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PONTIFICIA UNIVERSIDAD CATOLICA DEL ECUADOR

FACULTAD DE COMUNICACIN LINGSTICA Y LITERATURA


ESCUELA MULTILINGE DE NEGOCIOS Y RELACIONES INTERNACIONALES

READING AND WRITING

BUSINESS PLA CUPS

SAMANTA ANDRADE
PAMELA JAEL AVILA TORO
PATRICIA GARCIA

MAYO, 2014
QUITO ECUADOR
Table of Contents

1. Executive Summary
2. General Company Description
3. Products and Services
4. Marketing Plan
5. Operational Plan
6. Management and Organization
7. Personal Financial Statement
8. Startup Expenses and Capitalization
9. Financial Plan
10. Appendices
11. Refining the Plan

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EXECUTIVE SUMMARY
CUPS is a start-up business; we are pioneers in the production of
personalized cupcakes with unique and special characteristics. Our specialty
are cupcakes, but we also provide other kind of delicious desserts like pies,
muffins, mousses and cheesecakes and beverages like coffee, tea, sodas and
others.
In CUPS, you will be surrounded by worldwide culture; we have created
a culture shelter where all people can enjoy their desserts. Moreover, we offer a
high quality service and a very characteristic environment. We have shelves
with many books, so that customers can read a book while eating. Our books
are divided by sections and we will also have books in several languages. Then,
any customer can take a book home with the condition to leave another one in
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replace. In addition, our products are not expensive so they are available for all
public.
The owners of CUPS are Ms. Jael Avila, Ms. Patricia Garcia and Ms.
Samanta Andrade; we own 33% of the company each. Furthermore, CUPS is a
unique business in the market. Still, we should consider some important
competitors like Cupcake Factory and Torta y Fiesta. Taking into account this,
we have developed many strategies to increase our market share.
Low prices, high-quality products and publicity are one of the best
strategies to attract clients. Moreover, nowadays cupcake businesses are on
the raise and the cupcake industry is growing in Ecuador. Therefore, the main
goal at CUPS will be to differentiate itself, its products and its services from the
traditional cafeterias, by providing all clients a totally new experience while they
enjoy a coffee or a dessert.
In other, we will apply for a loan of 50 000$ which will be used to
purchase the local as we are not willing to rent the local. The reason why we
want to buy the local instead of renting it is because like this, the business will
be more profitable. If we avoid paying a rent each month, we will have fewer
expenses monthly. Plus, even if we have to pay for the loan, this payments will
help us to increase our assets because the local we be ours. In addition, this
will be really useful for CUP'S as it is part of a back-up plan. In the case CUP'S
is not profitable and we have to close, we can rent the local in order to pay the
loan, and it will give us incomes after we have paid the loan. We are willing to
pay the loan, in a period of 5 years; we will be able to pay each month with the
incomes of CUP'S.
GENERAL COMPANY DESCRIPTION
Cups is a new company in a relatively new market the market of
cupcakes. For this reason, there is not much competition, but still there are two
strong competitors The Cupcake Factory and Torta y Fiesta. We have many
strengths in the market, our products are unique and have fruit filling and
personalized frosting, based on cultural events, seasons, and special dates, not
only from Ecuador , but from around the world; also our products have designs
chosen by customers. At CUPS, we do not have a specified menu with the
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designs of our cupcakes, they will always be changing in new funny, creative
and unique designs and we also provide other desserts, in order to offer
delicious products to enjoy with embracing worldwide culture. Even if our
competitors are already well- placed in the market, we have arrived with a fresh
idea.
Prices and quality are strengths for us, because, we offer the lowest
price in the market and we guarantee high quality products. This is because;
our main competitors have already reached a high level, so they have increased
their prices and reduced their quality because of an exaggerated confidence. In
CUPS, the environment is as important as our products, which are affordable to
everyone. At CUPS, everyone can enjoy a cupcake, with a reasonable price
and in an ideal environment. On the other hand , national and international
consumers will be able to taste endemic fruits from Ecuador and, at the same
time, be surrounded by a polite environment and workers who will serve them
as if they were at home, making them feel comfortable and relaxed. Then,
customers will select us over our competitors because our company is
ecofriendly and the products we use to bake our cupcakes or desserts, and to
prepare our beverages, come from national industries; with whom we will have
arrangements to collaborate with the national market.
In spite of the stability that our competitors have established in the
market, we have absolutely trust in our capacity to take a percentage of that
market. The way to gain customer reliance is to show them the process by
which the hands of our workers transform some ingredients into delicious flavor
experiences.
Another thing we have taken into account is the reputation we must build
from the beginning. Our competitors have a well-established reputation, and
thats something we will have to work on.

Our competitors are well-placed. The concurrence of people at The


Cupcake Factory is relatively good; they are installed on Shyris Avenue. For
our other competitor (Torta y Fiesta), the location is not a problem, as they
deliver their products only by on-line requests. In order to affront this, we have
decided to place CUPS in front of Jardin Commercial Centre, a very touristic
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and concurrent area in Quito.

Its appearance will have a decoration that

represents different parts of the world. We want to give a cultural image more
than the typical bakery image.
Our competitors have sales that vary depending on the seasons,
specifically on special dates, which show to be the best moment to increase
sales. Taking into account this fact we thought about making every day a
special date. About credit the market we are in is not able to give credit to
customers, but we, as a business, have a wide range of credit to set up our
business. Also we have assured a very strict control over all our employees and
we will count on the necessary certifications for our proper operation; so we will
fulfill all the requirements needed to provide high quality products. The image
and advertising we want to project to the market is mainly related to or
philosophy and the cultural concept we want to implement; that is something
our competitors havent.
PRODUCTS AND SERVICES
Technical specifications
In CUPS, our specialty are cupcakes. But, we also provide other kinds
of delicious desserts like pies, muffins, mousses and cheesecakes. Also, we
offer many different beverages like coffee, tea, sodas, and others.
Moreover, we offer a high quality service and a very characteristic
environment. In CUPS, where you will be surrounded by worldwide culture. We
have shelves with many books, so that customers can read a book while eating.
Our books are divided by sections and we also have books in several
languages. Any customer can take a book home with the condition to leave
another one in replacement.
Advantages or disadvantages
First of all, we are not just a bakery or a cafeteria, but we have created a
culture shelter where foreigners and national people can enjoy of worldwide
culture and cinema. Plus, we have a huge offer of our specialty, cupcakes.
Our cupcakes are unique in the market because they have typical
Ecuadorian fruits inside the cake. They have not only the best quality and taste,
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but also they come in different sizes and we offer multiple options so people can
choose the one that better fits their cravings.
Other huge advantages we have from competitors are the environment
and services we provide. We are offering our clients a different environment
from the traditional cafeteria. The key to stand out from our competence is that
we have developed a space that does not exist in the country. CUPS offers our
clients a comfortable environment for all people; we have a social area, a
smoking area and a lecture area, so that our clients have a comfortable and
quiet space to read. We are also offering film functions each month where we
will present cultural movies in different languages.
Pricing
CUPCAKES

Simple cupcake (no filling, no frosting design)

1.50$

Filled cupcake (with filling, no frosting design)

1.80$

Designed cupcake (no filling, with frosting design) 2,30$

Cups cupcake (with filling, with frosting design)

2,80$

CUPPIES (smaller cupcakes)

Simple cuppie (no filling, no frosting design)

1.00$

Filled cuppie (with filling, no frosting design)

1.30$

Designed cuppie (no filling, with frosting design) 2,00$

Cups cuppie (with filling, with frosting design)

2,50$

MARKETING PLAN AND BUDGET


Niche
According to the analysis and the competition itself, it is recommended
to establish our niche market, especially for young and adult people. Not only
will they have access to our products and high quality service, but also, those
people who enjoy the company of a book with a sweet meal too. People who

love reading, chatting, hanging out with a friend or spending some time with the
family, form part of our niche market, which is a wide one.
Strategy
Taking into account that Cupcakes are a niche market in the baking and
culinary industry, and cupcake businesses are on the rise, according to a 2009
article on Mainstreet, it is vital to show customers what the cupcake concept
involves, which has for example a historical connotation that comes from the
First World War. Since we want to offer an environment with literature involved,
the marketing strategy will join these two concepts. It means that we want
people to think of us not with the idea they bake cupcakes, but we want them
to ask themselves what can I learn in every bite? Our marketing campaign will
be based on the importance of acquiring knowledge, in a funny and delicious
way. We must differentiate our products and services from other cupcakeries to
ensure that our cupcake company becomes a staple of your community.
Promotion
The promotion of our products will consider the media, the Internet and
flyers, as the main elements to get the word out to customers. The media we
will use are the radio, because it is far more communicative and attractive for
customers. We will use them for a month till we get well-known. Then, the web
page of the company will be available 24 hours a day, 7 days a week, so it will
be constantly giving our customers information.
We have also planned to distribute a graphic image support including
our logo and designs in our brochures. Furthermore, we will have a system to
identify repeat customers by giving them a card in which they will fill in 10
purchases in order to get a free cupcake and a book.
Promotional Budget
We have considered prices for the items mention before, and we have
determined that $ 33600, 00 will fit with our requirements.
The Monthly Expenses:

Staffing = $3,500
Rent and utilities = $3,000
Inventory = $1,500
Rough monthly expenses = $8,000

The Start-Up Costs:


Insurance = $3,600
Renting = $2,000
Start-up inventory =$5,000
Oven = $8,000
Pots, pans, tables and racks = $8,000
Decoration= $6,000
Permits = $1,000
Total start-up costs = $33,600

Pricing
The prices of our products are set by considering the ingredients we
need for them and the complexity of elaboration. Although having low prices for
small business is not a good policy, we have decided that a good way to get into
the cupcake market is to have lower prices than our competitors. Since our
strongest competitor cupcake factory has already gained a solid market, we
need to attract some of their customers by offering the same product with better
quality and lower prices. After we have gained a solid market of our own, we will
increase our prices.
During our competitive analysis, we thought about our competitors and
how to win a market that is already taken, and we had decided that beginning
with low prices is one of the best strategies.
Apart from our lower prices, we will have more products to offer as other
desserts and beverages. Moreover, we have a special and unique customer
service. One of our policies is to make our clients feel at home and give them a
cultural environment to enjoy and learn. This is a great strength we have, as our
clients will search for and for this given time, our prices go up.
Proposed Location
After considering the customers we want to reach, we have decided that
the best location for Cups is in avenues Shyris and Republica del Salvador. The
reason for our decision is that these streets are located between the biggest
malls of Quito, so they are crowded most of the time. Also, our competitors are

located nearby. So, when customers are looking for their cupcakes, they may
find us instead.
Distribution Channels
CUPS is a new enterprise. Thats why we only have one location where
we produce and sell all our products. For this reason, we are using our own
sales force as a distribution channel. This is a fast, economical and direct
channel of distribution. Under it, we (the producers) have full control over the
distribution of our products. Moreover, this type of distribution channel will allow
us to sell directly our products to the consumers. We will also save money and
avoid unnecessary expenses as we wont need to pay an intermediary to
transport or sell our products.
In addition, our consumers will benefit from direct selling because of the
convenience and service benefits it provides, including personal demonstration
and explanation of the products and satisfaction guarantees.
Sales Forecast
CUPS expects a strong rate of growth at the start of operations. Due to
our marketing strategies, and our market research, we have prepared this
projection of sales. The total number of incomes we need monthly to break
even is $ 6000.
Best case
SALES
CUPCAKES
OTHER
DESSERTS
BEBERAGE

Worst Case
1st Month
(100)

SALES

$ 7000
$ 3000
$ 4000

CUPCAKES
OTHER
DESSERTS
BEBERAGE

OPERATIONAL PLAN CUPS

1st Month
(35)

$ 3000
$ 1500
$ 1500

An Operational Plan is vital to develop a successful enterprise. The goal


of this essay is to explain the daily operation of the business it will have for
topics: the production, location, legal environment, personnel, inventory,
suppliers, and credit policies.
Firstly, Cups production will be produced at the locale. The, our methods
of production take into account a Just In Time Production (JIT), which generates
goods/services just in time for them to be sold, rather than preparing them
months or weeks in advance. It is well known that this production technique
saves storage costs and keeps the production going with customer demand.
The costs of production come from the expenses of: Cost of raw ingredients
(44$ daily 60 cupcakes), Cost of equipment ($27000), Cost of labor/$500
chef, $340 bakery helper. After quality and food safety will follow all the
requirements asked from the Direccin Nacional de Control Sanitario, and
some other standards and practices proper from the company.
Not only quality will be important, but also our customer service, which
determines as a policy to be friendly and helpful with customers from their
arrival to their departure. In addition, the inventory control has an average of 35
to 100 cupcakes per day. The products the company has will not be stable in
order to keep innovation going.
To continue, it is important to talk about the location Cup's will have: it's
physical requirements and access. First, the physical requirements for Cup's as
a food service locale should have a space between 200 to 250 m; it should be
a one floor building with to areas, the kitchen and larder and the area where all
the tables and the cash machine will be located. This distribution is thought to
allow a good environment and an easy transportation of the products. The
locale will be preferably located in a commercial and busy zone, specifically
between the avenue Republica del Salvador and Eloy Alfaro; this zone was
chosen because of the amount and economic status of people that concur in
that zone. The utilities Cups needs are water, electricity, telephone, Wi-Fi.
Then, about the access, it is important for Cups to have an easy walking
access and a parking zone to give the clients an easy access to the store. The
idea for Cups is not to sink the capital into a construction, but to buy an existing
locale. For the costs, Cups will buy the local instead of renting it and the price
estimated is 80.000 $; about 12 000 $ in remodeling, so the locale will become
exactly what needed, and every month, the costs of maintenance will be
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approximately of 150$.
In CUPS, we believe that conducting business ethically and striving to
do the right thing are vital to the success of the company. For this reason, we
managed our business under strict compliance with all relevant national and
international laws. Our business ethics aim to be responsible not only with
our consumers, our suppliers and our employees, but also with the local community
and society in general. In order to operate legally in Ecuador, the company needs
licensing and bonding requirements; we will register our name and company in
the Superintendency of Companies, write up the constitution of our company,
and get the Commercial Register and RUC. The process lasted approximately
65 days.
In Ecuador, all commercial business needs an operating permit which
contains the patent, permission of the Fire Department, Bureau of Health, the
Ministry of Tourism and Ministry of Interior. This operating permit must be
renewed each year. The renewal of this license has no cost.
All employees need to be insured in the IESS (Ecuadorian Institute of
Social Security). The payment of the insurance will be shared between the
employer and the employee. All employees will work in a safe environment free
of discrimination and under all health and safety laws, and under laws
regulating minimum wages. In Ecuador, contracts between employer and
employees are mandatory. The relevant environmental regulations in food
industry include proper waste management, recycling and reuse of products,
and use of eco-friendly products. Then the CUPS zoning or building code
requirements will consider for working a rented locale, so building code
requirements will not apply and the zone we have chosen does not have any
special regulations. In addition the company has signed a contract with AIG
Metropolitan Insurance Company. The total cost of the insurance will be $ 3600.
Another important aspect is that the patent of the company name is granted
during the registration of the Company in the Superintendent of Companies.
On the other hand, personnel in Cups will be considered the most
important part of the company, because without them, the company would not
be able to offer customers the quality service and products they want. The
company needs a qualified staff to ensure its prestige. For that reason, a
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professional chef, a sous- chef, a cashier, waitress, a legal representative and


three managers will be hired to begin the business activities. The employees
will need to have minimum a professional degree related to the needs the
company has, but only the sous-chef and the cashier can be university
students. If they are students, they must be at the highest levels of their
careers. Managers, in their case, must work on accounting, marketing and
production respectively.
The pay structure is established according to the Ecuadorian law of
labor, in which it is mentioned that workers can be paid monthly or each 15 days
with a previous contract that determines the time they will work for the company.
Cups will pay employees monthly, and the waitress will keep tipping.
Since the company takes care the image and the name of the company,
employees must do the same. So, employees will receive induction training
when they beginning their activities and during their work they will have the
opportunity to have an On-the-Job-Training, Lectures and Seminars. This
method is hands on and allows the employees to get a feel for their
responsibilities. Not only lectures and seminars are the preferred methods of
training for some organizations because they are low cost, but also they are
easy to set up, and they have the potential to reach a number of people. The
assistance for training will be taken into account to measure performance and
commitment, and they are requirements the company demands.
After the company has clear the people needed and how to pay them, it
is necessary to give employees concrete details about the tasks they must
accomplish. Employees will have the procedure code, which establishes the
things each person must do in every situation during work and out of work
(emergencies). For example, the chef and the sous- chef will be in charge of the
kitchen, also the cleaning. Both will have to bake cupcakes and other desserts,
prepare the beverages and deliver the orders to the waitress. The cashier will
be responsible to receive money, give change, count the money at the end of
the day of work, and keep a register to give to the accounting manager. Then,
the waitress will receive the orders to give them to the chef, and she will deliver
the orders to the tables. On the side of managers, the accounting manager will
have to prepare financial reports and maintain a register of the transactions the
company does in order to know how the company is all the time. The marketing
manager will have to prepare publicity campaigns, think about changes the
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company has to apply in order to attract more and more customers. The
production manager will control the quality of the products, the inventory, and
the relation with suppliers and so on.
With a brief description of the tasks, employees will have a schedule to
follow and specific activities depending on the day. The procedure code
employees receive in the induction training has in detail the description of each
job at the company, and all have the same importance, so in that way
employees internal communication its better. If it is necessary the company will
hire extra staff especially for the kitchen or for the service, when there is a
difficult period which requires more workers because of the demand.
To continue, the inventory is vital to take into account. The materials
Cups will need are principally raw materials as the cupcakes will be made daily
in the store, and books. The average value in stock of Cups is 500$ in books as
most of the books will be contributions from the clients and the books are not
going to be bought each month so they are a onetime expense. About 1100$ in
materials for the coffees and pastry will be needed each month in order to
provide the ingredients that are used in their elaboration. The rate turnover
which is computed by dividing the total sales revenue in a period by the average
inventory is 10000/1100 which equals 9, 09, while the average of other cupcake
stores is 6.39. Cupcakes are considered seasonal products because in some
holidays such as Christmas and Valentines Day they are more sold, so Cups
will need to produce more cupcakes during these periods. The lead time for
ordering will be really short because the products are storable and the fruits
should be bought daily.
In CUPS, we are committed to dealing ethically with our suppliers and
we want our suppliers to recognize the importance of Corporate Social
Responsibility. When CUPS purchases goods and services we want to
participate in a professional collaboration that creates long-term value for both
parties and to base our collaboration on trust and mutual interest.
Our policy with suppliers outlines our expectations of them as well as our
commitment with them. The guidelines for suppliers are intended to ensure that
our collaboration can develop and result in the greatest possible responsibility in
our supply chain. CUPS considers that the most important thing about
purchasing goods is quality. It is committed to work with our suppliers on
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innovative and proficient methods of obtaining lower costs for the highest quality
goods.
Moreover, CUPS is an eco-friendly company. For this reason we expect
our suppliers to:

Maintain

environmental impact.
Respect fundamental human rights including worker representation.
Maintain responsible health and safety practices.
Be committed to equal opportunities in employment.
Adopt ethical business practices.

effective

policies

and

procedures

to

manage

their

Our main suppliers will be:

Favorita Corporation, 6 de Diciembre Av. y Julio Moreno


Dulce Aroma, La Rotonda Mall, Local # 22, Alborada.
The delivery policies we work with are simple. We expect from our

suppliers to deliver high quality goods and to do it on time. In case of an


emergency or lateness in any delivery, we have a list of emergency suppliers.
We have accorded with our suppliers that the payment will be in checks and
directly to the organization. We wont work with credit in order to get our goods.
Our company will not has credit policies, because it is better to maintain
counts without debts that must be recover later , and also it is not necessary
taking into account that people normally has the moment to pay for this kind of
products we offer at the moment they are buying. Also, Cups will not offer credit
so it is not necessary to define when to make the phone calls, send letters or
get an attorney to threaten. All the sales will be current to avoid payments
problems.
MANAGEMENT AND ORGANIZATION
The one responsible for the business management in CUPS will be
Samantha Andrade. Ms. Andrade has a multilingual degree in International
Business and International Relations. Furthermore, she has worked for very
successful enterprises such as Pronaca and Sweet and Coffee. She has
demonstrated communicative and organizational competencies in her previous
jobs and independent projects. In case of loss or incapacitation, Jael Avila will
take her place and continue with the established business plan.
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The board of directors is formed by Samanta Andrade, Jael Avila y


Patricia Garcia (actual owners and investors at CUPS). The management
advisors we have chosen are Mr. Daniel Valencia (business advisor) and Ms.
Pamela Toro (accountant and financial advisor). They will help with the direct
operation of the company and keep us informed on various businesses, legal
and financial trends that may affect us and our business.
Then, the legal advisor of CUPS will be Roberto Diaz Guevara who will
offer legal assistance and advice, in case of lawsuits or litigations. The official
accountant of the company will be Ms. Jael Avila who will be in charge of the
day to day registering and transactions of the company.
The Insurance Institution we have chosen is AIG Metropolitan Insurance
Company. The business insurance offers us a diverse portfolio of plans that
protect both individuals and business. Our insurance agent will be Jovany Avila
(insurance broker). We are going to work with Banco del Pacifico. Ms. Mayra
Villamarn will be our official banker. She will help with the financial
requirements and will provide advice and financial services.
The group of consultants who will provide legal and financial advice will
be formed by Hernn Loya (Consultant at the Chamber of Commerce in Quito)
and Luis Vega (trader at the Stock Market). Our mentor and key advisor will be
Mr. Donald Stewart, successful business man and professor at Pontifical
Catholic University of Ecuador. Finally, in case of seeking for a loan we will work
with Banco del Austro. This financial Institution provides training and financial
support for start-up enterprises.
PERSONAL FINANCIAL STATEMENT
CUPS is a start-up business with 3 owners: Ms. Jael Avila, Ms. Patricia
Garcia and Ms. Samanta Andrade. In order to start our business, we have
decided to buy our own local instead of renting it. Owning the local will
represent an important asset for the Company and will help us to reduce future
expenses.

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PERSONAL FINANCIAL STATEMENT


Assets

Cash - savings accounts


Personal property (autos,
jewelry, etc.)
Total Assets

Amount in Dollars
Samantha
A.
$ 6000,00
$25000,00

Jael A.

Patricia G.

$31000,00

$31000,00 $31000,00

$ 6000,00 $ 6000,00
$25000,00 $25000,00

The personal financial statement presented above will allow us to apply


for a credit. Since we are starting our business, we do not have any liability. In
addition, we are going to contribute with $ 6 000 each. We are starting with a
capital of $ 18 000. So, each investor will have a 33,33% of ownership.
The Start-Up Costs:
Insurance = $3,600
Renting = $2,000
Start-up inventory =$5,000
Oven = $8,000
Pots, pans, tables and racks = $8,000
Decoration= $6,000
Permits=$1,000
Total start-up costs = $33,600
The Financial Institution we have decided to work with is Banco del Austro. We
are going to request a credit for the total amount of $ 50 000. The interest rate
the Bank offers us is 19.05% for a year. We asked for a 5 year loan. Cups
contingency fund will be of $ 1 000, in order to face surprise expenses.
Finally, we have based our startup expenses on financial information of
similar businesses, provided by our financial advisors.

STARTUP EXPENSES AND CAPITALIZATION AND FINANCIAL PLAN


Underlying Assumptions

Cups will have an annual revenue growth rate of 16% per year.

The Owners will acquire each one $5,000 of debt funds to develop the
business.
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The loan will have a 5 year term with a 19.05% interest rate.

Source of Funds

Profit and Loss


Statements
$ 93000,00
$ 93000,00
$ 50000,00
$ 50000,00
$143000,00
$143000,00

$ 72000,00
$13200,00
81,6%
$58800,00
$49000,00
$2000,00
$3500,00
$1000,00
$1000,00
$56500,00

Break Even Analysis


As indicated on our Start-Up Costs Analysis, it will cost us $33,600 to get
our business off the ground. At a selling price of $1.00 to $2.80 per cupcake, we
would have to sell 10,000 cupcakes in our first year as our breakeven point for
the first week payroll and startup cost, before we can realize a profit. This leads
us to make about 24,271 cupcakes being made to pay off the yearly payroll and
startup costs. That averages out to approximately 2,022 cupcakes that have to
be sold per month. All additional sales would result in a profit for the year.
Funding Sources

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The CUPS Team will be able to secure to $31,000 from savings, as well
as from family and friends contributions. In addition, we plan on taking out a big
business loan in the amount of $50,000. Therefore, we are seeking $10,000
from interested persons who are willing join in this exciting venture. You are
invited to take advantage and join in this billion dollar industry.

APPENDICES

Advertising materials

Maps and photos of location

Detailed list of equipment to be purchased


Oven
Cash Machine
Dishes
Books
Baking

MENU

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Pots
Bowls
Mugs
Pans

Promotional budget
/The Start-Up Costs:
Insurance = $3,600
Renting = $2,000
Start-up inventory =$5,000
Oven = $8,000
Pots, pans, tables and racks = $8,000
Decoration= $6,000
Permits = $1,000
Total start-up costs = $33,600

Sales forecast
Best case

SALES
CUPCAKES
OTHER
DESSERTS

Worst Case

1st Month
(100)

BEBERAGE

SALES

$ 7000

CUPCAKES
OTHER
DESSERTS

$ 3000
$ 4000

BEBERAGE

1st Month
(35)

$ 3000
$ 1500
$ 1500

REFINING THE PLAN


For Raising Capital
For Bankers
Cups will need a loan of 50 000$. This loan will be used to purchase the
locale where Cups will be operating. We have decided to buy the locale instead
of renting one because we dont want to expend money each month by paying
for something that will not be part of our assets. As well, by buying the locale
instead of renting it, we can be sure that we will be able to stay in the same
location as long as we want to. This is important for Cups, because in case we
rent the locale and the owner asks us to leave before we have set a reliable and
loyal list of clients, we can be facing some important losses in income numbers.
For this loan, Cups intents to pay the total of the loan in a five year period, as it
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wouldnt be productive to have a long term debt, and a payment period of less
than five years will make the payment quotes really high, resulting in low or
none profits.
For Investors
In a short term period, Cups needs funds for buying the equipment, the
locale and advertising the cupcake store. The short term funds will be recovered
as soon as the number of clients increases. The funds needed in two to five
years will be easier to have because after that period of time, Cups will be a
well-known cupcake store, attractive to investors. The funds needed, after this
period of time will be used to set up franchises in other cities of the country or
abroad, in order to expend the business and have a bigger profit. The reason
for why this investment is highly probable to be returned is that the more
franchises Cups has more money it will make.
In case the investors want to exit Cups, the strategy is that the shares
can be sold to other investors of Cups, to the owners of Cups, or to willing
investors. If the latter is the option chosen, then, it will be necessary that the
directive board decide if they agree with these new investors in Cups or not. As
well, the percentage of ownership we will give to investors will always be less
than 49%. Weve decided to give only this percentage, because this way, we will
always have the final word in any Cups decision. It is clear that we will be open
to our investors ideas and suggestions, but our point of view will be the most
important ones as we are Cups founders, and we know what we want Cups to
be.
The financial reports will be provided every month to all the investors, so
they will be able to keep track on how things are going in their investment. Also,
Cups will provide an annual financial report, with which Cups owners and
investors will have a meeting to think about changes that need to be made or
new directions that need to be taken.
Type of Business
CUPS is a retail business that will produce on a small scale.
Furthermore, we have prepared the planned production levels based in the
variation of the demand throughout the year. We are conscious that there are
special days such as Valentines Day, Christmas, and others, when the demand
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of our products will be higher. For this reason, we have chosen a dynamic
production plan; this involves that the production levels will depend on the
demand we received.
The image the company wants to transmit is a cultural one, because
through food, we will be able to communicate facts from the past and the
present. Then, the company is meant to be a place where people can open their
minds, their hearts and their appetite at the same time; since they use all their
senses to learn, we think in that way we are productive and aware of the
community around us.
Our prices were set according to our production costs and the benefit we
want to obtain. As we are starting our business, we considered what
competitors are charging for their products and we decided to adopt a
competitive pricing advantage. We expect our prices will help us to place CUPS
in the market. The markup policy we have is calculated in the same way, but
since each product has its specific price and cost of production, the benefit will
vary from product to product. However, we have established that any product
will cost us more than the price we sell it. Each product must return the
business at least of 50% of its cost. Furthermore, the inventory of the goods we
use in the production and the products we produce will be carried out very
strictly. The products we expect to sell, after opening our locale are: cupcakes,
all kinds of desserts, and hot and cold beverages.
To continue, it is vital to take into account the inventory. The materials
Cups will need are principally raw materials as the cupcakes will be made daily
in the store, and books. The average value in stock of Cups is 500$ in books,
as most of the books will be contributions from the clients, and the books are
not going to be bought each month, so they are a onetime expense. About
1100$ in materials for the coffees and pastry will be needed each month in
order to provide the ingredients that are used in their elaboration. The rate
turnover which is computed by dividing the total sales revenue in a period by
the average inventory is 10000/1100, which equals 9.09, while the average of
other cupcake stores is 6.39. Cupcakes are considered seasonal products as in
some holidays, such as Christmas and Valentines Day, they are more sold, so
Cups will need to produce more cupcakes during these periods. The lead time
for ordering will be really short, because the products are storable and the fruits
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should be bought daily.


CUPS will be owned by three members, each contributing to the starting
capital of the business. The major source of revenue during the first year will be
service revenue, which includes cupcakes and drink sales. This shop, including
walk-in service, has three delivery channels to order, via online ordering phone
orders and going to the location we have chosen. This business will aim to
achieve a high profit in the first year, by distinguishing from competitors through
a structured promotional campaign. The Republica del Salvador and Eloy Alfaro
area, in addition, has many visitors which can stimulate the revenue. This shop
will also sell other products, such as books, movies, and some antiquities.
CUPS will offer only high-quality products, as well as quality service. In
order to achieve this, we have developed a purchasing policy that is to buy the
right quality and quantity of materials at the best possible price and from the
best distributor. Then, the customer service policies are written at the entrance
of the location and also in our webpage. We want to place CUPS in the market
as an eco-friendly business. We want to stand out for the quality of all our
products and for our customer service. Our customer policy will be to be friendly
and helpful with customers from their arrival to their departure. Furthermore,
CUPS aims to offer an efficient, effective, and excellent service, treat all
customers with respect and courtesy, always listen to what customers have to
say, respond to enquiries promptly and efficiently, and consult customers about
their needs.
Then, the physical requirements for Cup's as a food service locale is a
space between 200 to 250 m; it should be a one floor building with two areas,
the kitchen and larder and the area where all the tables and the cash machine
will be located. This distribution is thought to allow a good environment and an
easy transportation of the products. The locale will be preferably located in a
commercial and busy zone, specifically between Republica del Salvador
Avenue and Eloy Alfaro.
Also, in order to provide a consistent image we will offer different kinds
of promotions that will include: free products, discounts, and extra services as
being able to take books home, etc. Also, one of our advantages is that our
prices are the lowest in the market. Finally, Cups will not offer credit. All the
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sales will be in cash in order to avoid payment problems.

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