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Café MacVille – Manage Risk

BSBRSK501B

Introduction

Café MacVille will serve take away beverages (especially fine coffee) and moderately priced good quality light meals to the casual dining market within the shopping centre precinct. The café is profitable, has a strong positive cash flow and may be seen as a strong viable and growing business

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Business Opportunity

Brendan and Margaret Elliott have entered into negotiations to purchase a café business, called Café MacVille, because of its great location in the Mountain Glen Shopping Centre with the highest number of passing shoppers which is supported by a large and growing local population. There are a limited number of cafés within the centre and with both Brendan‟s and Margaret‟s experience with having successfully operated and owned a number of cafes in Australia and overseas they will be able to increase their market share from 35% to 40% in 12 months. The competitive advantages of the business are:  location  quality of food and service  knowledge and experience of the industry  available financial resources

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Operation

The main activity of the company is the operation of the Macville Cafe. Business activities include purchasing, storing, preparing, selling and serving our products to our valued customers. The Café is open from 8:00am to 5:00pm Monday to Saturday and from 8:00am until midday on Sunday. The café comfortably seats 36 persons. The mission of the business is to satisfy customers‟ needs and wants for high quality coffee, delicious nutritious meals and excellent service. Our main point of differentiation from other cafes and coffee shops in the Centre is that one of the business owners is an internationally trained chef who will be able to produce fresh, light and healthy meals each day as well as develop new menu items to meet the changing needs and tastes of people who care about what they eat. The high quality coffee will target staff and shoppers in the Shopping Centre who enjoy good coffee that simply offers good value for money at highly competitive prices

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Management Team

The Owner of MacVIlle Café is experienced Café owners/managers having successfully operated a number of cafes in Australia and overseas. The Kitchen team is comprised of qualified chef and has previously worked for the Hilton and the Sofitel groups before this café. She has a degree in Business Management (Hospitality) and she has worked for the Hilton group of companies and for the Rydges group.

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Financial Plan

The projected performance is summarised below: Turnover: Year 1 $536,650 Year 2 $580,000 Gross margin $378,690 (71%) Net profit (before tax) of $109,869 in the first year, growing to $131,175 in the second year of operation. The business is cash flow positive from the first month of operation Break-Even is estimated at a monthly sales level of $30,869 Return on Total Assets: 37.3% Return on Equity: 51.2% The purchase price of the business is $170,000. Total start-up cost has been calculated at $209,810 and is to be funded by way of a $104,905 bank loan and equity injection of $104,905 from Brendan and Margaret. It is proposed that the loan be paid back over a two year period from cash flow.

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Business Opportunity
1 Business Opportunity

Purchase of an established MacVille cafe within the CBD of Brisbane, Queensland that is part of a large, well developed master planned community which is still growing, incorporating a regional shopping centre, residential, retail and commercial development. The business is ideally located for a Café, being situated on the main mall with a high passing trade due to its close proximity to two national supermarket chains and a number of wellknown retail fashion clothing chains. There are a limited number of cafes within the centre and Café MacVille has the best location, with the highest number of passing shoppers. Café MacVille‟s primary customers are shoppers and staff within the CBD area who take a break from their shopping or work and enjoy fine coffee or other beverages as well as for people wanting a light, quick and healthy meal that provide a good alternative to the fast food options. The success of the business is based on its excellent location, quality of management and staff, great „value for money‟ coffee and meals and superior service.

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Vision and Mission

Vision - The company‟s vision is „to be the Café of preference for Brisbane CBD Mission - The mission of the business is to satisfy customers‟ needs and wants for high quality coffee, delicious nutritious meals and excellent service.

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Goals and Objectives

Goal one: maintain continuity of customer relationships during the changeover by:  Retaining two key staff members of Café MacVille  Maintaining the existing price levels Goal two: maintain market share and sales through the change of ownership then grow market share to 40% in 18 months. The strategies to achieve this goal are:  Increase the number of customers  Increase the average sales size  Increase repeat trade from customers  Undertaking more aggressive marketing and promotion Goal three: generate a before tax net margin of 20% for the next two financial years by:  Eliminating high cost purchases  Improving cost control  Improving stock control

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such as water and electrical power STRATEGY Expand marketing and promotion and maintain prices at current market levels Increase advertising and investigate potential to increase floor space Increase advertising in these surrounding areas to attract new clients STRATEGY Look at alternatives to develop capacity to use gas and implement water saving policies and practices Table 1: SWOT analysis and strategy development Page 5 . low interest rates and high disposable income Social Patterns – Population growth (residential development) and increased standard of living Physical Factors – Improved public transport and infrastructure WEAKNESS Environmental – Increased cost of utilities. marketing and develop new resources and strong cash flow from menu items operations WEAKNESS STRATEGY Location – capped capacity due to floor Investigate the option of negotiating space acquisition of additional floor space from adjoining shops OPPORTUNITY Economy – Well positioned to take advantage of a strong economy. skills and experience of Train and develop staff to deliver superior owners/managers in running successful café quality of products and services businesses previously Financial – owners‟ access to financial Fund training.Market Analysis 1 Situational & SWOT Analysis STRENGTH STRATEGY Sales & Marketing – Currently holds largest Maintain and grow market share by market share in the shopping improving marketing and promotions both within and outside the Shopping Centre Location within the Shopping Centre for Provide quality products and services to point of sales generate word of mouth endorsements and repeat business Skills – knowledge.

These factors are based on the positioning of the business as well as its‟ place and physical appearance:  Location of café in terms of: o Proximity to surrounding attractions o Short distance to consumers o Convenience and accessibility Physical appearance in terms of: o Cleanliness of premises o Quality of food o Quality of service Clear market position   Café MacVille will need to maintain current marketing activities and a high level of service and product quality to ensure its competitiveness. To this extent. Key points about the café and restaurant industry:  Greater concentration in higher than average household income areas  Sensitive to changes in real household disposable incomes  Trend towards singles. While the level of competition is increasing. There are three key success factors in the café industry that are essential for the business to do well in order to be competitive.2 Industry Analysis The café market is a competitive market with franchised operators starting to emerge in the coffee shop segment (also offering light meals). there will be limited competition and it is anticipated that all cafés and coffee shops within the complex will be quite profitable. which will over time increase concentration in this segment. families and business people meeting and eating out  Growth with households increasing purchasing frequency and the amount spent in each transaction in this area The current general trend is for cafes and restaurants to concentrate on offering value for money with an emphasis on family restaurants. This will include more dining out or take away food consumption. the shopping centre in which Café MacVille will be located has capped the number of cafés and coffee shops within the complex (by covenant in the Lease Agreement). The industry will continue to benefit from higher incomes and time constraints on some households as well as lifestyle changes. Page 6 . It needs to have a clear market position to target and promote the quality and value for money of products and services. as well as franchised opportunities.

Page 7 . quality and value for the coffee drinkers as well the health conscious consumer who is concerned about what they eat. The master planned community attracts a high socioeconomic demographic with high employment and higher than average per capita income. In addition. These competitive advantages form the basis of our unique selling proposition with the slogan of “MacVille‟s – convenient. They are wanting a convenient. one of the owners is an International Chef who can create new menu items overnight which gives the business the flexibility to sell products to meet the changing preferences of customers. Café MacVille customers are the passing shoppers and shopping centre staff of all ages who enjoy a fine coffee (dine-in. The majority of customers who purchase coffee from Café MacVille are „social drinkers‟. They tend to have moderate incomes with high discretionary spending. light and healthy” and will also include widely promoting the culinary skills of our International Chef. friendly and relaxing environment to „recharge their batteries‟ or socialise over a fine coffee. Café MacVille is in the best possible location for a café and has 3 years of the initial 5 year lease to run. plus the option of another 5 years.1 Target Market There is substantial population growth in the area as residential development continues and commercial development commences. The cafe will make it particularly easy for a young family to enjoy a meal by providing a range of children‟s meals and activities. followed by customers who want their daily fix or a pick me up. light and healthy meals that provide an alternative to fast food options. The majority of the general public consulted in the shopping centre were families and young singles.4.2 Competitive Advantage and Unique Selling Proposition Our first and main competitive advantage that we possess is our location.0 Elements of Success 4. Our take away beverages will also appeal to this group and the segments made up largely of singles between the ages of 18 – 40 who shop or work within the shopping centre precinct. The market need being satisfied is based on convenience. Our second competitive advantage is the quality and value of the wide variety of light and healthy meals offered by the business that cannot be matched by other businesses in the centre. 4. choice of beverages and quality fresh. or take away) and a healthy. Our third competitive advantage is the industry experience and expertise of both owners running successful café and restaurant businesses in the past. value-for-money meal.

There is no intention to discount to buy Page 8 .2 Marketing Mix PRODUCT Healthy and light meals are the key point of differentiation for the business because the Café has the capabilities and flexibility to develop new menu lines to meet the changing needs and tastes of customers. beverages and cakes and desserts that offers excellent value for money. 5. To position the business as a convenient place to eat light and healthy meals To be reviewed in 6 months. 10 = High PRICE We propose to offer high quality food and service at a price comparative to our major competitors – we will meet the market on price to retain market share if we need to. prices have not been discounted in the market.1 Marketing Objectives There are three key marketing objectives:    To achieve sales of $536.650 for the first year and $580. whereas the two franchise businesses in the centre must conform to the requirements of the franchisor. While the other products. To achieve estimated 40% market share next 12 months. Our clientele have a medium to high disposable income and seek high quality products and good service. are not unique they do offer excellent „value for money‟ that fill the price points between the high and low ends of the other coffee and café businesses in the centre.0 Marketing Plan 5. pricing will reflect the value of our products and services. but do recognise that this is not unique as shown in table 4 below: Table 4: Value Propositions Features Cafe environment Fine coffee Beverages Fresh & light meals International chef Cakes & desserts Benefits Relax and take a break Enjoyment & social connector Refresh and relax Health & well being Quality and variety of meals Complements coffee & meals Importance (1 to 10) 8 7 4 8 8 4 Unique? Y/N No No No Yes Yes No Rating: 1 = Low. The café will provide the relaxed and friendly environment that our customers seek when searching for a „dine in‟ meals.5. The shopping centre has a „captive market‟ and given the limited number of cafés in the centre. in particularly fine coffee.000 for the second year.

The cleanliness of the premise. These promotions will include offers of discounted meals and coffee. DISTRIBUTION) Customers access and purchase our products and services through our shop front. shop front signage will be bright and appealing. PEOPLE Both Brendan and Margaret Elliott have been successful owners and managers of cafés. Word of mouth advertising is very important and the best advertising we will be providing is the quality of our products and service.e. As most of our business will be passing trade. PHYSICAL EVIDENCE The café is fully fitted out with table. An option to take another 5 years is available under the lease. tables and chairs will be Page 9 . It is situated on the main mall. weekly newspaper advertising and a three monthly flyer drop in local mail boxes. near the major (national) supermarkets and retail fashion clothing chains. Further information about the processes in place are detailed in section 8 of this business plan.market share as Café MacVille currently holds the largest market share of approximately 35% and we intend to take it to 40%. chairs and décor that projects the desire image of quality and value as well as aligns with the USP of „Light and Healthy – Café MacVille‟. Brendan is a French trained chef and his skills will be used new product lines to meet the changing needs and preferences of consumers which will be a point of differentiation for the business Margaret with her business and hospitality background will be responsible for the day to day operations of the Café. PLACE (i. We will develop and offer a loyalty card scheme to increase repeat business. The business plan will be revisited at this time. The café is 60 m² and there is three years to run on the current 5 year lease. Our regular advertising will consist of shopfront A-frame advertising boards.000 persons. the businesses located there are potential customers for a catering business. The location of the café is at the southern end of the Mountain Glen Shopping Centre. When the proposed commercial development goes ahead. but they will only run for two weeks. Two key staff member who worked with the previous owner will be retained to help with the continuity of existing relationships with customers. It has a high passing trade due to its close proximity to two national supermarket chains and a number of well known retail fashion clothing chains. We estimate that this will be sufficient time to allow a smooth transition to ourselves as new owners. PROMOTION In conjunction with Mountain Glen Centre Management we will be undertaking a range of promotions when we take over the cafe promoting the new ownership of the café. Mountain Glen is a very large regional shopping centre drawing customers from up to 15 kilometres away and is surrounded by a „market‟ of approximately 250. This also applies to uniforms for the staff. This includes sufficient numbers of staff are working during the peak periods to make sure customers are served in a timely manner. PROCESS Major processes are flow-charted in the café‟s procedure manual that are geared to providing quality and responsive services to clients as well as efficient and effective operations of the cafe. whilst maintaining existing margins.

Page 10 .maintained to a consistently high standard at all times.

000 customers (transactions) per month with a general mix of customers buying only coffee. Our Sales Forecast by quarter is shown in the figure below. Figure 1 Sales forecast Sales Budget Forecast by QTR 160.000 60.000 120.50 per cup for coffee and average light meal selling price of $13. Easter etc. The marketing plan will be revisited at this time.000 0 Sales Budget QTR 1 132.000 20.650 for the first year and $580. Our regular advertising will consist of shopfront A-frame advertising boards. In this area will be training the staff in customer service skills When the proposed commercial development goes ahead.000 for the second year.5. We estimate that this will be sufficient time to allow a smooth transition to ourselves as new owners. As most of our business will be passing trade. We will develop and offer a loyalty card scheme to increase repeat business. weekly newspaper advertising and a three monthly flyer drop in local mail boxes. Sales performance will be analysed on the basis of sales ($) per employee.3 Action Plan In conjunction with Mountain Glen Centre Management we will be undertaking a range of promotions when we take over the cafe promoting the new ownership of the café. but they will only run for two weeks.100 QTR 3 117.00.000 80.400 QTR 4 139.4 Sales Analysis and Forecast Our sales analysis has revealed that we can expect on average 6. shop front signage will be bright and appealing. Our sales forecast is based on an average industry selling price of $3. usually „take away‟ and those „dining in‟ buying a light meal and coffee. On this basis we have projected sales of $536.200 $ Page 11 .5:1 and have based this on the cafés current figures. the businesses located there are potential customers for a catering business.000 140. These promotions will include offers of discounted meals and coffee.g.000 40. Mother‟s and Father‟s days.950 QTR 2 147. 5.000 100. We expect that the mix of coffee to meals will be approximately 1. Sales will spike in the build-up to Christmas and at times of seasonal celebration e. Word of mouth advertising is very important and the best advertising we will be providing is the quality of our products and service.

Licences and Permits Table 5: Listing of registrations. ACN. TFN.0 Legal Matters and Risk Management 6. 38 111111111 The Business Name Café MacVille is an existing registered business name that is being acquired by Seaview Pty Ltd. BN.2 Registrations. licences and permits Description of Registration/Licence Registration of Company Registration of Business Name Australian Business Number (ABN. xxxxxxx Expires.1 Business Structure and Business Name Seaview Pty Ltd has been established to carry on the business Café MacVille. GST) Food Business Licence Date Obtained July 1st 2007 July 3rd 2007 July 4th 2007 Current licence – September 2006 Expiry Date Ongoing July 2nd 2008 Ongoing 3rd September 2007 Page 12 . September 2008 6. with Brendan Elliott and Margaret Elliott being the shareholders and management of the company. 111111111 ABN. PAYG.6.

Informal agreements Agreements with Customers and Contractors Cooperative Agreements with other Businesses No No Page 13 .3 Contracts and Agreements Table 6: Listing of contracts and agreements Contract/Agreement Contract or Agt Yes/No Yes Current Status Awaiting copy from vendor‟s solicitor. Plant & Equipment Purchase/ Maintenance Advertising Contracts Intellectual Property Distribution Rights Purchase/Supply Contracts Service Contracts Loan Documentation Yes No No No No No Yes Have held an initial discussion with the bank – awaiting a copy of the contract.6. loan application documentation and finalisation of the business plan. Refer Business Purchase Contract. Business Purchase Contract Franchise Shop Lease No Yes Subject to due diligence and finance approval. To be acquired as part of the business.

Investigate source of food poisoning and remediate Purchase from alternative suppliers or use suitable substitute products Engage lawyer for advice Short term contract for suitable replacement (until permanent staff can do the job). Develop and maintain a sound working relationship with the Centre Manager. correct storage of food stuffs.6. regular staff training in emergency fire procedures including evacuation plans (shop & centre). fire extinguishers installed and regularly checked. M=medium. Take out key person insurance. evaluate substitute products Major dispute with centre owner Loss of key person L M H VL M M Ensure formal lease agreement is in order. VL=very low. train staff in hygiene principles as part of a Quality Control Process Supplier unable to supply L M M Arrange alternative suppliers. effect knowledge and skill transfer to other staff Page 14 . public liability and business interruption are adequate and in place Maintain good relationships with suppliers and maintain access to personal cash reserves Food poisoning VL VH H Use quality products. VH=very high) Likelihood Priority Fire – loss of property/life M H Impact Risk Description Preventative Action Contingency Plans Immediate access to personal resources to rebuild shop and business quickly whilst waiting for insurance payments Utilise alternative suppliers or increase working capital (from personal cash reserves) Develop a complaint handling process.4 Risk Management Table 7 Risk assessment (L=low. Ensure insurances including fire. Call up insurance policy H Change in suppliers terms M M M Installation of smoke alarms and sprinkler system. H=high.

400 Commencement Date Insurances will be arranged upon execution of the contract. Brendan and Margaret have life insurance and income protection policies already in place.6 Intellectual Property Table 9 Listing of intellectual property owned IP Description Registered –yes/no Commencement Date Expiry Date The business does not hold any Intellectual Property at this stage.6. Page 15 . burglary and business interruption insurance. Insurances will be arranged upon execution of the contract. 6. Insurances will be arranged upon execution of the contract. Insurances will be finalised once the contract has been signed. Table 10 Listing of permissions for use of intellectual property IP Description Registered –yes/no Commencement Date Expiry Date The business does not require any permission for use of Intellectual Property at this stage. Expiry Date Indemnity Insurance QBE $ 500 Key Person Insurance AMP $ 500 Workers Compensation WorkCover $ 200 The business package will include public liability. fire. The above is based on quotes obtained from our Insurance Broker. theft.5 Insurances Table 8 Listing of insurance policies Type of Insurance Business Package Insurer and Policy # QBE Annual Premium $ 1. Insurances will be arranged upon execution of the contract. The café will not be providing either live or recorded music.

marketing. accounting. Margaret has experience in the „front‟ and „back‟ offices of resort hotels and is highly respected in the industry for her management skills. 7. Brendan is a qualified chef and has successfully managed a number of restaurants both here and overseas. the kitchen and food preparation. We will be taking them through our in-house induction program prior to opening.0 Human Resource Management The management of the business comprises Brendan and Margaret Elliott who between them have significant experience in the hospitality industry. It is planned to retain two staff members from the previous ownership and recruit two more appropriately qualified staff. sales. Brendan Elliott will head Team 2 which will be responsible for the food preparation and the kitchen.000 and $200. front counter.000 in the second year of operation. The maximum staff requirement (including the owners) is estimated at 6 employees. stock control. Margaret will have primary responsibility for staff. Salaries and wages in the first year are estimated at $182.1 Organisational Chart Owners/Managers Team Leader 1 Team Leader 2 Team 1 Team 1 Staff at Café MacVille will be organised into two teams. Two of the employees will be employed on a part-time basis. Brendan will be responsible for HR. Page 16 . The main skill sets required are food preparation. customer service. stock control and management.7. and managing the operation of the Café. sales. Team 1 will be headed by Margaret Elliott and will be responsible for customer service and administration.

Skills. with the last role involving turning around the underperforming restaurants of the Hotel/Motels Brendan Elliott Owner/Manager. responsible for the day to day running of the Café 7. Local restaurant and café experience Degree in Business Management (Hospitality). and relevant experience Name Position Knowledge.3 Industry Knowledge and Experience of Key Personnel Table 12: Details of personnel with specific industry knowledge and experience Name Position Knowledge/Experience Staff Member 1 Staff Member 2 Staff M Customer Service Customer Service Customer Worked with previous owners Worked with previous owners Page 17 . international and local experience.7. skills. qualifications. Chef Margaret Elliott Owner/Manager. Worked for two national franchise chains. Qualifications and Experience French trained chef.2 Owner/Operator Skills and Experience Table 11: Summary of owners’ knowledge. Business Manager.

4 Human Resource Requirements Table 13: Analysis of human resource requirements Full Time Staff Team 1 Team 2 Catering Total 2 2 4 Permanent Part Time Casual Staff 1 1 2 Contractors The team of staff will be comprised of Brendan and Margaret. and one „kitchen hand‟. Table 14: Staff and wages estimate Number of Staff Current Year Administration Sales/Marketing Management Production Secretarial TOTAL 5 5 6 $182.6 Employment Conditions As per Hospitality Award.000 $100. 7. 7.7.5 Job Descriptions Under review. Staff will be employed under the Hospitality Award.000 $90.000 Next Year 1 Next Year 2 Current Year Wages $ Next Year 1 Next Year 2 The above includes casual staff.000 $110.000 $100.000 $120. plus two service staff (counter and waiting).000 $220. Page 18 . one assistant „chef‟. This equates to 5 full time equivalents (FTEs).000 $200. Two of these staff will be casual and will work on a part-time basis.000 3 2 3 2 4 2 $82.

400 7.qld.7 Training and Development Table 15: Analysis of qualifications/skills & competencies Actual (1-10) Administration Accounting/ Bookkeeping Computer/EFTPOS Legal Matters Marketing/ Sales Management Personnel Production/Process Research/ Technology Secretarial Strategic Planning Other 8 8 10 8 9 .10 8 8 8 1 8 Forecast (1-10) 8 8 10 8 9 .10 9 . Page 19 .au and their fact sheets for the restaurant and café industry.gov. Duration 2 days Cost $2.8 Workplace Health and Safety The workplace health and safety plan is based on the advice and guidance provided by Workplace Health and Safety Queensland www. then as required.worksafe.7.10 8 8 8 1 8 The skills and competencies are largely covered by Brendan and Margaret and professional expertise will be provided by our external lawyer and accountant.10 9 . Table 16: External or internal on-the-job training courses Staff Member All team members (5 FTE) Training Course Details Induction Course Date Prior to opening.

1 Business Premises and Location At present the only facility we will be using is the café. 8. computer 72 settings of crockery and cutlery 1 of each Replace within 6 months as part of promotional strategy Replace as necessary Under warranty Page 20 . it may be necessary to acquire operating premises to implement the idea. Included in the purchase price. Ongoing costs and Maintenance Under warranty Annual maintenance check Replace as necessary Replace as necessary Crockery. Included in the purchase price. The items to be acquired in the purchase price are two years old and will be subject to a Mortgage Debenture Charge as part collateral for the bank loan. It is ideally located within the shopping centre to attract passing customers and is also relatively close to our main suppliers i.2 Plant and Equipment Requirements Set out below is a listing of the minimum plant and equipment items that are required to successfully operate the Café. The café is fully fitted out and is fit for purpose. grocer and bakery. If this occurs.e. Included in the purchase price. Table 17: Listing of plant and equipment Description of Plant / Equipment Item Quality coffee maker Small commercial kitchen Benches & cupboards. The purchase price of the plant and equipment items listed below is stated in the contract at $50. Included in the purchase price. There is an opportunity to roast coffee beans and manufacture the café‟s own blends at a later date. There is no need for a separate operating location at this point in time. A schedule of the plant and equipment (and their values) contained in the purchase price will be included in the contract documentation and will be subject to due diligence.8. cutlery and linen POS Equipment (including software).000. Included in the purchase price. Included in the purchase price. We will undertake routine maintenance and plan the replacement of plant and equipment items on the basis of annual condition assessments. sinks/drains Furniture – Chairs & tables Signs 36 chairs 10 tables 3 Number required 1 1 Cost and how financed Included in the purchase price.0 Operations 8.

and delicatessen items $500 per week 30 days Alternative local supplier „Mavs Meat Supplies‟ Mountain Glen Bakery Supplies Fresh bread.400 per week Trading Terms 30 days Alternate Suppliers Alternative local supplier „The Greengrocer‟ Mountain Glen Fruit & Vegetable Supplies Tasty Meat & Delicatessen Supplies Fresh meat. soft drinks $350 per week 30 days Uniforms R Us Staff uniforms & 4 per quarter badges Serviettes. 30 days No local alternative supplier Interstate options No local alternative supplier Interstate options A number of alternative suppliers exist Various Hot Shot Coffee Supplies Coffee beans $150 per week 14 days BWS (Drink Suppliers) Wines. Where suppliers do not provide formal contracts we will be requesting an exchange of letters to confirm the basic arrangements.200 per week 30 days Alternative local supplier „The Daily Bread‟ Café Supplies Pty Ltd Plant and equipment As required. and flour etc $1. promotional material 30 days Alternative local supplier „Workwear‟ Café Supplies 30 days No local alternative supplier Interstate options Page 21 .3 Purchasing and Supply Brendan has contacted all existing suppliers and has negotiated supply arrangements on very attractive terms. At this point there are no written contracts although three suppliers have indicated that they are currently preparing contracts for execution. Where local alternative suppliers do not exist. beer.8. Table 18: Listing of major suppliers Name Product/ Service Fresh fruit and vegetables Volume Purchased $1. manufactured meat. tablecloths. In most instances local alternative suppliers exist. we have identified alternative suppliers from nearby regions who have the capacity to meet the café‟s needs in a timely manner at a reasonable cost. rolls.

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Yes Yes Yes Yes Layout of business premises Yes Yes Material Requirements All goods and produce readily available at reasonable prices Excellent Yes Yes Location Yes Excellent location Customers come into the café. Review design and lay out if additional space acquired No change envisaged at this time. sequences & timing) Equipment/Tooling Requirements Current schedules working well. Meets Industry Standard Plant/Office Capacity Yes Yes Scheduling (operation. food and beverage preparation.4 Operating and Production Processes Our major processes are sales. controlling). table service and stock control (ordering. Major processes are flow-charted in the café‟s Procedures Manual. Great service from suppliers No change envisaged at this time. The processing of Point of Sale (POS) transactions is electronic. Table 19: Analysis of operating facilities and processes Detail Current Level of Operation/ Standard „Dine in‟ seating for 36. with transactions being automatically posted into the accounting system (which incorporates a stock control system). The table below represents the current and the planned level of operation and the standard of these operations. Equipment sufficient for our needs Premises well designed and lay out excellent. Meets Industry Standard Planned Level of Operation/ Standard 36 + May need to increase floor space Efficient. A copy of this is appended to the business plan. All appropriately trained Yes Purchasing lead times Excellent.8. storing. Ongoing continuous improvement Appropriate Yes Distribution Customers come into the café. effective & economical Maintain and replace as required. Yes Page 23 . QA system working well Yes Yes Quality Controls Yes Satisfies all industry requirements Yes Staffing Levels Adequate at present Yes.

21 5 $4.97 $2.104.0% 5 $4. 15.29 85.500 $6.20. 19.900 for QTR 3.448 per month. 8. This includes both full time and casual employees. Credit Card.900 $8. linked to the accounting system.900 $7. Other perishables including cakes and cheese cakes will be kept in refrigerated display cabinets and will be stored for a maximum of three days. The accounting system will process the payroll.900 for QTR 1.600 $7.8.75 $2.20 85.% QTR 1 Budget QTR 2 Budget QTR 3 Budget QTR 4 Budget 17. general ledger transactions and maintain the Human Resource records. we expect to turn stock over once per week.0% 6 $6. Figure 2 Operational targets Operational Targets Number of units produced Number of customers Number of Sales Average sale value Average Cost of Sales Leads Lead conversion rate Number of persons employed incl owner Profit per person / % of nett profit to labour Customer satisfaction .20 85.6 Information Communication Technology Systems ICT systems include the computerised EFTPOS system. canned and packaged products will be kept in the storage cupboards. Profit per person is projected at $4. Our target for client satisfaction is a rating of 85% for the first year. 8.21 15.91 $2. and Cash transactions directly to the bank and the accounting system.7 Operational Forecast We have projected sales transactions at 17. Fresh produce such as vegetables are purchased in vacuum sealed bags or cartons and meat in vacuum sealed packs.46 with the average cost of sales at $2.600 for QTR 4.20 85. and 18.951. thus enhancing productivity and management decision making. They provide real time reports.054. The EFTPOS system will process Direct Debit.500 for QTR 2.20 19. These will be stored in a small commercial refrigerator.0% Page 24 . Our average number of employees is estimated at 5 with 6 required at peak times.050. stock control. Stock will be controlled using our stock control system. These systems effectively reduce manual accounting and processing to a minimum. Other items such as coffee beans. Our average sale price is estimated to be $7. On average.5 Stock or Inventory All stock at this stage will be stored „on site‟ at the café. which is a module of the accounting software package.0% 5 $6.17 18.43 $2.

Methods for Improvement Cost 8 9 Change menu to match seasonal availability and cost of food items Ongoing QA audits and training Monitor stock control (orders & wastage) Workplace Agreement On the job training. We believe that this is necessary and achievable. Page 25 .Table 20: Analysis of operational performance (existing/planned) Rating out of 10 Operational Feature Current Expected (in next 6 months) Notes . We propose to lift standards significantly within a few months of taking over. mentoring and coaching None at present None at present None at present None at present Train staff and encourage excellence in service On the job training for the EFTPOS Evaluate changes in consumer tastes and behaviour and monitor the menus of the leading restaurants and cafés Quality 7 9 Wastage 8 8 Flexibility Skill Levels 9 7 10 8 Dependability Scheduling Downtime Safety Service 10 10 10 10 8 10 10 10 10 10 Technology 7 8 Innovation 7 9 The current rating is based on our observation of the existing operation under the current owner.

810 broken up into „one off‟ costs of $187.000.9. Included in the „one off‟ costs is goodwill valued at $120.300 and monthly expenses in advance of $ 22. Figure 3 Start-up budget Page 26 .000 and plant and equipment of $ 50. The start-up budget is shown in Figure 3 below.1 Start-Up Budget The start-up budget is estimated at $ 209.0 Financial Plan Tables attached:  Sales Forecast  Start-up Budget  Annual Profit Budget  Profit and Loss Statement (2 years projected)  Annual Cash Flow Budget  Balance Sheet (2 years projected)  Break-Even Analysis  Financial Analysis 9.510.

510 % of Total 3.1% 10.000 $7.Up Budget MONTHLY EXPENSES Salary of owner-manager All other salaries and wages Rent/lease Advertising & promotion Delivery expense Supplies (stock-in-trade) Telephone Other utilities (electricity.600 $187.1% 0.Start.750 $1.0% 0.2% 0.000 23.4% 0. gas etc) Insurance Consumables Interest Maintenance Legal and Professional costs Miscellaneous Subtotal Projected Monthly Expenses $8.000 $550 $5.000 $124.000 $400 $2.4% 89.8% $3. licenses and permits Advertising and promotion for opening Cash Other Subtotal Other includes goodwill.1% 0.3% TOTAL ESTIMATED START-UP CAPITAL $209.300 1.000 $2.000 $7.8% 3.100 $300 $500 $300 $460 $200 $250 $22.7% One Off' Costs Fixtures and Equipment Fitout Installation charges Starting Inventory Deposits for utilities (electricity.3% 2.2% 1.510 Cash needed to Start $8.200 $200 $3. rent in advance & insurance $50.3% 0. gas etc) Legal and professional fees Registrations.5% 0.2% 0.1% 0.1% 1.3% 1.0% Page 27 .200 $200 $3.810 100.100 $300 $500 $300 $460 $200 $250 $22.4% 59.000 $2.5% 0.

Brendan and Margaret have personal financial resources to more than adequately cover the loan repayment.000 600.000 300. for Year 1 and 22.The Start-up budget is to be funded by way of equity injection of $104.000 $ 400.000 Figure 5 Year 2 financial highlights Year 2 .Financial Highlights Sales Gross Profit Year 1 Net Profit 0 100.905 by the owners and a loan over two years from the bank.000 700. These projections have been based on the Annual Profit Budget (copy attached). Net Profit Margin (Before Tax) is calculated at 20.000 500.5% for Year 2. The business is quite profitable and margins are sustainable over the medium to longer term. A Mortgage Debenture over the business is being offered as collateral along with the Directors personal guarantees.Financial Highlights Sales Year 2 Gross Profit Net Profit 0 100. with the second year projected at $131. The bank loan will be repaid out of the business‟ strong cash flow.6% for Year 2.175.000 $ 400.000 Gross Margin is calculated at 71% for Year 1 and 71.000 600.2 Annual Profit Budget The projected profit for the first year of operation is $109. If cash flow is reduced for any reason. Page 28 .000 200.000 200. Financial Highlights over the 2-year period are summarised in the figures below.000 300. Figure 4 Year 1 financial highlights Year 1 .869.5%.000 500. 9.

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657.187 QTR 2 25. If all suppliers reduced their terms to 7 days cash flow for two trading months.000 40.000 30.000 50. although in most cases these arrangements are not in writing.000 20.681 Budget $ Page 30 .000 0 Budget QTR 1 52. the peak cash shortfall would be approximately $1.000 10. Figure 6 below shows the projected cash-flow by quarter.847 and an ending cash balance of $145.3 Cash Flow Forecast The Cash Flow Forecast projects a very healthy cash surplus on trading for each month with the end-of-year „cash from operations‟ calculated at $105. the business has a strong and positive cash flow. On the figures provided and the arrangements negotiated. Figure 6 Projected cash flow by quarter Net Cashflow Budget by QTR 60.402 QTR 3 27. Brendan has negotiated very favourable credit terms of 30 days from all suppliers for the first 12 months.9.947 QTR 4 19. Brendan and Margaret have significant liquid assets to call upon should this eventuate.200 for about 2 months.

553 54.26% 20.19% 100.000 209.905 109.000 23.4 Balance Sheet The opening Balance Sheet shows an equity position of $104.040 1.22% $ $ $ 120.905 104.71% 40.905 growing to $214.51% Total Assets Liabilities Current Liabilities Bank Overdraft Short Term Loans Trade Creditors All other current Total Current Liabilities Non-Current Liabilities Proprietors Loans Secured Loans Other Loans Total Non-Current Liabilities $ - $ $ $ 14.000 16.905 104.00% $ $ $ 120.83% $ 50.975 214.600 40.79% $ $ $ $ 104.747 40.9.905 $ 104.71% 106.00% Net Assets Represented by: Opening Balance .422 18.810 18.97% $ $ $ 131.00% $ $ 54.905 100.96% $ 50.000 23.347 45.774 Page 31 .00% $ $ 100.822 25.400 3.48% 0.553 79.26% 13.000 294.000 120. By the end of Year 2 the business will be clear of any debt and be „cashed up‟ to take advantage of further opportunities in the market place.Owners Equity Add Capital injected Plus Profits Less Capital Draws/Dividends TOTAL PROPRIETORSHIP $ $ 104.600 10.772 68.53% 31.949 at the end of Year 2.810 57.69% 0.97% $ 134.107 2.905 $ $ 104.41% $ 39.810 18.774 at the end of Year 1 and to $345.21% Total Liabilities 100.869 214.19% 57.000 120.200 44.58% Fixed Assets Land & Building at Cost Plant & Equipment at Cost Motor Vehicles at Cost Leasehold Improvements at Cost Less Provision for Depreciation Total Fixed Assets Intangible Assets Goodwill Other Total Intangible Assets $ 50. Figure 7 Projected opening balance sheet and year-end balance sheet Industry Average % Opening Balance Sheet Balance Sheet Assets Current Assets Cash at Hand and Bank Trade Debtors Inventory Value Short Term Investments All other current Total Current Assets % Year 1 % $ 39.83% $ $ 9.905 104.

2%.000 50.2% 51. Page 32 .46.793 6.3%.138 4.000 20.000 40.000 10.483 3. Return on Total Assets is calculated at 37.5% The above ratios indicate a very solid financial performance over the period.6 Financial Analysis The Return on Owners Equity calculated on the projected end of year financial performance and position indicates a return on investment of 51.869 per month.966 5.000 $ 30.5 Break-Even Analysis The Break-Even point has been calculated at 4138 transactions at an average selling price of $7. The projected level of sales for each month is well above the Break-even level (approximately 30% above).7% 132 27.0% 100. Figure 8 Break-even analysis Break-Even Chart Monthly unit sales Break -Even $ Monthly Sales 60. Gross Profit Margin over the period is estimated at 71% with the Net profit Margin estimated at 20.2% - Ratio Analysis Current Ratio Acid Test (Quick Ratio) Inventory Turnover Debt / Total Assets Debt / Net Worth Return on Equity Return on Total Assets Days Sales Outstanding Gross Margin Net Margin Year 1 528.3% 1 70.1% 37.9.655 2.5% 523.310 4.5%. Figure 9 Financial ratio analysis Opening Balance Sheet 50.621 Monthly Unit Sales 9.0% 51.38 per transaction and a Break-even sales point of $30. This equates to a contribution margin of $6.000 0 1.6% 20.2% 37.

The business also enjoys a sound financial position with the Debt to Equity ratio calculated at 37.2% and Debt to Total Assets at 27. PAYG (withholding) is remitted monthly on the Instalment Activity Sheet (IAS). Page 33 .20 per transaction Sales transactions range from 5900 per month to 7500 in peak period Historical gross profit margin of 70% will hold. with GST remitted quarterly in arrears on the Business Activity Statement (BAS). the after New Year slow to February) The business operates on a cash basis for reporting and paying tax.1%.The Current Ratio and the Quick Ratio (Acid Test) are both very high reflecting the fact that the business has a very strong and positive cash flow. Assumptions Average sale price $7. Liquidity is sound. This is due to sales being predominantly cash. Seasonal fluctuations – Christmas and New Year are peak periods of sales activity (build up from November.46 per transaction Average cost $2. whilst purchases are bought on largely on 30 day terms.

10.0 Financial Worksheets The following documents have been attached:  Sales Forecast  Start-up Budget  Annual Profit Budget  Profit and Loss Statement (2 years projected)  Annual Cash Flow Budget  Balance Sheet (2 years projected)  Break-Even Analysis  Financial Analysis Page 34 .

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2% 0.4% 89.100 $300 $500 $300 $460 $200 $250 $22.100 $300 $500 $300 $460 $200 $250 $22. gas etc) Insurance Consumables Interest Maintenance Legal and Professional costs Miscellaneous Subtotal Projected Monthly Expenses $8.3% 2.3% Page 36 .7% One Off' Costs Fixtures and Equipment Fitout Installation charges Starting Inventory Deposits for utilities (electricity.510 to % of Total 3.000 $2.300 1.5% 0.1% 0.1% 10.4% 0.1% 0.Up Budget MONTHLY EXPENSES Salary of owner-manager All other salaries and wages Rent/lease Advertising & promotion Delivery expense Supplies (stock-in-trade) Telephone Other utilities (electricity.000 $124.000 $400 $2.510 Cash needed Start $8.Start.0% 0.3% 0.3% 1.200 $200 $3.000 $550 $5.000 23.4% 59.1% 0.1% 1.000 $7.8% 3.2% 0.600 $187. gas etc) Legal and professional fees Registrations.5% 0.2% 1.750 $1.8% $3.000 $2.000 $7. licenses and permits Advertising and promotion for opening Cash Other Subtotal $50.200 $200 $3.

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2% 51.7% 132 27.Ratio Analysis Current Ratio Acid Test (Quick Ratio) Inventory Turnover Debt / Total Assets Debt / Net Worth Return on Equity Return on Total Assets Days Sales Outstanding Gross Margin Net Margin Opening Balance Sheet 50.2% 37.3% 1 70.0% 100.1% 37.2% - Year 1 528.0% 51.5% Year 2 Year 3 Page 42 .6% 20.5% 523.

0 Action Plan Action Priority Date Initiated Date for follow up May 25th Person/s Responsible Work/ Stages to be done Deadlines Outcome Costs Complete due diligence (including purchase contract) Review insurances and arrange as required Check that all necessary licences and permits are held Review business plan Prepare finance proposal Submit finance application Arrange settlement date & handover 1 May 18th Accountant Lawyer June 5th Contract terms and conditions reviewed $1.11.600 1 May 18th May 25th Brendan Elliott June 5th All required licenses and permits held 1 June 7th 2 June 11th 2 June 16th 2 June 25th June 25th Lawyer June 25th Take over Café June 16th Accountant June 16th Finance approved/not approved June 15th Accountant June 15th Submit for approval June 10th Accountant June 10th Viability established Page 43 .650 1 May 18th May 25th Insurance Broker June 5th Insurances arranged $2.

0 Refining the plan This section would not be retained when presenting the business plan to other parties e. potential lenders and investors.12.g. Page 44 .

families) Geographic distribution Level of education TECHNOLOGY: Innovations in the manufacturing process Technological developments (substitute products) SOCIAL/CULTURAL Corporate social responsibility Environmentally friendly „green‟ products Standard of living Percentage of work to leisure time POLITICAL/LEGAL: Regulatory environment and legislation Compliance with standards and codes ENVIRONMENTAL Climate Change & Carbon Trading Eco-efficient manufacturing PHYSICAL FACTORS: Climatic conditions Water restrictions Yes 6 Yes Yes Yes Yes 5 6 7 5 Yes Yes Yes Yes 5 6 8 7 Yes Yes Yes 7 7 6 Opportunity Threat Influence (1-10) Page 45 .g. singles.Appendices for Business Plan Appendix 1: Situational analysis – external environment External Environment ECONOMIC: Stage of the economic cycle Current interest rate Average disposable income DEMOGRAPHIC Population growth and make-up Household structure (e.

g. trust) Distribution and sales to target markets Are your buildings and facilities adequate? Is your equipment effective and up to date? Able to protect your IP from being copied? SYSTEMS Strength Weakness Yes Yes Yes Yes 7 8 5 8 Yes Yes Yes Yes Yes Yes Yes 7 8 6 7 8 8 7 Yes 5 Yes Yes for current level of demand Yes Yes – limited capacity for expansion 9 7 5 Page 46 .Infrastructure . communications and services Yes 8 Appendix 2: Situational analysis – internal environment Factor (1-10) Internal Environment STRATEGY Competitive advantage . learn from and adapt your marketing activities STRUCTURE Business structure – maximise wealth and minimise risk (e. company. partnership.transport.able to differentiate Key drivers of the business are known Strategy and resources for growth Detailed action plan SALES & MARKETING Clear evidence of market need for your product/service Know your specific market & competitors in detail Know exactly who your target audience is and be able to describe them in detail Spend more resources on your current and most profitable customers Competitive and profitable pricing strategy Your marketing plan and budget Measure. sole trader.

g. experience & track record Establish complementary areas of skills (e. 10 = High Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 5 5 6 8 8 8 Yes Yes 7 7 8 9 7 Yes Yes Yes Yes 8 8 6 5 10 8 10 8 Yes 8 Page 47 . trusted advisors with skills you don‟t have) Distinctive competencies reside in the business SHARE VALUES People understand why the business exists Shared understanding of the vision People can describe ways in which the business is distinctive FINANCES Do you have access to further funds? Manage budgets.Information and management systems (e.g. satisfaction and remuneration Diversification of management and staff skill base Management skills. cash flow and debtors Is your cash flow adequate for growth Manage and analyse performance against financial indicators in your industry Management understand and use their financial accounts on a regular basis OTHER FACTORS: Nil Rating: 1 = Low. CRM) Performance measurement and rewards Documented processes and systems Strong debt collection systems Purchasing systems and inventory management STAFFING & SKILLS Recruit the right people Training and development of staff Staff motivation.