Expanding Your Business - the Coffee Shop - Essay Example

Expanding Your Business November 11, Introduction Setting up a coffee shop entails implementing the marketing mix principles. The topic centers on setting up a second coffee shop location. The discussion includes guerrilla marketing, with emphasis on the marketing mix principles, precipitating to a higher demand for the Gosfield coffee shop products. Outline a Financial Plan for Your Small Business The company, The Coffee Shop, will cater to the coffee needs of people living within the Fitzrovia district and neighboring communities. The targeted communities include coffee lovers from Mayfair community, Covent Garden community, Bloomsbury community, and Regent’s Park Estate community (Britten, 2008). Further, the company, The Coffee Shop, pricing for breakfast, lunch, and diner dish is pegged at an average of £10 per meal, including coffee. Coffee and other beverage prices include £ 2.60 for Espresso, £ 2.20 for Americano, £2.20 for Macciato, £2.20 for Cortado, £2.65 for Flat White, £ 2.65 for Latte, £ 2.60 for Cappuccino, £ 2.90 for Mocha, £ 290 for Hot Chocolate, £ 2.90 for Iced tea, and £ 2.90 for Iced Chocolate. The English breakfast prices include £ 7 bacon sandwich, £ 3.70 poached egg, £ 8 for has browns, £ 11 full breakfast, £ 7 Scottish smoked salmon and scrambled egg, and £ 10 Omelette meal. The breakfast menu includes £ 3 porridge, £ 4 strawberries and pears, £4 fruit mix breakfast, £ 2.50 grapefruit, and £ toasted bread £ 1.70. The customers can also savor the £ 12 hamburger or the stomach filling Longhorn Beef hamburger for £ 19. Furthermore, the average cost of each menu choice is only 30 percent of the total menu price. The remaining 70 percent represents the amount allocated to paying for the expenses of running the business. The expenses include amount paid for electricity, water, and telephone expenses. The expenses also include the amount paid for the salaries of the coffee shop crew of five persons (Warren, 2009). Income Statement The company is expected to generate the following operating data for each month. Appendix A shows the company’s one month income statement. The company is expected to borrow funds to realize the dream of setting up a residential coffee shop. The amount of loan is twenty percent of the total business capital. With a total business investment of £ 60,000 pounds, the amount to be loaned is only £ 20,000. Consequently, the company will pay £ 1,000 interest per year for the use of the loan amount. The amount £ 60,000 will be used to prepare the residential unit for the coffee business. The total investment is composed of £ 40,000 investment by the sole proprietor and £ 20,000 loan amount (Noreen, 2008). Balance sheet The balance sheet shows that the company uses the loan and the owner’s investment to purchase the coffee shop assets. The coffee shop assets include the coffee making equipments, chairs, tables, and other expenses needed to make the coffee shop a very comfortable home away from home venue (Hill, 2011). Shown on Appendix B is the company’s projected one month balance sheet. Development of a Guerrilla Marketing Strategy for your Small Business The business will pay for advertisements in the local Fitzrovia district newspapers. The company will distribute brochures to offices and residences within the Fitzrovia district and the nearby communities. The company will offer a 10 percent discount for group customers of five or more members. The advertising scheme is meant to persuade the prospective customers from the business districts, homes, and other work establishments to try the excellent quality service and products of the company. The newspaper advertisements contain cutout coupons that offer a ten percent discount to the newspaper readers. The store will also offer 10 percent discount to the store’s customers during off peak hours. Off peak hours include those hours when the number of customer visits is low. The above guerrilla marketing strategy will ensure easy encroachment into the current coffee stores’ market. Consequently, the optimistically projects that many of the competing Fitzrovia Coffee store clients will increasingly detour towards the direction of my company’s coffee shop. The prices discussed on the above outline of a financial plan for your small business indicates that new company’s coffee and menu prices are pegged on the current prices of the other Fitzrovia competitors’ prices. The financial plan shows the different selling prices of the company’s many coffee shop food choices. After complying with the price and product aspects of the marketing mix, the company complies with the place aspect of the marketing mix. The coffee shop is strategically located in an area where the prospective clients can easily buy a cup of coffee. The residents do not need to go far to gulp down a cup of The Coffee Shop brand coffee. In the same way, the current and prospective customers of the Fitzrovia district coffee competitors can easily take a turn towards the peaceful, traffic free Gosfield Street to quietly tinker with their current and future business and personal London plans. The new location will entice the competitor shops’ clients to try a new coffee location. With the guerrilla style marketing strategy, the Fitzrovia district workers, managers, transients, and residents will surely remember and return to the new Gosfield street alternative coffee shop location. The Promotion aspect of the marketing mix makes the Fitzrovia and nearby communities become aware of an alternative coffee shop. When the customers arrive within the Gosfield store, the service crew members are trained and eager to pamper the coffee customers with fast service, quality coffee and other menu choices, and offer discounts to group visits. With the company’s cozy home away from home theme, the prospective customers will easily feel at ease as they converse with business associates, fellow workers, friends, loved ones, and other acquaintances (Buttle, 2009). Discussion of the Most Appropriate Location for a Second Store The Coffee Shop is strategic location is no. 47 Gosfield Street, London, W1W 7QJ. It is a residential part of London. The location the most appropriate for the second store, in terms of reducing the risk of not generating enough customers (Colliers, 2009). This allows lower coffee shop facility expenses. The store will open from Monday to Friday from 8:00 am to 7:00 p.m. The store will open Monday to Sunday. This is within the Fitzrovia business district. Fitzrovia is located in Central London, near London’s West End. The place includes residential communities, business establishments, retail outlets, school districts, and healthcare facilities. The community is visited by people from all walks of life. May of the low income, middle income, and high income families live in, pass through, or visit the famed Fitzrovia district. The sprouting of many coffee shops in Fitzrovia is a strong signal that setting up another coffee shop is a very profitable venture. The current long list of coffee shops lining the Fitzrovia business district includes famous local and imported brands. The competitors within the Fitzrovia community include Lantana café, Kaffeeine coffee shop, Tapped and Packed Café, Café Nero, Sergeant Pepper Café, Bon Appetit Café, and Starbucks coffee. Within the residential district, the residents will be able to enjoy their right to savor the taste of the coffee shop specialties without having to hustle through the traffic of Titchfield Street, Portland Street, Cavendish Street, or Oxford Street. Consequently, the residents will save on gasoline expenses, transportation expenses and time (Colliers, 2009). In addition, the Gosfield street coffee shop’s residential location will succeed. The business owner will implement the four P’s of marketing to ensure the business will reach its goal of being one of the top coffee shop choices in the Fitzrovia district. First the company will sell a quality product. The quality product includes coffee choices that will rival the best coffee choices of the Fitzrovia district coffee shop competitors. The menu discussed in the above section shows that the coffee choices are the most sought coffee types, in terms of customer purchase alternatives (Drury, 2007). According to my personal interviews with people within the Fitzrovia district, they prioritize their vacant time sipping cups of coffee from the top coffee shops. This statement persuades me to join the bandwagon (Hartline, 2011). Seeing the current Fitzrovia district coffee shops filled with people lining up in queues, the sole proprietor is on the right track. Evidently, selling at lower prices will create an impression that the new coffee brand is cheap, driving away the rich and famous coffee shop customers. Selling the proposed coffee brands at prices that are higher than the prices offered by the current top coffee shops will drive my prospective customers. With the current coffee shop’s established brand and service quality, a neophyte coffee shop does not have enough evidence to prove that the new coffee brand is better than the current coffee brands, let alone equaling the current coffee brand quality of the competitors. Outline a Plan for Securing Sources of Debt Financing for your Second store The company will source debt financing from friends. Some of the sole proprietor’s friends have the money to loan. The loan amount will cost 5 percent interest per year. The loan amount is £20,000. With the trust that the business owner generates, the friend’s loan will definitely be approved (Levine, 2008) Conclusion Summarizing the above discussion, establishing a second coffee shop location includes implementing the marketing mix principles. The residential coffee shop business will cater to the residents and business district’s coffee shop needs. The guerrilla marketing strategy includes all four marketing mix concepts. Evidently, the complying with the price, promotion, place, product requirements of the marketing mix increases coffee shop revenues, customer demand, and company profits. References: Britten, F. (2008). A Hedonists Guide to London. New York: A Hedonists Guide Press. Buttle, F. (2009). Customer Relations Management. New York: Elsevier Press. Colliers, P. (2009). Fundamentals of Risk Management for Accountants and Managers. New York: Elsevier Press. Drury, C. (2007). Cost and Management Accounting . New York: Thompson Press. Hartline, M. (2011). Marketing Strategy. New York: SouthWestern Press. Hill, A. (2011). Operations Management. New York: Pearson Press. Levine, S. (2008). The Financial Analysts Handbook. New York: Irwin Press. Noreen, E. (2008). Managerial Accounting. New York: McGrawHill Press. Warren, C. (2009). Managerial Accounting. New York: SouthWestern Press. APPENDIX Appendix A Income statement                     Daily Monthly     Coffee, meal, other revenues £ 3,750.00 £ 24,375.00     cost of ingredients 1,250.00 8,125.00     gross profit £ 2,500.00 £ 16,250.00     Expenses 1,200.00 7,800.00     Net profit £ 1,300.00 £ 8,450.00                     Appendix B Balance Sheet                   First     Month     Assets:     Coffee shop equipment/ other assets £ 60000         Liabilities:     Loan from friends £ 20000         Capital:     Owner, Capital 40000     Total liabilities & Capital £ 60000                     Read More