Opportunity
Problem
Not only do people living near the University of Oregon want coffee, tea, pastries or snacks, they also need a place to relax, have a group discussion or just sit and read. Although it is easy to find this near the University of Oregon campus now, it is too crowded too often and does not offer the right combination of elements for everyone.
Solution
Java Culture coffee bars are a must-have for local coffee drinkers. They offer a safe place to relax and enjoy a cup of coffee, as well as a cozy place to share stories with friends.
Market
Java Culture will target university students and faculty, as well as people working in coffee bars near their offices. Based on market research, these customers are the most likely to purchase gourmet coffee. Gourmet coffee consumption is universal and largely depends on income level. The University of Oregon campus near you will allow you to access the targeted customer market.
Competition
Java Culture’s closest competitors will be the other coffee bars near the University of Oregon campus. These include Starbucks, Cafe Roma and The UO Bookstore.
Why Us?
Good coffee, pastries, additional tea options, very welcoming atmosphere.
Expectations
Forecast
The chart below shows our plans to grow, based on our sales forecast. We strive to maintain an industry-standard 60% gross margin and reasonable operating expenditures, and to generate reasonable profits in both the second and third years.
Financial Highlights for the Year
You will need financing
The owners will spend $140,000 to start the company and then take out a $30,000 loan from the bank to cover any deficient spending or assets.
The start-up expenses of $27,000 include:
- Legal expenses for obtaining licenses and permits as well as the accounting services totaling $1,300.
- Marketing promotion expenses for the grand opening of Java Culture in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- For the assistance in setting up the coffee bar, consultants fees of $3,000 were paid to ABC Espresso Services (name changed).
- General liability, workers’ compensation, and property loss insurance coverage with a total premium starting at $2,400
- Pre-paid rent expenses one month at $1.76/square feet for a total cost of $4,000.
- Premises remodeling up to $10,000
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
These expenses will be incurred prior to launch. They are included in our financial projections as a negative retained earnings of $27 680 at the month’s end. It is included in the balance.
These are the required assets for starting a business:
- Cash in the bank in the total amount of $67,000, which includes enough to cover employees and owner’s salaries of $23,900 for the first two months and cash reserves for the first three months of operation (approximately $14,400 per month).
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Start-up inventory starting at $16,000. This includes:
- Coffee beans (12 regular brands and five decaffeinated brands) – $6,000
- Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – $7,900
- Retail supplies (napkins, coffee bags, cleaning, etc.) – $1,840
- Supplies for offices – $287
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Equipment worth $60,000
- Espresso machine – $6,000
- Coffee maker for $900
- Coffee grinder –, $200
- Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000
- Storage hardware (bins and utensil racks, shelves, food cases) #8211; $3720
- Counter area equipment (counter top, sink, ice machine, etc.) – $9,500
- Server area equipment (plates/glasses, flatware) #8211 $3,000
- Store equipment (cash register, security, ventilation, signage) – $13,750
- Office equipment (PC, fax/printer, phone, furniture, file cabinets) – $3,600
- Other miscellaneous expenses – $500
The company is funded by two main sources: bank loans and investments from owners. Arthur Garfield & James Polk have contributed $70,000 & $30,00, respectively. The total investments now stand at $140,000. $40,000 has been contributed by all other investors. The remaining $30,000 needed to cover the start-up expenses and assets came from the two bank loans–a one-year loan in the amount of $10,000 and a long-term (five years) loan of $20,000. Both loans were secured through the Bank of America. Therefore, the total start-up cost is $27,000
The balance sheet shows the amounts in the month preceding opening. Paid in Capital is what the $140,000 investment looks like. Negative retained earnings is shown for the $27,000 expense. Both assets and liabilities exist. All of this is based on financial standards.
