Budget and Finance Coffee Cafe coffee Bar

Question: Describe about the Executive Summary ,Calculation of Start-up Costs and Other Budgeted Projections and Assumptions of the presentation to the Bank of Coffee Cafe coffee bar? Answer: Executive Summary Coffee Cafe coffee bar aims at becoming the daily necessity of the local addicts. This will be a place for the consumers to relax so that they can escape the daily stress from their life. The coffee shop will be a comfortable place to meet up with friends, family. One can have a sip of coffee while reading the book (Pinson, 2008). There is growing demand for coffee which is of high quality. The service of the coffee shop will be satisfactory. The coffee shop will capitalize on its proximity to the University of Sydney campus so that it can build a core group of customers who will be repeat customers. The Coffee Caf has decided its venue in the populated areas of Sydney in order to build a core of repeat customers. The coffee shop will build strength of repeat customers (McKeever, 2002). The coffees will be complemented with pastries and other snacks. The customers can read free books so that they can enjoy their visit in the coffee shop (BBC News, 2014). The coffee shop will operate in a 1500 square foot area and it will be located in close proximity to the University of Sydney. The place has been secured by the owners with a lease for a period of three years. The owner of the coffee shop will invest $140000 for the initial start up of the business. The total capital required for the coffee shop is $170000 for starting the business. The coffee shop will obtain the remaining capital from Bank of Australia via commercial loans (V.T., 2014). The company has estimated the revenue from sales for the financial year 2015 to financial year 2017. The sales revenue for the year 2015 will be $584000 in the year 2015 and the sales revenue will reach to $706000 in the year 2017. The Coffee Caf bar will keep a marginal gross profit of around 65% in the three years. The operating expenses will be reasonable and there will be a significant increase in the net profit during the period of three years. The objective of the coffee shop for the first year of operations is to become the best new coffee shop in the locality of Sydney. The coffee shop will be set up in the close proximity of the busy street of Sydney so that it can address to a maximum customers. The college students will be potential customers of the coffee shop (Wagen and Goonetilleke, 2015). The coffee shop will turn profits in the first month of operation. The coffee shop will maintain the gross margin of 43%. The key success of the business of the Coffee shop will depen d on the design of the store, the quality of coffee offered to the customers. The ambience of the coffee shop is crucial for the growth of the coffee shop business. The coffee shop will be visually attractive for the customers and they are designed for the efficiency of operations of the coffee shop (Sanchez, 2014). The employees of the coffee shop will be trained properly to ensure that the coffee preparation techniques are top class and maintains the standards with the best coffee shop in Australia (Thomsen, 2015). The marketing strategies of the coffee shop will aim to build a solid base of loyal customers. The organization will aim at maximizing its sales (entrepreneur.com, 2015). The products with high margin such as expresso will be sold keeping high margin. The major expenses of the company will be incurred in legal expenses as accounting services amounting to $1300. The coffee shop has to spend on marketing promotion expenses for the opening of the coffee shop (Kerner, 2015) . Additional charges have to be paid to the consultants for helping the set up of the coffee shop. Expenses will be made for insurance, prepaid rent, remodeling of the premises and other expenses in stationery and phone utility deposits (Beanhunter, 2015). The Coffee Caf shop will be located in the ground floor of the commercial building near University of Sydney (Awe, n.d.). The owner will take the lease of the building for one year. The lease contract will be renewed for three years at a fixed rate that will be executed by Coffee Caf depending on the financial strength of the business. The property will be located in the commercial area in the near proximity of the University campus (BBC News, 2014). The interior design of the coffee shop will portray a clean interior design. The dcor will be modern wooden dcor (BizPlanDB, 2015). The quality of the coffee and the snacks will be one of the best in Australia. It will be an eclectic place where the people can relax and enjoy a cup of coffee (web.uvic.ca, 2015). The window display of the coffee shop will be clear so that the customers sitting at the coffee shop will have a clear view of the passerby while enjoying their beverages (Urbanspoon, 2015). Calculation of Start-up Costs and Other Budgeted Projections Budgeted Cash Flow Statement Cash received from Operations Cash Sales $ 548,000.00 $ 624,000.00 $ 705,640.00 Additional cash received Receipt of Sales Tax , GST / VAT $ - $ - $ - Current Net borrowing $ - $ - $ - New interest free liabilities $ - $ - $ - New long term liabilities $ - $ - $ - Current Assets sale $ - $ - $ - Long term assets sale $ - $ - $ - Receipt of New investment $ - $ - $ - Sub Total receipt of cash $ 548,000.00 $ 624,000.00 $ 705,640.00 Expenditure Expenditure of Operations Cash Spending $ 126,400.00 $ 134,800.00 $ 154,155.00 Payment of Bills $ 327,856.00 $ 388,751.00 $ 402,954.00 Subtotal operation expenses $ 454,256.00 $ 523,551.00 $ 557,109.00 Repayment of Principal of Current Borrowing $ 3,300.00 $ 3,300.00 $ 3,300.00 Principal Repayment for long term liabilities $ - $ 3,858.00 $ 3,691.00 Long term asset purchase $ - $ 2,000.00 $ 2,000.00 Dividends $ - $ - $ - Subtotal cash spent $ 457,556.00 $ 532,709.00 $ 566,100.00 Net flow of cash $ 90,444.00 $ 91,291.00 $ 139,540.00 Budgeted Profit and Loss January May June July August September October November December Sales $ 40,000.00 $ 47,000.00 $ 47,000.00 $ 47,000.00 $ 47,000.00 $ 48,000.00 $ 49,000.00 $ 51,000.00 $ 53,000.00 Direct Cost of Sales $ 14,500.00 $ 15,500.00 $ 15,750.00 $ 16,000.00 $ 16,250.00 $ 16,500.00 $ 16,750.00 $ 17,000.00 $ 17,250.00 Gross Margin $ 25,500.00 $ 31,500.00 $ 31,250.00 $ 31,000.00 $ 30,750.00 $ 31,500.00 $ 32,250.00 $ 34,000.00 $ 35,750.00 Gross Margin % 76% 66% 66% 65% 67% 67% 69% 70% 67% Expenses Payroll $ 10,833.00 $ 10,833.00 $ 10,833.00 $ 10,833.00 $ 10,833.00 $ 10,833.00 $ 10,833.00 $ 10,833.00 $ 10,833.00 Sales and Marketing $ 2,250.00 $ 2,250.00 $ 2,250.00 $ 2,250.00 $ 2,250.00 $ 2,250.00 $ 2,250.00 $ 2,250.00 $ 2,250.00 Depreciation $ 432.50 $ 432.50 $ 432.50 $ 432.50 $ 432.50 $ 432.50 $ 432.50 $ 432.50 $ 432.50 Rent $ - $ 4,120.00 $ 4,120.00 $ 4,120.00 $ 4,120.00 $ 4,120.00 $ 4,120.00 $ 4,120.00 $ 4,120.00 Maintenance $ 400.00 $ 600.00 $ 650.00 $ 700.00 $ 750.00 $ 800.00 $ 850.00 $ 900.00 $ 950.00 Utilities $ 717.00 $ 717.00 $ 717.00 $ 717.00 $ 717.00 $ 717.00 $ 717.00 $ 717.00 $ 717.00 Payroll Tax @ 12.5% $ 1,354.13 $ 1,354.13 $ 1,354.13 $ 1,354.13 $ 1,354.13 $ 1,354.13 $ 1,354.13 $ 1,354.13 $ 1,354.13 Total Operating Expenses $ 15,986.63 $ 20,306.63 $ 20,356.63 $ 20,406.63 $ 20,456.63 $ 20,506.63 $ 20,556.63 $ 20,606.63 $ 20,656.63 Profit before Tax $ 9,513.38 $ 11,193.38 $ 10,893.38 $ 10,593.38 $ 10,293.38 $ 10,993.38 $ 11,693.38 $ 13,393.38 $ 15,093.38 Interest expense $ 247.00 $ 239.00 $ 237.00 $ 235.00 $ 233.00 $ 231.00 $ 229.00 $ 227.00 $ 225.00 Tax Burden @10% $ 951.34 $ 1,119.34 $ 1,089.34 $ 1,059.34 $ 1,029.34 $ 1,099.34 $ 1,169.34 $ 1,339.34 $ 1,509.34 Net Profit $ 8,315.04 $ 9,835.04 $ 9,567.04 $ 9,299.04 $ 9,031.04 $ 9,663.04 $ 10,295.04 $ 11,827.04 $ 13,359.04 Net Profit Percentage 21% 21% 20% 20% 19% 20% 21% 23% 25% Budgeted Balance Sheet January February March April May June July August September October November December Assets Current Assets Inventory $15,027.00 $16,400.00 $16,325.00 $17,480.00 $17,480.00 $17,480.00 $18,864.00 $20,010.00 $22,175.00 $22,354.00 $24,135.00 $25,600.00 Cash $66,123.00 $94,736.00 $106,966.00 $114,462.00 $121,235.00 $129,127.00 $137,020.00 $144,914.00 $152,811.00 $161,679.00 $172,596.00 $184,211.00 Other current assets $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Total current Assets $81,150.00 $111,136.00 $123,291.00 $131,942.00 $138,715.00 $146,607.00 $155,884.00 $164,924.00 $174,986.00 $184,033.00 $196,731.00 $209,811.00 Long term Assets Long term assets $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 $58,160.00 Depreciation $0.00 $430.00 $645.00 $967.50 $1,451.25 $2,176.88 $3,265.31 $4,897.97 $7,346.95 $11,020.43 $16,530.64 $24,795.97 Total Long term assets $58,160.00 $58,590.00 $58,805.00 $59,127.50 $59,611.25 $60,336.88 $61,425.31 $63,057.97 $65,506.95 $69,180.43 $74,690.64 $82,955.97 Total Assets $139,310.00 $169,726.00 $182,096.00 $191,069.50 $198,326.25 $206,943.88 $217,309.31 $227,981.97 $240,492.95 $253,213.43 $271,421.64 $292,766.97 Liabilities and Capital Current Liabilities Current Borrowing $11,000.00 $10,850.00 $10,700.00 $10,550.00 $10,400.00 $10,250.00 $10,100.00 $9,950.00 $9,800.00 $9,650.00 $9,500.00 $9,350.00 Accounts Payable $0.00 $20,118.00 $24,118.00 $28,118.00 $32,118.00 $36,118.00 $40,118.00 $44,118.00 $48,118.00 $52,118.00 $56,118.00 $60,118.00 Total current liabilities $11,000.00 $30,968.00 $34,818.00 $38,668.00 $42,518.00 $46,368.00 $50,218.00 $54,068.00 $57,918.00 $61,768.00 $65,618.00 $69,468.00 Long term liabilities $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 $21,000.00 Total Liabilities $32,000.00 $51,968.00 $55,818.00 $59,668.00 $63,518.00 $67,368.00 $71,218.00 $75,068.00 $78,918.00 $82,768.00 $86,618.00 $90,468.00 Paid in capital $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 $130,500.00 Earnings $0.00 $6,963.00 $7,102.26 $7,528.40 $7,980.10 $8,458.91 $8,966.44 $9,504.43 $10,074.69 $10,679.17 $11,319.92 $11,999.12 Total Capital $130,500.00 $137,463.00 $137,602.26 $138,028.40 $138,480.10 $138,958.91 $139,466.44 $140,004.43 $140,574.69 $141,179.17 $141,819.92 $142,499.12 Total Capital and Liabilities $162,500.00 $189,431.00 $193,420.26 $197,696.40 $201,998.10 $206,326.91 $210,684.44 $215,072.43 $219,492.69 $223,947.17 $228,437.92 $232,967.12 Net Worth $293,000.00 $326,894.00 $331,022.52 $335,724.79 $340,478.20 $345,285.81 $350,150.88 $355,076.85 $360,067.38 $365,126.35 $370,257.85 $375,466.24 Assumptions of the presentation to the Bank 1. The coffee shop will be set up in the close proximity of University of Sydney. It will be located in the busy streets of Sydney to attract mass of customers mostly comprising of college students who will form repeat customers. 2. The profit of the coffee shop for the first three years has been presented. The net profit margin will be 9.15% in the first year, 14.61% in the second year and 19.59% in the third year. The gross profit margin will reach to around 65% in the three years. References Awe, S. (n.d.).The entrepreneur's information sourcebook. BBC News, (2014).Deadly end to Sydney cafe siege. [online] Available at: https://www.bbc.com/news/world-australia-30485355 [Accessed 26 Feb. 2015]. BBC News, (2014).Gunman holds Sydney cafe hostages. [online] Available at: https://www.bbc.com/news/world-australia-30473983 [Accessed 26 Feb. 2015]. Beanhunter, (2015).Sydney, Australia. [online] Available at: https://www.beanhunter.com/australia/new-south-wales/sydney [Accessed 26 Feb. 2015]. 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