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Business Plan of Coffee Lids

Jul 13, 2017 | 0 comments

Jul 13, 2017 | Essays | 0 comments

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Business Plan of Coffee Lids

 

Table of contents

  1. Executive Summary……………………………………………………………3
  2. Objectives…………………………………………………………………………..3
  3. Key to Success……………………………………………………………………..3
  4. Mission………………………………………………………………………………4
  5. Company Summary…………………………………………………….……….4
  6. Company Ownership…………………………………………………..……….4
  7. Start-Up Summary……………………………………………………………….4
  8. The Company’s Facilities and Location……………………………………5
  9. Products……………………………………………………………………………….5
  10. Sales Literature……………………………………………………………………..6
  11. Summary of Market Analysis……………………………………………………..6
  12. Market Trends of Coffee in America……………………………………….6
  13. Coffee At Home………………………………………………………………………7
  14. The Instant Flavors…………………………………………………………………..7
  15. Projection of Coffee Market in America…………………………………….7
  16. Competition and Buying Patterns………………………………………………8
  17. Competition……………………………………………………………………………..8
  18. Buying Patterns……………………………………………………………………….8
  19. Management Team………………………………………………………………….8
  20. Personal Plan…………………………………………………………………………..9
  21. Financial Plan…………………………………………………………………………..9
  22. Important Assumptions………………………………………………………….10
  23. Projected Cash Flow…………………………………………………………………..11
  24. Projected Profit and Loss…………………………………………………………..13
  25. Projected Balance Sheet………………………………………………………………15
  1. Executive summary

The coffee company is determined to serve the local coffee shops that serve people who like coffee, a place to look forward to as you try to leave the daily life stressors, and a nice place to read your book or to meet your family or friends. With the great demand for great service and coffee of high quality, the company will capitalize on its location in the city centers to build a core group of store partners. The company will offer the best coffee lids to its customers and it will be complemented with free delivery that makes the patrons enjoy.

The owners of the company have secured the company building for a five –year lease with an extending option. They have also paid the $ 150, 000 of the required $180,000 startup money. The remaining balance will be settled through a loan from the bank of America.

The projected sales for the company are $584,000 in financial year 1 to year three. The company will strive to maintain a 60% gross profit margin in addition to manage operating expenses. The company will also ensure net profits grow from $125,000 to $130,000 during the period.

  1. Objectives

The objectives of the company in the first year are:

  • Become the best coffee disposal lids company in the area
  • Plough in profits of  the fist operation month
  • Maintain 60% gross margin
  1. b) Keys to success

Attractive store design to the customers, and has efficient and fast operations

Employee training for the best coffee disposal lids designs

Marketing strategies geared to maximizing profits and creating a solid base of customers

  1. c) Mission

The company will strive to crest unique designs of coffee disposal lids that are environment-friendly and simple to use by the clients. We will be the best business that creates beauty through its products. The company will invest back its profits for the customer’s satisfaction while giving stable returns to the owners.

  1. Company summary

The company sells disposal coffee lids to the coffee stores in the company building located in New York City. The investors are “Tom and jack” who cumulatively own over 65% of the company. Furthermore, the company’s startup loss is assumed to be $25,600

  1. Company ownership

The company is registered as a limited liability company in New York. “Tom and jack” owns 65 % of the company. Other family member s of tom and jack hold minority stakes in the company.

  1. Star-up summary

The expenses of a startup include:

  • Legal expenses for getting permits and licenses and accounting services totaling to $1200
  • Expenses for marketing promotions for the grand opening of the company is $3500 besides flyer printing  of a total amount of $3600
  • Consultants fees of $2800 paid to espresso consultants to help I set up the company
  • Insurance (property-casualty, workers compensation, and general liability) coverage totaling to $2500.
  • One month prepaid rent expenses of $4200
  • Remodeling of the premises for $ 9000
  • Other expenses for the startup including stationery ($600) utility deposits and phone ($2500).

The startup assets required of $ 143,000 include:

  • Operating capital of $67,000 which includes salaries of the owners and employees of $23,800 for the first two months and also cash reserves set for the first three operations months.
  • Startup inventory of $16,000.
  • Equipment for an amount totaling  to $60,000

Two major sources are reliable for funding the company, the bank loans, and owners’ investments, and the principal owners “tom and jack,” have contributed $100,000 and $50,000 respectively. The remaining $30,000 required covering the expenses of the assets and startup came from bank loans. A long-term loan of five years of $20,000 and a one-year loan of $10,000.all loans were gotten from the bank of America. Therefore, the assumed total start-up loss is $2,600.

  1. The company’s facilities and location

The company will be located on the first floor of the commercial building in New York. The floor plan includes 300 square feet of office and 2200 square feet of operations are which also include the store and washrooms. The premises have the necessary electricity and water will only require slight remodeling to accommodate the store and the kitchen

  1. Products

The company will offer its customers the best coffee disposal lids. This will be achieved by sourcing aesthetic and unique designs, light and environmentally friendly raw materials, and products. The products will be aimed at making our clients attract many clients to their stores.

  1. Sales literature

Three thousand flyers will be distrusted to the nearby neighborhoods, in the selected coffee store, restaurants, and hotels two weeks before the grand opening of the company. Subsequently, some free postcards with the company’s endorsement will be printed and distribute to increase the visibility of the company in the neighborhoods.

  1. Summary of the Market analysis
  2. Market trends of the coffee market in America

Coffee is one of the most consumed beverages globally and in the United States. Coffee is a significant beverage in the daily life of the Americans that we can say that it assists Americans over forward. In fact, about 60% of the United States households either use at home ground or whole coffee beans. The coffee market is segmented into roasters, growers, and retailers. Nescafe is the most valuable brand of coffee globally while Maxwell and Folgers are the primary coffee brands in the local coffee segment. In 2012 flogs were estimated to be valued at US 852.4 million dollars.

For many years, coffee chains have gained popularity among their customers. These retail markets were dominated by Dunkin brand Inc. and Starbucks Company with almost 50% of a combined market share in 2011.furthermore, the latest statistics show that about 22% of American coffee consumers take one cup of coffee daily averagely. Similarly, the employed Americans of ages ranging from 18-34 years usually spend 24.74 dollars on coffee weekly.

  1. Coffee at home
  • The average household in the U.S that uses a ground and household coffee consumes an average of 4.2 cups daily. That amounts to 289.5 million total coffee cups consumed at home daily
  • 89% of households stock regular coffee
  • 84% of the households use pre-ground coffee and the other 26% of the households use whole bean coffee.
  1. The instant flavored coffee
  • 27% of households stock the intent coffee
  • 16% of households use it. Most coffee drinkers of instant flavor are Older Americans.
  1. Projection of the coffee market in America

The volume of off-trade sales is projected at 1% for the forecast period, steadying at 760,830 tons by the year 2017. This is a representation of a conservative forecast grounded on single-serve brewing changes in the market. Furthermore, with the expiration of the k-cup patent by Green Mountain, economy brands, private labels, premium players, and regional roasters could all have an impact on the growing terms in the whole category. This combined with on-trade brands for the off-trade brand consumption replication and the brewing convenience will increase the volume of off-trade sales of the fresh coffee pods. However, the projected growth will be affected by the other reductions in other categories, because of a shift in the manner people consumes coffee, rather than more consumers taking the coffee.

On the other hand, the international coffee organization on July 10th, 2013 forecasted that the production and supply of the world coffee for the past one year was 7.8% higher compared to the other previous coffee years.

The company will strive to build many loyal customers by offering quality products.

e)     Competition and buying patterns

Competition

The company will face competition from other established companies that have contracts with the leading cogged stores like Starbucks and Café Roma statistics from the New York food services estimate that non-alcoholic bars and snack shops made sales of $14.2 million in 2012. therefore; competition exists for the suppliers to these coffee outlets.

Buying patterns

The major reason for the stores to go for the disposable coffee lids is the uniqueness, quality, and ease of disposal of the lids. The company will price its products competitively. We believe that selling the lids with great service will help us build a storing and a large base of loyal clientele.

  1. Management team

The company will hire a full-time manager to oversee the running of the company. The company (name withheld due to his commitment to his current employment) has three years of experience in a managerial position in a New York industry. His responsibilities will include ordering inventory, managing staff, developing a marketing strategy, dealing with suppliers, and other daily managerial duties.

The company will also still retain the services of espresso consultants. The consultants will primarily do market research, conduct surveys on customer satisfaction, and give additional input in the business evaluation.

  1. Personal plan

Year1 ($)

Year 2($)

Year 3($)

Manager

34000

36,000

40,000

Barristers

48,000

52,000

58,000

Employees

40,000

53,000

55,000

Total people

8

9

9

Total payroll

122,000

141,000

153,000

 6.      Financial plan

The company will capitalize on the high demand for coffee in the locality. The owners of the company provided sufficient capital for stat up. With professional management aimed at creating and growing a large base of customers, the company will double its net profit in a couple of years. The company intends to maintain 60% of the gross margin, which when combined with operating expenses will give enough return to finance the company’s growth.

a)     Important assumptions

  Year1 (%) Year 2 (%) year3 (%)
Plan month 1 2 3
Current interest rate 9 9 9
Long term interest rates 9    9 9
Tax rate 24.4 24 24.4

b)    Projected cash flow

Proforma cash flow

  Year 1($) Year 2($) Year 3($)
Cash received      
Cash from operations      
Cash sales 585,000 640,000 707,000
Subtotal cash from operations 585,000 640,000 707,000
Additional cash received      
Sales tax, HST/GST received, VAT 0 0 0
Other new liabilities 0 0 0
New long term liabilities 0 0 0
Sales of other current assets 0 0 0
Sales of long term assets 0 0 0
New investment received 0 0 0
Subtotal cash received 585,000 640,000 707,000
Expenditures Year 1($) Year 2($) Year 3 ($)
Expenditures from the operations      
Cash spending 125,000 144,000 155,000
Bill payments 328,000 400,000 421,000
Subtotal spent on payments 452,000 533,000 576,000
Principal Repayment of the Current borrowing 3500 3500 3500
Long term liabilities Principal Payments 0 3600 4000
Purchase long term assets 0 2500 2500
Dividends 0 0 0
Subtotal cash spent 133,000 107,000 131,000

c)     Projected profit and loss

Proforma Profit and Loss

  year1 ($) Year 2($) Year 3($)
Sales 585,000 643,000 707,000
The direct cost of sales 205,000 225,000 247,000
The total cost of sales 205,000 225,000 247,000
Gross margin 380,000 418,000 460,000
Gross margin percent 65% 65% 65%
Expenses      
Payroll 125,000 144,000 155,000
Sales marketing and other expenses 26, 000 28,000 31,000
Depreciation 5500 5600 5500
Rent 48,000 53,000 53,000
Maintenance 6000 6500 7000
Phone/utilities 9000 9600 10,000
Payroll taxes 18,700 22,000 23,000
Total operating expenses 640,000 708,000 710,000
Profit before interest and taxes 131,000 157,000 162,000
       
       

d)    projected balance sheet

Proforma balance sheet

  Year1 ($) Year 2($) Year 3($)
Assets      
Current assets      
Cash 195,000 296,000 418,000
Inventory 21,000 23,000 26,000
Other current assets 0 0 0
Total current assets 217,000 320,000 443,000
Long term assets      
Long term assets 59,000 61,000 63,000
Accumulated depreciation 5500 11,000 16,500
Total long term assets 54000 50,000 47,000
Total assets 270,000 370,000 490,000
Liabilities and capital year1 year2 year3
Current liabilities      
Account payable 32,000 32,000 35,000
Current borrowing 68000 35000 100
Other current liabilities 0 0 0
Subtotal current liabilities 39,000 35,000 35,000
Long term liabilities 21000 16500 12500
Total liabilities 58,700 52,000 47,000
Paid in capital 150,000 150,000 150,000
Retained earnings 27700 72,000 178,000
Earnings 99,000 107,000 125,000
Total capital 212,000 318,000 443,000
Total capital and liabilities 270,000 370,000 490,000
       
Net Worth 212,000 318,000 443,000
 

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