Detailed Business Plan for P & T Coffee House - Financial Analysis

This business plan outlines the strategy for P & T Coffee House, a coffee shop aiming to offer a variety of coffee and snacks with a focus on hygiene and eco-friendly practices in Birmingham, UK. It includes an executive summary detailing the business's purpose, market opportunity, products, mission, and business model. The plan covers marketing and sales strategies, competition analysis, operational details, and location selection. Financial projections are provided, including start-up expenses, sales forecasts, cash flow, income statements, and break-even points, along with information on funding sources. The business will target a diverse customer base and will use both online and offline marketing channels. The coffee shop aims to differentiate itself through innovative coffee products and eco-friendly practices. The financial section details the capital requirements, sources of finance, and key financial assumptions. The plan includes tables summarizing expenses, sales projections, cash flow, income statements, fixed costs, and break-even analysis.

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TABLE OF CONTENTS
PART 1: Executive Summary.........................................................................................................3
Purpose of the business and the business differentials ...............................................................3
Description of market opportunity...............................................................................................3
Details of the products or services...............................................................................................3
Mission statement .......................................................................................................................3
Business model............................................................................................................................4
Marketing.....................................................................................................................................5
Sales strategy...............................................................................................................................5
Competition .................................................................................................................................6
Operations....................................................................................................................................6
Choice of business location.........................................................................................................6
PART 2 : Financial Requirements & forecasts ...............................................................................7
Sources of finance available .......................................................................................................7
Types of finance to be used for the venture ................................................................................7
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INDEX OF TABLES
Table 1Start-up expenses.................................................................................................................9
Table 2: Sales projection................................................................................................................10
Table 3: Cash flow.........................................................................................................................10
Table 4: Income statement.............................................................................................................11
Table 5: Fixed cost.........................................................................................................................11
Table 6: Break even points............................................................................................................11
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PART 1: Executive Summary
Purpose of the business and the business differentials
The current business “P & T Coffee House” (Pure and tasty) is based on coffee shop
which will be providing variety of coffee along with range of snacks in accordance with
customers' requirement. The business differentials will be considered in term of quality of
services and range of coffee and snacks. Furthermore, hygiene is the main focus of business as it
will render services by taking into account the same concept. In this regard product will be
offered to end users for meeting their requirement related to healthy life style.
Description of market opportunity
The market opportunity is available in UK for hygiene products because issues related to
health are taken on first priority. Owing to this, current business will be opened to grab the
available opportunity and accordingly business will be set up in Birmingham city of London.
The demand of Coffee is very high in UK market as average consumption is 2.8kg in each year.
Currently approximately 1.7 bn cups of coffee are sold in every year (Everyone wants a taste of
booming UK coffee market, 2016). For meeting their higher requirement there are 18000 outlets
which are about to grow by 21000 till 2020. It reflects that current business will have growth and
high demand of its offering. At this juncture, business can have growth by anticipating high
demand of products and services in the marketplace.
Details of the products or services
Products included in P & T Coffee House are; Cappuccino, Espresso and Glance as well
as lemon tea. Apart from this range of snacks consists of Toasties, Sandwiches and Paninis. In
addition to this, snacks will consists of Wraps & Salads also which will be served with cold
coffee. Here, only wheat bread will be used for meeting expectations of health concious people.
The USP of business is that the utensils used for offering products at the new coffee shop will be
eco- friendly. The theme of coffee bar will be eco- friendly in which the business is going place
the furniture and infrastructure which is concerned to environment safety. It is going to satisfy
the needs of customers in respect with healthy diet. The cups and waste will be recycled after
use. Hence, consumer health and environment will be the most concerned area. The concept of
hygiene will be taken into considered to meet expectations of many of customers facing health
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issues such as obesity. This is the main reason behind additional of products like tea with lemon
grass, green tea and lemon tea.
Mission statement
To inspire the healthy life style through P & T food
Business model
The information related to P & T business has been presented in following table. It
consists of all information related to products and services to be produced by proposed business-
Value propositions
 Cost effective
 Hygienic
product
 Preference to
need to
customers
 Range of healthy
drinks and
snacks
Key partners
 Suppliers of
coffee, bread and
vegetables
 Tea suppliers
Competitive strategy
 Efficient and
polite service to
the customers
 Sit- down
restaurant
 Diversifying its
product range by
offering gluten
free pastries
Distribution channel
 Physical outlet
will be
preferred for
distribution
with effective
promotional
strategies
 Trained and
skilled waiter
will be there
to render
services
among end
users
Key activities
 Key activities
 Production
 Marketing
 Selling
Key resources
 Manpower
 Machinery
 Land
 IT
Customer
relationship
 Good customer
relationship
 Cost effective
marketing
 Low cost price
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will be helpful to
build good
relationship
Customer segment
 All age people
with middle
and higher
income group
 People with
moderate
income group
Revenue stream
 Sale of variety of drinks and snacks
 Lower prices initially for increasing
customer base
Cost and cost budget
 Capital expenditure- Kitchen equipments, machineries, supplies,
etc.
Marketing
In order to sustain in highly competitive market place, it will be required by the business
enterprise to develop and implement effective marketing strategies. One of the major advantage
of this is that it will create more and more awareness among people in market regarding the
products and services offered by the business (How to Create a Restaurant Marketing Plan,
2015). Both online and offline marketing techniques will be adopted by. Promotion will be
carried out on social media sites such as Facebook and Twitter by creating official page and
account on the same. This will have direct impact on consumer attraction as currently these
channel tends to attract large mass of buyers at a time. In addition to this, ads will be displayed
on newspaper and television to promote the new business. The target market is going to be
college going students and working professional. People in middle income group is the one
which will be mainly targeted.
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Sales strategy
In order to sale the products and services of “P & T Coffee House” appropriate channel
of distribution will be used. The coffee house is going to offer all its products with the help of a
physical store which will be located in Birmingham. In terms of business to customer sales, store
will be used (Meyer, 2014). On the other hand, suppliers and mediators will be used during
initial stage in order to sales and supply products to other business and corporate clients. The
priority of “P & T Coffee House” will be to serve all its customers with most accurate and
satisfactory products and services.
Competition
Along with the increase in number of coffee drinkers, the number of coffee shops
operating in Birmingham has also increased to a great extent (Birmingham Business
Opportunities, 2016). P & T Coffee House is going to face high degree of competition from
different small and large coffee shops. New business direct and indirect competitor will include
Urban Coffee shop, 6/8 Kafe, Faculty coffee, Saint Kitchen etc. in order to gain advantage over
these market players, the brand will be serving coffee products which are different and highly
innovative (Coffee in the United Kingdom, 2016).
Operations
Operations of business are the most significant aspect that helps is identifying different
operations that are to be carried out. In terms of operations, it can be stated that the coffee
shop will be importing its coffee beans from Brazil and Yemen. Further, it will make sure that
the beans are of fine quality and consist of rich taste. The process of blending will be carried out
in the physical store only. Along with this, the brand will be using the latest machines and
technology in order to produce the best coffee in cost effective manner. It facilitates corporation
to meet quality standard so as to give higher level of satisfaction among users.
Choice of business location
The location selected for the proposed business is 30 Church Street, Birmingham, United
Kingdom. The location is selected while considering the huge frequency of tourist in the area.
The street has set out a blueprint for Birmingham coffee culture, that has provided many
opportunities to independent coffee stores to earn good income (The best independent coffee
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shops in Birmingham, 2016). The location is one among fabulous independent stop offer coffee,
tea and more, hence, the location is selected.
Operations Illustration
Choice of business location 30 Church street,
Management Team 2 people
Production process Fresh input – Quality processing – Output finished
products
Suppliers Local market
Equipment Coffee machinery and swap machining
Inventory management FIFO
Trading hours 12:00 hours
Payment modes Cash and Card (Plastic money)
Credit terms Payment in 30 days
Quality control Total quality management
Staff structure-2chef,1 marketing personnel, 3 service providers, 1 accountant, 1-cleaning
P & T Coffee House will be consist of staff member of total eight people. There will be 2
persons appointed to make coffee and other products. One person will be responsible to deal with
all marketing activities of the new business. Three persons will be appointed to provide
satisfactory services to all the customers. Other than this, one accountant will be there and one
person will be responsible for cleaning. The entire management will be taken care by the owner
itself. During the initial stage there will be not manager appointed and all operations will be
managed by owner of P & T Coffee House.
PART 2 : Financial Requirements & forecasts
The financial feasibility of a new business depends upon the availability of finance and
the available sources of finance. The owner is going to open a coffee shop in Birmingham, UK.
Therefore, huge capital investment is required. The section herewith is going to represent a
financial projection for proposed business plan of a new coffee shop which includes capital
requirements, initial expenses along with future incomes and obligations.
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Sources of finance available
For starting up a new business, owner has two sources to get funds i.e. internal and
external sources. Internal sources are one from where the business access the finance for internal
sources such and personal capital of owner and business, on the other hand, external sources are
one from where the funds are acquired from external sources such as bank loan, venture capital
etc.
Types of finance to be used for the venture
There are two major type of finance which are going to be used for financing new
venture such as personal capital and Bank Loan. Total capital investment is expected to be ￡
12000. The owner is going to put personal capital of ￡4000 however, rest of the amount is going
to be acquired as a Bank Loan ￡8000.
Financial assumptions
 The sale of business is going to be increased by 10% every year.
 Rent of premises are increased by increase by 5% p.a.
 Bank Loan interest rate is 7.83%.
 A continual increment in marketing and promotional expenses will be 15% p.a.
 The staff salary will be 7%
 The payment of loan will be repaid in upcoming three years.
 Corporate tax rate is 20%, hence, business will pay against profits
 Utilities expenses (electricity, telephone etc.) are going to be increased by 12% p.a.
 Insurance of restaurant £150 per annum
 Miscellaneous expenditure is going to be increased by 5% p.a.
 Cost of sales will be 30%
Table 1Start-up expenses
Expenses ￡
Market Research 2000
Legal and Registration Charges 50
Marketing and promotional 150
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Utilities (Electricity & Phone) 200
Rent of warehouse 500
Insurance 50
Salary 3000
Miscellaneous Expenses 200
Sales Projection
Table 2: Sales projection
Year 1 (£) Year 2(£) Year 3(£)
Units of coffee
products sold
3000 3300 3600
Average price 1.5 1.5 1.5
Revenues 4500 4950 5400
Units sold of anytime
from other items 10000 11000 12100
Average price 2.5 2.5 2.5
Revenues 25000 27500 30250
Total sales 29500 32450 35650
(Source: Dunkin' Donuts Menu, 2016)
Projected Cash flow
Table 3: Cash flow
Cash flow statement
Pre-Operating
Year Year 1 (￡) Year 2 (￡) Year 3 (￡)
CASH INFLOW
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Opening Balance 0 9500 27711 40450
Sales 0 29500 32450 35650
Owner's fund 4000
Bank Loan 8000
Total Cash Inflow 12000 39000 60161 76100
CASH OUTFLOW
Working Capital 2000 0 0 0
Legal and Registration Charges 50 0 0 0
Market Research 100 0 0 0
Marketing and promotional 150 150 1725 1983
Utilities (Electricity & Phone) 0 200 2300 2645
Rent of warehouse 0 500 5250 5512
Interest on loan 0 939 626 313
Salary 0 3000 3210 3434
Miscellaneous Expenses 200 2000 2100 2205
Insurance 0 500 500 500
Tax 0 0 0 0
Loan Repayment 0 4000 4000 4000
Total Cash Outflow 2500 11289 19711 20592
Closing Balance 9500 27711 40450 55508
Projected income statement
Table 4: Income statement
Particulars Year 1 (￡) Year 2 (￡) Year 3 (￡)
Revenue 29500 32450 35650
Less: COGS (20%) 5900 6490 7130
Gross Profit 23600 25960 28520
Operating Expenses
Legal and Registration Charges 50 0 0
Market Research 100 0 0
Marketing and promotional 150 150 1725
Utilities (Electricity & Phone) 200 2300 2645
Rent of warehouse 500 5250 5512
Insurance 500 500 500
Salary 3000 3210 3434
Miscellaneous Expenses 2000 2100 2205
Total Operating Expenses 6500 13510 16021
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Operating Profit 17100 12450 12499
Less: Interest 9396 6264 3132
PBT 7704 6186 9367
Less: Tax 1540.8 1237.2 1873.4
Net Profit 6163.2 4948.8 7493.6
Fixed cost
Table 5: Fixed cost
Fixed cost
Legal and Registration Charges 50
Rent of warehouse 500
Salary 3000
Insurance 50
Total fixed expenses 4050
BEP in units
Table 6: Break even points
Average selling Price 5
Variable Cost 1
Contribution 4
Total Fixed cost 4050
Contribution 4
BEP 1012
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