Coffee Shop Business Plan

Java Culture

Executive Summary

Java Culture coffee bar is determined to become a daily necessity for local coffee addicts, a place
to dream of as you try to escape the daily stresses of life and just a comfortable place to meet
your friends or to read a book, all in one. With the growing demand for high-quality gourmet
coffee and great service, Java Culture will capitalize on its proximity to the University of Oregon
campus to build a core group of repeat customers. Java Culture will offer its customers the best
prepared coffee in the area that will be complimented with pastries, as well as free books that its
patrons can read to enjoy their visit.

The company will operate a 2,300 square foot coffee bar within a walking distance from the
University of Oregon campus. The owners have secured this location through a three-year lease
with an option for extending. The have also provided $140,000 of the required $170,000 start-up
funds. The remaining capital will be obtained through Bank of America commercial loans.

The company is expected to grow sales revenue from $584,000 in FY2001 to $706,000 in year
three. As Java Culture will strive to maintain a 65% gross profit margin and reasonable operating
expenses, it will see net profits grow from $100,000 to $125,000 during the same period.
1.1 Objectives

Java Culture's objectives for the first year of operations are:

 Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide.

 Turn in profits from the first month of operations.

 Maintain a 65% gross margin.

1.2 Keys to Success

The keys to success will be:

 Store design that will be both visually attractive to customers, and designed for fast and
efficient operations.

 Employee training to insure the best coffee preparation techniques.

 Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing
the sales of high margin products, such as espresso drinks.
1.3 Mission

Java Culture will make its best effort to create a unique place where customers can socialize with
each other in a comfortable and relaxing environment while enjoying the best brewed coffee or
espresso and pastries in town. We will be in the business of helping our customers to relieve their
daily stresses by providing piece of mind through great ambience, convenient location, friendly
customer service, and products of consistently high quality. Java Culture will invest its profits to
increase the employee satisfaction while providing stable return to its shareholders.

Company Summary

Java Culture, an Oregon limited liability company, sells coffee, other beverages and snacks in its
2,300 square feet premium coffee bar located near the University of Oregon campus.  Java
Culture's major investors are Arthur Garfield and James Polk who cumulatively own over 70%
of the company. The start-up loss of the company is assumed in the amount of $27,680.

2.1 Company Ownership

Java Culture is registered as a Limited Liability Corporation in the state of Oregon. Arthur
Garfield owns 51% of the company. His cousin, James Polk, as well as Megan Flanigan and
Todd Barkley hold minority stakes in Java Culture, LLC.

2.2 Start-up Summary

The start-up expenses include:

 Legal expenses for obtaining licenses and permits as well as the accounting services totaling
$1,300.

 Marketing promotion expenses for the grand opening of Java Culture in the amount of
$3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of
$3,580.

 Consultants fees of $3,000 paid to ABC Espresso Services <name changed> for the help
with setting up the coffee bar.
 Insurance (general liability, workers' compensation and property casualty) coverage at a
total premium of $2,400.

 Pre-paid rent expenses for one month at $1.76 per square feet in the total amount of $4,400.

 Premises remodeling in the amount of $10,000.

 Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).

The required start-up assets of $142,320 include:

 Operating capital in the total amount of $67,123, which includes employees and owner's
salaries of $23,900 for the first two months and cash reserves for the first three months of
operation (approximately $14,400 per month).

 Start-up inventory of $16,027, which includes:

o Coffee beans (12 regular brands and five decaffeinated brands) - $6,000

o Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. - $7,900

o Retail supplies (napkins, coffee bags, cleaning, etc.) - $1,840

o Office supplies - $287

 Equipment for the total amount of $59,170:

o Espresso machine - $6,000

o Coffee maker - $900

o Coffee grinder - $200

o Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) -

$18,000

o Storage hardware (bins, utensil rack, shelves, food case) - $3,720

o Counter area equipment (counter top, sink, ice machine, etc.) - $9,500

o Serving area equipment (plates, glasses, flatware) - $3,000

o Store equipment (cash register, security, ventilation, signage) - $13,750

 o Office equipment (PC, fax/printer, phone, furniture, file cabinets) - $3,600

o Other miscellaneous expenses - $500

Funding for the company comes from two major sources--owners' investments and bank loans.
Two major owners, Arthur Garfield and James Polk, have contributed $70,000 and $30,00
respectively. All other investors have contributed $40,000, which brings the total investments to
$140,000. The remaining $30,000 needed to cover the start-up expenses and assets came from
the two bank loans--a one-year loan in the amount of $10,000 and a long-term (five years) loan
of $20,000. Both loans were secured through the Bank of America. Thus, total start-up loss is
assumed in the amount of $27,680.

The following chart and table summarize the start-up assumptions.

START-UP REQUIREMENTS

Start-up Expenses
Legal $1,300

Stationery etc. $500

Brochures $3,580

Consultants $3,000

Insurance $2,400

Rent $4,400

Remodeling $10,000

Other $2,500

TOTAL START-UP EXPENSES $27,680

Start-up Assets

Cash Required $67,123

Start-up Inventory $16,027

 Other Current Assets $0

Long-term Assets $59,170

TOTAL ASSETS $142,320

Total Requirements $170,000

START-UP FUNDING

Start-up Expenses to Fund $27,680

Start-up Assets to Fund $142,320

TOTAL FUNDING REQUIRED $170,000

Assets

Non-cash Assets from Start-up $75,197

Cash Requirements from Start-up $67,123

Additional Cash Raised $0

Cash Balance on Starting Date $67,123

TOTAL ASSETS $142,320

Liabilities and Capital

Liabilities

Current Borrowing $10,000

Long-term Liabilities $20,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

TOTAL LIABILITIES $30,000

Capital

Planned Investment
 Arthur Garfield $70,000

James Polk $30,000

All other investors $40,000

Additional Investment Requirement $0

TOTAL PLANNED INVESTMENT $140,000

Loss at Start-up (Start-up Expenses) ($27,680)

TOTAL CAPITAL $112,320

TOTAL CAPITAL AND LIABILITIES $142,320

Total Funding $170,000

2.3 Company Locations and Facilities

Java Culture coffee bar will be located on the ground floor of the commercial building at the
corner of West 13th Avenue and Patterson Street in Eugene, OR. The company has secured a
one-year lease of the vacant 2,500 square feet premises previously occupied by a hair salon. The
lease contract has an option of renewal for three years at a fixed rate that Java Culture will
execute depending on the financial strength of its business.
The floor plan will include a 200 square feet back office and a 2,300 square feet coffee bar,
which will include a seating area with 15 tables, a kitchen, storage area and two bathrooms. The
space in the coffee bar will be approximately distributed the following way--1,260 square feet
(i.e., 55% of the total) for the seating area, 600 square feet (26%) for the production area, and the
remaining 440 square feet (19%) for the customer service area.

This property is located in a commercial area within a walking distance from the University of
Oregon campus on the corner of a major thoroughfare connecting affluent South Eugene
neighborhood with the busy downtown commercial area. The commercially zoned premises have
the necessary water and electricity hookups and will require only minor remodeling to
accommodate the espresso bar, kitchen and storage area. The coffee bar's open and clean interior
design with modern wooden decor will convey the quality of the served beverages and snacks,
and will be in-line with the establishment's positioning as an eclectic place where people can
relax and enjoy their cup of coffee. The clear window displays, through which passerby will be
able to see customers enjoying their beverages, and outside electric signs will be aimed to grab
the attention of the customer traffic.

Products

Java Culture will offer its customers the best tasting coffee beverages in the area. This will be
achieved by using high-quality ingredients and strictly following preparation guidelines. The
store layout, menu listings and marketing activities will be focused on maximizing the sales of
higher margin espresso drinks. Along with the espresso drinks, brewed coffee and teas, as well as
some refreshment beverages, will be sold in the coffee bar. Java Culture will also offer its clients
pastries, small salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee
at home, Java Culture will also be selling coffee beans.

The menu offerings will be supplemented by free books and magazines that customers can read
inside the coffee bar.
3.1 Product Description

The menu of the Java Culture coffee bar will be built around espresso-based coffee drinks such
as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with
whole, skimmed, or soy milk. Each of these coffee beverages is based on a 'shot' of espresso,
which is prepared in the espresso machine by forcing heated water through ground coffee at high
pressure. Such espresso shots are combined with steamed milk and/or other additives like cocoa,
caramel, etc., to prepare the espresso-based beverages. Proper preparation techniques are of
paramount importance for such drinks. A minor deviation from the amount of coffee in the shot,
the size of the coffee particles, the temperature of milk, etc., can negatively affect the quality of
the prepared drink.

3.2 Sales Literature

Two thousand flyers will be distributed in the adjacent neighborhood, on the University campus,
at the malls and in the selected office buildings within two weeks prior to the opening of Java
Culture. Subsequently, free postcards with Java Culture endorsement will be printed to increase
the company visibility among the patrons.

Market Analysis Summary

U.S. coffee consumption has shown steady growth, with gourmet coffee having the strongest
growth. Coffee drinkers in the Pacific Northwest are among the most demanding ones. They
favor well-brewed gourmet coffee drinks and demand great service. Eugene, OR, with its liberal
and outgoing populace and long rainy winter, has traditionally been a great place for coffee
establishments. Java Culture will strive to build a loyal customer base by offering a great tasting
coffee in a  relaxing environment of its coffee bar located close to the bustling University of
Oregon campus.

4.1 Market Segmentation

Java Culture will focus its marketing activities on reaching the University students and faculty,
people working in offices located close to the coffee bar and on sophisticated teenagers. Our
market research shows that these are the customer groups that are most likely to buy gourmet
coffee products. Since gourmet coffee consumption is universal across different income
categories and mostly depends on the level of higher education, proximity to the University of
Oregon campus will provide access to the targeted customer audience.

The chart and table below outline the total market potential (in number of customers) of gourmet
coffee drinkers in Eugene, OR.

MARKET ANALYSIS

YEAR YEAR YEAR YEAR YEAR

1 2 3 4 5

Potential Customers Growth CAGR

Students and Faculty 2% 18,000 18,360 18,727 19,102 19,484 2.00%

 Teenagers 1% 3,000 3,030 3,060 3,091 3,122 1.00%

Office workers 2% 8,000 8,160 8,323 8,489 8,659 2.00%

Other 0% 5,000 5,000 5,000 5,000 5,000 0.00%

Total 1.63% 34,000 34,550 35,110 35,682 36,265 1.63%

4.2 Target Market Segment Strategy

Java Culture will cater to people who want to get their daily cup of great-tasting coffee in a
relaxing atmosphere. Such customers vary in age, although our location close to the University
campus means that most of our clientele will be college students and faculty. Our market
research shows that these are discerning customers that gravitate towards better tasting coffee.
Furthermore, a lot of college students consider coffee bars to be a convenient studying or
meeting location, where they can read or meet with peers without the necessity to pay cover
charges. For us, this will provide a unique possibility for building a loyal client base.

4.2.1 Market Needs

General trend toward quality among U.S. consumers definitely plays an important role in the
recent growth in gourmet coffee. Additionally, such factors as desire for small indulgencies, for
something more exotic and unique, provide a good selling opportunity for coffee bars.

4.3 Industry Analysis

Coffee consumption has shown a steady 2.5% growth rate in the United States over the last
decade. In 1994, total sales of coffee were approximately $7.5 billion with gourmet coffee
representing 33% (or $2.5 billion) of that. The retail coffee industry is flourishing in the U.S.
Pacific Northwest. The local climate, with a long rainy season, is very conducive for the
consumption of hot non-alcoholic beverages. At the same time, hot dry summers drive people
into cafes to order iced drinks. Further, coffee has really become a part of the lifestyle in the
Pacific Northwest. Its discerning coffee drinkers are in favor of well-prepared, strong coffee-
based beverages, which they can consume in a relaxing environment.

4.3.1 Competition and Buying Patterns

Competition

According to the 1997 Oregon Food service Statistics (NAICS 72), Eugene had 45 established
snack & non-alcoholic beverage bars (NAICS 722213) with total sales of $14.2 million. Among
other establishments that offer coffee drinks to their customers are most of Eugene's limited- and
full-service restaurants. Java Culture's direct competitors will be other coffee bars located near
the University of Oregon campus. These include Starbucks, Cafe Roma, The UO Bookstore, and
other Food service establishments that offer coffee. Starbucks will definitely be one of the major
competitors because of its strong financial position and established marketing and operational
practices. However, despite of Starbuck's entrenched market position, many customers favor
smaller, independent establishments that offer cozy atmosphere and good coffee at affordable
prices. Cafe Roma is a good example of such competition. We estimate that Starbucks holds
approximately 35% market share in that neighborhood, Cafe Roma appeals to 25% of customers,
The UO Bookstore caters to another 10%, with the remaining market share split among other
establishments. Java Culture will position itself as a unique coffee bar that not only offers the
best tasting coffee and pastries but also provides home-like, cozy and comfortable environment,
which established corporate establishments lack. We will cater to customers' bodies and minds,
which will help us grow our market share in this competitive market.

Buying Patterns

The major reason for the customers to return to a specific coffee bar is a great tasting coffee,
quick service and pleasant atmosphere. Although, as stated before, coffee consumption is
uniform across different income segments, Java Culture will price its product offerings
competitively. We strongly believe that selling coffee with a great service in a nice setting will
help us build a strong base of loyal clientele.

Strategy and Implementation Summary

Java Culture's marketing strategy will be focused at getting new customers, retaining the existing
customers, getting customers to spend more and come back more often. Establishing a loyal
customer base is of a paramount importance since such customer core will not only generate
most of the sales but also will provide favorable referrals.

5.1 Competitive Edge

Java Culture will position itself as unique coffee bar where its patrons can not only enjoy a cup
of perfectly brewed coffee but also spend their time in an ambient environment. Comfortable
sofas and chairs, dimmed light and quiet relaxing music will help the customers to relax from the
daily stresses and will differentiate Java Culture from incumbent competitors.

5.2 Sales Strategy

Java Culture baristas will handle the sales transactions. To speed up the customer service, at least
two employees will be servicing clients--while one employee will be preparing the customer's
order, the other one will be taking care of the sales transaction. All sales data logged on the
computerized point-of-sale terminal will be later analyzed for marketing purposes.

In order to build up its client base, Java Culture will use banners and fliers, utilize customer
referrals and cross-promotions with other businesses in the community. At the same time,
customer retention programs will be used to make sure the customers are coming back and
spending more at the coffee bar.

5.2.1 Sales Forecast

Food costs are assumed at 25% for coffee beverages and 50% for retail beans and pastries.
Proximity to the University campus will dictate certain sales seasonality with revenues slightly
decreasing during the school vacation periods.
The chart and table below outline our projected sales forecast for the next three years.

SALES FORECAST

YEAR 1 YEAR 2 YEAR 3

Sales

Coffee beverages $350,400 $385,440 $423,984

Coffee beans $87,600 $96,360 $105,996

Pastries, etc. $146,000 $160,600 $176,660

 TOTAL SALES $584,000 $642,400 $706,640

Direct Cost of Sales Year 1 Year 2 Year 3

Coffee beverages $87,600 $96,360 $105,996

Coffee beans $43,800 $48,180 $52,998

Pastries, etc. $73,000 $80,300 $88,330

Subtotal Direct Cost of Sales $204,400 $224,840 $247,324

Management Summary

Java Culture is majority-owned by Arthur Garfield and James Polk. Mr. Garfield holds a
Bachelor's Degree in Business Administration from the University of ZYX. He's worked for
several years as an independent business consultant. Previously, he owned the ABC Travel
Agency, which he profitably sold four years ago. Mr. Garfield has extensive business contacts in
Oregon that he will leverage to help his new venture succeed. Mr. Polk has a Bachelor's Degree
in Psychology from the XYZ State University. For the last five years he has worked as a
manager of DEF Ristorante, a successful Italian restaurant in Portland, OR. Under Mr. Polk's
management, the restaurant has consistently increased sales while maintaining a lower than
average level of operating expenses.

However, because of the investors' other commitments they will not be involved into the daily
management decisions at Java Culture. A professional manager ($35,000/yr) will be hired who
will oversee all the coffee bar operations. Two full-time baristas ($25,000/yr each) will be in
charge of coffee preparation. Four more part-time employees will be hired to fulfill the staffing
needs. In the second and third year of operation one more part-time employee will be hired to
handle the increased sales volume.

6.1 Management Team

A full-time manager will be hired to oversee the daily operations at Java Culture. The candidate
(who's name is withheld due to his current employment commitment) has had three years of
managerial experience in the definitely industry in Oregon. This person's responsibilities will
include managing the staff, ordering inventory, dealing with suppliers, developing a marketing
strategy and perform other daily managerial duties. We believe that our candidate has the right
experience for this role. A profit-sharing arrangement for the manager may be considered based
on the first year operational results.

6.2 Management Team Gaps

Despite the owners' and manager's experience in the definitely industry, the company will retain
the consulting services of ABC Espresso Services, the consultants who have helped to develop
the business idea for Java Culture. This company has over twenty years of experience in the
retail coffee industry and has successfully opened dozens of coffee bars across the U.S.
Consultants will be primarily used for market research, customer satisfaction surveys and to
provide additional input into the evaluation of the new business opportunities.

6.3 Personnel Plan

The table below outlines the personnel needs of Java Culture coffee bar.

PERSONNEL PLAN

YEAR 1 YEAR 2 YEAR 3

Manager $35,000 $37,800 $40,824

 Baristas $50,000 $54,000 $58,320

Employees $39,600 $52,000 $56,000

TOTAL PEOPLE 7 8 8

Total Payroll $124,600 $143,800 $155,144

Financial Plan

Java Culture will capitalize on the strong demand for high-quality gourmet coffee. The owners
have provided the company with sufficient start-up capital. With successful management aimed
at establishing and growing a loyal customer base, the company will see its net worth doubling in
two years. Java Culture will maintain a healthy 65% gross margin, which combined with
reasonable operating expenses, will provide enough cash to finance further growth.

7.1 Important Assumptions

GENERAL ASSUMPTIONS

YEAR 1 YEAR 2 YEAR 3

Plan Month 1 2 3
 Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0

7.2 Projected Cash Flow

As the chart and table below present, the company will maintain a healthy cash flow position,
which will allow for timely debt servicing and funds available for future development.

PRO FORMA CASH FLOW

 YEAR 1 YEAR 2 YEAR 3

Cash Received

Cash from Operations

Cash Sales $584,000 $642,400 $706,640

SUBTOTAL CASH FROM OPERATIONS $584,000 $642,400 $706,640

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

SUBTOTAL CASH RECEIVED $584,000 $642,400 $706,640

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $124,600 $143,800 $155,144

Bill Payments $327,865 $388,715 $420,945

SUBTOTAL SPENT ON OPERATIONS $452,465 $532,515 $576,089

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $3,300 $3,300 $3,300

Other Liabilities Principal Repayment $0 $0 $0

 Long-term Liabilities Principal Repayment $0 $3,585 $3,961

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $2,000 $2,000

Dividends $0 $0 $0

SUBTOTAL CASH SPENT $455,765 $541,400 $585,350

Net Cash Flow $128,235 $101,000 $121,290

Cash Balance $195,358 $296,358 $417,648

7.3 Key Financial Indicators

7.4 Break-even Analysis

With average monthly fixed costs of $20,300 in FY2001 and an average margin of 65%, Java
Culture's break-even sales volume is around $31,300 per month. As shown further, the company
is expected to generate such sales volume from the outstart.

BREAK-EVEN ANALYSIS

Monthly Revenue Break-even $31,247

Assumptions:

Average Percent Variable Cost 35%

Estimated Monthly Fixed Cost $20,311

7.5 Projected Profit and Loss

Annual projected sales of $584,000 in FY2001 translate into $254.00 of sales per square foot,
which is in line with the industry averages for this size of coffee bar. Overall, as the company
gets established in the local market, its net profitability increases from 17.06% in FY2001 to
17.63% in FY2003. The table below outlines the projected Profit and Loss Statement for
FY2001-2003.

PRO FORMA PROFIT AND LOSS

YEAR 1 YEAR 2 YEAR 3

Sales $584,000 $642,400 $706,640

Direct Cost of Sales $204,400 $224,840 $247,324

Other $0 $0 $0

TOTAL COST OF SALES $204,400 $224,840 $247,324

Gross Margin $379,600 $417,560 $459,316

Gross Margin % 65.00% 65.00% 65.00%

Expenses

Payroll $124,600 $143,800 $155,144

Sales and Marketing and Other Expenses $25,800 $27,600 $31,000

Depreciation $5,400 $5,500 $5,500

Rent $48,400 $52,800 $52,800

Rent $6,000 $6,000 $6,000

Maintenance $5,840 $6,424 $7,066

Utilities/Phone $9,000 $9,500 $10,000

Payroll Taxes $18,690 $21,570 $23,272

Other $0 $0 $0

Total Operating Expenses $243,730 $273,194 $290,782

 Profit Before Interest and Taxes $135,870 $144,366 $168,534

EBITDA $141,270 $149,866 $174,034

Interest Expense $2,821 $2,326 $1,618

Taxes Incurred $33,740 $35,510 $42,424

Net Profit $99,308 $106,530 $124,491

Net Profit/Sales 17.00% 16.58% 17.62%

7.6 Projected Balance Sheet

The company's net worth is expected to increase from approximately $212,000 by the end of
FY2001 to approximately $443,000 in FY2003. The table below summarizes the projected
balance sheets for this period.

PRO FORMA BALANCE SHEET

YEAR 1 YEAR 2 YEAR 3

Assets

Current Assets
Cash $195,358 $296,358 $417,648

Inventory $21,175 $23,293 $25,622

Other Current Assets $0 $0 $0

TOTAL CURRENT ASSETS $216,533 $319,651 $443,270

Long-term Assets

Long-term Assets $59,170 $61,170 $63,170

Accumulated Depreciation $5,400 $10,900 $16,400

TOTAL LONG-TERM ASSETS $53,770 $50,270 $46,770

TOTAL ASSETS $270,303 $369,921 $490,040

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $31,974 $31,947 $34,836

Current Borrowing $6,700 $3,400 $100

Other Current Liabilities $0 $0 $0

SUBTOTAL CURRENT LIABILITIES $38,674 $35,347 $34,936

Long-term Liabilities $20,000 $16,415 $12,454

TOTAL LIABILITIES $58,674 $51,762 $47,390

Paid-in Capital $140,000 $140,000 $140,000

Retained Earnings ($27,680) $71,628 $178,159

Earnings $99,308 $106,530 $124,491

TOTAL CAPITAL $211,628 $318,159 $442,650

TOTAL LIABILITIES AND CAPITAL $270,303 $369,921 $490,040

Net Worth $211,628 $318,159 $442,650

7.7 Business Ratios

The table below outlines the company's business ratios. The last column represents industry
average business ratios for Specialty Eating Places (SIC 5812).

RATIO ANALYSIS

YEAR 1 YEAR 2 YEAR 3 INDUSTRY

PROFILE

Sales Growth 0.00% 10.00% 10.00% 7.60%

Percent of Total Assets

Inventory 7.83% 6.30% 5.23% 3.60%

Other Current Assets 0.00% 0.00% 0.00% 35.60%

Total Current Assets 80.11% 86.41% 90.46% 43.70%

Long-term Assets 19.89% 13.59% 9.54% 56.30%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%

Current Liabilities 14.31% 9.56% 7.13% 32.70%

Long-term Liabilities 7.40% 4.44% 2.54% 28.50%

Total Liabilities 21.71% 13.99% 9.67% 61.20%

NET WORTH 78.29% 86.01% 90.33% 38.80%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 65.00% 65.00% 65.00% 60.50%

Selling, General & Administrative 47.94% 48.47% 47.37% 39.80%

Expenses

Advertising Expenses 2.26% 2.18% 2.26% 3.20%

Profit Before Interest and Taxes 23.27% 22.47% 23.85% 0.70%

Main Ratios

Current 5.60 9.04 12.69 0.98

Quick 5.05 8.38 11.95 0.65

Total Debt to Total Assets 21.71% 13.99% 9.67% 61.20%

Pre-tax Return on Net Worth 62.87% 44.64% 37.71% 1.70%

Pre-tax Return on Assets 49.22% 38.40% 34.06% 4.30%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 17.00% 16.58% 17.62% n.a

Return on Equity 46.93% 33.48% 28.12% n.a

Activity Ratios

Inventory Turnover 10.91 10.11 10.11 n.a

Accounts Payable Turnover 11.25 12.17 12.17 n.a

Payment Days 27 30 29 n.a

Total Asset Turnover 2.16 1.74 1.44 n.a

Debt Ratios
 Debt to Net Worth 0.28 0.16 0.11 n.a

Current Liab. to Liab. 0.66 0.68 0.74 n.a

Liquidity Ratios

Net Working Capital $177,858 $284,304 $408,334 n.a

Interest Coverage 48.16 62.07 104.13 n.a

Additional Ratios

Assets to Sales 0.46 0.58 0.69 n.a

Current Debt/Total Assets 14% 10% 7% n.a

Acid Test 5.05 8.38 11.95 n.a

Sales/Net Worth 2.76 2.02 1.60 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix
SALES FORECAST

MON MON MON MON MON MON MON MON MON MON MON MON
TH 1 TH 2 TH 3 TH 4 TH 5 TH 6 TH 7 TH 8 TH 9 TH TH TH
10 11 12

Sales

Coffe 0 $24,0 $27,0 $28,8 $28,8 $28,8 $28,8 $28,8 $28,8 $29,4 $31,2 $33,0 $33,0
e % 00 00 00 00 00 00 00 00 00 00 00 00
bevera
ges

Coffe 0 $6,00 $6,75 $7,20 $7,20 $7,20 $7,20 $7,20 $7,20 $7,35 $7,80 $8,25 $8,25
e % 0 0 0 0 0 0 0 0 0 0 0 0
beans

Pastri 0 $10,0 $11,2 $12,0 $12,0 $12,0 $12,0 $12,0 $12,0 $12,2 $13,0 $13,7 $13,7
es, % 00 50 00 00 00 00 00 00 50 00 50 50
etc.

TOT $40,0 $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
AL 00 00 00 00 00 00 00 00 00 00 00 00
SALE
S

Direct Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
Cost h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12
of
Sales

Coffe $6,00 $6,75 $7,20 $7,20 $7,20 $7,20 $7,20 $7,20 $7,35 $7,80 $8,25 $8,25
e 0 0 0 0 0 0 0 0 0 0 0 0
bevera
ges
Coffe $3,00 $3,37 $3,60 $3,60 $3,60 $3,60 $3,60 $3,60 $3,67 $3,90 $4,12 $4,12
e 0 5 0 0 0 0 0 0 5 0 5 5
beans

Pastri $5,00 $5,62 $6,00 $6,00 $6,00 $6,00 $6,00 $6,00 $6,12 $6,50 $6,87 $6,87
es, 0 5 0 0 0 0 0 0 5 0 5 5
etc.

Subtot $14,0 $15,7 $16,8 $16,8 $16,8 $16,8 $16,8 $16,8 $17,1 $18,2 $19,2 $19,2
al 00 50 00 00 00 00 00 00 50 00 50 50
Direct
Cost
of
Sales

PERSONNEL PLAN

MON MON MON MON MON MON MON MON MON MON MON MON
TH 1 TH 2 TH 3 TH 4 TH 5 TH 6 TH 7 TH 8 TH 9 TH TH TH
10 11 12

Manag 0 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91 $2,91
er % 7 7 7 7 7 7 7 7 7 7 7 7

Barista 0 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16 $4,16
s % 7 7 7 7 7 7 7 7 7 7 7 7

Emplo 0 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30 $3,30
yees % 0 0 0 0 0 0 0 0 0 0 0 0

TOTA 7 7 7 7 7 7 7 7 7 7 7 7
L
PEOP
LE

Total $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3
Payroll
 83 83 83 83 83 83 83 83 83 83 83 83

GENERAL ASSUMPTIONS

MON MON MON MON MON MON MON MON MON MON MON MON
TH 1 TH 2 TH 3 TH 4 TH 5 TH 6 TH 7 TH 8 TH 9 TH 10 TH 11 TH 12

Plan 1 2 3 4 5 6 7 8 9 10 11 12
Mon
th

Curr 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
ent % % % % % % % % % % % %
Inter
est
Rate

Long 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
- % % % % % % % % % % % %
term
Inter
est
Rate

Tax 30.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00
Rate % % % % % % % % % % % %

Othe 0 0 0 0 0 0 0 0 0 0 0 0
r

PRO FORMA PROFIT AND LOSS

MON MON MON MON MON MON MON MON MON MON MON MON
TH 1 TH 2 TH 3 TH 4 TH 5 TH 6 TH 7 TH 8 TH 9 TH TH TH
10 11 12
Sales $40,0 $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
00 00 00 00 00 00 00 00 00 00 00 00

Direct $14,0 $15,7 $16,8 $16,8 $16,8 $16,8 $16,8 $16,8 $17,1 $18,2 $19,2 $19,2
Cost of 00 50 00 00 00 00 00 00 50 00 50 50
Sales

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TOTAL $14,0 $15,7 $16,8 $16,8 $16,8 $16,8 $16,8 $16,8 $17,1 $18,2 $19,2 $19,2
COST 00 50 00 00 00 00 00 00 50 00 50 50
OF
SALES

Gross $26,0 $29,2 $31,2 $31,2 $31,2 $31,2 $31,2 $31,2 $31,8 $33,8 $35,7 $35,7
Margin 00 50 00 00 00 00 00 00 50 00 50 50

Gross 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00
Margin % % % % % % % % % % % %
%

Expenses

Payroll $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3
83 83 83 83 83 83 83 83 83 83 83 83

Sales and $2,15 $2,15 $2,15 $2,15 $2,15 $2,15 $2,15 $2,15 $2,15 $2,15 $2,15 $2,15
Marketin 0 0 0 0 0 0 0 0 0 0 0 0
g and
Other
Expenses

Depreciat $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450
ion

Rent $0 $4,40 $4,40 $4,40 $4,40 $4,40 $4,40 $4,40 $4,40 $4,40 $4,40 $4,40
0 0 0 0 0 0 0 0 0 0 0
Rent $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Maintena $400 $450 $480 $480 $480 $480 $480 $480 $490 $520 $550 $550
nce

Utilities/ $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Phone

Payroll 15 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55 $1,55
Taxes % 8 8 8 8 8 8 8 8 8 8 8 8

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total $16,1 $20,6 $20,6 $20,6 $20,6 $20,6 $20,6 $20,6 $20,6 $20,7 $20,7 $20,7
Operatin 91 41 71 71 71 71 71 71 81 11 41 41
g
Expenses

Profit $9,80 $8,60 $10,5 $10,5 $10,5 $10,5 $10,5 $10,5 $11,1 $13,0 $15,0 $15,0
Before 9 9 29 29 29 29 29 29 69 89 09 09
Interest
and
Taxes

EBITDA $10,2 $9,05 $10,9 $10,9 $10,9 $10,9 $10,9 $10,9 $11,6 $13,5 $15,4 $15,4
59 9 79 79 79 79 79 79 19 39 59 59

Interest $248 $245 $243 $241 $239 $236 $234 $232 $229 $227 $225 $223
Expense

Taxes $2,86 $2,09 $2,57 $2,57 $2,57 $2,57 $2,57 $2,57 $2,73 $3,21 $3,69 $3,69
Incurred 8 1 2 2 3 3 4 4 5 6 6 7

Net $6,69 $6,27 $7,71 $7,71 $7,71 $7,72 $7,72 $7,72 $8,20 $9,64 $11,0 $11,0
Profit 3 3 5 6 8 0 1 3 5 7 88 90
Net 16.73 13.94 16.07 16.08 16.08 16.08 16.09 16.09 16.74 18.55 20.16 20.16
Profit/Sal % % % % % % % % % % % %
es

PRO FORMA CASH FLOW

MON MON MON MON MON MON MON MON MON MON MON MON
TH 1 TH 2 TH 3 TH 4 TH 5 TH 6 TH 7 TH 8 TH 9 TH TH TH
10 11 12

Cash
Received

Cash from
Operations

Cash Sales $40,0 $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
00 00 00 00 00 00 00 00 00 00 00 00

SUBTOT $40,0 $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
AL CASH 00 00 00 00 00 00 00 00 00 00 00 00
FROM
OPERATI
ONS

Additional
Cash
Received

Sales Tax, 0.00 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

VAT, %
HST/GST
Received

New $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Borrowing
New Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
(interest-
free)

New Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
term
Liabilities

Sales of $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other
Current
Assets

Sales of $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term
Assets

New $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment
Received

SUBTOT $40,0 $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
AL CASH 00 00 00 00 00 00 00 00 00 00 00 00
RECEIVE
D

Expenditur Month Month Month Month Month Month Month Month Month Month Month Month
es 1 2 3 4 5 6 7 8 9 10 11 12

Expenditur
es from
Operations

Cash $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3
Spending 83 83 83 83 83 83 83 83 83 83 83 83

Bill $728 $22,1 $29,8 $30,5 $29,4 $29,4 $29,4 $29,4 $29,4 $30,4 $32,7 $34,1
Payments 12 45 69 50 49 47 45 74 24 27 95
SUBTOT $11,1 $32,4 $40,2 $40,9 $39,8 $39,8 $39,8 $39,8 $39,8 $40,8 $43,1 $44,5
AL 12 96 28 52 34 32 30 29 57 08 10 78
SPENT
ON
OPERATI
ONS

Additional
Cash Spent

Sales Tax, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
VAT,
HST/GST
Paid Out

Principal $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275
Repayment
of Current
Borrowing

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Principal
Repayment

Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Principal
Repayment

Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other
Current
Assets

Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term
Assets

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
SUBTOT $11,3 $32,7 $40,5 $41,2 $40,1 $40,1 $40,1 $40,1 $40,1 $41,0 $43,3 $44,8
AL CASH 87 71 03 27 09 07 05 04 32 83 85 53
SPENT

Net Cash $28,6 $12,2 $7,49 $6,77 $7,89 $7,89 $7,89 $7,89 $8,86 $10,9 $11,6 $10,1
Flow 13 29 7 3 1 3 5 6 8 17 15 47

Cash $95,7 $107, $115, $122, $130, $138, $145, $153, $162, $173, $185, $195,
Balance 36 966 462 235 127 020 914 811 679 596 211 358

PRO FORMA BALANCE SHEET

MON MON MON MON MON MON MON MON MON MON MON MON
TH 1 TH 2 TH 3 TH 4 TH 5 TH 6 TH 7 TH 8 TH 9 TH TH TH
10 11 12

Assets Starti
ng
Balan
ces

Current
Assets

Cash $67,1 $95,7 $107, $115, $122, $130, $138, $145, $153, $162, $173, $185, $195,
23 36 966 462 235 127 020 914 811 679 596 211 358

Inventory $16,0 $15,4 $17,3 $18,4 $18,4 $18,4 $18,4 $18,4 $18,4 $18,8 $20,0 $21,1 $21,1
27 00 25 80 80 80 80 80 80 65 20 75 75

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets
TOTAL $83,1 $111, $125, $133, $140, $148, $156, $164, $172, $181, $193, $206, $216,
CURRE 50 136 291 942 715 607 500 394 291 544 616 386 533
NT
ASSETS

Long-
term
Assets

Long- $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1 $59,1
term 70 70 70 70 70 70 70 70 70 70 70 70 70
Assets

Accumula $0 $450 $900 $1,35 $1,80 $2,25 $2,70 $3,15 $3,60 $4,05 $4,50 $4,95 $5,40
ted 0 0 0 0 0 0 0 0 0 0
Depreciati
on

TOTAL $59,1 $58,7 $58,2 $57,8 $57,3 $56,9 $56,4 $56,0 $55,5 $55,1 $54,6 $54,2 $53,7
LONG- 70 20 70 20 70 20 70 20 70 20 70 20 70
TERM
ASSETS

TOTAL $142, $169, $183, $191, $198, $205, $212, $220, $227, $236, $248, $260, $270,
ASSETS 320 856 561 762 085 527 970 414 861 664 286 606 303

Liabilities Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
and h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12
Capital

Current
Liabilities

Accounts $0 $21,1 $28,8 $29,5 $28,4 $28,4 $28,4 $28,4 $28,4 $29,3 $31,5 $33,0 $31,9
Payable 18 25 87 69 67 65 64 62 35 86 92 74

Current $10,0 $9,72 $9,45 $9,17 $8,90 $8,62 $8,35 $8,07 $7,80 $7,52 $7,25 $6,97 $6,70
Borrowin 00 5 0 5 0 5 0 5 0 5 0 5 0
g
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Liabilities

SUBTOT $10,0 $30,8 $38,2 $38,7 $37,3 $37,0 $36,8 $36,5 $36,2 $36,8 $38,8 $40,0 $38,6
AL 00 43 75 62 69 92 15 39 62 60 36 67 74
CURRE
NT
LIABILI
TIES

Long- $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0 $20,0
term 00 00 00 00 00 00 00 00 00 00 00 00 00
Liabilities

TOTAL $30,0 $50,8 $58,2 $58,7 $57,3 $57,0 $56,8 $56,5 $56,2 $56,8 $58,8 $60,0 $58,6
LIABILI 00 43 75 62 69 92 15 39 62 60 36 67 74
TIES

Paid-in $140, $140, $140, $140, $140, $140, $140, $140, $140, $140, $140, $140, $140,
Capital 000 000 000 000 000 000 000 000 000 000 000 000 000

Retained ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6 ($27,6
Earnings 80) 80) 80) 80) 80) 80) 80) 80) 80) 80) 80) 80) 80)

Earnings $0 $6,69 $12,9 $20,6 $28,3 $36,1 $43,8 $51,5 $59,2 $67,4 $77,1 $88,2 $99,3
3 66 80 97 15 34 56 79 84 30 18 08

TOTAL $112, $119, $125, $133, $140, $148, $156, $163, $171, $179, $189, $200, $211,
CAPITA 320 013 286 000 717 435 154 876 599 804 450 538 628
L

TOTAL $142, $169, $183, $191, $198, $205, $212, $220, $227, $236, $248, $260, $270,
LIABILI 320 856 561 762 085 527 970 414 861 664 286 606 303
TIES
AND
CAPITA
L
Net $112, $119, $125, $133, $140, $148, $156, $163, $171, $179, $189, $200, $211,
Worth 320 013 286 000 717 435 154 876 599 804 450 538 628

Reference: http://www.bplans.com/coffee_shop_business_plan/executive_summary_fc.php

FieldFresh Foods

On one of those pleasant cold February mornings, Sanjay Nandrajog, the Chief Executive
Officer of FieldFresh Foods Private Limited, pondered the future. He had just returned to Delhi
from the company’s Agri Centre of Excellence (ACE), an R&D farm where he celebrated the
dispatch of 500 metric tons of fresh baby corn to Europe. The top management team at
FieldFresh was justifiably proud of this achievement as it had required tremendous effort to
become an important exporter of Indian produce.

FieldFresh had been incorporated in 2004 with the vision of linking Indian fields to the world.
India had a number of natural advantages in terms of climate, acres in production, and labor
force to become a major power in agriculture. However, a poor infrastructure and an antiquated
regulatory regime had stymied efforts to unleash India’s promise. FieldFresh hoped to overcome
those challenges to bring India to the forefront of the world’s agriculture.

During its initial years of operation, FieldFresh had found out how difficult it was to build a
supply chain for produce in India. The company had been through a phase of experimentation
where it tried different sourcing models, logistical options, and crops. After less than stellar
results, the company had decided to concentrate on one crop, baby corn. Over the next 24
months, the FieldFresh team adapted logistics to overcome crowded and crumbling roads,
irregular power supply, and bureaucratic procedures. The company worked with thousands of
farmers to gain their trust. By 2010, the FieldFresh team had been able to create an efficient
supply chain for baby corn across Punjab and Maharashtra at all levels— input delivery, credit,
irrigation, timely scientific advice, production as per specifications of European market, careful
harvesting, improved produce handling, clean and fast transportation, proper management of
cold chain storage environment, gaining safety certification, as well as grading, packaging, and
labeling to meet international standards.

But success brought with it the expectation of growth. Nandrajog had a number of questions to
answer before he could articulate a plan. Should FieldFresh grow opportunistically into different
foreign markets as retailers and wholesalers demanded different products for their respective
markets? Should FieldFresh continue to focus on baby corn, whose supply chain-market linkages
it had perfected, or should the company expand the range of products it would supply? Should
FieldFresh continue to maintain its primary export focus, or shift relative emphasis to the
growing domestic market? 

Reference: http://som.yale.edu/case/2010/fieldfresh-foods

The Alibaba Group

By July of 2011, Yun “Jack” Ma had achieved his goal of creating one of the world’s leading e-
commerce companies. Ma founded the Alibaba Group and took advantage of growing internet
usage in China to launch the leading B2B, C2C and B2C sites in the country and capture a huge
market. Despite his success, Ma had a troubled relationship with Yahoo!, the largest investor in
the Alibaba Group. Ma’s decision in January of 2011 to transfer Alipay (the Alibaba Group’s
online payment unit) from the Alibaba Group to a company under his personal control was just
making matters worse.

When Ma founded Alibaba.com in 1999, he faced competition from a number of other Chinese
B2B web portals. Ma made a number of strategic decisions that allowed his portal to grow as
others fell by the wayside. By 2003, Alibaba.com had emerged as the dominant B2B site in
China. With Alibaba.com prospering, Ma entered the C2C space by creating Taobao.com which
quickly overcame eBay-EachNet as China’s dominant internet consumer space. He also created
Alipay (PayPal type site) to allow for easy transactions and T-Mall a B2C portal allowing
merchants to sell directly to Taobao.com consumers.
Expansion required capital and technical expertise. Ma hoped to obtain both by striking a
strategic partnership with Yahoo! in 2005. Under the terms of the agreement, Yahoo! provided
Alibaba with $1 billion in capital, access to Yahoo’s search technology, and the control of
Yahoo! China. In return, Yahoo received a 40% stake in the Alibaba Group, the entity that Ma
created to own his various ventures. In the intervening years, tensions had flared between Yahoo!
and Ma over the direction of the Alibaba Group. Indeed in 2010, Ma had sought to buy back
Yahoo!’s share in the venture.

These issues came to a head in May of 2011 when Yahoo! investors reacted negatively to a
disclosure that Alipay had been spun-out of the Alibaba Group. Ma claimed that he was forced
into the transfer by Chinese authorities who insisted that Alipay be controlled by domestic
Chinese investors or risk losing its license to operate. After the disclosure of spin-out, Ma
promised to make sure that Yahoo! and his other foreign investors were adequately compensated
for the transfer. But two months after the disclosure, negotiations over how to compensate the
foreign shareholders in the Alibaba Group had yet to be resolved.

Reference: http://som.yale.edu/case/2011/the-alibaba-group

Clorox Inc
In October 2007, Clorox announced that it would buy Burt’s Bees for $925 million – more than
five times Burt’s Bees’ annual sales. Clorox’s move caught many in the industry by surprise. The
company was known for bleach, auto polish and other synthetic chemical cleaners. On the other
hand, the much smaller Burt’s Bees was best known for its trademark natural lip balm. The
company, founded by two people making beeswax candles in the backwoods of Maine, had
emerged as a leader in the natural personal care products category with revenue climbing steadily
from $23 million in 2000 to $164 million in 2007.Nonetheless, Burt’s Bees retained its folksy
image and natural appeal with consumers. Could such a brand find a home within a company
best known for a toxic cleanser?

There was no doubt that the entire natural personal care products market had been changing.
Like Burt’s Bees, many of these small companies had been founded by feisty nonconformists for
whom their companies were an extension of a crusade for natural products rather than just a way
to make money. But as the enterprises grew, a number of leading natural personal care
companies had sold out to larger multinationals. Estée Lauder bought Aveda; L’Oreal took over
The Body Shop; and Colgate-Palmolive gobbled up Tom’s of Maine. But even within this trend,
the marriage of Clorox and Burt’s Bees seemed somewhat anomalous.
Certainly, a number of Burt’s Bees’ customers thought so. As soon as the sale was announced,
angry calls and emails came pouring in to Burt’s Bees headquarters in North Carolina. “Don’t
judge Clorox as much by where they’ve been as much as where they intend to go,” Burt’s Bees’
CEO John Replogle pleaded when customers accused his company of selling out. Indeed a
month before the Burt’s Bees purchase, Clorox announced a long-planned extension into the
natural cleaning products market with a line of eco-friendly cleaners called Green Works.

But would Replogle’s diplomatic response and Clorox’s push into “green” cleaners satisfy Burt’s
Bees’ faithful customers? Had Clorox paid too much for its acquisition? Or, were there potential
synergies between the idiosyncratic lip balm maker and the multinational cleanser manufacturer
that could justify the purchase? And with so many global conglomerates jumping into the natural
personal care products category, what was the future of this market?

Reference: http://som.yale.edu/case/2009/clorox-inc

CENTRAL PHILIPPINE UNIVERSITY

SCHOOL OF GRADUATE STUDIES

COFFEE SHOP

Business Plan

Presented to the Faculty

Of the School of Graduate Studies

Central Philippine University

In Partial Fulfilment for the Requirements of the Course

MBA 727-Entrepreneurship

Submitted by:

Kate Ann B. Sagarang

Submitted to:

Prof. Hernani Miralles

2017

CENTRAL PHILIPPINE UNIVERSITY

SCHOOL OF GRADUATE STUDIES

FIELDFRESH FOODS

Business Plan

Presented to the Faculty

Of the School of Graduate Studies

Central Philippine University

In Partial Fulfilment for the Requirements of the Course

MBA 727-Entrepreneurship

Submitted by:

Kate Ann B. Sagarang

Submitted to:

Prof. Hernani Miralles

2017

CENTRAL PHILIPPINE UNIVERSITY

SCHOOL OF GRADUATE STUDIES

THE ALIBABA GROUP

Case Study

Presented to the Faculty

Of the School of Graduate Studies

Central Philippine University

In Partial Fulfilment for the Requirements of the Course

MBA 727-Entrepreneurship

Submitted by:

Kate Ann B. Sagarang

Submitted to:

Prof. Hernani Miralles

2017

CENTRAL PHILIPPINE UNIVERSITY

SCHOOL OF GRADUATE STUDIES

CLOROX INC

Case Study

Presented to the Faculty

Of the School of Graduate Studies

Central Philippine University

 In Partial Fulfilment for the Requirements of the Course

MBA 727-Entrepreneurship

Submitted by:

Kate Ann B. Sagarang

Submitted to:

Prof. Hernani Miralles

2017

KATE ANN B. SAGARANG

ETHICS 6

How much responsibility should our youth have for illegal downloading?

When a movie or song is produced and marketed, everyone involved in the process has
monetary gains from the sale of that product. Therefore, that product is protected by
copyright law so that it cannot be copied, reproduced or resold without their permission.
If you did not pay for a song, movie or other media file that has a copyright, then
downloading that file is a crime. Likewise, distributing a copyrighted media file, whether
via electronic or non-electronic methods, without the express permission of the
copyright holder is also illegal.

Most Peer-to-Peer software has file-sharing features that are turned on by default
making any song or movie files on your computer available to others for download. In
effect, you are distributing copyright materials without even knowing it. Know what
software you have on your computer and how it works. Turn-off any file sharing options.

If you have a wireless router setup in your dorm room or apartment, be sure to setup
security, including a good password. Only give that password to people you trust. If
someone connects to your wireless router and downloads or shares files illegally, that
activity will be traced back to you and you will be held liable.

If you are a student living on the Webster Groves campus, you can take your computer,
for free, to the Restech office, and they will help you remove or disable any file sharing
software that might be on your computer.

KATE ANN B. SAGARANG

AS SEEN IN ENTREPRENEUR MAGAZINE 6

Provide advice to an entrepreneur about some legal aspects of starting a business.

1. Budget more for legal spend than you think you need.
Don’t underestimate your legal expenses. Legal fees could end up being a
large upfront investment when you start your business. These fees always
end up being more than anticipated due to the constant back and forth,
legal complexity and other factors. Give yourself enough of a buffer in
your budgeting for these services. Also, make sure you consult with your
attorney to estimate the total legal fees at the onset.
2. Make sure you have the right attorney for each task.
 Specialization matters. An attorney not versed in the specific field can be
costly. For instance, if you need to obtain a patent, or worse, go toe-to-toe
with a patent troll, work with a patent attorney.
Opting for a general practice lawyer who covers a broad range of areas
but specializes in none of them may save you money upfront, but this
individual’s lack of expertise in a specific field could cost you down the
road. It’s worth getting the right person for the job-you’ll spend more in the
long run if you don’t.
3. It’s not all or nothing; run legal processes in parallel.
If part of your model requires licenses/compliance, do what you can legally
until you’re compliant. While obtaining legal permissions to run your
business is vital to starting your business, don’t sit around waiting for
progress on the legal front. Use your time wisely, investing and building
the areas of your business you don’t need legal clearance for.

KATE ANN B. SAGARANG

ETHICS 13

Lessons from Enron

The Enron scandal is the most significant corporate collapse in the United States since
the failure of many savings and loan banks during the 1980s. this scandal
demonstrates the need for significant reforms in accounting and corporate governance
in the United States, as well as for a close look at the ethical quality of the culture of
business generally and of business corporations in the US.

Every good business has a solid business plan and a realistic design for implementing
that plan. A business plan is a written description of your business’ future, a document
that tells what you plan to do and how you plan to do it. But there are some generally
accepted conventions about what a full-blown business plan should include and how it
should be presented. A plan should cover all the important matters that will contribute to
making your business a success.

KATE ANN B SAGARANG

ETHICS 9

Lawyers explain the steps to take if your business partner violates his or her obligations
to the business.

Partnership is a formal arrangement in which two or more parties cooperate to manage

and operate a business. Your partner should be trustworthy, honest and loyal.

If your planning to build a partnership, you have to make sure you choose your partner
wisely. Both of you should stick on your agreement to avoid violations so that the
business will not be affected.
AS SEEN IN ENTREPRENEUR MAGAZINE 9
Provide advice to an entrepreneur about entering into agreements
1. Hire an experienced lawyer to help form your company.
2. Sharing resources can be great, but it can come at a price.
3. A good partnership should be grounded in business and treated as a business
relationship.
4. Obtain a patent
5. Decide what help you need
6. Make a prototype
7. Locate a production source

KATE ANN B SAGARANG

ETHICS 12

FINANCIAL TRANSPARENCY A MUST

Transparency is the extent to which investors have ready access to required financial
information about a company, such as price levels, market depth and audited financial
reports. Transparency helps reduce price volatility, because all the market participants
can base decisions of value on the same data. Companies also have a strong
motivation to provide disclosure, as transparency is generally rewarded through the
stock’s performance.
A strong indicator of future growth is how a business invests its money. When an
investor cannot find concrete information stating where a company’s money is invested,
the investor is less likely to invest in the business. Opaque financial statements may
hide a company’s debt level, and the business could be facing insolvency.

KATE ANN B SAGARANG

ETHICS 7
Protecting your business idea
1. Avoid revealing too much
2. Use non-disclosure agreements
3. Apply for a provisional patent
4. Trademark your name
5. Research the recipients
6. Follow your instincts
7. Document, document, document
AS SEEN IN BUSINESSWEEK 7
Provide advice to an entrepreneur about solving their cash-flow problem to stay in
business

Cash is the fuel that drives business and many financial analysts consider the condition
of a company’s cash flow to be one of the most important indicators of that business’s
financial health. Fixing a cash flow problem requires companies to examine three key
flows of commerce: to follow the goods, understand the information and speed the
funds.

KATE ANN B. SAGARANG

ETHICS 8
DEVIL’S ADVOCATE
We should do our work with outmost honesty and integrity to protect ourselves as well
as our reputations as an individual.
As an entrepreneur, you should not hire people who are going to tell you what you want
to hear but hire people who are smarter than you. And create a team of people who are
going to push back and play devil’s advocate.

AS SEEN IN ENTREPRENEUR MAGAZINE 8

Provide advice to an entrepreneur about growing into new markets using the internet
1. Optimize the digital dividend
The digital dividend creates a favorable platform through which businesses can
expand their reach to potential consumers. This can be a potent force when
companies harness it correctly.
2. Understand the competition
Business leaders must identify direct and indirect competitors and asses the
market for gaps they can fill.
Make an incisive SWOT assessment of key competitors, this will put the
landscape you face into perspective and enable your business to evaluate its
position.
3. Build resourceful networks
It will help them identify the best service providers, budding market opportunities
and partnerships that will enhance their competitiveness.