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BUSINESS PLAN FOR AN ENGLISH-SPEAKING CAF

Prepared by Trong Dai

Hanoi 02/11/2008

CONTENTS
I.Executive Summary
1.Objectives 2.Missions 3.Keys to Success 4.Risks

II. Company Summary


1.Company name, logo and slogan 2.Company Ownership 3.Company Location and Facilities 4.Start-up Summary 5.Expansion

III.Products and services


1.Products 2.Sourcing 3.Future Products

IV. Market Analysis Summary


1.Market Needs 2.Market Segmentation

V. Strategy and Implementation Summary


1.Operation Strategy 2. Marketing and promotion Strategy 3.Pricing Strategy 4. SWOT Analysis 5. Sales Forecasts

VI.Management Summary
1.Personnel Plan

VII. Financial Plan


1.Estimated Monthly Fixed Cost 2.Estimated Monthly Revenue 3.Break-even Analysis 4.Profit and loss Analysis 5.Projected Cash Flow

VIII.Milestones

BUSINESS PLAN FOR AN ENGLISH-SPEAKING CAF


I.Executive Summary
INTRODUCTION: There is a growing demand among students in Hanoi for pratising English,especially in regard to speaking skill,which is undeniable.There have been a number of English clubs in Hanoi but just with limited chances for them to better the skill. Appreciating the problem,we give birth to DE. Unlike a typical cafe, DE will provide a unique forum for communication and entertainment through an English speaking environment.DE is the answer to this increasing demand, filling this niche . The public wants: (1) access to the methods of communication and volumes of information related to English speaking countriescultures which are now available at DE, and (2) access at a cost they can afford and in such a way that they aren't educationally,socially, or culturally isolated. Therefore,DE's goal is to provide the community with a social, educational, entertaining atmosphere for universal communication. And,obviouslly functioning as a caf, DE offer high-quality products in a unique, innovative environment with an atmosphere that will spawn socialization in every season, at all times of the day, every day of the week.

This business plan is prepared to obtain financing in the amount of 200,000,000VND. The financing is required to begin work on site preparation and modifications, equipment purchases, and to cover expenses in the first year of operation. DE will be joined by 5 investors.The investors will be treated as shareholders and therefore will contribute 40,000,000VND each This business plan provides a step-by-step plan for the business start-up, establishing favourable sales numbers, gross margin, and profitability. This plan includes chapters on the company, products and services, market focus and forecasts, management team, financial plan and action plans.

1.Objectives DE has established 4 objectives it wishes to achieve in the first three years of operation: + Gross margin approaching and surpassing 324,000,000 VND (= 36,000,000VND*9 months)by the end of the first fiscal year. +Targeting and maintaining a net profit margin of at least 15% by the second fiscal year. + Achieving a 30% net profit margin by the third fiscal year + Cultivating monthly sales to reach 23,000,000 VND by the end of the third month of operation( monthly break-even point), and 36,000,000VND monthly by the end of the first year of operation. 2.Missions: Educational Mission:+To creat an interesting learning environment for customers to attain better English communication skills Product Mission : + To provide customers good quality drinks . Economic Mission :+ To operate and grow at a profitable rate through sound economic decisions. 3.Keys to Success There are keys to success in this business,some of which are virtually the same as any foodservice business.

It is our 1ST three keys,the english-related factors,that will give us that extra measure of success as it differentiates DE from other local cafes +Native English shareholders +Presence of native English speaking people at DE every evening +Just English spoken with interesting activities (topics) to create unique attraction and originality for DE +Good location - accessible to a dynamic student population +Interior design style suitable for the business model +Reasonably priced products

4.Risks The risks involved with starting DE are: + Will the popularity of English speaking cafes continue to grow, or is an English speaking cafe a fad in HN? + Will individuals be willing to pay for the drinks and happy to come back again while the majority of our customers are budgetary students? + Will there be constant presence of native English speaking people at DE everyday to attract customers? + Will there be many competitors in the furure?

II. Company Summary


1.Company name, logo and slogan Name: DRINK ENGLISH ( D.E ) Logo: Slogan: VINGLISH TO ENGLISH

2.Company Ownership DE is a privately held cafe with the ownership shared by 5 investors:JOSH,JEFF,TUAN,KHIEM and DAI 3.Company Location and Facilities DE will be located in a renovated house in NGUYEN CHI THANH Street which can be seen as a crossroad of universities. It will be designed by??? Our design style features stained glass decorations,creating a nice and modern space suitable for an English speaking environment,especialy highlighting English culture but not loosing its foodservice function The facility will be divided equally between the caf function and the English learning function. The cafe will feature an indoor speaking room for approximately 30 patrons,a reading room for 20 and an outside space for 30 novice ones , designed for flexible seats and a small platform for presentaion, and shelves of books, magazines and newspapers available for reading and for sale Dcor:.( still waiting for a detailed sketch from a professional architect)

4.Start-up Summary The start-up costs for DE cafe can be found in the chart and table below. (just roughly) Start-up Expenses CONSTRUCTION & DCOR Cost 30.000.000VND(for more specifics,it will be sorted out later)

RENTAL FOR 6 MONTHS

60.000.000VND

MARKETING&ADS

6.000.000VND 55.000.000VND (for more details,it will be sorted out later) 6.000.000vnd 10.000.000vnd

EQQUIPMENT PURCHASE: 1 Refrigerator 1 Computer,Wifi, 1 Printer,1 Telephone Stationery etc Tables, Chairs, Furnishings Cups /glasses 1 Microwave,1 gas cooker, 1 Blender Other.. Total Start-up Expenses

30.000.000vnd 5.000.000vnd 4.000.000vnd . 151.000.000VND

5.Expansion: Assuming this cafe is successful, it will be the first of a chain of English speaking cafes located in markets that have similar demographic profiles, a sizeable student population. we will use this as a "blueprint" for expansion. For example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency

III.Products and services


1.Products Learning environment: - Improving English skills - Getting an insight into English speaking countriescultures

Socialisation : - Make new friends,especially native English speakers and people of different nationalities Educational products:

- Books,magazines,newspapers,CDs in English for sale

Drinks and food:

- Menu and pricing: DE offers its patrons the finest custom drinks. In addition, DE will offer bakery items and other confections.They are divided into 5 groups as follws: coffee, tea, juice & shake, fastfood and others Seasonally, DE will add beverages such as . Prices have been determined after a thorough analysis of all costs for every item in each drink. In some cases, an average price has been calculated and applied to all similar drinks in order to keep the menu from confusing customers.

Here is a rough illustration of our products:

HAMBURGER:

COFFEE:

SANDWICH:

BEER???:

GREEN TEA

TEA BAGS(LIPTON,DIMAH)

JUICES:

CAKES:

Drinks
Coffee D1 D2 D3 Vietnamese (black)- C ph en Vietnamese (with milk) - C ph sa Western (Instant 3 in 1) - C ph ho tan 12,000vn d 12,000vn d 10,000vn d

Tea D4 D5 D6 Vietnamese Tea (by pot)- Tr Vit Nam Lipton - Tr Lipton Dilmah - Tr Dilmah 12,000vn d 10,000vn d 10,000vn d

Juice D7 D8 D9

(blended with ice) Orange - Nc Cam Passion fruit - Nc Chanh Leo Lemon - Nc Chanh 18,000vn d 15,000vn d 12,000vn d

Shake D10 D11 D12 D13 D14

(blended with ice & milk) Mango - Sinh t Xoi Pineapple - Sinh t Da Watermelon - Sinh t Da Hu Lemon - Sinh t Chanh ti Avocado - Sinh t B 18,000vn d 18,000vn d 18,000vn d 18,000vn d 20,000vn d

Other D15 D16 D17 Chocolate - Ca cao Milk - Sa Ti Yogurt - Sa Chua nh . (blended with ice & your choice of coffee, chocolate or orange) 15,000vn d 10,000vn d 15,000vn d

D18 D19 D20

Salted lemon - Chanh Mui Salted apricot - M Mui Soft Drinks- Noc ngt (Coke, Fanta, Sprite, Mineral Water) Beer - Bia: Tiger & Halida (can)

12,000vn d 12,000vn d 12,000vn d 18,000vn d

D21

Food

s
F1 F2 Toast - Bnh m B mt (served with butter & Jam) Pancakes - Bnh Kp (your choice of toppings: Chocolate/Banana, Lemon/Sugar, Honey/Banana) 12,000vnd 12,000vnd F3 Toast (Omelette) - Bnh m p la 12,000vnd

F4

American Hotdog (sausage in baguette, Fillings: cheese, onion, tomato) -Bnh m xc xch

20,000vnd

F5

Grilled Cheese Sandwich(Served with onion, tomato, ham)-Bnh Sandwich

20,000vnd

F6

French Fries (With or without Gravy) - Khoai ty chin

15,000vnd

F7

Australian Vegemite Sandwich -Bnh Sandwich kiu c

12,000vnd

F8

American PB&J Sandwich (peanut butter & jelly) -Bnh Sandwich kiu M

12,000vnd

F9 F10 F11 F12

Snacks - Bim bim Melon Seeds- Ht Da Crackers/Biscuits - Bnh Quy Cakes- Bnh ngt

8,000vnd 5,000vnd 10,000vnd 8,000vnd

2.Sourcing DE will buy materials from 3.Future Products As the business is going well, DE will offer more products and improve services that will enhance sales and satisfy its customers' desires.

IV. Market Analysis Summary


1.Market Needs Such factors as current trends, addiction, and historical sales data ensure that the high demand for coffee and other drinks will remain constant over the next five years. Besides, the importance of English is widely acknowledged,so DEs potential growth is enormous as a harmonious combination between learning English and enjoying a drink DE is facing with an exciting opportunity of being the first-mover in this type of market By opening DE, we maximize our potential for success thanks to several factors: + Consistent popularity of coffee and other drinks

+ Growing interest in English but lack of such an environment + This type of business is new,so there is no competition in Hanoi up to present + Good location

2.Market Segmentation - In terms of familiarity with English, DE's customers can be divided into 2 groups: +The first group is familiar with ENG and desires a progressive and inviting atmosphere where they can enjoy a great drink in a friendly way +The second group is not familiar with ENG, yet, is just waiting for the right opportunity to enter this community. The majority of these individuals are students . See the Market Analysis chart below for more specific (there will be a chart later) - In terms of age, DE's customers are comprised of these target groups: + Universitiy and colledge Students + School children + People who are working but want to improve english for better jobs - Besides,foreigners who want to explore Vietnamese culture and make Vietnamese friends might be our potential custumers

V. Strategy and Implementation Summary


1.Operation Strategy DE has three main strategies for operation: -The first strategy focuses on attracting novice English speaking people. By providing a friendly environment, DE hopes to help them fortify their confidence and make more progress and become our loyal customers in the future.Moreover, DE will be staffed by knowledgeable employees paying attention to accommodating customers needs. If a customer has any type of question or concern, a DE employee will always be available to assist.

-The second, and most important strategy focuses on pulling in power English speaking people. Power English speaking people are so familiar with English. This group of customers plays an important role at DE. Power ones have a good command of English and are willing to share,which will certainly impress and attract novice ones -The third strategy focuses on building a social hub for DE customers so that they see numerous benefits from frequenting DE To realize the above-mentioned strategies, we set forth a number of approaches as follows: + Specific Sales Programs:??? + Topic every evening???Anyone to conduct??? + Special performances on certain occassions ??? 2. Marketing and promotion Strategy - We will launch marketing to establish our brand image via several methods: + Using advertising as its main source of promotion. Ads placed in universities,schools, English clubs,and English centres will help build public awareness. + Handing out leaflets to students.Accompanying the leaflet will be a coupon for a discounted drink for the first time + Building relationships with teachers of universities,schools, other organizations as well as famous people + Taking advantage of word of mouth via our friends(both domestic and foreign) and our very patrons + Also conducting PR activities in media + Internet forums, DE blog, e-mails. + Inviting our pax (when on tour) to DE? - DE realizes that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain our market share, by: + Offering gifts on special occassions(Valentine,Chrismas,New year,Womens Day..), frequency cards, and discounts to key groups + Drink Coupons: At special events, we will be giving away drink coupons as door prizes or awards. This encourages the person to come in for their free beverage and bring their friends or buy a bakery item.DE will also hand out free drink coupons to those who have purchased a certain number of cups or something similar +Soliciting customer feedback to constantly improve our services and streamline our operation 3.Pricing Strategy Our food, drinks, and other options(books,CDs) are priced reasonably but still give us an attractive margin while at the same time offering value to the consumer. We want to repeat business . So, the beverages, food and the others will be relatively flexible. Pricing will be monitored accordingly 4. SWOT Analysis The SWOT analysis provides us with an opportunity to examine the internal Strengths and Weaknesses that DE must address. It also enables us to examine the Opportunities presented to DE as well as potential Threats. * Strengths DE has a valuable inventory of strengths that will help it succeed. These strengths include:

+ Native English shareholders and their native English-speaking friends can usually show up to attract custumers + All of DE founders are quite familiar with English,so we can easily manage English-related requests from our customers + Many of us work in the travel industry,so we have numerous opportunities to persuade our very pax touring with us to come to DE.Their presence contributes remarkably to appealing to our customers + Many of us have close connections with students who are eager to improve their english + There is a clear vision of the market need while we are currently enjoying a first-mover advantage in the local market + We can hire knowledgeable students with good English at cheap wages to work as friendly and skilled staff + By attracting students , we will generate excellent word-of-mouth Strengths are valuable, but it is also important to realize the weaknesses DE must face with. * Weaknesses These weaknesses include: +The majority of our customers are budgetary students and school children + The student population is not as strong during the summer as it is from May through August of each year , DE will do poorly during the non-school months.We must also market ourselves anew each year to the incoming students. DE cannot avoid these peaks and valleys in business * Opportunities DE's strengths will help it capitalize on emerging opportunities. These opportunities include: + An increasing need for English can be seen widely and becoming more and more popular.It gives us opportunities to multiply the model * Threats Threats that DE should be aware of include: + Currently high rental and will it be higher in the future? + Will the so-called budgetary custumers be willing to pay? + Will there be additional local competitors on the horizon? So,we need to be prepared for their entry into the market and will closely monitor pricing and our programs should be designed to build customer loyalty, and it is our hope that our quality service and up-scale ambiance won't be easily duplicated. 5. Sales Forecasts (there will be a chart later) In the firtst quarter of the first year of operation In the first year of operation. In the fiscal second year, In the third fiscal year.

VI.Management Summary
1.Personnel Plan The staff will consist of HOW MANY? crucial part-time employees working HOW MANY hours a week at $? per month . Part-time personnel will be hired to handle bartending, serving, dishwashing function and..etc In addition, one full-time manager who will assist in maintaining and reviewing DEs operations will be employed to work HOW MANY hours? a week at $? per month *Requirements: + Good English(especially speaking skill) + Articulate,polite,friendly,honest,good sense of responsibility + With as much experience as possible and will be re-trained in line with DE style. The personnel plan is included in the following table: ESTIMATION: Personnel Plan Full-time Manager1 Part Time Manager2 7 pp 2.000.000vnd 1.500.000vnd

Part Time Bartender 1 800.000vnd Part Time Bartender 2 800.000vnd Part Time waitress 1 Part Time waitress 2 Part Time waitress 3 Total Payroll 800.000vnd 800.000vnd 800.000vnd 7.500.000vnd

(Thanks to the chosen location,there neednt be a security gard)

VII. Financial Plan


Fixture Costs: Fixture costs are associated with the above-mentioned start-up costs:151.000.000vnd 1.Estimated Monthly Fixed Cost:

Payroll Expense: Rent Expense Utilities Expense Bike keeping Tax Total

7.500.000vnd/1 month 10.000.000vnd/1 month 2.500.000vnd/1 month (water,electricity,gas,phone,ieternetetc.) 1.500.000/1 month 500.000vnd/1 month 23.000.000vnd/ 1 month

Contingency 1,000,000 vnd/1 month

DE is leasing a 120 m2 location at 10.000.000vnd per month. The lease agreement specifies that we pay 60.000.000vnd for a total of every 6 months. At the end of the third year, the lease is open for negotiations and DE may or may not resign the lease depending on the demands of the lessor. Depreciation: In depreciating our capital equipment ,We depreciate our fixtures over a five-year time period 2.Estimated Monthly Revenue : Asumption: Average Number of custumers/1 day: 100pp Average Per-Unit Margin : Gross margin/1 day : 12,000vnd 1,200,000vnd 36,000,000vnd 23,000,000vnd 13,000,000vnd

Gross margin /1 month: Monthly fixed cost:: Monthly Net Profit:

3.Break-even Analysis +Monthly Break-even point: Monthly Margin Break-even Monthly Units Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Average Per-Unit Margin 15,000vnd 3,000 vnd 12,000vnd 23,000,000vnd 1,917drinks(64 drinks or 64 custumers/ day)

+ Duration of investment return (according to our assumptions): - Total fund: - Monthly Net Profit: 200,000,000vnd 13,000,000vnd

=> Duration = 200,000,000vnd/13,000,000vnd=15.4 months(+ the first 3 months without pfofit= 18.4 months) 4.Profit and loss Analysis (there will be a table later) 5.Projected Cash Flow Cash flow data is presented in the table below. Cash Flow Cash Received Expenditures Cash Balance FY1 200.000.000VND 151.000.000VND .. . FY2 FY3 . .

49.000.000VND(will be allocated for variable costs in . the beginning phase of opperation)

VIII.Milestones
The accompanying table lists important program milestones, with dates and people in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

Milestones Business plan

Start Date

End Date

Budget

People in charge DAI

Leasehold Buildout Marketing Plan Leaflet design Begin Construction Process Design Management

TUAN.B DAI & KHIEM DAI & KHIEM TUAN.B

TUAN.B IInterior Design Staff plan DAI

Equipment Purchasing Inauguration Christmas???

TUAN.B