Crafting Strategies: An Example of a Business Plan for Coffee Central

By Ahmad Fuad
​
Introduction
​
The preferred start-up is a coffee bar located near a university. The product is becoming a daily necessity for more people who would wish to enjoy their favorite drink or be in a comfortable place where they can meet their friends or engage in other personal activities such as reading a book. Thus, the support from investors will pave the way for a successful start-up and an easy entry into the promising market.

Justification for Investors Involvement in Business

Reasons for Investing in Coffee Central
Coffee is becoming a daily necessity for more consumers. The rising demand for the product and excellent customer service provide better opportunities for new entrants to make an impact in the industry (Sumathi et al., 2017). The decision to start a coffee bar also aligns with the need to capitalize on a large number of students and the nearby community that will be the core group of repeat clients. Thus, Coffee Central will offer the best products in the targeted market, complemented by pastries to make the moments at the bar memorable.

The goal is to become the preferred new coffee joint and make profits in the short term. Coffee Central will also strive to establish a store design that captures the attention of customers and enables employees to respond fast to clients' orders. Aggressive marketing will allow the firm to create a solid base of loyal consumers and maximize sales from high-quality coffee, such as espresso. The company will offer an ambient atmosphere where consumers can have peace of mind through excellent services and consistent quality (Almohaimmeed 2017). In this case, investors could be assured of steady revenue streams from the sale of coffee and pastries. Moreover, the targeted location connects to an affluent neighborhood with busy commercial activities and consumer traffic. The site will ensure that the company reaches out to individuals with a high purchasing power who are likely to order coffee to cope with their schedule.

A start-up fund of $180,000 from investors is adequate to complement the amount borrowed from a commercial bank. The projected revenue growth is from $600,000 in the initial year to $800,500 in the third trading period. The company will maintain a 68% gross profit margin. Further, operational excellence could help to grow the net margins from $150,500 to $250,500 within the three years. The gross margin shows Coffee Central’s financial health after subtracting the cost of sales (Omari et al., 2017; Husna et al., 2016).

In this case, investors can be assured of the firm’s ability to generate revenues in the short-term due to the low costs involved in the production process. The net profits also indicate the likelihood of Coffee Central generating the desired income after deducting taxes, interest rates, and other operating expenses (Tulsian 2014). Thus, investors can be assured of the commitment of the company to maintain higher operational efficiency and profitability than its rivals.

Business Critique

Risks
Coffee Central has already laid out a plan to address the gaps. Among the risks is a poor choice of location of the business. The threat could limit sales due to low customer traffic. As such, it is vital to be close to an adequate number of consumers who can easily access the joint in all weather conditions. In this case, the coffee joint will be in a commercial location with a seating area of 30 tables to accommodate more people. It will be within walking distance from a university and in a location that connects an affluent neighborhood. The clean windows and visual signs outside the joint will capture the attention of more customers (Sabir et al., 2014).

The other risk is negotiating a lease agreement since the joint will be in a prime location. In this case, we hope to secure a two-year lease of a vacant premise with an optional renewal for three years based on the financial strength of Coffee Central. The busy nature of the target market means that there is a risk of establishing the right consumer flow layout (Rahardjo et al., 2019).

The joint will have adequate space to accommodate thirty people. The design will also have a pickup area to enable consumers to access products easily. There is a chance to grow the business by sustaining customer traffic. The other risk relates to an inefficient coffee workstation where the barista has less space to prepare the products. The plan is to secure a structure that has enough space to enable employees to cope with a high demand work environment. Enough space also minimizes exposure to hazards by facilitating the flexible movement of workers and consumers.

Weaknesses
One weakness is that the established brands may use their position to limit potential consumers due to the rapport already established with clients. Further, there are chances that some customers may take longer to get used to Coffee Central due to its unfamiliar menu and ingredients (Liu et al., 2019).

For example, some may not be aware of exotic flavors or espressos. In this regard, the firm has to invest in aggressive marketing to assure clients about the value provided at the coffee bar. The economic situation brought by COVID-19 may lead to potential limits on consumption due to the lockdowns and a declining disposable income caused by job losses and closure of businesses.

Proceeding with the Start-up

Coffee Central has the determination to become the best brand for consumers who seek a relaxed environment with a layout that provides the best daily experiences. Therefore, the process will go on as planned due to the increasing need for the best coffee and the assurance of excellent customer service (Al-Tit 2015). We are confident that the brand will become the preferred joint for university students, the business community, and other consumers who seek the best consumption experiences.

The visually attractive store design will facilitate high customer traffic as more people become aware of the uniqueness provided by Coffee Central (Rahardjo et al., 2019). We are in business to help consumers cope with daily life stressors and a busy schedule that requires time to enjoy the best coffee drink. The company will offer clients the best taste in the region. The goal is achievable using high-quality ingredients, including exotic ones prepared by the best baristas (Baros et al., 2014). The menu and layout will focus more on maximizing sales by enabling consumers to have their preferred choice of coffee and pastries.

Free Wi-Fi and large screens will enable consumers to catch up with the latest news and be entertained through some soft music to complement the relaxed atmosphere. Further, the menu of Coffee Central includes espresso-based drinks offered in different forms, such as skimmed milk depending on the client’s request (Fesseha et al., 2016). The decision to proceed with the idea is based on the steady growth in coffee consumption. In this case, the industry is promising, and Coffee Central will achieve the anticipated gross profits to facilitate growth and future expansion.

With the right leadership, there is an assurance of sustainable success in the industry (Gill et al., 2010). Further, the firm targets the university, the working group, and the business community, thus expanding market share. The preference for better-tasting quality and curiosity among university students to try out new products in the market are also some of the factors that will fuel the demand for Coffee Central's products.

Limitations of Models and Concepts

One limitation of the model used is the lack of a hierarchy to identify the most pressing weaknesses. The gap limits the prioritization of interventions required to put the business on the right path (Gürel & Tat 2017). The limitation could also increase the risk of overlooking significant issues. The other drawback is the subjectivity caused by unreliable data sources and inadequate brainstorming. Biased insights could undermine the integrity of the analysis, thus making it difficult to achieve the intended outcomes (Oreski 2012). In this case, it is difficult to identify problems or adopt the best solutions.

Conclusion
​
Selling coffee is one of the most promising ventures in the modern business environment. It is also among the preferred drinks and encourages consumers to make repeat visits by offering the best quality in the market. In other words, establishing a loyal base enables an organization to increase sales and gain a competitive edge in the industry. Therefore, Coffee Central will make an impact in the market through effective management responsible for maintaining desired quality, customer services and employee motivation to achieve the desired sales. Thus, investors can be assured of operational excellence and maximum returns for their investment in the business.

References

Almohaimmeed, B. (2017). Restaurant quality and customer satisfaction. International Review of Management and Marketing, 7(3), 42–49.

Al-Tit, A. (2015). The effect of service and food quality on customer satisfaction and hence customer retention. Asian Social Science, 11(23), 129–140.

Baros, I., Setiawan, B., Hanani, N., & Koestiono, D. (2014). Indonesian coffee competitiveness in the international market: a review from the demand side. International Journal of Agriculture Innovations and Research, 3(2), 605–610.

Fesseha, Y. M., Matsuda, T., & Sato, N. (2016). Substitution in consumer demand for coffee product categories in Japan. Journal of Agricultural Science, 8(4), 50–58.

Gill, A., Flaschner, B. A., Shah, C., & Bhutani, I. (2010). The relations of transformational leadership and empowerment with employee job satisfaction: a study among Indian restaurant employees. Business and Economics Journal, 1–10.

Gürel, E., & Tat, M. (2017). Swot analysis: a theoretical review. The Journal of International Social Research, 10(51), 995–1008.

Husna, N., & Desiyanti, R. (2016). The analysis of financial performance on net profit margin at the coal company. International Journal of Management and Applied Science, 2(4), 104–108.

Liu, C. C., Chen, C. W., & Chen, H. S. (2019). Measuring consumer preferences and willingness to pay for coffee certification labels in Taiwan. Sustainability, 11(1297), 1–12.

Omari, R., Zakaria, S. M., & Razzak, A. (2017). The impact of profitability ratio on gross working capital of the Jordanian industrial sector. International Journal of Applied Business and Economic Research, 15(26), 421–430.

Oreski, D. (2012). Strategy development by using SWOT-AHP. TEM Journal, 1(4), 283–290.

Rahardjo, B., Hasbullah, R., & Taqi, F. (2019). Coffee shop business model analysis. Integrated Journal of Business and Economics, 26(8), 140–150.

Sabir, I. R., et al. (2014). Customer satisfaction in the restaurant industry: examining the model in local industry perspective. Journal of Asian Business Strategy, 4(1), 18–30.

Sumathi, N., et al. (2017). Coffee shop management. International Journal of Latest Technology in Engineering, Management & Applied Science, 6(8), 175–180.

Tulsian, M. (2014). Profitability analysis (a comparative study of SAIL & TATA Steel). Journal of Economics and Finance, 3(2), 19–22.