The Global Coffee Shop Business Plan

Coffee Shop

Confidentiality Agreement

The reader of this business plan is aware of the confidentiality of the information therein. The reader has agreed on the nondisclosure clause without permission from the Global Coffee Shop. Any disclosure without the permission of the Global Coffee Shop will be treated with malice and might attract legal redress as advised by the company secretary. This document is a property of the Global Coffee Shop and should be returned to this address when a notice is issued on the same.

Executive Summary

The proposed Global Coffee Shop is a multicultural cuisine business that aims at offering quality and unique cuisine services at competitive pricing for customers from different cultures and regions across the globe. The business will be owned by three partners with an equal share. The business will be operated from a centralized location at the headquarters in a private villa in Jumeirah Road the heart of Dubai with regional shops being opened annually in each of the nations in the Gulf area and beyond.

The location will be idyllic and perfect since it will provide easy access to the customers. There is no major coffee shop within the Jumeirah Road with the ability to offer multicultural cuisines at a competitive price. Since the proposed Global Coffee Shop will be based on the model of uniqueness and affordability, it is predicted that the company will quickly penetrate the expansive market since nearly every household within and without Dubai is a potential customer.

Company Description

Promoters, shareholders and Board

The business will be owned by three partners with an equal share. Since the three directors are owners of the business, the directors will take the roles chairman, chief executive officer, and chief financial officer because the business will be relatively small at the beginning of operations. In case a partner withdraws his or her shares, the other partners will buy the shares. The roles assigned to the owners of the business will be rotational every twelve months. The supervisor will report to the three directors while the other employees will report to the supervisor.

Advisors

The business will contract a legal expert to handle legal suits, a financial expert to advise on the financial aspects of the business, and marketing expert to facilitate the entry and expansion into the Dubai market. Other experts may be hired on a need basis.

Products and services

The innovative concept will have four corners with unique designs, decorations, and a food menu that will consist of traditional drinks and light meals inherited from the culture of the chosen country: An Emirati, Egyptian, Turkish and French corner. The coffee shop will be located in a private villa along Jumeirah Road in the heart of Dubai. A more innovative idea lies in having a duplex villa that would give the customer extra space for reading and business activity. Moreover, the first floor will be hosting events, training sessions, and meeting rooms for startup entrepreneurs and trainers. The coffee shop will be catering to any held event for a coffee break or brunch. A highly professional chef is already selected to serve the exquisite menu. Global Coffee shop’s multi-cultural menu will be served on tabs placed on each table with attractive pictures of food, customers’ feedback, and suggestion.

Long Term Aim of Business

The long terms aim of the business is to attract and maintain customers through the provision of convenience and high-quality multicultural cuisines that surpass the expectation of the clients.

Objectives

The experienced team at Global Coffee Shop, excellent locality, special and distinctive services as well as the strategic management team will be critical in the business’ undertakings. The short and long term objectives of the Global Coffee Shop are summarized below.

Short term goals

  1. The Global Coffee Shop aims to establish a strong customer base of 200 customers per meal after six months into the business. This goal will be used to benchmark future physical structure expansion strategies and recruitment of more staff.
  2. The business intends to acquire cooperate customers from more than twenty organizations within the first twelve months of operation. Through the corporate catering strategy, the business will aim at enticing this segment with a variety of foods and drinks as requested.
  3. The Global Coffee Shop aims to expand the customer segment to customers who may want to try its cuisines within a radius of five kilometers around the Jumeirah Road in the heart of Dubai.

Long term goals

  1. The Global Coffee Shop has the long term goal of establishing more food and drinks in its menu depending on the market demand and recommendations from the customers.
  2. The Global Coffee Shop intends to open two more branches in the outskirts of the Jumeirah Road to cater to customers who live in these places and may experience challenges in visiting the main restaurant.
  3. The Global Coffee Shop intends to increase its visibility within Dubai and it’s surrounding by establishing mobile food vending stores to capture the customer segment consisting of travelers and temporary campers.

S.W.O.T. Analysis

Strengths

The stable and management team comprising of three directors is instrumental towards providing necessary support and guidance in the provision of restaurant services to customers. Besides, the business has the Unique Selling Point (USP). Thus, the company has an advantage in its product on competitors. Global Coffee Shop has a solid understanding of the market because of its well-established business plan. Besides, it is the first of its kind in the Jumeirah Road in the heart of Dubai. Thus, the Global Coffee Shop position is to reap maximum benefits through the first-mover strategy.

Weaknesses

Global Coffee Shop is a start-up business so it has a high chance of failing because of the difficulties in starting up businesses. Furthermore, the lack of variety of products might also be a factor for the business to fail. Also, the business may not pick within the first six months since the target clients are not many in the region. As a result of these weaknesses, the business may not be able to efficiently penetrate the small restaurant business segment in Dubai.

Opportunities

The business has an opportunity to expand since it will be working with the corporate organizations and health clubs within the Jumeirah Road in the heart of Dubai. Therefore, Global Coffee Shop has experienced customers and referral marketers. As a result, the business will be in a position to double its current revenues projections and increase the customer base within the first six months of operation. Besides, the business is projected to benefit from the intended market expansion strategy since its services are the first of their kind within the restaurant industry. Also, the business has the opportunity of establishing a strong sustainability network through health clubs and corporate organizations.

Threats

Since the business is a threat to its competitors, they might retaliate by providing the public with similar products at a lower price. This will hurt the revenues of the Global Coffee Shop venture. Besides, conglomerate diversification would be a threat to the Global Coffee Shop should the business decision environment conspire against its goals. Since the Global Coffee Shop operates in a business environment where customer preference is very important, the business many suffer a massive loss should the customer preferences change due to one issue or another. The SWOT is summarized in the table below.

Market force Strength Weakness Threat Opportunity
Strategy Multicultural cuisine services Small market niche Changed preferences Business expansion
Technology Local magazine easily accessible Target client relatively traditional Changing media forms Online marketing
Competitive advantage Affordable prices Sustainability of the entry pricing Changing customer loyalty Business expansion
Political and economic conformity Free market Unstable business model Economic swings Establishment of more branches
Legal conformity Limited conformity requirements Sensitive business environment Tax regime Structured operations
Cultural aspects Conformity to Dubai culture Challenge of wining clients Changed customer preferences Opportunity for expansion
Process and systems A simple but effective system The limited scope of the system Limited staff due to low business turnover Opportunity for expansion

Market Analysis

Target market

The Global Coffee Shop targets customers of all ages since everybody eats the meals on its menu. However, the customers are further classified as low economic end consumers since the business will offer affordable meals from as low as one AED depending on the meal and time of visiting the restaurant. Fortunately, this consumer segment forms the majority of the residents of the targeted region.

Total market valuation

Dubai has become a green pasture for cultural cuisines because of the high demand in this region. The country has a unique market and taste for different cuisines, and this means that there is a need for multicultural cuisine shops to serve this market. The restaurant industry has also expanded, and the trend is set to improve in the coming years. In 2015, more than 1,000 coffee shops were opened in Dubai. Therefore, as the world restaurant industry grows at 4.5%, Dubai’s rate is 23%, which means that this region is experiencing rapid growth in the restaurant industry. At present, the coffee shop sector is valued at more than AED 300 million.

Targeted share

McDonald’s occupies the largest share of the market at 13%. The second position is held by the Starbuck brand, which has experienced steady growth over the years in the market share at 9%. The other businesses occupy the remaining market share. The largest market share occupied by McDonald’s and Starbuck can be attributed to the well-organized network and variety of cuisines. From the above analysis, Global Coffee Shop will have to come up with market penetration strategies to get a share of the market through strategies such us unique cuisines, affordable pricing, and quality service charter that matches or surpasses the current companies that dominate the market.

Market trends

The middle-aged clients, especially between the ages of 25-50 will be a major market target for Global Coffee Shop due to their elastic reactions to marketing. Additionally, Global Coffee Shop will target high-income earners since the richest individuals consume at least twice cuisines service compared to the poorest individuals who love coffee. In essence, the business will target everyone. Thus, the Global Coffee Shop is well-positioned to gain maximum benefits of the current and future free market opportunities. Despite competition from other brands, the above analysis indicates that Global Coffee Shop has the potential for further growth and expansion.

Profile of competitors

The main competitors for the Global Coffee Shop are summarized below.

McDonald’s

McDonald’s is the leader in the industry. McDonald’s has over twenty branches all over the city of Dubai. The firm has a distinct trademark as well as efficient delivery personnel. McDonald’s’ product philosophy is centered on quality and consumer satisfaction thereby gaining a competitive advantage over rivals.

Starbuck

Starbucks has diversified its operations in over 15 branches within and without Dubai. The business brilliance of the firm’s management has led to its rapid expansion within the city. Further, Starbucks’ low-price strategy has been vital to the attraction of consumers. The firm has also received various international quality accolades thereby amassing numerous consumers of different cuisines.

Competitive advantage

The owners and marketers of Global Coffee Shop will adopt five-stage processes to assess the business because banks are unresponsive to invest a large amount for the projects viewed as non-viable. The Global Coffee Shop team will identify unique characteristics of their services by comparing with the cuisine services of the competitors, assess the emotional demand from the perspective of the customers, and find out the limitations of the competitors. These procedures will help the management to avoid risks of an investment to some extent. The business will design a unique campaign plan to move forward as well as an again competitive advantage.

Benefits to clients

Global Coffee Shop will offer a new service that will be the first in the area which is the multicultural cuisine product range. The Global Coffee Shop will offer free and extra services to devoted clients such as discounts, free delivery, and snacks.

Marketing/Sales Strategy

Income sources

The business will derive income sources from direct sales within the shop, mobile restaurant services, sale of menus, and snacks.

Marketing strategy

The main strength of Global Coffee Shop will be the presence of a well-established marketing network since it is the only company that will offer multicultural cuisines. As a result, the Global Coffee Shop will be able to reduce the cost of advertisement since it will depend on referrals from satisfied customers and free services to widen its catchment. The threat faced by the Global Coffee Shop in executing the proposed marketing plan is stiff competition.

The current opportunities for the Global Coffee Shop include advancement in technology and information in reaching the market by integrating different aspects of marketing communication in the proposed marketing plan. The main impediment facing the Global Coffee Shop is the challenge of continuous expansion in the backdrop of customer concerns on the quality and affordability of the multicultural cuisines. The proposed marketing strategy to address this shortfall is discussed below.

The Global Coffee Shop products will be positioned as the first of their kind in the Dubai market. As the first player for this kind of multicultural cuisine, it will be easy to project a steady market share gain within fifteen months after the implementation of marketing management. As a result, a permanent and positive image of the Global Coffee Shop will be glued in the minds of the clients.

Psychographics refers to “the study of the values, personality, attitudes, opinions, lifestyles, and interests” (Cheverton 2012, p. 26). Purchasing trends continue to progress proportionately to evolving psychographics. Consumer behavior is increasingly being influenced by host factors including; wealth propensity, behavioral proclivities, globalization, cultural discernment, and enhanced education. This has driven the acceptance of branding and particular store brands as people become aware of their value.

They are willing to evolve their lifestyles more to sample store brands as much as national brands. In the context of the Global Coffee Shop, psychographics refers to the data on the lifestyles of its customers, which they use in creating customer profiles. This information is important to the company, especially when it comes to market segmentation. In particular, Global Coffee Shop will use this information in market segmentation based on lifestyles, social class, and personality attributes.

Branding is a “name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition” (Cheverton 2012, p. 174). The objective of the business will be to penetrate the coffee shop market in Dubai through the provision of affordable and customized cuisines. The business will accentuate on customer satisfaction and quality services as a strategy for upholding its position as the preferred coffee shop for customers looking for multicultural cuisines.

To diversify market operations, the Global Coffee Shop will create multiple products depending on the origin of the customer and preference. As a result, this will create an environment of its competition and block other competitors from encroaching into this customized market. These sub-products and services will be differentiated by features, prices, and differences in the level of customization as requested by clients.

The marketing management plan will be implemented within 12 months since the Global Coffee Shop operates in a dynamic environment. The Global Coffee Shop will outsource the service of social media advertising through two popular sites, that is, Facebook and Twitter. Basically, “it will cost a company $2,000-$4,000 per month to launch a twitter account and outsource the content creation and consumer interaction.

Advertising on Facebook is even higher with online PR agencies charging an average of AED 1, 500-AED 2, 000 per month” (Mariotti 2011, p. 45). This translates into AED 24, 000 during the 12 months of implementation. The marketing plan for the Global Coffee Shop will be implemented against the backdrop of continuous progress report through the management team. The tracking system will be reviewed every three months and adjustments made as necessary. To minimize the risks such as increased cost and changed customer preference, the plan will be evaluated at each implementation stage against the expectations.

Pricing

The company will use the ‘good, better, best’ pricing strategy comprising of discounts for every product sold during the period of market entry (Mariotti 2011). Therefore, the company will be able to attract customers from the young adults’ market segment and achieve the aim of quantity maximization by increasing the number of products sold at a discount. The standard product will be priced as ‘better’ while the customized product as ‘best’.

These prices will be set below the market price of the competitors. In the establishment of the Global Coffee Shop’s product prices, essential factors will be considered and taken care of. These are the sensitivity of the company to its customers’ interest, the market prevalence, and the products to be sold. A vigorous research team will be instituted to overlook the possible pricing strategies that do not infringe on the economic status of the customers in offering affordable multicultural cuisines (Mariotti 2011).

Advertising and Promotion

The business will adopt flexible and proactive advertisements meant to appeal to each customer segment. Besides, the business will have a series of after-sales services such as discounts, coupons, and rewards to customers who make the highest number of periodic visits to the coffee shop. The business will use direct, online, and database marketing through its Business-to-Consumer (B2C) and e-commerce models (Cheverton 2012).

The main objective of the promotion plan is to attract the customers’ market through the company’s website and fan pages to increase the customer traffic for the Global Coffee Shop products. The objective aims at packaging the Global Coffee Shop as a favorite of customers who want coffee drinks that can be associated with their culture. Through massive recruitment of online fans in the Twitter and Facebook pages, the company will not only benefit from increased traffic of online compliments but also record high rates of customer loyalty as most customers are influenced by reactions from other clients.

Sales Strategy

The business will engage traditional and online sales strategies to reach customers. Under the traditional method, sales will be done at the store through direct interaction with the customers. The online method will be used through different apps to reach customers.

Research & Development

Patents, copyrights, and brands

Since the company will be registered under the Dubai commerce laws, the owners will patent the unique menus. The provision of patent and trademark rights in Dubai will help the business to eliminate the chances of fraudulent attempts on a company’s product to ensure that the Global Coffee Shop is not disadvantaged. The business could take up this as an assurance of the protection to be offered to their products against illegal dealers.

Product/Service Development

The business will develop a series of menus for different cuisines. The innovative concept will have four corners with unique designs, decorations, customs of waiters, and a food menu that would consist of traditional drinks and light meals inherited from the culture of the chosen country: An Emirati, Egyptian, Turkish and French corner.

R&D

The business will invest in research and development to discover the latest mechanical service technologies and perfect the current practices. The business will establish a research and development department to concentrate on quality assurance in the products and services it offers as a strategy for guaranteeing sustainable competitive advantage. The research and development department will also perform the role of the creation of new brands of products and services for the company. Besides, the head office in Dubai, the business will establish four sub-research and development centers within the region and a mobile unit that will serve the large corporate organization.

Staffing and Operations

Management Organization Charts

The type of organizational chart illustrated for Global Coffee Shop is the traditional hierarchal structure. This means that the reporting procedure is aligned to a specific grid since persons that have similar roles are pooled in terms of assignments in the organization. The organization chart of the organization allows from close monitoring of activities within the headquarters and interests in divisions. As a result, the managers report to a single higher authority in the organization (Mariotti 2011). For instance, the supervisor reports to the three directors while specialized attendee reports to the supervisor. At the bottom of the grid, the general attendees and marketing team report directly to the supervisor. This is summarized in the chart below.

Management Organization Charts

Staffing

Employee selection will be focused to evaluate resumes of applicants for essential requirements which include review analytical skills besides academic credentials. Through the aptitude test, the elimination of those lacking analytical skills is possible within minimal prejudice or biases. The staffing plan will incorporate the different aspects of recruitment such as gender balance, disability consideration, and experience to ensure that the employees reflect the face of Dubai. Concerning the Global Coffee Shop, the management team will consist of the operations director, marketing director, and supply chain director.

All the directors are owners of the business. Under the directors, there will be supervisors who will manage the chefs and the employees who serve the customers. Also, the business proposes to have a standby marketing team consisting of two employees. The business will adopt the inverted triangle management model whereby the employees will have to take most of the responsibilities with the directors limited to leadership and goal setting. This is summarized in the job descriptions below.

Job descriptions

Operations Director

  • Managing the daily operation of the Global Coffee Shop business.
  • Providing administrative roles.
  • Planning the duties and responsibilities of the employees.
  • Tracking the performance of the employees against the set targets.
  • Briefing the other directors of the concerns and success of each stage of the business.
  • Creating and generating bi-monthly reports and other invoices of the business.
  • Managing the petty cash and the restaurant’s invoices.

Marketing director

  • Managing the daily marketing activities of the Global Coffee Shop business.
  • Providing the administrative roles to the marketing team.
  • Planning the duties and responsibilities of the marketing team.
  • Tracking the performance of the marketing team against the set targets.
  • Briefing the other directors of the concerns and success of each stage of the marketing strategies.
  • Creating and generating bi-monthly marketing reports.

Supply chain director

  • Managing the daily operation of the Global Coffee Shop business in the department of supply chain.
  • Providing the administrative roles within the supply chain.
  • Planning the duties and responsibilities of suppliers.
  • Tracking the performance of the suppliers against the set targets.
  • Briefing the other directors of the concerns and success in the supply chain.
  • Creating and generating bi-monthly reports on supply chain.

Supervisor

  • Managing the daily operation of the Global Coffee Shop business.
  • Providing administrative roles.
  • Planning the duties and responsibilities of the employees.
  • Tracking the performance of the employees against the set targets.
  • Briefing the directors of the concerns and success of each stage of the business.

Chef

  • Generating different recipes for cooking different meals.
  • Cooking the meals and cuisines as requested by the customers.
  • Ensuring the cleanliness of the restaurant.
  • Planning the duties and responsibilities within the kitchen environment.
  • Offering creativity in food decoration.

Restaurant Attendee

  • Taking orders from the customers.
  • Performing public relations exercise with the customers.
  • Serving the customers.
  • Registering the complaints of the customers.
  • Providing administrative roles.
  • Briefing the supervisor of the concerns and success of each stage of the business.

Marketing Personnel

  • Providing administrative roles.
  • Planning the duties and responsibilities within the marketing plans.
  • Marketing the products of the business.

Job specifications

Supervisor

Qualification for Job:

  • Language skills: Fluent in English and the local language.
  • At least three years experience in a senior supervisor position.
  • University degree in business administration or a relevant field.
  • Proper knowledge of the modern management system and quality implementation.

Marketing personnel

Qualification for Job:

  • Language skills: Fluent in English and the local language.
  • At least three years experience in a similar position.
  • High school education.
  • Proper knowledge of modern marketing skills.

Chef

Qualification for Job:

  • Language skills: Fluent in English and the local language.
  • At least three years experience in the same position in a busy response.
  • University diploma in home economics and catering or a relevant field.
  • Proper knowledge of modern cooking styles.

Restaurant attendees

Qualification for Job:

  • High school certificate.
  • Ability to work under pressure.
  • Language skills: Fluent in English and the local language.
  • One year of experience in serving customers in a busy restaurant.

Training Plans

Continuous training of the employee is critical towards the optimal performance and sustainability of the business. In the case of the Global Coffee Shop, the supervisor will have the duty of creating a continuous training program for the employees. The training program will be delivered in three phases after every three months or when the need arises before the three months. The first training phase will deal with the general operations of the Global Coffee Shop and basic rules of engagement.

The second phase of the employee training will deal with talent development, communication development, creativity, and professionalism with the Global Coffee Shop. The last phase will deal with quality addition and customer relations exercises such as office etiquette, response to customer complaints and compliments, and philosophy of the Global Coffee Shop.

Operations

The business will have to restructure the organization in a way that allows for the implementation of continuous quality management systems to ensure that the interests of the customers and employees are served. The staff would need to adapt to the new requirement of learning the dynamic communication system in a bid to accomplish the goals of the Global Coffee Shop. The goals of improving control systems are to improve the efficiency and effectiveness of the current model of service delivery between the employees and the business through the incorporation of multicultural training. Besides, it will ensure that the various available methods of service delivery appeal to the financial health of the Global Coffee Shop.

The objectives of the proposed control systems will ensure that the business improves the standard of the working environment and increase the number of clients that the organization handles daily in a bid to accomplish the organization’s objectives. Also, it will help the Global Coffee Shop to avoid expenditure that would jeopardize the running of the organization’s basic activities and increase the number of staff available to attend to clients without creating undue pressure on the finances.

Financial Projections

Key Assumptions

The business will ensure that proper bookkeeping, vouching, financial statements, reconciliations, financial management, auditing, and proactive fund allocation strategies are observed. The company will apply the SunSystem accounting system to manage the financial aspects of the Global Coffee Shop.

Profit and Loss Accounts

Global Coffee Shop. Income statement. For the three years ended 31st December 2019.

2017 2018 2019
Sales 1,275,000 1,338,750 1,445,850
Less: Cost of Sales -522,000 (548,100) (591,948)
Gross Profit 753,000 790,650 853,902
Fixed Expenses:
Worker wages 186,000 195,300 210,924
Rent 99,600 104,580 112,946
Electricity and Other Utilities 17,040 17,892 19,323
Other Administrative Expenses 12,240 12,852 13,880
Sales Promotion 20,600 21,630 23,360
Total Expenses -335,480 (352,254) (380,434)
Operating Profit 417,520 438,396 473,468
Interest -53,400 (56,070) (60,556)
Depreciation -23,200 (24,360) (26,309)
Interest and Depreciation 76,600 80,430 86,864
Profit for the year before tax 340,920 357,966 386,603
Less: Taxation (30%) -102,276 (107,390) (115,981)
Net Profit 238,644 250,576 270,622

Balance Sheets

Global Coffee Shop. Balance sheet statement. As of 31st December 2019.

Description 2017 2018 2019
Fixed Assets
Property, Plant, and Equipment 348,000 365,400 394632
Less: Depreciation 23,200 24,360 26,309
Total Fixed Assets: 324,800 341,040 368,323
Current Assets:
Cash balance 431,270 452,834 489,060
Accounts receivable 89,250 93,713 101,210
Rent Advance 99,600 104,580 112,946
Total Current Assets 620,120 651,126 703,216
Current Liabilities:
Accounts Payable 70,000 73,500 79,380
Tax Payable 102,276 107,390 115,981
Total Current Liabilities 172,276 180,890 195,361
Networking capital 447,844 470,236 507,855
Total Assets 772,644 811,276 876,178
Source of Fund:
Long-term Loan 380,000 399,000 430,920
Capital 154,000 161,700 174,636
Net Profit for the year 238,644 250,576 270,622
Total Equity 392,644 412,276 445,258
Total Sources 772,644 811,276 876,178

Cash flow Projections

Global Coffee Shop. Cash flow budget statement. For the three years ended 31st December 2019

The year 2017
Particulars Startup Quarter 1 Quarter 2 Quarter 3 Quarter 4 2017 2018 2019
Estimated Sales 6000 11500 13000 19,500 50,000 52,500 56,700
Sales Revenue 153000 293250 331500 497,250 1,275,000 1,338,750 1,445,850
Cash Inflow
Accounts Receivable 153000 293250 325125 465,375 1,185,750 1,245,038 1,344,641
Initial capital 154,000 0 0 0 0 154,000 161,700 174,636
Total debt 534,000 0 0 0 0 534,000 560,700 605,556
Total (A) 688,000 153000 293250 325125 465,375 1,873,750 1,967,438 2,124,833
Cash outflow
Accounts Payable 61100 143600 167200 175,500 547,400 574,770 620,752
Worker wages 39900 39900 39900 39,900 186,000 195,300 210,924
Factory Rent 24900 24900 24900 24,900 99,600 104,580 112,946
Electricity and Utilities 4260 4260 4260 4,260 17,040 17,892 19,323
Other Admin expenses 3060 3060 3060 3,060 12,240 12,852 13,880
Sales Promotion 8240 4120 4120 4,120 20,600 21,630 23,360
Interest 13350 13350 13350 13,350 53,400 56,070 60,556
Property, Plant and Equipment 348,000 0 0 0 0 348,000 365,400 394,632
Rent advance 99,600 0 0 0 0 99,600 104,580 112,946
Loan Repayment 0 0 0 154,000 154,000 161,700 174,636
Total (B) 447,600 154810 233190 256790 419,090 1,063,880 1,117,074 1,206,440
Net cash (A) – (B) 240,400 -1810 60060 68335 46,285 431,270 452,834 489,060
Opening balance 698040 794300 974555 1,281,960 496,155 431,270 452,834
Closing Cash 240,400 696,230 854360 1042890 1,346,245 431,270 452,834 489,060

Sales Pipeline

Name of Customer Size of Deal (AED) per annum Date PO expected Probability % of Getting Sale
Corporate institutions 200,000 Within the first 12 months 60%
Individual customers 800,000 Within the first 12 months 80%
Government agencies 400,000 Within the first 12 months 40%
Private corporations 300,000 Within the first 12 months 70%

Funding Requirements

The initial capital proposed to be introduced is set at AED 154,000 and the venture will try to arrange for a long-term loan of AED 534,000 with an interest rate of 10% payable quarterly. The repayment of the loan will take place in 5 years. For calculating the cash flow, sales will be made both on cash and credit and there will be accounts payable of 15 days outstanding. Similarly, for the supplies of materials, the venture will enjoy a credit period of 15 days. The venture will invest AED 348,000 in property, plant, and equipment and this amount will include the cost of furniture, fittings, and office equipment.

Business financing has become a challenge for those aspiring to expand an existing business or start a business. Thus, this part attempts to explicitly review the sources of funding options available for the Global Coffee Shop. Besides, it explores the cost aspects of each source of business financing and the importance of financial planning.

The internal financing options available for the company include personal sources such as retained profits and share capital. The retained profit is the funds generated by the initial business when it profitably trades. Considering the duration that the company has taken, the shared profits will substantially contribute to the funding for the Global Coffee Shop. Reflectively, retained profits are necessary is financing the further expansion of the company since the business has the potential of making consistent sales. Besides, the company has the option of acquiring funding from the share capital which has been the main source of funding for the startup.

Among the most viable external funding sources available for the Global Coffee Shop include loan capital in the form of bank overdraft or bank loan, engaging external investors, and convincing business angels to be part of the company. Under a bank loan option, the Global Coffee Shop Limited will be in a position to receive funding that is fixed over some time. The loan(s) will attract different interest rates, depending on the type and amount that the business will borrow. Reflectively, bank loans are repaid over a longer period and repayment schedules are fixed.

Besides the bank loan, the Global Coffee Shop has the option of acquiring financing through a bank overdraft. Bank overdraft is a short term loan. Bank overdrafts are a very flexible source of business financing since they can be used to handle temporary cash flow fluctuations in the company. Besides, bank overdrafts may offer the company a lifeline when it experiences temporary cash flow challenges. Another source of financing available for the Global Coffee Shop is the use of funds from outside investors such as contributions from family, friends, and interested investors who will be given shares in the company according to their contribution. The fund contributors will be allocated shares in line with the total capital that the company requires for the expansion of the business.

Reference List

Cheverton, P 2012, Key marketing skills: Strategies, tools, and techniques for marketing success, Kogan Page, London, UK.

Mariotti, S 2011, Entrepreneurship: Starting and Operating a Small Business, Prentice Hall, New York, NY.