Sweet Coffee Shop is a proposed coffee shop business to be located on the campus of Cochin University of Science and Technology. The business plan projects that the coffee shop, which will offer coffee, tea, snacks and stationery items, will earn sales revenue of 175,000 INR in its first year of operation. Market research found that students, faculty, office workers and lab staff on campus would be the primary customers. The coffee shop aims to distinguish itself through high quality products and cleanliness. It projects sales and profits to increase significantly over the first three years.

1. Business Plan
Sweet Coffee Shop
Submitted by
Job Thomas
Roll No.8, Sem-5
MBA(PT)
School of Management studies
Cochin University of Science and Technology
Cochin, Kerala, India
PIN 682022
October 2012
Business plan of Sweet Coffee Shop by Job Thomas 1

2. 1. Executive summary
Coffee shop is the flourishing business in Kerala. Coffee or Tea bar is a daily necessity
for local coffee addicts, a place to dream many things, a place to escape the daily
stresses of life and just a comfortable place to meet your friends or to read a book, all in
one. With the growing demand for high-quality tea or coffee and great service, Sweet
Coffee shop will capitalize inside School of Management Studies (SMS), Cochin
University campus to build a core group of repeat customers. The culture will offer its
customers the best prepared coffee/tea in the area that will be complimented with
pastries, as well as free books that its patrons can read to enjoy their visit.
The shop will operate a 50 square foot coffee bar near to the entrance of SMS building.
The identified place can be obtained for lease for one year possible to get extension in
the upcoming years. The start-up funds available with owner is INR 50,000/-. It is
expected that the remaining capital of Rs.50,000/- will be obtained through commercial
loans from State bank of Travancore.
The business is expected to earn sales revenue of INR 175,000/- in the first year. Sweet
Coffee shop will strive to maintain a high gross profit margin and reasonable operating
expenses. The projected sale and the profit are indicated in Figure 1.
160%
120%
Year 1
80%
Year 2
Year 3
40%
0%
Sale Margin Profit
Figure 1. Project growth of sale and profit of Sweet Coffee shop
Business plan of Sweet Coffee Shop by Job Thomas 2

3. 2. Business Description
The coffee and tea consumption in the campus is very high. Sweet Coffee shop will
serve students, teachers, ministerial staffs, laboratory staff and visitors are the
customers of the campus. It is expected that the people from School of Management
Studies and neighboring departments will be the loyal customers of the shop. An opinion
survey conducted in SMS indicates that the proposed business plan is something people
are waiting for. The quality and cleanliness will be the distinctive feature of the venture.
The product share is indicated in Figure 2.
Product share
17% 17% Coffee
Tea
Snacks
28%
38% Stationery
Figure 2. Product share of Sweet Coffee shop
3. Marketing
The projection of daily sales of Sweet Coffee shop for the given in Table 1. The total
expected sale per day will be Rs. 15500/- . The expected daily profit is about 50 percent
of the operating expenses.
Table 1. Projected Daily sale
Items Day-time Evening Total
Coffee INR 1,000 INR 250 INR 1,250
Tea INR 1,500 INR 500 INR 2,000
Snacks INR 2,000 INR 750 INR 2,750
Stationery INR 1,000 INR 250 INR 1,250
TOTAL INR 5,500 INR 1,750 INR 7,250
Sweet Coffee shop will offer its customers the best tasting coffee or tea beverages in the
area. This will be achieved by using high-quality ingredients and strictly following
preparation guidelines. The store layout, menu listings and marketing activities will be
focused on maximizing the sales of higher margin espresso drinks. Along with the
espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will
be sold in the coffee bar. Sweet Coffee shop will also offer its clients pastries, small
salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee at
home, Sweet Coffee shop will also be selling coffee beans. The menu offerings will be
Business plan of Sweet Coffee Shop by Job Thomas 3

4. supplemented by free books and magazines that customers can read inside the coffee
bar
Market share
10% Students
10%
Faculty
office workers
50%
20% Labstaffs
10% visitors
Figure 2 Market analysis results of Sweet Coffee shop
Sweet Coffee shop will focus its marketing activities on reaching the University students
and faculty, people working in offices located close to the coffee bar and on
sophisticated teenagers. The details of market survey are shown in Figure 2. The market
research shows that these are the customer groups that are most likely to buy tea or
coffee and snacks. The quality and cleanliness are other important factors to be used for
marketing in well educated group of customers.
Sweet Coffee shop will cater to people who want to get their daily cup of great-tasting
coffee in a relaxing atmosphere. Such customers vary in age, although the location is
inside University campus, most of our clientele will be college students and faculty. Our
market research shows that these are discerning customers that gravitate towards better
tasting coffee or tea. Furthermore, a lot of college students consider coffee bars to be a
convenient studying or meeting location, where they can read or meet with peers without
the necessity to pay cover charges. For Sweet Coffee shop, this will provide a unique
possibility for building loyal client base.
4. Operation
The Sweet Coffee shop will be open with one working staff and one cashier cum
accountant. The sweet coffee shop is planned to operate at 50 square feet space room
available in the ground floor of School of management studies, CUSAT. The women
labors are available in the locality to engage in the operation of the shop. The location of
the shop is accessible to supplier’s delivery van and waste removal. The start-up fund
requirement is given in Figure 3.
Business plan of Sweet Coffee Shop by Job Thomas 4

5. Start-up funding
INR 60,000
INR 40,000
INR 20,000
INR 0
Total fund Assets Liabalities Investment
Figure 3. Start-up fund plan of Sweet Coffee shop
5. Management
Sweet Coffee shop is owned by Mr. JOB THOMAS, who holds a Masters Degree in
Business Administration from Cochin University. Mr. Thomas has good management
experience in owning similar shop near University campus. He had conducted a study in
various coffee shops, which is operating with significant margin. The customer feed back
would be the prime consideration in the development of the business. The person who is
working as cashier cum accountant will have to manage the labour, ordering inventory,
dealing with suppliers, developing a marketing strategy and perform other daily
managerial duties. A profit-sharing arrangement for accountant will be considered based
on the first year operational results. The personnel plan of Sweet Coffee shop is given in
Table 2.
Table 2. Personnel Plan
Personnel Year 1 Year 2 Year 3
Cashier INR 60,000 INR 66,000 INR 72,600
Worker INR 48,000 INR 52,800 INR 58,080
Number of employees 2 2 2
TOTAL 108000 118800 130680
6. Finance
Sweet Coffee shop will capitalize on the strong demand for high-quality coffee. The
owners have provided the shop with sufficient start-up capital. With successful
management aimed at establishing and growing a loyal customer base, the business will
see its net worth doubling in two years. Sweet Coffee shop will maintain a healthy 50%
gross margin, which combined with reasonable operating expenses, will provide enough
cash to finance further growth.
The profit and loss account is projected for upcoming three years. The sales, margin,
expenses and profit are given in Figure 4. It is expected that the proposed product is
profitable in the first year. The profit is increasing in the upcoming years.
Business plan of Sweet Coffee Shop by Job Thomas 5

6. INR 3,000,000
INR 2,500,000
INR 2,000,000
Year 1
INR 1,500,000
Year 2
INR 1,000,000
Year 3
INR 500,000
INR 0
Sale Margin Expenses Profit
Figure 4. Projected sale, margin, expenses and profit of Sweet Coffee shop
The balance sheet is projected for the upcoming three years. The projected asset,
liabilities and capital are given in Figure 5. The growth of asset and capital is increasing
significantly. The net worth of the business is increasing, which is the positive sign of
growth of the business
INR 1,000,000
INR 800,000
INR 600,000 Year 1
INR 400,000 Year 2
INR 200,000 Year 3
INR 0
Assests Liabilities Capital
Figure 5. Projected assets, liabilities and capital of Sweet Coffee shop
7. Critical-Risks
The neatness and the custom made coffee or tea would be core attraction of Sweet
Coffee shop. Milma booth stall will definitely be one of the major competitors because of
its established marketing and operational practices. However, despite of Milma booth
stall entrenched market position, many customers favor smaller, independent
establishments that offer cozy atmosphere and good coffee at affordable prices.
8. Harvest strategy
Strategy will be focused at getting new customers, retaining the existing customers,
getting customers to spend more and come back more often. Establishing a loyal
customer base is of a paramount importance since such customer core will not only
generate most of the sales but also will provide favorable referrals. Sweet Coffee shop
will position itself as unique coffee bar where its patrons can not only enjoy a cup of
Business plan of Sweet Coffee Shop by Job Thomas 6

7. perfectly brewed coffee but also spend their time in an ambient environment.
Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the
customers to relax from the daily stresses and will differentiate Sweet Coffee shop from
incumbent competitors. To speed up the customer service, at least two employees will
be servicing clients--while one employee will be preparing the customer's order, the
other one will be taking care of the sales transaction. All sales data logged on the
computerized point-of-sale terminal will be later analyzed for marketing purposes.
9. Milestone schedule
The milestones are guidelines for each of the members should strive to achieve. The
milestones of Sweet Coffee shop is given below.
Milestones
Item Quarter1 Quarter2 Quarter3 Quarter4
Customer delight XXXXXXXXXXXXXXXX
Achieve sale target XXXXXXXXXXXXXXXX
Improvement in business XXXXXXXXXXXXXXXX
Business plan of Sweet Coffee Shop by Job Thomas 7

8. 10. Appendix
A1. Start-up Requirements
Start-up Expenses
Legal INR 5,000
Stationery etc. INR 2,000
Brochures INR 2,000
Consultants INR 0
Insurance INR 5,000
Rent INR 1,000
Remodeling INR 5,000
Other INR 5,000
Total Start-up Expenses INR 25,000
Start-up Assets
Cash Required INR 10,000
Start-up Inventory INR 10,000
Other Current Assets INR 0
Long-term Assets INR 15,000
Total Assets INR 35,000
Total Requirements INR 60,000
Business plan of Sweet Coffee Shop by Job Thomas 8

9. A2. Start-up Funding
Start-up Expenses to Fund INR 25,000
Start-up Assets to Fund INR 35,000
Total Funding Required INR 60,000
Assets
Non-cash Assets from Start-up INR 25,000
Cash Requirements from Start-up INR 10,000
Additional Cash Raised INR 0
Total Assets INR 35,000
Liabilities and Capital
Liabilities
Current Borrowing INR 20,000
Long-term Liabilities INR 0
Accounts Payable (Outstanding Bills) INR 0
Other Current Liabilities (interest-free) INR 0
Total Liabilities INR 20,000
Capital
Planned Investment
Investor 1 INR 40,000
investor 2 INR 0
All other investors INR 0
Additional Investment Requirement INR 0
Total Planned Investment INR 40,000
Loss at Start-up Expenses (INR 25,000)
Total Capital INR 15,000
Total Capital and Liabilities INR 35,000
Total Funding INR 60,000
Business plan of Sweet Coffee Shop by Job Thomas 9

10. A2. Profit and Loss Account (projected)
Income Year 1 Year 2 Year 3
Sales INR 1,740,000 INR 2,175,000 INR 2,610,000
Direct Cost of Sales(0.65-.55) INR 1,131,000 INR 1,305,000 INR 1,435,500
Other 0 0 0
Total Cost of Sales INR 1,131,000 INR 1,305,000 INR 1,435,500
Gross Margin INR 609,000 INR 870,000 INR 1,174,500
Gross Margin % 35% 40% 45%
Expenses Year 1 Year 2 Year 3
Payroll INR 130,680 INR 0 INR 0
Sales and Marketing and Other Expenses INR 20,000 INR 20,000 INR 20,000
Depreciation (0.3) INR 4,500 INR 4,500 INR 4,500
Rent INR 1,000 INR 1,000 INR 1,000
Maintenance INR 5,000 INR 5,000 INR 5,000
Utilities/Phone INR 1,000 INR 1,000 INR 1,000
Payroll Taxes INR 0 INR 0 INR 0
Other INR 0 INR 0 INR 0
Total Operating Expenses INR 162,180 INR 31,500 INR 31,500
Profit Before Interest and Taxes INR 446,820 INR 838,500 INR 1,143,000
EBITDA INR 451,320 INR 843,000 INR 1,147,500
Interest Expense INR 4,000 INR 4,000 INR 4,000
Taxes Incurred (0.3) INR 134,046 INR 251,550 INR 342,900
Net Profit INR 313,274 INR 587,450 INR 800,600
Net Profit/Sales 18% 27% 31%
Business plan of Sweet Coffee Shop by Job Thomas 10

11. A4. Balance sheet (projected)
Assets Year 1 Year 2 Year 3
Current Assets
Cash INR 328,938 INR 616,823 INR 840,630
Inventory INR 29,500 INR 24,000 INR 18,500
Other Current Assets INR 10,000 INR 10,000 INR 10,000
Total Current Assets INR 368,438 INR 650,823 INR 869,130
Long-term Assets
Long-term Assets INR 15,000 INR 15,000 INR 15,000
Accumulated Depreciation (INR 4,500) (INR 9,000) (INR 13,500)
Total Long-term Assets INR 10,500 INR 6,000 INR 1,500
Total Assets INR 378,938 INR 656,823 INR 870,630
Liabilities and Capital Year 1 Year 2 Year 3
Accounts Payable INR 15,664 INR 29,373 INR 40,030
Current Borrowing INR 20,000 INR 20,000 INR 20,000
Other Current Liabilities INR 0 INR 0 INR 0
Subtotal Current Liabilities INR 35,664 INR 49,373 INR 60,030
Long-term Liabilities INR 0 INR 0 INR 0
Total Liabilities INR 35,664 INR 49,373 INR 60,030
Paid-in Capital INR 40,000 INR 30,000 INR 20,000
Retained Earnings (INR 10,000) (INR 10,000) (INR 10,000)
Earnings INR 313,274 INR 587,450 INR 800,600
Total Capital INR 343,274 INR 607,450 INR 810,600
Total Liabilities and Capital INR 378,938 INR 656,823 INR 870,630
Business plan of Sweet Coffee Shop by Job Thomas 11

12. A5. Ratio Analysis
Financial ratios Year 1 Year 2 Year 3
Current ratio 10.33 13.18 14.48
Inventory turn-over 38.34 54.38 77.59
Debt/Net worth 0.10 0.08 0.07
Return on tangible net worth 0.91 0.97 0.99
Return on Assets 0.83 0.89 0.92
Financial ratios
80
60 Year 1
Ratio
40 Year 2
20 Year 3
0
Current ratio Inventory turn-over
Financial ratios
1.00
0.80
0.60 Year 1
Ratio
0.40 Year 2
0.20
Year 3
0.00
Debt/Net w orth Return on tangible Return on Assets
net w orth
Business plan of Sweet Coffee Shop by Job Thomas 12