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Business Plan

                         Sweet Coffee Shop




                               Submitted by

                              Job Thomas
                             Roll No.8, Sem-5
                                MBA(PT)




                  School of Management studies
           Cochin University of Science and Technology
                      Cochin, Kerala, India
                           PIN 682022

                               October 2012


Business plan of Sweet Coffee Shop by Job Thomas         1
1.     Executive summary

Coffee shop is the flourishing business in Kerala. Coffee or Tea bar is a daily necessity
for local coffee addicts, a place to dream many things, a place to escape the daily
stresses of life and just a comfortable place to meet your friends or to read a book, all in
one. With the growing demand for high-quality tea or coffee and great service, Sweet
Coffee shop will capitalize inside School of Management Studies (SMS), Cochin
University campus to build a core group of repeat customers. The culture will offer its
customers the best prepared coffee/tea in the area that will be complimented with
pastries, as well as free books that its patrons can read to enjoy their visit.

The shop will operate a 50 square foot coffee bar near to the entrance of SMS building.
The identified place can be obtained for lease for one year possible to get extension in
the upcoming years. The start-up funds available with owner is INR 50,000/-. It is
expected that the remaining capital of Rs.50,000/- will be obtained through commercial
loans from State bank of Travancore.

The business is expected to earn sales revenue of INR 175,000/- in the first year. Sweet
Coffee shop will strive to maintain a high gross profit margin and reasonable operating
expenses. The projected sale and the profit are indicated in Figure 1.


     160%

     120%
                                                                    Year 1
     80%
                                                                    Year 2
                                                                    Year 3
     40%

       0%
                 Sale          Margin          Profit


Figure 1. Project growth of sale and profit of Sweet Coffee shop




Business plan of Sweet Coffee Shop by Job Thomas                                          2
2.     Business Description
The coffee and tea consumption in the campus is very high. Sweet Coffee shop will
serve students, teachers, ministerial staffs, laboratory staff and visitors are the
customers of the campus. It is expected that the people from School of Management
Studies and neighboring departments will be the loyal customers of the shop. An opinion
survey conducted in SMS indicates that the proposed business plan is something people
are waiting for. The quality and cleanliness will be the distinctive feature of the venture.
The product share is indicated in Figure 2.


                     Product share


            17%                17%               Coffee
                                                 Tea
                                                 Snacks
                                      28%
        38%                                      Stationery




Figure 2. Product share of Sweet Coffee shop

3.     Marketing
The projection of daily sales of Sweet Coffee shop for the given in Table 1. The total
expected sale per day will be Rs. 15500/- . The expected daily profit is about 50 percent
of the operating expenses.

 Table 1. Projected Daily sale
       Items        Day-time           Evening      Total
 Coffee            INR 1,000          INR 250     INR 1,250
 Tea               INR 1,500          INR 500     INR 2,000
 Snacks            INR 2,000          INR 750     INR 2,750
 Stationery        INR 1,000          INR 250     INR 1,250
           TOTAL   INR 5,500         INR 1,750    INR 7,250

Sweet Coffee shop will offer its customers the best tasting coffee or tea beverages in the
area. This will be achieved by using high-quality ingredients and strictly following
preparation guidelines. The store layout, menu listings and marketing activities will be
focused on maximizing the sales of higher margin espresso drinks. Along with the
espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will
be sold in the coffee bar. Sweet Coffee shop will also offer its clients pastries, small
salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee at
home, Sweet Coffee shop will also be selling coffee beans. The menu offerings will be


Business plan of Sweet Coffee Shop by Job Thomas                                          3
supplemented by free books and magazines that customers can read inside the coffee
bar


                      Market share


             10%                             Students
       10%
                                             Faculty
                                             office workers
                                 50%
      20%                                    Labstaffs
             10%                             visitors




Figure 2 Market analysis results of Sweet Coffee shop

Sweet Coffee shop will focus its marketing activities on reaching the University students
and faculty, people working in offices located close to the coffee bar and on
sophisticated teenagers. The details of market survey are shown in Figure 2. The market
research shows that these are the customer groups that are most likely to buy tea or
coffee and snacks. The quality and cleanliness are other important factors to be used for
marketing in well educated group of customers.

Sweet Coffee shop will cater to people who want to get their daily cup of great-tasting
coffee in a relaxing atmosphere. Such customers vary in age, although the location is
inside University campus, most of our clientele will be college students and faculty. Our
market research shows that these are discerning customers that gravitate towards better
tasting coffee or tea. Furthermore, a lot of college students consider coffee bars to be a
convenient studying or meeting location, where they can read or meet with peers without
the necessity to pay cover charges. For Sweet Coffee shop, this will provide a unique
possibility for building loyal client base.

4.     Operation
The Sweet Coffee shop will be open with one working staff and one cashier cum
accountant. The sweet coffee shop is planned to operate at 50 square feet space room
available in the ground floor of School of management studies, CUSAT. The women
labors are available in the locality to engage in the operation of the shop. The location of
the shop is accessible to supplier’s delivery van and waste removal. The start-up fund
requirement is given in Figure 3.




Business plan of Sweet Coffee Shop by Job Thomas                                          4
Start-up funding

     INR 60,000

     INR 40,000

     INR 20,000

         INR 0
                  Total fund   Assets   Liabalities Investment



Figure 3. Start-up fund plan of Sweet Coffee shop

5.      Management
Sweet Coffee shop is owned by Mr. JOB THOMAS, who holds a Masters Degree in
Business Administration from Cochin University. Mr. Thomas has good management
experience in owning similar shop near University campus. He had conducted a study in
various coffee shops, which is operating with significant margin. The customer feed back
would be the prime consideration in the development of the business. The person who is
working as cashier cum accountant will have to manage the labour, ordering inventory,
dealing with suppliers, developing a marketing strategy and perform other daily
managerial duties. A profit-sharing arrangement for accountant will be considered based
on the first year operational results. The personnel plan of Sweet Coffee shop is given in
Table 2.
 Table 2. Personnel Plan
 Personnel                     Year 1        Year 2        Year 3
 Cashier                       INR 60,000    INR 66,000     INR 72,600
 Worker                        INR 48,000    INR 52,800     INR 58,080
 Number of employees                     2             2              2
                 TOTAL             108000        118800          130680



6.     Finance
Sweet Coffee shop will capitalize on the strong demand for high-quality coffee. The
owners have provided the shop with sufficient start-up capital. With successful
management aimed at establishing and growing a loyal customer base, the business will
see its net worth doubling in two years. Sweet Coffee shop will maintain a healthy 50%
gross margin, which combined with reasonable operating expenses, will provide enough
cash to finance further growth.

The profit and loss account is projected for upcoming three years. The sales, margin,
expenses and profit are given in Figure 4. It is expected that the proposed product is
profitable in the first year. The profit is increasing in the upcoming years.




Business plan of Sweet Coffee Shop by Job Thomas                                        5
INR 3,000,000
     INR 2,500,000
     INR 2,000,000
                                                                    Year 1
     INR 1,500,000
                                                                    Year 2
     INR 1,000,000
                                                                    Year 3
      INR 500,000
            INR 0
                       Sale       Margin     Expenses    Profit



Figure 4. Projected sale, margin, expenses and profit of Sweet Coffee shop

The balance sheet is projected for the upcoming three years. The projected asset,
liabilities and capital are given in Figure 5. The growth of asset and capital is increasing
significantly. The net worth of the business is increasing, which is the positive sign of
growth of the business



     INR 1,000,000
      INR 800,000
      INR 600,000                                       Year 1
      INR 400,000                                       Year 2

      INR 200,000                                       Year 3

            INR 0
                     Assests Liabilities   Capital




Figure 5. Projected assets, liabilities and capital of Sweet Coffee shop

7.       Critical-Risks
The neatness and the custom made coffee or tea would be core attraction of Sweet
Coffee shop. Milma booth stall will definitely be one of the major competitors because of
its established marketing and operational practices. However, despite of Milma booth
stall entrenched market position, many customers favor smaller, independent
establishments that offer cozy atmosphere and good coffee at affordable prices.

8.       Harvest strategy
Strategy will be focused at getting new customers, retaining the existing customers,
getting customers to spend more and come back more often. Establishing a loyal
customer base is of a paramount importance since such customer core will not only
generate most of the sales but also will provide favorable referrals. Sweet Coffee shop
will position itself as unique coffee bar where its patrons can not only enjoy a cup of


Business plan of Sweet Coffee Shop by Job Thomas                                          6
perfectly brewed coffee but also spend their time in an ambient environment.
Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the
customers to relax from the daily stresses and will differentiate Sweet Coffee shop from
incumbent competitors. To speed up the customer service, at least two employees will
be servicing clients--while one employee will be preparing the customer's order, the
other one will be taking care of the sales transaction. All sales data logged on the
computerized point-of-sale terminal will be later analyzed for marketing purposes.

9.     Milestone schedule
The milestones are guidelines for each of the members should strive to achieve. The
milestones of Sweet Coffee shop is given below.

Milestones
Item                      Quarter1 Quarter2 Quarter3 Quarter4
Customer delight          XXXXXXXXXXXXXXXX
Achieve sale target                         XXXXXXXXXXXXXXXX
Improvement in business            XXXXXXXXXXXXXXXX




Business plan of Sweet Coffee Shop by Job Thomas                                      7
10. Appendix


A1. Start-up Requirements
Start-up Expenses
Legal                                  INR 5,000
Stationery etc.                        INR 2,000
Brochures                              INR 2,000
Consultants                                INR 0
Insurance                              INR 5,000
Rent                                   INR 1,000
Remodeling                             INR 5,000
Other                                  INR 5,000
          Total Start-up Expenses     INR 25,000
Start-up Assets
Cash Required                         INR 10,000
Start-up Inventory                    INR 10,000
Other Current Assets                       INR 0
Long-term Assets                      INR 15,000
                       Total Assets   INR 35,000
                Total Requirements    INR 60,000




Business plan of Sweet Coffee Shop by Job Thomas   8
A2. Start-up Funding
Start-up Expenses to Fund                    INR 25,000
Start-up Assets to Fund                      INR 35,000
                Total Funding Required       INR 60,000
Assets
Non-cash Assets from Start-up                INR 25,000
Cash Requirements from Start-up              INR 10,000
Additional Cash Raised                            INR 0
                             Total Assets    INR 35,000
Liabilities and Capital
Liabilities
Current Borrowing                            INR 20,000
Long-term Liabilities                             INR 0
Accounts Payable (Outstanding Bills)              INR 0
Other Current Liabilities (interest-free)         INR 0
                         Total Liabilities   INR 20,000
Capital
Planned Investment
Investor 1                                    INR 40,000
investor 2                                         INR 0
All other investors                                INR 0
Additional Investment Requirement                  INR 0
               Total Planned Investment       INR 40,000
Loss at Start-up Expenses                    (INR 25,000)
                             Total Capital    INR 15,000
            Total Capital and Liabilities     INR 35,000
Total Funding                                 INR 60,000




Business plan of Sweet Coffee Shop by Job Thomas            9
A2. Profit and Loss Account (projected)
Income                                           Year 1         Year 2            Year 3
Sales                                         INR 1,740,000    INR 2,175,000     INR 2,610,000
Direct Cost of Sales(0.65-.55)                INR 1,131,000    INR 1,305,000     INR 1,435,500
Other                                                      0                 0                 0
                        Total Cost of Sales   INR 1,131,000    INR 1,305,000     INR 1,435,500
Gross Margin                                    INR 609,000      INR 870,000     INR 1,174,500
Gross Margin %                                          35%               40%               45%
Expenses                                         Year 1         Year 2            Year 3
Payroll                                         INR 130,680              INR 0             INR 0
Sales and Marketing and Other Expenses           INR 20,000       INR 20,000        INR 20,000
Depreciation (0.3)                                INR 4,500         INR 4,500         INR 4,500
Rent                                              INR 1,000         INR 1,000         INR 1,000
Maintenance                                       INR 5,000         INR 5,000         INR 5,000
Utilities/Phone                                    INR 1,000         INR 1,000         INR 1,000
Payroll Taxes                                          INR 0             INR 0             INR 0
Other                                                  INR 0             INR 0             INR 0
                Total Operating Expenses        INR 162,180        INR 31,500        INR 31,500
Profit Before Interest and Taxes                INR 446,820      INR 838,500     INR 1,143,000
EBITDA                                          INR 451,320      INR 843,000     INR 1,147,500
Interest Expense                                   INR 4,000         INR 4,000         INR 4,000
Taxes Incurred (0.3)                            INR 134,046      INR 251,550       INR 342,900
                                 Net Profit     INR 313,274      INR 587,450       INR 800,600
Net Profit/Sales                                        18%               27%               31%




Business plan of Sweet Coffee Shop by Job Thomas                                         10
A4. Balance sheet (projected)
Assets                                Year 1          Year 2          Year 3
Current Assets
Cash                                  INR 328,938     INR 616,823     INR 840,630
Inventory                              INR 29,500      INR 24,000      INR 18,500
Other Current Assets                   INR 10,000      INR 10,000      INR 10,000
            Total Current Assets      INR 368,438     INR 650,823     INR 869,130
Long-term Assets
Long-term Assets                        INR 15,000      INR 15,000      INR 15,000
Accumulated Depreciation                (INR 4,500)     (INR 9,000)   (INR 13,500)
         Total Long-term Assets         INR 10,500        INR 6,000      INR 1,500
Total Assets                          INR 378,938     INR 656,823     INR 870,630
Liabilities and Capital               Year 1          Year 2           Year 3
Accounts Payable                        INR 15,664      INR 29,373      INR 40,030
Current Borrowing                       INR 20,000      INR 20,000      INR 20,000
Other Current Liabilities                     INR 0           INR 0          INR 0
       Subtotal Current Liabilities     INR 35,664      INR 49,373      INR 60,030
Long-term Liabilities                         INR 0           INR 0          INR 0
                 Total Liabilities      INR 35,664      INR 49,373      INR 60,030
Paid-in Capital                         INR 40,000      INR 30,000      INR 20,000
Retained Earnings                     (INR 10,000)    (INR 10,000)    (INR 10,000)
Earnings                              INR 313,274     INR 587,450     INR 800,600
                     Total Capital    INR 343,274     INR 607,450     INR 810,600
Total Liabilities and Capital         INR 378,938     INR 656,823     INR 870,630




Business plan of Sweet Coffee Shop by Job Thomas                                     11
A5. Ratio Analysis
Financial ratios                       Year 1        Year 2       Year 3
Current ratio                             10.33        13.18        14.48
Inventory turn-over                       38.34        54.38        77.59
Debt/Net worth                              0.10        0.08         0.07
Return on tangible net worth                0.91        0.97         0.99
Return on Assets                            0.83        0.89         0.92




                                    Financial ratios


                  80
                  60                                                             Year 1
        Ratio




                  40                                                             Year 2
                  20                                                             Year 3
                   0
                           Current ratio             Inventory turn-over




                                    Financial ratios

                  1.00
                  0.80
                  0.60                                                           Year 1
          Ratio




                  0.40                                                           Year 2
                  0.20
                                                                                 Year 3
                  0.00
                         Debt/Net w orth   Return on tangible Return on Assets
                                               net w orth




Business plan of Sweet Coffee Shop by Job Thomas                                          12

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Business plan for Coffee Shop

  • 1. Business Plan Sweet Coffee Shop Submitted by Job Thomas Roll No.8, Sem-5 MBA(PT) School of Management studies Cochin University of Science and Technology Cochin, Kerala, India PIN 682022 October 2012 Business plan of Sweet Coffee Shop by Job Thomas 1
  • 2. 1. Executive summary Coffee shop is the flourishing business in Kerala. Coffee or Tea bar is a daily necessity for local coffee addicts, a place to dream many things, a place to escape the daily stresses of life and just a comfortable place to meet your friends or to read a book, all in one. With the growing demand for high-quality tea or coffee and great service, Sweet Coffee shop will capitalize inside School of Management Studies (SMS), Cochin University campus to build a core group of repeat customers. The culture will offer its customers the best prepared coffee/tea in the area that will be complimented with pastries, as well as free books that its patrons can read to enjoy their visit. The shop will operate a 50 square foot coffee bar near to the entrance of SMS building. The identified place can be obtained for lease for one year possible to get extension in the upcoming years. The start-up funds available with owner is INR 50,000/-. It is expected that the remaining capital of Rs.50,000/- will be obtained through commercial loans from State bank of Travancore. The business is expected to earn sales revenue of INR 175,000/- in the first year. Sweet Coffee shop will strive to maintain a high gross profit margin and reasonable operating expenses. The projected sale and the profit are indicated in Figure 1. 160% 120% Year 1 80% Year 2 Year 3 40% 0% Sale Margin Profit Figure 1. Project growth of sale and profit of Sweet Coffee shop Business plan of Sweet Coffee Shop by Job Thomas 2
  • 3. 2. Business Description The coffee and tea consumption in the campus is very high. Sweet Coffee shop will serve students, teachers, ministerial staffs, laboratory staff and visitors are the customers of the campus. It is expected that the people from School of Management Studies and neighboring departments will be the loyal customers of the shop. An opinion survey conducted in SMS indicates that the proposed business plan is something people are waiting for. The quality and cleanliness will be the distinctive feature of the venture. The product share is indicated in Figure 2. Product share 17% 17% Coffee Tea Snacks 28% 38% Stationery Figure 2. Product share of Sweet Coffee shop 3. Marketing The projection of daily sales of Sweet Coffee shop for the given in Table 1. The total expected sale per day will be Rs. 15500/- . The expected daily profit is about 50 percent of the operating expenses. Table 1. Projected Daily sale Items Day-time Evening Total Coffee INR 1,000 INR 250 INR 1,250 Tea INR 1,500 INR 500 INR 2,000 Snacks INR 2,000 INR 750 INR 2,750 Stationery INR 1,000 INR 250 INR 1,250 TOTAL INR 5,500 INR 1,750 INR 7,250 Sweet Coffee shop will offer its customers the best tasting coffee or tea beverages in the area. This will be achieved by using high-quality ingredients and strictly following preparation guidelines. The store layout, menu listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks. Along with the espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be sold in the coffee bar. Sweet Coffee shop will also offer its clients pastries, small salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee at home, Sweet Coffee shop will also be selling coffee beans. The menu offerings will be Business plan of Sweet Coffee Shop by Job Thomas 3
  • 4. supplemented by free books and magazines that customers can read inside the coffee bar Market share 10% Students 10% Faculty office workers 50% 20% Labstaffs 10% visitors Figure 2 Market analysis results of Sweet Coffee shop Sweet Coffee shop will focus its marketing activities on reaching the University students and faculty, people working in offices located close to the coffee bar and on sophisticated teenagers. The details of market survey are shown in Figure 2. The market research shows that these are the customer groups that are most likely to buy tea or coffee and snacks. The quality and cleanliness are other important factors to be used for marketing in well educated group of customers. Sweet Coffee shop will cater to people who want to get their daily cup of great-tasting coffee in a relaxing atmosphere. Such customers vary in age, although the location is inside University campus, most of our clientele will be college students and faculty. Our market research shows that these are discerning customers that gravitate towards better tasting coffee or tea. Furthermore, a lot of college students consider coffee bars to be a convenient studying or meeting location, where they can read or meet with peers without the necessity to pay cover charges. For Sweet Coffee shop, this will provide a unique possibility for building loyal client base. 4. Operation The Sweet Coffee shop will be open with one working staff and one cashier cum accountant. The sweet coffee shop is planned to operate at 50 square feet space room available in the ground floor of School of management studies, CUSAT. The women labors are available in the locality to engage in the operation of the shop. The location of the shop is accessible to supplier’s delivery van and waste removal. The start-up fund requirement is given in Figure 3. Business plan of Sweet Coffee Shop by Job Thomas 4
  • 5. Start-up funding INR 60,000 INR 40,000 INR 20,000 INR 0 Total fund Assets Liabalities Investment Figure 3. Start-up fund plan of Sweet Coffee shop 5. Management Sweet Coffee shop is owned by Mr. JOB THOMAS, who holds a Masters Degree in Business Administration from Cochin University. Mr. Thomas has good management experience in owning similar shop near University campus. He had conducted a study in various coffee shops, which is operating with significant margin. The customer feed back would be the prime consideration in the development of the business. The person who is working as cashier cum accountant will have to manage the labour, ordering inventory, dealing with suppliers, developing a marketing strategy and perform other daily managerial duties. A profit-sharing arrangement for accountant will be considered based on the first year operational results. The personnel plan of Sweet Coffee shop is given in Table 2. Table 2. Personnel Plan Personnel Year 1 Year 2 Year 3 Cashier INR 60,000 INR 66,000 INR 72,600 Worker INR 48,000 INR 52,800 INR 58,080 Number of employees 2 2 2 TOTAL 108000 118800 130680 6. Finance Sweet Coffee shop will capitalize on the strong demand for high-quality coffee. The owners have provided the shop with sufficient start-up capital. With successful management aimed at establishing and growing a loyal customer base, the business will see its net worth doubling in two years. Sweet Coffee shop will maintain a healthy 50% gross margin, which combined with reasonable operating expenses, will provide enough cash to finance further growth. The profit and loss account is projected for upcoming three years. The sales, margin, expenses and profit are given in Figure 4. It is expected that the proposed product is profitable in the first year. The profit is increasing in the upcoming years. Business plan of Sweet Coffee Shop by Job Thomas 5
  • 6. INR 3,000,000 INR 2,500,000 INR 2,000,000 Year 1 INR 1,500,000 Year 2 INR 1,000,000 Year 3 INR 500,000 INR 0 Sale Margin Expenses Profit Figure 4. Projected sale, margin, expenses and profit of Sweet Coffee shop The balance sheet is projected for the upcoming three years. The projected asset, liabilities and capital are given in Figure 5. The growth of asset and capital is increasing significantly. The net worth of the business is increasing, which is the positive sign of growth of the business INR 1,000,000 INR 800,000 INR 600,000 Year 1 INR 400,000 Year 2 INR 200,000 Year 3 INR 0 Assests Liabilities Capital Figure 5. Projected assets, liabilities and capital of Sweet Coffee shop 7. Critical-Risks The neatness and the custom made coffee or tea would be core attraction of Sweet Coffee shop. Milma booth stall will definitely be one of the major competitors because of its established marketing and operational practices. However, despite of Milma booth stall entrenched market position, many customers favor smaller, independent establishments that offer cozy atmosphere and good coffee at affordable prices. 8. Harvest strategy Strategy will be focused at getting new customers, retaining the existing customers, getting customers to spend more and come back more often. Establishing a loyal customer base is of a paramount importance since such customer core will not only generate most of the sales but also will provide favorable referrals. Sweet Coffee shop will position itself as unique coffee bar where its patrons can not only enjoy a cup of Business plan of Sweet Coffee Shop by Job Thomas 6
  • 7. perfectly brewed coffee but also spend their time in an ambient environment. Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the customers to relax from the daily stresses and will differentiate Sweet Coffee shop from incumbent competitors. To speed up the customer service, at least two employees will be servicing clients--while one employee will be preparing the customer's order, the other one will be taking care of the sales transaction. All sales data logged on the computerized point-of-sale terminal will be later analyzed for marketing purposes. 9. Milestone schedule The milestones are guidelines for each of the members should strive to achieve. The milestones of Sweet Coffee shop is given below. Milestones Item Quarter1 Quarter2 Quarter3 Quarter4 Customer delight XXXXXXXXXXXXXXXX Achieve sale target XXXXXXXXXXXXXXXX Improvement in business XXXXXXXXXXXXXXXX Business plan of Sweet Coffee Shop by Job Thomas 7
  • 8. 10. Appendix A1. Start-up Requirements Start-up Expenses Legal INR 5,000 Stationery etc. INR 2,000 Brochures INR 2,000 Consultants INR 0 Insurance INR 5,000 Rent INR 1,000 Remodeling INR 5,000 Other INR 5,000 Total Start-up Expenses INR 25,000 Start-up Assets Cash Required INR 10,000 Start-up Inventory INR 10,000 Other Current Assets INR 0 Long-term Assets INR 15,000 Total Assets INR 35,000 Total Requirements INR 60,000 Business plan of Sweet Coffee Shop by Job Thomas 8
  • 9. A2. Start-up Funding Start-up Expenses to Fund INR 25,000 Start-up Assets to Fund INR 35,000 Total Funding Required INR 60,000 Assets Non-cash Assets from Start-up INR 25,000 Cash Requirements from Start-up INR 10,000 Additional Cash Raised INR 0 Total Assets INR 35,000 Liabilities and Capital Liabilities Current Borrowing INR 20,000 Long-term Liabilities INR 0 Accounts Payable (Outstanding Bills) INR 0 Other Current Liabilities (interest-free) INR 0 Total Liabilities INR 20,000 Capital Planned Investment Investor 1 INR 40,000 investor 2 INR 0 All other investors INR 0 Additional Investment Requirement INR 0 Total Planned Investment INR 40,000 Loss at Start-up Expenses (INR 25,000) Total Capital INR 15,000 Total Capital and Liabilities INR 35,000 Total Funding INR 60,000 Business plan of Sweet Coffee Shop by Job Thomas 9
  • 10. A2. Profit and Loss Account (projected) Income Year 1 Year 2 Year 3 Sales INR 1,740,000 INR 2,175,000 INR 2,610,000 Direct Cost of Sales(0.65-.55) INR 1,131,000 INR 1,305,000 INR 1,435,500 Other 0 0 0 Total Cost of Sales INR 1,131,000 INR 1,305,000 INR 1,435,500 Gross Margin INR 609,000 INR 870,000 INR 1,174,500 Gross Margin % 35% 40% 45% Expenses Year 1 Year 2 Year 3 Payroll INR 130,680 INR 0 INR 0 Sales and Marketing and Other Expenses INR 20,000 INR 20,000 INR 20,000 Depreciation (0.3) INR 4,500 INR 4,500 INR 4,500 Rent INR 1,000 INR 1,000 INR 1,000 Maintenance INR 5,000 INR 5,000 INR 5,000 Utilities/Phone INR 1,000 INR 1,000 INR 1,000 Payroll Taxes INR 0 INR 0 INR 0 Other INR 0 INR 0 INR 0 Total Operating Expenses INR 162,180 INR 31,500 INR 31,500 Profit Before Interest and Taxes INR 446,820 INR 838,500 INR 1,143,000 EBITDA INR 451,320 INR 843,000 INR 1,147,500 Interest Expense INR 4,000 INR 4,000 INR 4,000 Taxes Incurred (0.3) INR 134,046 INR 251,550 INR 342,900 Net Profit INR 313,274 INR 587,450 INR 800,600 Net Profit/Sales 18% 27% 31% Business plan of Sweet Coffee Shop by Job Thomas 10
  • 11. A4. Balance sheet (projected) Assets Year 1 Year 2 Year 3 Current Assets Cash INR 328,938 INR 616,823 INR 840,630 Inventory INR 29,500 INR 24,000 INR 18,500 Other Current Assets INR 10,000 INR 10,000 INR 10,000 Total Current Assets INR 368,438 INR 650,823 INR 869,130 Long-term Assets Long-term Assets INR 15,000 INR 15,000 INR 15,000 Accumulated Depreciation (INR 4,500) (INR 9,000) (INR 13,500) Total Long-term Assets INR 10,500 INR 6,000 INR 1,500 Total Assets INR 378,938 INR 656,823 INR 870,630 Liabilities and Capital Year 1 Year 2 Year 3 Accounts Payable INR 15,664 INR 29,373 INR 40,030 Current Borrowing INR 20,000 INR 20,000 INR 20,000 Other Current Liabilities INR 0 INR 0 INR 0 Subtotal Current Liabilities INR 35,664 INR 49,373 INR 60,030 Long-term Liabilities INR 0 INR 0 INR 0 Total Liabilities INR 35,664 INR 49,373 INR 60,030 Paid-in Capital INR 40,000 INR 30,000 INR 20,000 Retained Earnings (INR 10,000) (INR 10,000) (INR 10,000) Earnings INR 313,274 INR 587,450 INR 800,600 Total Capital INR 343,274 INR 607,450 INR 810,600 Total Liabilities and Capital INR 378,938 INR 656,823 INR 870,630 Business plan of Sweet Coffee Shop by Job Thomas 11
  • 12. A5. Ratio Analysis Financial ratios Year 1 Year 2 Year 3 Current ratio 10.33 13.18 14.48 Inventory turn-over 38.34 54.38 77.59 Debt/Net worth 0.10 0.08 0.07 Return on tangible net worth 0.91 0.97 0.99 Return on Assets 0.83 0.89 0.92 Financial ratios 80 60 Year 1 Ratio 40 Year 2 20 Year 3 0 Current ratio Inventory turn-over Financial ratios 1.00 0.80 0.60 Year 1 Ratio 0.40 Year 2 0.20 Year 3 0.00 Debt/Net w orth Return on tangible Return on Assets net w orth Business plan of Sweet Coffee Shop by Job Thomas 12