If there are images in this attachment, they will not be
displayed. Download the original attachment
                     ...
PO Box 2432
Frisco, Texas USA 75034
866-900-7887
www.125aday.com
iii
                                                     ...
Changing the Page Setup.......................................................................... 2
The Page Tab ............
Complete the General Company Description Section....................................24
When You Have Completed the Company...
Complete the Sales Forecast Section .........................................................56
When You Have Completed th...
A Discussion of the Basic Legal Forms of Ownership .............................. 87
Proprietorship, Partnership or Incorp...
Throughout this business plan, there will be important notes and tips about
entering information into the business plan sp...
Page 12
The Business Plan for Your Coffee Shop
The Sheet Tab
Here you can adjust and set the:
Print Area
Print Titles
Prin...
The Business Plan for Your Coffee Shop
Renaming the Pages in the Spreadsheet
Select the tab you want to rename. Right clic...
Start-Up Costs Narrative
√
Step 6
Start-Up Costs
√
Step 7
Marketing Plan
√
Step 8
Sales Forecast
√
Step 9
Operational Plan...
to protect its ideas and concept at this stage of the game then there may not
be any barriers to entry for others to enter...
ready now to begin preparing The Business Plan for Your Coffee Shop.
10
                                                  ...
2738 Commerce Way
Any Town, State, Zip
Contact Person: Dustin Roberts
Telephone: 222-333-4444
Fax:
111-222-3333
Email:
xyz...
Page 24
The Business Plan for Your Coffee Shop
•
Mission statement
•
Management
•
Products & Markets
•
Sales and Profit Su...
Here are several common mistakes that can make your Executive Summary
less effective:
•
Lacking a specific focus
•
Too lon...
be short at the expense of effectiveness, but that each word should be
powerful and meaningful. Be clear and concise and m...
coffee shop. Go into as much detail as necessary for the reader to get an
understanding for what the enterprise will be. M...
Smoking Facilities
Business Meetings
Souvenirs
Other Retail Sales
Bakery Products
Cold and Hot Beverages (Other)
19
      ...
the future. Consider covering the following in your company description
section:
Legal Description
Include details about w...
brand coffee availability and world famous Southern Style® pecan pie.
Objectives might be annual sales targets and some sp...
Now you are ready to proceed to the next step in the preparation of your
business plan, so proceed to Step Five, Products ...
Special Blend
Full Service Menu
Buffet
Specials
Grab and Go Menu
Café Rental
Delivery Service
Banquet Facilities
Smoking F...
•
Omitting the specific problem the products and services addresses and
how that problem is solved
•
Assuming an improved ...
Souvenirs
Other Retail Sales
Bakery Products
Cold and Hot Beverages (Other)
29
                                           ...
Evaluating Start-Up Costs
When starting a new coffee shop, moving to a new location, opening a new
branch or expanding you...
signs, brochures, etc.)
$
______________
Accounts Receivable (_____ days of
sales)
$
______________
Salaries and owners dr...
Obtain needed facilities, equipment, furnishings,
signage, supplies, stock.
_____ 10.
Recruit personnel. Establish job des...
Instructions on How to Complete this Section in the Excel®
Spreadsheet
In the Excel® spreadsheet, you will either enter th...
$0
Facilities - Phone
$0
$0
Facilities - Property Taxes
$0
$0
Facilities - Rent
$0
$0
Facilities - Security
$0
$0
Faciliti...
$0
$0
Payroll Taxes
$0
$0
Postal / Shipping
$0
$0
PR / Advertising
$0
$0
Repairs & Maintenance
$0
$0
Research and Developm...
functions. The anticipated Audit/Accounting Fees for the Start-Up
Period will be $1,000.
The Company estimates the Busines...
maintenance.
The Company also plans to study, design, development, implement,
support or manage computer-based information...
The Business Plan for Your Coffee Shop
Step Seven
The Marketing Plan
Marketing & Sales: Business Plan Basics
Every good ma...
•
Defining your target market too widely and assuming success will
result from simply capturing a "small portion" of this ...
your potential customer base also helps to drive overall marketing and sales
strategies that you will include within other...
target market that your coffee shop can serve is far better.
•
Don't jump to conclusions about why your target market need...
trends in product development.
45
                                                                                Page 55
...
What products and services and other coffee shops will compete with you and
your coffee shop?
List your major competitors:...
Pro Bp Coffee Shop Business Plan doc
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  1. 1. If there are images in this attachment, they will not be displayed. Download the original attachment Page 1 The Business Plan for Your Coffee Shop Fourth Edition Page 2 The Business Plan for Your Coffee Shop Other Titles of Interest from 125aday.com Publishing Company, Inc. Helping Small Business Do More Business! More Coffee Shop Related Products • Start Your Own Coffee Shop Top Business Books • New Customer Development Program • Customer Care Guide • Market Research: Surveys and Questionnaires • Human Resources: Independent Contractors Special Offers Business Talk™ Newsletter For more information, go to www.125aday.com to sign up or e-mail us at corporate@125aday.com ii Page 3 The Business Plan for Your Coffee Shop The Business Plan for Your Coffee Shop Fourth Edition Starting, operating and managing a coffee shop is a complex task. A functional business plan is not only valuable when seeking investment funds, but in the day to day management of the coffee shop. This eleven step business plan will help you create your coffee shop business plan with confidence. This user friendly business plan was prepared with ProBP, the professional business plan software solution. Be sure that you have all of the components; the workbook, the Excel spreadsheet and the Word Option document. Jack Samson 125aday.com Publishing Company, Inc.
  2. 2. PO Box 2432 Frisco, Texas USA 75034 866-900-7887 www.125aday.com iii Page 4 The Business Plan for Your Coffee Shop Publisher: 125aday.com Publishing Company, Inc. Cover Design: Chad Wade Photographs & Graphs Copyright © 2007 David Lee This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering professional services. If legal, account, medical, psychological, or any other expert assistance is required, the services of a competent professional person should be sought. ADAPTED FROM A DECLARATION OF PRINCIPLES OF A JOINT COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND PUBLISHERS. Copyright 2004-2008 by 125aday.com Publishing Company, Inc. All rights reserved. Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to the Permissions Department, 125aday.com Publishing Company, Inc. 125aday, 125aday.com, Business Talk and ProBP (business plan software) are trademarks of Dallas Distribution and Publishing Company, Inc. Third-Party Materials and Linked Materials - The publisher is not responsible for the content of those "third-party" materials which are not directly related to the publisher, and not under its control or auspices. Further, the publisher makes no representations regarding the content, products, services, advertising or other materials available from "third-party" materials and is not responsible for the legality, decency, copyright compliance, or accuracy of information provided by those individuals/companies which have paid to be linked to this material. Additionally, the publisher will not be held liable for damage or loss (caused or alleged to be caused) in connection with the use of a "third party" material. Please be advised that when you use affiliated services or third-party materials, you may be subject to additional terms and conditions. As with a multitude of other web materials, we ask that you exercise due diligence in browsing any "outside" vendor page. Trademark Notice - The words contained in this text which are believed to be trademarked, service marked, or otherwise to hold proprietary rights have been designated as such by use of initial capitalization. No attempt has been made to designate as trademarked or service marked any personal computer words or terms in which proprietary rights might exist. Inclusion, exclusion, or definition of a word or term is not intended to affect, or to express judgment upon, the validity of legal status of any proprietary right which may be claimed for a specific word or term. iv Page 5 The Business Plan for Your Coffee Shop The Business Plan for Your Coffee Shop Table of Contents Introduction................................................................................................. 1 Customizing the Business Plan ................................................................. 2
  3. 3. Changing the Page Setup.......................................................................... 2 The Page Tab ...................................................................................... 2 Orientation ...................................................................................... 2 Paper Size ....................................................................................... 2 Print Preview.................................................................................... 2 The Margins Tab .................................................................................. 2 The Header/Footer Tab ......................................................................... 2 Changing the Header......................................................................... 2 Changing the Footer.......................................................................... 2 The Sheet Tab ..................................................................................... 3 Changing the Font and Font Size ............................................................... 3 Changing the Color of the Text .................................................................. 3 Adding or Removing Worksheets................................................................ 3 Renaming the Pages in the Spreadsheet ..................................................... 4 Renaming the Pages in the Spreadsheet ..................................................... 5 Adding or Removing Rows or Columns........................................................ 5 Inserting Pictures .................................................................................... 5 Changing the Formulas............................................................................. 5 Excel Help .............................................................................................. 5 Word® Option........................................................................................... 5 Samples and Illustrations ......................................................................... 6 Changing Chart Information ..................................................................... 6 Mutual Non-Disclosure Agreement............................................................ 8 Step One ...................................................................................................... 9 Your Personal Evaluation.......................................................................... 9 Your Net Worth ....................................................................................... 9 Instructions on How to Complete in Excel ................................................ 9 Your Personal Budget............................................................................... 9 Why This Information Is Important ............................................................ 9 Step Two .................................................................................................... 11 The Cover Sheet...................................................................................... 11 First Impression! ....................................................................................11 Elements of the Cover Sheet....................................................................11 Complete the Cover Sheet Section ............................................................11 Saving Your Business Plan File..................................................................11 Cover Sheet Sample ...............................................................................13 v Page 6 The Business Plan for Your Coffee Shop Step Three.................................................................................................. 14 The Executive Summary.......................................................................... 14 The Basics of the Executive Summary .......................................................14 Applying for Loans or Investors ................................................................14 Information That Should Be Included ........................................................14 Mistakes to Avoid................................................................................16 Mission Statement..................................................................................16 The Basics of the Mission Statement ......................................................16 Mistakes to Avoid................................................................................17 Products and Services .............................................................................17 Complete the Executive Summary.............................................................18 When You Have Completed the Executive Summary ....................................18 Executive Summary Sample.....................................................................19 Step Four ................................................................................................... 22 General Company Description................................................................. 22 Company Description: Business Plan Basics................................................22 Mistakes to Avoid ...................................................................................23 Company Goals and Objectives.................................................................23 Business Philosophy................................................................................23 Legal Form of Ownership .........................................................................24
  4. 4. Complete the General Company Description Section....................................24 When You Have Completed the Company Goals and Objectives.....................24 General Company Description Sample .......................................................25 Step Five .................................................................................................... 26 Products and Services Description.......................................................... 26 Competitive Advantages or Disadvantages..............................................26 Pricing Structures................................................................................26 Products and Services Description: Business Plan Basics ..............................27 Mistakes to Avoid ...................................................................................27 Complete the Products and Services Section...............................................28 When You Have Completed the Products and Services Description.................28 Products and Services Description Sample .................................................29 Step Six...................................................................................................... 31 Start-Up Costs and Capitalization ........................................................... 31 Qualified and Non-Qualified Start-Up Costs ................................................31 Qualified Start-Up Costs.......................................................................31 Non-Qualified Start-Up Costs ................................................................31 Budget Allowances..................................................................................31 Evaluating Start-Up Costs........................................................................32 Start-Up To Do List.................................................................................33 Start-Up Narrative..................................................................................34 Instructions on How to Complete in Excel ...............................................35 Complete the Start Up Costs Section.........................................................36 When You Have Completed the Start Up Costs and Capitalization Section .......36 Start-Up Narrative Sample.......................................................................37 Step Seven ................................................................................................. 41 The Marketing Plan ................................................................................. 41 Marketing & Sales: Business Plan Basics ....................................................41 vi Page 7 The Business Plan for Your Coffee Shop Mistakes to Avoid ...................................................................................42 Target Market: Business Plan Basics..........................................................43 Mistakes to Avoid ...................................................................................44 Market Research Basics...........................................................................44 Market Research - Why? ......................................................................44 Market Research - How?.......................................................................45 Primary Market Research ..................................................................45 Secondary Market Research ..............................................................45 Economics of the Industry .......................................................................45 Product.................................................................................................46 Features and Benefits ..........................................................................46 Customers.............................................................................................47 Competition...........................................................................................47 Niche Market .........................................................................................48 Marketing Strategy .................................................................................48 Promotion ..........................................................................................48 Promotional Budget .............................................................................48 Pricing...............................................................................................49 Proposed Location ...............................................................................49 Complete the Marketing Plan....................................................................50 When You Have Completed the Marketing Plan ...........................................50 Marketing Plan Sample............................................................................51 Step Eight................................................................................................... 54 Sales Forecast......................................................................................... 54 Financial Projections: Business Plan Basics.................................................54 Sales Forecast .......................................................................................55 The Excel Spreadsheet ............................................................................55 Instructions on How to Complete in Excel ...............................................55
  5. 5. Complete the Sales Forecast Section .........................................................56 When You Have Completed the Sales Forecast............................................56 Step Nine ................................................................................................... 57 The Operational Plan .............................................................................. 57 Operational Plan: Business Plan Basics ......................................................57 Mistakes to Avoid ...................................................................................57 The Operational Plan...............................................................................58 Production.............................................................................................58 Location................................................................................................59 Physical Requirements .........................................................................59 Access...............................................................................................59 Construction.......................................................................................59 Cost ..................................................................................................59 Legal Environment..................................................................................59 Personnel ..............................................................................................59 Inventory..............................................................................................60 Suppliers...............................................................................................60 Managing your Accounts Receivable ..........................................................60 Managing your Accounts Payable ..............................................................61 Complete the Operational Plan Section ......................................................61 When You Have Completed the Operational Plan .........................................62 Operational Plan Sample..........................................................................63 vii Page 8 The Business Plan for Your Coffee Shop Step Ten..................................................................................................... 66 Management and Organization ............................................................... 66 Management Team: Business Plan Basics...................................................66 Specific Team Members...........................................................................66 Board of Directors ..................................................................................67 Board of Advisors ...................................................................................67 Consultants ...........................................................................................67 Mistakes to Avoid ...................................................................................68 Professional and Advisory Support ............................................................68 Complete the Management and Organization Section...................................68 When You Have Completed the Management and Organization .....................68 Management and Organization Sample ......................................................69 Step Eleven ................................................................................................ 71 The Financial Plan................................................................................... 71 Financial Projections: Business Plan Basics.................................................71 Mistakes to Avoid ...................................................................................72 The Financial Plan for Your Company.........................................................73 Instructions on How to Complete the Profit-Loss Narrative ........................73 Profit-Loss Projection ..............................................................................73 Instructions on How to Complete the Profit-Loss Statement.......................74 Projected Cash Flow................................................................................74 Instructions on How to Complete the Projected Cash Flow.........................75 Opening Day Balance Sheet .....................................................................76 Instructions on How to Complete the Balance Sheet.................................76 Break-Even Analysis ...............................................................................76 Instructions on How to Complete the Break-Even Analysis ........................77 When You Have Completed the Financial Plan.............................................77 Financial Plan Sample .............................................................................78 Appendixes ................................................................................................ 81 Your Business Plan Now Complete and Ready for Printing......................... 82 In Conclusion ............................................................................................. 82 PowerPoint:Demonstrations ................................................................... 82 Non-Disclosure Agreement......................................................................... 84 Attachment One ......................................................................................... 87
  6. 6. A Discussion of the Basic Legal Forms of Ownership .............................. 87 Proprietorship, Partnership or Incorporation?..............................................87 Advantages and Disadvantages of Proprietorship .....................................87 Advantages.....................................................................................87 Disadvantages.................................................................................88 Advantages and Disadvantages of Partnership.........................................88 Advantages.....................................................................................88 Disadvantages.................................................................................89 Advantages and Disadvantages of Incorporating......................................89 Advantages.....................................................................................89 Disadvantages.................................................................................90 Registering a Proprietorship or Partnership .............................................90 Registering a Corporation.....................................................................90 Incorporating a Company in your State ..................................................90 viii Page 9 The Business Plan for Your Coffee Shop ix Attachment Two......................................................................................... 91 Information Resources ........................................................................... 91 U.S. Small Business Administration (SBA)..................................................91 Service Corps of Retired Executives (SCORE) .............................................92 Small Business Development Centers (SBDCs) ...........................................92 Small Business Institutes (SBIs)...............................................................92 SBA Business Development Programs........................................................92 Other U.S. Government Resources............................................................92 Federal Publications ................................................................................92 Consumer Information Center (CIC)..........................................................93 Consumer Product Safety Commission (CPSC)............................................93 U.S. Department of Agriculture (USDA) .....................................................93 U.S. Department of Commerce (DOC) .......................................................93 U.S. Department of Health and Human Services (HHS) ................................93 U.S. Department of Labor (DOL)...............................................................94 Internal Revenue Service (IRS) ................................................................94 U.S. Environmental Protection Agency (EPA) ..............................................94 U.S. Food and Drug Administration (FDA) ..................................................94 For More Information ..............................................................................94 Government and State Websites ................................................................ 96 Index ......................................................................................................... 97 Page 10 The Business Plan for Your Coffee Shop Introduction There are few very secrets and absolutely no short cuts to preparing a business plan for a coffee shop. Careful investigation, complete research, and a through thought process is required to complete an accurate business plan for a coffee shop. The real value of creating a business plan is not in having the finished product in your hand; rather, the value lies in the process of researching and thinking about your business in a systematic way. The act of planning helps you to think of things thoroughly, study and research if you are not sure of the facts, and look at your ideas critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later. This business plan is carefully structured to take you a step at a time. In order to complete this business plan accurately, you should take each step, in order, and then move on to the next step. You do not have to complete the entire business plan at once. We do suggest that you complete each step before leaving your work. Important Notes and Tips
  7. 7. Throughout this business plan, there will be important notes and tips about entering information into the business plan spreadsheet template, formatting the business plan spreadsheet template, Word option narratives, and printing suggestions and alerts. If you have any problem with these areas, check the Appendix on page 81 for trouble shooting information related to these important notes and tips. So when you see these, carefully read the information! Let’s get started. The Business Plan for Your Coffee Shop is divided into eleven (11) steps. These steps are: Step One – Your Personal Evaluation on page 7 Step Two – The Business Plan Cover Sheet on page 11 Step Three – The Executive Summary on page 13 Step Four – General Company Description on page 22 Step Five – Products and Services on page 26 Step Six – Start Up Costs on page 31 Step Seven - The Marketing Plan on page 41 Step Eight – Sales Forecasts on page 54 Step Nine – The Operational Budget on page 57 Step Ten - Management and Organization on page 66 Step Eleven – The Financial Plan on page 71 Appendixes on page 81 Your business plan Is Now Complete and Ready for Printing on page 82 1 Page 11 The Business Plan for Your Coffee Shop In Conclusion on page 82 Customizing the Business Plan You can customize the business plan and how it looks when viewed on the computer and when the business plan is printed. Here we explain some of the basics of customizing the Excel® spreadsheet. Changing the Page Setup The Page Tab Orientation Here you can select to view and print your business plan in portrait (vertical) or landscape (horizontal) format. The default setting is portrait. Paper Size Here you can select to and view print in letter, legal or custom paper sizes. The default setting is letter. Print Preview Here you can select to print the business plan from the back to the front, or vice versa. The default setting is back to front. The Margins Tab Here you can select the margins for your business plan. The default settings are the recommended settings. The Header/Footer Tab Changing the Header Click on the Custom Header button and you can customize the header for your business plan. Also notice that you can select a print preview from this screen that allows you to see the entire page, with headers and footers. After changing the header, click OK to save your changes. Changing the Footer Click on the Custom Footer button and you can customize the header for your business plan. After changing the footer, click OK to save your changes. 2
  8. 8. Page 12 The Business Plan for Your Coffee Shop The Sheet Tab Here you can adjust and set the: Print Area Print Titles Print Instructions for: Gridlines Row & Column Headings Comments Page Order Changing the Font and Font Size You can select the entire worksheet or specific text to assign font and font size to in the workbook and make your changes on the toolbar. You can have different size fonts on the same page. The default font is Trebuchet MS and the font size varies. You can select the Formatting Toolbar that will show the font and font size. It will look like this: Changing the Color of the Text You can select the entire worksheet or specific text to assign font and font size to in the workbook and make your changes on the toolbar. You can have many different colors on the same page. The default color is the color that is on the worksheets now. Adding or Removing Worksheets You can add worksheets by clicking on Insert, Worksheet. You will want to click on the tab next to the area where you want to insert the worksheet. You can delete a worksheet by clicking on Edit, Delete Sheet. Spreadsheet Note Important Note Regarding Deleting a Worksheet WARNING: if you delete a sheet with formulas that extend to other pages in the spreadsheet, you will receive errors in the formulas. So be sure you want to delete the worksheet before doing so! 3 Page 13 The Business Plan for Your Coffee Shop Viewing the Pages in the Spreadsheet The pages of the spreadsheet are shown at the bottom of the page as tabs. To view the different pages, the sheet tabs Sheet tab bar appears at the bottom of the screen with tab scrolling buttons displayed on the left side. If the Sheet Tabs are not there, you can restore them by the following: 1. On the Tools menu, click Options. 2. On the View tab, under Window options, select or clear the Sheet tabs check box. You will notice that the columns are labeled with letters (A, B, C, etc) and the rows are numbered. As we go through spreadsheets, we will refer to the column letter and the row number. The column letter is across the top of the spreadsheet. The row number is along the left hand side of the spreadsheet. Each individual block in the spreadsheet is called a cell. Rows, Columns and Cells While we have attempted to include everything necessary in these spreadsheets, if you add rows to the spreadsheets, the totals may not add up! You will need to adjust the formulas to add up the figures if you add rows. While this is not difficult, you will need to ensure that you can adjust the totals so the figures will be correct. You can also change the text colors, fonts, and sizes of the fonts as you work. 4 Page 14
  9. 9. The Business Plan for Your Coffee Shop Renaming the Pages in the Spreadsheet Select the tab you want to rename. Right click on the tab and select Rename. Type the new name of the page, but there is a character limit. Adding or Removing Rows or Columns You can rows or columns by selecting where you want to add the row or column. Then select Insert, then row or column. You can remove an entire row by clicking on the row number (far left) and selecting Edit, delete. You can remove an entire column by click on the column and selecting Edit, delete. Spreadsheet Note Important Note Regarding Deleting a Rows or Columns WARNING: if you delete a cell, row or column with formulas that extend to other pages in the spreadsheet, you will receive errors in the formulas. So be sure you want to delete the cell, row or column before doing so! Inserting Pictures You can insert pictures from your computer into the business plan by selecting the cell where you want the picture to be inserted. Then select Insert, Picture and browse to the picture you want to insert. Double click the picture and then format the cell. Changing the Formulas Changing or adding formulas is not extremely difficult in Excel®. However, it does require a working knowledge of the formulas. You can search the Help section for information pertaining to the formula you want to change or add. Excel Help Depending on the version you are using, you can use the Help section in the application and later versions have online extend help resources. Just click on Help on the toolbar or you can hit F1. Word® Option If you are not familiar with how to enter text into the Excel® spreadsheet, you might find it easier to enter all of the narrative information in the Word® Option document. If you use the Word® Option document, you will need to manually enter the page numbers onto each page of your business plan. 5 Page 15 The Business Plan for Your Coffee Shop Samples and Illustrations In each step of the business plan, we provide you either a sample or an illustration of the information that you will need to provide in the step. Sample Illustration Excel Step 1 Net Worth √ Step 2 Cover Sheet √ Step 3 Executive Summary √ Step 4 General Company Description √ Step 5 Products and Services Description √ Step 6
  10. 10. Start-Up Costs Narrative √ Step 6 Start-Up Costs √ Step 7 Marketing Plan √ Step 8 Sales Forecast √ Step 9 Operational Plan √ Step 10 Management and Organization √ Step 11 Financial Plan Narrative √ Step 11 Profit-Loss Statement √ Step 11 Projected Cash Flow √ Step 11 Balance Sheet √ Step 11 Break-Even Analysis √ Changing Chart Information We have provided charts in the Excel® spreadsheet for the information that bankers, investors, and other lenders want to see in your business plan. The charts are automatically produced from the information that you enter. Based on the information that you enter, you may need to change the information on the axis of the chart. For example, this Chart Example 1 is from Step One, Personal Net Worth. As you can see, the Income Needed axis on the left is in the increments of $100,000 and $200,000. The axis information needs to be changed to make the information look better and more visible. 6 Page 16 The Business Plan for Your Coffee Shop Chart Example 1 We have changed the axis information to increments of $10,000 up to $90,000. See the difference in Chart Example 2 below. Chart Example 2 How to change entries on the X-axis or Y-axis: 1. Right click on the Axis that you would like to change and then click the tab labeled Scale. 2. When you have determined what range of numbers you want to use insert them into the proper boxes to the minimum and maximum units that you want to use. 3. With this option you can also change the font, sizing of the font, the category and alignment. 7 Page 17 The Business Plan for Your Coffee Shop Mutual Non-Disclosure Agreement A non-disclosure agreement (NDA) can send up red flags to your intended audience. A seasoned banker or venture capitalist is bound by client confidentiality and may find a NDA insulting. Secondly, if the business needs
  11. 11. to protect its ideas and concept at this stage of the game then there may not be any barriers to entry for others to enter the market. A simple confidentiality clause at the front of the plan should suffice. In some cases, such as setting up a strategic alliance a non-disclosure may be necessary. If in doubt, consult with a lawyer. A sample agreement is shown on page 84. We have chosen to include a Confidentiality and Recognition of Risks statement on the Cover Sheet. You can view this statement on the Cover Sheet Sample on page 13. 8 Page 18 The Business Plan for Your Coffee Shop Step One Your Personal Evaluation Your Net Worth Before starting your coffee shop, you need to have a firm grasp on your own personal financial situation. For that reason, the first step in preparing your business plan will be to determine your personal financial picture. Instructions on How to Complete the Excel Spreadsheets Refer to your Excel® Spreadsheet. The first page is entitled Step 1 -Your Net Worth. In viewing the first page of the Excel® spreadsheet entitled Step 1 -Your Net Worth, you will find that this information is very straight forward and simple, so a detailed discussion is unnecessary. Just fill in the blanks. At the bottom of the page, you will see your Estimated Net Worth. The areas in the light blue color automatically fill themselves in, so do not enter any figures in these cells. Hopefully, this will be a positive number. Your Personal Budget Refer to your Excel® Spreadsheet, Step 1 – Your Net Worth and scroll down to the section entitled Your Personal Budget. Again, this information is commonplace and you should know what dollar amounts to enter into the cells. For instance, in Column C, Row 56, this is monthly mortgage. If you monthly payments are $1,500.00, enter 1500 in Column D, Row 56. You will see that this Personal Budget is for 1 month, 3 months, 6 months, and 1 year. You should also notice that as you enter your monthly mortgage payment, the spreadsheet automatically totals the rest of the row. So you only need to enter the monthly amounts to get the 3 and 6 months totals and the yearly total. Why This Information Is Important In starting your coffee shop, you need to have your personal financial situation firmly planted on the ground. Starting a business is difficult enough without personal financial problems getting in the way of your success. If the Total Income Needed (Column D, Row 89) is greater than your Total Income (Column D, Row 87), you have some financial issues to fix before starting your coffee shop. We can’t tell you how to fix this problem, but we 9 Page 19 The Business Plan for Your Coffee Shop can tell you that your will be starting your coffee shop in financial trouble and that is no way to start a business! In the example below, the total income is $8,000 a month with monthly expenses of $4,355. Therefore, there is a surplus of funds monthly for savings, investment and/or starting a business. Figure 1-1. Income Differential Figure 1-2. Income Differential Now, assuming that your personal financial situation is acceptable, you are
  12. 12. ready now to begin preparing The Business Plan for Your Coffee Shop. 10 Page 20 The Business Plan for Your Coffee Shop Step Two The Cover Sheet First Impression! The Cover Sheet is the first page of your business plan. The cover of the document is often the "First Impression" of your shop for any interested parties or investors. The purpose of a cover is to tell the reader what the document is about. Your cover sheet should include: Name and business name Company logo Address Telephone number Fax number E-mail address Other contact information Tip Important Tip Cover Sheet The cover should be attractive and professional looking. Fonts used should be easily read and color contrasts should be pleasant to the eye. Elements of the Cover Sheet The information is very basic. You can view an example of a Cover Sheet on page 13. Complete the Cover Sheet Section You can prepare the Cover Sheet in Excel® or Word®. To complete the Cover Sheet in Excel®, go to the Excel® spreadsheet to the tab labeled Step 2 – Cover Sheet. Fill in the information and save your work. To complete the Cover Sheet in Word®, go to the Word® options file and complete the information. Saving Your Business Plan File As you complete the Steps in this business plan, be sure to save your work often. 11 Page 21 The Business Plan for Your Coffee Shop Tip Important Tip Save Your Work Often Nothing is worse than working on your business plan for an hour and then having the computer shut down expectedly. Save your work often and you won’t lose your information! When you have completed the Cover Sheet, you are ready for the next step in the preparation of your business plan. So proceed to Step Three, the Executive Summary on page 13. 12 Page 22 The Business Plan for Your Coffee Shop The Business Plan For Perk Me Up Coffee Shop Perk Me Up Coffee Shop
  13. 13. 2738 Commerce Way Any Town, State, Zip Contact Person: Dustin Roberts Telephone: 222-333-4444 Fax: 111-222-3333 Email: xyz@example.com Confidentiality and Recognition of Risks Confidentiality Clause The information included in this business plan is strictly confidential and is provided on the understanding that it will not be disclosed to third parties without the expressed written consent of Dustin Roberts. Recognition of Risk This business plan represents management's best estimate of the future potential of our business venture. It should be recognized that not all-major risks can be accurately predicted or otherwise avoided and that few business plans are free of errors of omission or commission. Therefore investors should be aware that this business has inherent risks that should be evaluated prior to any investment. 13 Page 23 The Business Plan for Your Coffee Shop Step Three The Executive Summary The Basics of the Executive Summary The Executive Summary is a narrative and should be one to two pages in length. We certainly suggest you make it two pages or less, especially if investors or bankers will be reviewing your business plan for loan or investment purposes. You should explain the fundamentals of your coffee shop: 1. What will your menu products and store services be, 2. Who will be your customers, 3. Who are the owners of your coffee shop, and 4. What you think the future holds for your coffee shop and the industry. You should make this narrative enthusiastic, professional, complete and concise without overstating the financial figures. If You Will Be Applying For Loans or Investors If you will be applying for a loan or looking for investors, state clearly how much you want, precisely how you are going to use it, and how the loan or investment will make your coffee shop more profitable and successful, thereby ensuring repayment. Tip Important Tip Applying for Loans or Approaching Investors If you are going to use your business plan for applying for loans and especially if you are going to be looking for investors, make sure that your business plan meets any requirements as it can be construed as a Securities Offer. You consult with your attorney regarding this matter. What Information Should Be Included in the Executive Summary? We have provided a sample Executive Summary to help give you an idea of the way the information can be formatted. See the sample Executive Summary on page 19. The following are commonly used sub-headings to cover the key points. Avoid general statements and be sure to clearly articulate key numbers. • The Company 14
  14. 14. Page 24 The Business Plan for Your Coffee Shop • Mission statement • Management • Products & Markets • Sales and Profit Summary • Funding Requirement • Investment Proposal Regardless of how you organize your Executive Summary, be sure to answer the following questions (note - due to the sensitive, confidential nature of what you might say in such a document, you might want to restrict your disclosure in certain areas and only reveal such information to others if you are assured of confidentiality). You should address these questions, and any others which you consider important, under headings such as those noted above. We have provided a sample of a simple Executive Summary to help give you an idea of the way the information can be formatted. See the sample Executive Summary on page 19. Questions to Address: 1. What is the full, legal name (and jurisdiction of incorporation) of your coffee shop (if it exists) and a brief history (when incorporated, ownership and capital structure, track record, accomplishments to date if any, etc)? Don't forget to include a complete address and contact details (email address, telephone numbers, etc). 2. What is the "Mission" of your coffee shop (i.e. what is it setting out to achieve or accomplish)? 3. What is the market which your business is going after (who, where, size -in dollars) and what is the unique (i.e. proprietary advantage in the form of patents, trade secrets, trademarks) or new product or service which is being offered to this market? A comment on competition is useful. Also, identify and current and potential customers. Testimonials are helpful. 4. Who are the key people behind your coffee shop (i.e. why would someone entrust them with their money?) and what are their credentials? Include all board members and key management people. 5. What does your coffee shop expect to achieve in sales and profit (before tax) (in $) in years 1, 2, 3 and beyond? 6. How much capital is needed (at various stages over the first 3 years)? And what are the uses to which these funds will be applied? 7. What has already been invested (# of years sweat equity, or seed investment amounts, i.e.#shares@$xx, and by whom)? 8. What is being offered for the investment (e.g. equity %, board seat, etc.) 9. What kind of return might an investor expect? Over what time frame? And what is the "exit strategy"? 10.What else is important to note? (that hasn't been covered elsewhere) 15 Page 25 The Business Plan for Your Coffee Shop Executive Summary: Mistakes to Avoid
  15. 15. Here are several common mistakes that can make your Executive Summary less effective: • Lacking a specific focus • Too long and wordy, and failing to get to the point • Trying to be all inclusive (it should be a powerful summary) • Failing to demonstrate a special or unique opportunity • Failing to outline the terms of the investment sought • Failing to generate enthusiasm in the reader Some suggestions to combat these problems: • Limit your Executive Summary to a maximum of 3 pages (at the very most) • If possible, attempt to present your Executive Summary on 1 or 2 pages • Focus on the opportunity you are presenting your investor and explain why it is special • Make certain that the opinions and claims in your Executive Summary are fully supported in the other sections of your business plan • Attempt to use only concrete facts and figures that explain your business concept, market niche and financial projections • Don't forget to include the details of your investment (the amount you need, what you will spend it on, and the return you offer your investor) • Keep your reader in mind - why are they reading the plan and what response/action to you hope to generate? Mission Statement Many companies have a brief mission statement, usually in thirty words or less, explaining their reason for being in business and their guiding principles. Some are very complex. You should carefully think through your own personal Mission Statement for your coffee shop, also referred to as Mission and Vision Statements. You might write down whatever comes to mind now. The good news is that you can change, revised, and detail your Mission Statement later on, as you should with your entire business plan over the years. The Basics of the Mission Statement The Mission and Vision Statements set the tone for not only your business plan, but also for your company. They define the path your company will follow and act as a guiding principle by which your company functions. 16 Page 26 The Business Plan for Your Coffee Shop Your Mission and Vision Statements tell your reader what you and your business are all about - what your company stands for, what you believe in, and what you intend to achieve. Economy of words is critical. This doesn't necessarily mean that they should
  16. 16. be short at the expense of effectiveness, but that each word should be powerful and meaningful. Be clear and concise and make it obvious what your company is attempting to do. Is there a difference between a mission and vision statement? Yes, the differences are: Your VISION defines your long-term dream. It should not be achievable. That may sound ridiculous, but the objective is for your vision to always be just slightly out of your reach. It's what you constantly strive to attain, and it becomes your reason for being. Your MISSION is what you intend to become or accomplish. It should be challenging but achievable. A well-written mission statement demonstrates that you understand your business, have defined your unique focus, and can articulate your objectives concisely to yourself and others. Mission & Vision: Mistakes to Avoid Here are some of the "don'ts" to avoid when writing your Mission Statement or Vision Statement: • Don't regurgitate a description of your business. • Don't make it boring. • Don't make it the length of a Ph.D. thesis. • Don't fake emotion. • If you don't believe it, don't include it. • Don't lie or claim to be something you aren't (i.e. intend to do exactly what you say you are going to do in your mission statement). • Don't forget to get the input of everyone on your team. Products and Services This is a SUMMARY of the menu products and store services that you will offer in your shop. The detailed products and services section is in Step 5 of the business plan. For now, you might have a good idea of the menu products and store services that you will offer. Some might include the following: Coffee Club Blends Special Blend Full Service Menu Buffet Specials 17 Page 27 The Business Plan for Your Coffee Shop Grab and Go Menu Café Rental Delivery Service Banquet Facilities Smoking Facilities Business Meetings Souvenirs Other Retail Sales Bakery Products Cold and Hot Beverages (Other) Describe each of the menu products and store services you will offer in your
  17. 17. coffee shop. Go into as much detail as necessary for the reader to get an understanding for what the enterprise will be. Make it interesting. It is important to point out how your coffee shop is different from other coffee shops. Just saying "It is better" is not enough. You must tell how it is better. Every business claims to be "high quality, better service". While a business must have quality and good service, it is no real selling point, since the consumer is bombarded with that claim at every turn. One can not bore a reader into buying their proposal! One must convince them about their product or service. If it can not be done here, it won’t be done in the market place when your business starts. Complete the Executive Summary To complete the Executive Summary in Excel®, go to the Excel® Spreadsheet to the tab labeled Step 3 – Executive Summary. Fill in the information and save your work. To complete the Executive Summary in Word®, go to the Word® options file and complete the information. When You Have Completed the Executive Summary Now you are ready to proceed to the next step in the preparation of your business plan, so proceed to Step Four, General Company Description. 18 Page 28 The Business Plan for Your Coffee Shop The Business Plan For Perk Me Up Coffee Shop Executive Summary The Company Perk Me Up Coffee Shop is incorporated in the state of Washington. It is equally owned and managed by its two partners. The company intends to hire six full-time waitresses and six part-time workers/students to handle day to day operations. Mission Statement Perk Me Up Coffee Shop aims to offer beverages, coffee, and pastries at a competitive price to meet the demand of the local market area residents. Management Dustin Roberts has extensive experience in sales, coffee products, and management. Mr. Roberts was manager of Coffee and Donuts. Lynn Baur brings experience in the area of office management and financial accounting. Ms. Baur was operating manager of Coffee To Go. Products & Markets The Company will provide the following products and services: Coffee Club Blends Special Blend Full Service Menu Buffet Specials Grab and Go Menu Café Rental Delivery Service Banquet Facilities
  18. 18. Smoking Facilities Business Meetings Souvenirs Other Retail Sales Bakery Products Cold and Hot Beverages (Other) 19 Page 29 The Business Plan for Your Coffee Shop The Company will target the following market: local market area residents. Sales and Profit Summary Perk Me Up Coffee Shop is a start-up company. Financing will come from the partners' capital and a ten-year SBA loan. The following chart and table illustrate the company's projected initial start-up costs. Start-up Funding Requirement Perk Me Up Coffee Shop expects to raise $110,000 of its own capital and to borrow $100,000 guaranteed by the SBA as a ten-year loan. This provides the bulk of the current financing required. Perk Me Up Coffee Shop anticipates sales of about $389,000 in the first year, $443,000 in the second year, and $590,000 in the third year of the plan. The company should break even by the fourth month of its operation as it steadily increases its sales. Profits for this time period are expected to be approximately $33,000 in year 1, $56,000 by year 2, and $76,000 by year 3. The company does not anticipate any cash flow problems. 20 Page 30 The Business Plan for Your Coffee Shop Investment Proposal The company is currently seeking total capital in the amount of $110,000 to be repaid as follows: Interest only for five (5) years at a negotiated rate (APR). Principal payments of $10,000 per year plus interest payable as negotiated, but quarterly payments are preferred. Stock, equity or ownership is available as negotiated. 21 Page 31 The Business Plan for Your Coffee Shop Step Four General Company Description The General Company Description is made up of the following: Company Goals and Objectives on page 23 Business Philosophy on page 23 Legal Form of Ownership on page 24 Company Description: Business Plan Basics The Company Description section of your business plan should outline your company’s basic background information and business concept. Explain in general terms who you are and what you do. It should also cover the history of your company, how you reached this point, and where you intend to go in
  19. 19. the future. Consider covering the following in your company description section: Legal Description Include details about where and when the company was formed, where and when it was incorporated, a one line description of what business you are in, and a brief overview of what your shop offers. If the location of your shop is important, explain the advantages and benefits to your reader. History of the Company Provide a general overview of the history of your company. Organize details of your company into a timeline or narrative format, and include your achievements and significant milestones. Explain why you started the shop, the driving force behind its inception, and how your company’s product/service mix has changed over time. Include historical data on sales, profits, individual menu products and store services, number of employees, and other important facts to build a case for your company. Current Status Provide a snapshot of where your company is today. Are you in one location, what do you offer to your customers now, how many employees do you have, and how successful are you? Point out your current strengths, but also honestly and frankly address your weaknesses. Investors know all businesses have weak points. You demonstrate business maturity by acknowledging your weaknesses and outlining steps to combat them. Future Goals This section gives your reader an idea of where your company is heading. What are looking to accomplish over the next 1, 3, 5 and 10 years? Relate these goals to the investment you seek so an investor understands why you need their money and what you intend to do with it. Explain the overall approach for reaching growth and profit goals in optimistic language, but 22 Page 32 The Business Plan for Your Coffee Shop make sure it's realistic. It's easy to make rosy projections about the future of your coffee shop, but it's harder to make them believable. Company Description: Mistakes to Avoid The company description should clearly explain your shop and the products and services you offer. This section could be considered the who, what, why, where, when and how of your company, with the focus on significant highlights of your business. Here are some of the most common mistakes that we find in the company section: • Including far too much detailed information about your business • Providing information that an investor would consider your "personal opinion" • Appearing as though you have no business history or business purpose • Leaving out important business and legal particulars • Writing the section in an unorganized or confusing manner Company Goals and Objectives for Your Coffee Shop Your goals and objectives for your shop are destinations; where you want your shop now and in the future. Objectives are progress markers along the way to measure goal achievement. For example, a goal might be to have a healthy, successful shop that is a leader in freshly brewed import JavaBest
  20. 20. brand coffee availability and world famous Southern Style® pecan pie. Objectives might be annual sales targets and some specific measures of customer satisfaction. Tip Important Tip Goals & Objectives This particular area of the business plan may be difficult to completely fill out at this time. You might need additional financial data to reasonable determine your goals and objectives. Nevertheless, you should make some notes in on the page and then proceed. Business Philosophy This is a description of what is important to you in your business as the owner and operator of a coffee shop. You will need to address, in some detail, the following: 1) To whom will you market your products and services. 2) Describe who your target market is. 3) Describe the coffee industry with some emphasis on the following items: 4) Is the shop in a growth industry? 23 Page 33 The Business Plan for Your Coffee Shop 5) What changes do you foresee in your industry, short term and long term? 6) How will your company be poised to take advantage of the changes mentioned above? 7) Your most important company strengths and core competencies. 8) What factors will make your shop succeed? 9) What do you think your major competitive strengths will be? 10) What background experience, skills, and strengths do you personally bring to this new venture? Legal Form of Ownership Describe what legal form of ownership you have decided to form for your coffee shop; Sole Proprietor, Partnership, Corporation, Limited Liability Corporation (LLC) and describe why you have selected this form. Tip Important Tip Legal Form If you haven’t determined the legal form of ownership, you certainly need to discuss with your attorney and/or accountant. We will provide you some information here about this, but in no way is this information to be assumed to be legal advice. Only your professional legal and accounting team can correctly advice you what you should do in this regard as to the legal form of ownership of your coffee shop. For a general discussion on the legal forms of business ownership, please see Attachment One – A General Discussion on page 84. We have provided a sample General Company Description to help give you an idea of the way the information can be formatted. See the sample General Company Description on page 25. Complete the General Company Description Section To complete the General Company Description in Excel®, go to the Excel® Spreadsheet to the tab labeled Step 4 – Gen Co Description. Fill in the information and save your work. To complete the General Company Description in Word®, go to the Word® options file and complete the information. When You Have Completed the Company Goals And Objectives
  21. 21. Now you are ready to proceed to the next step in the preparation of your business plan, so proceed to Step Five, Products and Services on page 26. 24 Page 34 The Business Plan for Your Coffee Shop The Business Plan For Perk Me Up Coffee Shop General Company Description Company Goals and Objectives The initial goal of the Company will be to gain enough customers in the first six (6) months of operation to reach a break even point between expenses and revenue. In the following twelve months of operation, the Company will strive to increase the total base increase of new customers by 10% per quarter. Thereafter, the Company will strive for a total base increase of new customers by 5% per quarter. Business Philosophy The Company will provide top quality menu products and store services to a market consisting of local market area residents. The coffee industry is a staple growth industry, as rated by Standard & Poor’s when reporting on the condition of the industry as of December 2007. With an increase in expected population growth, the expected marketplace will increase 30% over the next three (3) years in the state of Washington. By gaining a foothold in the next six (6) months with the Company’s new customer base, the Company will be firmly situated to take advantage of increases in the marketplace. The experience and past success of the main participates in the Company will enhance the success potential of Perk Me Up Coffee Shop. Legal Form of Ownership Perk Me Up Coffee Shop is a corporation form in the state of Washington in September 2007. All corporate documentation is available for inspection upon request. 25 Page 35 The Business Plan for Your Coffee Shop Step Five Products and Services Description The Products and Services Description section of your business plan will describe in detail the products and services you will provide in the course of your operating your coffee shop. We have provided an illustrative Products and Services Description to help give you an idea of the way the information can be formatted. See the Products and Services Description on page 29. How to Describe In Depth Your Products and Services Here, you will describe in depth your menu products and store services. Here is a general list of potential products and services, but you will need to elaborate and breakdown the pricing for each products and services. Coffee Club Blends
  22. 22. Special Blend Full Service Menu Buffet Specials Grab and Go Menu Café Rental Delivery Service Banquet Facilities Smoking Facilities Business Meetings Souvenirs Other Retail Sales Bakery Products Cold and Hot Beverages (Other) Competitive Advantages or Disadvantages You will need to list what factors will give you competitive advantages or disadvantages. For example, the level of quality or unique or proprietary features you will offer in your coffee shop. Pricing Structures You will need to list what the pricing structures are for the menu products and store services. If you have any drawings, photos, sales brochures, etc, these can be shown in your first Appendix. We have provided an example Appendix One on page 30. 26 Page 36 The Business Plan for Your Coffee Shop Tip Important Tip Appendixes The Appendixes will be at the back of your business plan, so keep this in mind when saving your files. Products and Services Description: Business Plan Basics The products and services section is one of the most important parts of your business plan. It's your chance to clearly explain your menu products and store services, identify their features and benefits, and discuss what needs or problems they address in the market. Product Overview In explaining each of the products you will offer, your reader will want to know what it is, what it does, and its features and benefits. Consider including pictures if they would help your reader get a better understanding of your product. Service Overview In explaining each of the services you will offer, your reader will want to know what it is, what it does, and its features and benefits. Consider including pictures if they would help your reader get a better understanding of your service. Write this section with enough information to satisfy an outsider's need to understand your service without boring them with trivial details. Products and Services Description: Mistakes to Avoid The following are the some of the most common mistakes we find in the products and services description section: • Failing to identify the benefits of the menu products and store services (focusing instead on the features) • Describing the products and services in language that is too technical, with too many industry specific words or phrases
  23. 23. • Omitting the specific problem the products and services addresses and how that problem is solved • Assuming an improved products and services will "sell itself" • Describing the products and services in terms that are too broad • Failing to include a third-party evaluation or analysis of your menu products and store services • Underestimating the importance of legally protecting your products and services 27 Page 37 The Business Plan for Your Coffee Shop Complete the Products and Services Description Section To complete the Products and Services Description in Excel®, go to the Excel® Spreadsheet to the tab labeled Step 5 – Prod and Servs. Fill in the information and save your work. To complete the Products and Services Description in Word®, go to the Word® options file and complete the information. Tip Important Tip Appendixes If you use Appendixes, be sure to number them in the actual order that you use them. When You Have Completed the Products and Services Description Section Now you are ready to proceed to the next step in the preparation of your business plan, so proceed to Step Six, Start Up Costs and Capitalization on page 31. 28 Page 38 The Business Plan for Your Coffee Shop The Business Plan For Perk Me Up Coffee Shop Products and Services Description (As described in the instructions, you will need to elaborate on your products and services. You can start with this list.) Coffee Club Blends Special Blend Full Service Menu Buffet Specials Grab and Go Menu Café Rental Delivery Service Banquet Facilities Smoking Facilities Business Meetings
  24. 24. Souvenirs Other Retail Sales Bakery Products Cold and Hot Beverages (Other) 29 Page 39 The Business Plan for Your Coffee Shop Appendix One Products and Services Attachments 30 Page 40 The Business Plan for Your Coffee Shop Step Six Start-Up Costs and Capitalization You will have many expenses before you even begin operating your coffee shop. It is important to estimate these expenses accurately and then plan where you will get sufficient capital. This is a research project. The more thorough your research, the less chance you will leave out important expenses or underestimate them. Qualified and Non-Qualified Start-Up Costs Qualified Start-Up Costs Start-up costs include costs for the following: Surveys of potential markets. Analyses of available facilities, labor, supplies, etc. Advertisements for the opening. Salaries and wages for employees who are being trained, and their instructors. Travel and other necessary costs for securing prospective distributors, suppliers, or customers. Salaries and fees for executives and consultants, or for similar professional services. Non-Qualified Start-Up Costs Start-up costs do not include the following. Deductible interest. Taxes. Research and experimental costs. Budget Allowances Even with the best of research, however, opening a coffee shop has a way of costing more than you anticipate. There are two ways to make allowances for surprise expenses. The first is to add a little “padding” to each item in the budget. The problem with that approach, however, is that it destroys the accuracy of your carefully thought out plan. The second approach is to add a separate line item, which we call contingencies, to account for the unforeseeable. This is the approach we recommend, and you will see a “Contingencies” line in our spreadsheet. 31 Page 41 The Business Plan for Your Coffee Shop Tip Important Tip Contingencies You should talk to other individuals who have started similar coffee shops to get a good idea of how much to allow for contingencies. If you cannot get good information, we recommend a rule of thumb that contingencies should equal at least 20% of the total of all other startup expenses.
  25. 25. Evaluating Start-Up Costs When starting a new coffee shop, moving to a new location, opening a new branch or expanding your shop, there will be start-up or one-time expenses. Know what these expenses will be by filling in the amounts of dollars required for each of the items listed below. Item Dollar Cost Real Estate, furniture, fixtures, machinery, equipment: a) Purchase price - if paid in full with cash $ ______________ b) Cash down payment - if purchased on contract $ ______________ c) Transportation & installation costs $ ______________ Starting Inventory $ ______________ Decorating, refurbishment, & remodeling costs $ ______________ Deposits Required: a) Utilities $ ______________ b) Rent $ ______________ c) Other (identify) $ ______________ Fees Required: a) Legal, accounting, others $ ______________ b) Licenses, permits, etc. $ ______________ c) Other (identify) $ ______________ 32 Page 42 The Business Plan for Your Coffee Shop Initial Advertising & Marketing Costs (i.e., flyers, sales letters and calls,
  26. 26. signs, brochures, etc.) $ ______________ Accounts Receivable (_____ days of sales) $ ______________ Salaries and owners draw until business enterprise opens or until cash flow is positive $ ______________ Other miscellaneous expenses: Merchant Association fees, equipment rental, office supplies, cleaning service, other supplies, signs, etc. $ ______________ Payments on other fixed obligations $ ______________ Total Start-Up Costs $ ______________ Start-Up To Do List _____ 1. Know what type of business you would like to start and learn al you can about it. _____ 2. Appraise your business strengths and weaknesses. Be strict and objective. _____ 3. Conduct thorough research of potential customers, your industry, your competition, your licensing and tax requirements, location, and name. _____ 4. Determine type of business organization (i.e. Proprietorship, Partnership, or Corporation) _____ 5. Evaluate possible shop locations. Check physical condition suitability, traffic flow, parking, utility requirements, and cost. _____ 6. Prepare a comprehensive business plan – include your action timetable. _____ 7. Decide on your business hours. _____ 8. Secure necessary capital. (Bank loan, budget to save, borrow on insurance, etc.) _____ 9.
  27. 27. Obtain needed facilities, equipment, furnishings, signage, supplies, stock. _____ 10. Recruit personnel. Establish job descriptions and a training program. 33 Page 43 The Business Plan for Your Coffee Shop _____ 11. Print business cards, stationery, invoice or statement forms. _____ 12. Register name of business (your assumed name) and/or file articles of incorporation with the Secretary of State. Publish notice in newspaper. _____ 13. Secure any necessary permits, licenses, or zoning variations. Check with both local and state licensing agencies. _____ 14. Register your business with the state and obtain a Sales & Use Tax Permit (if applicable). _____ 15. Register for Federal tax number (Form SS-4) and obtain employee tax and withholding information from the IRS. _____ 16. Establish bank account (separate from personal account). Shop for the bank and services that best suit your needs. _____ 17. If you intend to hire employees in your business, phone your Department of Economic Security or Workforce Commission. _____ 18. Phone the IRS for a free "Small Business Tax Kit" at 1-800-829-3676. For information about free Tax Education Workshops, call 1-800-829-1040 or check out the IRS website (http://www.irs.gov/) for this information. _____ 19. Issue news releases. Publicize your new coffee shop. Start-Up Narrative We have provided a sample Start-Up Narrative to help give you an idea of the way the information can be formatted. See the sample Start-Up Narrative on page 37. To complete the Start-Up Narrative in Excel®, go to the Excel® Spreadsheet to the tab labeled Step 6 - Startup Costs Narrative. Fill in the information and save your work. To complete the Start-Up Narrative in Word®, go to the Word® options file and complete the information. Explain your research and how you arrived at your forecasts of expenses. Give sources, amounts, and terms of proposed loans. Also explain in detail how much will be contributed by each investor and what percent ownership each will have. 34 Page 44 The Business Plan for Your Coffee Shop
  28. 28. Instructions on How to Complete this Section in the Excel® Spreadsheet In the Excel® spreadsheet, you will either enter the dollar amount that you know will reflect the projected cost of the item to the left or use the best estimate approach we told you about earlier. In Column C, these dollar amounts will reflect the actual start up costs while the dollar amounts in Column G will reflect a gross amount spent over a 3 month period. This is considered your Start-Up Period. Start-Up Costs (to be completed in Excel®) C G Start-up Costs Operating Costs (Pre-Revenue (3-Months Cash Requirements) assuming no revenue) Audit / Accounting Fees $0 $0 Bus Dev. - Travel $0 $0 Bus. Dev. - Entertainment $0 $0 Bus. Dev. - Meals $0 $0 Capital Acquisitions $0 $0 Charitable Contributions $0 $0 Commissions $0 $0 Conferences & Seminars $0 $0 Consulting Fees $0 $0 Contingencies $0 $0 Employee Benefits $0 $0 Entertainment $0 $0 Equipment Lease $0 $0 Facilities - Insurance $0
  29. 29. $0 Facilities - Phone $0 $0 Facilities - Property Taxes $0 $0 Facilities - Rent $0 $0 Facilities - Security $0 $0 Facilities - Utilities $0 $0 Facility - Other $0 $0 Financial Charges $0 $0 Furniture $0 $0 Insurance $0 $0 Inventory Purchases $0 $0 IT Consulting $0 $0 Legal Fees $0 $0 35 Page 45 The Business Plan for Your Coffee Shop Loan Interest $0 $0 Loan Capital $0 $0 Miscellaneous $0 $0 Office Supplies $0 $0 Payroll - Administrative Staff $0 $0 Payroll - Sales / Marketing $0 $0 Payroll - Owner / Directors
  30. 30. $0 $0 Payroll Taxes $0 $0 Postal / Shipping $0 $0 PR / Advertising $0 $0 Repairs & Maintenance $0 $0 Research and Development $0 $0 Storage $0 $0 Subscriptions & Dues $0 $0 Taxes & Licenses $0 $0 Telecommunications $0 $0 Vehicle Expenses $0 $0 Total Start-Up Costs $0 $0 The total amount in Column G represents the total Start-Up Cost for start-up period. Complete the Start-Up Costs Section in the Excel® Spreadsheet Go to the Excel® Spreadsheet to the tab labeled Step 6 – Start Up Costs. Fill in the information and save your work. When You Have Completed the Start-Up Costs and Capitalization Section Now you are ready to proceed to the next step in the preparation of your business plan, so proceed to Step Seven, The Marketing Plan on page 41. 36 Page 46 The Business Plan for Your Coffee Shop The Business Plan For Perk Me Up Coffee Shop An Explanation of the Facts, Assumptions, and Information Pertaining to the Start-Up Costs Section The Company estimates that the total Monthly Start-Up Costs to be $192,960. Therefore, the total Start-Up Costs for the Start-Up Period will be $578,880. The Company will use Larry Belcher, CPA for all accounting needs and
  31. 31. functions. The anticipated Audit/Accounting Fees for the Start-Up Period will be $1,000. The Company estimates the Business Development expenses to be $2,000. Of this amount, $1,500 is for Travel, $400 for Entertainment and $100 for Meals. The Company does not anticipate any Capital Acquisitions during the Start-Up Period. The Company will not make any Charitable Contributions during the Start-Up Period, but will consider such expenses based on profitability. The Company estimates that Commissions will be $3,000 per month and will be funded directly from revenue. The Company plans to attend one Conferences or Seminars. The cost has already been included in the Business Development section. The Company estimates that Consulting Fees will be paid in the amount of $1,000 for training related to safety issues and food delivery/handling techniques. The Company estimates Contingencies to be $32,160 which is 20% of the total Start-Up Costs estimates. 37 Page 47 The Business Plan for Your Coffee Shop The Company plans to offer Employee Benefits after the first year of operation, so no allocations have been made for employee benefits for the Start-Up Period. The Company plans to lease certain office equipment and may lease coffee shop equipment and fixtures. The Company estimates that the Equipment Lease amount will be $2,000. The Company estimates Facility expenses for the shop as follows: Facilities – Insurance, $1,000 Facilities – Phone, $500 Facilities - Property Taxes, $1,500 Facilities – Rent, $1,300 Facilities – Security, $75 Facilities – Utilities, $300 Facility – Other, $200 The Company estimates Financial Charges will be $200 and will result from credit card finance charges. The Company estimates Furniture expense to be $2,000, which will be primarily office furniture purchases. The Company estimates Insurance expenses will be $700. This insurance will be a policy purchased to cover general liability, employee dishonesty, dining area furniture, fixtures, kitchen appliances and equipment, and premise from damage. The Company estimates Inventory Purchases will total $130,000. The inventory will consist of food items, dining room furniture, initial kitchen appliances and equipment, and other related products and support items. The Company estimates that there will be IT Consulting expenses in the amount of $1,000. The Company plans to explore the use of staffing resources for kitchen help, wait staff, and building
  32. 32. maintenance. The Company also plans to study, design, development, implement, support or manage computer-based information systems, particularly software applications and computer hardware by using computers and computer software to convert, store, protect, process, transmit, and securely retrieve information. 38 Page 48 The Business Plan for Your Coffee Shop The Company estimates that Legal Fees will be incurred in the amount of $2,000. These costs represent incorporation and filing fees. The Company has not included Loan Interest which might result from the Investment Needed Proposal. The Company will revise the Start- Up Costs for the loan interest costs when the negotiated investment proposal is completed. The Company estimates Miscellaneous and unforeseen costs might be $1,000. The Company estimates Office Supplies to be $200. The Company estimates Payroll expenses to be: Payroll - Administrative Staff, $2,000 Payroll - Sales / Marketing, $3,000 Payroll - Owner / Directors, $500 Payroll Taxes, $1,500 The Company estimates Postal / Shipping costs to be $200. These costs will result from a Direct Mail program. The Company estimates PR / Advertising to be $1,000. These costs will result from print and media advertising. The Company estimates Repairs & Maintenance budget to be $500. The Company estimates Research and Development to be $1,000. This cost can result due to menu product research, Consumer Report comparisons of cold storage equipment, and traffic studies. The Company estimates Storage costs to be $100. This cost will result from storing excess inventory, extra dining room furniture, spare equipment and parts. The Company estimates Subscriptions & Dues costs to be $25. This cost will be for subscriptions. The Company estimates Taxes & Licenses costs to be $300. This cost will result from municipal business license, occupancy license, and police, building and sellers permits. Also for regulations that might include health regulations and requirements, fire safety standards or regulations, retail sales tax, and/or zoning by-laws. 39 Page 49 The Business Plan for Your Coffee Shop The Company estimates Telecommunications expenses will be $300. These costs include land lines and mobile (wireless) expenses. The Company estimates Vehicle Expenses to be $400. This cost includes insurance and possible lease fees. 40 Page 50
  33. 33. The Business Plan for Your Coffee Shop Step Seven The Marketing Plan Marketing & Sales: Business Plan Basics Every good marketing plan should include two major parts - a definition of your target market and a specific outline to market, promote and sell your menu products and store services. Target Market It's critical to clearly define your target market in your business plan - investors expect it. Tell your business plan reader about your customers and describe their defining characteristics in detail. Include information such as age, gender, geographic location, income bracket, buying similarities, and more. The goal of this section is to build a demographic profile of your typical coffee shop customer. The more clearly you pinpoint the defining traits of your customer, the easier it is to construct a marketing program to reach them effectively. The information and research included in your target market section should originate from primary and secondary sources. Primary sources includes information that you discover or conclude from personal observation and research, such as personal studies, results of questionnaires, site visits, and conversations with experts in your coffee industry. Secondary sources include such sources as journals, books, published reports, government statistics, or internet findings. Marketing Program After you define your target market, you need to determine specifically how you will reach them. Outline the details and steps necessary to reach potential customers and convert them from prospects to paying customers. Tip Important Tip Market Avenues and Procedures It is important to demonstrate to investors that you have identified specific marketing avenues and procedures to effectively sell your products and services. Answer questions such as the following in your marketing program section: • What specific marketing mediums will you use to reach your customer? 41 Page 51 The Business Plan for Your Coffee Shop • How often will each be used? What will they cost? Why did you choose these marketing avenues over others? • What marketing materials will you need? (brochures, website, etc) • Who will design your marketing materials? What will they cost? • What is the cost of marketing materials per customer? (You may choose to include marketing pieces in the appendix of your business plan) • Will your shop be able to attract PR? Why will they run your story? What's the "angle"? Which publications and mediums will you target? Marketing & Sales: Mistakes to Avoid Here are some of the most common mistakes found in the marketing and sales section:
  34. 34. • Defining your target market too widely and assuming success will result from simply capturing a "small portion" of this enormous market. • Unclear definition of your target market. • Attempting to attack an entire market instead of a narrow niche. • Making assumptions about your target market without research or concrete support. • Not specifically identifying the mediums you will use to advertise and promote your products and services. • Omitting details such as when, where, why and how you will reach your target customer - along with costs. • Making the assumption that offering a lower price will lead to increased sales. • Underestimating the importance of packaging, brand name, and reputation. • Attempting to immediately fill several lucrative but unrelated markets. • Lacking clarity about how future changes might affect your market. We have provided an illustrative Marketing Plan to help give you an idea of the way the information can be formatted. See the Marketing Plan on page 51. The Marketing Plan consists of six (6) primary sections and five (5) sub- sections under Marketing Strategy. Those sections are: Economics on page 45 Product on page 46 Customers on page Competition on page 47 Niche on page 48 Marketing Strategy on page 48 Promotion on page 48 Promotional Budget on page 48 Pricing on page 49 42 Page 52 The Business Plan for Your Coffee Shop Proposed Location on page 49 You will gather the information necessary for these sections to fit your exact demographical area. This is not something that can be a “One Size Fits All” scheme. Someone starting a coffee shop in Chicago, IL will have different statistics than someone starting a coffee shop in Charlotte, NC. The only way to gather this information is by conducting market research for your specific demographical area. Target Market: Business Plan Basics The target market section of your business plan must clearly identify the current and prospective buyers of your menu products and store services. Your goal in preparing the target market section is to demonstrate to readers that you clearly understand who your customers are and how your products and services directly meet the needs of the marketplace. Properly identifying
  35. 35. your potential customer base also helps to drive overall marketing and sales strategies that you will include within other sections of your business plan. Although your product or service may meet the needs of a large constituency of potential customers, the goal is to define your customer base as specifically as possible, both quantitatively and qualitatively. Consider the follow types of characteristics for inclusion in the target market section of your business plan: Size How large is your target market? Are there 1,000 business customers? 10 million potential customers ready to purchase your product or service? Or a small handful of very large target customers? Demographics The demographic traits of your customers often vary based on whether you are focused on serving the consumer or business markets: • Consumer - Income, Occupation, Gender, Single/Married, Ethnic Group, Education • Business - Industry, Product/Service, Years in Business, Revenue, Employee Size, Private/Public Geographic Where are your customers located? While technology has made location less of an issue for many companies, it doesn’t mean you should overlook the importance of defining the geographic location of your coffee shop customers. Clarifying these issues also helps to ensure that your marketing and sales strategies/budgets properly match your goals to capture market share. 43 Page 53 The Business Plan for Your Coffee Shop Other Characteristics What are some of the more subjective traits that define your customers? This might include things such as current buying motivations, perceived shortcomings of other solutions in the market, and trends/purchasing shifts likely to occur within your target market. Naturally, the more you understand your customers, the better your chances of success. Many times the best approach to answer the target market question: Who is our customer? Invest time and resources in primary market research. Conduct simple surveys or focus groups. If feasible, work with a reputable market research firm to guide you through the process. At the very least, use the Internet and industry groups to locate market research studies and statistics for your business plan. These resources can range from free information available on websites to expensive professional market research studies prepared by experts in the field. Performing primary research enables you to gather and document the quantitative and qualitative information needed to prepare a solid target market section for your business plan. Target Market: Mistakes to Avoid Here are some of the "don'ts" to avoid when writing the Target Market section of your business plan: • Don't assume that everyone is a buyer of your products and services. • Don't be unclear about the characteristics that define who your target customers are. • Don't assume you must have a "huge" target market - a well-defined
  36. 36. target market that your coffee shop can serve is far better. • Don't jump to conclusions about why your target market needs you - instead explain how you meet their needs. • Don't underestimate the value of focus - sell a specific product or service to a specific group. • Don't try to attack too many markets at once - particularly if you are a startup or early-stage coffee shop. Market Research Basics Market Research - Why? No matter how good your product or service, your coffee shop cannot succeed without effective marketing. This begins with careful and systematic research. It is very dangerous to simply assume that you already know about your intended market. You need to do market research to make sure that you are on correct track. Use the business planning process as your opportunity to uncover data and question your marketing efforts. Your time will be well spent. 44 Page 54 The Business Plan for Your Coffee Shop Market Research - How? There are 2 kinds of market research: primary and secondary. Primary market research means gathering your own data. For example, you could do your own traffic count at a proposed shop location, use the yellow pages to identify competitors, and do surveys or focus group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books out that show business owners how to do effective research by themselves. Tip Important Tip Be Specific In your marketing plan, be as specific as possible; give statistics & numbers and sources. Later on, the Marketing Plan will be the basis of the all- important sales projection. Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, Chambers of Commerce, vendors who sell to the coffee industry, government agencies (Commerce Dept. and state and local development agencies), and the SBA Business Information Centers. Start with your local library. Most librarians are pleased to guide you through their business data collection. A good way to start is at the SBA site, http://www.sba.gov/; click the Outside Resources button for a great collection of resource links. Your Chamber of Commerce has good information on the local area. Trade associations and publications often have excellent industry specific data. The Economics of the Industry You will need to gather information from your market research that will be able to address these questions and provide facts about your coffee industry: What is the total size of your coffee shop target market? What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.) Current demand in your target market. Trends in target market - growth trends, trends in consumer preferences, and
  37. 37. trends in product development. 45 Page 55 The Business Plan for Your Coffee Shop Growth potential and opportunity for a coffee shop of your size. What barriers to entry do you face in entering this market with your coffee shop? Some typical barriers are: High capital costs High production (food prep) costs High marketing costs Consumer acceptance/brand recognition Training/skills And of course, how will you overcome the barriers? You will also need to address how could the following affect your business? Change in technology. Government regulations. Changing economy. Change in the coffee shop industry. Back to Market Plan Sections on page 42 Product In the Step Five, Products and Services section, you described your menu products and store services as YOU see them. Now describe them from your CUSTOMER'S point of view. Features and Benefits List all your major menu products and store services. For each product or service that you provide in your coffee shop: Describe the most important features. That is, what will the product or service do for the customer? What is special about it? Now, for each menu product and store service, describe its benefits. That is, what will the product or service do for the customer? Note the difference between features and benefits, and think about them. You build features into your product or service so you can sell the benefits. Back to Market Plan Sections on page 42 46 Page 56 The Business Plan for Your Coffee Shop Customers Identify your targeted customers, their characteristics, and their geographic locations; i.e., demographics. You may well have more than one customer group. Identify the most important groups. Then, for each customer group, construct what is called a demographic profile: Customer Profile Age Gender Location Income level Social class/occupation Education Group Profile Industry (or portion of an industry) Location Size of shop Quality/technology/price preferences Back to Market Plan Sections on page 42 Competition
  38. 38. What products and services and other coffee shops will compete with you and your coffee shop? List your major competitors: Names & addresses Will they compete with you in across the board, or just for certain products and services, certain customers, or in certain locations? Will you have important indirect competitors? How will your menu products and store services compare with the competition? Back to Market Plan Sections on page 42 47 Page 57 The Business Plan for Your Coffee Shop Niche Market Now that you have systematically analyzed your industry, your product or service, your customers and the competition, you should have a clear picture or where your coffee shop fits into the marketplace. In one short paragraph, define your niche market; your unique corner of the market. Back to Market Plan Sections on page 42 Marketing Strategy Now you can outline a marketing strategy for your coffee shop that is consistent with your niche. Back to Market Plan Sections on page 42 Promotion How will you get the word out to customers? Advertising: what media, why, and how often? Why this mix and not some other? Have you identified low cost methods to get the most out of your promotional budget? Will you use methods other than paid advertising, such as incentives, word of mouth (how will you stimulate it?), network of friends or professionals? What image do you want to project? How do you want customers to see you? In addition to advertising, what plans do you have for graphic image support? This includes things like logo design, cards and letterhead, brochures, signage, and interior design. Should you have a system to identify repeat customers, and then systematically contact them? Back to Market Plan Sections on page 42 Promotional Budget How much will you spend on the items listed above? 48 Page 58 The Business Plan for Your Coffee Shop Before startup? (These numbers will go into your Startup budget.) Ongoing? (These numbers will go into your Operating Plan budget, which we will discuss later.) Back to Market Plan Sections on page 42 Pricing Explain your method(s) of setting prices. For most coffee shops, having the lowest price is not a good policy. It robs you of needed profit margin; customers may not care as much about price as you think; and large competitors can under price you anyway. Usually, you will do better to have average prices and compete on quality and service in your coffee shop. Does your pricing strategy fit with what was revealed in your competitive analysis?

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