1

BUSINESS PLAN
ON
“BOOKS & COFFEE STORE”
Submitted Towards the Partial Fulfillment of the Requirement for the
Award of the Degree of
Master of Business Administration (F&C)

Submitted To Submitted By
Dr. MohdArif Anu Singh
Assistant Professor Class/Sem:MBA-F&C(A)/4th
Institute of Management Sciences Roll No.:180013160019
University of Lucknow, Batch: 2017-2019
Lucknow

Institute of Management Sciences

University of Lucknow (New Campus)
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DECLARATION

I hereby declare that the project entitled “Books & Coffee Store” submitted by me in the
fulfillment of the requirements for the award of the degree of Master of Business Administration
of University of Lucknow,Lucknow is a record of my own work carried under the supervision
and guidance of Dr. MohdArif Sir. To the best of my knowledge this project has not been
submitted to this or any other University or Institute for the award of any degree.

Anu Singh

Master of Business Administration (MBA) Sem.4

Institute of Management Sciences

University of Lucknow

Roll No. : 180013160019

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ACKNOWLEDGEMENT

Every work constitutes great idea of assistance and guidance from the people concerned and this
particular project is of no exception.

A report of the nature is surely a result of tremendous support, guidance, encouragement and
help.

Wish to place on record my sincere gratitude to my OSD Prof.Vinod Singh Sirand my project
guide Dr. Mohd. Arif Sir, Institute of Management Sciences, University of Lucknow, Lucknow.
I thank them for constructive help and encouragement throughout the project. Without their
support and guidance, taking this project would not have been possible.

Also I wish to acknowledge enthusiastic encouragement and support extended to me by my

family members.

I am thankful to my friends who provided me their constant support and assistance.

Anu Singh

Master of Business Administration (MBA) Sem.4

Institute of Management Sciences

University of Lucknow

Roll No. : 180013160019

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EXECUTIVE SUMMARY

Operating a used Bookstore does a like own a recycling center,not too glamorous until you take a
look at the owner’sbank account . This is an idea “absentee-owner” type of business,or a small
investment type business for someone to start part-time while holding down a regular,full time
job. The type of person “best-suited” to run a successful used bookstore is a man or woman who
loves to read ,has collected books over the years and enjoys associating with peoples of similar
interests.

Start-up business risks average high, with the average time period needed to become established
is about 3 years. After that “becoming established” stage however, you should be able to enjoy
ownership of a business without extreme market fluctuations,plus an income close to Rs.500,000
per year or more.
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TABLE OF CONTENTS

Chapters No. Chapter Name Page No.

Certificate from Institute 2
Declaration 3
Acknowledgement 4
Executive Summary 5
1 Introduction 7
2 Description of Venture 11

3 Environmental and Industry Analysis 12

4 Organizational and Management Plan 14
5 Market Analysis 15
6 Product/Service 18
7 Strategic Plan 19
8 Production and Operational Plan 21
9 Marketing Plan 25
10 Human Resource Plan 31
11 Financial Plan 33
12 Exit Plan 38
13 Appendix 39
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BOOKS & COFFEE STORE

INTRODUCTION

BOOKS & COFFEE STORE is a startup of used bookstore in the Lucknow.It is the goal of the
company management to acquire local market share in the used bookstore industry through low
price, a dominant selection of products, along with a mug of Coffee and a competitive variety of
services including a buyback/trade program and hard to find book search plus a relaxing, friendly
environment that encourages browsing and reading.
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VISION AND MISSION

Books & Coffee Store’s vision is to provide quality but affordable books for entertainment, self
development&self fulfillment with an excellent environment & experience.

Books & Coffee’s mission is to provide used quality literatureof a types at the lowest possible
prices in the Lucknow area. The company additionally seeks to provide a comfortable
atmosphere for its clients that promote browsing,relaxation, and an enjoyable environment to
spend extend time in. Books & Coffee’s attraction to its customers will be our large selection of
books, magazines, used CD’s and our purchasing\buyback option, which willlower book
acquisition costs and allow our customers to discard unwanted books\CD’s in exchange for cash.
 8

OBJECTIVE

Establishing a bookstore need goals and objectives in your long range plan.As Charles suggested
that “Objectives need to be considerable and achievable benchmarks for expectations.Objectives
are generally indicated in terms of success, growth,profit or incomes.”

The objective of a bookstore will become dependable over a long period of time. The store’s
objectives, however, reflect modifications in environmental surroundings and changes in store’s
competitive position. As a newer business runner should require the objective as a procedure in
the long range plan. Wendy (1997) again said that, “Some entrepreneurs have difficulties placing
objectives since they ask, ‘how could I predict what is possible tomorrow?” However, in case if
you are expecting the market and willing to reach the objectives, only long term panning can
assist you to eliminate such issues and place dominating the bookstore in future. It is also called
the ally plan, where the long term planning supports you to set up unique objectives and targets
or change current ones to get maximum objectives. And it is great idea to include as much
experienced staff when going to set the objective.
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NEW CONCEPT

A bookstore and a cafe give bookworms an opportunity to purchase their favorite titles, discover
new books and enjoy a beverage and snack. Your bookstore will serve as the main attraction but
the cafe helps add a layer of customer service by offering customers convenience while they
shop. Starting a bookstore and café is a massive undertaking and requires a lot of planning. From
calculating your budget to deciding which types of drinks to sell, each decision will determine
your store’s success.

KEYS TO SUCCESS

In order to survive and expand, BOOKS & COFFEE STORE must keep the following issues in
mind:

 We must attain a high eve of visibility through media,billboards and other advertising.
 We must establish rigid procedures for cost control and incentives for maintaining tight
control in order to become the low cost leader.
 In order to continually attract customers, we must be able to keep the maximum amount
of inventory viable and achieve a high level of customer service.
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DESCRIPTION OF THE STORE

BOOKS & COFFEE STORE will be a limited liability partnership registered under Limited
Liability Partnership Act 2008, in Lucknow. Miss Anu Singh & Miss Pragati Singh will jointly
own the store. Miss Anu will establish this firm as a growth-oriented endeavor in order to
supplement her carrier, continue meeting people with similar interests and to lead a viable
business to future. Books & Coffee Store will be establishing its store in one of the busiest
section of Hazaratganj, a busiest market intersection inLucknow. This area is we known for its
upscale residents and high quality establishments. Our facility is a 2000 square ft. store,which
allows the company to stock a large amount of inventory.
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ENVIRONMENTAL AND INDUSTRY ANALYSIS

SWOT ANALYSIS FOR BOOK AND COFFEE STORE

Strengths are those positive internal attributes that strengthen your business. For earning
strengths and weaknesses, the bookstore is recentcome into the market, which has not existed in
the current market before. Since the bookstore is a new one, the plan and which the way of
growth is quite flexible, this could give a quick response to any market variety.

Strengths -

 Professional and quality customer services.

 Cost effectiveness to convenience the customers to buy.
 Post sales services of informing customers about new products & new auctions.

Weaknesses are those negative internal attributes that are working against your success. You can
shore up those weaknesses so they don’t stop your success.

Weaknesses-

 The store has no market position/reputation before.

 Might be unsuccessful to take the maximum interest of customers.
 Manufacturing capability can only fit into the beginning market and could undergo into
the growing market.

Opportunities are those external conditions that can have a positive effect on your goals. These
opportunities can point you in the right direction.

Opportunities –

 The store can have local authors give lectures and book signings.
 Can deliver the same day to mobility-impaired customers.
 Can make personalized recommendation to long term customers.
 Can start frequent buyer program.
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Threats are those external conditions that can have a negative effect on your goals. These threats
can effect you less if you identify and minimize them.

 Large chains have more buying power.

 E-books and E-books reader can minimize the need for physical books.
 Younger generation don’t read as much.
 Nearby public libraries can pose a big threat.

Industry profile :India’s book market, currently worth Rs. 261 billion making it the sixth
largest in the word and the second largest of the Englishlanguages ones, is expected to touch Rs.
739 billion by 2020, as per Economics Times of India report.(source – Nielsen India Book
Market Report 2015)

The report estimates CAGR of 19.3% for the industry for next five years. However, the Indian
book industry receives no direct investment from the government.

Further books have emerged as an instrumentalcategory for e-commerce business,accounting for

15% of the overall e-commerce trade’ just trailing behind electronics(34%) and apparel and
accessories (30%).

The report said that “general and literary fiction” was ranked #1 genre in the trade book
segment,that provides an opportunity for our bookstore to trade in such books.
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ORGANIZATIONAL AND MANAGEMENT PLAN

As stated earlier, Books & Coffee Store will be allimited liability partnership owned by Miss
Anu Singh and her firm partner Miss Pragati Singh. Miss Pragati is expected to assist Miss Anu
in various ways and act as store’s bookkeeper. She is currently a business student at SRMU and
is expected to graduate in 2019. She has expressed an interest in eventually taking over the
management of the store and will be working as a part time manager with this goal in mind.

The company also plans to hire various part-time workmen as needed, some for up keeping the
store others for making coffee & snacks.Additional personnel will be added if necessary.

Miss Anu Singh is a post graduate in management.She has been associated for two years in a
local city library. Over that time she has established excellent contacts in the book acquisition
industry and plans to leverage these contacts in her new business.

Besides this the store is also planning to generate an online app for delivery of books at home for
the customers.For this purpose a staff of 5 deliverymen will be hired in the initial stage and this
may be increased or decreased as per the demand.

MANAGEMENT PLAN –

The Ownership Structure – Limited liability partnership between Miss Anu Singh & Miss
Pragati Singh.

The Internal Management –

Administration – Miss Anu Singh

Marketing – Miss Pragati Singh

Sales – Staff is to be hired

The External Management – The suppliers, bankers, lawyers, business consultants.

Human Resource Needs – Staff may be hired as per the need either freelancing or contract
workers.
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MARKET ANALYSIS

India’s GDP growth of 7.1% is fueling a boom in book sales. Indian publishing successes,in
return, can help provide insights into the country’s growth. The publishing industry is growing at
an impressive rate of 30% every year as per the Indian high commissioner to the United
Kingdom Shiv Shankar Mukherjee. Estimations are that that the sector is now $6.76 billion.

This means that there will be more expenditure by the general public as disposable income will
increase.

The bookstore industry as a whole is going through a large consolidation.Previously local small
stores and regional chains dominated the market. With the advent of the “superstore’ as created
by andmark, the largest payers in the market have been able to gather significant market share
and drive many independent booksellers out of the market.

Where independent booksellers can still create a viable position for themselves within the market
is in the used books segment. This segment generally does not attract big companies since the
“superstore’ concept is much more difficult to replicate in the market with such low profit
margins. This tends to favor the local independent bookseller in the used book market segment as
long as they can acquire a sufficiently large enough facility to house an attractive inventory and
compete with the national chains.
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TABLE SHOWING FORECASTED YEARLY GROWTH

Potential Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR

Customer rate
s

Casual 2% 78,000 79,560 81,151 82,774 84,429 2.00%

Shoppers

‘Hardto 2% 22,000 22,440 22,889 23,347 23,814 2.00%

Find’
Shoppers

Specific 2% 50,000 51,000 52,020 53,060 54,121 2.00%

Category
Shoppers

Total 2.00% 150,000 153,000 156,060 159,181 162,364 2.00%

Note : The abovementioned figures are taken from the market survey done in Hazaratganj area
& also with the help of expert’s opinion.
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180000

160000

140000

120000

100000
Casual Shoppers

Specific category shoppers

80000
Total

60000

40000

20000

0
Year 1 Year 2 Year 3 Year 4 Year 5
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PRODUCTS/SERVICES

BOOKS & COFFEE STORE will offer a wide range of book, magazine, and musicselections.
This includes just about every conceivable category including fiction, non-fiction, business,
science, children's, hobbies, collecting, and other types of books.Our music selection
willconcentrate on CD's as these are the mostpopular and take up the least amount of floor
space.Inaddition, we will be offering a competitive buy and trade service to assist inlowering our
inventory acquisition costs and making our store more attractive to our customers.In addition, we
offer a search and order service for customer seeking to find hard to get items. BOOKS &
COFFEE STORE will have a relaxed "reading room" type atmosphere that we will encourage
through the placement of chairs, couches, etc.
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STRATEGIC PLAN

Books & coffee store’s competitiveedge will be the lower prices we will charge our customers
and the dominant selection above what our used bookstore rivals can offer. This is based on
management's industry knowledge, greater capitalization and excellent location..

One of the most critical elements of Books & Coffee Stores' success will be its marketing
andadvertising strategy. In order to capture attention and sales our company will use prominent
signs atthe store locations, billboards, media bites on local news, and radio advertisements to
capturecustomers.We expect an average 2.00% increase in sales during the first three years as we
establish ourselves in the community. After that we assume a much higher average growth of
between 10%-15% growth over the next five years with growth then tapering off to the industry
average of 2.5% from year to year. These figures may seem very high, but considering the
levelof initial sales and the growth possibilities, management actually considers this to be
conservative.

LEVELS OF STRATEGY

Overall Strategy – The overall strategy is to provide quality but affordable books with friendly
ambience including a cup of copy to the customers.

Business Strategy – Apart from selling books to the in-house customers, the store will also
deliverbooks at home to the mobility impaired customers & can take orders on phone as per the
customers convenience.

Functional Strategy – All activities related to marketing, financing, operations in the

business.Relationship with customers, suppliers etc.
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SALES STRATEGY -Since our store will be a stand alone facility, there is little in the way
to directly influence how we close the sale other than to have an attractive storefront with our
low prices and excellent selection .

The sales price will be the average of most of the soughedliterature books ranging from Rs. 100
to Rs. 500 that comes out to be Rs. 250 in most cases. It will further include the cost of coffee
too. In the first year the forecasted sales will be Rs. 13,04,071 i.e, 5,216 units.

Based on 10% mark up, our forecasted sales will increase by an average of 4.5% from year to
year. These sales figures are based on a conglomerate of commuter and walk by traffic
established by the Fun Mall/Saharaganj Mall management and with an average Rs. 300 purchase
amount. The target profit margin was defined as an average net profit of a merchandise.

SALES FORECAST YEAR 1 (in Rs.) YEAR 2 (in Rs.)

Sales
Fiction Books 1,64,292 1,72,507
Science Fiction Books 1,84,829 1,94,070
Magazines/Newspapers 1,43,756 1,50,944
Children’s Books 1,84,829 1,94,070
Biography Books 1,23,219 1,29,380
Business Books 1,12,951 1,18,599
CD’s and Music 1,84,829 1,88,526
Other 2,05,366 2,09,473
Total Sales 13,04,071 13,57,569
DIRECT COST OF SALES YEAR 1 YEAR 2
Fiction Books 1,26,505 1,31,105
Science Fiction Books 1,42,318 1,47,494
Magazines/Newspapers 1,10,692 1,14,717
Children’s Books 1,42,318 1,47,494
Biography Books 94,879 98,329
Business Books 86,972 90,135
CD’s and Music 1,42,318 1,43,279
Other 1,58,131 1,59,199
Sub Total Direct Cost Of 10,04,135 10,31,752
Sales

PRODUCTION AND OPERATIONAL PLAN

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TO FIND USED BOOKS FOR BOOKSTORE

Most usedbookstore entrepreneurs use their own book collections as start-up inventory base. In
addition, talk to as many neighbors, friends and relatives as possible for the donation of books. :
Then start making the rounds of all the garage salesand flea markets.You should haveat Icast
10,000 books in stock when you open for business and that's a lot of books. Search for books to
sell; those you can buy for 250Rupees or less in all thrift shops.Goodwill storesand Salvation
Army outlets, Church bazaars and estate sales also sometimes provide you with almost
"complete" libraries.

You might place a small ad in your newspaper announcing that you're looking for good
usedbooks to buy. Generally, you evaluate a book according to the price you think you can get it
for in your store. Then you subtract two thirds of that total and offer that as your buying price.
Always separate the books you feel certain you can sell from those you aren't sureabout.

It's going to take awhile for you to become proficient as a book buyer but with practice andsome
experience, you'll quickly develop the intuition you need to realize a profit on every book you
buy. Always flip through the pages of each individual book and be sure of itscondition before
you quote a price.

In many instances you'll also find that out of a box of 25 books, you're only interested in buying
10. The seller will generally want to get rid of his books now and for a couple of dollars more
than your bid price on the 10 books you want, he will let you have all 25 of them.

This is like a windfall to you because you can always use the unwanted books as leader itemsor
extras to generate traffic during two-for-one sales; all books on a certain table for just a nickel
each; or your choice of free books for everyone coming in to browse on certain days.

You should carry hardcover as well as paperback books. Pay no more than 25% of new price or a
mint condition hardcover book and buy only those you are certain can be sold in your store. Pay
no more than 10% of the new price for a mint condition used paperback.
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Visit the libraries and bookstores in your area. Observe what people are interested in
readingwhat they're checking out or buying. Stock your store with these kinds of books. Below is
a listing of the kinds or types of books you should consider stocking in your used books store:

Types of Books you should stock in your Used Bookstore

Business books: These should include books on leadership, marketing, entrepreneurship, career
advancement, time management and people management.

How-to-Books: These should include all the self-help and self improvement manuals you can
find; mail order, auto repair, carpentry, business opportunities, metalwork, home building,
gardening, and small business startup.

Cook Books: You'll probably be surprised at how many people buy books relating to the
culinary arts. A well-stocked cookbook section will mean definite profits for you. Forget about
books on dieting, home economics, and etiquette; these just don't do well in used bookstores.

Special interest books: Watch and listen to the people of your area. Be on the lookout for
people into World War, history, aviation, sports perfection, movies and just plain old book
collectors.

Paperbacks: Women's romance, science fiction, mysteries, and historical novels are all good
movers currently enjoying an upsurge in popularity and sales. These will be the “best movers"
in your inventory, so develop good sources of supply, and price them for fast sales.

Building and maintaining your inventory, while continuing to rapidly turn that inventory over,
can be handled in a number of different ways. It's not a good idea for you to exchange two or
three of your customer's books for one of yours. There's always a variance in price, plus you
may not want the type of books your customer is offering to trade.

The most feasible plan seems to be to give the customer a credit line for each book you from
him. Simply have a supply of business cards promoting your store, printed at your quick print
shop.

Then when someone brings in a couple of books to sell, you pay him in credit, marking in the
amount and signing your name on the card. An easier way might be to have your signature
 22

printed on the cards when you order them; you or your clerk would simply fill in the credit
amount, and emboss the card with a notary-type embosser.

Usually, you allow 200 to 250Rupees for mint condition paperbacks and about one quarter
ofyour selling price for hardbacks. Always make sure the customer understands that regardlessof
how many "credit chits" he has, the credit chits can only pay for half the purchase price.Thisof
course, is to protect your cash flow from running out.

Many used bookstores add to their income potential by adding tape cassete lending libraries.
These are real money makers with a kind of service that lends out “books on tape" and special
learning programs where portion of the rental fee applies to the purchase of the original
tapecassette.

Many great used bookstores add to their income by running mail order book sellingoperations in
addition to the retail business. This is natural, either for a retail operatorwanting to expand his
market or a mail order operator wanting to increase his income.
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ARRANGEMENT OF BOOKS IN BOOKSTORE

The next thing is to build or buy half shelves, tables and revolving racks for more books. The
halves shelve about 4 feet wide by 4 feet high and similar to bookcases in your home: should be
located at right angles to your wall shelves, and in the rear of your store.

Tables should be about 3 feet wide by 4 feet long, and about 30 inches high. These also should
be located at right angles to your wall shelves, but closer to the front of your store. A revolving
wire rack, to hold currently popular or specially featured books, and located at the front of your
bookstore, will be a special extra merchandising effort that'll really pay off in sales of your
books.

In locating your half shelves and tables down the middle of your bookstore, stagger them; one 3
feet from the wall shelves, the next one 6 feet out, then 4 feet and so on. This will allow people
to be "seen" in your bookstore; cut down on the appearance of a formal or military layout, and
project a more casual atmosphere for browsing and this is precisely what you want. This kind of
arrangement will cost you some space, but it will be worth it with increased traffic.

Another merchandising idea that works very well is a couple of revolving wire racks on wheels.
These you push outside and position near the entrance to your bookstore. You can feature
popular paperbacks, and a few oversize hard cover books with bright, flashy colors in these racks
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MARKETING PLAN

MARKET SEGMENTATION

The company serving the needs of all the potential customers within a ten tofifteen mile radius in
which the approximate population is 150,000 (based on censusinformation). The majority of the
residents with occupations are classified as professional, homemaker, or retired. Themajority of
household incomes range from Rs.50,000-Rs 100,000 per month (50.3%). The medianincome in
this area is Rs.68,096 per month, compared to the whole Lucknowarea, which is Rs.34,248 per
month.The typical "head of household" age is 25-34 (22.4%) or age 34-44 (23.1%) with a
medianAge of 44.4 years old and an average age of 32 years old.
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TARGET MARKET SEGMENTS

Used bookstores serve the entire purchasing population of its geographical area but focuseson
customers who desire to purchase books/music at discount prices because they are seeneither as
near commodity items or, in the case of books, are not considered to be a long- term investment
(i.e. they will trade them back). Because of this relatively low value placed uponour merchandise
by potential customers, BOOKS& COFFEE STORE can still flourish in anupscale environment
like Hazratganj. This is especially true with people seeking to cutwith the bad economy. Even
though we service the entire book reading population inHazratganj and the surrounding area, we
can divide our customers based on purchasinghabits.

 Casual Shoppers: These are customers who go to the bookstore with no set idea of what
they want to purchase. They seek to spend a fair amount of time browsing the store and
often are considered impulse buyers. Often they leave the store with small purchases or
without buying anything. These customers are attracted to bookstores with low prices and
large inventory.
 Hard to Find Shoppers: These are customers with very specific needs. They are looking
for a difficult to obtain item, usually a book that is out of print. If we can satisfy this
customer, then we are able to build significant customer loyalty. These clients are
generally price insensitive and are also drawn to stores that have large inventory.
 Specific Category Shoppers: These customers are those types that generally buy books
or music of one category, such as fiction or romance. These customers generally have a
good idea of what they want to purchase and have the greatest buyback/trade potential.
These customers represent the highest volume purchaser, often leaving the store having
spent Rs.300-Rs.500.

.
 26

COMPETITION AND BUYING PATTERNS

Our main competitors are: Universal Book Stores (which holds approx. 22% city market share),
Rama Book Depot (which holds approx. 15%) and other local new and used bookstores. The
used bookstore that most closely rivals our own is Sahay Books, which is, located
approximately 5 km away in Aminabadmarket.It is estimated that they hold 9% of the local
market share.

Management feels it must be clearly stated that we do not intend to directly compete with the
Landmark/CrosswordBookstores. Superstores are large and carry approximately 150,000 titles
per location. Over the years, these large companies has successfully leveraged their resources to
engineer
 27

MARKET POSITIONING

The market positioning for Books & Coffee Store will be through its marketing and advertising.
In order to capture attention and sales the store will use prominent signs at the store
locations,billboards,media bites on local news and radio advertisements to capture customers.

PROMOTION STRATEGY

The entire front of the store will be a show window; of which display will be in an uncluttered
manner showing the kinds of the book that the store will have. However, a window display is not
necessary; more important is a window for the passerby to see into the bookstore. At any rate if
we will be going for a window display, it will never be more than 36 inches high leaving a lot of
room for people passing to see in the bookstore and notice people browsing through the book.
And I have heard of one successful owner of a used bookstore who had members of his
family,relatives and friends purposefully “browsing” through his bookstore just to project that
kind of image for the store.
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BRANDING OF THE BOOKSTORE

Once the location is selected,the entire interior will be painted in a dark, warm color such as
mahogany. A lighter shade of carpet will be installed throughout indoor and outdoor. The
lighting will be indirect and somewhat subdued to give the store a warm feeling. Checkout
corner will be parallel to one of those sidewalls. It shoudn’t guard or bock the easy entry and exit
of the store so that the customers just feel comfortable visiting the store.

To do everything that encourages the browser is the motive of the store because it is proven that
“the browsers are the bookbuyers”. Encouraging people to come and do generally as they
please,to pick up thumb through the books that interests them, to read them and “fall in love”
with them. These will be the real bookbuyers

The bookshelves should run along each sidewall and across the back of the store. It wont be
build more than six feet high. The partition of these shelves into sections will be about four feet
wide and at top of the each section;a sign would be paced indicating the genera subject matter of
the books to be found in that section.

The was of the store will be papered from the top of the bookshelves to the ceiling with posters,
colorful and descriptive travel posters; broad way show billboards, concert posters and fu color
dust jackets from the books that are perennially popular.
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ADVERTISING OF THE BOOKSTORE

Newspaper or broadcast advertising will be much more expensive than its worth. The best bet
here is to create a comfortable feeling and open invitation for browsers, price the stock fairy,
concentrate on persona service andlet ‘word of mouth’ advertising and time to do the rest.

Even so, we can run an advertisement in the yellow pages and in college papers and from time to
time, special advertisements in local shopping newspapers. Inexpensive flyers inviting people in
to exchange books, or to just browse, can be printed at your local quick print shop and handed
out or paced under the windshields of cars in the larger shopping center parking lots.

Advertising and special sales during holiday periods such as Christmas, Mother’s day and
Father’s day are generally quite effective in bringing in the new customers.
 30

HUMAN RESOURCE PLAN

HIRING OF EMPLOYEES FOR BOOKSTORE

If you cannot be there to “open the store”, then hire part time help. The best arrangement is
housewives or college students in 4 hour shifts at the minimum wages. First off, write out a list
of duties you want to each clerk to performwhile he is on shift. In addition to taking care of sales
transactions, you might want him to do some stocking, dusting, cleaning, sorting and pricing.

Regardless, you will have a fewer problems and enjoy bigger profits if you formally write these
shift duties out, post them as job requirements and explain them when you interview for hired
help. Look, for and try to hire only book lovers who are personable, outgoing and have some
sort of business aptitude.

You can train these people in a phases of your operation with the thought in mind that they will
run the store in your absence and eventually be store manager. The best way to find such people
is by taking with your customers and observing which might be willing to work for you and
which of them might best fulfill your needs.
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PERSONNEL PLAN

Initially the store will have a small staff including upper management and sales personnel.We
expect to expand our personnel and extend our hours once we begin to make a profit. Here is a
forecasted paycheck for the employees of the store -

No. of persons Year 1 Year 2 Year 3

Miss Anu Singh Rs.1,00,000 Rs.1,20,000 Rs.1,20,000
Miss Pragati Singh Rs.50,000 Rs.55,000 Rs.60,000
Salespeople (3) Rs1,60,000 Rs.1,62,000 Rs.1,62,000
Up keeping & Rs.60,000 Rs.62,000 Rs.64,000
Maintenance staff (2)
Deliverymen (2) Rs.50,000 Rs.55,000 Rs.60,000
TOTAL Rs.4,40,000 Rs.4,54,000 Rs.4,66,000
 32

FINANCIAL PLAN

Our start up is expected to operate at a loss for the first couple of months before advertising
begins to take effect and draw customers. The expenses would be financed through sources such
as private investors and loan finances. We do not anticipate any cash flows problems during next
three years.

OBJECTIVES-

These are goals for the next three years for BOOKS & COFFEE STORE :-

 Achieve profitability by July Year 2

 Earn approximate y Rs.10,00,000 in sales by Year 3
 Pay owners a reasonable salary while running at a profit.

IMPORTANT ASSUMPTIONS :-

 All sales are on cash basis

 All merchandise acquisition on cash
 Tax rate @30%
 33

BREAK EVEN ANALYSIS

Selling price per unit Rs. 250

Profit @ 10% on total cost

Total cost Rs. 227

Total fixed cost per unit = Rs. 6,61,250/ 5,216 units

= Rs. 127

Total variable cost = Rs. 100

Fixed costs Amount

Advertisements 50,000
Depreciation 21,250
Salary (workers) 2,90,000
Stationary 20,000
Electricity 40,000
Rent 2,40,000
Total fixed costs 6,61,250

Break even point (in units) = Total fixed costs/ (Sales price – Variable cost)
= 6,61,250/ (250 -150) = 6,613 books

 Projected monthly sales : 552 books

 Break even point (months) : 6,613/552 = 11 months (approx.)

DEPRECIATION:

Assumption :Depreciation @25%

 34

Furniture 20,000
Bookshelves 25,000
Inverter 15,000
Computer 25,000
Total 85,000

Total annualDepreciation : 85,000 * 25/100 = Rs.21,250

Projected Profit and Loss Statement

Year 2019 2020 2021

Sales (in units) 7,500 8,500 9,500
Sales (in Rs.) 18,75,000 21,25,000 23,75,000
Cost of goods sod 11,25,000 12,75,000 14,25,000
Gross Margin 7,50,000 8,50,000 9,50,000
Expenses
Depreciation 21,250 21,250 21,250
Salaries 2,90,000 2,79,000 2,86,000
Advertisements 50,000 50,000 50,000
Stationary 20,000 20,000 20,000
Electricity 40,000 40,000 40,000
Rent 2,40,000 2,40,000 2,40,000
Profit before tax 88,750 1,99,750 2,92,750
Tax @ 30% 26,625 59,925 87,825
Net Profit 62,125 1,39,825 2,04,925

Projected cash A/c (1st Year)

Particulars Amount Particulars Amount

To Bal. B/d 1,00,000 By Purchases 11,25,000
To Sales 18,75,000 By Salaries 2,90,000
By Advertisement 50,000
By Stationary 20,000
By Electricity 40,000
By Rent 2,40,000

By Tax 26,625
By Drawings 50,000
By Bal c/d 1,33,375
 35

19,75,000 19,75,000

Projected cash A/C (2nd Year):

Particulars Amount Particulars Amount

To Bal. B/d 1,33,375 By Purchases 12,75,000
To Sales 21,25,000 By Salaries 2,79,000
By Advertisement 50,000
By Stationary 20,000
By Electricity 40,000
By Rent 2,40,000
By Tax 59,925
By Drawings 50,000
By Bal c/d 2,44,450
22,58,375 22,58,375

Projected cash A/C (3rd Year):

Particulars Amount Particulars Amount

To Bal. B/d 2,44,450 By Purchases 14,25,000
To Sales 23,75,000 By Salaries 2,86,000
By Advertisement 50,000
By Stationary 20,000
By Electricity 40,000
By Rent 2,40,000
By Tax 87,825
By Drawings 50,000
By Bal c/d 4,20,625
26,19,450 26,19,450
 36

Projected Balance Sheet

Assets 31 Dec. 2019 31st Dec. 2020 31 "Dec. 2021

Current Assets
Cash 1,33,375 2,44,450 4,20,625
Fixed Assets
(Less Dep.)
Furniture 15,000 10,000 5,000
Inverter 11,250 7,500 3,750
Book Shelves 18,750 12,500 6,250
Computer 18,750 12,500 6,250
Total 1,97,125 2,86,950 4,41,875
Liabilities/ capital
Capital 85,000 97,125 1,86,950
 37

EXIT PLAN

While “shutting down” is always an option, it is rarely the strategic business decision. As long as
business’s brand has any value and a loyal or sizeable customer base or a stable core of
employees, the business owner would be significantly better off selling the business as an exit
strategy. However, in an opposite case you may be compel to wind up the business because
continuing on is going to incur further lossesonly. In that case, selling off the business to the
right party is the most suitable solution.

Advantage :

 Can generate significant revenue

Disadvantages :

 Can take longer than expected

 Requires suitable buyers
 Less buyers, lower prices.

Generally, the most potential buyer for the business, the better it is since then you can establish a
market price.
 38

BIBLIOGRAPHY

Web Sources -

 www.books.google.co.in
 www.wisegeek.com
 www.managementparadise.com
 www.bplans.com

Books -

 Entrepreneurship : New Venture and Creation, David H. Holt

 Innovation and Entrepreneurship, Peter F. Drucker
 Entrepreneurship, Rajeev Roy

Reports

 Nielsen India Book Market Report 2015)