1. Jessie has prepared a business plan for opening a coffee shop. Coffee shops are quite common business for Australians. The industry trend and analysis indicate that, it has developed especially in the last five years. Considering the love of Australians towards the vibrant coffee culture and good quality coffee, the revenue in this industry is increasing and it is expected to reach minimum of 7% on an annual basis by the year 2017. This figure indicates that there has been a great boost over the years in this industry. Considering the plan made by Jessie, there are few strong points and weaknesses in this plan. Those are discussed below:
The primary strength of the business plan made by Jessie is that, it has predetermined and pragmatic mission. Since, the coffee industry is growing and more players are coming to the market with their new and innovative plans, while starting a new business it is very much significant to determine the mission and vision of the organization. The mission of the proposed coffee shop would be to give the most effort for creating a unique place for the consumers where they can socialize in a relaxing and comfortable environment. Along with that they will also be able to experience one of the best home-brewed coffees along with delicious snacks and pastries. Other than that, the business plan has determined its small term and long term objective in a transparent way. For the first month, a minimum of 10% profit has been expected as well, which is the primary short term goal for the café. However, considering the long term goals, the café has determined its objective to be selected as one of the best cafes by the local guides and food websites. Determining the objectives and fixing the short term goals are the two strongest points about the business plan. The business plan also contains the description of the expenses that can be required for the café, such as the promotional expenses, legal expenses, insurance fees, rent, consultation fees and other deposits and stationary expenses. The financial budget of the business has been written in details in the plan which is a major part of a business planning.
Other than the strong points in the business plan, the plan has several weak points as well. Those are listed below:
Unrealistic Budget Projections:
The business plan has projected few unrealistic monetary projections such as; it did not include the monthly salary of the owners. This is a major drawback of the plan. Also, the plan has considered the starting inventory budget of the café to be quite high. The owners may have some issues with the budget of the business at the initial stage. Since the owners do not have any sponsor currently, they have to arrange for the money themselves. Therefore, the budget needs to be reviewed before proceeding with the plan. The plan has also considered 10% profit for the first month of the business, which seems very unlikely for a start up business.
For every business, there is a target customer base. If the café targets the youngsters to be their major customers, they have to decorate the interiors according to that; however, if they target the middle aged or the old population, they have to outline their menu and decoration in accordance to that. This specifies the lack of market research before making the draft business plan.
The plan can also be considered to be a little over-hyped. Coffee business is quite common in Australia and there are several start ups all around the country. Therefore, the idea of the business is not very unique. Other than that, the plan also did not focus on having the competition in the market which is very high right now. Due to the growing revenue of this industry, there can be several players in the market with an almost similar idea. Therefore, it can also be said that the plan lacks a unique quotient.
The plan has detailed different sectors, while it has missed few important ones. However, sometimes the plan also put more information in the detailing which was unnecessary. Therefore, if this plan is presented to any of the sponsors, they might get bored with all the extra information in the plan.
2. The directors should proceed with the business plan, only if the plan is reviewed and changes are made at few major places. The plan lacks research and development of the business idea which indicates the plan to be a little vague. Entrepreneurs dream about their business plan for a long time, but in reality setting a business as it has been planned is the toughest job. The real challenge comes while the plan fails in reality. Therefore, making the practical plan before starting the job is very important for a business. For this coffee shop business, Jessie has made a draft plan where the other two directors, Stephen and Andrew had some issues. So, before considering this plan to be their final one, they require to make several changes in the outline. The primary changes that are to be made in the plan are listed below:
The plan lacks serious research and development. The author missed few major parts such as the salary of the first month, target customers, overall market trend of a certain age group etc. It is very much significant to make all the facts sure and verified. Before opening the coffee shop, the owners should ensure that they know the industry and the market in and out. They need to know about the market positioning, buying habits of the customers, market size and most importantly the market trends. However, the business plan did not mention anything. If this plan is presented to any sponsor, they will not get any kind of authentic statistics or data in the plan. Therefore, there are low chances of approving this business plan.
The very characteristics of the business plans say that there are several assumptions in it. It is the job of the owners that they should try their best to make all these assumptions true. They require highlighting all their assumption while they require providing adequate amount of authentic data and time for the market research. However, it seems from the business plan that it has been made in a hurry and it lacks market research. Other than that, it is not possible for the owners to make several decisions. For instance, the plan has aimed to have minimum of 10% profit in the first month; however, this is not quite likely for any start up business. It is possible that they may not have any profit in first two months. They should be financially prepared for it as well, so having this assumption is not pragmatic at all. Therefore, the other directors should not proceed with the existing plan, rather they need to contribute more time to the plan for appropriate market research and make an authentic one.
The plan seems to be more detailed whereas, at the same time, it lacks sufficient information at some major points. The author has detailed the financial budget of the coffee shop, but she has missed some major points such as the salary of the owners at the first month. There are several sections of the plan where the author has detailed the information more that it is required. However the author has included more technical details of the café decoration in the plan while it was not at all required in the plan. They could include all such details in the appendix because including them in the main plan would be very confusing for the sponsors. Therefore, the directors should make necessary changes according to the market research. The market research should be aimed to know about the market trend and targeting a specific sector of audience. Therefore they should conduct a detailed market research, otherwise they should not proceed with this plan.
The plan seems to be incomplete without identifying the basic sectors in any business. A complete plan always includes a detailed discussion of the specific industry, industry trend and target audience. These three major things are unavailable in this plan, so this can be considered as an incomplete plan. Therefore, if the directors want to consider doing business in the coffee industry, they need to complete the plan first doing sufficient market research.
It cannot be claimed that a business does not have any competition in the market. Moreover, coffee industry is quite a popular industry in Australia. Therefore, the competition is quite tough for any start up. However, the plan does not include any future plan for this difficulty. Also, due to the lack of market research, the plan could not target a specific audience; therefore they do not have a transparent idea about the market situation. A complete business plan should not be that way. Therefore before continuing with the plan, the directors should consider doing more research and development.
3. Apparently, it may seem that Andrew and Stephen are having issues with the business plan because they had no contribution to the plan. Since, Jessie had more experience in the business world; she has made the plan on her own. Along with that, she has claimed that she will be running it and others will just contribute money in the business. Therefore, she seems to be more autocratic, so other two partners do not feel comfortable with the plan. However, the plan already has several issues as it does not include significant points for the business. It lacks identifying the market trend and it has considered a huge amount of money to be included initially for the coffee shop. Therefore, considering that the other directors are justified to reject the plan. However the plan can be modified with appropriate market research and the plan could be developed. As this industry has growing revenues by every year, it has turned into a promising industry. Therefore, it can be said that even if it may seem that Andrew and Stephen had reservations with this plan only due to the personal reasons, but the real scenario does not support that. They may have issues with the plan becsue of the genuine drawbacks of the plan.
Jessie could remodel the plan if they want to go for this business. The possible solutions to this issue are listed below:
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