Business Plan for coffee club

1. Business Plan

2. Coffee Club

3. We created a business plan for our
business, Coffee Club. We also
created a breakeven chart, which
showed us that we were going to have
difficulties to breakeven because of
our fixed costs and total costs being
much higher than our revenue.
However once we altered the business
plan and chart we saw that we were
hitting a positive outcome on each
section.

4. Break even
Taking a more realistic look at the sales figures of other businesses and
comparing them to our business, we decided that it would be logical to
increase the sales we make, now our business is breaks even and makes a
profit.

5. Balance Sheet
From our balance sheet we can that we are able to
balance assets with our capital. They balance at
£89,860. We applied the matching principles to
get to this figure.

6. Cash flow forecast
Our cash flow shows that we
are making a loss but we are
still in positive cash. We are
able to apply the Matching
principles into this section,
due matching the payments
and receipts.
Most of the Cash comes from
our Capital investment.

7. Profit And loss
With the profit and loss sheet we can see that we are making a profit of
£19860 a year, as all of are sales are instant, we record the revenue when the
sales according to the Accruals principle.

8. The difference between profit and loss and Cash Flow
 Although on our Profit and loss sheet we are making
a Profit of £19860, on our cash flow we still have
£88,834 of cash in our business. This shows that
there is a clear difference between profit and cash in
the business. The difference between profit and cash
is what keeps the business running, whilst profit how
much money the business makes after all expenses
have paid.

9. Ratios
The ROCE is 22%.
This is still a reasonable amount of return, but this could be subject to change,
currently the business has too much invested for the first year, with £89,860.
which the cash made within the first year is more than enough to sustain the
business, meaning we could potentially reduce the loan that’s part of the capital
meaning the return would increase to 33% but the business would still have
£58,834 cash at the end of the year.

10. Ratio
With the current ratio it should generally be around 2:1
So with this been 35.9:1 the business has too many assets,
primarily this been the cash the business has.
To resolve this we could start taking drawings from the business or
reduce the loan and capital invested.
The Liquid ratio shows the businesses ability to cover its liabilities as
our business has accumulated too much cash, this ratio is too high.
Although this generally isn't a bad thing, the cash the business has accumulated
Should generally be used to reinvest.

11. As it’s a coffee shop and currently
all our transaction take place with
cash, we don’t have any debtors, so
there shouldn’t be any debtors
Currently it takes us 35.1 days to pay off our
suppliers. Although with our businesses having a
lot of cash, we would be able to stick to the
suppliers payment terms of 30 days rather than
waiting the extra 5 days.

12. Currently our business is highly
geared – 33%
Meaning that 33% of our equity is
debt, which isn't too bad but also
not great, but could be better.
From the large amount of cash
within the business it is something
that can be paid off rather fast.