Elements For Building A Attractive Coffee Shop

Questions: 1. Outline a financial plan for your small business. 2. Develop a guerrilla marketing strategy for your small business. 3. Discuss the most appropriate location for a second store (an actual street address). Explain your reasoning. 4. Outline a plan for securing sources of debt financing for your second store. ? Answers: Introduction The caf and the restaurant industry of New York is profitable business. It is seen that the caf industry in USA is highly competitive. The management of our small business had decided to acquire 12 Corners Coffee. This was a major step of the business in maintaining its competitive advantage. The papers emphasizes on the preparation of a financial plan for 12 Corners Coffee. A guerilla marketing strategy for the caf has been entailed. A possible location for the second store for the caf shop in USA has been discussed. The sources of debt finance for the small business has been discussed (Cho, 2014). 1. Outline of Financial Plan A three year financial plan for 12 Corners Coffee has been prepared. It provides an outline of the Income statement, balance sheet and cash flow statement. Profit and Loss Statement Description Year 1 $000 Year 2 $000 Year 3 $000 Sales $13,000 $15,000 $21,000 Cost of Goods Sold $6,000 $8,000 $9,000 Gross Profit $8,000 $10,000 $13,000 Operating Expenses $5,200 $6,300 $7,400 Salary Expenses $700 $800 $1,000 Office Expenses $700 $800 $900 Maintenance Expenses $600 $800 $900 Rent Expenses $800 $1,000 $1,300 Payroll Expenses $600 $700 $800 Accounting Expenses $700 $700 $900 Legal Expenses $500 $600 $700 Telephone Charges $400 $600 $700 Operating Income/ EBIDT $2,800 $3,700 $5,600 Depreciation and Amortization $700 $900 $1,100 EBIT $2,100 $2,800 $4,500 Interest $400 $500 $600 EBT $1,700 $2,300 $3,900 Tax $300 $600 $900 EAT $1,400 $1,700 $3,000 Cash Flow Statement Particulars Pre Startup EST Year 1 Year 2 Year 3 Total Item EST Cash on hand $4,300 $4,900 $4,950 $5,100 $19,250 Cash Receipts $0 Cash Sales $2,350 $2,450 $2,550 $2,650 $10,000 Cash Collections $1,850 $1,950 $2,050 $2,150 $8,000 Loan $1,750 $1,850 $1,950 $2,050 $7,600 Total Cash Receipts $5,950 $6,250 $6,550 $6,850 $25,600 Total Cash Available $10,250 $11,150 $11,500 $11,950 $44,850 Cash Paid Out $0 Purchases $550 $600 $650 $700 $2,500 Gross Wages $250 $300 $350 $400 $1,300 Supplies $350 $400 $450 $500 $1,700 Maintenance $550 $600 $650 $700 $2,500 Advertising $450 $500 $550 $600 $2,100 Legal Accounting $450 $500 $550 $600 $2,100 Insurance $350 $400 $450 $500 $1,700 Tax $250 $300 $350 $400 $1,300 Interest $350 $400 $450 $500 $1,700 Rent $250 $300 $350 $400 $1,300 Telephone $250 $300 $350 $400 $1,300 Subtotal $4,050 $4,600 $5,150 $5,700 $19,500 Loan payment $750 $850 $950 $1,050 $3,600 Other Costs (Startup) $450 $550 $650 $750 $2,400 Capital Purchase $650 $750 $850 $950 $3,200 Total Cash Paid Out $5,900 $6,750 $7,600 $8,450 $28,700 End cash Value $4,350 $4,400 $3,900 $3,500 $16,150 Balance sheet Particulars Start Date Value End Date Value Cash in Bank $4,300.00 $3,400.00 Assets Inventory $550.00 $450.00 Deposits $850.00 $750.00 Accounts Receivables $850.00 $550.00 Total Current Assets $6,550.00 $5,150.00 Machines Equipment $2,100.00 $1,600.00 Land Buildings $2,100.00 $1,800.00 Total Fixed Assets $4,100.00 $3,300.00 Total Assets $14,850.00 $11,850.00 Liabilities Equity Interest Payable $350.00 $250.00 Current Debt $850.00 $650.00 Accounts Payable $650.00 $450.00 Current Liabilities $1,850.00 $1,350.00 Bank Loans $1,100.00 $900.00 Long term Borrowings $900.00 $800.00 Other Debts $900.00 $700.00 Fixed Liabilities $2,700.00 $2,200.00 Total Liabilities $7,450.00 $5,950.00 Equity $1,900.00 $1,600.00 2. Guerilla marketing strategy 12 Corners Coffee will create a unique message so that the local culture of coffee gets highlighted. This will create a unique message towards the customers and 123 Corners Coffee will gain loyal customers. The followings strategies can be applied (Nufer, 2013). Digital communication 12 Corners Coffee can use digital communication as a mode to communicate directly with the customers. There are various ways to interact with the customers directly which includes sending fun marketing email messages and tweets on lean season (Baltes Leibing, 2008). This will encourage the customers to stop for a cup of coffee at 123 Corners Coffee. The customers will be asked a secret password that will be included in the message to get a cup of espresso or the free pastry (Bertaut, Haliassos Reiter, 2009). The customers can be encouraged to introduce a friend to the coffee house in exchange of the drink of their choice at the coffee shop. This platform can be used as a promotional strategy to encourage the people to sign up for the outlets of social media and share the messages with their friends. This will increase the sales of the coffee shop (Bigat, 2012). Usage of Free Press The usage of Free Press will serve as a promotional tool for products sold at 123 Corners Coffee. The free espressos or the lattes will be delivered personally by a staff member to the local newspaper office or the radio station (Chionne Scozzese, 2014). The employees at the newspaper office and the local radio station will be asked to try the coffee and mention a review of it on their show or the newspaper. In order to survive and compete in the coffee industry, it is important to be a coffee expert. A track of the ongoing coffee and tea trend has to be maintained so that articles can be suggested for the coffee drinkers in the industry. This will provide the coffee shop with more coverage. Street advertising Street advertising is an important tool for marketing the products of the coffee shop. Employees at 123 Corners Coffee can handle out coupons or fliers on the street. The distribution of the fliers and the coupons can be done within few kilometers of the coffee shop. This will help during lean period and customers will make a visit at the coffee store with the coupon. This will generate interest among the customers and popularity of 123 Corners Coffee will increase (De Bonis Stacchini, 2013). On the Go Branding Logo of 123 Coffee Corners can be added to the caps, t-shirts. They can be handed to the customers to wear. This will increase the visibility of the product and introduce new people in the atmosphere of the coffee house. This form of branding strategy will make the customers as walking advertisements (Grotowska, 2012). 3. Appropriate location for second store The first store of 12 Coffee Corners was started in New York City. The second store will be opened at Los Angeles. The address for the coffee shop 1818 Western Avenue Los Angeles, CA, United States Los Angeles will be an ideal location for the coffee store. It is the second largest city in United States. It is also the most populous cities of United States. There are numerous coffee shops in Los Angeles. It will be an ideal location for 123 Coffee Corners. The store will find enough customers. This will help the store to increase its market share along with increase in sales. 4. Sources of debt financing 123 Coffee Corners will open its second store in Los Angeles. For this purpose the coffee shop needs to arrange money for its funding purpose. The sources of debt finance for 123 Coffee Corners are discussed below. Commercial banks Loan can be obtained from commercial banks. 123 Coffer Corners can approach any commercial bank in Los Angeles. They can lend money via overdraft or installment loan. The coffee shop can take huge amount of loan required for their entire set up in the new location from the commercial banks (COLLA, IPPOLITO LI, 2013). Asset based lenders Asset based lenders provide loan secured by any kind of collateral asset. In most cases the loan or the line of credit is generally secured by inventory or accounts receivable or the assets of the balance sheet. The loan can be used by the bank to meet the various requirements of cash flow of the coffee shop. It is seen that the rate of interest on the loans are generally less than the rate of interest on the unsecured loan (De Bonis Stacchini, 2013). Commercial finance companies Commercial finance is a major function that offers loans to the business firms. The commercial financing is offered by the bank or the lender. The commercial financing is provided by the banks or the financial institutions that are secured by the assets of the business or they can be unsecured in nature (Hohpe, 2005). Savings and Loan Savings and Loan association is also referred to as thrift. 123 Coffee Corners can avail loan against their savings from such associations (Jennings, 2015). Private placements Private placement can also be a major source of debt finance. The securities of the organization are made for sale. They are not made available to the public. The securities are sold to few investors. It is one of the important measures for raising capital (Marchesi, 2006). Conclusion: The paper has presented a business strategy for 123 Corners Coffee. A financial plan for 123 Coffee Corner has been prepared. The financial plan has been prepared for a period of three years. A guerilla marketing strategy has been formulated for 123 Corners Coffee. The second store for the coffee shop will be set up at Los Angeles. It is one of the busiest cities in the country. The coffee shop will be able to reach out to maximum customers as Los Angeles is one of the populated cities. 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