Coffee Connection: New Venture Creation Report Executive Summary

This report provides an executive summary for a new coffee shop venture, Coffee Connection, planned for launch in London. It details the market analysis, including industry competition, supplier power, customer bargaining power, and the threat of substitutes and new entrants. The report outlines the marketing plan, including segmentation, targeting, and positioning (STP) strategies, and proposes a competitive pricing strategy. A financial plan is included to analyze the business's financial position and project future profitability. The management team and organizational structure are also described, highlighting the venture's approach to establishing, organizing, and controlling the business. The primary goal is to establish a social and cultural hub by providing a unique customer experience and a variety of coffee flavors to attract a target market of young people and college students.

New Venture Creation
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Executive Summary
There are ample of new and small business are being initiated with young and enthusiastic
entrepreneurs. In the current report, a new business named as Coffee Connection is going to start
in London. There is detailed analysis of market as well as financial condition of company is
essential to ensure long term sustainability. Managers of company need to prepare appropriate
plans and policies in order to attract more number of customers.
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Table of Contents
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................4
Marketing Plan.............................................................................................................................5
Financial Plan:.............................................................................................................................8
Management team and company structure:...............................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16
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INTRODUCTION
In the current business world, there are ample of new ventures are being situated by
entrepreneurs. These business are considered as a crucial way to earn substantial amount of
profit. It is analyzed that there is huge competition is prevailing at market place so it is not easy
for new business owners to initiate as well as sustain at competitive market place for longer
duration. So, it is crucial to have creative as well as innovative ideas in order to ensure long term
sustainability (Baron and Markman, 2018). Here, entrepreneur needs to take proper market
analysis before initiating a business so that they get to know the feasibility of new business idea.
For this, they also need to select target audience who will purchase their products and services.
In addition, a complete financial plan also needs to prepare by entrepreneur in order to
implement predefined business ideas in an efficient manner. There are ample of risks associated
with new business ideas that needs to analyze by business owners before starting a business unit.
It helps to prepare appropriate strategies in order to face uncertainties and sustain in market for
longer duration. The current report is based on a new business idea called as coffee connection. It
is a cafe that will establish in London. It is based on the concept of facilitating social as well as
cultural interaction among people. Here, report comprises a detailed analysis of market along
with industrial, competitor’s analysis. It also includes information regarding target segment of
company. Further, a financial plan has been included in order to give a clear ides regarding
profit, loss and expenses of business. It provides detailed overview about financial condition of
business. Lastly, management team and organizational structure of entity have been also
included in the following report. Moreover, it is based on the way in which new ventures are
established, organized as well as controlled at market place.
Overview of new business venture:
This plan is going to launch in London and main aim of this cafe is to ensure that people
socialise as well as interact with each other. Location is an important aspect so business has been
situated at prime location near colleges of London. Because, most of the crowd who will visit to
cafe is youth. Here, they can come with friends, love ones. For this purpose ambiance of cafe has
been designed in such a manner where can sit for longer time. There are also facilities of some
indoor games so that visitors can spend some quality time and moment of happiness. It is really
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essential to bring peace, calmness in life. Here, time is provided to individuals to relax, enjoy
themselves and interact with their families and friends in an effective manner. Uniqueness of this
business project is its services and the way they are treating customers. Here, activities are
organized on every weekend in order to engage audience. The idea is to provide great
experiences to customers so that they visit to shop frequently. These all services will provide
higher competitive edge to cafe that is crucial to grow as well as sustain in competition for
longer run. Apart from the services organization also focuses on its core product that is coffee.
They provide different flavours in coffee to provide a range of choices to customers. It is helpful
to attract more number of visitors that is increasing sales and profit margin of company. It is
analyzed that organization is adopting ample of creative as well as innovative ideas in order to
sustain at competitive market place for longer duration. So, the current project named as “coffee
connections” will be ideally launched in upcoming six months.
Marketing Plan
Marketing: There are several ways which can be used by coffee connections to promote its
products and services among customers. However, it is a new business venture so need to focus
on their budget as well. For this, they acquired such marketing strategies which drive a lot of
positive outcomes at lower cost (Champenois and Etzkowitz, 2018). To manage budget they are
using digital technologies, social media platform to promote products. Majority of Customers of
company are also youth so it is a better way to attract audience. In addition, organization also
posts pictures with hash tags over social media platforms that play a great role to attract
millennial group of customers.
Marketing plan is a document that demonstrates marketing strategies of company. It
provides a detailed overview regarding current market position as well as strategy of
organization. Here, it is a strategic framework which is generally used by managers to organize
as well as evaluate the marketing strategies over a particular period of time.
Segmentation Targeting and positioning:
It is a crucial framework to divided whole market into small segments and then select a
particular segment to provide goods and services (Cosenz and Noto, 2018) . As per this, it is also
essential to position product and services in the mind of target audience in desired manner. This
strategy really helps to maintain positive image of brand in market that will lead it towards long
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term sustainability. With this, company is able to target right audience that is essential to earn
potential profit margin. Further, components of STP are given as under:
Segmentation: It is the first step of STP process where whole population is divided into
smaller segments in order to select target audience. Main rationale behind this is to focus on a
particular group of individuals as it is not possible for an organization to target whole population.
Here, segments are generally divided as per the characteristics, attributes of audience. With this,
organization can meet with the demand, requirements of potential customers in an effective
manner. There are different types of segmentation are used in market place that are given as
under:
Demographic: Under this, population is divided on the basis of factors such as Age,
gender, occupation, income and more. It is an important way that is widely used by organizations
to select an appropriate segment of customers (Dempster, 2018).
Psychographic: Here, customers are bifurcated as per attributes related to personality and
characteristics. It comprises factors such as personality traits, values, attitude, interest and more.
Geographical: It is also considered as a crucial method of segmentation where
population are divided as per the locations. With this, managers are able to target audience from
different locations.
Behavioural: It is based on the buying behaviour, pattern as well as habits of customers.
For this, first manager need to well aware with perception, opinions, thoughts as well as actions
of customers.
It is monitored that Demographic as well as Psychographic segmentation are being used by
Coffee Connections in order to select an appropriate segment of customers. In Demographic
segmentation, they are majorly characterizing customers on the basis of age, income and more.
Simultaneously, they are also dividing audience as per their personality, attributes, traits and
more (Herron, 2020).
Targeting: After segmentation, next step is targeting in which an appropriate segment
has been selected by managers. It helps them to prepare strategies for a particular group of
customers. In addition, targeting is crucial to put embark efforts of manager in right direction.
They need to consider about cost, profit, buying habits, characteristics of individuals before
selecting a target audience. Here, coffee connections are targeting to youth customers specially
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college going students who like to interact with each other and spend quality time with friends.
So, they prepare strategies to attract their target audience and able to make efficient use of
available resources.
Positioning: It is the last but most crucial stage where customers form perception
regarding a particular brand. It is vital for a brand to have strong positioning among customers so
that they prefer their brand over others (Iguisi, 2018). In this regard, coffee connection is looking
forwards to position itself as a brand that provides quality services at affordable price. It will
provide higher competitive edge to organization that is crucial to maintain positive brand image
in market.
Industry Analysis:
In current business world, it is essential to analyze industry in which company is
operating business. In this, competitors, vendors, suppliers, customers are considered as crucial
part of industry. For this purpose, Porters five forces model have been applied in following
manner:
Industry rivalries: It refers to the completion prevailing in industry. It is monitored that
there are ample of companies are working within hospitality sector of London. There are
competitor firms such as the attendant, Climpson and sons & more that are providing similar
services at reasonable price. So, there is higher completion is present at current market place
(McGee and Peterson, 2019).
Bargaining power of suppliers: Vendors are one of the crucial stakeholders of company
as they provide necessary resources to undertake different organizational activities. It is stated
that bargaining power of supplier is lower in terms of respective company. There are ample of
other vendors (farmers) present in market who are also providing similar raw materials.
Bargaining power of customers: There are ample of competitors are present in market so
customers of Coffee Connections have choice to switch over other brands. Moreover, customers
within hospitality industry are price sensitive so they are not likely for same brand for longer run.
Threats of substitute: Here, threats of substitute are also higher due to availability of
several replaceable products in market. Apart from direct competitors, local coffee shops are also
in competition of Coffee connections.
Threats of new entrants: It is monitored that threats of new entrants for respective
organization is really higher. Business model of company is not unique as well as highly
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innovative. So, it can be easily copied by others. In addition, there are lower barrier for new
entities to enter in existing market place.
So, competition within industry is really high for company so manages need to prepare
appropriate strategies so that they can sustain within industry for longer duration (Mograbyan
and Autio, 2017). It will help organization to build strong brand identity among target segment.
Pricing strategy:
Pricing is a crucial component of each and every business unit. With this, they are able to
earn potential profit margin that is crucial as well as main aim of business. It need to be
determine with due consideration so that company can save sufficient profit margin after
deducting expenses from income earned (Neumeyer and Santos, 2018). In addition, managers
also need to think about purchasing power of customers while determining price of products and
services. There are ample of pricing strategies such as cost plus pricing, value based pricing,
competitive and premium pricing strategies. In regards of coffee connections, they are adopting
competitive pricing strategy in order to attract more number of customers. For this, they first
analyse activities as well as strategies of competitors and then select their own price accordingly.
This pricing strategy will help organization to sustain in competitive market place for longer
duration.
Financial Plan:
It is a document that depicts current financial position of entity along with its long term
goals. It provides detailed information regarding assets, liabilities of company. With this,
managers identify different sources of funds in order to meet with business requirements.
Further, it helps to identify current level of profit and prepare strategies to increase in
profitability. So, an appropriate financial plan is used by managers to analyze current financial
positions and prepare strategies to meet with future goals & objectives. It is a wide term that
starts with preparation of budget and finished with communication of and record keeping of data.
Apart from assets and liabilities, it is also helpful to manage necessary liquidity and ready to use
cash within organization. Thus, Coffee Connections needs to prepare a detailed financial plan in
order to manage funds in an efficient manner.
Source of Funding: There are ample of sources which are used to get necessary funds in
order to meet with predefined requirements. Here, different sources incurred different rate of
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interest, time period and more. So, managers need to give due consideration to these factors
while getting fun for business purpose. Sources of funds are given as under:
Bank: It is considered as a major source of funding for business. Banks provide funds for
a stipulated period of time and also charge interest with predefined rate. They also keep some
assets of company as mortgage for security purpose (Pindado and Sánchez, 2017). However, it is
a widely used source of funding but managers need to return the amount after certain time. In
addition, it also creates a burden in terms of interest which is mandatory to pay regardless profit
& loss in business. So, it is wise to use this source while one have a permanent source of income.
Still, there are ample of business units who are getting funds from baking institutions as it is an
authentic as well as reliable source.
Personal Funding: In this, individuals invest their own money in business activities.
Most important benefit of this is they do not need to pay any kind of interest and other expenses.
Besides this, there is no hurry & burden to repay amount so people can freely work for growth of
business. But, it is suitable for limited funding as this source cannot be use to meet with the huge
financial requirements.
Angel Investors: These investors put money in business at early stage. Their main aim is
to promote as well as encourage people to initiate new and creative business ideas. They
generally provide funding in exchange of ownership in company in terms of equity. Angel
investors belong from acquaintances of entrepreneurs. So, it is a crucial way to promote new
business and start-ups.
Venture Capital: It is a way of financing in which investors invest in start ups and small
companies with long terms growth prospective. They generally invest in such businesses that
have higher potential of growth and success (Prashantham and Floyd, 2019). Here, capitalist are
generally from wealthy and institutional investors who like to invest their capital in small
businesses with long term growth prospective. So, it is a way for companies majorly start ups to
get money for short period of time.
With above discussion, it is analyzed that venture capital is one of the major source of
funding that can be used by Coffee Connections. It is a start up to bring new and innovative ideas
in front of customers so venture capital is one of the most suitable sources to get required funds.
It will help company to grow business significantly. Unlike, bank funding and other sources,
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they are not required to pay a certain amount to venture capitalist. So, it is recommended to use
this source in order to promote business in market.
Cash Flow Analysis:
Cash flow demonstrates inflow and outflow of funds in business. It helps to know the
way in which a business entity generates as well as spends money over a stipulated period of
time. In business, there are ample of transaction are done on day to day basis which generate
inflow and outflow of cash. Here, cash flow includes three activities such as operating, investing
and financing (Ramachandran, Ray and Chakrabarti, 2016). It is analyzed that Coffee
Connection makes ample of transactions on daily basis in the form of cash. For this purpose cash
flow of firm is given as under:
Cash flow forecasting:
Cash receipts
Cash in hand 2500
Investment 6000
Estimated sales 40000
Loan 9000
Total cash receipts £ 57500
Cash payments
Fixed cost
Interest on loan 1000
Rent 2500
Insurance 1500
Salary of employees 6000
Variable cost
Electricity cost 600
Raw material cost 1400
Wages 2000
Total cash payables 15000
Cash flow £ 42500
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Profit and Loss Statement:
It shows profits and losses of company for a particular financial year. All the operating
expenses and incomes are included in this statement which provides a complete overview
regarding current profit and loss situation of organization (Schulte, 2018). It is monitored that
Coffee connections prepare a detailed profit and loss statement to prepare appropriate strategies
in order to improve current level of profitability.
Profit and loss statement
sales 40000
Less: cost of sales 3000
Gross profit 37000
Less: operating cost
Fixed cost
Interest on loan 1000
Rent 2500
Insurance 1500
Salary of employees 6000
Variable cost
Electricity cost 600
Raw material cost 1400
Wages 2000
Net profit £ 22000
Balance Sheet:
It shows the complete financial situation of a company through its assets and liabilities
for a particular period of time. It is one of the fundamental financial statements of company.
Balance sheet is also termed as new worth and financial position statement. With this, it is easy
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to understand the financial position of a company. In reference of Coffee Connections, Balance
sheet of organization is given as under:
Assets
current assets
Cash 3500
Investment 5000
Debtors 1500
Fixed assets
Machinery 10500
Total assets £ 20500
Liabilities and equity
Current liabilities
Creditors 500
Long term liability
Loan 3500
Total liabilities 5000
Equity
Reserves 10750
Share capital 750
Total liabilities and equity £ 20500
Breakeven:
It is a point on which company is neither on profit and loss. Here, income is equal to the
expense. If, company goes blow this point then it generates losses while above BEP points are
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