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Discuss about the Enterprenuership, The new business is intended to offer its target consumers, mainly the younger and middle-aged individuals, with freshlypreparedsuper quality coffee within the selected locality of Melbourne at Little Bourke Street. 

Potential of New Venture

Encore coffee roaster company is expected to become a daily necessity for domestic coffee addicts and can serve as a comfortable place to meet new friends. The new business is intended to offer its target consumers, mainly the younger and middle-aged individuals, with freshlypreparedsuper quality coffee within the selected locality of Melbourne at Little Bourke Street. The coffee beverages offered by Encore Coffee Roaster Company will be complemented with pasties along with reading free magazines that would be available on each table of the shopfor reading within it, which can attract consumers in enjoying their visit to the café (Allison, McKenny and Short2014). With increasing demand for superior quality gourmet coffee along with better service, the brewbusiness will set its business location near University in Melbourne region to develop a core group of repeat consumers.

The new coffee shop business will initiate its operation on 1st January 2019 and will operate within 2300 square foot coffee bar area in a walking distance from the university. Thenew business will invest $25,000 for its start-up funds and the remaining capital of $25,000 will be attained through attaining commercial loans from banks.For ensuring successful launch of this business, Encore Coffee Roaster Company will develop effectivebusinessby conducting marketing research, operational strategy, financial plan estimation and management structure thatwill ensure its survival in the market.

Coffee consumption in Australia has indicted a steady growth with gourmet coffee attaining he highest demand in the Melbourne region(Barton 2016). Coffee drinkers in the Pacific Northwest are among the demanding ones(Barton 2016). The consumers in the coffee industry of Australia is observed to favor well-brewed gourmet coffee beverages along with demanding great coffee shop ambiance services. Melbourne region in Australia is observed to be liberal with outgoing population. Moreover, the region has soothing climate all around the year, which serve as a great place for coffee establishments.Based on the situation of coffee beverage industry of Australia the new business will focus on building a loyal consumer base through offering a great tasking coffee.

The coffee shops industry has attained strong growth over the years that is supported by Australia’s vibrant coffee consumption culture. The revenue within the industry is anticipated to grow by 5.1% because of positive consumer sentiment along with rising incomeswhich persuaded consumers to visit coffee shops. Industry revenue is anticipated to increase by 2.7% that is to $ 8.3 billion (Thomas, Gudmundson, Turnerand Suhr 2014). The café and coffee shops sector are characteristics by a low market share concentration with no player responsible for more than 6% of revenue. Coffee culture within Australia along ith its increasing number of specialty cafes along with coffee shops has resulted in increased competition within the industry, low entry barriers along with low industry concentration. Consumers select independent cafes and coffee shops in comparison to chain stores and tailored coffee along with exceptional product offerings (Thomas, Gudmundson, Turnerand Suhr 2014).

Based on the coffee industry of Australia, Encore Coffee Roaster Company has better potential for its business growth among all its target consumers. The new business has great potential for growth in the selected location of Melbourne through catering to the market needs that is focused towards quality and variety in coffee beverages (Thomas, Gudmundson, Turnerand Suhr 2014). The industry is observed to support innovation in coffee beverage innovation those are in great demand by the consumers. Focused on such industrial situation, Encore Coffee Roaster Company will a lot of college students prefer visiting coffee bars as they feel that it is a convenient place for studying or meeting with friends. The major success objectives set by Encore Coffee Roaster Company includes:

  • Positioning itself as ‘the best new coffee bar within Melbourne’ by the local restaurant guide
  • Attaining profits from the first month of its business operations along with maintaining 65% of the gross margin

Market Position

To attain better potential for this new business success in Melbourne, Encore coffee Roaster Company will make best efforts in developing a unique place where consumers can socialize with one another within a comfortable and relaxing surrounding while enjoying the perfectly brewed coffee along with espresso and pastries in the locality (Watson, McGowan and Cunningham 2018). To attain maximum growth potential from the coffee shop business the company will invest its share of profits for enhancing consumer satisfaction through offering espresso-based coffee beverages including lattes, mochas and cappuccinos with shot of skimmed, whole or soy milk.

The selected target market for this new business of Encore Coffee Roaster Company is the students and faculty of “University of Melbourne” along with the people working within the offices situated nearby the coffee shop. The sophisticated teenagers working within the locality of Melbourne are also the target consumers of the new coffee shop venture (Schaper, Volery Weber and Gibson 2014). From the marketresearch it is evident that the selected target consumer groups are most likely to purchase gourmet coffee products. In addition, anothertargetconsumergroup for Encore Coffee Roaster Company are the coffee houses, espresso cars and drive through establishments. This segment is deemed to have 97 potential consumers along with 7% growth rate (Simón-Moya and Revuelto-Taboada 2016). For the reason that consumption of gourmet coffee is universal within different income groups, selection of the target market is based on different income categories and it greatly relies on higher education level, closeness to the university of Melbourne. This can facilitate the new business to attain increased access to target consumers.

Encore Coffee Roaster Company will position its market position through developing the finest coffee beverageproducts, exceeding consumersexpectational and through employing strict financial controls (Kusumaningrum and Hidayat 2016). The new coffee shop business intends to attain a huge consumer base and an increasing market share within Melbourne region through building brand awareness and consumer service excellence through increasing sales. In addition, Encore Coffee Roaster Company will offer finest selection of coffee beverages through using an excellent Italian master roaster that can brew fine quality coffee (Macaulay 2018). The coffee shop willdevelop three keys for attaining competitive success within the market. The owner of the new business will bring in authentic Australian traditions and recipes in addressing the market need for the premium coffee beverage. To cater to the demands of target consumers, Encore Coffee Roaster company will provide competitive coffee bean and ground offerings in one- and five-poundpackages. To attain a competitive market position, the new coffee shop will position itself as best in product category relied on quality and taste (McKenzie 2017).

The consumers in the coffeeindustry of Australia is observed to favor well-brewed gourmet coffee beverages along with demanding great coffee shop ambiance services.Consumers select independent cafes and coffee shops in comparison to chain stores and tailored coffee along with exceptional product offerings (Hervert-Escobar and Alexandrov 2018).Encore Coffee Roaster Company will a lot of college students prefer visiting coffee bars as they feel that it is a convenient place for studying or meeting with friends. The new coffee shop will address the market demand through catering to consumer needs through offering better tasting coffee (Rimm 2016). It will also provide exotic and unique that can offer good selling opportunity for the coffee shop. Moreover, Encore Coffee Roaster Company will also position itself among its target consumers through offering independent establishment which offer cozy surrounding along with offering high quality coffee at affordable prices as per consumer demands (Ivanisevic, Katic, Buchmeister and Leber 2016). Selling coffee with superior service within a nice setting that can facilitate the target consumers in developing a strong consumer base with developing ambiance of comfortable sitting arrangements and quite relaxing music that can facilitate consumers to get revealed in such surrounding as per consumer needs.

Market Demand

The pricing strategy of Encore Coffee Roaster Company will be focused on maximizing the consumer strengths. This can be attained if they price the food and coffee beverage products at a lower level. Competitive pricing strategy will be followed by the new coffee shop at aa cheaper rates based on the prices set by the competitor companies (Busenitz 2014). Through setting such prices for all its product offerings such asespresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be sold in the coffee bar. Through offering low process for all its high quality and innovative coffee products, Encore Coffee Roaster Company is intended to offer complementary or discounted sides such as pastries, small salads and sandwiches at lower price than its major business rivals in the locality (Chambers and Humble 2017).

The advertisingstrategy of Encore Coffee Roaster Company will be through the social media channels such as Facebook, Instagram and Twitter (Chang 2016). This marketing strategy will be focused on communicating with the target consumers regarding the competitive benefits and new flavors offered by the company in comparison to its business rivals. Print advertising campaign will also be used by this new coffee shop business and the advertisementpamphlets will be distributed within the university campus. Advertisement in such publications will be efficient in attracting huge target audience base (Cordell and Plaster2015).

The distribution strategy of Encore Coffee Roaster Company will be focused on offering high quality coffee product offerings along with exceptional service. In the distributionstrategy of this new business, the account managers will be accountable for looking after the needs of individualconsumers making sure that their demands are addressed (DeNoble and Zoller2017). The coffee-basedproducts and services will be offered by Encore Coffee Raster Company through its local coffee shop space set nearby the “University if Melbourne”. For setting up the business, the owners will secure the location chosen in Melbourne on a three-year lease basis with keeping an option for extending the lease (Gilman 2017).

Cost Estimates

Buildings / Real Estate

Purchase

 $                       40,000

Construction

                          10,000

Remodeling

                                      -

Other

                                500

Total Buildings and R / E

 $                       50,500

Leasehold Improvements

Espresso machine

 $                         5,500

Two Grinders

 $                         5,500

Refrigerator

 $                         5,500

Freezer

 $                         5,500

Total L / H Improvements

 $                       22,000

Capital Equipment List

Furniture

 $                       55,000

Equipment

 $                         1,500

Fixtures

 $                         1,500

Machinery

 $                         6,500

Other

 $                         2,500

Total Capital Equipment

 $                       67,000

Location and Admin Expenses

Rental

 $                                  -

Utility Deposits

                             5,500

Legal and Accounting Fees

                             4,500

Prepaid Insurance

                          55,000

Pre-opening Salaries

                             5,500

Other

                             5,500

Total Location and Admin Expenses

 $                       76,000

Opening Inventory

Espresso machine

 $                         2,560

Two Grinders

 $                         2,560

Refrigerator

 $                         2,560

Freezer

 $                         2,560

Brewer

 $                         2,560

Total Inventory

 $                       12,800

Advertising and Promotional Expenses

Advertising

 $                         1,500

Signage

 $                         1,500

Printing

 $                         1,500

Travel & Entertainment

 $                         1,500

Other / Additional categories

                                      -

Total Adv and Promo expenses

 $                         6,000

Payroll and payroll taxes

Expense 1

 $                       25,000

Expense 2

                          25,000

Total Payroll and payroll taxes

 $                       50,000

Specific functions of Encore Coffee Roaster Company will be to offer the target consumers of “University of Melbourne” with premium coffee and espresso products along with complementary snacks and pastries. The major operation of this new coffee shop will be to offer super quality coffee beverages of different flavors and innovative preparations as per the demands of the local consumers in Melbourne (Thomas, Gudmundson, Turnerand Suhr 2014). Moreover, the business will also be set in the location of Melbourne near to the “University of Melbourne” for attracting huge target consumers and attaining high sales and profits from the businesses over years to sustain competitive position in the market.

Encore Coffee Roaster Company will start up its business near the “University of Melbourne” for the reason that it can offer the business with increased proximity to its consumers. The target consumers of the business will majorly be the students and faculties working within the university those greatly demand superior quality coffee in a cozy coffee shop surrounding (Kusumaningrum and Hidayat 2016). Moreover, the new coffee shop is positioned near the university so that the business can regularly track changing consumer metrics for further modification of its coffee beverages or services as per the desires of all its target consumer segments in the locality of Melbourne.

Encore Coffee Roaster company will maintain suppliers those are renowned to offer superior quality sustainably sourced coffee beans from New Zealand. The ne coffee shop business will also make sure that the supplier is selected by the company offers quality rawmaterials at a competitiveprice in the Melbourne locality. Moreover, the new coffee shop will also consider maintaining effective relationship with its suppliers through following the legislative rules and components along with paying on time (Cordell and Plaster2015). In addition, local suppliers of coffee and other rawmaterialsneed for food products will be sourced locally by Encore Coffee Roaster Company. Coffee bean suppliers, premium coffeesuppliers from New Zealand, quick service restaurantsandspecialty coffee center will also be the suppliers of this new coffee shop.

The legalstructure of Encore Coffee Roaster Company will be a corporation business that will involve two or more people those will agree to share profits or losses within the business (Botha and Robertson 2014). A major benefit of such legal corporation business structure will become an entity that will handle all the responsibilities of the business. Moreover, the corporation can be taxed and can be legally viable for all its business conducts. The major advantage of this legal structure is avoidance of personal liability and in such business structure it is important for Encore Coffee Roaster Company to record investment in equipment and whether the business lends itself in potential liability (Burns and Dewhurst 2016).

A full-time manager will be appointed to look after everyday operations of Encore Coffee Roaster Company. The personnel had three years of managerial experience in one of the renowned hotels of Melbourne (Berbegal-Mirabent, Gil-Doménechand Alegre 2016). The responsibility of this person will be to name staff, ordering inventory, dealing with suppliers, developing marketing strategy along with carrying other everyday managerial operations.

The management staff of the Encore Coffee Roaster Company will be divided into segments including restaurant manager, cashier and storekeeper. The personnel within this level will have the responsibility of allocate right resources at the right time for creating a better experience for consumers (Thomas, Gudmundson, Turnerand Suhr 2014). The kitchen staff of the new business will have the responsibility of takeaways, casual dining and offering better diningexperience for the target consumers.

Other than the above-mentionedstaff, the management structure of Encore Coffee Roaster Company will include owner, bookkeeper, general manager, assistant managers, kitchen managers and team members for floor support (Thomas, Gudmundson, Turnerand Suhr 2014). Other than these personnel, the employees will include two cashiers, two cooks and table attendants.

Startup Expenses of Encore Coffee Roaster Business

Startup Expenses

Buildings / Real Estate

Purchase

 $                       40,000

Construction

                          10,000

Remodeling

                                      -

Other

                                500

Total Buildings and R / E

 $                       50,500

Leasehold Improvements

Coffee beans

 $                         5,500

grinding machines

 $                         5,500

snacks

 $                         5,500

kitchen appliances

 $                         5,500

furniture

 $                       22,000

Capital Equipment List

Furniture

 $                       55,000

Equipment

 $                         1,500

Fixtures

 $                         1,500

Machinery

 $                         6,500

Other

 $                         2,500

Total Capital Equipment

 $                       67,000

Location and Admin Expenses

Rental

 $                                  -

Utility Deposits

                             5,500

Legal and Accounting Fees

                             4,500

Prepaid Insurance

                          55,000

Pre-opening Salaries

                             5,500

Other

                             5,500

Total Location and Admin Expenses

 $                       76,000

Opening Inventory

Coffee beans

 $                         2,560

grinding machines

 $                         2,560

snacks

 $                         2,560

kitchen appliances

 $                         2,560

furniture

 $                         2,560

Total Inventory

 $                       12,800

Advertising and Promotional Expenses

Advertising

 $                         1,500

Signage

 $                         1,500

Printing

 $                         1,500

Travel & Entertainment

 $                         1,500

Other / Additional categories

                                      -

Total Adv and Promo expenses

 $                         6,000

Payroll and payroll taxes

Expense 1

 $                       25,000

Expense 2

                          25,000

Total Payroll and payroll taxes

 $                       50,000

Break Even Point of Encore Coffee Roaster Business

Fixed Expenses

Fixed Expenses

Electricity

 $                   50,500

Water

                       22,000

Managers and employees salary

                       67,000

Local council rates

                       76,000

Internet

                                  -

Telephone

                         6,000

Other Expenses

                       50,000

Total Fixed Expenses

 $                 271,500

Variable Expenses

Inventory or Materials

90000.0

Direct labor (includes payroll taxes)

91000.0

Variable costs per units produced

98000.0

Material cost

99000.0

Salaries (includes payroll taxes)

100000000.0

Supplies

10000000.0

Total Variable Expenses

11037800000%

Breakeven Sales level   =

0

Profit and Loss Statement of Encore Coffee Roaster Business

Year 1

Year 2

Year 3

Year 4

Year 5

Gross revenue

$80,000

$81,600

$84,864

$89,956

$97,152

Cost of goods sold

$0

$0

$0

$0

$0

Gross margin

$80,000

$81,600

$84,864

$89,956

$97,152

Other revenue [source]

$21,000

$22,000

$23,000

$24,000

$25,000

Interest income

$8,000

$7,000

$6,000

$5,000

$4,000

Total revenue

$109,000

$110,600

$113,864

$118,956

$126,152

Operating expenses

Sales and marketing

$6,000

$6,120

$6,365

$6,747

$7,286

Payroll and payroll taxes

$50,000

$51,000

$53,040

$56,222

$60,720

Depreciation

$27,900

$28,458

$29,016

$29,574

$30,132

Maintenance, repair, and overhaul

$0

$0

$0

$0

$0

Total operating expenses

$83,900

$85,578

$88,421

$92,543

$98,139

Operating income

$25,100

$25,022

$25,443

$26,413

$28,014

Interest expense on long-term debt

$1,500

$1,545

$1,591

$1,639

$1,688

Operating income before other items

$23,600

$23,477

$23,852

$24,774

$26,325

Loss (gain) on sale of assets

$330

$320

$310

$300

$290

Other unusual expenses (income)

$0

$0

$0

$0

$0

Earnings before taxes

$23,930

$23,797

$24,162

$25,074

$26,615

Taxes on income

$7,179

$7,139

$7,249

$7,522

$7,985

Net income (loss)

$16,751

$16,658

$16,913

$17,552

$18,631

Balance Sheet of Encore Coffee Roaster Business

Assets

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Cash and short-term investments

$0

$74,400

$195,403

$318,010

$442,223

$568,044

Accounts receivable

0

0

0

0

0

0

Total inventory

0

0

0

0

0

0

Prepaid expenses

0

0

0

0

0

0

Deferred income tax

0

0

0

0

0

0

Other current assets

0

0

0

0

0

0

Total current assets

$0

$74,400

$195,403

$318,010

$442,223

$568,044

Buildings

$50,500

$50,500

$50,500

$50,500

$50,500

$50,500

Land

0

0

0

0

0

0

Capital improvements

 $                        22,000

22,000

22,000

22,000

22,000

22,000

Machinery and equipment

 $                        67,000

67,000

67,000

67,000

67,000

67,000

Less: Accumulated depreciation expense

0

27,900

56,358

85,374

114,948

145,080

Net property/equipment

$139,500

$111,600

$83,142

$54,126

$24,552

($5,580)

Goodwill

$0

$0

$0

$0

$0

$0

Deferred income tax

0

0

0

0

0

0

Long-term investments

0

0

0

0

0

0

Overhead costs

0

0

0

0

0

0

Other long-term assets

0

0

0

0

0

0

Total assets

$139,500

$186,000

$278,545

$372,136

$466,775

$562,464

Liabilities

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Accounts payable

$65,000

$65,000

$65,000

$65,000

$65,000

$65,000

Accrued expenses

21,000

21,000

21,000

21,000

21,000

21,000

Notes payable/short-term debt

18,000

18,000

18,000

18,000

18,000

18,000

Capital leases

19,000

19,000

19,000

19,000

19,000

19,000

Other current liabilities

17,500

17,500

17,500

17,500

17,500

17,500

Total current liabilities

$140,500

$140,500

$140,500

$140,500

$140,500

$140,500

Long-term debt from loan payment calculator

                          95,000

$51,500

$53,045

$54,636

$56,275

$57,964

Other long-term debt

$0

$0

$0

$0

$0

$0

Total debt

$235,500

$192,000

$193,545

$195,136

$196,775

$198,464

Other liabilities

0

0

0

0

0

0

Total liabilities

$235,500

$192,000

$193,545

$195,136

$196,775

$198,464

Equity

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Owner's equity (common)

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

Paid-in capital

0

0

0

0

0

0

Preferred equity

0

0

0

0

0

0

Retained earnings

0

0

0

0

0

0

Total equity

$50,000

$50,000

$50,000

$50,000

$50,000

$50,000

Total liabilities and equity

$285,500

$242,000

$243,545

$245,136

$246,775

$248,464

Cash Flow of Encore Coffee Roaster Business

 

Year 1

Year 2

Year 3

Year 4

Year 5

Total

Operating activities

Net income

$25,000

$26,000

$27,000

$28,000

$29,000

$135,000

Depreciation

$27,900

$28,458

$29,016

$29,574

$30,132

$145,080

Accounts receivable

$0

$0

$0

$0

$0

$0

Inventories

$0

$0

$0

$0

$0

$0

Accounts payable

$0

$0

$0

$0

$0

$0

Amortization

5,000

5,000

$5,000

$5,000

$5,000

$25,000

Other liabilities

25,000

25,000

$25,000

$25,000

$25,000

$125,000

Other operating cash flow items

0

0

$0

$0

$0

$0

Total operating activities

$82,900

$84,458

$86,016

$87,574

$89,132

$430,080

$0

Investing activities

$0

Capital expenditures

$0

$0

$0

$0

$0

$0

Acquisition of business

15,000

15,000

15,000

15,000

15,000

$75,000

Sale of fixed assets

$10,000

$10,000

$10,000

$10,000

$10,000

$50,000

Other investing cash flow items

0

0

0

0

0

$0

Total investing activities

$25,000

$25,000

$25,000

$25,000

$25,000

$125,000

Financing activities

Long-term debt/financing

($43,500)

$1,545

$1,591

$1,639

$1,688

($37,036)

Preferred stock

0

0

0

0

0

0

Total cash dividends paid

5,000

5,000

5,000

5,000

5,000

25,000

Common stock

0

0

0

0

0

0

Other financing cash flow items

5,000

5,000

5,000

5,000

5,000

25,000

Total financing activities

($33,500)

$11,545

$11,591

$11,639

$11,688

$12,964

Cumulative cash flow

$74,400

$121,003

$122,607

$124,213

$125,820

$568,044

Beginning cash balance

$0

$74,400

$195,403

$318,010

$442,223

Ending cash balance

$74,400

$195,403

$318,010

$442,223

$568,044


Social, Environmental and Entrepreneur Analysis

The corporate governance plan for the new business of Encore Coffee Roaster Company will include the social, environmental and entrepreneur aspects. In addition, the key performance indicators (KPIs) that the business will monitor, measureand report to its stakeholders in order to improve the company’s profit margin are described under:

  • Food and coffee average costs:Food and coffee beverage purchases can be measured against their sales. A coffee beverage cost per person can be determined to establish profit margin attained per consumer. A percentage increase in sales of the coffee beverage products indicates increasing profit for the companies.
  • Kitchen labor:This can be measured against the sales of coffee beverages sold. Time taken for preparing a coffee beverage or any food products is an effective manner to measure increasing productivity of the coffee shop’s productivity.
  • Basket Items:Analyzing the data on the increasing orders of morningcoffee drinkers will facilitate in measuring increasing sales of its offerings with growing years. A percentage increase in sales margin of all its basket items with growing months can facilitate in analyzing whether there is any room for up selling improvement.
  • Tracking cash flow:Monitoring cash flow is another major KPI for this new coffee shop business as this can facilitate in tracking its daily cash flow that can indicate the financial health of the business. If the new business desires to maintain a record of the money attained by it through its operations then it should keep on monitoring cash flow along with modifying its business operations accordingly.

 Encore Coffee Roaster Companywillattain Intellectual Property (IP) for the developing business that will include attaining copyright for its menu, illustrations, photographs, images and signature coffee beverages will safeguard the originality of its offerings and will prevent from other restaurants to imitate them. Moreover, as the name of the restaurant is a valuable asset trademark rights will be attained by Encore Coffee Roaster Company to avoid selecting similar name by any business rival. The IP for the new coffee shop will be protected throughfollowingfive major ways those are indicated below:

  • Being distinctive:The new business will develop a menu with innovative names that is not similar to the menu offered by its competitors. Such strategy will facilitate in facilitate it in promoting its offerings along with supporting in IP protection so that its offerings are not imitated by its business rivals. In addition, the name of the restaurant is also selected with considering that there are no other restaurants having same name that is confusing.
  • Realizing the unregistered IP rights:Encore Coffee Roster Company will be aware that certain intellectual property rights automatically exist regardless of registration. For instance, in this new business, copyright is generally associated with restaurant logos along with signage that can also stretch to safeguard menus. Recipes might be protected as trade secrets that will include information on economic or competitive advantages for its owner for certain secrecy reasons.
  • Registering the trademark:Certain IP addresses require being registered in order to attain maximum protection and attaining trademark is one of them. For Encore Coffee Roaster Company a trademark can exist in several forms and restaurant name and logo are involved in such trademarks. The company must also attain trademark o its name and logo and it can also exist for any of its dish name or trade secrets in its recipes. The overall appearance of this new coffee shop will also be attained under trademark to avoid imitation from its major competitors.
  • Understanding the contracts needed:The new coffee shop business will consider taking some legal advice from the outset in order to make certain that the IP rights attained by this coffee shop is contractually safeguarded. In ensuring protection of IP rights, the company will consider respect of copyright and respect of trade secrets. As the owner of the trade secret must take the necessary steps in sustaining its secrecy, the business will consider encompassing certain confidentiality provisions within its chef’s employment contract.

Certain risk factors can be faced by the business of Encore Coffee Roaster Company’s business in running their café. Such critical risks faced can be in the form of situations, incidents or certain circumstances that can result in negative consequences for its business. The identified risks that can be faced by this new coffee shop business are indicated below:

  • Strategic or operational risks
  • Compliance with laws and regulations risks
  • Financial risks related with financial structure of businesses, transactions along with financial systems
  • Operational risks associated with administration procedures
  • Market or industry risks that includes changes in government policies or legislation, global financial crisis, economic turmoil or any natural disaster

During the initial months of the coffee shop’s business, being a start-up it will develop financial assets but can still face the concern of lack in working capital in the future years of its operations. Among the major occupational hazard of owning a restaurant is lack of necessary funding or insufficient capital. For such reasons, at the time of initiating this business, the coffee shop needs to have at least seven months of funding saved for covering all its marketing and payroll expenses.

Certain market risks in the hospitality industryis also a concern for this new business as based on the industry reports wage along with hour lawsuits haveturned out to be a major concern for the new coffee shop business. Wage and hour claims takes place at the time employees accuse their employers of failing to pay overtime wages. Certain employment practices in the industry including the liability insurance are observed to greatly decrease the company’s exposure if it attains the suitable risk coverage. Moreover, to decrease such risks the employees of the company will be trained regarding suitable regulations along with reporting methods.

Privacy or data breaches can alsoserve as a critical risk for the new coffee shop business that necessitates Encore Coffee Roaster Company to reconsider their data security practices. Such high profile data breaches have persuaded the new business to select their data vendors efficiently along with analyzing the financial implications to their businesses. This new coffee shop business might have increased exposure as they collect great amounts of private data from consumers as a part of their everyday operations by means of credit card transactions and reward programs. Considering such likely risks, the new business might ensure that the networks are secured through implementing data encryption, straightening passwords along with safeguarding access from the unauthorized individuals.

Certain other industry risks that can be faced by the new coffee shop business are indicated below:

  • Innovating new products, application solutions along with packaging to reach new market without taking any effort more than the companies are capable to manage
  • Efficiently, reliably and profitably offering the freshest and superior quality goods on a regular basis to a multinational base of target consumers
  • Attaining along with maintaining full compliance of government along with industry regulations for environment, food along with worker safety in Australia

As the new coffee shop business will operate its business as a sole proprietorship, it needs an effective exit strategy. In the case the business is observed to be inefficient or not able to make enough profits, it will follow liquidation exist strategy that will consider closing the shop and selling all its assets. The company might also consider spending some time in retooling its business to make it efficient in operating business by someone else or making it a business someonemight prefer to purchase. The advantages of following liquidation strategy by Encore Coffee Roaster Company are its liquidity and the benefit of closing the business in a quick manner depending on the sale of assets. Another exist strategy that is considered by the company is IPO or Initial Public Offering as while closing up the business, this new coffee shop can attain the advantage of taking the company public that can serve to be highly profitable.

Transition of leadership and succession planning will also be considered by this new coffee shop business for its harvest and exist strategy. The leaders of Encore Coffee Roaster Company can consider following an exit strategy through transitioning the business in a new leadership. In case the restaurant is on the verge of its business failure, the owners will consider positioning this business for long term success before such transition takes place along with recognizing ways to increase value of the companies. The internal leadership transition and succession planning process steps that will be followed by this new coffee shop business is explained under:

  • The transition leadership followed by the company in case if business failure can be done through improving strategic leadership and intellectual agility, organizational balance, organizational politics along with dealing with negotiation and conflict resolution. The new leader will develop the ability to attain shared vision of the company based on the market position, profitability and growth position of the new coffee shop in future.
  • The succession planning will consider preparation for transition through communicating among its employees in advance regarding a leadershipchange. Developing a leadership transition process will involve deciding the executive job functions, developing report on company’s challenges and strengths and building relationships with stakeholders to ensure that the groups involved in the transition process will thrive in the company with a new leader.
  • The transiting process will them implemented in which the new leader will focus on relationship buildingalong with renewing collaboration with its coffee beans and necessary facilities suppliers along with developing a two-way communication with partners, consumers, providers and funders that can address priorities along with goals and challenges identified not be addressed by the companyin its initial stages of operations.

If the new coffee shop business faces the risk of decreasing profitability over years, it will consider franchising some of its products for considering business expansion and increasing trend of profitability. Distribution of few of its signature products such as cappuccinos, cookies and fine quality roasted coffee beans can facilitate Encore Coffee Roaster Company to address its consumer demands and efficiently distributing goods and services to improve its poor financial position. The new coffee shop can consider following a joint venture model in franchising its goods in which the company can later enter into a joint venture with any local or international and well-established coffee shop in developing a new company that can act as master franchisee. The master franchise can take care of the operations of the company and offer is franchised products in international market to improve the company’s business operations.

Project Task Information

Project Task

Estimated Start Date

Estimated Completion Date

Task Owner

Actual Start Date

Actual Completion Date

Comments

Project Feasibility Study

1-Jun-09

3-Jun-09

John Doe

1-Jun-09

2-Jun-19

Cost Benefit Analysis

2-Jun-09

4-Jun-09

Jane and John

2-Jun-09

3-Jun-19

Project Definition

6-Jun-09

8-Jun-09

Jane Doe

6-Jun-09

9-Jun-19

Assign Resources

8-Jun-09

9-Jun-09

John Smith

8-Jun-09

Create Project Plan

9-Jun-09

16-Jun-09

Kim Lee

Create Communications Plan

15-Jun-09

17-Jun-09

Jane Doe

Business plan implementation Meeting

19-Jun-09

19-Jun-09

Jane Doe

Create Phase 1 Plan and Definition

22-Jun-09

24-Jun-09

Jane Doe

Phase 1 Execution business plan

24-Jun-09

24-Jun-09

Jane Doe

Communicate Phase 1 Progress

25-Jun-09

1-Jul-09

John Doe

Change Control Processes

1-Jul-09

2-Jul-09

Jane and John

Close Phase 1

2-Jul-09

3-Jul-09

Jane Doe

Create Phase 2 Plan and Definition

1-Jul-09

3-Jul-09

Chris Johnson

Phase 2 Execution Business plan

6-Jul-09

6-Jul-09

Chris Johnson

Communicate Phase 2 Progress

7-Jul-09

9-Jul-09

Chris Johnson

Change Control Processes

9-Jul-09

10-Jul-09

Chris Johnson

Close Phase 2

13-Jul-09

14-Jul-09

Jane Doe

Project Delivery

15-Jul-09

15-Jul-09

Production Team

Project Closure Meeting

16-Jul-09

16-Jul-09

Jane Doe

Performance Appraisal

16-Jul-09

18-Jul-09

Jane Doe

Project Feedback Form

16-Jul-09

18-Jul-09

Kim Lee

Project Debrief Report

17-Jul-09

20-Jul-09

Jane Doe


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