PONTIFICIA UNIVERSIDAD CATOLICA DEL ECUADOR
FACULTAD DE COMUNICACIN LINGSTICA Y LITERATURA
ESCUELA MULTILINGE DE NEGOCIOS Y RELACIONES INTERNACIONALES
READING AND WRITING BUSINESS PLA CUPS
SAMANTA ANDRADE PAMELA JAEL AVILA TOROPATRICIA GARCIAMAYO,
2014
QUITO ECUADOR
Table of Contents
1. Executive Summary
32. General Company Description
43. Products and Services
54. Marketing Plan
75. Operational Plan
106. Management and Organization
157. Personal Financial Statement
168. Startup Expenses and Capitalization
179. Financial Plan
1710. Appendices
1811. Refining the Plan
20EXECUTIVE SUMMARYCUPS is a start-up business; we are pioneers
in the production of personalized cupcakes with unique and special
characteristics. Our specialty are cupcakes, but we also provide
other kind of delicious desserts like pies, muffins, mousses and
cheesecakes and beverages like coffee, tea, sodas and others.
In CUPS, you will be surrounded by worldwide culture; we have
created a culture shelter where all people can enjoy their
desserts. Moreover, we offer a high quality service and a very
characteristic environment. We have shelves with many books, so
that customers can read a book while eating. Our books are divided
by sections and we will also have books in several languages. Then,
any customer can take a book home with the condition to leave
another one in replace. In addition, our products are not expensive
so they are available for all public.
The owners of CUPS are Ms. Jael Avila, Ms. Patricia Garcia and
Ms. Samanta Andrade; we own 33% of the company each. Furthermore,
CUPS is a unique business in the market. Still, we should consider
some important competitors like Cupcake Factory and Torta y Fiesta.
Taking into account this, we have developed many strategies to
increase our market share.
Low prices, high-quality products and publicity are one of the
best strategies to attract clients. Moreover, nowadays cupcake
businesses are on the raise and the cupcake industry is growing in
Ecuador. Therefore, the main goal at CUPS will be to differentiate
itself, its products and its services from the traditional
cafeterias, by providing all clients a totally new experience while
they enjoy a coffee or a dessert.
In other, we will apply for a loan of 50 000$ which will be used
to purchase the local as we are not willing to rent the local. The
reason why we want to buy the local instead of renting it is
because like this, the business will be more profitable. If we
avoid paying a rent each month, we will have fewer expenses
monthly. Plus, even if we have to pay for the loan, this payments
will help us to increase our assets because the local we be ours.
In addition, this will be really useful for CUP'S as it is part of
a back-up plan. In the case CUP'S is not profitable and we have to
close, we can rent the local in order to pay the loan, and it will
give us incomes after we have paid the loan. We are willing to pay
the loan, in a period of 5 years; we will be able to pay each month
with the incomes of CUP'S.
GENERAL COMPANY DESCRIPTION Cups is a new company in a
relatively new market the market of cupcakes. For this reason,
there is not much competition, but still there are two strong
competitors The Cupcake Factory and Torta y Fiesta. We have many
strengths in the market, our products are unique and have fruit
filling and personalized frosting, based on cultural events,
seasons, and special dates, not only from Ecuador , but from around
the world; also our products have designs chosen by customers. At
CUPS, we do not have a specified menu with the designs of our
cupcakes, they will always be changing in new funny, creative and
unique designs and we also provide other desserts, in order to
offer delicious products to enjoy with embracing worldwide culture.
Even if our competitors are already well- placed in the market, we
have arrived with a fresh idea.
Prices and quality are strengths for us, because, we offer the
lowest price in the market and we guarantee high quality products.
This is because; our main competitors have already reached a high
level, so they have increased their prices and reduced their
quality because of an exaggerated confidence. Patty GarcaIn CUPS,
the environment is as important as our products, which are
affordable to everyone. At CUPS, everyone can enjoy a cupcake, with
a reasonable price and in an ideal environment. On the other hand ,
national and international consumers will be able to taste endemic
fruits from Ecuador and, at the same time, be surrounded by a
polite environment and workers who will serve them as if they were
at home, making them feel comfortable and relaxed. Then, customers
will select us over our competitors because our company is
ecofriendly and the products we use to bake our cupcakes or
desserts, and to prepare our beverages, come from national
industries; with whom we will have arrangements to collaborate with
the national market.
In spite of the stability that our competitors have established
in the market, we have absolutely trust in our capacity to take a
percentage of that market. The way to gain customer reliance is to
show them the process by which the hands of our workers transform
some ingredients into delicious flavor experiences.
Another thing we have taken into account is the reputation we
must build from the beginning. Our competitors have a
well-established reputation, and thats something we will have to
work on.
Our competitors are well-placed. The concurrence of people at
The Cupcake Factory is relatively good; they are installed on
Shyris Avenue. For our other competitor (Torta y Fiesta), the
location is not a problem, as they deliver their products only by
on-line requests. In order to affront this, we have decided to
place CUPS in front of Jardin Commercial Centre, a very touristic
and concurrent area in Quito. Its appearance will have a decoration
that represents different parts of the world. We want to give a
cultural image more than the typical bakery image.
Our competitors have sales that vary depending on the seasons,
specifically on special dates, which show to be the best moment to
increase sales. Taking into account this fact we thought about
making every day a special date. About credit the market we are in
is not able to give credit to customers, but we, as a business,
have a wide range of credit to set up our business. Also we have
assured a very strict control over all our employees and we will
count on the necessary certifications for our proper operation:); ;
so we will fulfill all the requirements needed to provide high
quality products. The image and advertising we want to project to
the market is mainly related to or philosophy and the cultural
concept we want to implement; that is something our competitors
havent.
PRODUCTS AND SERVICESTechnical specifications
In CUPS, our specialty are cupcakes. But, we also provide other
kinds of delicious desserts like pies, muffins, mousses and
cheesecakes. Also, we offer many different beverages like coffee,
tea, sodas, and others.
Moreover, we offer a high quality service and a very
characteristic environment. In CUPS, where you will be surrounded
by worldwide culture. We have shelves with many books, so that
customers can read a book while eating. Our books are divided by
sections and we also have books in several languages. Any customer
can take a book home with the condition to leave another one in
replacement.
Advantages or disadvantages
First of all, we are not just a bakery or a cafeteria, but we
have created a culture shelter where foreigners and national people
can enjoy of worldwide culture and cinema. Plus, we have a huge
offer of our specialty, cupcakes.
Our cupcakes are unique in the market because they have typical
Ecuadorian fruits inside the cake. They have not only the best
quality and taste, but also they come in different sizes and we
offer multiple options so people can choose the one that better
fits their cravings.
Other huge advantages we have from competitors are the
environment and services we provide. We are offering our clients a
different environment from the traditional cafeteria. The key to
stand out from our competence is that we have developed a space
that does not exist in the country. CUPS offers our clients a
comfortable environment for all people; we have a social area, a
smoking area and a lecture area, so that our clients have a
comfortable and quiet space to read. We are also offering film
functions each month where we will present cultural movies in
different languages.
Pricing
CUPCAKES
Simple cupcake (no filling, no frosting design) 1.50$ Filled
cupcake (with filling, no frosting design) 1.80$ Designed cupcake
(no filling, with frosting design) 2,30$ Cups cupcake (with
filling, with frosting design) 2,80$CUPPIES (smaller cupcakes)
Simple cuppie (no filling, no frosting design) 1.00$ Filled
cuppie (with filling, no frosting design) 1.30$ Designed cuppie (no
filling, with frosting design) 2,00$ Cups cuppie (with filling,
with frosting design) 2,50$MARKETING PLAN AND BUDGET Niche
According to the analysis and the competition itself, it is
recommended to establish our niche market, especially for young and
adult people. Not only will they have access to our products and
high quality service, but also, those people who enjoy the company
of a book with a sweet meal too. People who love reading, chatting,
hanging out with a friend or spending some time with the family,
form part of our niche market, which is a wide one.
Strategy
Taking into account that Cupcakes are a niche market in the
baking and culinary industry, and cupcake businesses are on the
rise, according to a 2009 article on Mainstreet, it is vital to
show customers what the cupcake concept involves, which has for
example a historical connotation that comes from the First World
War. Since we want to offer an environment with literature
involved, the marketing strategy will join these two concepts. It
means that we want people to think of us not with the idea they
bake cupcakes, but we want them to ask themselves what can I learn
in every bite? Our marketing campaign will be based on the
importance of acquiring knowledge, in a funny and delicious way. We
must differentiate our products and services from other cupcakeries
to ensure that our cupcake company becomes a staple of your
community.
Promotion
The promotion of our products will consider the media, the
Internet and flyers, as the main elements to get the word out to
customers. The media we will use are the radio, because it is far
more communicative and attractive for customers. We will use them
for a month till we get well-known. Then, the web page of the
company will be available 24 hours a day, 7 days a week, so it will
be constantly giving our customers information.
We have also planned to distribute a graphic image support
including our logo and designs in our brochures. Furthermore, we
will have a system to identify repeat customers by giving them a
card in which they will fill in 10 purchases in order to get a free
cupcake and a book.
Promotional Budget
We have considered prices for the items mention before, and we
have determined that $ 33600, 00 will fit with our
requirements.
The Start-Up Costs:
Insurance = $3,600Renting = $2,000Start-up inventory =$5,000
Oven = $8,000Pots, pans, tables and racks = $8,000Decoration=
$6,000
Permits = $1,000
Total start-up costs = $33,600
Pricing
The prices of our products are set by considering the
ingredients we need for them and the complexity of elaboration.
Although having low prices for small business is not a good policy,
we have decided that a good way to get into the cupcake market is
to have lower prices than our competitors. Since our strongest
competitor cupcake factory has already gained a solid market, we
need to attract some of their customers by offering the same
product with better quality and lower prices. After we have gained
a solid market of our own, we will increase our prices.
During our competitive analysis, we thought about our
competitors and how to win a market that is already taken, and we
had decided that beginning with low prices is one of the best
strategies.
Apart from our lower prices, we will have more products to offer
as other desserts and beverages. Moreover, we have a special and
unique customer service. One of our policies is to make our clients
feel at home and give them a cultural environment to enjoy and
learn. This is a great strength we have, as our clients will search
for and for this given time, our prices go up.
Proposed Location
After considering the customers we want to reach, we have
decided that the best location for Cups is in avenues Shyris and
Republica del Salvador. The reason for our decision is that these
streets are located between the biggest malls of Quito, so they are
crowded most of the time. Also, our competitors are located nearby.
So, when customers are looking for their cupcakes, they may find us
instead.
Distribution Channels
CUPS is a new enterprise. Thats why we only have one location
where we produce and sell all our products. For this reason, we are
using our own sales force as a distribution channel. This is a
fast, economical and direct channel of distribution. Under it, we
(the producers) have full control over the distribution of our
products. Moreover, this type of distribution channel will allow us
to sell directly our products to the consumers. We will also save
money and avoid unnecessary expenses as we wont need to pay an
intermediary to transport or sell our products.
In addition, our consumers will benefit from direct selling
because of the convenience and service benefits it provides,
including personal demonstration and explanation of the products
and satisfaction guarantees.
Sales Forecast
CUPS expects a strong rate of growth at the start of operations.
Due to our marketing strategies, and our market research, we have
prepared this projection of sales. The total number of incomes we
need monthly to break even is $ 6000.Best case
Worst Case
SALES1st Month
CUPCAKES(100) $ 7000
OTHER DESSERTS$ 3000
BEBERAGE$ 4000
SALES1st Month
CUPCAKES (35) $ 3000
OTHER DESSERTS$ 1500
BEBERAGE$ 1500
OPERATIONAL PLAN CUPSAn Operational Plan is vital to develop a
successful enterprise. The goal of this essay is to explain the
daily operation of the business it will have for topics: the
production, location, legal environment, personnel, inventory,
suppliers, and credit policies.
Firstly, Cups production will be produced at the locale. The,
our methods of production take into account a Just In Time
Production (JIT), which generates goods/services just in time for
them to be sold, rather than preparing them months or weeks in
advance. It is well known that this production technique saves
storage costs and keeps the production going with customer demand.
The costs of production come from the expenses of: Cost of raw
ingredients (44$ daily 60 cupcakes), Cost of equipment ($27000),
Cost of labor/$500 chef, $340 bakery helper. After quality and food
safety will follow all the requirements asked from the Direccin
Nacional de Control Sanitario, and some other standards and
practices proper from the company.
Not only quality will be important, but also our customer
service, which determines as a policy to be friendly and helpful
with customers from their arrival to their departure. In addition,
the inventory control has an average of 35 to 100 cupcakes per day.
The products the company has will not be stable in order to keep
innovation going.
To continue, it is important to talk about the location Cup's
will have: it's physical requirements and access. First, the
physical requirements for Cup's as a food service locale should
have a space between 200 to 250 m; it should be a one floor
building with to areas, the kitchen and larder and the area where
all the tables and the cash machine will be located. This
distribution is thought to allow a good environment and an easy
transportation of the products. The locale will be preferably
located in a commercial and busy zone, specifically between the
avenue Republica del Salvador and Eloy Alfaro; this zone was chosen
because of the amount and economic status of people that concur in
that zone. The utilities Cups needs are water, electricity,
telephone, Wi-Fi. Then, about the access, it is important for Cups
to have an easy walking access and a parking zone to give the
clients an easy access to the store. The idea for Cups is not to
sink the capital into a construction, but to buy an existing
locale. For the costs, Cups will buy the local instead of renting
it and the price estimated is 80.000 $; about 12 000 $ in
remodeling, so the locale will become exactly what needed, and
every month, the costs of maintenance will be approximately of
150$.
In CUPS, we believe that conducting business ethically and
striving to do the right thing are vital to the success of the
company. For this reason, we managed our business under strict
compliance with all relevant national and international laws. Our
business ethics aim to be responsible not only with
ourconsumers,oursuppliers and our employees, but also with the
local community and society in general. In order to operate legally
in Ecuador, the company needs licensing and bonding requirements;
we will register our name and company in the Superintendency of
Companies, write up the constitution of our company, and get the
Commercial Register and RUC. The process lasted approximately 65
days.In Ecuador, all commercial business needs an operating permit
which contains the patent, permission of the Fire Department,
Bureau of Health, the Ministry of Tourism and Ministry of Interior.
This operating permit must be renewed each year. The renewal of
this license has no cost.
All employees need to be insured in the IESS (Ecuadorian
Institute of Social Security). The payment of the insurance will be
shared between the employer and the employee. All employees will
work in a safe environment free of discrimination and under all
health and safety laws, and under laws regulating minimum wages. In
Ecuador, contracts between employer and employees are mandatory.
The relevant environmental regulations in food industry include
proper waste management, recycling and reuse of products, and use
of eco-friendly products. Then the CUPS zoning or building code
requirements will consider for working a rented locale, so building
code requirements will not apply and the zone we have chosen does
not have any special regulations. In addition the company has
signed a contract with AIG Metropolitan Insurance Company. The
total cost of the insurance will be $ 3600. Another important
aspect is that the patent of the company name is granted during the
registration of the Company in the Superintendent of Companies.On
the other hand, personnel in Cups will be considered the most
important part of the company, because without them, the company
would not be able to offer customers the quality service and
products they want. The company needs a qualified staff to ensure
its prestige. For that reason, a professional chef, a sous- chef, a
cashier, waitress, a legal representative and three managers will
be hired to begin the business activities. The employees will need
to have minimum a professional degree related to the needs the
company has, but only the sous-chef and the cashier can be
university students. If they are students, they must be at the
highest levels of their careers. Managers, in their case, must work
on accounting, marketing and production respectively.
The pay structure is established according to the Ecuadorian law
of labor, in which it is mentioned that workers can be paid monthly
or each 15 days with a previous contract that determines the time
they will work for the company. Cups will pay employees monthly,
and the waitress will keep tipping.
Since the company takes care the image and the name of the
company, employees must do the same. So, employees will receive
induction training when they beginning their activities and during
their work they will have the opportunity to have an
On-the-Job-Training, Lectures and Seminars. This method is hands on
and allows the employees to get a feel for their responsibilities.
Not only lectures and seminars are the preferred methods of
training for some organizations because they are low cost, but also
they are easy to set up, and they have the potential to reach a
number of people. The assistance for training will be taken into
account to measure performance and commitment, and they are
requirements the company demands. After the company has clear the
people needed and how to pay them, it is necessary to give
employees concrete details about the tasks they must accomplish.
Employees will have the procedure code, which establishes the
things each person must do in every situation during work and out
of work (emergencies). For example, the chef and the sous- chef
will be in charge of the kitchen, also the cleaning. Both will have
to bake cupcakes and other desserts, prepare the beverages and
deliver the orders to the waitress. The cashier will be responsible
to receive money, give change, count the money at the end of the
day of work, and keep a register to give to the accounting manager.
Then, the waitress will receive the orders to give them to the
chef, and she will deliver the orders to the tables. On the side of
managers, the accounting manager will have to prepare financial
reports and maintain a register of the transactions the company
does in order to know how the company is all the time. The
marketing manager will have to prepare publicity campaigns, think
about changes the company has to apply in order to attract more and
more customers. The production manager will control the quality of
the products, the inventory, and the relation with suppliers and so
on.
With a brief description of the tasks, employees will have a
schedule to follow and specific activities depending on the day.
The procedure code employees receive in the induction training has
in detail the description of each job at the company, and all have
the same importance, so in that way employees internal
communication its better. If it is necessary the company will hire
extra staff especially for the kitchen or for the service, when
there is a difficult period which requires more workers because of
the demand.
To continue, the inventory is vital to take into account. The
materials Cups will need are principally raw materials as the
cupcakes will be made daily in the store, and books. The average
value in stock of Cups is 500$ in books as most of the books will
be contributions from the clients and the books are not going to be
bought each month so they are a onetime expense. About 1100$ in
materials for the coffees and pastry will be needed each month in
order to provide the ingredients that are used in their
elaboration. The rate turnover which is computed by dividing the
total sales revenue in a period by the average inventory is
10000/1100 which equals 9, 09, while the average of other cupcake
stores is 6.39. Cupcakes are considered seasonal products because
in some holidays such as Christmas and Valentines Day they are more
sold, so Cups will need to produce more cupcakes during these
periods. The lead time for ordering will be really short because
the products are storable and the fruits should be bought
daily.
In CUPS, we are committed to dealing ethically with our
suppliers and we want our suppliers to recognize the importance of
Corporate Social Responsibility. When CUPS purchases goods and
services we want to participate in a professional collaboration
that creates long-term value for both parties and to base our
collaboration on trust and mutual interest. Ourpolicy with
suppliers outlines our expectations of them as well as our
commitment with them. The guidelines for suppliers are intended to
ensure that our collaboration can develop and result in the
greatest possible responsibility in our supply chain. CUPS
considers that the most important thing about purchasing goods is
quality. It is committed to work with our suppliers on innovative
and proficient methods of obtaining lower costs for the highest
quality goods.Moreover, CUPS is an eco-friendly company. For this
reason we expect our suppliers to:
Maintain effective policies and procedures to manage their
environmental impact.
Respect fundamental human rights including worker
representation.
Maintain responsible health and safety practices.
Be committed to equal opportunities in employment.
Adopt ethical business practices.Our main suppliers will be:
Favorita Corporation, 6 de Diciembre Av. y Julio Moreno
Dulce Aroma, La Rotonda Mall, Local # 22, Alborada.
The delivery policies we work with are simple. We expect from
our suppliers to deliver high quality goods and to do it on time.
In case of an emergency or lateness in any delivery, we have a list
of emergency suppliers. We have accorded with our suppliers that
the payment will be in checks and directly to the organization. We
wont work with credit in order to get our goods. Our company will
not has credit policies, because it is better to maintain counts
without debts that must be recover later , and also it is not
necessary taking into account that people normally has the moment
to pay for this kind of products we offer at the moment they are
buying. Also, Cups will not offer credit so it is not necessary to
define when to make the phone calls, send letters or get an
attorney to threaten. All the sales will be current to avoid
payments problems.
MANAGEMENT AND ORGANIZATIONThe one responsible for the business
management in CUPS will be Samantha Andrade. Ms. Andrade has a
multilingual degree in International Business and International
Relations. Furthermore, she has worked for very successful
enterprises such as Pronaca and Sweet and Coffee. She has
demonstrated communicative and organizational competencies in her
previous jobs and independent projects. In case of loss or
incapacitation, Jael Avila will take her place and continue with
the established business plan.
The board of directors is formed by Samanta Andrade, Jael Avila
y Patricia Garcia (actual owners and investors at CUPS). The
management advisors we have chosen are Mr. Daniel Valencia
(business advisor) and Ms. Pamela Toro (accountant and financial
advisor). They will help with the direct operation of the company
and keep us informed on various businesses, legal and financial
trends that may affect us and our business.
Then, the legal advisor of CUPS will be Roberto Diaz Guevara who
will offer legal assistance and advice, in case of lawsuits or
litigations. The official accountant of the company will be Ms.
Jael Avila who will be in charge of the day to day registering and
transactions of the company.
The Insurance Institution we have chosen is AIG Metropolitan
Insurance Company. The business insurance offers us a diverse
portfolio of plans that protect both individuals and business. Our
insurance agent will be Jovany Avila (insurance broker). We are
going to work with Banco del Pacifico. Ms. Mayra Villamarn will be
our official banker. She will help with the financial requirements
and will provide advice and financial services.
The group of consultants who will provide legal and financial
advice will be formed by Hernn Loya (Consultant at the Chamber of
Commerce in Quito) and Luis Vega (trader at the Stock Market). Our
mentor and key advisor will be Mr. Donald Stewart, successful
business man and professor at Pontifical Catholic University of
Ecuador. Finally, in case of seeking for a loan we will work with
Banco del Austro. This financial Institution provides training and
financial support for start-up enterprises.
PERSONAL FINANCIAL STATEMENT
CUPS is a start-up business with 3 owners: Ms. Jael Avila, Ms.
Patricia Garcia and Ms. Samanta Andrade. In order to start our
business, we have decided to buy our own local instead of renting
it. Owning the local will represent an important asset for the
Company and will help us to reduce future expenses.
PERSONAL FINANCIAL STATEMENT
AssetsAmount in Dollars
Samantha A.Jael A.Patricia G.
Cash - savings accounts$ 6000,00$ 6000,00$ 6000,00
Personal property (autos, jewelry,
etc.)$25000,00$25000,00$25000,00
Total Assets$31000,00$31000,00$31000,00
The personal financial statement presented above will allow us
to apply for a credit. Since we are starting our business, we do
not have any liability. In addition, we are going to contribute
with $ 6 000 each. We are starting with a capital of $ 18 000. So,
each investor will have a 33,33% of ownership.
The Start-Up Costs:
Insurance = $3,600Renting = $2,000Start-up inventory =$5,000
Oven = $8,000Pots, pans, tables and racks = $8,000Decoration=
$6,000
Permits=$1,000
Total start-up costs = $33,600
The Financial Institution we have decided to work with is Banco
del Austro. We are going to request a credit for the total amount
of $ 50 000. The interest rate the Bank offers us is 19.05% for a
year. We asked for a 5 year loan. Cups contingency fund will be of
$ 1 000, in order to face surprise expenses.
Finally, we have based our startup expenses on financial
information of similar businesses, provided by our financial
advisors.
STARTUP EXPENSES AND CAPITALIZATION AND FINANCIAL PLANUnderlying
Assumptions
Cups will have an annual revenue growth rate of 16% per
year.
The Owners will acquire each one $5,000 of debt funds to develop
the business.
The loan will have a 5 year term with a 19.05% interest
rate.
Source of Funds Profit and Loss Statements
$ 93000,00
-
-
-
$ 93000,00
$ 50000,00
$ 50000,00
$143000,00
$143000,00
$ 72000,00
$13200,00
81,6%
$58800,00
-
$49000,00
$2000,00
$3500,00
$1000,00
$1000,00
-
-
$56500,00
Break Even Analysis
As indicated on our Start-Up Costs Analysis, it will cost us
$33,600 to get our business off the ground. At a selling price of
$1.00 to $2.80 per cupcake, we would have to sell 10,000 cupcakes
in our first year as our breakeven point for the first week payroll
and startup cost, before we can realize a profit. This leads us to
make about 24,271 cupcakes being made to pay off the yearly payroll
and startup costs. That averages out to approximately 2,022
cupcakes that have to be sold per month. All additional sales would
result in a profit for the year.
Funding Sources
The CUPS Team will be able to secure to $31,000 from savings, as
well as from family and friends contributions. In addition, we plan
on taking out a big business loan in the amount of $50,000.
Therefore, we are seeking $10,000 from interested persons who are
willing join in this exciting venture. You are invited to take
advantage and join in this billion dollar industry.
APPENDICES
Advertising materials
Maps and photos of location
Detailed list of equipment to be purchased
Oven Pots
Cash Machine Bowls
Dishes Mugs
Books Pans
Baking
MENU
Promotional budget
/The Start-Up Costs:
Insurance = $3,600Renting = $2,000Start-up inventory =$5,000
Oven = $8,000Pots, pans, tables and racks = $8,000Decoration=
$6,000
Permits = $1,000
Total start-up costs = $33,600
Sales forecast
Best case Worst Case
SALES1st Month
CUPCAKES (35) $ 3000
OTHER DESSERTS$ 1500
BEBERAGE$ 1500
SALES1st Month
CUPCAKES(100) $ 7000
OTHER DESSERTS$ 3000
BEBERAGE$ 4000
REFINING THE PLAN
For Raising Capital
For Bankers
Cups will need a loan of 50 000$. This loan will be used to
purchase the locale where Cups will be operating. We have decided
to buy the locale instead of renting one because we dont want to
expend money each month by paying for something that will not be
part of our assets. As well, by buying the locale instead of
renting it, we can be sure that we will be able to stay in the same
location as long as we want to. This is important for Cups, because
in case we rent the locale and the owner asks us to leave before we
have set a reliable and loyal list of clients, we can be facing
some important losses in income numbers. For this loan, Cups
intents to pay the total of the loan in a five year period, as it
wouldnt be productive to have a long term debt, and a payment
period of less than five years will make the payment quotes really
high, resulting in low or none profits.
For Investors
In a short term period, Cups needs funds for buying the
equipment, the locale and advertising the cupcake store. The short
term funds will be recovered as soon as the number of clients
increases. The funds needed in two to five years will be easier to
have because after that period of time, Cups will be a well-known
cupcake store, attractive to investors. The funds needed, after
this period of time will be used to set up franchises in other
cities of the country or abroad, in order to expend the business
and have a bigger profit. The reason for why this investment is
highly probable to be returned is that the more franchises Cups has
more money it will make. In case the investors want to exit Cups,
the strategy is that the shares can be sold to other investors of
Cups, to the owners of Cups, or to willing investors. If the latter
is the option chosen, then, it will be necessary that the directive
board decide if they agree with these new investors in Cups or not.
As well, the percentage of ownership we will give to investors will
always be less than 49%. Weve decided to give only this percentage,
because this way, we will always have the final word in any Cups
decision. It is clear that we will be open to our investors ideas
and suggestions, but our point of view will be the most important
ones as we are Cups founders, and we know what we want Cups to
be.The financial reports will be provided every month to all the
investors, so they will be able to keep track on how things are
going in their investment. Also, Cups will provide an annual
financial report, with which Cups owners and investors will have a
meeting to think about changes that need to be made or new
directions that need to be taken.Type of Business
CUPS is a retail business that will produce on a small scale.
Furthermore, we have prepared the planned production levels based
in the variation of the demand throughout the year. We are
conscious that there are special days such as Valentines Day,
Christmas, and others, when the demand of our products will be
higher. For this reason, we have chosen a dynamic production plan;
this involves that the production levels will depend on the demand
we received. The image the company wants to transmit is a cultural
one, because through food, we will be able to communicate facts
from the past and the present. Then, the company is meant to be a
place where people can open their minds, their hearts and their
appetite at the same time; since they use all their senses to
learn, we think in that way we are productive and aware of the
community around us.
Our prices were set according to our production costs and the
benefit we want to obtain. As we are starting our business, we
considered what competitors are charging for their products and we
decided to adopt a competitive pricing advantage. We expect our
prices will help us to place CUPS in the market. The markup policy
we have is calculated in the same way, but since each product has
its specific price and cost of production, the benefit will vary
from product to product. However, we have established that any
product will cost us more than the price we sell it. Each product
must return the business at least of 50% of its cost. Furthermore,
the inventory of the goods we use in the production and the
products we produce will be carried out very strictly. The products
we expect to sell, after opening our locale are: cupcakes, all
kinds of desserts, and hot and cold beverages.
To continue, it is vital to take into account the inventory. The
materials Cups will need are principally raw materials as the
cupcakes will be made daily in the store, and books. The average
value in stock of Cups is 500$ in books, as most of the books will
be contributions from the clients, and the books are not going to
be bought each month, so they are a onetime expense. About 1100$ in
materials for the coffees and pastry will be needed each month in
order to provide the ingredients that are used in their
elaboration. The rate turnover which is computed by dividing the
total sales revenue in a period by the average inventory is
10000/1100, which equals 9.09, while the average of other cupcake
stores is 6.39. Cupcakes are considered seasonal products as in
some holidays, such as Christmas and Valentines Day, they are more
sold, so Cups will need to produce more cupcakes during these
periods. The lead time for ordering will be really short, because
the products are storable and the fruits should be bought daily.
CUPS will be owned by three members, each contributing to the
starting capital of the business. The major source of revenue
during the first year will be service revenue, which includes
cupcakes and drink sales. This shop, including walk-in service, has
three delivery channels to order, via online ordering phone orders
and going to the location we have chosen.This business will aim to
achieve a high profit in the first year, by distinguishing from
competitors through a structured promotional campaign. The
Republica del Salvador and Eloy Alfaro area, in addition, has many
visitors which can stimulate the revenue. This shop will also sell
other products, such as books, movies, and some antiquities.CUPS
will offer only high-quality products, as well as quality service.
In order to achieve this, we have developed a purchasing policy
that is to buy the right quality and quantity of materials at the
best possible price and from the best distributor. Then, the
customer service policies are written at the entrance of the
location and also in our webpage. We want to place CUPS in the
market as an eco-friendly business. We want to stand out for the
quality of all our products and for our customer service. Our
customer policy will be to be friendly and helpful with customers
from their arrival to their departure. Furthermore, CUPS aims to
offer an efficient, effective, and excellent service, treat all
customers with respect and courtesy, always listen to what
customers have to say, respond to enquiries promptly and
efficiently, and consult customers about their needs.
Then, the physical requirements for Cup's as a food service
locale is a space between 200 to 250 m; it should be a one floor
building with two areas, the kitchen and larder and the area where
all the tables and the cash machine will be located. This
distribution is thought to allow a good environment and an easy
transportation of the products. The locale will be preferably
located in a commercial and busy zone, specifically between
Republica del Salvador Avenue and Eloy Alfaro.
Also, in order to provide a consistent image we will offer
different kinds of promotions that will include: free products,
discounts, and extra services as being able to take books home,
etc. Also, one of our advantages is that our prices are the lowest
in the market. Finally, Cups will not offer credit. All the sales
will be in cash in order to avoid payment problems.
The Monthly Expenses:
Staffing = $3,500Rent and utilities = $3,000 Inventory =
$1,500
Rough monthly expenses = $8,000
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