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BUSINESS PLAN : A Sophisticated Coffee Shop


A5 a newly Indian company is a start-up coffee and bakery retail establishment located in Delhi NCR. A5 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 A5 aims to offer its products at a competitive price to meet the demand of the middle-to higher-income local market area residents and tourist

A5 is incorporated in the state of Delhi. It is equally owned and managed by its five partners. Mr. Abhishek Singh has extensive experience in sales, marketing, and was vice president of marketing with both Alakh & Amit and Mr. Abhishek Chokarburty Fields brings experience in the area of finance and administration, including a stint as chief financial officer with both and the national coffee store chain, BuzzCups,and MR,Abhay giri is the operation& production manager.

A5 offers a broad range of coffee and espresso products, all from high quality Columbian grown imported coffee beans. A5 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.

A5 aims to offer high quality coffee, espresso, and pastry products at a competitive price to meet the demand of the middle- to higher-income local market area residents and tourists.

A5 is incorporated in the state of New Delhi. It is equally owned by its 5 partners.

Start-up Requirements Start-up Expenses Legal Premise renovation Expensed equipment Other Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements 70,000 12,000 65,000 147,000 211,000 3,000 20,000 40,000 1,000 64,000

Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities 64,000 147,000 211,000 77,000 70,000 0 70,000 147,000

0 100,000 1,000 0 $101,000

Capital Planned Investment Patterson Fields Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding 55,000 55,000 0 0 110,000 (64,000) 46,000 147,000 211,000

1 Market Segmentation A5 focuses on the middle- and upper-income markets. These market segments consume the majority of coffee and espresso products. Local Residents A5 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.

Target Market Segment Strategy The dominant target market for A5 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 Delhi has a cool climate for 4 months out of the year, hot coffee products are very much in demand. During the remaining warmer four months of the year, iced coffee products are in significantly high demand, along with a slower but consistent demand for hot coffee products. Much of the day's activity occurs in the morning hours before ten a.m., with a relatively steady flow for the remainder of the day. Service Business Analysis The retail coffee industry in the India has recently experienced rapid growth. The cool climate in Delhi stimulates consumption of hot beverages throughout the year.. Despite low competition in the immediate area, A5 will position itself as a place where customers can enjoy a cup of delicious coffee with a fresh pastry in a relaxing environment.

Sales Month





Other Pastry






0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

sales Espresso Drinks Pastry items Total unit sales UNIT PRICES Espresso Drinks Pastry Items SALES Espresso Drinks Pastry Items Total Sales

Year 1 135,000 86,000 221,000 YEAR 1 3.00 1.00

YEAR 2 148,500 94,600 243,100 YEAR 2 3.15 1.05

405,000 86,000 491,000

467,775 99,330 567,105

Direct Unit Costs Espresso Drinks Pastry Items Direct Cost of Sales Espresso Drinks Pastry Items Subtotal Direct Cost of Sales

Year 1 0.25 0.50

Year 2 0.26 0.53

33,750 43,000 76,750 88,646

38,981 49,66 102,386

As the personnel plan shows, A5 expects to make significant investments in sales, sales support, and product development personnel.
Year 1 100,000 40,800 120,000 10 260,800 Year 2 105,000 42,84 126,000 10 273,840

Managers Pastry Bakers Baristas Total People Total Payroll

A5 expects to raise 110,000 of its own capital, and to borrow 100,000 guaranteed by the BANK as a ten-year loan. This provides the bulk of the current financing required.

YEAR 1 Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Utilities 260,800 27,000 60,000 1,200 491,000 76,750 0 76,750 414,250 84.37%

YEAR 2 567,105 88,646 0 88,646 478,459 84.37%

273,840 35,200 69,000 1,260

Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$39,120 0 388,120 26,130 86,130 10,000 3,111 13,019 2.65%

$41,076 0 420,376 58,083 127,083 9,500 12,146 36,437 6.43%

Year 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interestfree) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 0 0 0 0 0 0 0 491,000 491,000 491,000

Year 2

567,105 567,105 0 0 0 0 0 0 0 567,105

Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Subtotal Cash Spent Net Cash Flow Cash Balance

Year 1

Year 2

260,800 143,607 404,407

273,840 186,964 460,804

0 0 0 404,407 86,593 156,593

10,000 0 20,000 490,804 76,301 232,894

Year 1 Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets 65,000 60,000 5,000 173,593 156,593 12,000 168,593

Year 2

232,894 12,000 244,894 85,000 129,000 (44,000) 200,894

Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

Year 1

Year 2

14,574 0 0 14,574 100,000 114,574 110,000 (64,000) 13,019 59,019 173,593 59,019

15,438 0 0 15,438 90,000 105,438 110,000 (50,981) 36,437 95,456 200,894 95,456

A business plan is not just a lengthy document that helps you obtain financing. It's truly a thorough examination of whether your business idea is viable. Preparing your business plan in the early stages of developing your business can save you a great deal of time, money and heartache by showing you where the weaknesses in your idea lie and giving you a chance to correct them before you make any serious mistakes. For example, in the process of putting together your business plan, you might discover that you haven't really thought enough about your marketing budget or you haven't done enough research on government regulations that will affect your business. In putting together your plan, you will be forced to examine your business from the viewpoint of the skeptical potential investor and the skeptical potential consumer, not just from the perspective of the enthusiastic entrepreneur.