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Business Plan - Bookworm Cafe

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Business Plan for Bookworm Cafe
Business Plan
Norma Benavides
Jalisa Harris
Kyle Nedbal
Sarah Novak
Cameron Wheeler
Bookwo...
I. Table of Contents. 3
II. Executive Summary. 4
III. The Opportunity. 4
IV. The NewCo Solution. 4
V. Market Analysis and ...
The business opportunity we have created is a tutoring center in Midland, Michigan. This
business has an innovative design...
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Business Plan - Bookworm Cafe

  1. 1. Business Plan for Bookworm Cafe Business Plan Norma Benavides Jalisa Harris Kyle Nedbal Sarah Novak Cameron Wheeler Bookworm Cafe 1836 North Saginaw Rd. Midland, MI 48640 989-988-9999 989-988-9988 bookwormcafe@gmail.com I. Table of Contents
  2. 2. I. Table of Contents. 3 II. Executive Summary. 4 III. The Opportunity. 4 IV. The NewCo Solution. 4 V. Market Analysis and Marketing Plan. 5 VI. Products and Services. 12 VII. General Company Description. 12 VIII. Operational Plan. 13 IX. Management and Organization. 17 X. Start-up Expenses and Capitalization. 18 XI. Financial Plan. 18 XII. Appendices. 21 XIII. Refining the Plan. 21 II. Executive Summary
  3. 3. The business opportunity we have created is a tutoring center in Midland, Michigan. This business has an innovative design by providing students an environment that focuses on helping them succeed in their academic career. Our target market is 15-24 year olds who are high school and college students in the Midland area. Bookworm Cafe is a tutoring center that will provide students tutoring services for subjects such as math, reading, SAT & ACT workshops, writing, accounting, science, marketing, management, and much more. The facility will offer students areas to eat, study, and do group work. The cafe will also offer food services to help students stay focused on their work. The cafe is located on 1836 N. Saginaw Rd., Midland, Michigan, 48640. The Bookworm Cafe is located near Dow High School, Midland, High School, and Northwood University. The cafe will be a partnership between Norma Benavides, Jalisa Harris, Kyle Nedbal, Sarah Novak, and Cameron Wheeler each partner having an equal dividend of the company. Our main product are tutoring services that are offered through monthly memberships, starting at $39.00. Students that have a membership can come into the tutoring center to get tutored anytime between 11:00 am to 2:00 am on week days and 9:00 am to 2:00 am on weekends. Students that do not have a membership are allowed to walk-in, work, and eat however our tutoring services are not available to them. We understand that our target market are students, so we offer a lot of promotions to cut back on the cost of membership. Our company allows students to have a place to come in and concentrate on their work with a tutoring staff available throughout the day. We are different from other tutoring services because we are not targeting children, we are targeting high school students and higher education. We are different than our competitors because we offer general tutoring for specific subjects. For example, when a student comes into the café to get tutoring in math, we offer services that break it down to the specific course and teacher. This provides our customer specialized knowledge in subjects that they need help in. We plan to build up this company to be a standard in the tutoring industry. We will make sure there is a tutoring center for young adults in high school and college. However, to reach our goal we will need a $60,000 loan. This loan is for start-up costs, which include acquisition of property, supplies, furniture, and food services. This money will help us start the Bookworm Cafe. Our company will begin to see profit by the end of the first year in which allows us to start making payments back on our loans. Our ultimate goal is to pay off our loans within six years, so we can minimize our costs. The Bookworm Cafe is a great place for students to come in and get the help they need. With our target market being high school and college students, we will always have consumers due to the increasing rate of enrollment. We have a niche market because we offer specialized knowledge of courses in a fun and relaxing environment. Being in both service and food industry as well as the education service industry, we believe that there is great opportunity for the Bookworm Cafe. This new innovative idea will be the popular tutoring center for high school and college students providing them services to exceed in their academic career. III. The Opportunity
  4. 4. Bookworm Cafe will address the need for students to go study and get tutoring. We will also provide a relaxing atmosphere with good inexpensive food and beverages. There are not many locations in Midland that students can go to receive tutoring, that people understand what you need help in. The tutors that we have on staff would have in class experience to be able to relate to the customers. There are also no places that are open late for food or a study environment. We would be open from 11am to 2am everyday, and on weekends we would open 9am to 2am. This would allow us to target the student market. We are also going to have group conference rooms that groups can go to work on projects. Also we will implement technology into the environment so that students will have access to wifi and computers. With the Midland Area we have the ability to have a larger target market, because we can target high school and college students. Our target market is students between the age of 14-25 years of age. Midland has great economic conditions, it is an area with a majority of middle class to upper class citizens. We referenced other tutoring centers, such as Sylvan Learning Center, that are national companies that have been successful with tutoring. However, we have never encountered a tutoring center that targets our target market. Targeting this market we can develop a successful business that will serve the community and the students. IV. The Bookworm Cafe Solution Bookworm Cafe will provide student tutors that have in class experience in the areas that they are tutoring. For the high school students we will have the core subject matters such as english, math, history, and science. For the college students we would provide business based subjects such as accounting, management, and marketing. We would focus on business subjects, because of our location in Midland with Northwood University. This service is unique, because there are no tutoring services that focus on the target market of 14 to 25 year olds. There is also no places that offer students that have had the same classes as the customer. V. Market Analysis and Marketing Plan Market Research The market research we used to gather data were both primary and secondary research. We began data collection by gathering information from Northwood University students in Midland, Michigan to determine their outlook on preferences in their environment while studying for their classes. We used primary research by distributing an online survey consisting of eight questions that was constructed on SurveyMonkey. These questions were distributed by each of our group members who directly sent a link to Northwood students via online. This type of data collection was the least expensive and had the most anticipated response rate due to having the ability to send the link directly to students. Respondents were aware of the purpose of the survey and knew who was collecting the data. We did not think it was necessary to disguise the purpose of the survey and the data was not at risk of being biased. Our method of administration was, as stated above an online survey (see Appendix). The respondents were also able to remain anonymous when completing the survey which allowed them to answer truthfully.
  5. 5. Using the online questionnaire method allowed our group members to pick respondents that were necessary for our data collection. We were able to choose Northwood students as our respondents in our survey. Due to the given results, we were able to recognize an unmet need for an environment where college students have the ability to eat, group study, and receive tutoring all at the same time. For secondary research we used the United States Census Bureau to collect data about the demographics and economy of the city of Midland. We also used the online resources such as the Business Plans Handbook, Business Insights Global, Reference USA and ValueLine available in the Strosacker Library at Northwood University to have access to information about the total accommodation services and the education service industry. Market Size The Bookworm Cafe is a combination of two industries, the service and food industry and the education service industry. The total size of the market for the service and food industry in Midland, Michigan is $122,936 (QuickFacts, 2012). The total size of the market for the education service industry is $347 million (Industry Statistics Portal, 2012). This has increased 5% from 2012 to 2013. Our target market will be high school students and college students who live in Midland, Michigan. We decided to combine a tutoring center and a cafe in order to meet the needs of students who live in this county. Currently in Midland, there are no businesses such as the Bookworm Cafe. Our business is innovative combining two industries in one business. We were able to find this need by using the survey to provide us with feedback from current students who attend Northwood University. We were able to survey 32 students who attend Northwood University. According to the results, 66.67% of students use tutoring services that are offered through their school. The remainder 33.33% of students do not use any type of tutoring services. Most students prefer to study between the hours of 9 p.m. to 12 a.m. (53.13%) and 6 p.m. to 9 p.m. (50%). We asked students to rate the importance of the quality of the environment. From most important to least, students care about the level of noise, availability of assistance, space for group work, and availability of food. The qualities they look for in a tutor, from most important to least are someone who is easy to understand, someone who has had the same professor before, someone with a wide range of knowledge, and lastly someone with tutoring experience. We also asked students how far they would prefer to travel for tutoring and dining services, the key findings were that 59.38% of students would travel 1-5 miles, 28.13% of students would not travel at all for these services, and 12.50% of students would travel 5 or more miles. The type of food that students prefer to eat are snacks such as popcorn, chips, pizza, fruit, protein bars and cereal. Students were also asked how satisfied they were with the tutoring program offered at their school. 46.88% of students were neutral about the programs offered, 37.50% are satisfied, 9.38% are very satisfied, and 6.25% of students are not satisfied. These key findings helped us understand our target market to find their needs and meet them (Student Life Tutoring Survey, 2016). We believe that we will have 5% of the total accommodation of food and service industry and 20-25% of the educational service industry in Midland, Michigan. Our growth potential is
  6. 6. very high due to meeting the needs of our target market. We have an opportunity to grow within the year and possibly expand in locations. The barriers the Bookworm Cafe face are high capital costs, high production costs, and high marketing costs for the beginning of the years of operation. Because we are new to the market and have no clientele, we will have high advertising costs to build a brand and build a relationship with the community. These costs should decrease as the years go by when we are active in business. We will overcome these barriers by providing excellent customer service to our customers and meeting all their needs in order to be profitable. When it comes to sustainability, the Bookworm Cafe plans to utilize marketing tools to overcome barriers. We will utilize e-commerce in order to build a strong presence in the community. We plan to promote our business by sending emails, using social media and other online networks, and offering specials. With technological advances we plan to update our computers frequently to keep them working for our customers to use. The economic barriers are uncontrollable but we hope to sustain ourselves with strong marketing strategies. We are working towards a strong strategy in order to maintain market share in the area. Customer’s Point of View The Bookworm Cafe is known in the community as the most comfortable tutoring center in Midland, Michigan. It’s environment and staff are customer focused to satisfy the needs of high school and college students. It is a place where students study, eat, and stay productive. Features and Benefits Services Offered: ❖ Tutoring Services (One-on-One, Peer-to-Peer, Group Sessions, SAT, ACT, Workshops) Features: ❖ Comfortable Environment ❖ Available Tutors ❖ Free-WiFi ❖ Spacious rooms for group work ❖ Open late and on weekends Benefits ❖ Listening to our customers needs in providing them a comfortable environment to study and eat will help them exceed in their academics. ❖ The food offered will help our customers stay focused on their work. ❖ The availability of tutors gives our customers the assistance needed for studying or homework help. ❖ The spacious rooms give students the quiet spaces needed to collaborate for group work. ❖ We are open late for the customer’s convenience. Products Offered:
  7. 7. ❖ Food Services (pizza, tacos, burgers, subs, and many other enticing foods, coke products, smoothies, and coffee) Customers The Bookworms Cafe target market are both high school students and college students in Midland. These students attend Dow High School, Midland High School and Northwood University. The percentage of people who are between the ages of 15-24 is around 10%. Dow High School has 1,359 students who are between the ages of 15-19 and Midland High School has 1,488 students who also fall within this age group (Greif, 2015) (Mrs. Pam S Kastl, 2014-2015). Northwood University currently has 6,829 students enrolled in both their undergraduate and graduate programs. Of this total 1,586 students are in the undergraduate program who will be our customers. This provides us with a total of 4,433 students who are our total target market. We took into consideration the fact that this population lives a low income lifestyle and because of this we created our prices to fit this segment. Competitors There are many barriers that make it difficult to enter the service and food industry and the education service industry. Our competitors have been in Midland for years and have been able to establish a clientele and a relationship with the community. This gives them an advantage because they have already established their brand. Our indirect competitors are the Northwood Library and the Timberwolf Tutoring Learning Center. They are both located on 4000 Whiting Drive, Midland, Michigan 48640, at Northwood University. The Northwood Library provides students accessibility to computers, books for a student's’ specific major, online resources, and an environment for studying. The library is open from Monday through Thursday from 8 a.m. to 11 p.m., Friday from 8 a.m. to 5 p.m., Saturday from 12 p.m. to 6 p.m., and Sunday from 2 p.m. to 11 p.m. The library is only open to students and anyone who works for Northwood University. The Timberwolf Tutoring Center is a tutoring center that provides services to help students succeed and excel in their academic career. They are open from Monday through Wednesday from 12:30 p.m. to 8:30 p.m., Thursday from 12:30 p.m. to 5:30 p.m., Friday through Saturday they are closed, and Sunday from 3:30 p.m. to 8:30 p.m. The tutoring provided at this location can be one-to-one or tutor-led study groups. They offer drop-in tutoring as well with or without appointment for subjects such as accounting and math. The services provided by Northwood University is fully paid by students from their tuition in the beginning of the semester. Our direct competitor is Sylvan, which is located on 108 Wackerly St. Ste A, Midland, Michigan 48640. Their hours of operation are from Monday through Thursday from 9 a.m. to 7:30 p.m., Friday from 9 a.m. to 2 p.m., Saturday from 8:30 to 1 p.m. and Sunday they are closed. They provide tutoring for subjects such as math, reading, writing, and homework help. They also host camps for students for subjects such as coding, STEM, math, and robotics. Sylvan provides services in college prep for ACT, SAT, and advanced reading. They have six tutors who have college or university degrees in specific subjects. They currently also have promotional offers for their Insight programs and math edge program. They implement the use of ipads into their tutoring
  8. 8. approach and provide online tutoring services. The costs of tutoring can vary from child to child because they charge based on need, academic goals, program length, subjects, hourly instruction cost, and payment schedule that fits best with the customer. These competitors all offer the tutoring services but do not offer food service. We believe that the Bookworm Cafe’s advantage against our competitors are the hours of operation, availability of food service, peer to peer tutoring, and prices of services. These core competencies are crucial to our business operations. Some food and service industry competitors are Taco Bell, Subway, and McDonalds. They are located near our location which can create an issue when offering a food selection. These franchises have a brand established and are recognized for the product offerings on their menu. Taco Bell is a fast-food restaurant in which their prices vary from $0.99 to $10.00 (Taco Bell Prices, 2015). Their menu consists of crispy tacos, burritos, chalupas, beverages, quesadillas, and other authentic latin foods. McDonalds is also a fast-food restaurant that has a menu that ranges from $0.39 to $8.99 (McDonalds Prices, 2016). Their menu consists of breakfast, dessert, beverages, and a lunch with products such as burgers, fries, nuggets, and much more. Subway is another fast-food restaurant that works on offering products that are ‘healthier’ than the usual fast-food restaurant.Their prices vary from $0.30 to $8.95 and their menu consists on sandwiches, subs, soups, beverages, and much more (Subway Prices, 2016). All of these fast- food restaurants are within the walking distance of the Bookworm Cafe. With this said, even though they are all within the walking distance, these restaurants only provide food but not tutoring services. We believe that our competitive advantage is having both food and tutoring services in one location to provide high customer satisfaction. Niche The Bookworm Cafe is a customer oriented tutoring center that provides food services as well as tutoring services all in one to Midland students who are in need of an environment to achieve academic success. Our tutoring center is a new innovative idea that has not been introduced in the Midland market. Based on our survey results, we believe that the Bookworm Cafe will satisfy this need in the market. Our prices fit the students lifestyles as well as our hours of operation. The location is two miles away from Northwood University which gives students to easy access to our location. It is very important for us to maintain these core competencies of our business and to meet the needs of our customers. By establishing these competencies our unique corner in the market will not be comparable to other tutoring services in the area. Strategy To promote the Bookworm Cafe, we plan to use several different marketing tactics to attract and retain our customers. We plan to use radio stations to help spread the word of the business and the services we have to offer. We plan to advertise mostly early in the morning and later in the afternoon when students are on their way to school and getting out from school. We also plan to advertise in the local newspaper called Midland Daily News in order to attract the parents of the high school students who would like their child to receive tutoring services in an environment where they could also be fed and is close to the location of their schools. We will
  9. 9. use social media to advertise as well by creating profiles on Twitter, Instagram, and Facebook. These networks would help us attract our customers in the community as well as create a presence in the virtual world. We will also rely on word of mouth, which is the strongest way of promoting a business, from students who attend Northwood University, Dow High School, and Midland High School. Although we cannot advertise on these campuses, we believe if we target the the hangout spots for these students, we can gain momentum in retaining customers. We want our customers to view us as the place to be for studying and completing homework at the most efficient way possible. If a potential customer comes into the tutoring center, we would give them a pamphlet for information, ask for their email, and ask if they would like a tour of the location. We would also give them a 2-day free pass to come by the tutoring center anytime within the week to utilize the resources available in a comfortable environment. We believe that by doing this we have the ability to encourage them to try the Bookworm Cafe that could potentially lead to a long-term customer. Promotional Budget We will be spending $150 to professionally develop a half page print ad that will begin circulating in the Midland Daily Newspaper every sunday for 3 months before Bookworm Cafe opens. The cost of circulating this advertisement is expected to be in the range of $6000 in addition to the development of the advertisement. After this we are planning to develop one additional full page advertisement per month after opening and place it in the paper on first Sunday of every month. These advertisements will promote our general business as well as any scheduled workshops for the upcoming month. This will bring in an expected promotional budget of $700 per month. The reason for selecting Midland Daily Newspaper is that many parents of students in high school read the paper. In order to reach out to the market of college students we plan to take on a more viral marketing strategy and focusing on social media as well as food specials. On top of this we have a facebook page that we spend $35 a week in maintaining daily local advertisements for. This is targeted towards people connected to all local universities and high schools. We will also be spending $4000 a month to advertise on 2 different radio stations in our area. This brings our marketing budget up to $10700 per month. Proposed Location Our location is very important to our customers, because it needs to be easily accessible to them. Not all high school or college students have transportation, which can make it hard for them to get to a location that is far from their campus or home. With this being said we decided to keep it within five minutes of all of the campuses to make sure that it was in a convenient place for everyone. We have chosen a location that has lots of parking available. It is important for us to have a large amount of parking available for our customers, especially when we have special events such as the ACT or SAT training programs. We also think that we need a space with enough room to fit a kitchen, individual group rooms, computer stations, and tables with chairs for customers to sit and study. The interior should be a relaxed and welcoming
  10. 10. space/environment that customers feel comfortable to study and learn in.This is consistent with our image, because we are in business to provide a positive and relaxed environment where students can come to get assistance and learn while feeling comfortable. Bookworm Cafe’s location is center to our competitors locations. We are approximately five minutes away from each of our competitors in the education market. For the education market it doesn’t matter if we are near our competitors or not. As long as we provide the best service and environment for customers to learn. However in the restaurant market, we are right by Subway, Taco Bell, and McDonalds. This could prevent a bit more of a challenge for us to have to compete with their food and low prices. At the same time though, we will have different varieties of food available for customers than these suppliers do. Distribution Channels With us being a service, we will offer a direct distribution channel for selling our products and services to our customers. In the future, when we become a larger company, we may offer online sales in apparel and drink mixes. Sales Forecast Best Case Forecast Totals Units sold (food) 3680 3938 4213 4508 4824 5161 5523 5909 6323 6766 7239 7746 6583 0 Units sold (tutoring) 127 133 140 147 154 162 170 179 188 197 207 217 2021 Average revenue/Unit (Food) $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 Worst Case Forecast Totals Units sold (food) 2760 2843 2928 3016 3106 3200 3296 3394 3496 3601 3709 3820 3917 0 Units sold (tutoring) 127 131 135 139 143 147 152 156 161 166 171 176 1802 Average revenue/Unit (Food) $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 $2.6 9 The best case scenario is based off of a 7% growth rate and each customer ordering 4 food items per visit. This offers us a very fast expansion leading to a much faster break even point. The worst case scenario is based off of a 3% growth rate and each customer ordering 3 food items per visit. This results in a totals reduction of almost half for the food units. However
  11. 11. this just extends the break even point by months since the vast majority of revenue comes from tutoring services, which offers no variable costs due to it being an intangible service. VI. Products and Services Bookworm Café offers an inviting environment for students of all ages a place to eat and get tutoring help at the same time. Bookworm Café offers an American Style food bar with many different food options that fit a student's liking. Our tutors are students from the several different schools located in our area. These students are some of the top in their class and share the same school experience as our customers. We will employ Tutoring Specialist’s to overlook operations and hold special workshops throughout the week. Students will enjoy their eating experience at Bookworm Café, all while getting the grades to excel. The dining experience at Bookworm Café can be called “fast casual”, while still offering affordable and healthy options for the students. There will be a food bar to order from, and plenty of seats to gather and study while eating. If needed, a server will bring over the food after it’s prepared to your liking. Bookworm Café offers many different types of snack and beverage options throughout the day. We also offer specials each day that include options such as pizza, tacos, burgers, subs, and many other enticing foods offered in our buffet. Coke products will be offered in our soft drink dispenser, along with smoothies and coffee as beverage options. While you are enjoying your food, we will have multiple tutors on the floor who are willing to serve and tutor. Many of these tutors in the top of their class and come from local high schools. Tutoring allows students a great opportunity to volunteer their time, helping fellow students. What separates our tutoring experience from our competitors is the fact that we employ students who may have had a similar class in the past, or possibly even the same course instructor. The restaurant manager will also serve as a tutor at times. Often these managers are the instructors of our workshops. We offer both ACT and SAT help, one-on-one tutoring sessions, and specialized workshops throughout the year in our conference rooms we offer. The conference rooms are also available for rent free of charge for members, if not already occupied of course. Bookworm Cafe offers a productive and relatable tutoring service, all while offering food and staying competitive with pricing options. We offer different membership plans based on a monthly rate. For a 1 month membership, it will cost $39. We also offer discounted rates for longer plans. Bookworm Cafe offers ACT/SAT workshops in weekend, 2-week long, and 6- week long options at $99, $219, and $499 price points respectively. We also offer specialized workshops on different subjects throughout the year in 4 hour and weekend options for $69 and $99. One-on-one expert tutoring help will be offered for $15 an hour. To sign up for any of these workshops, or receive tutoring help, you must hold an active membership. People are welcome to eat at Bookworm Cafe whether they have a membership or not, however they will not receive any tutoring help.
  12. 12. The combination of affordable food, personable tutoring help, and competitive membership and workshop pricing makes Bookworm Cafe a top destination for students looking to raise their grades. The environment and feel of Bookworm Cafe will make students excited to come back and will create returning customers interested in a membership and workshops. With the company’s commitment to the community and excitement in our products and services, Bookworm Cafe will be the leading tutoring service in the Greater Midland area for years to come. VII. General Company Description Bookworm Café is a fast casual food restaurant offering tutoring help and services for students ranging from middle school to college. We will offer a conducive and productive environment for students to get their homework done and enjoy a meal with friends. MissionStatement Our mission is to provide students tutoring resources in an innovative environment to assist them in achieving their full potential, while serving today’s popular foods and beverages to satisfy our customers. Goals and Objectives Bookworm Cafe’s main goal is to provide Midland area students the tutoring help and be a leader for youth development in the community, while maintaining a profitable restaurant and business. We want to be recognized as a useful tutoring tool for students of various levels of education. We plan on achieving these goals by employing people who have the right experience and knowledge to teach and make a positive impact on each student. Top academic high school and college students will tutor to provide our customers with effective help. Bookworm Café wants to be seen by students as a cool and fun place to gather and study. Serving food and beverages will help us maintain these goals, while also providing another healthy source of income. Business Philosophy It is important to Bookworm Cafe that we supply our local students with the means to accel in school, while also providing a fun and inviting learning environment. We want to better the community, starting with the youth. Marketing We will primarily market our tutoring and food services to students in the age range from 15-24 in the Greater Midland area. It is also important that we market to parents, making it known to them that Bookworm Cafe is a safe and productive place for their kids to learn. Skills and Strengths
  13. 13. The restaurant’s biggest strength it holds is its relationships and similarities to the students we serve daily. We as a company share the same goals that many of our students hold; to succeed in school, and have fun while doing it! As mentioned before, many of our tutors will be students who attend the local schools. This make the tutoring sessions very relatable and personal to the student. We provide everything the average student wants while studying, including food, Wi-Fi, a quiet place if needed, and the most effective tutoring help in the area. Each partner in the business brings something different to the table. From marketing, to management, to experiences in the food industry, we all know how to prosper and run a business effectively. But the one thing that each partner has in common as students, is struggling through a class and not knowing where to find the right help. We know exactly what a student needs in order to succeed in school and that is what Bookworm Cafe is here for. Legal Form of Ownership Bookworm Cafe is considered a limited liability corporation (LLC) because of the protection of assets and the few restrictions that will be put on the company. VIII. Operational Plan Production We are going to get our foods and supplies from wholesale stores such as Gordon's Food Service. They have a location in Midland close to our cafe which makes it easy for us to go pick up our supplies and it is cost effective. They also sell things at wholesale in bulk, which is perfect for our cafe. It also lets us have inventory rate, we could just do a week by week supply to help keep our costs low and our margins up. We will use Office Depot as a supplier for our office supplies for the tutoring portion of the business. It is close by and they also offer delivery if needed. To control quality, the snack bar will be checked on twice an hour to insure that everything is stocked and up to our standards. For our beverages, we will make sure that our soft drink machine will be cleaned twice a day and the coffee pot will be checked and filled hourly. For tutoring, we will make sure that our tutors have at least a high school diploma and provide a transcript that shows the grade they received in every course. We are going to adapt a FIFO policy to make sure that first in is first out for all food supplies. To maintain the best quality service, we will update our tutoring services to match local high schools and colleges/universities course catalogs. We will also conduct surveys to ensure that our menu fits the needs of our customers and that our quality of our tutoring services is up to par. Location For our business we need a location with lots of traffic, that is close to the campus’s of our students, that has enough parking to satisfy our needs. We need a good amount of space to be
  14. 14. able to have a cozy work environment for our customers. We also need to have small rooms available for people to be able to access them to work on group projects. We are looking for a space between 1200-1600 square feet. This will give us enough space for food and drink preparation, an office, and seating for the customers. The location that we chose is 1836 North Saginaw Rd.Midland, MI this offers 1,625 square feet and lots of parking for commercial use. It is located less than 2 miles from Northwood University and Dow High School. The monthly rental fee is $1,152, plus utilities and taxes. This building offers us enough space to have these group rooms, and also have a roomy common area in our cafe. We are not building, but we will have to do some renovations for food preparation and dining areas. These renovations will cost approximately $13,000, this will include all of our kitchen equipment. Our business hours are between 11am to 2am during the week, and on weekends it will be 9am to 2am. The reasoning of these hours is based on our research that we conducted, most people prefer to study within these time frames. Our operation and sales throughout the day will all depend on the flow of customers. It will be on a walk in system, unless the student has requested an appointment with a tutor in advance, or we are holding a workshop. Legal Environment We need to have the health department assess the property and make sure it is a commercial space. We also need to obtain a food permit from the state of Michigan, which will cost us $109. As well as insurance to cover any accidents or incidents on the premises. We will also need to obtain a sales tax license, which we can attain with no cost to our company. Personnel We are going to start out with 24 employees. We will have 10 tutors, 5 cooks, 5 waiters, and 4 managers on staff. As we expand, depending on which department of our company needs more employees we will hire the more staff, whether it be tutors or kitchen staff. Our tutors will be trained basic teaching methods in order to assist the students. Our cooking staff will be trained to prepare quick and easy to eat meals. The waiters will be trained in basic customer service. To find the right employees for the cafe we will reach out to local students, preferably in honors programs. We will also place ads in the paper to look for experienced cooks and wait staff. The type of labor that we will be supplying is all unskilled labor. The cooks will be paid $10 an hour. The waiters will be paid $4 an hour plus tips. The tutors will be paid $8.50 -$10 an hour depending on length of employment. Management will have salaries of $25,000 to $50,000 depending on length of employment. The tutors will be required to help assist the customers with the areas they need assistance in. They will be required to clean the tutoring areas of the cafe and to make sure the computers and technology is running efficiently. The waiters will be required to wait on the customers, take orders, make sure the buffet is stocked, cash out customers, and clean cafe as well as the snackbar. The cooks will be required to prepare the food and keep the kitchen clean. Managers will be responsible for setting schedules, hiring and firing employees, managing
  15. 15. employees, make sure that customers are satisfied with their service and meals, and help out wait and cook staff when needed. Inventory We will have raw materials and supplies in stock. We will stock on a weekly basis to ensure freshness and quality. Inventory turnover will be high, to ensure that no food spoils. We will stock more food and supplies when we are hosting a workshop or for the week of midterms and finals. If we have access stock, we could run specials Suppliers For our cafe our main supplier will be Gordon’s Food Service. They sell all types of food in bulk at wholesale prices. Gordon’s Food Service 1511 Joe Mann Blvd. Midland, MI 48642 By using them we will not have to worry about shipping, because they are less than five minutes away from our cafe location. They are open from 7am to 8pm Monday through Saturday and 12pm to 5pm on Sundays. If we have any emergency shortages in food, we can go to Gordon’s to pick up or drop the products. If they are closed, we can go to any of the open grocery stores in Midland. Our prices on our supplies will be fluctuating slightly, so we will have to plan this into our prices of our products and services to account for this. Credit Policies We will have no credit policy in place for our customers. This is due to the fact that people will be paying a subscription fee in advance or paying for their product or service at the time of service. Credit policies are not very common in the cafe or education. By requiring our customers to pay on point of sale, it allows us to have the money at that time of the sale. This is good for our business, because we are small and it would be hard for us to have to maintain our business without a steady income. The only supplies that we will really need to purchase on account is food and beverages. Their system is a net 30 payment system, if you pay before you can earn points towards discounts on your account. We will be paying this monthly, to ensure that we can take full advantage of these deals. IX. Management and Organization The five owners will become managers. This way we do not have to hire outside help and we will keep the philosophy and integrity of our company because we will manage the company ourselves. We are all currently Northwood University students, by the time we are open we will have all graduated and have a degree in Business Administration. Out of the five managers we have experience in management, customer-service, and tutoring. If one of us
  16. 16. decides to move on we will still have four other managers we would like to have between 4-5 managers at a time. If someone leaves we would consider replacing them. Our company will need managers, cooks, waiters, tutors, and janitors. Our base for hiring would be from the high school and Northwood University students. That way they have the knowledge to be able to tutor students because they have taken the courses themselves. Professional and Advisory Support List the following: · Board of directors- Norma, Kyle, Cameron, Sarah, and Jalisa · Management advisory board- Norma · Market/Scientific advisory board- Norma and Sarah · Attorney- Delois Leapheart · Accountant- Thomas Sample · Insurance agent- · Banker- · Consultant or consultants- Amee Cox · Mentors and key advisors- Matthew Williams X. Startup Expenses and Capitalization We plan on moving into our building 2 months before opening. This means that the first two month’s rent will have to be paid before opening. This will give us the time we need to hire and train our chefs and waiters as well as install all of our food prep equipment. We will also use this time to promote our business and set up our tables, chairs, trays and office supplies. Our startup costs for all of our kitchen equipment, licenses, tables, chairs, office supplies, food supplies, and initial rent and advertisements is expected to be just over $47,000. Since our business is not expected to have consistent year-round business (due to summer vacations) our initial capitalization is based on the month of the year that is expected to have the lowest deficit in capital returns. Our end of the year predictions put us at almost -$25000 however the point where our net available cash dips the lowest is during the month of September when we are not planning on running as many workshops as during ACT prep season (winter/spring) and exam times. To remain solvent at this time we will be taking out a $66,000 loan ($55,000 plus an additional 20% for emergencies) that will be paid in 5 at 3% interest with monthly payments of $1185.93 XI. Financial Plan 12 Month Projected Balance Sheet
  17. 17. 5 Year Projected Balance Sheet 2016 2017 2018 2019 2020 Revenue Product Revenue (food) $177,083 $185,937 $195,234 $204,995 $215,245 Product Revenue (tutoring) $388,135 $415,305 $444,376 $475,483 $508,766 Total Revenue $565,218 $601,242 $639,610 $680,483 $724,021 Expenses Payroll $349,384 $370,312 $370,312 $419,784 $419,784 Supplies and Services $120,072 $126,076 $132,379 $138,998 $145,948 Operating Expenses $6,000 $6,000 $6,000 $6,000 $6,000 Marketing and Sales $68,160 $68,160 $68,160 $68,160 $68,160 Rent $13,824 $13,824 $13,824 $13,824 $13,824 Payments on Loan $14,231 $14,231 $14,231 $14,231 $14,231 Other $32,501 Total Expenses $604,172 $584,372 $590,675 $646,766 $653,716 Income before taxes & depr. -$38,954 $16,870 $48,935 $33,717 $70,305 Notes: Head Count Cooks @ $52320 2 2 2 2 2 Tutors @ $44472 4 4 4 5 5 Waiters @ $20928 2 3 3 3 3 Managers @ $25000 1 1 1 0 0 Managers @ $30000 0 0 0 1 1 Total 9 10 10 11 11 Revenue Units sold (food) 65830 69122 72578 76206 80017 Average Revenue/Unit (food) $2.69 $2.69 $2.69 $2.69 $2.69
  18. 18. 12 Month Projected Cash Flow Jan Feb Mar ch Apri l May June July Aug Sept Oct Nov Dec Total Beginning Available Cash $66,0 00 $27 ,32 5 $31, 641 $38, 265 $47, 329 $44, 223 $43, 103 $28, 227 $14, 787 $2, 875 $5,7 28 $10, 970 $66, 000 Income before taxes & depr. - $38,6 75 $4, 315 $6,6 25 $9,0 64 - $3,1 06 - $1,1 21 - $14, 875 - $13, 440 - $11, 913 $2, 854 $5,2 42 $7,7 75 - $47, 255 Change in Accounts Receivables 0 0 0 0 0 0 0 0 0 0 0 0 $0 Change in Accounts Payables 0 0 0 0 0 0 0 0 0 0 0 0 $0 Capital Expense 0 0 0 0 0 0 0 0 0 0 0 0 $0 Net Available Cash $27,3 25 $31 ,64 1 $38, 265 $47, 329 $44, 223 $43, 103 $28, 227 $14, 787 $2,8 75 $5, 728 $10, 970 $18, 745 $18, 745 5 Year projected Cash Flow 2016 2017 2018 2019 2020
  19. 19. Beginning Available Cash $66,000 $27,046 $43,916 $92,851 $126,567 Income before taxes & depr. -$38,954 $16,870 $48,935 $33,717 $70,305 Change in Accounts Receivables $0 $0 $0 $0 $0 Change in Accounts Payables $0 $0 $0 $0 $0 Capital Expense $0 $0 $0 $0 $0 Net Available Cash $27,046 $43,916 $92,851 $126,567 $196,872 Breakevenanalysis XII. Appendices XIII. Refining the Plan For Raising Capital
  20. 20. For Bankers We will be taking out a loan for our short term start up cost in the amount of $60,000. This money will help us with the startup expenses including supplies, furniture, and food, as well as a twenty percent cushion. According to our calculations our loans should be paid off in full within 4 years plus earning five percent interest per year. With the loan we will be able to cover our start up cost. Most of the money that we make will come from the tutoring membership cards that we have. We have projected to make a profit towards the end of year one. With that growth in profit we will be able to build it up until we can pay off our loans which we project to be in year four. Service Businesses The main competing factors in the industry are the tutors, environment, price and location. What makes Bookworm so unique is that we can offer tutoring help for students who have taken the exact class before so they know the material that certain professor or teacher will be focusing on. With the environment the bookworm is innovative because we are the first of our kind. We offer a place that you can come in and relax with your friends while getting help in the subject that you are struggling in. This gives it a more welcoming feel and does not bore our target market. Pricing is competitive, and the location is fantastic. We will be set up right down the road from Dow High School and Northwood University, so we are in a great location to sell to our target market. Having all of these competitive edges will help consumers see that The Bookworm is the best tutoring service around. Start-up Expenses Stove/Oven $1,545 Coffee Maker $1,489 Soda Fountain $1,440
  21. 21. Hot Food Bar $4,732 Industrial Sink $349 Refrigerator $324 Freezer $199 POS System $2,400 Total $12,480 Appendix Survey Questionnaire Questions Response Options Do you utilize tutoring services Yes offered in your community? No What kind of tutoring service Offered through school do you use? Offered through community center
  22. 22. Offered through a private tutoring service Other What time of day do you prefer 6:00 am - 9:00 am to study at? 9:00 am - 12:00 pm 12:00 pm - 3:00 pm 3:00 pm - 6:00 pm 6:00 pm - 9:00 pm 9:00 pm - 12:00 am 12:00 am - 3:00 am 3:00 am - 6:00 am How important would you rate the Availability of food following qualities of an environment to study in? Level of noise Availability of assistance Space for group work Please rate the following qualities that you Someone with a wide range of knowledge look for in a tutor? Someone who has had your professor Someone with experience in tutoring Someone who is easy to understand Would you travel to use a tutoring service in an NO environment that offered dining services as well? 1-5 miles 5+ miles What kind of food do you like to eat when you (record answer) study? How satisfied are you with your school’s offered Very Satisfied tutoring program? Satisfied Neutral Not Satisfied Very Satisfied

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