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ACKNOWLEDGEMENT

I would like to express my greatest thanks

to my subject teacher, Mrs. A. Basu for


providing us with hints and advices in all situations and encouragement and

motivation to complete this project


successfully. I would also like to thank my sister for helping me when required for the making this project successful.

EXECUTIVE SUMMARY
Beans & Bakes (B&B) is a start-up coffee and bakery retail establishment located in Marine Drive, Mumbai. B&B expects to catch the interest of a regular loyal customer base with its broad

variety of coffee and pastry products. The company plans to build a


strong market position in the town, due to the partners' industry experience and mild competitive climate in the area. B&B aims to offer its products at a competitive price to meet the demand of the middle-to higher-income local market area residents and tourists. The company intends to hire two full-time pastry bakers and six part-time baristas to handle customer service and day to day operations.

Business description
B&B is a bakery and coffee shop managed by two partners. These partners represent sales/management and finance/administration areas, respectively. The partners will provide funding from their own savings, which will cover start-up expenses and provide a financial cushion for the first months of operation. A

ten-year Small Business Administration (SBA) loan will cover the


rest of the required financing. The company plans to build a strong market position in the town, due to the partners' industry experience and mild competitive climate in the area.

START-UP SUMMARY
B&B is a start-up company. Financing will come from the partners' capital and a ten-year SBA loan. The aside chart and following table illustrate the company's projected initial start-up costs.

START-UP REQUIREMENTS
START-UP EXPENSES
Legal Premise Renovation Expensed Requirement Other

AMOUNT(Rs.)
30,000 2,00,000 4,00,000 10,000

TOTAL START-UP EXPENSES START-UP ASSETS


Cash Required Other Current Assets Long -term Assets

6,40,000 AMOUNT(Rs.)
7,00,000 1,20,000 6,50,000

TOTAL ASSETS TOTAL REQUIREMENTS

14,70,000 21,10,000

START-UP FUNDING
Start-up Expenses to fund
Start-up Assets to fund

AMOUNT(Rs.)
6,40,000
14,70,000

TOTAL FUNDING REQUIRED ASSETS


Non-cash Assets from Start-up Cash Balance on Starting date

21,10,000 AMOUNT(Rs.)
7,70,000 7,00,000

TOTAL ASSETS 14,70,000 LIABILITIES AND CAPITAL LIABILITIES AMOUNT(Rs.)


Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (Interest-free) 10,00,000 10,000 0

TOTAL LIABILITIES CAPITAL PLANNED INVESTMENT


Mr. Agarwal Mr. Gupta Other

10,10,000 AMOUNT(Rs.)
5,50,000 5,50,000 0

TOTAL PLANNED INVESTMENT


Less: Loss at Start-up (Start-up Expenses)

11,00,000
6,40,000

TOTAL CAPITAL TOTAL CAPITAL & LIABILITIES TOTAL FUNDING

4,60,000 14,70,000 21,10,000

COMPANY OWNERSHIP
Beans & Bakes is incorporated in the state of Mumbai. It is equally owned and managed by its two partners. Mr. Suresh Agarwal has extensive experience in sales, marketing, and management, and was vice president of marketing with Kathleen Confectionaries. Mr. Shubham Gupta brings experience in the area of finance and administration, including a stint as chief financial officer with both Monginis and the national coffee store chain, Caf Coffee Day.

PRODUCTS & SERVICES AVAILABLE


B&B offers a broad range of coffee and espresso products, all from high quality Columbian grown imported coffee beans. B&B caters to all of its customers by providing each customer coffee and espresso products made to suit the customer, down to the smallest detail. The bakery provides freshly prepared bakery and pastry products at all times during business operations. Six to eight moderate batches of bakery and pastry products are prepared during the day to assure fresh baked goods are always available.

SALES PLAN
As the chart and table show, B&B anticipates sales of about Rs. 49,10,000 in the first year, Rs. 56,70,000 in the second year, and Rs.65,50,000 in the third year of the plan.

SALES FORECAST
Year 1
SALES Espresso Drinks Pastry items Other
AMOUNT(Rs.) AMOUNT(Rs.)

Year 2 Year 3
AMOUNT(Rs.)

40,50,000 8,60,000 0
49,10,000

46,77,750 9,93,300 0
56,71,050

54,02,800 11,47,260 0
65,50,060

TOTAL SALES
DIRECT COST OF SALES

AMOUNT(Rs.)

AMOUNT(Rs.)

AMOUNT(Rs.)

Espresso Drinks
Pastry items Other
TOTAL DIRECT COST OF SALES

3,75,000
4,30,000 0
7,67,500

3,89,810 4,50,230
4,96,850 5,73,630 0
8,86,460

0
10,23,860

SALES BY YEAR
Rs. 7,000,000

Rs. 6,000,000

Rs. 5,000,000

Rs. 4,000,000

Rs. 3,000,000

Rs. 2,000,000

Rs. 1,000,000

Rs. 0 Year 1 Year 2 Year 3

Espresso Drinks Pastry Items Other

MARKETING STRATEGY
The process of marketing involves creating a market offering, to satisfy the needs and wants of the present and potential customers. To develop and market our products we use the strategy of marketing mix. The marketing mix is a business tool used in marketing and by marketing professionals. The marketing

mix is often crucial when determining a product or brand's


offering, and is often synonymous with the four Ps: PRICE: The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well. PRODUCT: A product is seen as an item that satisfies what a consumer needs or wants. It is a tangible good or an intangible service. Intangible products are service based like the tourism industry, the hotel industry and the financial industry. PROMOTION: Promotion comprises elements such as: advertising, public relations, personal selling and sales promotion PLACE: Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the

marketing mix.

PRODUCT RANGE
BEVERAGES Hot Coffee Cold Coffee Chocoholicas Fruiteazers

Hoteas
Frosteas International Coffee FOOD Pastries Sundaes Dessert Shots Sweet Treats Cake Away OTHERS Combo Deals The Lounge

Lounge New Food

PROMOTIONAL STRATEGY
We at B&B will use personal selling and sales promotion techniques in order to promote the franchise and boost its sales. Professional salesmen

will present the products in the form of conversation


with one or more prospective customers for the purpose of making sales. At the same time the shortterm incentives will encourage the buyers to make immediate purchase of the product.

TARGET MARKET
B&B's focus is on meeting the demand of a regular local resident customer base, as well as a significant level of tourist traffic from nearby highways. The dominant target market for B&B is a regular stream of

local residents. Personal and expedient customer


service at a competitive price is key to maintaining the local market share of this target market.

MARKET NEEDS
Because Mumbai has a hot climate for eight months out of the year, iced coffee products are very much in demand. During the remaining cooler four months of the year, hot coffee products are in significantly high demand, along with a slower but consistent demand for iced coffee products. Much of the day's activity occurs in the morning hours before eleven a.m., with a

relatively steady flow for the remainder of the day.

MARKET SEGMENTATION
B&B focuses on the middle- and upper-income markets. These market segments consume the majority of coffee, espresso and bakery products. Local Residents B&B wants to establish a large regular customer base. This will establish a healthy, consistent revenue base to ensure stability of the business. Tourists Tourist traffic comprises approximately 35% of the revenues. High visibility and competitive products and service are critical to capture this segment of the market.

MARKET SEGMENTS
Local Residents Tourists

65%

35%

PROJECTED PROFIT & LOSS A/C


As the Profit and Loss table shows, B&B expects to continue its steady growth in profitability over the next three years of operations.

PROFORMA PROFIT AND LOSS


Year 1
AMOUNT(Rs.)

Year 2 Year 3
AMOUNT(Rs.) AMOUNT(Rs.)

SALES Direct Cost of Sales Other


TOTAL COST OF SALES

49,10,000 7,67,500 0 7,67,500 41,42,500 84.37 %

56,71,050 8,86,460 0 8,86,460 47,84,590 84.37 %

65,50,060 10,23,860 0 10,23,860 55,26,200 84.37 %

Gross Margin Gross Margin % EXPENSES Payroll

26,08,000

27,38,400

28,75,320

Sales And Marketing And Other Expenses


Depreciation Utilities Payroll Taxes
TOTAL OPERATING EXPENSES

2,70,000

3,52,000

7.14.600

6,00,000 12,000 3,91,200 38,81,200 2,61,300 1,00,000 31,110 1,30,190 2.65 %

6,90,000 12,600 4,10,760 42,03,760 5,80,830 95,000 1,21,460 3,64,370 6.43 %

7,93,500 13,230 4,31,300 48,27,950 6,98,250 82,500 1,56,500 4,59,250 7.01%

Profit Before Interests & Taxes Interest Expense Taxes Incurred


NET PROFIT NET PROFIT/SALES

PROJECTED BALANCE SHEET


PROFORMA BALANCE SHEET
Year 1
AMOUNT(Rs.)

Year 2 Year 3
AMOUNT(Rs.) AMOUNT(Rs.)

ASSETS CURRENT ASSETS Cash


15,65,930 23,28,940 32,76,370

Other Current Assets


TOTAL CURRENT ASSETS

1,20,000
16,85,930

1,20,000
24,48,940

1,20,000
33,96,370

LONG-TERM ASSETS Long-term Assets Gross Margin Accumulated Depreciation Gross Margin %
TOTAL LONG-TERM ASSETS
TOTAL ASSETS
6,50,000 41,42,500 6,00,000 84.37 % 50,000 17,35,930 8,50,000 47,84,590 12,90,000 84.37 % (4,40,000) 20,08,940 10,50,000 55,26,200 20,83,500 84.37 % (10,33,500) 23,62,870

LIABILITIES & CAPITAL CURRENT LIABILITIES Accounts Payable


TOTAL CURRENT LIABILITIES LONG-TERM LIABILITIES
1,45,740 1,45,740 10,00,000 11,45,740 15,65,930 (6,40,000) 1,30,190 5,90,190 17,35,930 5,90,190 1,54,380 1,54,380 9,00,000 10,54,380 23,28,940 (5,09,810) 3,64,370 9,54,560 20,08,940 9,54,560 1,99,070 1,99,070 7,50,000 9,49,070 32,76,370 (1,45,440) 4,59,250 14,13,810 23,62,870 14,13,810

TOTAL LIABILITIES

Paid-in Capital Retained Earnings Earnings


TOTAL CAPITAL
TOTAL LIABILITIES & CAPITAL

NET WORTH

BREAK-EVEN POINT ANALYSIS


B&B's Break-even Analysis is based on the average of the firstyear figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk. B&B should break even by the fourth month of its operation as it steadily increases its sales.

BREAK-EVEN ANALYSIS
Rs. 3,00,000

Rs. 2,00,000

Rs. 1,00,000

Rs. 0

(Rs. 1,00,000)

(Rs. 2,00,000)

(Rs. 3,00,000)

0 30,000

60,000 90,000

1,20,000 1,80,000 2,40,000 3,00,000 1,50,000 2,10,000 2,70,000 3,30,000

BREAK-EVEN ANALYSIS

AMOUNT (Rs.)

Monthly Units Break-even


Monthly Revenue Break-even ASSUMPTIONS Average Per-unit Revenue Average Per-unit Variable Cost ESTIMATED MONTHLY FIXED COST

1,72,550
3,83,360 AMOUNT (Rs.) 22.2 3.5 3,23,430

MANAGEMENT SUMMARY
Mr. Suresh Agarwal has extensive experience in sales,

marketing, and management, and was vice president of


marketing with Kathleen Confectionaries. Mr. Shubham Gupta brings experience in the area of finance and administration, including a stint as chief financial officer with both Monginis and the national coffee store chain,

Caf Coffee Day.

PERSONNEL PLAN
As the personnel plan shows, B&B expects to make significant investments in sales, sales support, and

product development personnel.

PERSONNEL PLAN
Year 1
AMOUNT (Rs.)

Year 2 Year 3
AMOUNT (Rs.) 10,50,000 AMOUN T(Rs.) 11,02,500

Managers Pastry Bakers Baristas Other TOTAL PEOPLE TOTAL PAYROLL

10,00,000

4,08,000

4,28,400

4,49,820

12,00,000

12,60,000

13,23,000

0 10

0 10

0 10

26,08,000

27,38,400

28,75,320

SWOT ANALYSIS
STRENGTH
Selling Products in affordable prices. Products of extremely good quality and taste. Its a youth oriented brand. USP of the brand is that it is high affordable brand.

WEAKNESS
Limited target audience. Older generation may generally not like it. Self service for customers which make uncomfortable guest. Management team has not worked together for long period. Less advertisements in the market.

OPPORTUNITY
Coffee industry is one of the fastest growing industries in Asia. Scope for innovation in existing market. More people may like to visit for informal meetings.

THREAT
Large unorganized market. High number of competitors like Caf Coffee Day, Barista Lavazza, Starbucks, Georgia.

QUESTIONNAIRE
Dear Consumers,
I am a partner of a start-up coffee and bakery retail establishment located in Mumbai named Beans & Bakes. The Caf has been recently launched at Marine Drive, Mumbai. This survey is being conducted to estimate the potential demand for the coffee espresso and bakery products, etc so that we can serve you customers better. It is an earnest request to you to fill the attached questionnaire for our reference. It will

not take more than a minute. A lucky draw will also take place in which one lucky
winner will be gifted a Smartphone worth Rs. 10,000. All your valuable views will be respected. Thanking You. Instructions: Please fill in the form in BLOCK LETTERS. Tick mark ( ) in the squares as given against each question wherever it is applicable.

Avoid Cancellation or use of white ink. Please specify the units wherever applicable. PART A: Name: .. Address: Date of Birth: Sex: Male Female Business Student Service Others....

Occupation:

Monthly Income (in Rs.): . Contact Information: Phone Number: . Email-ID: ...

Part B: Q1. How often do you visit a caf? Everyday Once a week Once a Month Rarely Q2. What are the features that you expect at a caf? Good Ambience Air Conditioned Caf High Seating Capacity Good Service Others (specify) Q3. Do you find a caf easily accessible? Yes No Q4. Are you oriented towards cheaper espresso and bakery products? Yes No Q5. What are the primary purposes for which you visit a caf? Informal Meetings Formal Meetings Others (specify) Q6. What features of products do you expect at caf? Good Taste Low Price Others (specify) Q7. What is the monthly average expenditure made on the products of a caf? Less than Rs. 500 Between Rs, 500-Rs. 1000 Between Rs. 1000-Rs. 2500 More than Rs. 2500 Q8. Do you prefer bakery products over espresso items? Yes No Q9. Do you prefer eggless products more? Yes No Q10. Which of the following cafes do you visit more? Caf Coffee Day Barista Lavazza Starbucks OTHERS (specify) .. Q11. What is your view on the existing cafs and what will you suggest for improving this condition? ....

BIBLIOGRAPHY
I have taken information from the
following sources : www.google.com

www.wikipedia.org
www.scribd.com www.about.com Business Studies Textbook for Class XII Part II Entrepreneurship Textbook for Class XII