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Our Mission and Goal

Question:

Describe about Assumptions, Budget and Expected Profit and loss statement for the Cafe+?

Café+ will be located charlotte street, Brisbane, Queensland. Coffee shop business is one of the bumming industries in Australia because of the rise in the demand of the quality coffee and gourmet at value price.  The café will be owned by the sole proprietor with several year of experience.  The café + will be open for business from Sunday to Saturday 7-10pm (Augenti, 2010).  The café+ will b serving the various types of coffee, teas along with the pastry, muffins, breads, cookies and rolls.  The entire bakery stuff will be supplied daily by the local farmers. Café+ will have exposure from food to beverages especially in the current locations. Although there are number of Café house for the present in the Brisbane but lack of quality of coffee and price are some of the major opportunity which helps the business café+ to grow in the Queensland market (Baligh,  2007).

Mission

  • To satisfy the customer needs for high quality coffee along with delicious and nutritious meals
  • Excellent service with high degree of unique and fresh products served
  • Comfortable and relaxing environment for relaxing and enjoying the latte and pastries in town.
  • Café+ will be looking to earn the profit to increase the employee satisfaction while providing stable return.
  • Employees of the Café+ will be treated fairly with salary and the other major facilities.
  • People of all ages and backgrounds will be welcomed and enjoy the cuppa with family and friends.

Objectives

  • To become one of the bets coffee shop in the Brisbane in compare to its competitors.
  • Turn the profit from first month of the operations
  • Achieve the high market share within the 1st
  • Increase the number of the customers by 32% every year
  • Undertaking more aggressive marketing and promotions
  • Improving the cost control by reducing the operational wastage (Barringer, 2010).
  • Maintaining the same price level by creating the unique, upscale, innovative environment that will differentiate from the local coffee houses.
  • The environment will have affordable access to the resources of the internet and other facilities within the café +.
  • Maintain 45% gross profit every month (Barney, 2009).

Key success factors

  • Design of the store will be both visually attractive and designed for the quick operations  in order create high brand value.
  • Training given to the employee to ensure the best coffee preparations techniques
  • Marketing strategies aim to build solid base of loyal customers as well as maximizing the sales
  • Varieties of coffee to tea to soft drinks along with free Wi-Fi that is not available with existing competitors (Barrow, 2011).
  • Creation of unique and innovative form of atmosphere which will differentiate Café+ with others
  • Establish the Café+ club for socializations and entrainment.
  • Varieties within the gourmet like muffins, Chocó lava, to fruit cake and smoothies which will create niche market for the café+ among the competitors (Clarke, 2010).

Assumption

 The Brisbane market for the coffee shop is been one of the major strength for the business. Most of the population in Brisbane has been habituated to do their breakfast at the coffee shop.  The café+ will be selling the cup of the coffee at value pricing as per the customer orders (Drummond et al. 2012). The café+ will be selling espresso drinks , brewed coffee and teas as well as some of the major refreshments  beverages along with varieties of the gourmet which  is not been sold by the other members. The total capital invested for the café + will be 209,810 that will be break down cost for the monthly expense of 187,300 out of which 22,510 was paid in the advance. 

One of the major marketing objectives is to maintain the sales of 536,650 for the 1st year and achieve the more than 35% of Brisbane market shares within the 12 months are some of the major marketing objectives for the company.  The product will less costly and will be convenient place for the customer to eat healthy and live healthy (Jackson et al. 2008). Some of the other products which are sold by the Café+ are Green tea, Tulsi tea and cardamom tea along with organic form of gourmet which will be increasing the market share of the company in the current business market. 

Features

Benefits

Unique

Environment of café +

Comfortable  and relax along facilities of Wi-Fi

Yes

Quality of coffee and tea

Refreshing and fresh 

Nm

Variety of coffee tea, gourmet and meals

Lots of options of the customers

No

Fresh and organic meals

Health and well being

Yes

Chef

High quality meals and espresso and tea

Yes

Desserts and cakes

Complimentary with coffee and meals

No

ANNUAL SALES FORECAST for Café+

Sales Forecast

AUD $ 2015

AUD $ 2016

AUD $ 2017

Products

     

Coffee beverages

350,400

385,440

423984

Tea and other beverages

87,600

96360

105,966

Gourmet etc

146,000

160,600

176,660

total sales

584,000

642,400

706,610

Direct cost of sales

     

 Coffee  beverages

87,600

96360

105,996

Tea and other beverages

43,800

48,180

52,998

Pastries

73,000

80,300

88,330

subtotal direct cost

204,400

224,840

247,324

Fixed Cost for Café +

Equipment

Amount ($AUD)

Espresso Machine

6000

Coffee Maker

900

Coffee Grinder

200

Food service equipment

18000

Storage

3720

Counter Area Equipment

9500

serving Area Equipment

3000

Bookkeeping  register

13,750

Office equipment

3600

Miscellaneous Expenses

500

Total usage of the equipment for 300 days

(Excluding national holidays)

Employees

AUD $ 2015

AUD $ 2016

AUD $ 2017

Managers

35000

37800

40824

Employee

(3 waiters,

2 dishwashers,

2 security guard

1 book keeper

accountants

50,000

(6000*4=24000)

(2500*2= 5000)

(3000*2=6000)

5000

10,000

54000

58320

Chef

39600

52000

56000

Total people

10

11

13

Total payroll

124,600

143,800

155,144

Note : Working on the 3000 days as per the flexible working timings from (7am to 9pm ) every days ( except on national holidays)


Although the managers and owns are experience in the chosen industry but some of the major employee are required which will help to garb the opportunity to manage the café+ (Kaufman, 2010). Most of the personnel plans are very much required to control and develop the business objectives to achieve. With the help of flexible work timings and changing shift will help the business to manage and control the business (Rhyne, 2009).

Segmentation bases

 

Target customers segment of Fast food industry  

Geographic

Region

 Queens land, Brisbane

 

Density

Rural and Urban (1.23 million)

 

Age

All age category

 

Gender

Male, females and others

 

Income

High ,Low and middle income groups

 

Occupation

Employees and professionals

Demographic

Social status

Working class, middle class and higher class

 

Family size

Single, nuclear, joint family

Psychographic

Lifestyle

Traditional and moderns

 

Occasions

Regular  and other Festive seasons

Behavioural

Benefits

Price advantages and diversify products under one roof.

 

Occasions

Parties, Birthdays, anniversary and festive season along with normal days

From the above, it has been found that, both the partners will be investing 50,0000  each in order to on the business . The rest of $345000 is been arranged by the debt financing. Debt financing is one of the prominent ways of financing the business (Farrell,  2007). However, with large interest rates make it more riskier and dangerous. Apart from that, next options will be equity financing which has been which will not be easily available for the business because of new entrepreneur. It is less risky than the debt but company has to share with profit with the general share holders (Germain et al. 2008).

Our Products and Services

Assumptions

Particulars

2015

2016

2017

Current interest rates

10%

10%

10%

Long term interest rates

10%

10%

10%

Tax rates

25.43%

25%

25.50%

Income statement  for the Café+ for the year 2015-17

Particulars

AUD $ 2015

AUD $ 2016

AUD $ 2017

Sales

584,000

642,400

706,640

Direct cost

(Raw materials and equipments)

204,400

224,840

247,324

Gross profit

379600

417,560

459,316

Expenditure

 

 

 

Salary

124600

143,800

155,144

Sales and marketing expenditure

25,800

27,600

31,000

Depreciations

5400

5500

5500

 Rent

48400

52800

52800

Lease rent

6000

6000

6000

Maintenance

5840

6424

7066

Phone and register

9000

9500

10000

Total operating expenses

243,730

273,194

290782

PBIT

135,870

273,194

290,782

EBDITA

141,270

1443660

168,534

Interest expense

2821

2326

1618

Tax incurred

33740

35,510

42,424

Net profit

99,308

106530

124,491

Net sales

17%

16.58%

17.62%

Sales forecast for the year 2015

Sales

month 1

month 2

month 3

month 4

month 5

month 6

month 7

month 8

month 9

month 10

month 11

month 12

Sales

                       

Coffee beverages

24000

27000

28800

28800

28800

28800

28800

28800

29400

31200

33000

33000

Tea and other beverages

6000

6750

7200

7200

7200

7200

7200

7200

7350

7800

8250

8250

Gourmet etc

10000

11250

12000

12000

12000

12000

12000

12000

12250

13000

13750

13750

total sales

40000

45000

48000

48000

48000

48000

48000

48000

49000

52000

55000

55000

direct cost

                       

 Coffee  bevergaes

6000

6750

7200

7200

7200

7200

7200

7200

7350

7800

8250

8250

Tea and other beverages

3000

3375

3600

3600

3600

3600

3600

3600

3675

3900

4125

4125

Pastries

5000

5625

6000

6000

6000

6000

6000

6000

6125

6500

6875

6875

subtotal direct cost

14000

15750

16800

16800

16800

16800

16800

16800

17150

18200

19250

19250

Profit and Loss Statement for the year 2015

 

month 1

month 2

month 3

month 4

month 5

month 6

month 7

month 8

month 9

month 10

month 11

month 12

Sales

40000

45000

48000

48000

48000

48000

48000

48000

49000

52000

55000

55000

Direct cost

14000

15750

16800

16800

16800

16800

16800

16800

17150

18200

19250

19250

Gross profit

26000

29250

31200

31200

31200

31200

31200

31200

31850

33800

35750

35750

Expenditure

                       

Salary

10383

10383

10383

10383

10383

10383

10383

10383

10383

10383

10383

10383

Sales and marketing expenditure

2150

2150

2150

2150

2150

2150

2150

2150

2150

2150

2150

2150

Depreciations

450

450

450

450

450

450

450

450

450

450

450

450

 Rent

0

4400

4400

4400

4400

4400

4400

4400

4400

4400

4400

4400

Lease rent

500

500

500

500

500

500

500

500

500

500

500

500

Maintenance

400

450

480

480

480

480

480

480

490

520

550

550

Pay roll taxes

1558

1558

1558

1558

1558

1558

1558

1558

1558

1558

1558

1558

Phone and register and WIFI

750

750

750

750

750

750

750

750

750

750

750

750

Total operating expenses

16191

20641

20671

20671

20671

20671

20671

20671

20681

20711

20741

20741

PBIT

9809

8609

10529

10529

10529

10529

10529

10529

11169

13089

15009

15009

EBDITA

10259

9059

10979

10979

10979

10979

10979

10979

11169

13089

15009

15009

Interest expense

248

245

243

241

239

236

234

232

232

229

227

225

Tax incurred

2868

2091

2572

2572

2573

2574

2574

2735

3216

3696

3696

3696

Net profit

6693

6273

7715

7716

7718

7720

7721

7723

8205

9647

11088

11090

Cash Flow for the year 2015 , Café+

Particulars

month 1

month 2

month 3

month 4

month 5

month 6

month 7

month 8

month 9

month 10

month 11

month 12

cash sales

40000

45000

48000

48000

48000

48000

48000

48000

49000

52000

55000

55000

Sales tax

0

0

0

0

0

0

0

0

0

0

0

0

long term liabilities

0

0

0

0

0

0

0

0

0

0

0

0

total

40000

45000

48000

48000

48000

48000

48000

48000

49000

52000

55000

55000

Cash spending

10383

10383

10383

10383

10383

10383

10383

10383

10383

10383

10383

10383

Bill payments

728

22112

30569

29450

29449

29447

29447

29445

29474

30424

32727

34199

total Spent on operations

11,112

32,496

40228

40952

39834

39832

39830

39829

39857

40808

43110

4458

Repayment of loan

275

275

275

275

275

275

275

275

275

275

275

275

total cash spent

11387

32771

40503

41227

40109

40107

40105

40104

40132

41083

43385

44853

net cash flow

28613

12229

7497

6773

7891

7893

7895

7896

8868

10917

11615

10417

cash balance

95736

107966

115462

122235

130127

138020

145914

153811

162679

173596

185211

195,358

Balance Sheet for Café + for the Year 2015

Particulars

month 1

month 2

month 3

month 4

month 5

month 6

month 7

month 8

month 9

month 10

month 11

month 12

Asset

Current Asset

cash

95736

107966

15,462

122,235

130,127

138,020

145,914

153,811

162,679

173,596

185,211

195,358

Inventory

15400

17325

18480

18480

18480

18480

18480

18480

18865

20020

21175

21175

total current asset

83150

111136

125291

133942

140,715

148607

156500

164,394

172291

181544

193616

206386

long term asset

59170

59170

59170

59170

59170

59170

59170

59170

59170

59170

59170

59170

depreciation

450

900

1350

1800

2,250

2700

3150

3,600

4050

4500

4950

5400

total long term asset

58720

58270

27820

57370

56920

56470

56020

55570

55120

54670

54220

53770

total asset

169856

183561

191762

198085

205,527

212970

220414

227,861

236664

248,286

260606

270,303

liabilities

current Liabilities

                       

accounts payables

21118

28825

29587

28469

28465

28464

28462

29335

31586

33092

31974

31974

current borrowing

9725

9450

9175

8900

8625

8350

8075

7800

7525

7250

6975

6700

total current liabilities

30843

38275

38762

37369

37092

36815

36539

36262

36800

38836

40067

38674

long term liabilities

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

20,000

paid up capital

140000

140000

140000

140000

140000

140000

140000

140000

140000

140000

140000

140000

earning from selling of ownership

-27680

-27680

-27680

-27680

-27680

-27680

-27680

-27680

-27680

-27680

-27680

-27680

Total capital

119013

125286

133000

140717

148435

156154

163876

171599

179804

189450

200538

211628

total liabilities

169856

183561

191762

198085

205527

212970

220414

227861

236664

248286

260606

270303

net worth

119013

125286

133000

140717

148435

156154

163876

171599

179804

189450

200538

211628

Ratios

Profitability ratios

month 1

month 2

month 3

month 4

month 5

month 6

month 7

month 8

month 9

month 10

month 11

month 12

 

Current ratios

2.70

2.90

3.23

3.58

3.79

4.04

4.3

4.53

4.68

4.67

4.83

5.34

 

Current asset/current Liabilities

                         

Gross profit margin ratio

0.65

0.65

0.65

0.65

0.65

0.65

0.65

0.65

0.65

0.65

0.65

0.65

 

(gross profit*100)/sales

                         

ROA ratio

0.060

0.049

0.057

0.055

0.053

0.052

0.050

0.048

0.047

0.053

0.058

0.056

 

(EBIT*100)/total asset

                         

ROCE

5.51

4.80

4.95

5.30

5.54

5.78

6.03

6.28

6.43

6.39

6.50

6.99

 

Total asset/current liabilities

                         

Expense ratio

0.98

0.9

0.94

0.94

0.94

0.94

0.94

0.94

0.95

0.98

0.98

0.98

 

(expenditure/revenue)

                         


From the above financial feasibility, it has been found that, current ratio for the business is been adequate enough to handle the their operation which is to manage the employee pay roll and the manage the short term purchasing for the company which coffee beans, gourmet raw materials and the various napkins and the utensils for the business (Germain et al. 2008). The Current Ratio and the Quick Ratio (Acid Test) are both very high reflecting the fact that the business has a very strong and positive cash flow. This is due to sales being predominantly cash, whilst purchases are bought on largely on 30 day terms. Liquidity is sound.

The current ratio of the company is there has been numerous occasion  where the companies are looking to spend on the advertisement which will help the company to gather the large customer base of the Brisbane Australia (Glynett, 2012).  After the ROCE of the company is for the  first is more than 5 which shows that company has invested in the right  areas for the owners of the company. The ROCE depicts the return on capital employed which has been one of the most important parts of the business ratios to understand whether or not company is bale to invest in the right areas (Morris et al. 2011).

Apart from that, ROA of the company for the 2015 is very much depicts that company is able to manage and control asset as per the company development. ROA is been one of the major areas for the business which will give an insight for the valuation of asset. Expenditure ratio of the company is very much able to higher which shows that company is able to manage and control the revenue for the company. Besides that, gross profit margin of the company is higher than the expectation which is 0.65 (Godsmark et al. 2009).   The ratio for the café+ shows that company has enough cash and asst to manage its expenditure in the long run for the company.

Conclusion

From the above, it has been found that,  the study, the research project highlights the relationship existent between  the business plan and resources. The entire discussion on the selected topic centers round the aspect of understanding of the business and the financial feasibility which will helps to give an insight for  whether the company is able to create the profitability with current business trend or not . As observed from the primary research, impact of financial feasibility is no doubt shows the positive aspect for the current business process. The study of the chapter described the response of expected financial  plan which helps to gather the information  to explain whether t or not the business is profitable . With help of cash flow ,  it has been found that company has enough cash to maintain the  operation of the company. Apart from that, with help of income statement, it shows company ahs to investment 500, 00 of investment which will give the company enough scope to manage and control the expenditure and income. Lastly, balance of the  café+ very much help to understand whether the company is has  asst like land and building and the equipment which the company ahs top purchase for the sake of the running the business.   With the help of ratio analysis , it has been found that company ROCE is higher rather than what is was expected , therefore the business is very much financially feasible. Lastly, with the help of budgeted financial statements like profit and loss statement and the balance sheet would help to analyses the potential net return on investment of the ownership along with total expenditure.

Reference list

Augenti, L. (2010) How to Start a Home-Based Personal Trainer Business, 4th ed. London: Palgrave Macmillan.

Baligh, H. H. (2007) Organization Structures: Theory and Design, Analysis and Prescription, 5th ed. Heidelberg, New York: Springer Verlag.

Barney, J.  B. (2009) 'Strategic factor markets: Expectations, luck, and business strategy’, Management Science 32(1), pp.  1231-1241

Barringer, B. (2010) Managing Your New Business' Finances, 4th ed. New Jersey: Person Education

Barrow, C. (2011) Practical Financial Management: A Guide to Business planning and budgeting, 8th ed. London: Kogan Page Limited 

Clarke, G. (2010) Business Start Up and Future Planning, Bringhton: Emerald Publishing

Drummond, G., Ensor, J. and Ashford, R. (2012) Strategic Marketing: Planning and Control, 4th ed. London: Palgrave Macmillan.

Jackson, S. R., Sawyers, R. B. And Jenkins, G. (2008) Managerial Accounting: A Focus on Ethical Decision Making, 5th ed. London: Chapman and Hall.

Kaufman, R., (2010). Strategic planning for success, 5th ed. London: Routledge.

Farrell, M.A. (2007) The effect of a market-oriented organisational culture on sales-force behaviour and attitudes. Journal of Strategic Marketing, 13(4), 261– 273

Germain, R., Claycomb, C. and Droge, C. (2008) Supply chain variability, organizational structure and performance: the moderating effect of demand unpredictability.  Journal of operations management, 26, 557-570

Glynett, D. (2012) How to Start a Gym Business, 5th ed. London: Prentice Hall.

Godsmark, E., Arduser, L. and Brown, D. R. (2009) How to Open a Financially Successful Coffee, Espresso & Tea Shop - Page 17, 4th ed. Germany: Grin Verlag.

Goksoy, A., and Ozsoy, B., (2007). Business Process Reengineering: Strategic Tool for Managing Organizational Change an Application in a Multinational Company. International Journal of Business and Management, 22: 256-264.

Morris, M., Schindehutte, M. and Allen, J. (2011) The entrepreneur’s business model: Toward a unified perspective. Journal of Business Research, 58: 726-735.

Rhyne, L. C. (2009) “The relationship of strategic planning to financial performance,” Strategic Management Journal, 4, 319-337

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