Business Plan for a Coffee Shop: Grind Magic

This business plan outlines the strategies for a coffee shop named Grind Magic, which provides reading space to customers. It includes a summary of the business idea and cost, outline and discussion on cost, profit forecast statement, cash budget forecast, break-even point and margin of safety, key financial indicators, and recommendations based on the analysis.

BUSINESS PLAN
FOR
THE NEW BUSINESS

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
1.Summary of the business Idea and Cost:.............................................................................3
2.Outline and discussion on Cost:..........................................................................................4
3.Profit Forecast Statement month wise for a year:...............................................................5
4.Cash Budget forecast month wise for a year:......................................................................5
5.Calculation of Break Even Point and Margin of Safety:.....................................................5
6.Key Financial Indicator including financial and non-financial:..........................................6
7. Recommendation on the basis of the above analysis:........................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX....................................................................................................................................10

INTRODUCTION
The business Plan is a systematic report which consist of complete information relating the
business the entity wants to start that consist complete list of size of the market, competitors in
numbers, customer base and profile, products and services an organisation wants to offer, risk
and return the business earned etc. The business plan chosen in this report is the Coffee Shop
which also provides reading space for books lovers too names as Grind Magic. This report shall
consist of complete report regarding business plan that is proposed to be started soon. The report
showcase the brief description about the chosen business, location where such coffee shop is
situated etc. The detailed projected financial statements are being taken for a year on monthly
basis regarding the income and expenses generated by such business. Such statements include
profit forecast, cash flow statement and break even analysis etc (Almeida and Santos, 2018).
TASK
1.Summary of the business Idea and Cost:
The business plan is the written statement which consist of complete details regarding the
business the proprietor wants to start. This report showcase the strategies with the use of which
business will sustain in the market. This document consists of complete details starting from the
making of the coffee, machinery and other equipment’s that has been used, till the number of
units sold to the customer, all such aspect has been listed down in the detailed manner.
 Type of Business:
The business chosen is a coffee shop named as Grind Magic which provides varieties of
coffee along with reading space to customer. Such business is run by the single
proprietor with the couple of some employees engaged with him. The product they
offered is Black Hot Coffee, Chocolate Cold Coffee and Customised Coffee as per the
requirement of customer.
 Location of Business:
The grind Magic are being situated in the United Kingdom which is located at Cross
Roads, Near Arena Street. Cross roads are the place where residential and commercial
complex has been built. This will help the business to target both the customer easily
(Caratti, 2021).
 Customers:

The targets customers that the business is targeting are of all the age group between 20 to
60 year and also more than that too. The advantage is the space that is providing for
reading the books attract those customers who can enjoy their coffee with books. The
book shelve has been provided consist of different books that double the taste of coffee
enjoyed by the customers.
 Competitors:
The business model will receive the tough competition from the other market player as
the coffee business is accepted globally around the world. The existing competition they
are facing from the Red roaster, coffee aroma, the apple tree and dose expresso that gives
tough competition to such business model (Dolinger, 2019).
 Other risk faced by the business:
Every business model faces certain risk that affects their profitability and market share.
Such risk may arise due to increase in the competition, change in the customer taste and
preferences and so on. The biggest risk that has been faced by the restaurant is the
freshness as the dairy products they are using in making such coffee is of perishable
nature and if preserved form more than 2 days then quality and taste of the coffee will
suffer. Being the start-up it is important to maintain and retain the customer and if the
quality and taste suffer the business model will fail completely. The another important
aspect is to maintain the cost of the coffee to an acceptable limit as it will provide
competitive advantage to the business and customers also get attracted if price is lower
and quality is higher of Coffee (Günes, Akca and Zelewski, eds., 2019).
2.Outline and discussion on Cost:
In every aspect the cost of the product plays a vital role in success and failure of the start-up’s. In
the important of the Grind Magic to ascertain the cost they have been incurred in making the
coffee products and other fixed cost they are incurring so that price will be charged accordingly.
 Fixed Cost: Fixed cost always fixed and does not change with the change in the
production and it will remain the same on different level of output. The example of such
cost could be the rent the proprietor pays for the property under which the coffee shop is
running, Salary paid to the staff and chef who makes the coffee, advertisement and
promotional expenses incurred etc.

 Variable Cost:
Variable cost is the cost incurred by the organisation which directly depends upon the
level of units of Coffee sold by the proprietor. Variable cost is directly attributable to
units as the making of coffee increases such cost tends to rise and vice versa. They are
dependent upon coffee sold, inventory held as stock in trade, changes in internal and
external environment. The variable cost incurrent in Grind Magic is coffee beans,
disposables, Milk, ice-cream, etc. that directly depends upon the unit sold of the coffee
(Jelínková, 2019).
3.Profit Forecast Statement month wise for a year:
(Covered in Appendix Below)
4.Cash Budget forecast month wise for a year:
(Covered in Appendix Below)
5.Calculation of Break Even Point and Margin of Safety:
The formula of calculating the breakeven point will as under:
Break-even point (in units) = Fixed Cost / (Selling price per unit – Variable Cost per Unit)
Product 1: Black Coffee:
Fixed Cost = 11640
Contribution = 19.47
Break-even point = 11640 / (19.47) = 598 units
Product 2: Cold Coffee with ice-cream:
Fixed Cost = 11640
Contribution = 14.92
Break-even point = 11640 / (14.92) = 780 units
Product 3: Customised Coffee:
Fixed Cost = 11640
Contribution = 32.69
Break-even point = 11640 / (32.69) = 356 units

Margin of Safety = (Current Sales – Break even sales)
= (18940 – 1557) = 17383 units
6.Key Financial Indicator including financial and non-financial:
The key performance indicators have been defined as the measures which are responsible for the
success of the entity against the budget set by the corporation. These indicators support the
business in the long run as they show how performance can be improved using such factors. It
also ensures assistance towards monetary and non-monetary undertakings that the corporation
may achieve after considering the other competitive organisation (Nuić, 2021).
The following are some Key performance indicators that Grind Magic could set out in their start
up so as to gain success in the market: -
 Buyer or Consumer of Coffee Shop:
They are the consumer of the Coffee who consumer such coffee sold by the Grind Magic
outlet. In order to run the outlet successfully they need to satisfy such consumers as their
satisfaction is the deciding factor that whether the strategies and plans implemented to
run such business be successful or not. It also helps in increasing the perceptibility of the
company’s by gathering good knowledge relating to branding of the company in the
external environment (Prekslavec, 2019).
 The product and Services offered by the start-up:
This would support the business in addressing the quality and quantity required by the
business. The stock of goods also affects the inventory of the business and that will
impact their positioning in the market. It is important for the business to satisfy them in
terms of quality they offered and price as this would help the entity in creating the
goodwill amongst the consumers. This would be a technical approach in judging the
performance of corporate as it enables the start up in making proper use of time and cost
in more effective manner.
 The Prime cost engaged in the product:
It is the absolute of operational expenses that has been incurred by the organisation. It is a
major key presenter relating to the business on one of the source that cost of the milk and
coffee beans used to make the coffee is the primary well spring cost relating to entity. It
normally constitutes of 60% of the cost incurred to sell one cup of coffee and therefore it
is important to monitor so that business expenses can be restricted to an acceptable limit.

The prime cost is arrived after adding cost of goods sold with labour cost. Such cost is
normally connected with workers including payment made to them on pay rate basis
(Schäfer, 2020).
 Retention rate of the employees:
This simply means the percentage of employee an entity would retain over the financial
year. The café industry normally faces the issue towards the high turnover and it creates
the problem for business owners too to manage the staff accordingly. An incompetent
staff member can make damages to customer and business completely, therefore it in
important to provide sufficient to them so that their efficiency gets improved and saves
lots of time and effort.
 Table Spending Time:
The length of time it takes for a visitor to meal at a café, first from moment they sit at the
table to the time they depart, is known as table turn duration. It's critical to nail this
statistic, regardless of the sort of café operate. The sooner a table is turned, more and
more cash a casual restaurant café makes. Companies can establish how to increase table
turn time while providing a wonderful customer satisfaction after they assess the amount
of time it takes for a client to finish a meal and depart. Numerous elements play a role in
this, from receiving the check on time to keeping a kitchen running at peak performance
(Suib and et.al., 2021).
7. Recommendation on the basis of the above analysis:
One of the recommendation that the outlet must consider is to retain and attract the customer by
changing the offers in different time intervals specially on the weekends so that maximum
customers will gets attracted towards the outlet. Proper focus must be given on the cleanliness
and hygiene as after Covid 19 the customer are very optimistic towards eating the meals outside
their household.

CONCLUSION
From the above report it has been judged that the proprietor must be very much aware at the time
of making the investment in any sort of business whether at small or large scale. The investor
takes the huger amount of risk by making the investment in such organisation considering the
competition around the world. In this report the proprietor is planning to start the business of the
coffee shop along with providing the reading space to book lovers named as Grind Magic and
their main products are three types of coffee, that is black coffee, Cold coffee with ice-cream and
Customised coffee according to customer needs. In this report the projected cash flow statement
has been prepared along with profitability statement that shows the performance of the business
in the financial year. At the end of report break even analysis has been carried out so that
understanding will be developed towards recovery of the fixed cost.

REFERENCES
Books and Journals
Almeida, F. and Santos, J.D., 2018. 4 Financial Plan & Viability Analysis.
Caratti, M., 2021. L'influenza legittimante del business plan nei processi di accesso al credito
bancario da parte delle start up.
Dolinger, D., 2019. Gibt es den optimalen Businessplan für eine bestehende
Geschäftsidee? (Doctoral dissertation).
Günes, N., Akca, N. and Zelewski, S. eds., 2019. Business-Plan-Guide: Grundlagen-
Anschauungsbeispiele-Vorgehensmodell. Logos Verlag Berlin GmbH.
Jelínková, K., 2019. Podnikatelský záměr obce v oblasti bytové výstavby: The Business Plan of
the Municipality in the Housing Sector (Doctoral dissertation, Brno University of
Technology).
Nuić, A., 2021. POSLOVNI PLAN: SPECIJALIZIRANA PRODAVAONICA „HiStore
“(Doctoral dissertation, University of Split. Faculty of economics Split).
Prekslavec, M., 2019. POSLOVNI PLAN UGOSTITELJSKOG OBJEKTA (Doctoral
dissertation, Zagreb School of Business).
Schäfer, D., 2020. Businessplan–das oft ungeliebte, aber starke Fundament. In Gründen mit
Erfolg (pp. 151-165). Springer Gabler, Wiesbaden.
Suib and et.al., 2021. PKM Pendampingan Literasi Business Plan untuk Meningkatkan
Pengetahuan dan Keterampilan Berwirausaha Santri Pesantren Nurul Jadid. GUYUB:
Journal of Community Engagement. 2(2). pp.369-383.
Wiley, K., Brown, L. and Paulson, M., 2020. Business Plan to Create a Registered Dietitian
Nutritionist Food Pantry Manager Position at a Large Urban University. Journal of the
Academy of Nutrition and Dietetics. 120(9). p. A65.

APPENDIX
 Forecasted Profit and Loss Statement: -
Particulars January February March April May June July August Sep October Nov Dec TOTAL
Revenue 3000 3700 4350 4400 5678 5982 6210 6598 6425 6526 5784 6985 65638
Less Materials Cost 550 575 575 425 600 625 615 675 625 635 635 675 7210
Less Direct Wages 800 850 875 900 925 1125 1250 1300 1450 1770 1100 1300 13645
G/P 1650 2275 2900 3075 4153 4232 4345 4623 4350 4121 4049 5010 44783
Operating Expenses:-
Staff Salaries 500 500 500 500 500 500 500 500 500 500 500 500 6000
Rent & Rates 215 215 215 215 215 215 215 215 215 215 215 215 2580
Gas & Electricity 100 100 100 100 100 100 100 100 100 100 100 100 1200
Insurances 700 700 700 700 700 700 700 700 700 700 700 700 8400
Postage & Stationery 100 101 101 100 110 102 103 101 111 121 120 121 1291
Repairs & Maintenance 25 23 25 14 25 26 42 62 12 62 41 245 602
Travelling Expenses 100 100 100 100 100 100 100 100 100 100 100 100 1200
Loan Installment 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400
Telephone Expenses 51 52 51 52 53 52 55 50 51 52 51 52 622
Professional Fees 225 226 224 225 226 214 236 214 252 262 241 201 2746
Advertising & Promotions 225 225 225 225 225 225 225 225 225 225 225 225 2700
Miscellaneous Expenses 24 26 25 26 25 21 21 24 29 28 27 28 304
TOTAL EXPENSES £ 3465 3468 3466 3457 3479 3455 3497 3491 3495 3565 3520 3687 42045
Net Profit (Loss) Before Tax -1815 -1193 -566 -382 674 777 848 1132 855 556 529 1323 2738
PROFIT & LOSS FORECAST
 Forecasted Cash Flow Statement: -