Business Plan for Bubble Tea - Solent University, BFA438 Project

This document presents a comprehensive business plan for a bubble tea business, outlining the business idea, target market, and financial projections. It includes an analysis of fixed and variable costs, a budgeted profit forecast, a budgeted cash flow statement, and a break-even point analysis with a margin of safety assessment. The plan also identifies key performance indicators (KPIs) for measuring business success, such as revenue per customer, average class attendance, customer retention rate, and profit margin. The report concludes with recommendations for optimizing business operations and achieving financial goals. This business plan explores funding sources like owner's funds, crowdfunding, business loans, and venture capital. Risks like over or under capitalization and mismanagement of resources are also addressed.

Bubble Tea

Table of Contents
Summary of Business Idea..............................................................................................................3
Fixed and variable costs...................................................................................................................4
Budgeted profit forecast..................................................................................................................6
Budgeted Cash flow statement........................................................................................................9
Break-even point and margin of safety..........................................................................................10
Key performance indicators...........................................................................................................11
Recommendation...........................................................................................................................12

Summary of Business Idea
Our customers are usually the private area who lives near our store. To our valued messengers
we bring healthy and better quality milk, milk tea, tea with natural flavor, sweet ground colored
milk, macchiato and slush. Our essential goal is to become the best bistro in New York within the
3 years following our trip. Our supporting goal is to achieve a net income of $ 10k / month by
the end of the main year, a regular $ 15k / month per year, and $ 25,000 / month by the third
year.
By measure, Americans are much more espresso than tea people, drinking 8 ounces of liquid of
espresso coffee every day and just 33% teas. This fact also puts bubble tea on a level of
uncertainty, as it is difficult to break the American espresso practice. However, pessimism is not
necessarily all about bubble tea, as most refreshing drinkers point out how bubble tea offers an
inspiring choice as it may be it’s a smoothie or tea. In addition, the fact that caffeine is not
present in bubble tea makes it a great choice for people who do not need caffeine in their drinks.
Teelicious Bubble Tea is a tea base suitable for all tastes and types of tea with an air pocket. We
sell our pocket tea as packaged refreshment prepared for drinking. Our air pocket tea will be a
weird place for traditional tea, while providing the best information for our customers.
Business risks
Over or under capitalization
Addressing the financial risk of opening and receiving coffee in the workgroup will be one of the
biggest, if not the biggest, tasks the organization will have on the organization's agenda as
entrepreneur. Of course, even with the set of agreements and steps that the organization can take
to ensure that the organization has enough planned capital, there is still no contract for the dark; a
commercial enterprise is full of darkness.
Mismanagement of Resources
Not only can organization ruin the organization's money, but whatever the organization has at the
organization's disposal in this interaction. These elements can be classified as one of two classes:
a single asset and a theoretical fund. Substantial resources are, in essence, real resources. These

include things like the organization's structure, any equipment that organization has, necessary
business vehicles, PCs, retail space facilities, supplies, donations, and much more.
Sources of funding
Owner's Funds
Also known as bootstrap, this strategy to raise capital uses the funds of the business visionary or
entrepreneur himself to start the startup. The landlord may have used it to get cash investment to
pay for expenses, or they may be applying for another home loan on their home or another way
to get a basic cash raise.
Crowd funding
Another industry may subsidize the request of a group of lenders to help fund the project started,
often without seeking value or interest as a result. This method is called crowd funding and is
usually safe for business financing.
Business loan
Another company that is looking to get up could finance everything but business growth. There
is availability of collection of affordable credit for business such as private business promotions
for new businesses. Companies may also have the opportunity to obtain credit from your
different suppliers or sources.
Venture Capital
A promising start-up can receive investment funding, which is the level at which a group of
private lenders or investors promise to invest resources in an organization as a result of value, or
participation in the industry, and a portion of the benefits down the line.
Fixed and variable costs
Fixed cost
Fixed costs are costs associated with the activities or administrations of the organization that
should be paid with little regard to the volume of sales of the organization. An example of a fixed
cost is above. The above may include a space agency lease that includes, for example, the

organization’s office space or the organization’s production line space. Here are the top five fixed
costs in many organizations:
 Depreciation - slow tolerance of depletion A real resource is gradually depleted over a
period of time down to a value of $ 0.
 Depreciation - the cost determination of intangible assets over a specified period. It is
usually used to discount a home loan up to $ 0.
 Protection: A liability insurance company responsible for the business of the organization.
 Rent - the rental agency pays for office space, product line and extra space.
 Facilities: electricity, water and various facilities.
It is possible to reduce fixed costs to further improve the organization's revenue, but options such
as switching to a more convenient working environment or reducing the number of reps may be
required. Other fixed costs, such as depreciation, will not in turn further improve the group’s
revenue, but may further improve the organization's asset ratio.
Variable costs
Variable costs are directly attributable to contractual contracts. As contracts increase, make costs
variable. As contracts go down, factor costs go down. Variable costs are the costs of labor or raw
materials because these things change with contracts. One way to save money for a group is to
reduce its variable costs.
Some examples of variable costs:
 Direct materials: the raw materials that go into the creation of an article of an
organization
 Creative Sourcing: The essential provisions for the equipment that will help provide the
organization item, such as the sourcing that helps maintain the organization's equipment
 Complaints Fees: The part of a worker's compensation that is simply accountable for the
business they do
 MasterCard Fees: The costs that the sender has to pay to deliver the Mastercard
administration to their customers

Various variable costs are transportation costs, delivery costs, compensation and salary.
Performer performance awards are also considered as cost factors. In many cases, it is easier to
keep track of variable costs without getting too involved than changing fixed costs.
Budgeted profit forecast
Sales Budget
Qtr 1 Qtr 2 Qtr 3 Qtr 4 YEAR
Sales in Units 15,000 40,000 20,000 25,000 100,000
Budgeted price x $40 x $40 x $40 x $40
Sales in
Dollars $600,000 $1,600,000 $800,000 $1,000,000 $4,000,000
Production Budget
Qtr 1 Qtr 2 Qtr 3 Qtr 4 YEAR
Sales in Units 15,000 40,000 20,000 25,000 100,000
Add: Desired Ending
Inventory 16,000 8,000 10,000 6,000 6,000
(Next Qtr Sales x 40%) (40,000 x
40%)
(20,000 x
40%)
(25,000 x
40%) (given)
Total Units Needed 31,000 48,000 30,000

31,000 106,000
Less: Beginning
Inventory 10,000 16,000 8,000 10,000 10,000
Units to be Produced 21,000 32,000 22,000 21,000 96,000
Cost of Goods Sold budget
Direct Materials $ 10 per unit
Direct Labor $ 6 per unit
Variable Overhead $ 0.75 per unit
Fixed Overhead $75,000 per quarter
Cost of Goods Sold Budget
Qtr 1 Qtr 2 Qtr 3 Qtr 4 YEAR
Sales in Units 15,000 40,000 20,000 25,000 100,000
Direct Materials ($10 per unit) $150,000 $400,00
0 $200,000 $250,000 $1,000,000
Direct Labor ($6 per unit) 90,000 240,000 120,000 150,000 600,000

Variable Overhead ($0.75 per
unit) 11,250 30,000 15,000 18,750 75,000
Fixed Overhead 75,000 75,000 75,000 75,000 300,000
Cost of Goods Sold $326,250 $745,00
0 $410,000 $493,740 $1,975,000
Selling and Administrative Budget
Qtr 1 Qtr 2 Qtr 3 Qtr 4 YEAR
Selling Expenses 30,000 80,000 40,000 50,000 200,000
(Current qtr units sold x
$2 per unit)
(15,000
units x $2)
(40,000
units x $2)
(20,000
units x $2)
(25,000
units x $2)
Administrative Expenses 100,000 100,000 100,000 100,000 400,000
Total Selling and Admin
Expenses $130,000 $180,000 $140,000 $150,000 $600,000
Less: Office Bldg
Depreciation (20,000) (20,000) (20,000) (20,000) (80,000)
Total Cash payments for
selling and admin.
expenses
$110,000 $160,000 $120,000 $130,000 $520,000

Budgeted Income Statement
Qtr 1 Qtr 2 Qtr 3 Qtr 4 YEAR
Sales (in dollars) $600,000 1,600,00
0 800,000 1,000,00
0 4,000,000
Less: Cost of goods sold 326,250 745,000 410,000 493,750 1,975,000
Gross Profit 273,750 855,000 390,000 506,250 2,025,000
Operating Expenses:
Selling Expenses 30,000 80,000 40,000 50,000 200,000
Administrative Expenses 100,000 100,000 100,000 100,000 400,000
Income from operations $143,750 675,000 250,000 356,250 $1,425,000
Less: Income tax expense
(40%) 57,500 270,000 100,000 142,500 570,000
Net Income $86,250 $405,000 $150,000 $213,750 $855,000
Budgeted Cash flow statement
Cash at Beginning of Year 15,700
Operations
Cash receipts from

Customers 4,000,000
Other Operations
Cash paid for
Inventory purchases (1,975,000)
General operating and administrative expenses (400,000)
Wage expenses (200,000)
Interest (13,500)
Income taxes (570,000)
Net Cash Flow from Operations 841,500
Investing Activities
Cash receipts from
Sale of property and equipment 33,600
Collection of principal on loans 500,000
Sale of investment securities
Cash paid for
Purchase of property and equipment (650,000)
Making loans to other entities
Purchase of investment securities (300,000)
Net Cash Flow from Investing Activities (416,400)
Financing Activities
Cash receipts from
Issuance of stock
Borrowing
Cash paid for
Repurchase of stock (treasury stock)
Repayment of loans (34,000)
Dividends
Net Cash Flow from Financing Activities (34,000)
Net Increase in Cash 391,100
Cash at End of Year 406,800
Break-even point and margin of safety
Break-even point
Contribution per unit = Sales price per unit – Variable cost per unit
= $4 - $0.75
= $3.25

Fixed cost = $75,000 x 4 = $300,000
Break-even point = Fixed cost / contribution per unit
= $300,000/$3.25
= 92,307.69 or 92,308 units
Margin of safety = Actual sales – Break-even sales units
= 1,000,000 – 92,308
= 907,692 units
Key performance indicators
Key performance indicators reflect the characteristics that the organization needs to compare and
evaluate. Evaluation strategies provide the part for estimating and evaluating identified variables
to assess progress or impact. KPIs reflect what has been assessed and evaluation strategies detail
how and when it will be assessed. KPI is a function used to identify and evaluate the
effectiveness of a society. He usually communicates until he finds ground towards his long
hierarchical goals. KPI combines the source data, calculations and explanations for each activity
and sets out the plan for the month-to-month information reconciliation.
1 - Customer / partial conversion (RPC)
Revenue per customer is the most recognizable KPI and probably the following minimum
demand, a proportion of efficiency. Basic measure (annual revenue broken down by number of
customers).
2 - Average attendance at lessons (ACA)
Another well-known KPI, as one would expect, is the average class attendance (ACA). If the
classes are full or almost as full, it is proven to be a very demanding class and, theoretically, a
rewarding class. At the other end of the range, some classes are less crowded. It is up to the
owner to find out why; consistently slippery response.
3 - Consumer retention rate (CRR)

Maintenance - the level of your existing customers - is critical to long-term productivity. From a
multivariate point of view, it is the main KPI of all because it estimates how well you are
following the promise of your image.
4 - Profit margin (PM)
Just in case it costs you more to make the income than the income you generate, this is a negative
PM and your business is not far from moving forward. That is, unless you are financially funded
and have abundant resources.
5. Quick assets
Quick allowance, also known as analysis allowance, is another type of cash allowance that
activates a company's ability to meet commitments on the spot. The fast installment uses
standard straight-to-use tools, such as cash, deposit protection, and receipts, in its calculator. The
proof will be that conventional assets, such as stocks, will not be very easy to convert into cash.
6. Leverage
The money effect, also known as value multiplication, refers to the exercise of responsibility in
purchasing resources. Since not all resources will be funded on a value basis, the multiplier is
one. As the obligation expands, multiplication increases by one, demonstrates the impact of the
obligation, and ultimately increases the risk of the industry.
8. Inventory Turnover
Inventory conversion is an efficiency component that works so frequently in the accounting
period that the organization sells the entire stock. It provides an understanding of whether an
organization is above best inventory by industry standards.
Recommendation
Based on above analyses, it is recommended that company should appropriate metrics to get
better result from KPI. The KPIs only performs when it is compared either with competitors or
past performance of the company. The margin of safety shows that if company able to achieve
targeted sales than it will be able to avoid the risk of rundown of the business.