Expanding Your Business

Coffee business is a profitable venture that can grow in a short time if the service and products offered to the clients meet the expected quality or standards. I recently visited a small coffee shop named Café Paradiso, and the business idea appealed to me. The major product offered by the business is coffee. Clients enjoy various types of coffee at various points of the day. In addition to that, the business premise offers clients the chance to share moments with their peers or business partners with its serene environment. What follows is a strategy for business designed to compete in the coffee market with enterprises such as Café Paradiso.

Business Strategy

The entrepreneur will enter into negotiations to buy a café business, called Café Delight, due to its strategic location in a busy town with a number of coffee loving consumers and a growing population. Apart from Café Paradiso, the number of cafés in and around the center were limited and given the fact that the entrepreneur has operated other businesses in other areas successfully; the new business will manage to increase its market share to attain 40% in a span of a year.

The new business will have several advantages which include a great location, good standards of service, good quality of coffee, experience and skills in the industry, and available resources. The main activities of the business will be carrying out the operations of the café. Business activities will subsume buying, storing, preparing and selling coffee products to highly valued clients. The business expects to serve more than 5,000 clients every month. The café will be open for business every day and will manage to allow a total of 36 people when full.

The main mission of the business will be to make its clients satisfied by offering them high-quality coffee that meets their expected standards. The major point of differentiation from the competitors in the market is that the entrepreneur holds an international certification in food preparation. Therefore, the café will be able to offer light, fresh, and healthy coffee every day as well as develop options that will meet the evolving tastes and preferences of the customers. The business will target shoppers and staffs who visit the center where it will be located who are looking for great coffee that assures value for money at extremely competitive prices.

Objectives

· Maintain great share of the market through changing ownership then increase the market share to over 40%

· Generate a net margin of around 20% before taxation

· The business aims at achieving these objectives by:

· Retaining a few of Café Delight's workers to ensure continuity of the relationship between clients and the business during the process of changing ownership

· Upgrading the current signage to be more appealing to clients

· Controlling costs and managing the existing price levels

· Undertaking more promotional and marketing activities

Purchasing Existing Business

The entrepreneur will purchase an existing business instead of starting an entirely new café because of the benefits involved in the former option. Firstly, there will be savings in terms of energy, time, and money when purchasing a business that is already in existence. When opening an entirely new business, entrepreneurs have to be involved in lengthy processes of researching and developing models and business plans. However, in the event where an entrepreneur purchases an existing business, most of these processes will already be done. In the case of Café Delight's purchase, the financial viability of the business is vital. The entrepreneur can be able to get financing for the purchase if the financial viability or the track record of the business is good.

Purchasing an existing venture instead of developing a new café business from scratch will also be a great plan because of the advantage of inheriting infrastructure needed for the business. It will be beneficial for an entrepreneur to inherit the café's infrastructure that the current owner has already established. In addition to that, purchasing an existing business will bring the advantage of inhering clients, suppliers, systems, equipment, and all the necessary equipment. Importantly, the previous owner of the coffee shop may offer essential insight and help that will make the transition much easier (Lee, 2011).

The café business will start generating great cash flow immediately if it acquires an existing business instead of starting from nothing. Profitability will not be a question for the café business as it would have been in the case of a startup. Café Delight is currently producing a good income, and it has a solid and established client base. Therefore, the new business will be able to maximize the opportunities of success once the entrepreneur takes over. A discussion with the current owner of Café Delight, as well as some of its clients, has helped in establishing insight into the performance of the business. In addition, even though Café Delight had already established itself, there will be room for creativity and innovation. It is highly beneficial to purchase a business that one can bring additional expertise based on experience and skills. The entrepreneur has gained significant experience and skills from past training and business involvement. Against this backdrop, creativity and innovation for the new business will be easy and will increase the profitability of the company.

Form of Ownership

The best form of ownership for this new business will be a sole proprietorship. The entrepreneur in this case will be legally and fully in charge of Café Delight. The entrepreneur will own the café alone and will be charged with running the firm from day to day. The entrepreneur as is the case in all sole proprietorships will own all the assets acquired from an existing business and the profits that venture will produce. Additionally, the entrepreneur will report the income and losses that emanate from the café business using small finance software and claim the same on the personal tax return (Wallace & Forte, 2008). It is noteworthy that the entrepreneur will be liable for claims and business debts made against the name of the café.

The biggest reason as to why a sole proprietorship is the best form of ownership for the small café is that it is the most simple and uncomplicated form of ownership. Sole proprietorship is the only form with the least red tape, which is what a small café business would need. Given the experience and ambitions of the entrepreneur, making decisions singly is an ideal option, which is what the sole proprietorship will offer. The profits will flow right into the entrepreneur's personal tax returns, and he can decide to use the revenue from the business as he wishes. Although legal liability might be a drawback that may emanate from the venture, the entrepreneur can decide to transform the business into another form as the risks increase due to business uncertainty or expansion (Kennedy, 2005). However, during the initial months, it is quite certain that the business will make gains, and thus the assets of the entrepreneur will not stand much risk.

Business Plan

Company Description

The entrepreneur will name the new café Coffee Lounge. Coffee Lounge will be a transformation of Café Delight. The new sole proprietorship business will have the same location as the old business but will use new strategies that meet the needs of the consumers. Given the fact that the location of the business hosts myriad businessmen and employees of various companies, Coffee Lounge will provide a wide assortment of coffee brands and drinks that will cater for the wide diversity of the consumer base. This strategy will help the business to stand out from the competitors, and it will lure more clients and make them loyal ones.

Market Analysis

Coffee is the most popular hot drink and the second most common drink after water according to consumption studies all over the world. Its market is ever growing, and consumers are always looking out for coffee joints that offer good quality and myriad brands. In Coffee Lounge's location, Louisiana, there are several competitors. The top five competitors include Maple Street Bakery & Café, Campbell's Coffee & Tea, Coffee Rami, and Café Paradiso. However, Café Paradiso presents the biggest competition to the upcoming business owing to its proximity. Nevertheless, Coffee Lounge's strategy and the constant flow of visitors and coffee lovers in the location will ensure that there is constant profitability.

Organization and Management

The entrepreneur, having operated several successful cafés in other parts of the country, will steer Coffee Lounge to profitability and success. A sole proprietor is a qualified chef with a proven track record in café management. In addition to that, the proprietor will maintain 20% of the staff from the previous business in order to ensure continuity of clients. Other than that, 80% of the staff employed to help run the business will have the qualifications needed to make the transition smooth and business growth constant.

Marketing and Sales

The business that Café Lounge will make the transition from already had a great market share. Café Lounge will, therefore, have easy task marketing. The market promotions used for the new business will be both within and outside the location of the business.

Financial Projections

The projected annual profit for the first year is $10,754, with the following year projected at $15,175. These projections are founded on the annual profit budget. The business calculates the gross margin at 70% for the first year and 71.5% for the second year. The net profit during the first year is calculated at 15% before tax for the starting year and 22% for the subsequent year. The business is highly profitable, and the profit margins will be sustainable from the medium to long term duration.

Appendix

References

Kennedy, J. (2005). The Small Business Owner’s Manual. Career Press.

Lee, R. (2011). The Complete Guide to Running a Cafe Business. Adams Media.

Wallace, C., & Forte, G. (2008). The Professional Personal Chef: The Profession of Carrying Out Business as a Personal Chef. John Wiley & Sons.