Business Finance for Managers: The Street Bakers and Cafe Business Plan

This report is about the preparation of a new business plan named as “The Street Bakers and Cafe” which will be popularly known as “SBC”. The report briefly shows the outline of the costs incurred, involves the preparation of profit and cash flow forecasting projections, ascertaining the break-even point and the margin of safety and the key performance indicators in relation to monetary and non monetary aspects.

RESIT-Business
Finance for Managers
REPO1

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Summary of the business idea.....................................................................................................3
Outline and discussion of fixed and variable costs.....................................................................4
Financing need............................................................................................................................4
Profit forecast statement.............................................................................................................5
Budgeted Cash flow forecast statement......................................................................................6
Break even point and margin of safety.......................................................................................6
Key performance indicators........................................................................................................7
Recommendations on the basis of the analysis...........................................................................7
CONCLUSION ..............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business finance may be explained as the appropriate managing of funds and utilisation
of available resources so as to attain efficient and effective performance by the business. A
business plan will assist their appropriate use. A business plan refers to a structure comprising
of the business vision, mission and objectives and the forecasted statements (Arrondel, 2018).
This report is about the preparation of a new business plan named as “The Street Bakers and
Cafe” which will be popularly known as “SBC”. The business plan in the report briefly shows
the outline of the costs incurred, involves the preparation of profit and cash flow forecasting
projections, ascertaining the break-even point and the margin of safety and the key performance
indicators in relation to monetary and non monetary aspects.
Business summary: The business idea is The street bakers ad café which is provided snacks to
people as per the requirements.
Business aim: The company's goal is to develop a dominant position in the street food industry
by providing the most cost-effective solution to meet the needs and demands of the target
clients.
Finance: The overall expected cost to start the entire business is expected to be 160,000
TASK
Summary of the business idea
The business chosen for preparing the business plan is a bakery and coffee cafe named as
“The Street Bakers and Cafe”. The type of business is sole trader. The SBC offers prominent
coffee, wonderful pastries, comfortable chairs and tables, desk space and a location near the
University with a very welcoming atmosphere. Its aim is to attain a standard for industry 60%
profit margin and rational operating expenses and to attain rational profits in the second and
third year. The SBC offers a wide variety of coffee and Java products, all from top tier
imported coffee berry. The cafe is set on to become a every day requisite for local espresso
lovers, an environment to dream of as one try to escape from the daily stresses and a pleasant
place for a get together or to to do work, all in one (Asebedo, 2019).

Location: SBC united based entity located near the Westcott House University, Cambridge. In
the city of Cambridge, there is a shortage of cafe spots where customers can get finest coffee
and freshly prepared pastries and coffee. People there just not need coffee or pastries, but they
also need a place to sit and meet comfortably, where they can have a group discussion, or if
they have to work and read, the cafe will provide the perfect atmosphere for all these things.
Consumers: The SBC cafe will focus on reaching the people of the University and offices
located close to the cafe and on the advanced youth. These people are included in the customer
squad which is most likely to buy coffee products according to the market research and
analysis.
Competitors: SBC's direct competitors will be other coffee shops and cafe located near the
Westcott House University. These include the Locker cafe, Cafe at Abantu, Indigo Coffee
House and other near bakery service establishments.
Outline and discussion of fixed and variable costs
For the purpose of starting a new business, it is crucial to evaluate the cost to be
expensed by the SBC. The type of costs can be divided into fixed and variable costs.
 Fixed costs: Cost which remain same throughout the year are known as fixed costs. This
cost is to be bear by the SBC even when there is no production taking place. The fixed
costs of the company are salaries, rent, advertisement and accounting, and insurance
(Eichelberger and Gilpatrick, 2020).
 Variable costs: Costs which vary with the change in the production are known as variable
costs. These cost depend upon the quantity of goods sold, inventory held and the internal
and external environment changes. These costs in relation to SBC are raw material,
transportation cost, and many more.
Financing need
The amount of $160,000 will be invested by the owners and they will take a bank loan
for $50,000 covering the starting expenses and assets required plus compensatory spending in
starting months.
The starting expenses of $45,000 include:

 Statutory expenses and accounting services of $2,500.
 Promotional and marketing expenses for the opening of the SBC totalling $7,000.
 Consultant fees paid $4,000 for the set up.
 Premium for the insurance coverage of $3500.
 Rent prepaid expenses for 1 month at $1.75 per sq ft. Total amount of $6,000.
 Remodelling of premises amounting to $15,000.
 Other startup expenses including stationery of $2,000 and phone and utility deposits of
$5,000.
All these expenses has to be incurred before launch, so they will be showed as negative retained
earnings of $45,000 in the financial projections, at the end of the month before the launch. This
number will be shown in the balance sheet (Messer, 2020).
The startup assets required of $155,000 include:
 Cash in the bank of amount equal to $70,000 which includes enough to cover the salaries
of employees and owner and the cash reserves for the first 2 months.
 Inventory of $20,000, including: Coffee beans- $7,000, Coffee filters, baked goods and
beverages, etc.- $8000, Retail and office supplies- $5000
 Amount for equipments total for $65,000: Coffee machine- $8000, Coffee maker and
grinder- $2000, Food service equipments- $20,000, Storage hardware- $5000, Counter
area and serving area equipment- $15,000, Store and office equipment- $14000, Other
miscellaneous expenses- $1000.
The two major sources of funding for the company includes owners invested funds and bank
loans. Two owners, namely, Arthur Roman and Austin Polk, have invested $60,000 and $40,000
respectively. $60000 are contributed by all other investors, totalling to $160,000. The balance
$50000 required to cover the startup expenses and assets, raised from the two bank loans, a 1
year loan for the amount $20,000 and a long term loan of $30,000. Both loans were secured
through the bank.
The balance sheet shows these amounts in the month before the opening. The investment of
$160000 will be showed as Paid in capital. The expenses of $45000 will be showed as negative
retained earnings. All assets and liabilities are showed according to the applicable financial
standards (Nair and Muda, 2021).

Profit forecast statement
Profit forecast statement
Budgeted Cash flow forecast statement
Cash flow forecasted statement
Break even point and margin of safety
Breakeven point = Fixed cost/ contribution per unit
Fixed cost = 50000*12= 600000
Contribution per unit = sales – variable cost = 17650000 – 14910600 = 2739400

Breakeven point = 600000/2739400 = 0.2190260641016281
Key performance indicators
The KPI to monitor progress towards business goals are SMART. SMART refers to
Specific measurable, Achievable, Realistic and Time sensitive. The key performance indicators
for a business should be SMART. These are measurable factors used to examine personnel and
company performance. Quantitative measures for evaluating the business's performance against
the set budget goals can be said as key performance indicators. This assist organisation to grow
in the long run. This helps in setting the monetary or non monetary targets the company could
attain looking at the other competitors (Spanos and Liapis, 2019). Following are the Key
performance indicators that could be set by the SBC.
The first one is customers. Customers are the users in the end of the products produced by the
SBC. Customer satisfaction is the only key to decide whether the business is able to attain the
targets or not. This assists the business to create a strong bond with the customers that would be
there for long term. This will also help business to increase its visibility by creating awareness in
the market (Terrones, 2020).
The second one is goods and services. Ascertaining the quality and the quantity demanded by the
customers will assist business operations. This affects the inventory holding and the position in
the market. This refers to the practical method for assessing the accomplishment of the business
authorising the use of time and money more effectively and efficiently.
The third one is the prime cost. It is the direct costs related to production like raw material and
labour. It generally runs 60% to 65% of hard and fast arrangements in a whole organisation of
the outlet shops and 55% to 60% of the income for the rapid administrations demonstrated by the
firm.
Prime cost = Labour cost + Cost of goods sold
Recommendations on the basis of the analysis
The financial plan prepared by the organisation is incredible. This financial plan shows
powerful support for the enterprise for its new expansion, enhancement and advancement. The
SBC can also further add new products like cookies and must have a book for analysis, which
each customer will fill ensuring to use their items and work. This would be important for
managing the resources and handling with the administration of the SBC. This will help for the
increment of overall benefit (Van der Zwan, 2019).

CONCLUSION
A person needs to be careful while making a investment in a new enterprise. The parties
that are investing puts their holdings at risk in the new firm by making large investments with
the high competition existing in the market. Good returns are demanded by them in exchange of
these funds. Thus the owners before starting a business must have a practical feasible plan and
have conducted a proper survey on the products and the market. Then the initiation of plan
should begin. The report shows the financial plan for the SBC. All the required analysis is done
in the plan. The break even point assists in assessing minimum number of units necessary to
sale for achieving a high level of profit. KPI's will assist the firm in attaining the level which it
wants to achieve through its level of accomplishment.

REFERENCES
Books and Journals
Arrondel, L., 2018. Financial Literacy and Asset Behaviour: Poor Education and Zero for
Conduct?. Comparative Economic Studies, 60(1). pp.144-160.
Asebedo, S.D., 2019. Financial Planning Client Interaction Theory (FPCIT). Journal of Personal
Finance, 18(1).
Eichelberger, B. and Gilpatrick, T., 2020. Financial education, college retention, and graduation
rates. College Student Journal, 53(4). pp.479-489.
Messer, R., 2020. Budget Management Decisions. In Financial Modeling for Decision Making:
Using MS-Excel in Accounting and Finance. Emerald Publishing Limited.
Nair, R. and Muda, R., 2021. A critical reading of impression management in times of financial
crisis and implications for business writing. Journal of Education for Business, 96(4).
pp.230-236.
Spanos, P.M. and Liapis, K.J., 2019. Corporate financial modeling using quantitative methods.
In Economic and Financial Challenges for Eastern Europe (pp. 161-183).
Terrones, P., 2020. Powering Innovation with TBM. The Journal of Government Financial
Management, 68(4). pp.38-43.
Van der Zwan, N., 2019. 11 The financial politics of occupational pensions. Business Interests
and the Development of the Modern Welfare State. p.110.
Walker, L., 2018. The Profession of Financial Planning: Past, Present, and the Next 45
Years. Journal of Financial Planning, Mar, 31(3). pp.20-26.