Business plan
Written By:
Haseeb Ur Rehman Shaikh Mansoor Malik Saima Mustafa Supro Shuaib Ahmed Narejo
Submitted To :
Disclaimer: This document is written solely for the purpose of submission and grading to Mr. Faiz Muhammad Khuaja as a class project for the subject of Entrepreneurship. This document cannot be copied or Edited without the permission of all four authors in written.
1 Introduction
1. About SHMS Coffee
There is growing recognition of the need for new Brands in market place. Consumers are demanding more than product from their favorite brands. In todays competitive environment, everyone wants to have such type of Products which satisfy the. Coffee is second only to water as the worlds most popular drink, with more than 400 billion cups consumed every year. Coffee is a giant industry employing 20 million people globally, and ranks as the second most traded commodity on the planet after petroleum.
Location
Keeping in view the industry and need of customer we little champs start SHMS Coffee Shop in the area of Defense Phase-II Ext. Karachi. We offer Seasoned based coffee with different Flavors. We offer satisfaction of consumer needs by providing great customer service experience and Quality product.
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Saima Mustafa supro Email: Saima.mustafa@iba-suk.edu.pk Add: House# 211 Shahi Bazar Naudero, Larkana.
Shuaib Ahmed Narejo Email: Shuaib.ahmed@iba-suk.edu.pk Add: House# 789 Narejo House Khairpur Mirs
Mansoor Ahmed Malik Email: mansoor.ahmed@iba-suk.edu.pk Add: Malik, House near post office Naushehro Feroz.
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3 Industry Analysis
3.1 Future outlooks And Trends. Economy has major role in success or failure of any business hence our business would also be affected in a way that if interest rate is increased or decreased the tax system, the inflation rate, population size, Per capita Income and so forth. 1 Inflation rate: Inflation is very volatile in Pakistan, currently 13%, in last quarter it was jumped from 10.2 to 16.5%, which will strongly affect the prices of Coffee and pricing strategy, but as we operating in Defense Area and High Class, it will be very little effect on sales in terms of Change in Price and so forth. 2 Outright Prices: Coffee prices can be negotiated either at outright prices or in relationship to the prevailing wholesale price. We at SHMS will give preference today is to source coffee at outright prices. This provides stability and predictability for both buyers and sellers. In fiscal 2011, 12 percent of coffee supply 74 percent of green coffee will be purchased at outright prices. 3 Per Capita Income: One of the Positive indicator for our business operations, Per Capita Income Jumps from $1206 per year to $3100 in 2011, which means people having more money to spent for consumption which will positively affect the sales of Coffee. 4 Population size: Population size also increases in Pakistan, and 65 of Population in the age bracket of 20 to 40, the youth we are targeting the major portion of population size, which will strongly positive for our Coffee sales and so forth. Apart from that Population growth rate is 2.5 and day by day trends of Consumption is going towards fast foods and outing outlets like Coffee Shops and so forth. 5 GDP Growth rate: GDP in Pakistan is growing every year, in 2012 are 2.39 and people having more money to spend as discuss above in per capita Income also increasing, which will positively effect on sales of our Coffee.
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Technology Emerging technological changes having little impact on our Business operations, Because only the Coffee machine is Required other things will manually manage at our SHMS Coffee Shop, as Standard of Coffee making changes we will be change the way to follow Global standards and Starbucks as our Benchmark, and it will having very little impact on our Coffee Quality and sales.
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This Model emphasis the mode of Competition in our Coffee Industry, which includes; 1 Threat of New Entrants: We will operate our Coffee Shop in Defense Phase-II Ext. Area where very few are available, yes new Entrants are open and not in our control. We will give them the competition in terms of maintaining our customer, capturing the new market and price controls.
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Bargaining Power of Customer / Buyers: As we operating for the High-High and High-Middle so bargaining power is very low, where the product is of Premium Quality and Status Symbol.
there are not many suppliers of Coffee Beans and other raw materials of Coffee in the market. We will manage this with strong relationship with one or two suppliers and keep our materials ready and less bargaining over prices but we need quality. 4 Threat of Competitors: In Coffee Industry Competition is different, very few
competitors available near the area, and we make competition not in terms of prices but on Service experience and customer satisfaction. We provide value added services with High end Coffee to make Win-Win Situation. 5 Substitutes Products: No direct substitute of Coffee, indirect Substitute of coffee
can be the tea, Coffee lover does not want to shift, and yes different Flavors can be substitute but is in internal. Apart for that customer make differ with variety of taste and Seasoned Coffee which we will be offer at greater extent. Summary of the Model in Perspective of SHMS Coffee Shop Bargaining Power of Buyers Bargaining Power of Suppliers Barriers to Entry Threat of Substitutes Competitive Rivalry Low Moderate Moderate Low Low
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4. Description of venture
4.1 Our product(s) and Service(s)
The choices we make and actions we take are a reflection of our core values
We offer Seasoned Coffee with amazing service experience with great interior dcor and ambiance for the customers
We offer different flavors of coffee as per the choice of our customers We offer friendly and romantic environment as customer desire.
Personnel
Manager Waiters Cook
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Step 1
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Outbound Logistics: For SHMS as not such any outbound activities, because we are operating in Junk Food providers that serve as on the spot Product and services also rendered at the same time. Marketing and Sales: Marketing activities of SHMS includes the Cable Advertisement in Karachi for creating the awareness to customers, and some Bill Boards will be placed at nearby located areas and mainly focusing on word of mouth, by Visiting Business Institutes and organizations also for distributing Brochures and provide them discount offers and so forth.
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1. Marketing Plan
6.1 Pricing Pricing policy of company is very simple as we are operating in DHA Karachi we would be charging price lesser than our competitor (A-one Snacks, Espresso Coffee Shop and Coffee at Hot & Spicy) in starting to capture the market. Rs.100/= cup of coffee. 6.2 Distribution
For SHMS as not such any outbound activities, because we are operating in Junk Food providers that serve as on the spot Product and services also rendered at the same time.
6.3 Promotion
We will launch 360 degree campaign for SHMS Coffee Shop. As this business initially is operated just in Karachi Defense area so we will have niche marketing to focus on so promotional strategy includes; Local cable TV ads Distributing Pamphlets (Visiting Universities and Companies) Publicity Retail Merchandising Online marketing Local Cable TV Ad As our business is located in Karachi so its appropriate to use local TV ad this would limit to the geographic level according to our requirement and will also reduce the expenses. Local cable TV advertisement will include a moving footer ad at the bottom of channels which will create awareness in our target audience and along with this a 30 sec TV commercial will also be launched to effectively execute advertisement. Pamphlets Pamphlets would be kept inside the newspapers so it would also be effective source of providing information regarding our business. For accomplishing this task we would contact with newspaper venders.
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Publicity
After registration of our business, we will visit universities and Companies. Moving ahead, from head offices, through emails and telephone calls branch managers could be told regarding our service easily and then branch managers would at least aware their customers regarding our services. After this initial publicity, automatically positive word of mouth would be generated when they will use our service with high satisfaction. So publicity is strong and very important tool for our marketing campaign. Retail Merchandising: We will carry out our merchandising in the offices so that: Get a chance to explain them about our business and the benefits they can have by getting our services educate them about new services and ease to avail those services Online Marketing Now a days most of the organization is working on online marketing that is very cheap and feasible, so in online marketing well use Google Ad word (advertising tool provided by goole.co). Secondly social marketing tools like face book, LinkedIn will be used to get people inform about the service. Moreover we will also develop a website, Facebook page, to give the customers more information about the services we are offering and how it is beneficial in future prospect. Besides this there will be a feedback system which will record all the complaints and suggestions of customers for further improvisation in our services. Summarizing all this: a) Website development b) Google ad wards c) Fan pages on social media webs (Facebook, LinkedIn, twitter).
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Partnership: a form of business operated by 2 or more partners, all having the equally liable for the liabilities. Corporation: a legal entity that is run by stockholders having limited liability. As we are four students (HASEEB, SAIMA, SHOAIB and MANSOOR) in this project so we have decided to go for the partnership and we require an initial investment of PKR.1, 000,000/-, so each partner would contribute PKR. 0.25million.
7.2 Identification
of partners
Contributed amount PKR 0.25million PKR 0.25million PKR 0.25million PKR 0.25million
Partners Name 1. Haseeb Shaikh 2. Saima Supro 3. Shuaib Narejo 4. Mansoor Malik
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Business Registration
January 2013
December 2012
January 2013
By following complete Recruitment process Carrying out different activities like publishing ad in newspaper, local cable TV ad launching, retail merchandising and so on With the help of sales team efforts would be made to increase no: of customer base Buying will be made through different venders
January 2013
January 2013
Haseeb Shaikh
JAN-JUN 2013
Expansion of business through adding one more coffee shop in Karachi at different location
JAN-JUN 2014
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8 Assessment of risk
Strengths
1) Seasoned Coffee SHMS offers a very highly specialized and Customized Coffee which has ability to delight customers with their various choices and adjust to the changing seasons. We at SHMS will offer Coffee of all Seasons to change the mind set of people that Coffee is only Winter Product. 2) Educated Workforce As being a service business SHMS believes its employees satisfaction is its customers satisfaction so it employs the most talented and educated people for its services to gain ultimate delight of the customers. 3) Global Culture As Globalization now at every corner of the world, SHMS proactively realizing the need of our target market and we will be Following international Standards in terms of (Language, Service Standards, Interior Dcor etc. and provide friendly and Energetic environment at SHMS Coffee which will be derived as competitive edge over others.
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4) Environment We at SHMS Coffee offer the Different Themes of Environment, again with customer driven experience, which includes Friendly Environment, Romantic Environment and also Business Class Meetings. 5) Target Market (Business Class) Since our target market is business class where people value quality more than price which SHMS is the only desired place for our target market. 6) Flavored Coffee We at SHMS Coffee Provide Coffee in variety of Flavors with customer driven Choices, different Flavors with Customized Taste and so forth 7) Single Product Category We at SHMS will only operate in Coffee category, will get Competitive edge by using our core competencies
Weaknesses
1) Very Limited Startup Budget Rich people having enough capital to invest in new business and expand their operations very quickly and smoothly 2) Marketing Expenses New business requires more marketing expenses to advertise and create awareness form connection of Brand with Customer, SHMS cannot afford more outflows since SHMS is short of budget. 3) Discrepancy between Local and Global Cultures
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Our target market is more oriented to the global culture whereas our employees are inborn local cultures. So more training and education of employees required which will turn in to one of Core Strength. 4) Insecurity of Intellectual Property In Pakistan there is common violation of copyrights and intellectual Property theft
Opportunities
1) Market Growth Since population is ever increasing in Pakistan and its literacy rate of youth is also increasing which will ultimately be our target market which will be an opportunity to capture the market share. 2) Availability of Efficient Labor Due to unemployment in Pakistan the more educated people are willing to work at SHMS. 3) Increasing Trend towards Coffee Since Coffee brand is getting more exposure to the business class and all classes all over the country it will help SHMS to achieve more ROI and sooner achieve the Break even and having potential to grow up in new markets to open more outlets in Karachi Clifton and Sadar area. 4) Globalization Inflow and outflow of people especially business class has become faster due to globalization. It will grow SHMS coffee customer base and helps to increasing revenue.
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5) Expansion SHMS is unique business in its entire industry in terms of Seasoned and Customized Coffee Provider to delight customer, to arrange Business Meetings and provide romantic environment, so it has golden opportunities to grow in various areas of Karachi like Clifton and Sadar and afterwards into other cities of Pakistan like in Islamabad and Lahore.
Threats
1) Brain Drain The educated business class tends to quit Pakistan due to more favorable opportunities available in other countries and will affect in reducing Key Target customer. 2) Security issues Bomb blasts, target killings, robbery and political strikes make businesses shutdown regularly and strongly affects the business operations of SHMS Coffee. 3) Electricity Breakdown Fuel crises have gone up and due to continuous shut down of Electricity SHMS operations also affected and cost of providing the Services increases and customers also disturbed in their respective Meetings and so forth 4) Perception about Coffee as only Winter Product Peoples perception about coffee as a winter Product, in this regard we will make efforts to create awareness and
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change the perception to have mind set coffee can be every seasoned Product by offering Seasoned Coffee 5) Competitors Attacks Other mammoth competitors such as Starbucks McDonalds, KFC and other local competitor, five star and seven star hotels can easily jump over a new baby business in metropolitan city with their subsidiaries.
Strengths S
1. 2. 3. 4. 5. Seasoned Coffee Educated Workforce Global Culture Environment Themes Product Differentiation
Weaknesses W
1. 2. 3. 4. Low Startup Budget Low Marketing Budget In Security Discrepancy between local and Global Culture
Opportunities O
1. 2. 3. Market Growth Availability of Efficient Labor Increasing trends to towards outing and off-street Coffee Shop Gathering 4. 5. Globalization Expansion in new Markets
Threats T
3. 4. 5. 6. Brain Drain Security issues Electricity Breakdowns Perception about Coffee as only winter Product 7. Competitors Attacks
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9 Financial plans
9.1 SALES FORCAST FOR 3 YEARS
* Forecasted sales for a day are about 10,000 which are calculated as; (Per Coffee Cup Charged 100 PKR, expected cups sales per day 100, so its 10,000 PKR revenue generated daily *30 working days in a month) = (PKR 300,000) * The year end revenue will be 300,000*12=3,600,000 PKR annually * In second year the sales are expected to increase of 25% daily sales. (Per cup Price 100* Cup Sales per day 125) * In third again daily sales increase by 25%, per coffee cup sales Price 125*150 Cups daily)
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9.2 Financial Plan (Forecasted Financial Statements) Our financial Plan include the investment table, three years forecasted income statement, Depreciation expenses and finally the statement of financial position which is called Balance sheet.
Starting with the initial fixed cost required for the business it includes the Prepaid rent for a year, purchase of office furniture and fixture, prepaid insurance, legal fees and the pre-paid rent which in first year costs PKR 240,000 . In first year we will have ONE Coffee Shop located in DHA phase-II, Karachi. 150,000 PKR are in working capital for purchasing the raw material and other things. Total Budget expense 1,000,000 PKR
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(PKR 2,160,000) (PKR 2,700,000) (PKR 120,000) (PKR 130,000) (PKR 60,000) (PKR 66,000) (PKR 100,000) (PKR 100,000) (PKR 240,000) (PKR 264,000) (PKR 60,000) (PKR 60,000) (PKR 41,000) (PKR 49,000) (PKR 100,000) (PKR 100,000) (PKR 2,881,000) (PKR 3,469,000) PKR 790,000 PKR 1,031,000 (PKR 251,650) (PKR 360,850) (PKR 538,350) PKR 670,150
(PKR 4,032,000) (PKR 140,00) (PKR 72,000) (PKR 100,000) (PKR 288,000) (PKR 60,000) (PKR 57,000) (PKR 100,000) (PKR 4,849,000) PKR 1,871,000 (PKR 654,850) PKR 1,216,150
Cost of Goods Sold 60% of Sales Revenue Monthly Utility Expense 10,000 PKR Monthly Rent Expense 20,000 PKR
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Year 2 PKR 264,000 PKR 300,000 PKR 200,000 PKR 60,000 PKR 50,000 PKR 874,000 PKR 126,000 PKR 1,000,000 PKR 0 PKR 0 PKR 1,000,000 PKR 1,000,000
Year 3 PKR 288,000 PKR 300,000 PKR 200,000 PKR 60,000 PKR 50,000 PKR 898,000 PKR102,000 PKR 1,000,000 PKR 0 PKR 0 PKR 1,000,000 PKR 1,000,000
PKR 240,000 PKR 300,000 PKR 200,000 PKR 60,000 PKR 50,000 PKR 850,000 PKR 150,000 PKR 1,000,000 PKR 0 PKR 0 PKR 1,000,000 PKR 1,000,000
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