Georgetown Cupcake Business Strategies - Example

Running Head: BUSINESS PLAN Name Course Instructor Date Financial Data Georgetown Cupcake has a readily available investment capital $100, 000 which is a grant that have been received from RMIT. This amount will be used to make cash injections to purchase equipments required as well as building of the shop. The business will initialize by converting net profit in the first year of operation and it is expected that profit in the second and third year will significantly increase. With a more successful management aimed at growing loyal clients, the business expects its net worth double. The business focuses on maintaining a healthy 70% gross margin which combines reasonable and enhanced operating expenses thus providing more case to finance its future growth. START UP REQUIREMENTS Start up expenses Legal procedure 30,000 Brochures 30,000 Consultants 80,000 Rent 40,000 Expensed equipment 900,000 Other 120,000 Total start up expenses 1, 200, 000 Start Up assets No cash asset 0 Cash raised 100,000 Cash balance on starting date 360,000 Important Assumption The following are some of the assumptions; Slow economy growth Great access to equity capital as well as financing enough to maintain the business financial plan GENERAL ASSUMPTION Plan Year 1 2 3 Current Interest rate 13% 13% 13% Long term interest rate 7% 7% 7% Tax Rate 25% 25% 25% Key Financial Indicators The chart below shows some changes in the key financial indicators namely; inventory turnover, sales, gross margin and operating expenses. The company expects to keep its gross margin above 38% but does not anticipate exceeding 46% margin as it grows into new areas thus facing new competition. Break Even Analysis To arrive at the average monthly fixed costs, the Cupcake business calculated its intended fixed costs. Break Even Analysis Monthly unit break even $10,000 Monthly revenue break even $22,000 Assumptions Average per unit revenue $2.00 Average per unit variable cost $0.70 Estimated monthly fixed cost $12,347 Project profit and loss Cupcake business is expecting dramatic growth in the next three years which will be signified by health gross profits and sales margin by the end of its initial year. Expenses in the first year will affect the business net profit which will also be transferred in the earlier months of the second year. The largest expenditures in the first years will be; electricity, heating, administration, insurance, logistics, technology and rent (Scott Armstrong and Kesten, 2007). Sales in the second year are expected to increase by 150% as the business plan to expand in other major segments. Additionally, the company expects to have the opportunity to break into other markets outside its described metropolitan area. Pro Forma profit and loss Pro forma profit and loss   2013 $ 2014 $ 2015 $ Sales 5,760,000 6,912,000 8,294,400 Less Cost of Sales 1,027,800 1,130,580 1,221,026 Gross Profit 4,732,200 5,781,420 7,073,374 Less Operating Expenses Salary 3,204,000 3,524,400 3,876,840 Commission 273,600 386,800 425,480 Electricity 14,400 15,840 17,424 Office rent 144,000 144,000 144,000 Telephone 48,000 52,800 58,080 Water 2,400 2,640 2,904 Training 40,000 44,000 48,400 Maintenance and repairs 15,000 16,500 18,150 Insurance expenses 50,000 55,000 60,500 Advocate/Lawyer 25,000 27,500 30,250 Postal services 1,500 1,500 1,500 Bank Charges 6,000 6,600 7,260 Depreciation 74,065 74,065 74,065 Business advisory 15,000 16,500 18,150 Total Operating Expenses 3,912,965 4,368,145 4,783,003 Net Profit Before Interest and Tax 819,235 1,413,275 2,290,371 Less Interest Expense 91,000 91,000 91,000 Net Profit Before Tax 728,235 1,322,275 2,199,371 Less 18% TAX on Sales 921,600 1,105,920 1,327,104 Net Profit After Interest and Tax (193,365) 216,355 872,267 Projected Cash flow Like in any other business, the cash flow will be carefully be monitored. After the initial start up costs and investments has well been covered, the Cupcake business will be self sustaining. Assuming an initial financing, which largely includes an operating capital, the Cupcake business anticipates that none of its cash flow shortfalls the first year (Scott Armstrong and Kesten, 2007). The Graph below defines the business cash flow; Management Summary Organization Chart Job Description General Manager The business general manager is to ensure that company objectives and goal. Here, the general manager will oversee the general operation of the cupcake shop to ensure high performance that guarantees maximum customer satisfaction(Scott Armstrong and Kesten, 2007). Additionally, the general manager is expected to provide maximum ability to manage as well as supervise employees through provision of relevant and helpful information. Some of the overall responsibility by the general manager is; Ensure increased growth of sales Effectively planning and organizing work schedules Effectively communicates responsibilities an job expectations to employees Overseeing all organization processes including advertising and filling daily sales reports Enforcing employee disciplinary within the organization Assistant Manager The assistant manager with the help of the general manager will ensure that company objectives are met through effective staff management, enhanced communication to employees, controlling and managing human resource issues related to training and discipline (Scott Armstrong and Kesten, 2007). Generally, assistant manager roles include; Explain daily objectives and goals that need to be accomplished by employees Overseeing the overall operation in the absence of the general manager Assists in the training as well as hiring process Supervises customer transaction and orders Enforces employees disciplinary processes Counter supervisor The counter supervisor is expected to effectively direct the counter staff ensuring that the serving area is well prepared. Additionally, the supervisor is expected to keep the working space clean as well as maintaining the employees’ health and safety. The counter supervisor will; Training staff on the machine and counter space procedures Ensuring proper and correct use of cleaning methods of equipment Ensure safe handling practices of the food Responsible for managing all store inventories as well as ensuring the inventory cost is low Cashier/Food Prep/Cleaning Staff The cashier will be responsible for handling the cupcake credit and cash transaction not forgetting providing an excellent customer service. The main role of the food prep is to ensure that all the yoghurt and other foods are prepared correctly and safely before being offered to the customers. The cleaning staff is responsible for sanitizing as well as cleaning the workspace. Additionally, the cleaning staff is required to obtain suppliers needed in the business (Chen, 2007). Personnel Plan Personnel 2013($) 2014($) 2015($) General manager 10000 12000 14000 Assistant manager 6000 7500 9000 Counter Supervisor 3000 4500 6000 Cashier 3000 4500 6000 Food prep 1500 2000 2500 Cleaning Staff 1000 1750 2000 Total 24,500 32,250 39,500 Risk Register Identification of risks Georgetown cupcake is involved in identifying the different risks through scanning both their internal and external environments. The register will also involve the different risk assessment as well as mitigation or control measure to ensure smooth running of the business(Chen, 2007). The business managers’ aims at considering all sources of and their contributor to risk that are highly associated with delivering their objectives. The following factors posses’ risks to Georgetown cupcake service delivering; Finance Information Human resources Reputation Product quality Marketing and positioning Assessing the effects Risks within Georgetown cupcake are assessed through considering the different consequences of the event as well as the likelihood of the outcome occurring. Managing risks- controls and assurance Georgetown cupcake has developed a more integrated assurance and control framework that bring together mitigating practices such as policies, statutes, reporting framework and guidelines that the business uses to effectively govern its work (Chen, 2007). This approach provides more clarity over any area where there can be an assurance gap so as to avoid measures duplication as well as to ensure the business focuses on the designed objectives. The graph and pie chart below describes the risk distribution as described in table 1; Risk Identification Date likelihood Impact score class Control measures Target score Date Responsibility Organizational changes can significantly result to disengagement in the work displayed by partnership. Here, objectives are not significantly met. 4 3 12 high Understanding the different agendas displayed by all partners in the Frozen Yoghurt business. Maximum engagement of all partners 4*2 CEO Lack of a more coordinated approach in business development thus resulting to unconnected activities that do not enhance the achievement of the outlined objectives. 4 3 12 high Ensuring that clear accountability as well as reporting. Job descriptions need to be explained clearly. 2*2 Human resource manager Inadequate outreach in the marketing and product positioning within the business due to lack on innovative marketing strategies and poor cooperation with partners. 3 3 9 medium Creation of numerous outreach programmes. Additionally, need for enhanced partnership and stakeholders forums. Creation of a promotional website as well as targeted promotional events 2*2 Sales and marketing manager Inadequate resource management due to high level of reliance towards the business, inadequate skills development, inappropriate organizational culture and high inability to retain employees. 3 4 12 high Enhance the business human resource policies and strategies. Engage in performance management as well as targeted recruitment Human resource management Possibility of limited resources and thus possible inadequate funding 3 2 6 low Increased strategic and business planning. Stakeholder and partnership engagements. Finally, increased resource management 2*1 Finance management Inadequate Information and communication technology to support the business strategy which is coupled with absence of information 3 4 12 high Creation of ICT strategy, policy and governance model 2*2 Information and Communication Manager Social Responsibility Program Inputs CSR Activities Short Term Outcome Long Term Outcome Environment The company aims at implementing an efficient recycling as well as use energy efficient resources in their operations The business aim to rewards as well as encourage innovation through its rewards and operation program Reducing the environmental and global footprint Implementing better environmental friendly procedures Health and wellness Cupcake supports healthy and wellness initiatives to combat obesity and other lifestyle issues The business aim at promoting a healthy workforce through encouraging a healthy and well being customer base Provides opportunities to provide both clients and employees fitness in a more supportive environment Life skills supports Provide a program that incorporate holistic approaches so as to increase social responsibility at all community levels Provision of life skills support so as to increase likelihood of integration especially for marginalized community Increase and improve social responsibility at all community levels Cupcake Business code of conduct Cupcake Code of conduct illustrates how their core value as well as their commitment to ethical and lawful conducts in all our endeavors and decision making. All members are expected to observe highest standards of food safety and hygiene in both handling and storage. Cupcake believes that no matter what work is conducted, integrity, fairness and honesty are the foundation of a sound and healthy business reputation. As a way of preserving Cupcake reputation, all staffs in the company have a duty to assists other employees comply as well as understand the company code of ethics. Staff daily actions should be guided by the code of ethics as well as personal integrity, law and regulatory policy. Only the best and quality ingredients will be used to produce beverages in Cupcake Company All products will be a true label as well as originality and that Cupcake name will not misused and thus the reputation and integrity of the company will be enhanced and upheld. All members are expected to charge fair charges as well as offer value to customers while at the same time rewarding their own effort Cupcake Company will not negatively comment on the business or produce. Members are expected to support one another in the promotion of the beverages and food. Every member of Cupcake is expected to promote a culture of fair dealings, integrity and honesty. Managers are expected to act as role models in upholding the code of ethics as well as effectively promote a culture as defined by our values. Failure to adhere to the Cupcake Company code of ethics may lead to termination of duty or revocation of an individual membership. References Chen, M.-J (2007). "What is strategic management, really? Inductive derivation of a consensus definition of the field”. Strategic Management Journal 28 (9): 935–955. Scott Armstrong, J and Kesten C. Greene (2007). "Competitor-oriented Objectives: The Myth of Market Share". International Journal of Business 12 (1): 116–134. Read More