Business Plan Essay

Business Plan Essay

Business Plan Essay

EXECUTIVE SUMMARY

The following document is a plan of my intended business: Enilson’s Café, a coffee shop situated in Ealing Broadway. The intended premise is a 65 square foot commercial property situated on the high street. The premise would be designed in a coffee shop format, with a counter serving various items, and a large section where customers could come in during opening hours and feel comfortable. The major products sold would be coffee, tea, cappuccino, a variety of cakes, snacks and sandwiches, and food sold during lunch hours 12pm – 4pm.  Product ingredients would be sourced from wholesale suppliers such as Makro, equipments that are required would be sourced from Comet and Café suppliers, while food ingredients would be sourced from food suppliers and outsourced Chefs.

Ealing, the location within which this coffee shop is intended is a culturally and religiously diverse neighbourhood, with a majority (55%) being of ethnic minorities. Therefore the major target market would be the general population of commuters, workers and people living within the neighbourhood, who would like widely desirable, yet religiously conscious meals. The coffee market is growing, and everyone eats good food, thereby signifying a need for our services. However, our main competitors such as Starbucks and local cafes operate in close vicinity.

The pricing strategy utilised for this venture would be that of value based pricing. Competition, cost-plus and market oriented pricing would be adopted for the different products we have on offer. Several promotion strategies would also be adopted to promote the business. The business would be registered as a Sole Trader, with the owner, being the manager. Supervisors and Shop Assistants would also be hired. The start-up cost required for the business is £79,869, and in the first year, the café expects to make annual sales of £204,480, gross profit of £123,739 and net profit of £13,099. Breakeven period is in the 9th month of the first year.

The Café’s mission is to join the Ealing community, provide appropriate products that suite their tastes and deliver exceptional service. It is our objective to use this initial store as a stepping-stone towards higher sales and more store openings in neighbouring areas and throughout London. We intend to become a multinational organisation just like Starbucks in 5 – 10 years, and we hope that you can join us in that dream.

2.      COMPANY SUMMARY

This following document is a business plan report for a coffee shop start-up called Enilson’s Café. It would be located on the corner of The Broadway, West Ealing, London. The business premises would be leased from the current owners, and a total of 130 square feet would be secured up front, however, with the permission of the Landlord, only half of that space (65 square feet) would be utilised in the first year, pending business growth.

The business premises is currently being refurbished by the previous owners, however once done, it would be situated in a strategic location within the neighbourhood, with easy access to public transportation and a short distance from the train station. The premises would be designed to suite the coffee shop format, a counter would be situated adjacent to the main entrance, wherein customers can easily place their orders, whilst chairs and tables arranged in various seating formats, would be situated over the rest of the shop. The facilities that would be present within the store for it to run smoothly are expressed in Table 3, which also contains a breakdown of the price and the total start-up costs.

No licenses whatsoever would be required from the local committee, as the café would not be selling alcohol or opening beyond 11pm at night. However, information pack and booklets would be sought form the Healthy and Safety Standards agency within Ealing. The business is required by law to register premises used for food businesses, and strictly follows food safety regulations (Ealing, 2010). A licensed premises insurance cover would be taken out from Anglo Pacific Consultants (London) Ltd, which offers “package policy for public houses, wine bars, restaurants and café’s,” the insurance package covers all business risks including terrorism cover, personal accidents, and theft (Yesquote, 2010).

The business would be registered as a Sole Trader business, with me, Enilson Helder, being the sole owner of the business. All income from the business would be recorded as personal income, and I would be liable for any debts incurred.  All profits would be taxed as income.

3.      PRODUCTS AND SERVICES

Enilson’s Café would adopt a Coffee Shop format, in which the major product being sold would be a variety of coffee types, while additional products would also be sold. Coffee, Tea, Coffee Latte, Tea Latte, Cappuccino, amongst others would constitute the majority of our offering. Carbonated and no-calorie soft drinks would also be sold. A variety of cake, muffins, sandwiches, crisps, and chocolates amongst others would be sold within the café. During lunch periods, particularly between 12pm – 4pm, food menus would exists, cooked particularly by an outsourced chef, who would sell Rice, Chips, Chicken, Mashed Potato, Gravy amongst other lunch time meals.

Suppliers:

  • The refrigerator, coffee machines, microwave, dishwasher, and all other smaller but vital electronic equipments would be sourced from Comet , where a business membership account would be created.
  • All other catering equipments such as plates, spoons, trays, would be sourced from Makro , that sell a variety of wholesale food items for small businesses.
  • Food ingredients such as coffee beans, flour and sugar for in house baking or feed preparation would also be sourced from the superstore, as they offer a reasonable discount for small and medium business owners.
  • Sandwiches would be sourced from Gourmet Sandwich Co ; they provide wholesale sandwiches on a day-to-day basis for small businesses, while the cakes would be sourced from similar external suppliers.
  • The lunch menu would be sourced by hiring an external chefs who cook on their premises and bring in the food during lunch hour, companies such as Sundrica , a local catering company can provide these services.

4.      MARKET ANALYSIS

The Ealing borough is currently home to over 300,000 individuals, with 12,800 residing in close vicinity of the store. The population of individuals aged 20 – 44, are higher than the UK average. The region has one of the highest levels of international migration within London, and is the 4th most ethnically diverse, and 6th most religiously diverse borough within the UK, which in itself is a major attractant. 55% of all Ealing borough residents are from ethical minorities, 41% of which were not white (Ealing, 2010). Therefore the different market segments that exist are based mainly on ethnicity, which is a major dividing factor within the population.

The major target market segment is for the general population of commuters working or living around the store. The location is currently on a road in which several buses pass, and houses are located. People living and working within this region, no matter their ethnicity or nationality would be sought as potential customers. We intend to sell a wide vary of ethnically acceptable food for all residents. Meat and Chicken would be halal, but sold in a contemporary and modern fashion. Meals such as Chips, Chicken, and Mashed Potato would be suitable for everyone, and the Muslim population would appreciate the religious considerations. According to Mintel (2009), coffee shops are always sought after, and due to the scarcity of one in immediate vicinity to the proposed location, then it could be said that there is a need for one. The food products being sold are fresh, which would appeal to people that want to eat good food.

5.      STRATEGY

The pricing strategy being adopted by the café would be based on the overall strategy of the firm, which is to target low – mid income earners (population demographic), with easily affordable coffee and lunch. Therefore, our products would not be priced too high that it would deter customers; neither would be priced too low that it would be unprofitable. Due to the broad based generic product strategy we are adopting (Johnson et al, 2008), we would be adopting a value based pricing strategy, in which the price of each product being offered would be based on how much we believe the customers within this region are willing to pay.

Enilson’s Café intends to adopt the following pricing tactics for all/some of our product ranges.

  • Competition based pricing would be adopted for the price of Coffee and Tea products. They would be based mostly on the price being offered by competitors in the market. Though ours would be priced slightly cheaper, it would still be brewed and prepared to high quality, with a good taste.
  • Cost-Plus pricing would be adopted for those products such as Sandwich and Cakes that we have sourced from external vendors. If they have been bought at a wholesale price of £1.50 each, then they may be priced at £1.95 or £2, depending on what competitors in the immediate vicinity charge.
  • Lastly, market oriented pricing would be utilised for the food products sold during lunch break. We expect to attract a large number of low earners, and pricing our products appropriately would assist our strategy (Monroe, 2003).

Sales Forecast

The following is a weekly sales forecast for Enilson’s Café. A minimum of 200 coffees, tea, cappuccinos and soft drinks would be sold each weekday for an average price of £1.50, less on weekends. 100 cakes, sandwiches and crisps would be sold daily for an average price of £1.50, more on weekends.

 Table 1: Cafe Sales Forecast

Mon Tue Wed Thur Fri Sat Sun Weekly
Drinks £300 £300 £300 £300 £300 £200 £200

£1,900

Snacks £150 £150 £150 £150 £150 £180 £180

£1,110

Food £150 £150 £150 £150 £150 £250 £250

£1,250

Total

£4,260

Promotional Mix

  • The major forms of advertising for Enilson’s Café would be in the form of in store displays, brochures and catalogues available to new comers to the store, and external banners. Full-page adverts would also be placed in the Yellow Pages, online and offline, while print ads in newspapers particularly indigenous to Ealing would be utilised.
  • Personal selling would be utilised on all customers, especially new ones, in order to make them repeat customers. All staff would be taught how to provide the sort of service required for customers to come back frequently.
  • Sales promotions would be conducted within the first month of opening the store. Free coffees and snacks could be offered to customers as a form of tie in to ensure their continued patronage.
  • The major form of public relations to be conducted would be in local newspapers, an article that discusses our products, services and how we intend to please the local populace.

The business would be launched during a public holiday. Most probably a bank holiday weekend or Muslim holiday when most residents would be out shopping or celebrating.

6.      MANAGEMENT STRUCTURE

As the business is being operated as a sole trade, it would be composed mainly of Enilson, as the store manager and owner.

Other members of the management team would include a Café supervisor/Assistant Manager, who would supervise procurement of supplies and running of the store.

The Staff Supervisor would supervise the rota and ensure that all staff are being friendly and offering the level of service expected.

Store assistants would also be present and would be the company’s main point of contact with customers. They would receive orders and attend to each customer’s needs.

7.      FINANCE

The start-up cost for Enilson’s café would be based on the price of the following facilities. The total startup cost for the venture would therefore be £79,869, as illustrated in Table 3.

Table 3: Start Up Cost, 2017

Facilities Forecast Price
Facility Rent £30,000
Industrial Refrigerators £1,295
Dishwasher £1,275
Six Burner Range £1,899
Heated and Refrigerated Merchandisers £3,475
Microwave £300
Coffee/Cappuccino Machine £2,175
Domestic Food Appliances £3,450
Kitchen £9,500
Restroom £2,500
Furniture £9,000
Café Outfitting £15,000
Total £79,869

Table 4: Projected Profit and Loss 1 Year

Revenue

£204,480

Cost of Sales

£80,741

Coffee

£18,240

Snacks

£32,501

Food

£30,000

Gross Profit

£123,739

Expenses

Staff Salary

-£68,640

Rent

-£30,000

Maintenance

-£6,000

Misc

-£6,000

Net Profit

£13,099

The sales forecast depicted in Table 1 has been utilised for the projected profit and loss statement. All weekly forecast has been multiplied by 4 weeks in order to get the average forecast for one month (for the cash flow), then multiplied by 12 months. The cost of sales has been calculated based on projected cost of goods obtained from Startups (2010). The profit margin for coffee used was 80% that for Snacks was 40%, while the profit margin for good was 50%. The net profit for the first year is £13,099.

Table 5 is a representation of the forecast cash flow and breakeven analysis for the first year of business. The information presented above illustrates that Enilson’s café would make a profit of £13,099 in the first year of business. The breakeven would be in the 9th month of the first year. Particularly, money back analysis illustrates that the company may not get its total investment of £79,869 back within the first year. Most probably in the second year depending on how well the café is able to improve sales and profit.

Start-up capital required: £79,869.

Operating capital required till breakeven: First month Expense = £6,728

Total Capital Requirement = £86,597, half of which is sought from bank.

9.      APPENDICES

Appendix requirements such as start-up cost, list of suppliers, sales calculation, duty rotas, staffing and planning applications are already included in the main body of the business plan.

SAMPLE MENU AND DRINKS LIST

Drinks

Coffee

£1.80

Cappuccino

£2.50

Latte

£2.20

Carbonated Drinks

£1.00

Non Carbonated Drinks

£1.20

Water (75cl)

£0.75

Snacks

Cake

£1.95

Muffin

£1.70

Sandwich

£2.50

Crisps

£0.50

Chocolate

£0.50

Food

Mashed Potato and Chicken

£4.95

Rice and Chicken

£4.55

Fries and Chicken

£3.99

SAMPLE COSTINGS

Average cost for products sold

Drinks

80% Profit

Coffee

£0.36

Cappuccino

£0.50

Latte

£0.44

Carbonated Drinks

£0.50

Non Carbonated Drinks

£0.60

Water (75cl)

£0.38

Snacks

40% Profit

Cake

£1.17

Muffin

£1.02

Sandwich

£1.50

Crisps

£0.36

Chocolate

£0.30

Food

50% Profit

Mashed Potato and Chicken

£2.48

Rice and Chicken

£2.28

Fries and Chicken

£2.00

Profit figures are obtained from Startups (2010), as described in the main text.

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