BPD3100 Applied Business Challenge: Coffee Hub Plan, Semester 2019

This document presents a comprehensive business plan for "The Coffee Hub", a coffee bar established as a partnership. The plan details the business structure, products and menu, and a thorough industry and market analysis, focusing on the Australian coffee shop industry. It identifies a prime geographical location in Melbourne, near Victoria University, and sets SMART objectives for financial, market, operational, and CSR goals. The plan outlines competition, targets specific market segments including students and business professionals, and details a sales and marketing strategy. It covers operational aspects like property, equipment, and a financial plan with start-up capital requirements and required financial statements. Risk analysis and human resource considerations are also included, along with an organizational structure, providing a complete overview for a successful coffee shop venture. The plan adheres to the assignment brief, addressing the required areas of analysis and discussion in a structured manner.

Running head: APPLIED BUSINESS CHALLENGE
Applied Business Challenge
Name of the Student
Name of the University
Author’s Note

1APPLIED BUSINESS CHALLENGE
Table of Contents
Business Structure...........................................................................................................................3
Products and Menu..........................................................................................................................3
Industry/Market Analysis................................................................................................................3
Geographical Location.....................................................................................................................4
Business SMART Objectives – Financial, Market, Operational and CSR......................................4
Competition in the Market...............................................................................................................5
Market Segments.............................................................................................................................6
Market Segments.........................................................................................................................6
Reasons........................................................................................................................................6
Sales and Marketing Plan................................................................................................................7
Sales and Marketing SMART Objective.....................................................................................7
Pricing..........................................................................................................................................7
Promotion....................................................................................................................................7
Operation Plan.................................................................................................................................8
Property........................................................................................................................................8
Equipment....................................................................................................................................8
Finance Plan.....................................................................................................................................8
Start-up Capital Requirements.....................................................................................................8

2APPLIED BUSINESS CHALLENGE
Required Financial Statements....................................................................................................9
Risk Analysis...................................................................................................................................9
Human Resources..........................................................................................................................10
Organizational Structure............................................................................................................10
References......................................................................................................................................12

3APPLIED BUSINESS CHALLENGE
Business Structure
The name of the new coffee bar will be “The Coffee Hub”. The Coffee Hub has selected
partnership as the legal form due to the involvement of four partners. Another key reason for the
selection of partnership business is its easiness and inexpensiveness to set up (Burns 2016). The
four partners are needed to apply for the Australian Business Number (ABN) and they must
comply with the guiding principles of VIC – Partnership Act 1958 (business.gov.au 2019).
Products and Menu
The primary offering of The Coffee Hub will be coffee of different varieties. For
complementing coffee, there will be pasties, breads and others. A suggested menu of The Coffee
Hub is provided below.
Coffee Pastries and Breads
Cappuccino $5.00
Mocha $4.00
Espresso $3.00
Latte $6.00
Flat White $5.00
Ristretto $3.00
Donuts $5.00
Coffee Cake $6.00
Scones $4.00
Cookies $3.00
Danish $5.00
Bread $5.00
Industry/Market Analysis
It needs to be mentioned that The Coffee Hub will be operating in the coffee shop
industry of Australian. Australia has a vibrant coffee culture which has been a major force

4APPLIED BUSINESS CHALLENGE
behind the increase in revenue of this industry. This industry has been able in registering revenue
of $10 billion in the current year (ibisworld.com.au 2019). Due to the increased popularity of
coffee drinking in the country, the number of small coffee shops has increased over the years
particularly in the inner city areas where the presence of many colleges, universities and offices
can be seen. It needs to be mentioned that the independent small coffee shops are performing so
well that they are outperforming the large coffee shops in the country. The key factors
considered as the determinant of this industry success are price, convenience and location
(ibisworld.com.au 2019).
Geographical Location
The Coffee Hub will be located at the Melbourne Footscray which is close to the Victoria
University since The Coffee Hub targets the large mass of Victoria University. It needs to be
mentioned that New South Wales is the largest source of revenue from coffee shops followed by
Victoria (konacoffeefarmers.org 2019). This is an excellent location for The Coffee Hub due to
the presence of massive coffee culture amongst the students of the University and the people of
the locality.
Business SMART Objectives – Financial, Market, Operational and CSR
SMART objectives are shown below.
Specific – The main objective of The Coffee Hub is to increase the revenue as well as profit
margin of the business by second and third year through providing the customers with high
quality of coffee in a comfortable environment (Bjerke and Renger 2017).

5APPLIED BUSINESS CHALLENGE
Measurable – The aim of The Coffee Hub will be to increase the revenue by 5% in the second
year and by 10% in the third year. In addition, The Coffee Hub also aims to increase the profit by
6% in the second year and 10% in the third year.
Attainable – Considering the demand of coffee in the country, especially in the areas of
Melbourne, it is possible to attain the above-set objectives. Effective financial as well as
operational strategies will help the company in attaining these objectives.
Relevant – These above-set objectives or targets are most relevant for The Coffee Hub since
these will help it in maintaining their business operations in correct manner. These will also
facilitate growth of the business.
Time-Based – it will be needed for The Coffee Hub to achieve these objectives or goals in the
period of three years since this is the perfect timeframe to achieve these goals (Bjerke and
Renger 2017).
Competition in the Market
The coffee shop industry of Australia has a low level of market share concentration and it
is highly fragmented which traditionally includes single establishment owner-operated coffee
shops. However, there are certain franchised coffee shops in the industry those can be considered
as the competitors of The Coffee Hub. Some of these most prominent coffee chains include the
Coffee Club, Gloria Jean’s Coffee and Michel’s Patisserie. Retail Food Group (RFG) is
considered as the largest player in the industry which is aggressively expanding its business
portfolio of coffee shops (konacoffeefarmers.org 2019).

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Market Segments
Market Segments
Market segmentation is a crucial part for any business. The Coffee Hub will target certain
customer segments; they are students, boomburbs, business professionals, prosperous empty
nesters, local residents and tourists. The reasons are discussed below.
Reasons
Students – The Coffee Hub has a cheap and testy menu so that the students of Victoria
University can enjoy the foods and atmosphere of the shop with their limited income.
Boomburbs – These are the younger families having a busy and upscale lifestyle with good
income. They are targeted for their preference for good coffee in a good environment (Dibb and
Simkin 2013).
Business Professionals – This group is targeted since many offices are situated in the Melbourne
area. Free internet will be provided so that they can be connected with their professions in the
shop.
Prosperous Empty Nesters –These are the residents of the area with well education and
experience which are enjoying their retirements. This segment is active both financially and
physically.
Local Residents – This segment is targeted due to the presence of huge residence base in
Melbourne since this is a large source of revenue for The Coffee Hub (Weinstein 2013).

7APPLIED BUSINESS CHALLENGE
Sales and Marketing Plan
Sales and Marketing SMART Objective
Specific – The aim of The Coffee Hub will be to focus on the profitable products in the menu for
increasing sales through drawing attention of the customers towards these products.
Measurable – The Coffee Hub will target to increase their sales by 5% in the second year and
10% in the third year.
Attainable – In the presence of effective sales and marketing strategies, it is possible to attain
this objective.
Relevant – This objective is relevant as this will help The Coffee Hub in business expansion in
the presence of effective business growth.
Time-Based – This objective needs to be attained within the time frame of three years (Kotler et
al. 2015).
Pricing
In the primary stage, The Coffee Hub will utilize competition-based pricing. The coffee
shop will not use any coupons or discounts because of the belief of the shop that the target
customers are not influenced by coupons and discount programs (Kotler et al. 2018).
Promotion
 The Coffee Hub will advertise their coffee shop on social media sites like Facebook,
Instagram and others on regular basis. This is a cost effective mode of promotion as
compared to the traditional print advertising.

8APPLIED BUSINESS CHALLENGE
 The Coffee Hub will have their simple and easy-to-access website from where the
customers can get basic information of the shop like menu and their presence.
 The Coffee Hub will advertise in the local radio station during the holiday seasons
(Armstrong et al. 2014).
Operation Plan
Property
The Coffee Hub will utilize lease property for setting up the coffee shop (Barone, Birt
and Moya 2014). The Coffee Hub will be located at Melbourne Footscray with a seating of 20
customers. The rent of the property is $500 per month with a five-year lease available.
Equipment
The main required equipments for the kitchen are a commercial stove, refrigerator, walk-
in-cooler, freezer, microwave, oven and commercial dishwasher.
Finance Plan
Start-up Capital Requirements
Sources Amount ($)
Investments of the owners
Loan from Bank
Total Sources
15,000
35,000
50,000
Uses Amount ($)
Equipment Purchase
Leasehold Renovation
Deposit of Rent
Purchase of Furniture
22,000
6,000
500
1,500

9APPLIED BUSINESS CHALLENGE
Dishes/Silverware/Glassware
Cookware
Supplies
Compressor
Inventory for Food
Advertising Expenses
Insurance
Compensation of Workers
Working Capital
Total Uses
1,500
1,500
1,500
1,500
6,000
1,500
1,500
1,500
3,500
50,000
Required Financial Statements
It is needed for the owners of The Coffee Hub to prepare four basic financial statements
for their business; they are income statement, balance sheet and cash flow statement. Income
statement is also called as profit and loss statement which will help The Coffee Hub in tracing
the business sales, business expenses and profitability which is needed to ascertaining the overall
financial health of the business. Balance sheet will include the record of The Coffee Hub’s
assets, liabilities and available capital. Cash flow statement will provide the business with the
information of cash incoming and outgoing from a day-to-day standpoint (Williams and
Dobelman 2017).
Risk Analysis
Areas of Risk Corrective Measures
Strategic risk can arise from failed business
decision or lack of decision.
Needs to stick to the adopted business
strategies.

10APPLIED BUSINESS CHALLENGE
Operational risk arises from the failure in
internal control or inadequate internal control
like poorly trained employees and others.
It is needed to establish effective internal
control policies and procedures to avoid this
risk.
People risk arises in case there is anything bad
happens with the employee such as accidents.
This risk can be avoided with the introduction
of Employee Compensation Policies and
Procedures.
Governance risk arises when the owners fail
to manage the issues related to corporate
governance and corporate compliance.
Introduction of effective corporate governance
and regulatory policies.
Financial risk arises when there is possibility
that the firm will lose money in case there is
not adequate cash flow for meeting the
business obligations.
This risk can be avoided with the development
of robust financial plan (Lam 2014).

11APPLIED BUSINESS CHALLENGE
Board of
Directors
Operation
Manager
Café
Manager
Events and
Volunteer
Manager
5 Café
Employees
Human Resources
Organizational Structure
Figure 1: Organizational Structure of The Coffee Hub
(Source: As Created by Author)