04 May Business plan
Running head: Coffee Shop Business Plan 1
Coffee Shop Business Plan 2
Coffee Shop Business Plan
Executive Summary
The purpose of a coffee shop is to serve coffee drinks and other light refreshments. This kind of outlet is mainly preferred in areas with cold temperatures. This is for the reason that it helps raise the temperature of the body. The coffee shop business concept is about opening a coffee shop in Galena where there currently exists a high demand for coffee drinks. The current situation is that many locals are forced to travel to as far as Rockford whenever they want to take coffee for pleasure. What this shows is that there indeed exists a market demand for coffee that needs to be satisfied.
Table of Contents
7Market Selection (Geographic Location)
Coffee Shop Business Plan
Vision Business Concept
The vision of the planned coffee shop business is to become the most loved café in regards to serving coffee. The coffee shop business concept is about opening a coffee shop in Galena where there currently exists a high demand for coffee drinks. The current situation is that many locals are forced to travel to as far as Rockford whenever they want to take coffee for pleasure. This is good evidence that there exists a market demand for coffee that needs to be satisfied. The existing demand for coffee is expected to increase given the fact that the local population is on the rise (Chen, 2015).
The first step towards the implementation of this concept will be outsourcing funds. One of the sources that will be considered when outsourcing the funds will be family members and friends. When outsourcing from this potential supply, the business holds a capital raising function where all family members and friends will be invited to make their contributions. In any case, it will be determined that the funds raised through this source are not enough; the business will resort to taking a small loan from the local financial institution. The main aim here will be to ensure that there are adequate funds for the business idea (Honig, 2016).
Next, after outsourcing funds, the management will turn to implement the coffee shop business. This will involve translating the contents of the plan into action. One of the initial activities that will be carried out during the implementation of this concept is refurbishing the apartment on which the coffee shop will be located. The shop will be located in an apartment that has been freely given by a close relative. Correct financial estimates will be done to ensure that the implementation exercise does not come into a standstill as a result of a lack of inadequate funding (Karlsson, 2014).
Monitoring and improvement will come after the planned coffee shop business will have been implemented. The purpose of monitoring will be to establish how the business is progressing. During this exercise, the management will evaluate the business to determine existing challenges that need to be solved. Upon identification of challenges, the management will begin formulating strategies that will be used to solve the challenges that have been identified. The main aim of this will be to improve the performance of the shop. The monitoring and improvement exercise will be a continuous activity. Constant improvement will lead to never-ending improvement of efficiency (Mason, 2013).
The intended coffee shop business will focus on improving its customer experience. One of the ways through which the business will accomplish this goal is through serving coffee that has a unique taste. This will be achieved by adding ingredients that bring about a relaxing experience. The main aim of doing this will be to tract many customers. What usually happens is that customers tend to advertise a business venture through word of mouth to other potential customers. In any case, the experience that is being advertised is positive; this leads to a good reputation (Sahlman, 2017).
Competitive Advantages
In order to be placed in a better position in regards to competition, the planned coffee shop business will serve high-quality coffee drinks. The significance of this is that it will attract many customers to the café. Given the fact that customers are always more willing to pay high prices for the quality of coffee products, this will enable the business to generate high revenue. This is especially when the business will decide to increase the price of the coffee drinks being offered. The other importance of quality, in this case, is that it will help the business increase the number of loyal customers (Chen, 2015).
Second, the planned coffee shop business will sell its coffee drinks at affordable prices. This is for the reason that affordability ranks as the number one factor that many customers consider whenever they want to purchase a product. During the early phase of implementation, the business will employ a penetration pricing strategy where it will charge low prices for the coffee offered. The low prices will be matched with high-quality coffee drinks. What this will do is that it will influence the customer to view that the business is not after making profits. The business will sell its coffee drinks at a lower price than that of the existing coffee shops (Honig, 2016).
The planned coffee shop business will partner with organizations that import coffee from different parts of the world into the country. The significance of this is that it will enable the business to get access to the best coffee varieties in the world. In order to determine the brands that most customers prefer, the planned café will prepare coffee drinks using a variety of brand and then determine the ones that most customers appear to like. The business will major in serving the coffee variety that will emerge as the most preferred. This is the coffee that will mainly be used during advertisements. The customers will be asked to rate the brands that they have tasted (Karlsson, 2014).
Other than partnerships, the planned coffee shop business will expand through opening new branches. The importance of this is that it will help increase the market share that the business serves. This will help increase the financial stability of the business in the sense that it will lead to an increase in the revenue generated. Apart from helping the business increase its revenue generation, more branches will keep the main branch in operation during the times that it will be going through financial difficulties. What this means is that there will be no need for the main branch to take loans to solve its financial challenges as this will worsen the situation (Mason, 2013).
In addition, the business will focus on promoting a teamwork spirit. The significance of teamwork, in this case, is that it will help the business blend complementary strengths. Teamwork will help promote a culture of sharing knowledge and skills. What this means is that employees working in different units within the business will have knowledge and skills required in other units. What these further means is that it will be easier for the business to move an employee to take a position that has been left vacant by an employee for such reasons as sickness (Sahlman, 2017).
Market Selection (Geographic Location)
Galena, which is the place where the business will be located, has a fairly high population. The high population in this location presents a high demand for the coffee drink. What the high demand means, in this case, is that the business stands at a high chance of generating high revenue. This is for the reason that as per the current situation, selling coffee at fairly high prices will see the locals buy the coffee. The current high demand for coffee offers a better chance to the business to attract and retain customers. This can be easily achieved by offering high-quality coffee and better customer services (Chen, 2015).
Second, most Galena residents earn high incomes. The significance of high incomes, in this case, is that it will help lower the possibility of the business losing customers; in any case, it will decide to increase the price of its coffee drink and other products that it will be selling. This is a very critical factor given the fact that the prices of the ingredients used to make the coffee drinks will always change from time to time. The changes in proves are supposed to be reflected in the prices that the coffee drinks are being sold at. This is so as to avoid losses (Honig, 2016).
The third positive thing about Galena is that this location is located near companies that import coffee. This implies that the business will not need to travel to far places so that it can get the different coffee varieties that it needs to prepare its drinks. Apart from being located near companies that import different varieties of coffee, this location has malls. The business will rely on these malls in a few cases when the companies that import coffee will fail to supply the coffee orders on time. This will be in an effort to stop inconveniencing customers (Karlsson, 2014).
At this moment in time, Galena has favorable business policies. The local government as at the moment has come up with policies meant to encourage new ventures. One of such policies is that the local government has lowered the income taxes that new business ventures are supposed to pay. According to this particular policy, new business ventures are not supposed to pay more than 5 % of their revenue for the first three years that they are in business. What this means for the planned coffee business shop is that this venture will experience low operational costs. Given the fact that low operational costs lead to high profits, this is an offer that stands to benefit the business (Mason, 2013).
The other positive thing about Galena is that this location experiences a cold climate most of the time. The significance of a cold climate, in this case, is that it is helpful in increasing the frequency at which the locals visit the café. During instances when there will be a constant cold temperature, for instance, there are high expectations that a single customer will visit the coffee shop at least twice a day. In any case, this will happen; the business will end up doubling the amount of revenue that is usually generated in one day. The high profit generated will be used for such activities as expansion (Sahlman, 2017).
Target Identification
One of the things that the business will consider during target identification especially when it comes to expansion is the lifestyle of the people. The business will give priority to opening new branches in areas whose people prefer fast foods. One of the things that will be used to tell whether the inhabitants of an area prefer fast food is the number of local fast food restaurants. An area that has many fast food outlets will be interpreted to mean that locals prefer fast food. Areas with no fast food outlets at all will imply that locals do not like fast foods (Chen, 2015).
Second, the business will consider status during target identification aimed at expanding the business. The business will determine the status of an area by comparing the prices of the same commodities. Areas that charge high prices for some commodities will be interpreted to mean that they have a high-status level. To put it in a different way, these areas will be interpreted to mean that most locals are mainly of high class. In order to survive the stiff competition that exists in these kinds of areas, the company will offer high-quality coffee drinks (Honig, 2016).
The third factor that the business will consider during target identification particularly when considering expansion is status. The business will prioritize opening new branches in wealthy neighborhoods. In this particular area, the business will charge high prices than other areas. The high prices charged on the coffee drinks will be matched by the high quality of the coffee drink. On the contrary, the business will avoid opening new branches on areas that are mainly dominated by low-income earners. The importance of doing this is that it will prevent the business from experiencing risks associated with price increments (Karlsson, 2014).
Besides status, the business will consider existing business policies. In any case, the business will, for example, determine that the desired area has unfavorable policies such as high taxation; strategies to implement the business in this location will be stopped. This is because strategies such as these will increase the cost of the initial capital required to run a business in this kind of location. In any case, a new branch will be opened and the high operation cost transferred to the customer, many consumers will be turned away by the high prices of the coffee drinks. The impact of this will be losses (Mason, 2013).
Another factor that the business will consider is the number of people living in the desired location. The main reason for this is that the population determines the level of demand. A high population will be considered to be appropriate for the reason that it offers a high demand. The significance of a high demand, in this case, is that it will enable the new branch to generate high revenue. The business will avoid opening new branches in locations with low population. This is because, in these kinds of locations, the chances of making losses will be so high (Sahlman, 2017).
In conclusion, the current market situation offers a good opportunity for setting up a coffee shop business. The coffee shop business concept is about opening a coffee shop in Galena where there currently exists a high demand for coffee drinks. The vision of the planned coffee shop business is to become the most loved café in regards to serving coffee. A few of the steps towards implementation of this concept include outsourcing funds, implementing the coffee shop business, monitoring, and improvement. In order to be placed in a better position in regards to competition, the planned coffee shop business will serve high-quality coffee drinks.
References
Chen, X. P., Yao, X., & Kotha, S. (2015). Entrepreneur passion and preparedness in business plan presentations: a persuasion analysis of venture capitalists’ funding decisions.Academy of Management journal, 52(1), 199-214.
Honig, B., & Karlsson, T. (2016). Institutional forces and the written business plan. Journal of Management, 30(1), 29-48.
Karlsson, T., & Honig, B. (2014). Judging a business by its cover: An institutional perspective on new ventures and the business plan. Journal of Business Venturing, 24(1), 27-45.
Mason, C., & Stark, M. (2013). What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels. International small business journal, 22(3), 227-248.
Sahlman, W. A. (2017). Business Plan. Harvard business review.
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