Assignment -
Prepare the Financials: Balance Sheet, Financial Statement, Projections for 2 years, Cash Flow and Break-Even Analysis.
This is an executive summary where the student has projected to start a business.
Executive summary
This individual project is to highlight the readers about the process and the resources required to start a new business venture in the hospitality industry. As part of the requirement of the project, we are supposed to highlight the monetary and non-monetary resources required to start a new business of the Coffee Shop.
Introduction
The change in the behaviour of many business communities to hold business meetings at a Coffee and Snacks bar, has created an opportunity for many enterprises to expand the business through correlating the main business activity with the new opportunities. At present many business experts has correlated its business activities with the Coffee and Snacks bar. Considering this external change; our business entity had decided to expand our business operation by assisting the various prospective clients in constructing the basic infrastructure facilities for their coffee and snacks bars, this decision of the management will create opportunities for diversification of business, into other industry which shall help in creating the customers base, and boost the sales of our main business.
Projected cost structure and resources required to start the project Coffee Bar Business.
Capital investment:
In order to start a coffee & snacks bar, we require a shop at rent at an attractive location, and the projected cost of rent will be nearly $ 20,000 to $ 25,000 this investment shall be a part of the advance rent and other associated costs, while our monthly rent will be around $ 3000 to $ 3500. Now the projected infrastructure cost for various facilities, such as furniture, decorative item, and other items to make the premises attractive will be around $ 40000. So our capital investment will be nearly $ 60,000 to $ 65,000 this capital investment cost includes the legal cost and local regulatory licence cost.
Operating Cost
Our operating cost stature mainly consists of the cost of material, the direct labour and operating overheads, such as salary and wages of employees and the electricity and other administrative costs. This cost will not be in excess of $ 700 per week and thus monthly this amount will be $ 2800 on an average. Hence total monthly cost including rend will be around $ 6000
Projected sales for the first year
In a coffee shop, the majority of the customers come for spending their time with their loved ones (in case of family or friends meetings), however sometimes there are professional meetings as well. So generally the customer comes in the groups of two or three, this fact will be an advantage for the coffee shop to increase its sales. In normal business days the projected sales will be $ 500 per day, while on the weekends the sales will be $ 750 to 800, it means that the weekly sales will be around $ 4000. So monthly sales will be around $ 16000. This amount will be reduced by the operating cost , so net income for the month shall be around $ 10,000 though this business has nearly 70 to 80 percent profit margin & we can expect profits to increase by 15% every year
Long-term Target
We expect to break even the amount of capital invested in 5 years, so after 5 years we expect total profit earned to be close to $ 80,000.
We expect profit for next 5 years to be as follows
Year 1: 10000
Year 2: 11500
Year 3: 13225
Year 4: 15208
Year 5: 17490
Total: 67423
Thus as per our plans, we can reach the breakeven level in the 5th year.
Targeted audience
For a coffee shop, our targeted audience will be, the students, and the professionals. These two customer classes will be the best suitable customers for a coffee shop business, these two groups need some time to spend, their important moment in their productive ways.
Marketing strategy
New venture becomes a successful one only through its effective marketing strategy, our coffee shop business can also be profitable and we can invite the required expected customers groups by making the advertisement of facilities rendered by our coffee bar, through various information technology media, such as Facebook, tweeter, Instagram and other social networking sites where the student and professional communities spend their majority of time either directly or indirectly.
Conclusion:
To make an investment in any of profitable product range will not amount to business, to start a business, our fundamental requirement was to develop the effective business plan and formulation dynamic marketing strategy. The profit margin rate and the compliance of primary statutory and non-statutory aspect are just formality of the challenging task for the business and will be inviting and convincing the current and projected customers.
Attachment:- Assignment File.rar