisis. IBISWorld also notes that the trend is expected to continue over the next few years as the strong coffee culture will be boosted by rising incomes in the Australian economy and positive consumer sentiment. A separate survey by Euromonitor on cafés and bars in Australia also indicated that businesses are investing in their premises and expanding the number of outlets as a direct result of record growth rates. Euromonitor (2015) also notes that the café market is yet to be fully saturated with the number of cafés and bars increasing by 2% in 2014. Additionally, there is an ongoing trend where new formats and concepts are being introduced by businesses that seek to be differentiated from competitors. Therefore, a new business must find its niche and excel in being the best in that area of the market. An additional trend that is bound to affect Café Hideaway is Australia’s increasing preference for healthy foods. Consumers have become more aware of the dangers associated with unhealthy lifestyles that are characterised by the consumption of fast foods and inadequate physical activity. There is an ongoing trend where consumers utilise technology to monitor their intake of calories. This ongoing trend will have a direct impact on the café. As stated, coffee will be one of the key products offered at Café Hideaway. The choice of serving coffee in smaller cups can be attributed to a desire to cater to health-conscious clients who are moving away from the larger lattes. Additionally, the smaller serving will allow clients to experience the distinct characteristics of the blended and single origin coffees on offer. 3.2 Gaps in the Market Adelaide has a large number of cafés with most of them concentrated on the Northern end of the CBD. The Southern area of the CBD between Victoria Square and the South Terrace has five cafés that are close to King William Street. These are Funk Coffee, B at King Café, Wave Gourmet, Out of The Blue, and Its Simply Delicious. There is ongoing residential development in the Southern section of King William Street with an example being Vue on King William’s, a 26 storey building with 205 apartments that offers two 180m2 retail spaces on the ground floor (Vue on King William 2015). The low barriers to entry, strong coffee culture, preference for independent cafés, an underserved section of Adelaide’s CBD, and the increasing number of residents in the CBD point towards the existence of a gap in the market that can be exploited by Café Hideaway. The business will specialise in providing the highest-quality beverages and a limited menu to attract both the professionals and residents of the city’s CBD. 4 THE MARKET 4.1 Market Description The industry has shown that the Café segment of the hospitality industry in Australia is experiencing a period of growth with the major cities of Melbourne and Sydney being the leaders. There is also the general trend where consumers prefer independent establishments and healthier meals. The business intends to offer a unique business concept to Greater Adelaide, an area with a population of 1.3 million as of June 2014. There was an increase of 13,300 people in Greater Adelaide in 2014, with the centre of the population moving towards the CBD in the ten years to 2014 (ABS 2015). When it comes to the population living in the city, the Adelaide City Council (2015) notes that there were 10,781 dwellings in the city with the population being 20,920 in 2011. Forecasts indicate that the population will rise to 23,566 in 2016 and 28,080 in 2021. The number of dwellings will also increase to 12,242 and 14,838 in 2016 and 2021 respectively (Adelaide City Council 2015). These trends illustrate that the CBD is a prime location for business owing to the increasing number of residents, and those travel the Greater Adelaide to work in the city. 4.2 Customer Segments Geographic and demographic segmentation will be used to identify the section of the population that is likely to be clients. Geographic segmentation has led to the selection of a location that is within the city. The rationale for selecting the city is to help in targeting the working class segment that might need a quick meal before, during, and after work. Demographic segmentation will be used to select customer segments based on income, age, and education. First, the café will target educated individuals from the middle and upper classes. When it comes to age, the appropriate segments will be young professionals between the ages of 20 and 35 who are yet to start families. The other segment that will be targeted is empty nesters who will be between the ages of 45 to 70. There is an ongoing trend where these segments prefer living within the city (The Urban Developer 2015). This means that the café will serve a customer segment that is expected to grow in the coming years. 4.3 Competitors The café will face considerable competition from different types of hospitality organisations within the CBD. There are numerous Cafés within the city, with most of them concentrated in the northern section of the city. The location of the café will allow it to carve its own niche that should lead to the acquisition of a loyal client base. 4.4 SWOT Strengths Low barriers to entry Increasing population in the city Strategic location of the café Experienced staff and management Weaknesses High rent in the prime apartment High levels of competition Low season between June and August Opportunities Increased residential development Being responsive to the trend towards healthier meals Developing multiple locations Easy Threats New entrants in the same location with similar concept Increased operational costs Changing consumer trends Economic downturn 4.5 Marketing Strategies and Differentiation Price The pricing strategy that will be used will be based on the value of bundle that prospective clients will get. Given that profitability is the key objective of the small business, the pricing strategy will be designed to facilitate high returns. According to Euromonitor (2015), the spend-per-transaction for cafés and bars rose significantly from $8.87 to 9.35 as a result of value-added food servings. The business will offer exclusive single origin and blended coffees that will attract high pricing. The differentiated nature of the products will allow Café Hideaway to charge premium pricing when the smaller size of the coffee servings is taken into account. The introductory pricing will be $6 for a cup of coffee while the average meal will retail at $12. The café expects beverages to account for 60% of all sales while meals will account for 40% of sales. This will result in a weighted average selling price of $9.6, which is in the range of the average spend per transaction for cafés and bars. Product According to Katz & Green (2013, p. 290), a business that competes on quality and innovation instead of price will have greater growth than one which competes on price. As such, Café Hideaway will compete with the other cafés in Adelaide’s CBD on the basis of innovative products. First, the business will have a simple and intimate design that will allow clients to be comfortable. When it comes to service, the business will take the initiative of sourcing some of the best blended and single origin coffees that are available. These will be served in smaller cups to allow customers to experience the unique flavours of each type of coffee that will be available. Furthermore, the smaller serving will cater to the customers who will be health-conscious. According to Euromonitor (2015), cafés and bars that offer a mixture of drinks and high-quality food are more likely to be successful as they will attract sophisticated clients. The café will employ an experienced chef who will focus on a limited menu thus allowing the café to have longer hours of trade. The limited menu will allow the café to prepare food whose quality exceeds full-service restaurants. The café will offer ‘Specials of the Day’ on an occasional basis. An additional product that will be on offer is delivery services to the increasing number of people living in the CBD. Finally, the café will organize special sessions where some of the loyal customers will have the chance to taste select coffees. Place The café will serve a target market that lives or works in Adelaide’s CBD. Ongoing development in the southern section of the city coupled with the fewer cafés in the area has led to the decision to locate the restaurant in the Southern part of King William Street. Promotion An interactive website, social media, and brochures will be the primary method of advertising. The business will also engage in sales promotion through scheduled tasting events that will target some of the loyal customers who are coffee enthusiasts. Differentiation The business will be differentiated from the competitors in Adelaide in a number of ways. First, the small size of the restaurant, the limited menu, and the smaller beverage servings will be features that are not common in Adelaide. The pricing will be premium, a feature that will indicate that the café offers exceptional quality to an exclusive niche market. The café will also differentiate itself in terms of promotion by scheduling special nights where clients can taste some unique single source and blended coffees. 5 THE ORGANISATION 5.1 Legal and Organisational Structure The business will operate as a partnership that will be made up of three active members. A comprehensive partnership agreement will be signed to protect the interests of all partners as well as the business. Ms Zhang will be the general manager and will oversee all financial aspects of the business. Mr Smith, an experienced barista, will manage the Front of House while Ms Shah will be in charge of marketing. When it comes to ownership, Ms Zhang will own 45% with Mr Smith holding 30% and Ms Shah 25%. The café intends to begin operations in September 2016. Café Hideaway Organisational Structure 5.2 HRM and Key Personnel Recruitment and Training The business will function as a partnership with the three partners having different levels of involvement in the daily management of the business. The Front of House will be managed by Mr Smith, who is a barista with ten years’ experience. Mr Smith will be assisted by an assistant barista, a chef who will be in charge of the limited menu and daily specials, and two floor staff. The chef and assistant barista will have a minimum of three years’ experience preferably in Melbourne or Sydney. The floor staff will not be subject to any minimum requirements but will need to undergo comprehensive training from the experienced owners and senior staff. Compensation and Benefits Mr Smith will be the only partner who will be entitled to a salary owing to his prominent role. The barista, chef, and floor staff will be eligible for competitive compensation and benefits that will include bonuses and insurance cover for motivation. Health and Safety The café will adhere to all safety standards set by regulatory agencies. Key Personnel There will be one Front of House Manager who will also be the Head Chef. The café will employ an assistant barista and a Head Chef. The two floor staff will work on a part-time basis and handle one of the two daily shifts. 5.3 Key Suppliers Point of Sale (POS) System Supplier: Bluefrog POS Contact Email: sales@bluefrogpos.com.au Address: 76 McLaren Street, Adelaide, SA, 5000. Website: http://bluefrogpos.com.au/about/ Coffee Machines Supplier: Complete Café Services Contact Email: tech@cafeservices.com.au Address: 45 Charles St, Unley, SA, 5061. Website: http://www.cafeservices.com.au/ Catering Equipment Supplier: Food Equipment Distributors Contact Email: sasales@foodequipment.com.au Address: 4/9-11 William St, Mile End South Australia, 5031. Website: http://www.foodequipment.com.au/adelaide-store/ 6 THE FINANCIALS 6.1 Start Up Costs The three partners will raise $150,000 in Capital from personal savings. The business will take a loan worth $120,750 that will be repaid over three years. START UP COST COST ($) Start up Expenses Business Name 150 Licences and Permits 2500 Wages 20290 Rent 60000 Premium 30000 Graphic Design and Website Design 1500 Stock 15000 Utilities 2300 131740 Equipment Point of Sale System and Computers 15000 Coffee Machines 22000 Catering Equipment 40000 Furniture 18000 Phone 500 Office Supplies 2000 97500 Other Costs Insurance 2500 Operating Cash 34,710 Marketing and Advertising 3000 Consultation Fees 1300 41510 TOTAL START UP COST 270750 Owner Capital Contribution 150000 Loan Requirement 120750 6.2 Sales Forecast and Break Even The sales price per unit of beverage and food will be $6 and $12 respectively with the café expecting 60% of sales to be beverages and 40% food. The weighted average selling price will be $9.6, and the average variable cost $3.36. The assumption is that the variable cost will be 35% of sales. The total fixed costs will be $9650, resulting in a BEP of 1547 units. Food Beverage Sales Price Per Unit $6 $12 Weighted Average Selling Price = (6*0.4)+(12*0.6)=9.6 Variable Cost Per Unit (Assumed 35% of sales) $2.1 $4.2 Weighted Average Variable Cost = (2.1*0.4)+(4.2*0.6)=3.36 Ratio 40% 60% PROJECTED SALES Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Patronage 55% 60% 65% 65% 65% 68% 75% 70% 75% 55% 50% 58% UNITS Food 2228 2493 2621 2750 2700 2840 3022 2918 3046 2600 2500 2731 Beverage 2971 3235 3494 3667 3600 3787 4030 3890 4062 3467 3334 3641 $ Food 26736 29912 31446 33000 32400 34085 36268 35012 36557 31200 30003 32772 Beverage 17824 19408 20964 22000 21600 22724 24179 23341 24372 20800 20002 21848 Total 44560 48520 52410 55000 54000 56809 60447 58353 60929 52000 50005 54620 FIXED COSTS Administrative and General 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 Depreciation 300 300 300 300 300 300 300 300 300 300 300 300 EFTPOS 50 50 50 50 50 50 50 50 50 50 50 50 Interest 300 300 300 300 300 300 300 300 300 300 300 300 Total Fixed Costs 9650 9650 9650 9650 9650 9650 9650 9650 9650 9650 9650 9650 Break Even Point (Total Units) 1547 1547 1547 1547 1547 1547 1547 1547 1547 1547 1547 1547 Food (40%) 619 619 619 619 619 619 619 619 619 619 619 619 Beverage (60%) 928 928 928 928 928 928 928 928 928 928 928 928 Break Even Point (Sales) 12996 12996 12996 12996 12996 12996 12996 12996 12996 12996 12996 12996 Food 7428 7428 7428 7428 7428 7428 7428 7428 7428 7428 7428 7428 Beverage 5568 5568 5568 5568 5568 5568 5568 5568 5568 5568 5568 5568 6.3 Cash Flow Forecasts FORECASTED CASH FLOW STATEMENT YEAR 1 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 OPERATING ACTIVITIES INFLOWS Receipts from Customers 44560 48520 52410 55000 54000 56809 60447 58353 60929 52000 50005 54620 OUTFLOWS Payment to Suppliers 15000 14800 15000 16000 14000 13520 15800 16582 17500 17000 12000 16000 Payment to Employees 20290 20290 20290 20290 20290 20290 20290 20290 20290 20290 20290 20290 Payment of Other Variable Costs 4500 3605 3505 3923 2789 2489 2857 2951 2989 2989 3143 2935 Payment to Tax Office - 217.5 1369.5 1721.1 2346.3 3408 3735 2850 3360 807.3 1626.6 1903.5 Administrative Payments 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 Rent Payments 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 EFTPOS Payments 50 50 50 50 50 50 50 50 50 50 50 50 Payment of Interest 300 300 300 300 300 300 300 300 300 300 300 300 Total Outflows 49140 48262.5 49514.5 51284.1 48775.3 49057 52032 52023 53489 50436.3 46409.6 50478.5 NET OPERATING CASHFLOWS -4580 257.5 2895.5 3715.9 5224.7 7752 8415 6330 7440 1563.7 3595.4 4141.5 FINANCING ACTIVITIES OUTFLOWS Loan Principle Repayment 3354 3354 3354 3354 3354 3354 3354 3354 3354 3354 3354 3354 NET FINANCING ACTIVITIES 3354 3354 3354 3354 3354 3354 3354 3354 3354 3354 3354 3354 NET INCREASE (DECREASE) IN CASH -7934 -3096.5 -458.5 361.9 1870.7 4398 5061 2976 4086 -1790.3 241.4 787.5 CASH AT BEGINNING 34710 26776 23679.5 23221 23582.9 25453.6 29851.6 34912.6 37888.6 41974.6 40184.3 40425.7 CASH AT END 26776 23679.5 23221 23582.9 25453.6 29851.6 34912.6 37888.6 41974.6 40184.3 40425.7 41213.2 FORECASTED CASH FLOW STATEMENT YEARS 1-3 Year 1 Year 2 Year3 OPERATING ACTIVITIES INFLOWS Receipts from Customers 647653 778143 1167214.5 OUTFLOWS Payment to Suppliers 183202 219842.4 329763.6 Payment to Employees 243480 292176 438264 Payment of Other Variable Costs 38675 46410 69615 Payment to Tax Office 23344.8 28013.76 42020.64 Administrative Payments 48000 57600 86400 Rent Payments 60000 72000 108000 EFTPOS Payments 600 720 1080 Payment of Interest 3600 4320 6480 Total Outflows 600901.8 721082.16 1081623.24 NET OPERATING CASHFLOWS 46751.2 57060.84 85591.26 FINANCING ACTIVITIES OUTFLOWS Loan Principle Repayment 40248 40248 40248 NET FINANCING ACTIVITIES 40248 40248 40248 NET INCREASE (DECREASE) IN CASH 6503.2 16812.84 45343.26 CASH AT BEGINNING 34710 41213.2 58026.04 CASH AT END 41213.2 58026.04 103369.3 6.4 Pro Forma Income Statement 6.5 PRO FORMA INCOME STATEMENT Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 REVENUE (Food and Beverage) 44560 48520 52410 55000 54000 56809 60447 58353 60929 52000 50005 54620 BREAKDOWN Food 26736 29912 31446 33000 32400 34085 36268 35012 36557 31200 30003 32772 Beverage 17824 19408 20964 22000 21600 22724 24179 23341 24372 20800 20002 21848 less Cost of Goods Sold 15000 14800 15000 16000 14000 13520 15800 16582 17500 17000 12000 16000 Total 29560 33720 37410 39000 40000 43289 44647 41771 43429 35000 38005 38620 Other Revenue Discount Received 590 550 600 600 550 500 600 620 700 620 500 600 Total 590 550 600 600 550 500 600 620 700 620 500 600 Gross Profit 30150 34270 38010 39600 40550 43789 45247 42391 44129 35260 38505 39220 EXPENSES Wages Owner (Front of House Manager) 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 Employees 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 Superannuation 790 790 790 790 790 790 790 790 790 790 790 790 Total Wage Expenses 20290 20290 20290 20290 20290 20290 20290 20290 20290 20290 20290 20290 Utilities 1500 1420 1353 1623 989 1000 1100 1256 1235 1621 1723 1532 Marketing 1500 985 752 1200 800 500 625 562 522 300 352 214 Rates and Insurance 1500 1200 1400 1100 1000 989 1132 1133 1232 1068 1068 1189 Total Variable Costs 4500 3605 3505 3923 2789 2489 2857 2951 2989 2989 3143 2935 Administrative and General 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 Depreciation 300 300 300 300 300 300 300 300 300 300 300 300 EFTPOS 50 50 50 50 50 50 50 50 50 50 50 50 Interest 300 300 300 300 300 300 300 300 300 300 300 300 Total Fixed Costs 9650 9650 9650 9650 9650 9650 9650 9650 9650 9650 9650 9650 Total Expenses 34440 33545 33445 33863 32729 32429 32797 32891 32929 32929 33083 32875 Net Profit Before Tax -4290 725 4565 5737 7821 11360 12450 9500 11200 2691 5422 6345 Tax Payable (Refundable) -1287 217.5 1369.5 1721.1 2346.3 3408 3735 2850 3360 807.3 1626.6 1903.5 Net Profit After Tax -3003 507.5 3195.5 4015.9 5474.7 7952 8715 6650 7840 1883.7 3795.4 4441.5 6.6 Balance Sheet FORECASTED BALANCE SHEET AS ENDED Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 CURRENT Cash 42643 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 Inventory Food & Beverage 42643 14800 15000 16000 14000 13520 15800 16582 17500 17000 12000 16000 Consumables 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 Total Current Assets 87286 59444 59675 60705 58736 58287 60595 61408 62356 61887 56917 60948 NON-CURRENT Catering Equipment 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 40000 Point of Sale System and Computers 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 Coffee Machines 22000 22000 22000 22000 22000 22000 22000 22000 22000 22000 22000 22000 Furniture 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 Total equipment 95000 95000 95000 95000 95000 95000 95000 95000 95000 95000 95000 95000 less accumulated depreciation 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300 3600 Total Non-Current Assets 94700 94400 94100 93800 93500 93200 92900 92600 92300 92000 91700 91400 Other Assets 82406.8 110705 110108 106844 107218 107090 102491 96558.6 93746.5 85205 89032.5 82593.5 Total Assets 264393 264549 263883 261349 259454 258577 255986 250567 248402 239092 237650 234941 LIABILITIES Loan 120750 120750 120750 120750 120750 120750 120750 120750 120750 120750 120750 120750 Less accumulated principle payments 3354.17 6708.34 10062.5 13416.7 16770.9 20125 23479.2 26833.4 30187.5 33541.7 36895.9 40250 Net Loan 117396 114042 110687 107333 103979 100625 97270.8 93916.6 90562.5 87208.3 83854.1 80500 OWNER'S EQUITY Capital 150000 150000 150000 150000 150000 150000 150000 150000 150000 150000 150000 150000 add profit (loss) -3003 507.5 3195.5 4015.9 5474.7 7952 8715 6650 7840 1883.7 3795.4 4441.5 net Owner's Equity 146997 150508 153196 154016 155475 157952 158715 156650 157840 151884 153795 154442 Total Equity & Liabilities 264393 264549 263883 261349 259454 258577 255986 250567 248402 239092 237650 234941 FORECASTED BALANCE SHEET AS ENDED FOR YEAR 1-3 CURRENT Year 1 Year 2 Year 3 Cash 42948 51537.6 77306.4 Inventory Food & Beverage 16000 19200 28800 Consumables 2000 2400 3600 Total Current Assets 60948 73137.6 109706 NON-CURRENT Catering Equipment 40000 36960 34151 Point of Sale System and Computers 15000 13860 12806.6 Coffee Machines 22000 20328 18783.1 Furniture 18000 16632 15368 Total equipment 95000 87780 81108.7 less accumulated depreciation 3600 7200 10800 Total Non-Current Assets 91400 80580 70308.7 Other Assets 129620 148966 158635 Total Assets 281968 302684 338650 LIABILITIES Loan 120750 120750 120750 Less accumulated principle payments 40250 80500 120750 Net Loan 80500 40250 0 OWNER'S EQUITY Capital 150000 200000 245000 add profit (loss) 51468.2 62433.7 93650.1 net Owner's Equity 201468 262434 338650 Total Equity & Liabilities 281968 302684 338650 6.7 Critical Risks Risk Likelihood Impact Strategy Customers Likely High Reward loyal clients with free samples Offer prompt and friendly services Source exclusive beverages Seek feedback from loyal clients Employees Unlikely High Draft and enforce a code of conduct Provide adequate compensation and benefits Securing the most valuable assets Technology Risk High High Purchase computer and POS equipment from vendors that offer warranties and after sales services Use the best available software and secure the café website with firewalls and encryption. Debts Likely Low Proactively inspect financial statements on a regular basis Physical Risk Likely Low Get insurance cover Install safety systems Provide training on how to handle different emergencies Employees will follow health and safety regulations strictly 6.8 Assumptions Interest rates will remain constant Cost of inventory will not increase by over 15% per year The economy will remain strong without significant recession There will be more residential developments in Adelaide’s CBD The café will not face a competitor that offers similar products in the Southern Section of Adelaide’s CBD. References A vue to city living, 2015, Vue on King William, viewed Adelaide’s Tallest Residential Building Tops Out, 2015, The Urban Developer, viewed 1 November 2015 Cafés/Bars in Australia, 2015, Euromonitor International, viewed City of Adelaide: Population, households and dwellings, 2015, Adelaide City Council, viewed < http://forecast.id.com.au/adelaide/Population-households-dwellings> Coffee Shops in Australia: Market Research Report, 2015, IBISWorld, viewed Heffernan, M, 2015, Booming coffee market moves into consolidation phase, The Sydney Morning Herald, viewed < http://www.smh.com.au/business/retail/booming-coffee-market-moves-into-consolidation-phase-20150317-1m1g1p.html> Katz, JA, & Green, RP, 2013, Entrepreneurial small business, Fourth Edition. McGraw-Hill/Irwin. Robb, K, 2014, Aussies flock to local baristas as big coffee-chains struggle to grind out market share, Smart Company, viewed < http://www.smartcompany.com.au/growth/43846-aussies-flock-to-local-baristas-as-big-coffee-chains-struggle-to-grind-out-market-share.html> South Australia State Summary, 2015, Australian Bureau of Statistics, viewed 7 APPENDICES 7.1 Owners Resume MR John Smith 54 Franklin St, Adelaide, SA Phone: +61 8 3544 5678. Email: smithjk3@email.com Professional Goal I am a professional barista who wants to grow my extensive skills and gain experience in owning a hospitality organisation. Education January 2003: Australian Barista School, Brisbane April 2001: Brisbane State High School Skills Espresso blends, POS systems, Coffee Brewing, Customer Service, Inventory Management, MS Office, Cashiering. Employment Experience 2004 – 2010: Barista, Bell Jar Café, Kangaroo Point, Brisbane. Demonstrated Skills: Customer Service POS Systems Inventory Management Opening and Closing Duties 2010 – 2015: Head Barista, Vivo Café, Sydney. Demonstrated Skills Leadership Mastery of coffee bean features and types Introduction of innovative concepts Menu setting Interests Entrepreneurship, travelling, cricket. Referees Mr Walter Reid Owner, Bell Jar Café, Brisbane Tel 60 2 1545 5686 Email Wreid@belljar.com.au Ms Nancy Howard, Manager, Vivo Café Sydney Tel: 60 4 3546 5684, email: gm@vivocafe.com.au Ms Samantha Shah 22 Rundle Rd, Adelaide, SA. Tel: 61 8 5654 5897. Email: shahs168@mail.com Professional Goal To use my skills and knowledge to add value to a reputable organisation. To develop my skills through entrepreneurial ventures. Education 2015: UniSA Business School, MBA. 2011: The University of South Australia, Bachelor of Business (Marketing) Skills Management of Product marketing cycle, customer service, MS Office, Market Research, Analytical presentation. Employment Experience 2015: News Corp Australia Demonstrated Skills Product Positioning Design of brand marketing projects Customer relationship 2011: South Australia Brewing Company Demonstrated Skills Market research Social media management Analytical Presentation Skills Interests Reading, baking, gardening. Referees Mr Daniel Cameron Marketing Manager, News Corp Australia Tel 61 6 5263 8946, email: Camerondan@yahoo.com Mrs Taylor Holden Marketing Manager, South Australia Brewing Company Tel 61 6 5482 2136, email: tlholden@email.com Read More