Jolly ‘s Java and Bakery ( JJB ) is a start-up java and bakeshop retail constitution located in southwest Washington. JJB expects to catch the involvement of a regular loyal client base with its wide assortment of java and pastry merchandises. The company plans to construct a strong market place in the town, due to the spouses ‘ industry experience and mild competitory clime in the country.
JJB purposes to offer its merchandises at a competitory monetary value to run into the demand of the middle-to higher-income local market country occupants and tourers.
The Company
JJB is incorporated in the province of Washington. It is every bit owned and managed by its two spouses.
Mr. Austin Patterson has extended experience in gross revenues, selling, and direction, and was frailty president of selling with both Jansonne & A ; Jansonne and Burper Foods. Mr. David Fields brings experience in the country of finance and disposal, including a stretch as main fiscal officer with both Flaxfield Roasters and the national java shop concatenation, BuzzCups.
The company intends to engage two full-time pastry bakers and six parttime baristas to manage client service and twenty-four hours to twenty-four hours operations.
Merchandises and Servicess
JJB offers a wide scope of java and espresso merchandises, all from high quality Columbian grown imported java beans. JJB caters to all of its clients by supplying each client java and espresso merchandises made to accommodate the client, down to the smallest item.
The bakeshop provides newly prepared bakeshop and pastry merchandises at all times during concern operations. Six to eight moderate batches of bakeshop and pastry merchandises are prepared during the twenty-four hours to guarantee fresh baked goods are ever available.
The Market
The retail java industry in the U.S. has late experienced rapid growing. The cool Marine clime in southwest Washington stimulates ingestion of hot drinks throughout the twelvemonth.
JJB wants to set up a big regular client base, and will therefore concentrate its concern and selling on local occupants, which will be the dominant mark market. This will set up a healthy, consistent gross base to guarantee stableness of the concern. In add-on, tourer traffic is expected to consist about 35 % of the grosss. High visibleness and competitory merchandises and service are critical to capture this section of the market.
Fiscal Considerations
JJB expects to raise $ 110,000 of its ain capital, and to borrow $ 100,000 guaranteed by the SBA as a ten-year loan. This provides the majority of the current funding required.
JJB anticipates gross revenues of approximately $ 491,000 in the first twelvemonth, $ 567,000 in the 2nd twelvemonth, and $ 655,000 in the 3rd twelvemonth of the program. JJB should interrupt even by the 4th month of its operation as it steadily increases its gross revenues. Net incomes for this clip period are expected to be about $ 13,000 in twelvemonth 1, $ 36,000 by twelvemonth 2, and $ 46,000 by twelvemonth 3. The company does non expect any hard currency flow jobs.
Company Summary
JJB is a bakeshop and java shopA managed by two spouses. These spouses represent sales/management and finance/administrationA countries, severally. The spouses will supply support from their ain nest eggs, which will cover start-up disbursals and supply a fiscal shock absorber for the first months of operation. A ten-year Small Business Administration ( SBA ) A loan will cover the remainder of the needed funding. The company plans to construct a strong market place in the town, due to the spouses ‘ industry experience and mild competitory clime in the country.
2.1 Company Ownership
JJB is incorporated in the province of Washington. It is every bit owned by its two spouses.
2.2 Company History
JJB is a start-up company. Financing will come from the spouses ‘ capital and a ten-year SBA loan. The undermentioned chart and table illustrate the company ‘s jutting initial start-up costs.
Merchandises
JJB offers a wide scope of java and espresso merchandises, all from high quality Columbian grown imported java beans. JJB caters to all of its clients by supplying each client java and espresso merchandises made to accommodate the client, down to the smallest item.
The bakeshop provides newly prepared bakeshop and pastry merchandises at all times during concern operations. Six to eight moderate batches of bakeshop and pastry merchandises are prepared during the twenty-four hours to guarantee fresh baked goods are ever available.
Market Analysis Summary
JJB ‘s focal point is on run intoing the demand of a regular local occupant client base, every bit good as a important degree of tourer traffic from nearby main roads.
4.1 Market Segmentation
JJB focuses on the middle- and upper-income markets.A These marketA segmentsA devour the bulk of java and espresso merchandises.
Local Residents
JJB wants to set up a big regularA client base. This will set up a healthy, consistent gross base to guarantee stableness of the concern.
Tourists
Tourist traffic comprises about 35 % of the revenues.A High visibleness and competitory merchandises and service are critical to capture this section of the market.
4.1.1 Market Analysis
The chart and table below outline the entire market potency of the above described client segments.A
4.2 Target Market Segment Strategy
The dominant mark market for JJB is a regular watercourse of local occupants. Personal and expedient client service at a competitory monetary value is cardinal to keeping the local market portion of this mark market.
4.2.1 Market Needs
Because Washington has a cool clime for eight months out of the twelvemonth, hot java merchandises are really much in demand.A During the staying warmer four months of the twelvemonth, iced java merchandises are in significantly high demand, along with a slower but consistent demand for hot java merchandises. Much of the twenty-four hours ‘s activity occurs in the forenoon hours before 10 a.m. , with a comparatively steady flow for the balance of the twenty-four hours.
4.3 Service Business Analysis
The retail java industry in the U.S. has late experienced rapid growing. The cool Marine clime in southwest Washington stimulates ingestion of hot drinks throughout the twelvemonth. Coffee drinkersA in the Pacific Northwest are finical about the quality of drinks offered at the legion java bars across the part. Despite low competition in the immediate country, JJB will place itself as a topographic point where clients can bask a cup of delightful java with a fresh pastry in a relaxing environment.
4.3.1 Competition and Buying Patterns
Competition in the local country is slightly thin and does non supply about the degree of merchandise quality and client service as JJB.A Local clients are looking for a high quality merchandise in a loosen uping atmosphere.A They desire a unique, posh experience.
LeadingA competitorsA purchase and joint high quality, whole-bean javas and, along with Italian-style espresso drinks, cold-blended drinks, a assortment of pastries and sweets, coffee-related accoutrements and equipment, and a line of premium teas, sell these points chiefly through company-operated retail shops. In add-on to gross revenues through company-operated retail shops, taking rivals sell java and tea merchandises through other channels of distribution ( forte operations ) .
Larger chainsA vary theirA merchandise mix depending upon the size of each shop andA its location. Larger shops carry a wide choice ofA whole bean javas in assorted sizes and types of packaging, every bit good as an mixture of coffee- and espresso-making equipment and accoutrements such as java bombers, java shapers, espresso machines, java filters, storage containers, travel tumblers and mugs. SmallerA shops and booths typically sell a full line of java drinks, a more limited choice of whole-bean javas, and a few accoutrements such as travel tumblers and logo mugs.A During financial twelvemonth 2000, industryA retail gross revenues mix by merchandise type was about 73 % A drinks, 14 % nutrient points, eightA per centum whole-bean javas, and five per centum coffee-making equipment and accoutrements.
Technologically savvy competitorsA make freshA java and coffee-related merchandises handily available via mail order and online. Additionally, A mail order catalogsA offeringA javas, certain nutrient points, and choice coffee-making equipment and accoutrements, have been made available by a few larger competitors.A Websites offering on-line storesA that allow clients to shop for and purchase java, gifts, and other points via the Internet have become more commonplace every bit good.
Scheme and Implementation Summary
JJB will win by offering consumersA high quality java, espresso, and bakeshop merchandises with personal service at a competitory monetary value.
5.1 Competitive Edge
JJB ‘s competitory border is the relativelyA low degree of competition in the local country in this peculiar niche.
5.2 Gross saless Scheme
As the chart and table show, JJBA anticipates gross revenues of approximately $ 491,000A in the first twelvemonth, $ 567,000 in the 2nd twelvemonth, and $ 655,000 in theA 3rd twelvemonth of the program.
Gross saless Forecast
2001
2002
2003
Unit of measurement Gross saless
Espresso Drinks
135,000
148,500
163,350
Pastry Items
86,000
94,600
104,060
Other
0
0
0
Entire Unit Gross saless
221,000
243,100
267,410
Unit of measurement Monetary values
2001
2002
2003
Espresso Drinks
$ 3.00
$ 3.15
$ 3.31
Pastry Items
$ 1.00
$ 1.05
$ 1.10
Other
$ 0.00
$ 0.00
$ 0.00
Gross saless
Espresso Drinks
$ 405,000
$ 467,775
$ 540,280
Pastry Items
$ 86,000
$ 99,330
$ 114,726
Other
$ 0
$ 0
$ 0
Entire Gross saless
$ 491,000
$ 567,105
$ 655,006
Direct Unit of measurement Costss
2001
2002
2003
Espresso Drinks
$ 0.25
$ 0.26
$ 0.28
Pastry Items
$ 0.50
$ 0.53
$ 0.55
Other
$ 0.00
$ 0.00
$ 0.00
Direct Cost of Gross saless
Espresso Drinks
$ 33,750
$ 38,981
$ 45,023
Pastry Items
$ 43,000
$ 49,665
$ 57,363
Other
$ 0
$ 0
$ 0
Subtotal Direct Cost of Gross saless
$ 76,750
$ 88,646
$ 102,386
Management Summary
Austin Patterson has extensiveA experience in gross revenues, selling, and direction, and was frailty presidentA of selling with both Jansonne & A ; Jansonne and Burper Foods.A DavidA Fields brings experience in the country of finance and disposal, includingA a stretch as main fiscal officerA with both Flaxfield RoastersA and the national java shop concatenation, BuzzCups.
6.1 Forces Plan
As the forces program shows, A JJB expects to do important investings in gross revenues, gross revenues support, and merchandise development forces.
Forces Plan
2001
2002
2003
Directors
$ 100,000
$ 105,000
$ 110,250
Pastry Bakers
$ 40,800
$ 42,840
$ 44,982
Baristas
$ 120,000
$ 126,000
$ 132,300
Other
$ 0
$ 0
$ 0
Entire Peoples
10
10
10
Entire Payroll
$ 260,800
$ 273,840
$ 287,532
Fiscal Plan
JJB expects to raise $ 110,000A of its ain capital, and to borrow $ 100,000 guaranteed byA the SBA as a ten-year loan.A This provides the majority of the current funding required.
7.1 Break-even Analysis
JJB ‘s Break-even Analysis is based on the norm of the first-yearA figures for entire gross revenues by units, and by operating disbursals. These are presented as per-unit gross, per-unit cost, and fixed costs.A These conservative premises make for a more accurate estimation of existent hazard. JJB should interrupt even by theA 4th month of its operation as it steadilyA increases its gross revenues.
Break-even Analysis
Monthly Unit of measurements Break-even
17,255
Monthly Revenue Break-even
$ 38,336
Premises:
Average Per-Unit Gross
$ 2.22
Average Per-Unit Variable Cost
$ 0.35
Estimated Monthly Fixed Cost
$ 32,343
7.2 Jutting Net income and Loss
As the Net income and Loss tabular array shows, A JJB expects to go on itsA steady growing inA profitableness over the following three old ages of operations.
Pro Forma Profit and Loss
2001
2002
2003
Gross saless
$ 491,000
$ 567,105
$ 655,006
Direct Cost of Gross saless
$ 76,750
$ 88,646
$ 102,386
Other
$ 0
$ 0
$ 0
Entire Cost of Gross saless
$ 76,750
$ 88,646
$ 102,386
Gross Margin
$ 414,250
$ 478,459
$ 552,620
Gross Margin %
84.37 %
84.37 %
84.37 %
Expenses
Payroll
$ 260,800
$ 273,840
$ 287,532
Gross saless and Marketing and Other Expenses
$ 27,000
$ 35,200
$ 71,460
Depreciation
$ 60,000
$ 69,000
$ 79,350
Utilities
$ 1,200
$ 1,260
$ 1,323
Payroll Taxs
$ 39,120
$ 41,076
$ 43,130
Other
$ 0
$ 0
$ 0
Entire Operating Expenses
$ 388,120
$ 420,376
$ 482,795
Net income Before Interest and Taxes
$ 26,130
$ 58,083
$ 69,825
Earnings before interest taxes depreciation and amortization
$ 86,130
$ 127,083
$ 149,175
Interest Expense
$ 10,000
$ 9,500
$ 8,250
Taxs Incurred
$ 3,111
$ 12,146
$ 15,650
Net Net income
$ 13,019
$ 36,437
$ 45,925
Net Profit/Sales
2.65 %
6.43 %
7.01 %
7.3 Jutting Cash Flow
The hard currency flow projection shows thatA commissariats for ongoing disbursals are equal to run into JJB ‘s demands as the businessA generatesA hard currency flow sufficient to back up operations.
Pro Forma Cash Flow
2001
2002
2003
Cash Received
Cash from Operationss
Cash Gross saless
$ 491,000
$ 567,105
$ 655,006
Subtotal Cash from Operations
$ 491,000
$ 567,105
$ 655,006
Extra Cash Received
Gross saless Tax, VAT, HST/GST Received
$ 0
$ 0
$ 0
New Current Borrowing
$ 0
$ 0
$ 0
New Other Liabilities ( interest-free )
$ 0
$ 0
$ 0
New Long-term Liabilitiess
$ 0
$ 0
$ 0
Gross saless of Other Current Assetss
$ 0
$ 0
$ 0
Gross saless of Long-term Assetss
$ 0
$ 0
$ 0
New Investment Received
$ 0
$ 0
$ 0
Subtotal Cash Received
$ 491,000
$ 567,105
$ 655,006
Outgos
2001
2002
2003
Outgos from Operationss
Cash Spending
$ 260,800
$ 273,840
$ 287,532
Bill Payments
$ 143,607
$ 186,964
$ 237,731
Subtotal Spent on Operationss
$ 404,407
$ 460,804
$ 525,263
Extra Cash Spent
Gross saless Tax, VAT, HST/GST Paid Out
$ 0
$ 0
$ 0
Chief Repayment of Current Borrowing
$ 0
$ 0
$ 0
Other Liabilitiess Principal Repayment
$ 0
$ 0
$ 0
Long-run Liabilitiess Principal Repayment
$ 0
$ 10,000
$ 15,000
Purchase Other Current Assetss
$ 0
$ 0
$ 0
Purchase Long-term Assetss
$ 0
$ 20,000
$ 20,000
Dividends
$ 0
$ 0
$ 0
Subtotal Cash Spent
$ 404,407
$ 490,804
$ 560,263
Net Cash Flow
$ 86,593
$ 76,301
$ 94,744
Cash Balance
$ 156,593
$ 232,894
$ 327,637
7.4 Balance Sheet
The followers is a jutting Balance Sheet for JJB.
Pro Forma Balance Sheet
2001
2002
2003
Assetss
Current Assetss
Cash
$ 156,593
$ 232,894
$ 327,637
Other Current Assetss
$ 12,000
$ 12,000
$ 12,000
Entire Current Assets
$ 168,593
$ 244,894
$ 339,637
Long-run Assetss
Long-run Assetss
$ 65,000
$ 85,000
$ 105,000
Accumulated Depreciation
$ 60,000
$ 129,000
$ 208,350
Entire Long-term Assetss
$ 5,000
( $ 44,000 )
( $ 103,350 )
Entire Assetss
$ 173,593
$ 200,894
$ 236,287
Liabilitiess and Capital
2001
2002
2003
Current Liabilitiess
Histories Collectible
$ 14,574
$ 15,438
$ 19,907
Current Borrowing
$ 0
$ 0
$ 0
Other Current Liabilitiess
$ 0
$ 0
$ 0
Subtotal Current Liabilitiess
$ 14,574
$ 15,438
$ 19,907
Long-run Liabilitiess
$ 100,000
$ 90,000
$ 75,000
Entire Liabilitiess
$ 114,574
$ 105,438
$ 94,907
Paid-in Capital
$ 110,000
$ 110,000
$ 110,000
Retained Net incomes
( $ 64,000 )
( $ 50,981 )
( $ 14,544 )
Net incomes
$ 13,019
$ 36,437
$ 45,925
Entire Capital
$ 59,019
$ 95,456
$ 141,381
Entire Liabilitiess and Capital
$ 173,593
$ 200,894
$ 236,287
Net Worth
$ 59,019
$ 95,456
$ 141,381
7.5 Business Ratios
The following table represents cardinal ratios for the retail bakeshop and java store industry. These ratios are determined by the Standard Industry Classification ( SIC ) Index codification 5812, Eating Topographic points.
Ratio Analysis
2001
2002
2003
Industry Profile
Gross saless Growth
0.00 %
15.50 %
15.50 %
7.60 %
Percentage of Total Assets
Other Current Assetss
6.91 %
5.97 %
5.08 %
35.60 %
Entire Current Assets
97.12 %
121.90 %
143.74 %
43.70 %
Long-run Assetss
2.88 %
-21.90 %
-43.74 %
56.30 %
Entire Assetss
100.00 %
100.00 %
100.00 %
100.00 %
Current Liabilitiess
8.40 %
7.68 %
8.42 %
32.70 %
Long-run Liabilitiess
57.61 %
44.80 %
31.74 %
28.50 %
Entire Liabilitiess
66.00 %
52.48 %
40.17 %
61.20 %
Net Worth
34.00 %
47.52 %
59.83 %
38.80 %
Percentage of Gross saless
Gross saless
100.00 %
100.00 %
100.00 %
100.00 %
Gross Margin
84.37 %
84.37 %
84.37 %
60.50 %
Selling, General & A ; Administrative Expenses
74.74 %
71.43 %
71.39 %
39.80 %
Ad Expenses
0.49 %
1.76 %
6.87 %
3.20 %
Net income Before Interest and Taxes
5.32 %
10.24 %
10.66 %
0.70 %
Main Ratios
Current
11.57
15.86
17.06
0.98
Quick
11.57
15.86
17.06
0.65
Entire Debt to Total Assetss
66.00 %
52.48 %
40.17 %
61.20 %
Pre-tax Return on Net Worth
27.33 %
50.90 %
43.55 %
1.70 %
Pre-tax Return on Assetss
9.29 %
24.18 %
26.06 %
4.30 %
Extra Ratios
2001
2002
2003
Net Net income Margin
2.65 %
6.43 %
7.01 %
n.a
Tax return on Equity
22.06 %
38.17 %
32.48 %
n.a
Activity Ratios
Histories Collectible Employee turnover
10.79
12.17
12.17
n.a
Payment Dayss
27
29
27
n.a
Entire Asset Employee turnover
2.83
2.82
2.77
n.a
Debt Ratios
Debt to Net Worth
1.94
1.10
0.67
n.a
Current Liab. to Liab.
0.13
0.15
0.21
n.a
Liquidity Ratios
Net Working Capital
$ 154,019
$ 229,456
$ 319,731
n.a
Interest Coverage
2.61
6.11
8.46
n.a
Extra Ratios
Assetss to Gross saless
0.35
0.35
0.36
n.a
Current Debt/Total Assetss
8 %
8 %
8 %
n.a
Acid Test
11.57
15.86
17.06
n.a
Sales/Net Worth
8.32
5.94
4.63
n.a
Dividend Payout
0.00
0.00
0.00
n.a
