Business Plan

Plan for a Chinese Tea House

Table of Contents
1

Executive Summary.................................................................................................................3
1.1 Mission statement

1.2 Vision statement

1.3 Values 5
2

Company description...............................................................................................................6
2.1 Ideas origin

2.2 The product of Service

2.3 Promotion strategy
2.4 Location

3. Market environment.....................................................................................................................7
3.1 The Market and The Target customer 7
3.1.1 The Market......................................................................................................................7
3.1.2 The Target Customers.....................................................................................................8
3.2 The competition

3.3 SWOT analysis 8

4

PEST analysis..........................................................................................................................9

Management plan...................................................................................................................11
5.1 Goals 11
Short term goals (1 year)

11
2

Medium term goals (1-3years)

11

5.2 Organization 11
11

5.4 Leadership strategy

12

5.3 Control systems

Operational Plan....................................................................................................................12
6.1 Personnel

12

Financial Plan........................................................................................................................13
7.1 Source and application of the fund
7.2 Budget summary

13

13

7.3 Opening a balance sheet

7.4 Projected cash flow

14

7.5 Closing balance

15

13

Contingency plan...................................................................................................................15

Conclusion.............................................................................................................................15

10

References..............................................................................................................................16

Executive Summary

This paper will demonstrate and elaborate the business plan I developed, which includes market
research, promotion strategy, financial planning, etc., for a new start-up business a Chinese tea
house.
The Chinese have a saying: 'Firewood, rice, oil, salt, sauce, vinegar and tea are the seven
necessities to begin a day.' 1Currently, there is no traditional Chinese tea house in Singapore, but
it is a very popular among the foreigners and even local Singaporean Chinese. One of the most
famous tea house in Singapore is TWG, which is mainly serving the western teas with milk and
sugar in the western manner. For the Chinese, tea drinking and tasting are not the same. Tea
drinking is for refreshment and tonic effect. Tea tasting has cultural meaning. Tea and tea wares
should match surrounding elements such as breeze, bright moon, pines, bamboo, plums and
snow. All these show the ultimate goal of Chinese culture: the harmonious unity of human beings
with nature.2The essence of Chinese tea is the process and treatment of the tea. These are the
parts which Singapore tea houses do not have. Hence, we want to set up a small business so as to
bring the Chinese tea into Singapore and share the culture to this community. I had been
searching for places for the location and I found China Town is a suitable location because there
are lots of foreigners and Chinese people, which brings opportunities to the business. The
funding is an important issue, and we had tried to contact several sponsors from China to provide
the technicians and materials. As start, the sponsors would like to offer part of their business to
us also as expansion of their business. They had seen the potential and they are willing to provide
the techniques. As we are a start-up business, I am more than willing to study and help them first
as well as helping myself to gain experiences.
Hence, personally speaking,
Strengths

I have got the technique support from China

Some knowledge of Chinese tea culture
Financial support from personal saving and friends.

Chinese tea http://www.china.org.cn/learning_english/2011-04/28/content_22459812.htm

Chinese tea culture http://www.travelchinaguide.com/intro/cuisine_drink/tea/culture.htm

Weaknesses

I am inexperienced in business
Lack of comparison against similar industry in the market as we are starting a business in
Singapore.

Opportunity

Newly introduced business to Singapore market

Threats

There are coffee shops and cafe around.

The overall swot is in the favour of our business and more importantly the selling point of the
health and culture will be mostly beneficial to our business. The professionals hired from China
will ensure our business to run at the highest quality and the lack of experience will be
minimized from the strengths. Moreover, the opportunity brought by the business is unlimited
and we will be able to eliminate the competition from other coffee shops and cafe around the
area.
1.1

Mission statement

The importance of setting of mission is to ensure that I could stay focused to accomplish the
goals without drifting side track.
Our tea house offers:

1.2

Relaxing and refreshing moments to bring harmonious unity of human being s with

nature.
Introducing Chinese tea culture into Singapore
Bring in the concept of Cha Dao () and let people to understand the unity of human

being and nature.3

Advice on choice of tea and information on the culture.
Vision statement

Chinese tea house offers a holistic environment with Chinese culture and music to let people
settle down and relax in peace. Promoting the importance of health and nature is one of the
3

Chinese tea culture http://en.wikipedia.org/wiki/Chinese_tea_culture

important vision of the business.

1.3

Values

Chinese tea house aim to offer high quality and affordable services to the society with healthy
and living knowledge of tea towards the public.
2

Company description

The first thought was to set up a small business in order to let the community to know about
Chinese tea culture especially the tea bruising and tasting. More importantly, the culture is a very
big selling point of the business which will attract plenty of customers.
2.1

Ideas origin

We originated the idea ever since. It is very rare for us to find authentic Chinese tea house in
Singapore and even there are some cafe and tea houses around, they tend to serve in western
manner as a fast food fashion. The idea of bring in traditional Chinese tea service is to provide
customers a place to relax and refresh. Cha Dao() is an important culture and it focuses
on the process and taste. 4By introducing this culture into Singapore, we will manage to bring the
diversity of culture to the society.
2.2

The product of Service

Tea-drinking habits vary in different parts of China. Roughly, scented tea is popular in northern
China; green tea is preferred in eastern China, and black tea is optimum for people in Fujian and
Guangdong. Hence, we will bring in different types of tea vary according to the regions and set
up the shop in the sections of representatives of types of tea. Notably, Yum Cha (tea drinking) is
very popular in Hong Kong and Guangdong Province. 5Though dim sum, the true highlight of
Yum Cha, is what attracts gourmets, tea is an essential part of the meal. Hence, apart from tea,
we will serve some light food like dim sum to go with the tea. Hence, we serve tea and light food
together in our tea house, but additionally, the service of tea focusing on the process of tea
cooking and tasting. The most important product of our business is the culture and the
environment for people to relax and refresh. Also, we had done some research and survey around
the area. According to the statistics, 45% of China Chinese people are interested in the tea
4

I to en all things tea http://www.itoen.com/cultural-tea-traditions

Tea culture http://www.travelchinaguide.com/intro/cuisine_drink/tea/culture.htm

house, 40% of foreigners are interested and wanted to find out more about the tea culture and
more than 60% of the entire survey population says that they would like to try and consider
about it. 6The statistics are rather positive towards our business.
2.3

Promotion strategy

The importance of promotion strategy is to market my Chinese tea house with unique selling
point with advertisement, and other distribution channels such as the world of mouth.
There are several plans for promotion.

Soft opening with recommendation of tea and food

Happy hours

On the first week of opening, we will start a soft opening with all kinds of promotional tea and
provide the customers more choices with light food. If time is allowed, we shall set up a small
survey box and let the customers to write down what they like and dislike about our tea house.
After the soft opening, we shall introduce the happy hour time from 7pm to 9pm with different
promotion plans every day. The strategy is to attract people and build up a positive image of our
tea house so as to have a long term prosperity of the business.
2.4

Location

There are many advantages of locating the tea house at China Town. Firstly, China Town is a
place of attracts and all the tourists will come to China Town, which ensure that the accessibility
of the tea house. Secondly, there are many Chinese people gather around China Town and
according to a recent news that Singapore government has been setting Chinese Tea culture as a
part of the syllabus of Chinese lesson in the secondary schools. Hence, Chinese tea culture is a
very optimistic selling point and China Town fits many aspects of the business.7
3. Market environment
The importance of the market environment analysis is to identify the business environment so
that we could make good use of the advantageous influence of the environment on the business,
and take necessary measures to get rid of the disadvantages effects.

Chinese tea http://www.china.org.cn/learning_english/2011-04/28/content_22459812.htm

Chinatown business association http://www.chinatown.sg/index.php?fx=cba-contactus

3.1 The Market and The Target customer

3.1.2 The Target Customers
The target customers are the tourists, working professionals and families living around the area,
also the students but they are unlikely as they do not really have purchasing power. Nevertheless,
China Town is a popular location for restaurants, bars and pubs, which attracts many people
around dinner time and even later. The main reason we choose to locate in China Town, is to use
the impression that people have as if they want to have tea, they will try to find it in China Town.
Hence, whenever we have the profession and authenticity in our tea house, customers will come
up to our shop.
3.3 SWOT analysis
The importance of the SWOT analysis is to take actions on the analytic conclusions such as the
threats and weakness will be conquered and the opportunities and strengths will be utilized.
Strengths

The newly introduced tradition in to the community with high competency and

attractiveness in the business.

The location is at China Town where highly populated and accessible.
The price setting is relative low comparing to the TWG type of tea house.
The whole new experience of Cha Dao ().
The authenticity of the tea.
Hiring people from China and import materials and tea from China to ensure the
authenticity of the tea house.

Weaknesses

Start up business
Competition
Training requires money and time
The funding is concerning.
Singapore is a busy city and many people may not have enough time to actually sit down
and enjoy the culture.

Opportunities

Food trial set meal to go with tea designed by nutritionist for people do not know how to

choose
Bring in Chinese myth and stories about tea drinking and set up the tea house in sections

according to the themes.

To pursue my dream of setting up the business and promote Chinese tea culture.

Threat

Threat of potential participants: low at present we are the only one serving authentic

Chinese tea drinking services.

Threat of suppliers haggling force: low there are quite a few suppliers and sponsors
interested to expand their business into Singapore and we can take the sponsorship as

they provide the techniques and materials.

Threat of modern contenders: We have no contenders around the area at present. This

implies that we have the first mover advantage.

Cash flow

We are mostly focusing on the benefits of the health and the culture aspects. Hence the strengths
will ensure our business to run properly. Moreover, the weakness and the threats will be able to
eliminate by the opportunities and the strengths according to the SWOT comparisons. The
authenticity and profession will enhance the brand and make sure the running of the business.
2.5

Porters 5 forces

The competition is reasonably low as mentioned, mostly from other popular milk tea stalls,
coffee shops as they are the alternatives of the drinks instead of tea. Yet, the More importantly,.
Threat of new entrants: low.
There is no similar tea house around and even there are several places serving Chinese tea or
milk tea, the process and the property of the stall is very different from ours.
Threat of substitute products or services: High
Mostly from other popular milk tea stalls, coffee shops as they are the alternatives of the drinks
instead of tea.
Bargaining power of customers (buyers): moderate
The target customers are the tourists, working professionals and families living around the area,
9

also the students but they are unlikely as they do not really have purchasing power
Bargaining power of suppliers: high
The authenticity is the main brand we are building makes the supplier very special and hard to
find.
Intensity of competitive rivalry: low
Even though they are substitutes of tea, the process and the tea tasting culture is not replaceable.
4

PEST analysis

The importance of the PEST analysis is to analyse the business environment, so that we could
see what the best is for us when we set up a new enterprise in such environment.

Political factors are basically to what degree the government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labor law, environmental
law, trade restrictions, tariffs, and political stability. As mentioned in our mission
statement, we aim to proved the best health and culture which is a merit good to the
society and supported by the government. Moreover, the tax policy and labor laws are
also in the favor as the tea leaves importation from China is highly encouraged and there
is a relatively low trade restriction and tariffs on the tea. 8

Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make
decisions. For our company, interest rates affect a firm's cost of capital and therefore to
what extent a business grows and expands but it is not considered at the current stage as
we are only starting the business. However, for the further development, we will ensure
the business run smoothly. Yet the interest rate in Singapore is rather stable and it is not
concerning as an issue. Exchange rates affect the costs of exporting goods and the supply
and price of imported goods in an economy. In our case, the exchange rate is low
comparing SGD to RMB(1 SGD = 5 RMB)9 which allows us to import products and labor
forces at low prices. Hence, the economic is in the favor of our business as well.

Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social
factors affect the demand for a company's products and how that company operates. In
Singapore, the growing health consciousness is encouraging our business and the
popularity of the Chinese tea culture is also making the business prosper.10 More
importantly, the aging population of Singapore is also distributing to the target customers
as they could spend more time on leisure and relaxation.

World trade organization tariff documents http://tariffdata.wto.org/ReportersAndProducts.aspx

XE Currency Charts (SGD/CNY) http://www.xe.com/currencycharts/?from=SGD&to=CNY
10
The benefits of tea http://www.menshealth.com.sg/weight-loss-nutrition/benefits-tea
9

10

Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate of technological change. They can determine barriers
to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and lead to innovation.
However, as our business objectives mentioned that we aim to bring an interactive
community rather than making people facing the iced could machines. Hence, the use of
the technology is yet to be part of the plan. However, if we want further development, we
will figure out whether we could bring technological changes to our business in the
future.

Hence, according to the PEST analysis, the policies, economics and social aspects are in the
favour of or business and we will seize the opportunities to thrive in the market.
5

Management plan

The importance of management plan is to set goals and rules so that all the planning,
arrangement and appointment of staffs could be monitored accordingly.
2.6

Goals

Short term goals (1 year)

As portrayed in our business arrangement and thought, our fleeting objective is to get our
business to be the most authentic Chinese tea house in Singapore with the help of sponsor from
China and help them to expand the business as well. Within 1 year, we aim to build up our brand
and let people know about our tea house. More importantly, keep the quality of the service high
and use the competition system among our staffs so as to encourage the best performances all the
time. Hence in a short term, we aim to set the standard an quality and earn reputation from the
public.
Medium term goals (1-3years)
We will try to reduce weightage of the sponsorship and try to bring in our own products and start
our own brand. By visiting different parts of China and experiencing different styles of tea
drinking, introduce the ones that most suitable to the Singapore market. It will be important to
keep the map updated at all times, so we can always offer our customers top-quality service.
2.7

Organization

We are the four person with different personality and skills and we are likewise full-time workers
in the organization. We have all taken the identity test online and utilized it to assess who is best
11

suited to fill the different posts in the organization. The test partitions identities into four sorts:
decision maker, chairman, business person and integrator. The test indicated plainly which of the
qualities portrayed us best, furthermore demonstrated that we are three altogether different
persons with individual qualities. This is great, as we hence supplement one another well and
make up for one another's shortcomings. The consequences of the tests are appeared.
2.8

Control systems

Clear difference and distinctions between each job and do not mix up with each other----

easier to find the problems when errors occur.

Staff are decided by the customers through the soft opening--- This will bring
competition among the cooks and bring the best food to the public.

2.9

Leadership strategy

Since we specialize in different area of the business, we decided to follow the personality test
and separate into four sectors: decision maker, manager, business person and integrator.
According to our specialities, and the personalities, we will be working as a team together to
serve the customers and also to train new staff for better quality of the tea house. We will run the
control systems within our board and let each and every one supervise one another. The
leadership strategy is mainly for the contributing to the management of the business and we need
to focus on the supervision.
3

Operational Plan

The importance of operational plan is to make sure that we could stick to this plan for sustainable
business with planned operation.
We will contact supplier of the material and techniques and hire expertise from China if possible.
As the mission is to build up a business with relaxing and refreshing moments to bring
harmonious unity of human being s with nature. The main purpose is to bring healthy life style
and experiences to the community, hence the operation of the business will be mainly focusing
on this aspect.
3.1

Personnel

Decision maker, the person who decide the development of the business, will ensure the best
12

choice of our business. When the time come to the import of the materials, hiring people and
signing authorized papers, decision maker will play an important role.
Manager, the person who arrange business on the daily basis11, will be in charge of the
arrangement of the staff and contact the suppliers.
Business person, includes funder, owner, or executive who does the running of the business
every day.
Working staff, hired to serve the tea in our tea house who had been trained and taught by the
expertise. As our tea house is mainly for the tea cooking and tea tasting service, we need to
promote this aspect as the main selling point of the business. Hence we will need to spend money
and time on training staff.
3.2

Pricing

The preliminary price list of the menu is as follows:

Pu erh Tea from Yun Nan,China (Black tea) - $25.00/bottle
Bi luo chun tea: Royalty grade: $120.00/bottle, Special grade, $85.00/bottle, General grade:
$35.00/ bottle
Long jing tea(Dragonwell): Royalty grade : $120.00/bottle
Mao feng tea: Special grade: $60.00/bottle
Mao jian tea: Special grade: $60.00/bottle
General Green Tea: $5.60/bottle
Gold Ring Tea(Green Tea): $75.00/bottle
White Dragon pearl (Green Tea): $49.00/bottle
4

Financial Plan

The importance of financial plan is to make sure that we could stick to this plan for sustainable
business with planned expenses and forecasted sales.

11

Manager http://en.wikipedia.org/wiki/Manager

13

4.1

Source and application of the fund

The source of the fund is mainly from the personal savings and sponsorship from China. Since
we managed to contact suppliers and sponsors from China, we promise to sell their products so
as they can supply with lower price and even pay for the shipping cost by them. We had also
thought about join their business as a partnership and whatever we earn, we split by proportion to
them. We rejected the plan as we still want to set the tea house as a personal business and
planning to create our own brand after a period of time. The fund will be utilized in several
places: rental, utilities, tables and chairs, renovation, import tea and hiring staff.

4.2

Budget summary

The following table contains a summary budget based on the planned cost components and
estimated costs required for successful completion of the project for a typical restaurant.
Facilities
Rental
Tables and chairs
Kitchenware
Renovation
Training
Admin, cashier and waiter training
Utilities and raw materials
Food and tea
Water and electricity
Wages
Wages to the waiter and chef
Grand Total

4.3

$
$
$
$

4,700.00
500.00
400.00
200.00

$ 400.00
$ 15,000.00(per month)
$ 1,300.00
$ 5,600.00
$ 27,300.00

Opening a balance sheet

The balance sheet will indicate the ability of our business and how big we can start with.
Balance sheet
liabilities
assets
current assets
cash
short-term investment

50,000
30,000

current
liabilities
account payable
salaries payable

40,000
5,600

14

account receivable
inventories
prepaid insurance

100,000
20,000
25,000

interest payable
taxes payable
current
proportion of
note

10,000
5,000
30,000

225,000
long term investment
stock investment
cash value of insurance

20,000
10,000
30,000

intangible assets
goodwill

10,000

other assets
receivable from employee

20,000

total assets

4.4

285,000

90,600
long term
liabilities
notes payable
bank loan
income taxes
total
liabilities
stockholders
equity
capital stock
retained
earnings
total
stockholders
equity
total
liabilities and
equity

20,000
20,000
8,000

48,000
138,600

66,400
80,000
146,400
285,000

Projected cash flow

The cash flow chart indicates how much cash is injected in and ejected out of the business every
month. It shows the amount of the money we had been earning and how much had been used.

starting cash
in
sales
sponsorship
bank loan
total in
out
payroll
facilities
wages and training
utilities and materials

month 1

month 2

month 3

month
4
68,300

month 5

50,000

58,900

63,600

10,000
20,000
20,000
100,000

10,000
20,000
88,900

10,000
20,000
93,600

10,000
20,000
98,300

10,000
20,000
103,000

10,000
20,000
105,000

3,000
15,800
6,000
16,300

3,000
6,000
16,300

3,000
6,000
16,300

3,000
6,000
16,300

3,000
6,000
16,300

3,000
6,000
16,300

73,000

month 6
77,700

15

total out
cash balance

4.5

41,100
58,900

25,300
63,600

25,300
68,300

25,300
73,000

25,300
77,700

25,300
14,800

Closing balance

The closing balance indicates the amount of money we earn after one year. It is common for the
first few month to be losing as we are a start-up business and as long as the business works in the
trend that clearing off the debts after a few months, we are gaining eventually. According to the
closing balance, the prediction of the business is rather positive.
5

Contingency plan

The importance of contingency plan is to ensure that we could recover from the losses if our
business is not as expected and goes down.
If our business runs well we will consider to turn the partially partnership with the Chinese
sponsor into pure sponsorship and bring in our own brand instead of using others. And if the
business works well, we will try to expand the business only after this one is steady as the
expansion of the business may cause the cash flow went down and if the business is not steady, it
may eventually goes down.
If our business is not as expected and goes down, or does not meet our budget even after 6
months, we will consider other plans like transforming the tea house into other aspects of
business and combing other Chinese culture with tea together to promote our shop. If this does
not work eventually, we may need to stop the business, but it is very unlikely going to happen.
6

Conclusion

Chinese tea house is an idea that had been originated and researched for a long time and I have
confidence to run the business well. The main problem is that the funding and the import of the
tea. With the help of the Chinese sponsors, we will manage to find proper materials and
cookware for tea house, but the shipping will be costly and we need to take that in count.
With our tea house, customers can enjoy the best experience of tea drinking and tea tasting.
Instead of rushing in a hurry, people could actually to sit down and relax, to let the nature to be
16

unified with their body.

The business with such aspects is rather optimum and there are plenty of chance for our business
to boom in the future. More importantly, Singapore is a busy country and everyone is rushing.
People may see this as drawback to the business as the customers may not choose to spend time
in the tea house and instead, to take a cup of coffee in the food court. However, to me, the
business of the tea house is to promote how important the health is and people are forgetting
about relaxation of their nerves in Singapore. With such aims and missions, we will manage to
bring the calmness and peace to the people and improve their health both physically and
spiritually.12 Hence, Singapore needs our business in the market and people need an environment
like our tea house.
7

References

[1] Project Charter (Long Version) Template, see from

http://www.projectmanagementdocs.com/initiating-process-group/project-charter-long.html
[2] The Business Times, No waiter, please! We've the e-menu, see from
http://www.businesstimes.com.sg/archive/monday/lifestyle/entertainmentmusic/no-waiterplease-weve-e-menu-20131115?page=5
[3]Chinese tea culture
http://www.travelchinaguide.com/intro/cuisine_drink/tea/culture.htm
[4] Project: Fast Food Automated Ordering System, Vimal Mayank and Deep Saraf,see from
http://www .isr .umd .edu/ ~austin/ ense 621.d/ projects 04.d/ project- food- ordering .html #sec
1
[5] Financial plan and income statements.
http://www .bdc .ca /EN/espirit /spirit _grows /Pages /default .aspx
[6] Business plan of Construction Company
http:// business auckland nz. com- resources- Business_ Plan_Complete_-_SAMPLE.pdf
[7] History of Chinese tea http://www.chinahighlights.com/travelguide/chinese-tea/
12

History of Chinese tea http://www.chinahighlights.com/travelguide/chinese-tea/

17

[8] World trade organization tariff documents

http://tariffdata.wto.org/ReportersAndProducts.aspx
[9] XE Currency Charts (SGD/CNY) http://www.xe.com/currencycharts/?from=SGD&to=CNY
[10] The benefits of tea http://www.menshealth.com.sg/weight-loss-nutrition/benefits-tea

18