05 Mar Coffee Shop Business Plan

Opportunity

Problem

People near the University of Oregon need not just coffee and tea, or pastries and snacks, but also a place to meet comfortably, have a group discussion, or just sit quietly, work, and read. It is now available near the University of Oregon campus. However, it is too crowded and does not provide the right combination of factors.

Solution

Java Culture coffee shop is committed to becoming a daily necessity in the lives of local coffee addicts.

Market

Java Culture will target university students and faculty, as well as people working in coffee bars near their offices. Based on market research, these customers are the most likely to purchase gourmet coffee. Because gourmet coffee consumption is common across all income groups and greatly depends on education level, it will be easy to get to the right customer audience by being near the University of Oregon campus.

Concurrence

Java Culture will face competition from other coffee shops located close to the University of Oregon campus. These include Starbucks and Cafe Roma as well as The UO Bookstore and other food service establishments that serve coffee.

Why Us?

A great place to get coffee and pastries.

Expectations

Forecast

As shown below, we plan to grow as derived from our sales forecast. We aim to maintain an industry-standard 60% gross profit margin and reasonable operating expenses, and to produce reasonable profits in the second and third year.

Financial Highlights Year-by-Year

You will need financing

To cover start-up costs and assets, as well as deficient spending during the first months, the owners will invest $140,000.

$27,000 is the start-up cost.

• Legal expenses for obtaining licenses and permits as well as the accounting services totaling $1,300.
• Marketing promotion expenses for the grand opening of Java Culture in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
• For the assistance in setting up the coffee bar, consultants fees of $3,000 were paid to ABC Espresso Services (name changed).
• The total premium for insurance (general liability, workers&#8217’s compensation and property accident) is $2,400
• Pre-paid rent expenses for one month at $1.76 per square feet in the total amount of $4,400.
• Premises remodeling up to $10,000
• Other start-up costs include stationery ($500) as well as phone and utility deposits ($2,500).

These expenses will be incurred before launch, so they take their place in our financial projections as negative retained earnings of $27,680 at the end of the month before we begin. It is included in the balance.

The following assets are required to start-up:

• Cash in the bank totaling $67,000. This includes enough cash to pay employees and owners salaries of $23,900 in the first two months, and cash reserves for three months (approximately $14,400 per month).
• Initial inventory of $16,000 which includes:
  • Coffee beans (12 regular brand and five decaffeinated brands). #8211 $6,000
  • Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – $7,900
  • Retail supplies (napkins, coffee bags, cleaning, etc.) – $1,840
  • Office supplies – $287
• Equipment to purchase for $60,000
  • Espresso machine – $6,000
  • Coffee maker – $900
  • Coffee grinders #8211 $200
  • Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000
  • Storage hardware (bins. utensil rack. shelves. food case.) #8211 $3,720
  • Counter area equipment (counter top, sink, ice machine, etc.) – $9,500
  • Equipment for serving (plates, glasses and flatware): #8211; $3,000
  • Equipment for store (cash registers security ventilation signage) – 8211 – $13,750
  • Office equipment (PC, fax/printer, phone, furniture, file cabinets) – $3,600
  • Other miscellaneous expenses $500

Funding for the company comes mainly from two sources: owner investments and bank loans. Arthur Garfield & James Polk have contributed $70,000 & $30,00, respectively. The total investment amount is $140,000 thanks to $40,000 from all other investors. The remaining $30,000 needed to cover the start-up expenses and assets came from the two bank loans–a one-year loan in the amount of $10,000 and a long-term (five years) loan of $20,000. Both loans were secured via the Bank of America. Therefore, the total start-up cost is $27,000

The balance sheet shows these amounts for the month that preceded opening. Paid-in Capital is the $140,000 investment. The $27,000 expenses can be referred to as negative retained earnings. There are assets and liabilities. Financial standards dictate that this happens.