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.
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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
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
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.
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
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.
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.
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
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.
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.
Summary of the Market analysis
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.
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.
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.
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 $14.2 million in 2012. therefore; competition exists for the suppliers to these coffee outlets.
Buying patterns
The major reason for the stores to go for the disposable coffee lids is the uniqueness, quality, and ease of disposal of the lids. The company will price its products competitively. We believe that selling the lids with great service will help us build a storing and a large base of loyal clientele.
Management team
The company will hire a full-time manager to oversee the running of the company. The company (name withheld due to his commitment to his current employment) has three years of experience in a managerial position in a New York industry. His responsibilities will include ordering inventory, managing staff, developing a marketing strategy, dealing with suppliers, and other daily managerial duties.
The company will also still retain the services of espresso consultants. The consultants will primarily do market research, conduct surveys on customer satisfaction, and give additional input in the business evaluation.
Personal plan
|
Year1 ($) |
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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