Business Plan

Executive Summary

The Steaming Mug Cafe is a start-up coffee and retail cafe located in Northern Colorado. It is dedicated to providing gourmet coffee and specialty drinks at a reasonable price. The Steaming Mug plans of attracting the attention of a customer base due to its variety of gourmet drinks and plans on competing in the nearby market. The business will meet the constant demand of coffee for avid drinkers and for those wanting to give themselves a treat.

BUSINESS CONCEPT
The business itself will be run by I, Mariana Avitia at Johnstown Colorado. The Steamig Mug will sell a variety of products including coffee, espressos, iced coffee blends, lattes and other coffee beverages. It will also sell other beverages and confections such as teas, smoothies and pastries. The products and services will be aimed and sold to the general public, mainly adults. This will be a cafe that will provide the coffee drinkers in the area an opportunity to enjoy a wide variety of gourmet coffee and drinks at reasonable prices.
The Steaming Mug will provide homemade food and drink on the spot and prominent elements of a great goods and services retail.

OPPORTUNITY
The high demand for coffee in recent years has skyrocketed to a point where most Americans drink coffee on a daily basis. Customers are no longer interested in the basic recipe of coffee and creamer, and new coffee varieties are now being made and purchased. Now, there is a variety of coffee drinks and exotic versions of it. Around 54% of Americans drink coffee each day, a total of around 100 million. 30 million of that amount consume specialty drinks (mochas, lattes, etc.) The Steaming Mug would provide to a portion of Americans who rely on their coffee on a daily basis.

MISSION
The Steaming Mug Cafe is dedicated to offering high quality food and drink at reasonable prices. Through its impeccable ambition, it will cater to the needs of its customers and ensure excellent products and services.

FINANCIAL NEEDS, IMPORTANT ASSUMTIONS, EARNINGS PROJECTIONS
The start-up cost of the business will be greater than or equal to $100,000 dollars. This includes all of the assets needed to start the business such as equipment, supplies, insurance and the down payment of the location. I plan on taking out a $200,000 loan from the SBA and pay it back in small increments for about forty years. My sales forecast and projected income will be based on the season and how many customers that are attracted to the business. The Steaming Mug will have to keep in mind that coffee sales will fall during the summer and adjustments will have to be made to the menu to make up for lost money. During times of success, the Steaming Mug will make around six thousand dollars on an average monthly basis.

Company Overview

Key objectives

• Establish a successful and well known business with a large clientele.
• Have a successful dominance over the local market.
• Establish a second location 5 years after the first one.
• Expand the menu as new ideas and trends progress.

LOCATION AND FACILITIES
The Steaming Mug will be located in the Huwa Building in Johnstown, Colorado. The building itself rests on 39 S. Parish Ave. It faces the main parts of the town between the intersection of Parish Avenue and Highway 60. This area of downtown is where most people think of when they hear the town's name, providing a location that is easy to remember. The cafe location is right next to the local dentist office. Overall, it has a square footage of 2065 sq. ft., with rent costing $2065 dollars a month.

ORGANIZATIONAL STRUCTURE
The small, start-up business does not require a high complexity of service and staff in order to run the business. But it does include the basic structure of a cafe, which includes its owner, manager, baristas, cashiers and employees. I, the founder and owner, plan on managing and overseeing the overall functions of the business. I will be filing the business' taxes and will be in charge of everything having to do with the accounting. All of the other employees have specific assigned jobs and tasks to do.

OWNERSHIP STRUCTURE
The Steaming Mug Cafe is a sole proprietorship with all ownership entitled to I, Mariana Avitia. The business will be a proprietorship because overall, it's the easiest to start and I as the owner know that I will be able to manage a small business by myself for a living. In terms of transferability, the business can easily be sold to anyone when ever I deem the need to do so. If by any reason the need to sell the business arises, then a tax attorney or accountant will be contacted for assistance.

Organizational Structure

Market opportunity analysis

Statistics

• Sales generated by top 50 coffee shop operators: 70%
• Sales generated by small coffee shop operators :30%
• 18-24 year olds who drink coffee each day: 40%
• Adults 25-39 who drink coffee each day: 54%
• U.S adults who drink coffee over: 75%

statistics

• Caffeine consumption represented by coffee: over 75%
• Annual Growth Rate: 7%
• Consumers who drink coffee from home: 86%
• Consumers who drink coffee out of home: 14%
• Worldwide Coffee Drinkers: 108.8 million

STatistics

• U.S coffee drinkers: 52 million, or 47.75%
• Market size: $8.96 billion as of 2003

As the statistics show, the overall market is large and grows a considerable amount each year. Not only is there a large amount of coffee consumers, but there is a large population of young adults who drink coffee. Most coffee drinkers begin their lifelong habit in their teenage years. Even coffee shop owners admit that some of their regular customers are in younger age groups. The coffee industry is one that is rapidly growing, the fastest segment in the food industry. As the demographics show, the size of the available market is quite large and building a successful coffee business will easily contribute to the coffee industry's expansion.

Product

The Steaming Mug will offer its customers two major benefits when shopping with us: homemade, quality products and great service. The products themselves will encompass a wide variety of drinks and pastries. From lattes and macchiatos to muffin tops, there will be a variety of product appearances. All of the materials needed to make these products will be obtained by retailers who sell them. Certain goods will be imported on an international level, such as the coffee itself. There cannot be a set price for one product as an example that encompasses the whole business. The reasons are because the business will sell a variety of products . But on average, most of the products will be around four dollars.

Due to the average expenses that are associated with making cafe products, the Steaming Mug will impose a minimum percentage markup of 50%. This will be done in order to provide the business with a profit to pay. Assuming that a specific product costs $3 dollars to make, $1.50 will be added to the product to make it a total of $4.50. Percentage markups will be done at reasonable pricings to gain a profit, while maintaining our promise to provide our customers with affordable products.

PROMOTION
The Steaming Mug will promote itself with billboards, flyers, people with signs, and by handing out business cards. The billboard on highway 60 between Johnstown and Milliken will be used to promote the Steaming Mug at least during the beginning of the business to gather clientele. Flyers will be printed out and posted throughout the town, even at schools. During festive events such as the Johnstown BBQ Days, people will be assigned to hand out promotional flyers as well. Also, The Steaming Mug will pay for advertisements on the newspaper. All fo these things will be mainly done when the business has started, and before opening day.

PERFORMA CASH FLOW
On a monthly basis, I should be making around six thousand dollars, depending on how good business is. This is a rough estimate coming from the results of my data. I should be starting with around four thousand on a monthly average as I accumulate money from months prior to use in the next month. Business slows down according to seasons, especially in the summer, so there are months where I won't be making as much money than in the winter.

BREAK-EVEN ANALYSIS
*Fixed Cost: $6554
*Price: $4
*Variable Cost: $1 average
6554/(4-1)
6554/3
I would need to sell around 2,100 products on a daily average in order to be able to make a profit. (yikes)

Sources

• "Coffee Drinking Statistics". Statistic Brain.n.p.1 Jan, 2014.Web. 9 Apr.14