Coffee Distribution Business Plan

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The Coffee Warehouse
Coffee Distribution Business Plan

Executive Summary
The Coffee Warehouse is a new business providing high-quality, full service distribution of
coffee, specialty beverages and beverage-related supplies to coffee houses and espresso stands
throughout the Spokane and Northern Idaho market.
The principal owners are Steve and Jennifer Smith, whose combined experience brings office
management, high levels of customer service, and over 20 years in distribution and sales
management. At this time we are seeking additional equity capital to compliment our own
investment and are seeking to arrange a bank line for inventory and receivables financing. We
have firm commitments to distribute several high-quality new age beverage products, and have
verbal commitments from independent retailers throughout the Spokane and Northern Idaho
market to carry our product. We plan to distribute our first products within 30-60 days of
finalizing financial arrangements.
Sales projections for The Coffee Warehouse are estimated to begin at approximately $2,229,000
the first year, increasing to approximately $2,558,000 in Year 2 and approximately $2,936,000 in
Year 3. Our net profit is projected at approximately $283,000 the first year, increasing to
$406,000 by the end of the third year of operation.
Distinguishing characteristics of our business will be the combination of management
experience, sales and distribution experience, high-quality, innovative products and exceptional
customer service. In particular, what really sets up apart is that we are the ONLY full service
distribution company servicing the coffee and specialty beverage industry in the
Spokane/Northern Idaho market. In addition, The Coffee Warehouse has an exclusive contract
to distribute a new, groundbreaking product that would enable us to gain immediate access to a
majority of the potential customer base.
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1.1 Objectives
To open and operate a successful coffee and new age beverage

distributorship in the Spokane/Northern Idaho market, employing three
to five employees the first year.
To obtain a minimum of 100 regular customers in the Spokane/North Idaho

market the first year of operation.
Achieve first year sales of $2,000,000.
Maintain an average gross margin of 25 percent.
To produce a net profit of at least $400,000 by the end of the third year of
operation.
1.2 Mission
The Coffee Warehouse intends to become a recognized distributor of specialty beverages and
beverage-related supplies and services to coffee houses and espresso stands throughout Spokane
and Northern Idaho.
The Coffee Warehouse plans to develop strong relationships with key customers so we will be
viewed as indispensable partners, rather than just another supplier. We will work closely with
each customer to recommend product assortment unique for their retail base, appropriate
stocking levels, pricing and display assortments, as well as promotional ideas and material to
increase sales. The Coffee Warehouse will seek out and work with the manufacturers we
represent to deliver the most innovative and exciting products possible to the customers we
serve. We are not only selling product, we are selling service.
1.3 Keys to Success
Innovative quality products.
Individualized customer service - providing our customers with what they

want, when and how they want it.
Only full service distribution company in the Spokane/Northern Idaho market.
Fully integrated programs to help customers increase sales through menu

development, creative promotions, advertising, and custom marketing
material.
Exclusive distribution rights to ground-breaking products not currently

available in our market.
The combined experience of the principal owners bring upper office

management skills, high levels of customer service, and over 20 years in
distribution and sales management.
Company Summary
The Coffee Warehouse, Inc. is a new S-corporation business located in Spokane,

Washington, and will be established based on the details of the following plan.
2.1 Company Location & Facilities
The Coffee Warehouse will be located in the Spokane Valley within the Spokane Industrial
Business Park. This is a prime location to service both the Spokane and Northern Idaho market.
The facilities will include approximately 5,000 square feet of warehouse space, with an
additional 1,400 square feet built out for office/retail space. We are currently negotiating lease
terms on the several available properties, and plan to have a lease signed by July 31.
2.2 Company Ownership
The Coffee Warehouse is a privately held S-Corporation owned in total by its co-founders, Steve
and Jennifer Smith.
UBI Number: XXX-XXX-XXX (removed to protect confidentiality)
2.3 Start-up Summary
Start-up expenses for the Coffee Warehouse total $16,450, and include expenses such as legal,
marketing, lease deposit, computer systems, etc. Start-up assets include $9,800 in initial cash
requirements, $18,750 in short term assets (office furniture, refrigeration equipment), and
$75,000 in starting inventory. These start-up costs will be financed through investments and
small-business loans. The details of the start-up summary are included in the following table.
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Start-up Requirements
Start-up Expenses
Legal Business Formation

Business Plan
Warehouse Lease Deposit
Insurance (first month)
Utilities (first month)
Research & Development
Marketing
Advertising
Personnel
Business/Office Supplies
Computer Systems
Phone System
Communication Lines
Trade Show/Grand Opening
Total Start-up Expenses
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
Total Requirements
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Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
Capital
Planned Investment
Investor 1
Other
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital
Total Capital and Liabilities
Total Funding
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Products
The Coffee Warehouse will provide a first-class delivery service of quality hot and cold beverage
related supplies, including whole bean or ground coffee, flavor syrups, jet teas, fruit smoothies,
bubble teas, concentrated milk, fresh baked goods and assorted paper supplies. Our services will
include invaluable trade resources, effective promotional programs, custom-designed marketing
material, informative monthly newsletters, training and product demonstrations, as well as
information on the latest market trends in the coffee/specialty beverage industry.
3.1 Product & Service Description
PRODUCT DESCRIPTION
The Coffee Warehouse will carry a variety of quality products that will enable us to provide full
service delivery to espresso stands and coffee houses. Our underlying philosophy in selecting
products is to choose lines that will bring consistent quality, competitive prices, and product
satisfaction to our customers. We have personally researched and sampled each of the following
products that we offer to ensure the quality we guarantee.
Lowery's Gourmet Whole Bean and Wired Willey's White Coffee
Assorted Gourmet Syrups & Coffee Toppings
Chocolate, White Chocolate and Caramel Syrups/Sauces
Oregon Chai Concentrate
Jet Cafe and Jet Tea Fruit n' Tea Freeze
Cappuccina line of product
Big Train line of product
Red Bull Energy Drinks
Good Cow Concentrated Milk with Custom Dispensing Equipment
Fresh Baked Goods
Assortment of White, Pre-printed Paper, and Clear Beverage Cups Systems as well as an assortment of other paper supplies
At this time, the majority of these products are only available to customers through wholesale
vendors such as Cash and Carry retail outlets - therefore it is the customer's responsibility to
acquire these products by their own means. The Coffee Warehouse will make these same
products available through our high quality, full service delivery - bringing these products
directly to their doorstep at a competitive price.
SERVICE DESCRIPTION
An important component of our business is not just our products, but our service. In addition to
our full service delivery, the following are other important service elements that we will offer to
our customers:
Ideas to help our customers increase sales through menu development,

creative promotions, co-op advertising, and much more.
Custom designed marketing material such as printed banners, promotional

posters, punch cards, pre-purchased beverage cards, reader boards, etc.
Distribute a monthly newsletter featuring the latest coffee trends, new

industry equipment, breaking trade news, promotional ideas, new creative
recipes, and upcoming events.
Samples of the latest product releases - with eye-catching point-of-sale to

advertise new items to the end consumer.
Routine equipment maintenance and training.
3.2 Competitive Edge
KEY COMPETITIVE STRENGTHS

No other wholesaler in the market offers full service delivery with the variety of product we
feature. We are better positioned than our main competitors to take advantage of the increasing
demands of coffee and specialty beverage supplies because we focus exclusively on high-quality
distribution and customer service. In addition to the variety of products we feature, The Coffee
Warehouse has exclusive distribution rights to Good Cow's concentrated milk/dispensing system.
This product is not currently available in our market by any other suppliers.
KEY COMPETITIVE WEAKNESSES
Our primary weakness is that we are a new business competing largely against established
suppliers. To significantly build sales, we must not just find new customers - we must take
customers away from existing suppliers. However by offering a superior selection of supplies,
new groundbreaking products to the market, and focusing on high-quality service and full service
delivery, we feel will can quickly establish accounts and build strong relationships. Co-founder
Jennifer Smith has had many discussions with owners of coffee and espresso businesses that
confirm this opinion.
3.3 Sales Literature
Sales literature to be distributed to both current and potential customers will include brochures,
fliers, newsletters, as well as other print media such as print advertisements. Jennifer Smith is
highly skilled in graphic design and desktop publishing, and has quality design and printing
equipment to publish professional pieces at a low cost.
3.4 Sourcing
The Coffee Warehouse will purchase product directly from manufacturers, as well as master
distributors. Because this eliminates the broker or "middle man," this allows us to operate on a
25-30% profit margin, while providing our customers with competitive prices.
To further reduce costs, The Coffee Warehouse plans to share product shipments out of
California with distributors operating in Portland, Oregon and Tri-Cities, Washington. Other
product not being shipped directly to Spokane will be purchased and picked up in Seattle,
Washington. The Coffee Warehouse plans to send a truck to Seattle on a bi-weekly basis to pick
up product, thus cutting costs by an average of 5%.
3.5 Technology
To streamline the efficiency of our distribution methods, The Coffee Warehouse plans to use the
latest in cutting edge technology - not only in the warehouse - but also in the trade.
All of our drivers/sales representatives will be equiped with Thinque MSP handhelds and
software. Thinque MSP applications will reduce field expenses, decrease day's sales outstanding,
and increase worker efficiency. Features can be used in or out of the warehouse and include
managing returns and collections; adjusting item price, profit or margin; applying promotional
items to an account; streamlining orders; tracking inventory; reducing out-of-stocks; and
providing sales history reports. All information recorded in the handheld is available in real time
to be viewed by management in the office.
3.6 Future Products and Services
Within the first year of business, The Coffee Warehouse intends to open a retail/wholesale store
and high-quality showroom. Products will be available for purchase by both our wholesale
customers who may need product between delivery days, as well as retail consumers interested
in purchasing product for their home use. We will also offer a showroom that will feature
equipment, supplies, trade resources, and information on marketing services with examples of
marketing and promotional material available to customers.
With the addition of the product showroom, The Coffee Warehouse will offer customers
quarterly product and training demonstrations that will be presented by trained beverage experts
from the industry.
The Coffee Warehouse also plans to hold semi-annual trade shows for current or potential
customers. These trade shows will allow customers the opportunity to sample products, talk to
manufacturers, learn about new industry trends, review marketing material, and network with
other business owners in their market
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Market Analysis Summary
Coffee is the second largest commodity market next to oil, and growth is expected to continue at
a strong pace for the foreseeable future. The specialty beverage industry is growing at an equally
strong pace, with sales growth in some categories projected to grow at rates of 40% per year.
This growth offers excellent opportunities for new companies to enter this market, and we are
excited about the possibilities of what The Coffee Warehouse can accomplish in the Spokane and
Northern Idaho market.
4.1 Market Segmentation
The gourmet coffee and specialty beverage industry is divided into several segments. Consumers
who enjoy these products purchase drinks at restaurants, coffee houses, sports venues, drive-thru
espresso stands, and even inside other retail establishments that might feature an independent
beverage stand.
As illustrated in the chart below, within the market surrounding Spokane, Rathdrum, Post Falls
and Coeur d'Alene, there are currently 250 drive-thru espresso stands, 18 coffee/tea houses, 52
independent inner-retail espresso stands, and approximately 10 stands in locations such as sports
venues, university campuses, and etc. These figures are not including the number of restaurants,
bars and cafes that also feature these beverages.
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Market Analysis
Potential Customers
Drive-thru Espresso
Inner-Retail Espresso
Coffee/Tea Houses
Other (sports venues, universities, etc)
Total
business plan.
4.2 Target Market Segment Strategy
While the market is already sizeable, this industry continues to grow. New espresso stands open
their doors to the public on a monthly basis in our market, and it isn't uncommon to see
numerous espresso stands within a one or two mile radius. The article below, published by a
national coffee retail magazine, discusses our market's unique drive-thru espresso industry. The
sales potential in this market is unlimited.
The Coffee Warehouse initially plans to target these drive-thru espresso stands, as well as all
inner-retail espresso stands within our designated market. It is this segment that is most in need
of the services we are planning to offer. Essential needs include: quality products at competitive
prices, first class service, and strong sales support. It is most often these small owner-operated
businesses that are neglected by larger suppliers and are forced to service themselves. It is also
these smaller businesses who could most greatly benefit from marketing services, sales support,
and full service product delivery. Providing the same high-quality service, within the first six
months of operation, The Coffee Warehouse plans to expand our target into formal coffee houses
and cafes, and as business grows and stabilizes, eventually evaluate the needs of potential
customers in the restaurants and bar industry.
4.3 Market Growth
Coffee has been a growing industry for the past several years. In the gourmet/specialty coffee
industry alone, the figures show an impressive rate of growth in the United States.
The new age beverage industry is growing at an equally strong pace. Sales growth in the chai tea
category alone is estimated to be 50% historically, with projected growth rates of 40% per year.
Energy drinks, including brands such as Red Bull - and trends such as Jet Tea - are driving the
new age beverage growth, and have increased 50-fold in the past three years.
Bubble Tea has been a rapidly growing market in Asia, though it is relatively new to the United
States. Introduced to trend setting marketings such as San Francisco and Seattle, sales have
been exploding - and the craze of the "Tapioca Pearl" is expected to spread throughout America.
4.4 Industry Analysis
The coffee and specialty beverage industry is pulverized, with hundreds of manufacturers,
brokers, suppliers and retailers. Unlike the beer/soda industry, with large companies such as
Anheuser Busch, Pepsi and Coca Cola controlling most of the market, the coffee and specialty
beverage industry does not have large national chains with market control.
In an open industry growing at such a strong rate, The Coffee Warehouse is in position to
capitalize on the customer's need for quality product, exceptional service, and an effective
partner to success.
4.5 Industry Participants
With the rate of growth in the gourmet coffee market, in addition to the recent trends in Jet Teas
and other specialty beverages, the industry is comprised of many small participants, each
focusing on only a few specific items or brands at a time. As the markets evolve, we expect the
industry to consolidate with larger distributors representing more of a vast selection of products
in each market.
Currently in our segment of the industry, there are no large national chains with market control.
There are also few products that are offered with exclusive rights to one market. While this is
the case with many products, The Coffee Warehouse is working with manufacturers to change
that practice, and not only represent a larger variety of product than others in our industry, but
also acquire exclusive rights to many of the products in our portfolio.
4.6 Distribution Patterns
The following flow chart illustrates the overall industry surrounding the distribution patterns of
coffee and specialty beverages. (The Coffee Warehouse falls into the level highlighted in
yellow).
Several manufacturers are represented by master distributors and/or brokers who in turn provide
the product to direct distributors and other wholesale suppliers. Other manufacturers allow
distributors and suppliers to purchase product direct - depending on the quantity of product being
purchased. Product is then distributed or sold through cash and carry wholesale stores to retail
businesses as illustrated below.
4.7 Competition & Buying Patterns
While there are a handful of coffee and specialty beverage suppliers providing product in our
market, there is still a great deal of room for new business. Most importantly, there is room for
new business that understands the need for high-quality service and sales support - in addition to
product at competitive prices.
In this industry, customers choose their suppliers based on available product, price, and service though most often, it is the service that suffers most. While one supplier may offer the product at
the right price, they do not provide the level of service that the customer demands. The next
supplier may offer the right level of service, though their prices are too high. This results with the
customer purchasing most of their supplies through a cash and carry style wholesale store leaving the customer with no service or support.
By positioning ourselves in the market with in-demand, quality product at competitive prices,
with a consistent high level of customer service - we are confident that we will see customers
and their business continue to increase.
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Sales and Marketing
The unique aspects of our business include individual product selection, quality assurance, and
high-quality full service distribution. Our strategy is to focus 100% of our efforts on the market
for espresso supplies in the Spokane and Northern Idaho area. By focusing all of our effort and
energy on this particular area, we expect to quickly develop and maintain a leadership position.
The Coffee Warehouse's key personnel will stay in contact with our customers, and will be able
to respond to changes in this market much faster than our competitors.
The Coffee Warehouse will offer the best, most highly personalized service in the marketplace.
Being a small, owner-operated company, we intend to use this to our advantage to be absolutely
certain that every one of our customers receive excellent service. We will go out of our way to
make sure that our customers know that they truly matter to us. Sales reps and in-house
personnel who deal with customers will be carefully trained and given wide latitude for insuring
that customers are always satisfied.
5.1 Marketing Strategy
Our basic marketing strategy is to work with customers on a one-to-one basis to ensure their
supply needs are being met and help develop unique marketing programs for each of them. We
intend to prioritize customer service and make it a key component of our marketing programs.
We believe that providing our customers with what they want, when and how they want it, is the
key to repeat business and positive word-of-mouth advertising. Because we want to develop
close working relationships with our customers, we want to establish accounts in as personable a
way as possible. It is for this reason that we will overwhelmingly emphasize in-person sales calls
to build accounts.
We will closely integrate all of our marketing and sales efforts to project a consistent image of
our company and a consistent positioning of our products and services. We will build this image
around our name "The Coffee Warehouse, Inc." and emphasize to customers the high-quality
service that is behind this name.
To support our marketing initiatives and product knowledge, we will attend as many area
conventions and trade shows as possible to ensure we are offering the most up-to-date market
trend information.
5.2 Promotion Strategy
Relationships are the key to success in the distribution business. Personal selling will remain our
most important means of promotion. Both Steve and Jennifer Smith will lead this effort - Steve,
with his skill and experience in sales and distribution, and Jennifer in customer service and
relations. In addition to personal selling, The Coffee Warehouse has identified several other
means of advertising and publicity.
The Coffee Warehouse will send news releases to local media and press, as well as trade
magazines to try to get product and company feature coverage in front of the eyes of our
customers - as well as the end consumer. We will also produce a few generic press releases about
the products we are distributing for our customers to use toward publicity coverage for their
businesses in local publications such as the Spokesman, The Inlander and Local Planet.
Third, we shall have a monthly newsletter for current of potential customers. This newsletter will
highlight new and current trends in the industry, upcoming conventions and trade shows, offer
promotions and special deals, as well as provide new recipes, fun tips and other information that
can be used in their business. We will also highlight not just our products, but also display ideas
and success stories of other business in the industry. As a more straight forward advertising
effort, The Coffee Warehouse will feature an advertisement in the Yellow Pages, frequent ads in
the Spokesman Review, the Inlander, and the Local Planet, as well as participation in
networking, local trade shows, and personal word-of-mouth advertising.
5.3 Distribution Strategy
To begin, The Coffee Warehouse will operate two delivery trucks with a third vehicle for special
deliveries between scheduled delivery days. Deliveries will be made Monday through Friday,
and will be strategically routed to minimize travel time and fuel costs - while maximizing
production. On average, we will service 20-30 accounts per day, with deliveries to each account
twice a week. As the number of accounts increase, the need for additional delivery trucks will
continue to be evaluated. With each additional delivery truck, routes will be restructured to
maintain maximum efficiency.
5.4 Sales Strategy
Distribution sales are dependent on repeat business, therefore the sales strategy for The Coffee
Warehouse is based on personal, consistent sales contact, with a high emphasis on customer
service and relations. Because we are a new distributor, we understand that we will have to
prove our worth to our customers in order to earn their respect and business. Both of the owners,
Steve and Jennifer, will make personal calls on potential customers to review our product line
and services, give general information on our company, and discuss how we feel we can help
them succeed in their business.
The Coffee Warehouse will begin operations with two full-time delivery/sales representatives,
who will be responsible for providing full service and delivery to current customers, but also
make sales calls for potential new business. This delivery/sales representatives will receive a
base salary, with commission on qualified sales, as well as bonuses for new acquired business.
Customers will be scheduled for a pre-arranged delivery day once or twice a week, depending on
the quantity and timeline of product needed. Product orders can be placed in a number of ways to
help facilitate the process:
Phoned Orders: Customers can easily phone orders into our office, up until
2:30 p.m. of the afternoon prior to their scheduled delivery day.
Faxed Orders: Customers can fax in a completed product order sheet, with
the same deadline as phoned orders.
Tel-Sell: Customers may choose to have a representative from the office call
them the day prior to their scheduled delivery to check product quantities
and assist them in placing their order.
We understand the hectic schedule of a small business, so if a customer fails to call or fax their
weekly order, they will receive a courtesy call from our office to verify that an order is not
needed.
5.5 Sales Forecast
As indicated in the table, our sales are forecasted to increase rapidly, with an annual growth rate
of approximately 30%.
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Sales Forecast
Sales
Espresso Syrups
Chocolate & Caramel Sauces
Specialty Beverage Mixes
Energy Drinks
Concentrated Milk
Paper Supplies
Marketing
Total Sales
Direct Cost of Sales
Espresso Syrups
Energy Drinks
Concentrated Milk
Paper Supplies
Marketing
Subtotal Direct Cost of Sales
business plan.
5.6 Milestones
The following table and chart are the important milestones for The Coffee
Warehouse.
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Milestones
Milestone
Market/Trade Research
Logo Design/Marketing
Complete Business Plan
Product/Pricing Comparison
Finalize Potential Client List
Licensing/Incorporation
Secure Product Line
Research/Secure Financing
Warehouse Selection/Buildout
Leasehold Improvements
Delivery Vehicle Selection

Develop Routing
Hire Delivery/Sales Personnel
Office Equipment/Computer/Supplies
Order Beginning Inventory
Press Releases/Advertising
Organize Grand Opening Trade Show
Totals
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Management Summary
The Coffee Warehouse will be owned and operated by its founders, initially working with a small
employee base that will cover sales and delivery. Management and personnel plans are covered
in more detail in the topics to follow.
6.1 Organizational Structure
The Coffee Warehouse will be managed by the two founding partners, whose individual areas of
expertise cover many of the functional aspects of the business.
The organizational structure is very simple. Steve Smith will be responsible for the routing,
distribution management and delivery systems. Jennifer Smith will be responsible for customer
service, accounting, shipping and the general administration of the business. Together they will
be responsible for product selection and sales and marketing.
The support staff at the office and warehouse, as well as the delivery personnel will report to
Jennifer. Because Steve will be spending a majority of his time in the trade, Jennifer will be able
to support any day-to-day needs that the personnel may have. However even when Steve is out
of the office, he will be in constant contact via computer or phone.
The goal of The Coffee Warehouse is to have a team of committed associates who empower each
other so that the customer's expectations can be exceeded. Our goal is to offer career
opportunities, advancement opportunities and a level of income and benefits that is competitive
within the region and job classification. It is our long-term goal to be the preferred employer
within our niche of the beverage distribution industry.
6.2 Management Team
Steven D. Smith
Steve has a long history of experience in sales and distribution management, specifically in the
beverage industry. As the sales and distribution manager for the largest beverage distributorship
in the state, he currently manages ten sales representatives and twenty four merchandisers.
During this time as sales manager, he has helped increase market share from 25 to 40%.
Over the last twenty years, Steve has successfully built and maintained rapport with buyers in the
city's largest key accounts, and has strategically routed sales, merchandising and truck routes
throughout the city.
Steve has many industry contacts and an in-depth knowledge of the market.
Jennifer L. Smith
Jennifer recently operated as general manager for a local business and directed a staff of thirteen,
overseeing the accounting practices, human resource issues, and day-to-day operations of the
company. Prior to this position, Jennifer has held a variety of other inside business management
and operations positions.
Jennifer's strengths and skills include strong management, excellent public relations, high levels
of organization, extensive computer knowledge - including desktop publishing and graphic
layout - and extensive presentation and reporting skills.
6.3 Personnel Plan
PERSONNEL GENERAL
Initially we expect to be able to handle business needs with Steve and Jennifer, one
administrative assistant, and two product delivery/sales personnel. As business continues to
grow, we intend to hire additional employees one at a time and pay premium, over market labor
rates to attract and retain quality help.
Not only will we train our employees to deliver excellent service, we will give them the
flexibility to respond creatively to client requests. In addition, we will continually monitor our
clients' level of satisfaction with our service through surveys and other convenient feedback
opportunities.
To ensure our personnel are meeting our expectations, we will hold a minimum of quarterly
meetings with all employees so that results can be reviewed and future plans can be discussed. At
least twice a year, a refresher course will be required on product knowledge and how to exceed
our customer's expectations.
SALES AND DELIVERY
In order to deliver high quality, personalized service we will carefully select all employees - with
extra attention given to sales reps and delivery personnel who will deal directly with customers.
We will carefully review references not just from past employers or manufacturers, but also from
retailers whom these sales reps have served. We will also make sure that each employee
understands our way of delivering quality service to each customer. We will have immediate
back-up support available by phone from our office for more difficult service issues. We will also
give employees enough latitude so that they can respond immediately to almost any customer
request or complaint - which in this industry usually means granting immediate credit for
damaged merchandise, and adding additional merchandise to an order.
Personnel Plan
Jennifer Smith
Sales/Delivery (Salary)
Sales/Delivery (Commission)
Delivery/Warehouse Personnel
Administration
Total People
Total Payroll
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Financial Plan
The Coffee Warehouse projects the gross margin to be at approximately 20-25 percent. Sales
projections for FY2004 are at $2,229,652 increasing to $2,558,584 in FY2005 and $2,936,137 in
FY2006. Cash-flow analysis, balance sheet, business ratio, break-even analysis, and other
financial details are shown in the appendix.
7.1 Important Assumptions
General assumptions for this plan are on the following table.
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
business plan.
7.2 Break-even Analysis
The following table and chart illustrate our break-even analysis. With our fixed costs estimate of
approximately $15,000 per month, operating on average at a 25% profit margin, we will need to
sell 67,666 units to break-even in a month. Fixed costs include our warehouse lease, vehicle
leases, utilities, insurance, payroll, and an estimation of other running costs.
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Break-even Analysis
Monthly Revenue Break-even
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
7.3 Projected Profit and Loss
The following table and charts show the projected profit and loss. Monthly projections are
included in the appendix.
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Pro Forma Profit and Loss
Sales
Hidden Row
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Other
Depreciation
Rent
Utilities and Phone
Insurance
Payroll Burden
Leased Equipment (Delivery Vehicles)
Leased Equipment (Warehouse)
Leased Equipment (Other)
Fuel (delivery)
Advertising / Promotion
Professional Services
Miscellaneous (office supplies, etc)
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Other Income
Interest Income
Other Income Account Name
Total Other Income
Other Expense
Account Name
Other Expense Account Name
Total Other Expense
Net Other Income
Net Profit
Net Profit/Sales
7.4 Projected Cash Flow
The following table shows cash flow for the three years, and the chart illustrates monthly cash
flow in the first year. Monthly cash flow projections are included in the appendix.
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Pro Forma Cash Flow
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Non Operating (Other) Income
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)

New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Non Operating (Other) Expense
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance
7.5 Projected Balance Sheet
The projected balance sheet is shown in the following table, with monthly projections in the
appendix.
Pro Forma Balance Sheet
Assets
Current Assets
Cash
Inventory
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
business plan.
7.6 Business Ratios
The table shows projected business ratios.
Ratio Analysis
Sales Growth
Percent of Total Assets
Inventory
Long-term Assets
Total Assets
Current Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
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Appendix
Sales Forecast
Sales
Espresso Syrups
0%
$14,322
0%
$10,465
0%
$8,626
Energy Drinks
0%
$1,530
Concentrated Milk
0%
$1,530
Paper Supplies
0%
$51,400
Marketing
0%
$700
Total Sales
$88,573

Espresso Syrups
$11,908
$8,441
$6,496
Energy Drinks
$1,260
Concentrated Milk
$1,308
Paper Supplies
$38,550
Marketing
$250
Subtotal Direct Cost of Sales
$68,213
business plan.
Personnel Plan
Jennifer Smith
Sales/Delivery (Salary)
Sales/Delivery (Commission)
Delivery/Warehouse Personnel
Administration
Total People
Total Payroll
General Assumptions
M
Plan Month
Current Interest Rate
8.00%
Long-term Interest Rate
8.00%
Tax Rate
30.00%
Other
Pro Forma Profit and Loss
Sales
$88,573
$68,213
Hidden Row
$0
Total Cost of Sales
$68,213
Gross Margin
$20,360
Gross Margin %
22.99%
Expenses
Payroll
$7,630
Other
$0
Depreciation
$0
Rent
$2,758
Utilities and Phone
$600
Insurance
$500
Payroll Burden
15%
$1,145
Leased Equipment (Delivery Vehicles)
$1,000
Leased Equipment (Warehouse)
$250
Leased Equipment (Other)
$200
Fuel (delivery)
$1,000
Advertising / Promotion
$300
Professional Services
15%
$200
Miscellaneous (office supplies, etc)
$200
Total Operating Expenses
$15,783
$4,578
EBITDA
$4,578
Interest Expense
$620
Taxes Incurred
$1,187
Other Income
Interest Income
$0
Other Income Account Name
$0
Total Other Income
$0
Other Expense
Account Name
$0
Other Expense Account Name
$0
Total Other Expense
$0
Net Other Income
$0
Net Profit
$2,770
Net Profit/Sales
3.13%
Pro Forma Cash Flow
Cash Received
Cash from Operations
Cash Sales
$88,573
Subtotal Cash from Operations
$88,573
Additional Cash Received

Non Operating (Other) Income
Sales Tax, VAT, HST/GST Received
$0
0.00%
$0
New Current Borrowing
$0
New Other Liabilities (interest-free)
$0
New Long-term Liabilities
$0
Sales of Other Current Assets
$0
Sales of Long-term Assets
$0
New Investment Received
$0
Subtotal Cash Received
$88,573
Expenditures
Expenditures from Operations
Cash Spending
$7,630
Bill Payments
$2,607
Subtotal Spent on Operations
$10,237
Additional Cash Spent

Non Operating (Other) Expense
$0
Sales Tax, VAT, HST/GST Paid Out
$0
Principal Repayment of Current Borrowing
$2,000
Other Liabilities Principal Repayment
$0
Long-term Liabilities Principal Repayment
$0
Purchase Other Current Assets
$0
Purchase Long-term Assets
$0
Dividends
$0
Subtotal Cash Spent
$12,237
Net Cash Flow
$76,336
Cash Balance
$86,136
business plan.
Pro Forma Balance Sheet
Assets
Starting Balances
Current Assets
Cash
$9,800
$86
Inventory
$75,000
$75
$18,750
$18
$103,550
$17
Long-term Assets
$0
$0
Accumulated Depreciation
$0
$0
Total Long-term Assets
$0
$0
Total Assets
$103,550
$17
Accounts Payable
$0
$75
Current Borrowing
$95,000
$93
Other Current Liabilities
$0
$0
Subtotal Current Liabilities
$95,000
$16
$0
$0
Total Liabilities
$95,000
$16
Paid-in Capital
$25,000
$25
Retained Earnings
($16,450)
($1
Earnings
$0
$2,
Total Capital
$8,550
$11
Total Liabilities and Capital
$103,550
$17
Net Worth
$8,550
$11
Long-term Assets

Current Liabilities
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The Coffee Warehouse

Coffee Distribution Business Plan

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To open and operate a successful coffee and new age beverage

To obtain a minimum of 100 regular customers in the Spokane/North Idaho

Achieve first year sales of $2,000,000.

Maintain an average gross margin of 25 percent.

Innovative quality products.

Individualized customer service - providing our customers with what they

Only full service distribution company in the Spokane/Northern Idaho market.

Fully integrated programs to help customers increase sales through menu

Exclusive distribution rights to ground-breaking products not currently

The combined experience of the principal owners bring upper office

The Coffee Warehouse, Inc. is a new S-corporation business located in Spokane,

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Legal Business Formation

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Lowery's Gourmet Whole Bean and Wired Willey's White Coffee

Assorted Gourmet Syrups & Coffee Toppings

Chocolate, White Chocolate and Caramel Syrups/Sauces

Oregon Chai Concentrate

Jet Cafe and Jet Tea Fruit n' Tea Freeze

Cappuccina line of product

Big Train line of product

Red Bull Energy Drinks

Good Cow Concentrated Milk with Custom Dispensing Equipment

Fresh Baked Goods

Ideas to help our customers increase sales through menu development,

Custom designed marketing material such as printed banners, promotional

Distribute a monthly newsletter featuring the latest coffee trends, new

Samples of the latest product releases - with eye-catching point-of-sale to

Routine equipment maintenance and training.

3.2 Competitive Edge

KEY COMPETITIVE STRENGTHS

Market Analysis Summary

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4.2 Target Market Segment Strategy

4.3 Market Growth

4.4 Industry Analysis

4.6 Distribution Patterns

4.7 Competition & Buying Patterns

Sales and Marketing

5.2 Promotion Strategy

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Delivery Vehicle Selection

General assumptions for this plan are on the following table.

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7.3 Projected Profit and Loss

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Pro Forma Profit and Loss

7.4 Projected Cash Flow

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Pro Forma Cash Flow

New Other Liabilities (interest-free)

7.5 Projected Balance Sheet

Pro Forma Balance Sheet