View with images and charts A Report on Setting Up A New Coffee House 1.0 Executive Summary The concept Thanks primarily to Coffee Inn, within the past 10 years the coffeehouse has become a familiar feature of Chittagong life. Every day, millions of local people stop for an espresso-based coffee drink. People who would not have dreamed of spending more than Tk20 for a cup of coffee a few years ago now gladly pay Tk30 to Tk50 for their cappuccino, mocha latte or vanilla ice blended drink. The specialty-coffee business is growing at a healthy pace. During the past 20 years, there has not been a single year, despite recession, in which specialty coffee sales have not grown. In many years the increase has been in double digits. In addition, no coffeehouses have failed during this time, although the list of casualties in other industries is quite long. HALVESIA, Coffee Inn, Off Time, Sugar Bun and other major coffee shop serve average quality drinks in establishments that have the same generic design appearance. Indeed, Off Time and Sugar Bun are often referred to as "fast food" coffeehouses due to their "cookie cutter" design. A niche exists that has yet to be filled for a high-volume, upscale, quality-driven coffeehouse with a warm, inviting atmosphere. The Kandi's Coffeehouse meets this need and fills this niche. We offer high-quality products in an upscale environment. Furthermore, our high-profile location in Chittagong provides a mixed customer base that will maintain high levels of business in every season, at all times of the day, every day of the week. Founders Golam Masum Morshed, founder of The Kandi's Coffeehouse. He is going to be completed his graduation in 2008.he has the experience to work in HANDI, which is the only Indian restaurant in Chittagong as an adviser. Financials The Company anticipates rapid acceptance of The Kandi's Coffeehouse concept in Chittagong, with revenues of Tk6000000 in the first fiscal year, rising to more than $10000000 in FY 2011. Net profit is projected to be approximately Tk990000 in 2009, growing to an estimated $2600000 by 2011. An advanced and expandable point-of-sale system After carefully tracking the performance of the Chittagong store through an expandable and highly detailed point-of-sale system, we will use this as a "blueprint" for expansion.
For example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. Even after paying higher than average wages, we expect to allocate no more than 25% to labor costs. Highlights 10000000 8000000 6000000
Sales
4000000
Gross Margin Net Profit
2000000 0 FY 2009
FY 2010
FY 2011
1.1 Objectives Make The Kandi's Coffeehouse is the number one destination for coffee in Chittagong Sales of Tk6000000 the first fiscal year, Tk7500000 the second fiscal year and Tk1 crore the third fiscal year Achieve a 15% net profit margin within the first year and 30% by FY3 Achieve a total net profit of Tk1500000 in FY1 and Tk2000000 by FY3 Be an active and vocal member of the community, and provide continual reinvestment through participation in community activities such as the Chamber of Commerce and financial contributions to local charities and youth organizations Create a solid concept in the industry and track performance in order to begin expanding to other markets within six months 1.2 Mission Our goal is to be the coffeehouse of choice for the local Chittagong community, downtown business workers, tourists who visit the city, and students, by providing a higher quality experience than any competitor. As a result, we intend to create coffeehouses that quickly achieve profitability and sustain an attractive rate of return (20% or more annually) for our investors. We also want to make our contribution to the welfare of the local community by supporting charitable and civic activities. We will support the farmers who grow our coffee by using Fair Trade, Sustainable Production and Organic products whenever possible. The Kandi's Coffeehouse also awards its business to as many local suppliers as possible, keeping the business in the community or, at the least, in the state.
1.3 Keys to Success The keys to our success will be: A superior-tasting product backed by a unique quality store A relaxing, upscale interior design Prime site selection with an upscale affluent population, year-round tourist activity, heavy pedestrian traffic by the site, a dynamic student population and a concentration of local businesses A market that exposes The Kandi's Coffeehouse to high-profile "trend-setters" and "key influencers" Ongoing, aggressive marketing Highly trained and friendly staff Multiple revenue streams including gift items, gift baskets and coffee gift/frequency cards in addition to coffee, pastry, chocolates, tea, juice, water and soft drinks A dynamic website with online sales capability
2.0 Company Summary The Kandi’s coffeehouse is going to launches with its first coffeehouse located in Chittagong.The Kandi’s coffeehouse will offer residents and visitors a totally new style of coffeehouse - one offering a uniquely flavorful coffee drink and a comfortable, upscale environment at which to socialize, relax or work. Variety: No other coffeehouse in the area will provide the range of coffee drinks, tea, cocoa, juice, smoothies and other products that The Kandi’s coffeehouse does. Location: The Kandi’s coffeehouse will be located in the prime section of Chittagong in the heart of the shopping and entertainment district. The Kandi’s coffeehouse locations are designed for high volume year round, with revenues and profits to match. Expansion: Assuming this store is successful, it will be the first coffeehouse located in markets that have similar demographic profiles, significant traffic by the store, year-round tourist activity and a sizeable student population. The Kandi’s coffeehouse Concept At one time Cadillac was the acknowledged quality automobile in America. Then came Mercedes-Benz. And then Lexus, with its superb product and service approach. It will be the first "Lexus" of the coffeehouse industry, offering a higher quality product and better quality service in an exceptional environment. The only coffeehouse that comes close to being as upscale as our concept in the premier university campus, with its high style Italian décor. The first Kandi’s coffeehouse is located in G.E.C (Chittagong). Other Kandi’s coffeehouse will eventually be located in select affluent markets that support the business model (e.g. Dhaka- farm gate, University of Dhaka campus, Mirpur etc).
The Kandi’s coffeehouse offers a superior coffee product, delicious pastries, fresh juices, the finest tea drinks, gourmet chocolates and gift items. The Kandi’s coffeehouse staff members who prepare the coffee (baristas) are highly trained and experienced. They know how to prepare an excellent espresso-based drink and brew tasty coffee. We use the highest quality equipment and ingredients to deliver a noticeably superior product. Our design style is different from all other coffeehouses; it features stained glass decorations, art glasswork, Mediterranean Riviera style furnishings and outdoor dining. 2.1 Company Ownership The Kandi’s coffeehouse is a privately held company. It is registered under the sole proprietorship Act. 2.2 Start-up Summary Start-up expenses are in line with those of other coffeehouse. For example, Coffee Inn spends approximately Tk3000000 on average to build-out a new store location. My costs are an estimated Tk3500000 and Tk500000 for opening inventory and operating capital. Future stores should cost no more than Tk1750000 to build out since many of the costs incurred here will not have to be repeated later. The Start-up requirements, below, include Tk2000000 of short and long-term assets. Long term assets: Tk1500000 Under counter Refrigerators Service/Prep Counter Ice Machine Large Refrigerator Milk Coolers (3) Cash register (2) Point of Sale System Espresso Machine Fetco Coffee Brewer Counters/Condiment bar/shelving
Tk250000 Tk175,000 Tk150000 Tk200,000 Tk80,000 Tk190,000 Tk145,000 Tk110000 Tk200,000
Short-term assets: Tk500000 Tables, Chairs, Furnishings
Tk300,000
Persian Carpet
Tk100,000
Lighting Fixtures
Tk100,000
Start-up Start-up Requirements Start-up Expenses CONSTRUCTION Site design, architectural plan
Tk100,000
Demolition/Construction
Tk25,0000
Electrical, Lighting
Tk12,0000
Electrical, Other
Tk100,000
Flooring/installation
Tk50,000
Bathroom Construction
Tk40,000
Plumbing
Tk100,000
Fireplace Construction
Tk50,000
Painting
Tk2,5000
City permits/licenses/fees
Tk6,5000
LEGAL Accounting
Tk20,000
Legal
Tk40,000
Insurance
Tk2,5000
MARKETING Opening marketing/advertising
Tk30,000
Graphic design for signage, menu boards
Tk20,000
Outside Signage
Tk1,5000
Frequency Cards, Brochures
Tk1,5000
OFFICE Office equipment
Tk6000
Computer, scanner, printer
Tk20,000
Telephones/Fax/DSL
Tk5000
Stationery etc.
Tk10,000
Gift item displays (3)
Tk1,5000
APPLIANCES, ETC Preparation equipment
Tk10,000
Dishwasher
Tk3,5000
Blenders (3)
Tk20,000
Microwave
Tk5000
Panini maker
Tk7000
Storage racks
Tk10,000
Music system
Tk8000
Food display case
Tk60,000
Storage room shelving
Tk10,000
Bulk bean grinder
Tk7000
Sinks (2), prep counters
Tk1,2000
Menu board construction
Tk2,5000
Cups/Lids (50,000)
Tk14,0000
Total Start-up Expenses
Tk147,0000
Start-up Assets Cash Required
Tk75500
Start-up Inventory
Tk500,000
Other Current Assets
Tk500,000
Long-term Assets
Tk1500,000
Total Assets
Tk2575500
Total Requirements
Tk4000000
Start-up Funding Start-up Funding Start-up Expenses to Fund
Tk147,0000
Start-up Assets to Fund
Tk2575500
Total Funding Required
Tk4000000
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
Tk2500,000 Tk75500 Tk0 Tk75500 Tk2575500
Liabilities and Capital Liabilities Current Borrowing
Tk0
Long-term Liabilities
Tk0
Accounts Payable (Outstanding Bills)
Tk0
Other Current Liabilities (interest-free)
Tk0
Total Liabilities
Tk0
Capital Planned Investment Investors
Tk350,000
Other
Tk500000
Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses)
Tk0 Tk4000000 (Tk147,0000)
Total Capital
Tk2575500
Total Capital and Liabilities
Tk2575500
Total Funding
Tk4000000
Start-up
4000000 3000000 2000000 1000000 0 Start up
Expense
Assets
Investment
Loans
1470000
2000000
4000000
0
3.0 Products The Kandi's Coffeehouse sells high-quality specialty coffee beverages, tea, juice, water, soft drinks, pastries, chocolates and gift items. Despite being an upscale coffeehouse, our prices are in line with the leading in comparing with the other. 3.1 Vendors Coffee roasting is provided by Nescafe coffee company. Tea is primarily supplied by Ceylon and Finley tea company. Our water vendor is MUM from Partex group. Mango and oranges are brought from local market for juices. Pastries are provided by Coopers, sugar bun. Chocolates and cocoa are from different retailers. Gift items are from various vendors Soft drinks are provided by coca cola, PepsiCo etc. 3.2 The Kandi’s coffeehouse menu The Kandi’s coffeehouse menu sets us apart from other coffeehouses, giving me a competitive edge. We offer six groups of drinks - coffee, tea, Italian sodas, smoothies, juice and cocoa with several choices within each group. This enables us to provide more variety than our competitors while keeping the preparation of the drinks easy to execute.
We are taking advantage of the immense popularity of flavored drinks and Chai tea by offering a product mix that includes items the other coffeehouses don't carry as well as more familiar drinks. We are the only coffeehouse to have a wide range of gourmet hot cocoa. We carry the highest quality fresh juices. Prices have been determined after a thorough analysis of all food costs for every item in each drink. In some cases, an average price has been calculated and applied to all similar drinks in order to keep the menu from confusing the customer. 3.2.1 Coffee and Espresso Drinks
COFFEE
Coffees of the day: The Kandi’s coffeehouse Blend, Riviera Roast, Tk30 Regular Tk50 Large ESPRESSO Name Espresso
Description Regular Large A double shot of straight espresso. Tk30 Espresso combined with hot water, a Caffe Americano 25 50 gourmet brewed coffee. Espresso with a smooth topping of milk Cappuccino 20 50 foam. Espresso combined with steamed milk, Caffe Latte topped with a small amount of velvety 20 50 milk foam. COFFEE DRINKS Name The Banana Java
Description
Small Large
Coffee. Warm milk. Banana, Nut macadamia nut and vanilla syrups. Tk20 Topped with whipped cream and cinnamon dusting.
Tk40
FLAVORED ESPRESSO DRINKS Name Vanilla
Description Regular Large Cappuccino made with vanilla flavored Tk25 Tk45
Cappuccino milk foam. Vanilla Latte A Caffe Latte with vanilla essence added. Tk20 Espresso, white chocolate flavoring and White Chocolate steamed milk topped with velvety foam Tk25 Latte and white chocolate shavings. The 50/50 Espresso. Vanilla and orange syrups, Tk20 Latte steamed milk and whipped cream topping.
Tk40 Tk50 Tk40
HOT COCOA DRINKS all hot cocoa drinks are Tk30
Name French Vanilla Cocoa White Chocolate Cocoa Holiday Spice Cocoa Peppermint Cocoa Oval tine
Description Hot cocoa with vanilla and whipped cream. Hot cocoa with white chocolate and whipped cream. Rich hot cocoa and holiday spices. Topped with whipped cream. Rich chocolate and refreshing peppermint. Topped with whipped cream. Oval tine Chocolate Malt and milk.
3.2.2 Teas ICED TEAS Classic Iced Tea, just like you remember as a kid. Tk7 Small, Tk10 Medium, Tk15 Large HOT TEA Tk10 Regular • Earl Grey • English Breakfast • Peppermint • Earl Grey Lavender • Golden Flowers Herbal • Herbal Lemon • Tropical Green 3.2.3 Juices Name
Description
Regular
Large
Fresh squeezed Exclusively from Longhorn orange juice Orchards, Corpus Cristi, TX
Tk15
Tk30
Made fresh daily from Pleasant County lemons.
Tk15
Tk30
Old-fashioned Lemonade
Martinelli's Apple Juice A Chittaqgong favorite. (regular and sparkling)
Tk20
3.2.4 Snacks and Pastries Item Cheesecake, made just for us by coopers. Fresh scones, hot from the oven. Brownies Blueberry Muffins Best Ever Bakery Fancy Cookies
Price Tk120 Tk150 Tk160 Tk160 Tk120
3.2.5 Deli Items Item Sandwiches: Turkey, Roast Beef, Ham and Salami. Soup
Price Tk20-160 Tk80-220
4.0 Market Analysis Summary The Kandi’s coffeehouse launches with an exciting new coffeehouse concept in a receptive and steadily growing market segment - the specialty coffee retail business. Despite economic downturns in recent years the specialty coffee business has been a bright spot. While literally hundreds of businesses in many categories are facing poor sales, negative balance sheets and even bankruptcy, coffee business continue to show strong growth. Chittagong: The Perfect Launch Market By launching The Kandi’s coffeehouse in the Chittagong market we maximize our potential for success due to several factors: The highly affluent local population Year-round tourist activity
Ever-changing upscale student population Excellent auto and pedestrian traffic by our location Low media costs High number of local special events Prime site location
The Kandi’s coffeehouse is located at what is arguably one of the best locations for a coffeehouse in Chittagong- in the heart of the tourist and business district, adjacent to fine dining and shopping, and just steps from the busiest intersection in town. The Kandi’s coffeehouse Coffee has all the ingredients necessary for immediate success. 4.1 Market Segmentation The Kandi’s coffeehouse customer base in Chittagong is comprised of five target groups. 1. 2. 3. 4. 5.
Affluent local residents Tourists Local business people Students Travelers passing through
These groups are all potentially strong customer segments. The benefit of this mix of customers is that it helps maintain consistent business throughout the year. For example, while tourism is strong all year long in Chittagong, it peaks during the summer months. Conversely, the student population is not as strong during the summer as it is from September through June of each year. The other customer segments (local residents, local business) provide a consistent foundation all year long. Also, by appealing to several market segments, The Kandi’s Coffeehouse does not become overly dependent on any single consumer group. For example, several local coffeehouses with primarily student customers do poorly during the non-school months. They must also market themselves a new each year to the incoming students. The Kandi’s coffeehouse will avoid these peaks and valleys in business with a mix of customers. Affluent locals. Within two miles of The Kandi’s coffeehouse are 200,000 of the most affluent people in Chittagong. Tourists. More than 5,000,000 tourists visit Chittagong every year because the world’s largest sea beach is near the Chittagong. Most will pass by The Kandi’s coffeehouse location. Local business people. The Kandi’s coffeehouse is located on the center of Chittagong known as GEC Street in the heart of the prime downtown business district. It's across from the exclusive, chic, department store, and the number one shopping destination in Chittagong.
Students. Chittagong is home to a major branch of the Premier University as well as dozens of other schools, including many prestigious private schools and academies. Ispahani public School and collage is less than a mile from The Kandi’s coffeehouse. Market Analysis
Potential Customers
2009
2010
2011
2012
2013
Growth
Local residents
2%
75,000
76,500
78,030
79,590
81,181
Tourists
5%
100,000
105,000
110,250
115,763
121,551
Students
1%
40,000
40,400
40,804
41,212
41,624
Local businesses
1%
20,000
20,200
20,402
20,606
20,812
Total 9% Market Analysis (Pie)
235,000
242,100
249486
257171
265168
11%
22%
11%
local residents tourists students local businesses
56%
4.2 Target Market Segment Strategy Overall, our strategy is to maintain a constantly high customer count by leveraging our appeal to four groups of potential customers. Local Residents. Approximately 200000 people live within five miles of our The Kandi’s coffeehouse location. The most affluent of these live even closer, within two miles. It is a short 5 minute drive to The Kandi’s coffeehouse for most of our potential local customers. Excellent public parking is available within 100 yards. Local customers form the loyal core of our business. We will reach out to them through local marketing, involvement in the Chamber of Commerce, support of local charitable organizations and sponsorship of events and youth sports teams.
Tourists. Chittagong has excellent year-round tourist activity. About 5 million people will visit the area during the next year. While hotels are virtually sold out during the summer months, tourism all year is exceptionally strong. This is due in large part to the temperate climate, large sea beach and an unusually large number of special events (e.g. film festivals, concerts, art shows) scheduled throughout the year. With a troubled economy and fears of terrorism, more people are opting for the relatively inexpensive, easy and safe short trip to Chittagong for recreation. And, according to the Chamber of Commerce, 90% of all tourists visiting Chittagong will pass by The Kandi’s coffeehouse location. We will target these potential customers with ads in local tourism guides. Local businesses. Many local businesses, both private and government, are within two blocks of The Kandi’s coffeehouse. Central plaza, the prime shopping center of Chittagong, is one block away. The county courthouse is two blocks away. The Kandi’s coffeehouse is in the heart of the shopping and dining area. We also offer coffee service to local restaurants, night spots and businesses. Coffee service brings in additional revenue and promotes The Kandi’s coffeehouse among employees at these businesses. Students. The area has more than 30,000 students in several schools, including nearby City College and Premier University. Students, most of whom are under the drinking age, have few places they can go to meet their friends. Coffeehouses have proven to be very popular with students - even high school students. To reach students we offer special student discount cards, pass out free coffee coupons at student events and offer entertainment on weekends. Students represent an excellent customer segment for several reasons: Students bring an energy and youth to the coffeehouse By attracting students we generate excellent word-of-mouth Students represent a large base of potential part-time employees. 4.3 Industry Analysis The specialty retail coffee business as we know it today began in 1982 after Howard Schultz purchased the Starbucks name and began the expansion of the modern Starbucks chain. Prior to his transformation of the business, Starbucks sold only whole bean coffee. Overall coffee sales have not grown significantly in recent years, the specialty coffeehouse segment is growing steadily at a healthy pace every year. The low food cost of coffee drinks, relatively modest investment capital requirements, and low overhead, lead to high profit margins in the coffeehouse industry.
There are approximately 10 million coffee drinkers in the Bangladesh according to recent survey." 77% of coffee drinkers consume coffee daily. Coffee drinkers spend an average of Tk5000 on coffee annually, and drink an average 2 cups daily. It's easy to see why coffee is second only to oil as the largest commodity in the world. Local Competition The coffeehouse Coffee Inn has only one store in the Khulshi area. Its highest volume store (350 customers daily) is at an excellent location on 'A' block, the main thoroughfare in town, but the store is unattractive, small and lacks outside seating. Off-Time also has an excellent location directly across the street O R Nizam Road in Chittagong. This busy coffeehouse is very small. A counter inside and a couple of tables outside are the only areas for customers to sit down.
Other competitors include three independent coffeehouses. Sugar Bun is located on Dampara in a good location. They serve good coffee but have a limited menu and a very "funky" decor. A second Sugar Bun is located in Halisahar. New managers are trying to improve the store but without success so far. Another independent is YUM YUM, located in a residential neighborhood but on a busy street in what was once a gas station. This coffeehouse is also very "collegiate" in its decor, and a favored haunt of the law school students, but manages to average more than 250 customers per day. They have a second location in Probortok More. A new Coffeehouse is established in near the GEC which is named is “HALVESIA”. This coffee shop is very well known in Dhaka. 4.3.2 Competition and Buying Patterns Competition is dominated by the presence of “HALVESIA”. Other major are Coffee Inn, Sugar Bun, YUM YUM. Peet's Coffee & Tea, Coffee Bean & Tea Leaf, Seattle's Best, Gloria Jeans Coffee.
The coffeehouse business has grown every year since 1982.
Not a single coffeehouse chain has failed during the past 15 years.
Despite major economic recessions and terrorist attacks, the specialty coffee industry has grown every year. One industry observer said, "When times are good the coffeehouse industry is great. And when times are bad the coffeehouse industry is great." Lifestyle factors converge to make the coffee industry strong at all times. The stimulant effect of coffee is an important reason why many hard-working. Conversely,
coffeehouses provide calm, inviting environment for people to socialize, relax or catch up on work. Young people under the legal drinking age are one of the fastest-growing segments of the coffee drinking market. Coffeehouses provide them with a much-needed place to meet with their friends. Entertainment on weekend nights draws a young group of enthusiastic customers. The surge in interest in coffee drinking among young people assures a diverse, receptive, sophisticated customer base now and in the future. Older adults also enjoy the fact that for the relatively modest price of a cup of coffee and snack, they can meet with their friends, relax or work.
Quality is deteriorating even as the industry is growing.
Coffeehouses need to produce a quality product to back up the perceived "little luxury" image. Currently, most of the largest chains are bowing to the pressures of growth and are cutting corners on quality by introducing fully automatic espresso machines, mass bean buying and other efficiency measures.
Coffee drinking is now an all-day activity.
Once concentrated in the early morning hours or mid-afternoon, in recent years coffee drinking has become an all-day activity. Even late at night, many coffeehouses are packed with patrons. It's not unusual for a well located coffeehouse to exceed a daily average of 600 customers.
Customer guest check averages are rising.
As pastries, chocolates, tea, pre-packaged sandwiches, snacks, juice drinks and gift items are added to the menu, the average customer expenditure has risen. Many popular coffeehouses report averages in the Tk250 – Tk400 range. The Kandi’s Coffeehouse expects that guest checks will average about Tk300.
5.0 Strategy and Implementation Summary The Kandi’s coffeehouse uses a strategy of total quality - in product and service. Our promise is in our location, the products we sell, the people we attract and the atmosphere we create. Strategic Assumptions: People want a better-tasting coffee drink Coffee drinkers want a more inviting coffeehouse environment
Coffee drinks are considered an affordable luxury The coffeehouse industry is largely unaffected by the economy and world events The Kandi’s coffeehouse offers several unique advantages over all other coffeehouses 5.1 Competitive Edge Our competitive edge, compared to the other coffeehouses in the greater Chittagong area includes the following: A significantly higher quality, better tasting coffee product. Our current location can arguably be considered the best in the market - in the heart of the downtown shopping, dining, entertainment and cultural district in Chittagong and adjacent to the historic Theatre. The only coffeehouse downtown to provide regular weekend evening entertainment. A wider variety of popular drinks than our competitors, including flavored coffee drinks, tea, cocoa and juice. We have several drink options for people who don't drink coffee: tea, cocoa and juice. Our Internet website will include sales of whole coffee beans, tea, chocolates, gift items and gift baskets. 5.2 Marketing Strategy Other coffeehouses rely almost entirely on word-of-mouth marketing to generate business. We will engage in an ongoing aggressive marketing program that will help us establish profitability quickly and set the stage for continual growth. Our strategy will be to position The Kandi’s coffeehouse as the "Lexus" of coffeehouses, offering a high quality product and superb service in a superior environment. 5.2.1 Launch Marketing Most coffeehouse does little or no marketing and advertising. For example, Sugar Bun from Malaysia’s philosophy is that their ubiquity in the marketplace is all they need to sustain and grow their customer base. They spend less than 1% of gross revenues on advertising, and when they do spend, it is usually to introduce a new product. The retail coffee industry is a sales-oriented business with historically very little experience in marketing and advertising. This is likely why little is done. As yet, the major players have not been taken over by sophisticated companies like PepsiCo, where marketing is viewed as essential to gaining market share. An element of our differentiation from other coffeehouse will be our use of advertising and marketing to gain awareness, build customer traffic and establish a strong brand image. We intend to create immediate customer awareness and not wait for word-of-
mouth. We are also building customer traffic immediately with an aggressive Launch Marketing Plan. Launch Marketing Launch marketing will promote awareness, build immediate traffic and establish our brand image via several methods: Public relations/publicity Direct mail Local print and broadcast media Design and packaging Community involvement Sampling Superior location Public Relations A strong public relations/publicity program uses as its primary "hook" these three main points: 1. The Kandi’s coffeehouse in Chittagong is the first true coffeehouse 2. Our unique quality products The goal of the PR/publicity is to achieve local market awareness and establish the brand on a wider scale to set the stage for future expansion. Local market awareness is vital because more than 50% of sales will come from people living within a 5-mile radius of the store. National awareness will help drive the expansion by generating opportunities created by the media buzz and familiarizing people with our brand name. It will help set the stage for future brand identification. Local Media
The Chittagong Gazette Chittagong Magazine The Chittagong Weekly Chittagong Dining Chittagong Seasons ABC-TV Radio Today FM 89.6 Radio Foorty Fm 98.4 Radio Amar FM 101.6
Regional/National Print Media Business Week
The Business Journal Time Newsweek Entrepreneur Newspapers in top 50 Bangladesh markets National Broadcast Media Radio Bangladesh Bangladesh Television (BTV)
Direct Mail Ongoing direct mail generated from our website data Visa or MasterCard local direct mail program Website Our website is fully e-commerce functional and could easily become a significant revenue source. We will eventually sell the following items online:
Whole coffee, tea Gift baskets Gift items Furnishings
And in a first for any coffeehouse in the world, we will also sell a catalog of glass artwork representative of our store decor. We will act as the sales agent for a number of participating stained glass, and art glass artisans. The website also markets The Kandi’s coffeehouse with:
A monthly newsletter Interesting information about the coffee industry A map to our store Store hours Special events Coffee recipes
Most of these functions are already up and running. Trend-setters
Chittagong and the southern part of the state are home to thousands of individuals who can be important to the successful positioning of The Kandi’s coffeehouse. One mention on a TV talk program or in a 'lifestyle' magazine can launched many successful careers and businesses. With literally hundreds of celebrities and wealthy business people as local residents, the word-of-mouth recommendations from these people can drive significant business to us as well as generate favorable publicity. Many celebrities visit Chittagong or have second homes here. Politicians and entertainers have interests in several restaurants. Celebrities in Chittagong are also actively involved in the community, many supporting several local charities. Our involvement in the community will enable us to garner exposure for The Kandi’s coffeehouse among an important group of local residents. Key individuals will be targeted with gift baskets from The Kandi’s coffeehouse containing samples of our products to entice them to visit The Kandi’s coffeehouse and talk about us with their friends. Design style The interior design of The Kandi’s coffeehouse is unlike any other coffeehouse. While there are some upscale designs, they are the entire modern Italian or Indian look. Our upscale featuring stained glass decoration, art glasswork, differentiates us from all others. Gift Items We carry a wide variety of quality gift items, including gift baskets. Gift basket business could eventually grow to be substantial. However, since it is difficult to project at this time we have not included it in the financial computations. We also offer sales of stained glass and glass artwork by the artisans who produced our decor furnishings. Community Involvement We will make ourselves an integral part of the local and world community. This will generate goodwill, create opportunities to forge important contacts with key people and live up to our company Mission Statement. Some of these community involvement goals include: Take an active role in the Chamber of Commerce Supply complementary product to local charities Sponsor local sports teams Purchase fair trade coffee whenever possible Support Fair Trade, organic, sustainable farming
Location
for fund-raising activities
The location of the first The Kandi’s coffeehouse in Chittagong is a prototype of future sites. Our second site on University of Dhaka Campus will feature our flagship store. We will build The Kandi’s coffeehouse in the best locations possible, as this is the key element in a successful operation. Site selection criteria include: High traffic location Small or mid-size affluent market Year-round tourist activity Nearby (within 5 miles) student population Outside dining Other sites that meet these criteria include Halisahar, Tiger Pass, Lalkhanbazar etc. Exceptions will be made for some sites if they are deemed to be potentially very profitable. Sampling We will engage in several sampling activities to introduce potential customers (and current customers) to The Kandi’s coffeehouse range of drink options. Samples will be distributed at the coffeehouse Samples will be given to passers-by on the street Discount coupons will be distributed on the street, via direct mail and at special events Complementary coffee will be served at charitable and civic events Free coffee service will be provided to the Chamber of Commerce, a radio station, the newspaper and at select government offices (e.g. the Planning and Zoning Department) Portable Kiosk Within 6 to 8 months we will create a portable The Kandi’s coffeehouse kiosk to sell and market our products at special events and community activities. Chittagong has more than 130 such events every year. It will be an excellent way to publicize The Kandi’s coffeehouse coffee. The kiosk will be highly visible and fun. It will also potentially be very profitable, although it's hard to determine how profitable with any accuracy until the local response is measured. We believe it could generate Tk75000 - Tk100000 annual revenue. Pre-paid, re-loadable, frequency and discount cards We will promote our program of gift cards and customer frequency cards to drive business and stimulate cash flow. Industry records indicate that 25% - 40% of all gift
card amounts go unused. Also, gift cards have proven to be a popular holiday item accounting for more than 5% of total sales during December. Pre-paid and re-loadable cards have also proven to be very popular with the major coffeehouses, again accounting for a significant percentage of sales. These cards promote customer loyalty as well. Frequency cards rewarding the repeat customer with a free drink after a specified number of visits are popular and proven methods to forge customer loyalty. Discount cards are used to build goodwill among specific groups such as the Chamber of Commerce members and college students. By tying in with our computerized sales and inventory system we will be able to track usage and allocate the expense to marketing. The Future The number of The Kandi’s coffeehouse locations could easily reach 10 - 15 within five years. While the financials in this Business Plan only address the Chittagong location, we can extrapolate from the store's performance (which will be carefully monitored and tracked) to get a general idea of the projected profitability. With ten coffeehouses the gross revenues, when fully realized, would be more than Tk5 million using the third year performance figures. Even factoring in the cost of additional staff and other resources, The Kandi’s coffeehouse start-up, implementation and operation in Chittagong will be the "blueprint" for future efficient expansion. Our new University of Dhaka Campus location will incorporate the knowledge we gain with our first store as well as new creative ideas, and become our "flagship" operation. 5.3 Sales Strategy Our sales strategy includes: Staff
salaries that are 10% above the industry average in order to attract the best people Hiring for attitude so that we always have a friendly, enthusiastic staff to make customers feel welcome and appreciated; constant staff training to assure the best quality possible State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B) create efficient product ordering Create a mobile kiosk to take The Kandi’s coffeehouse into the community at special events, farmer's markets, art shows, etc. Sell coffee, gift baskets and glass artwork on our website Establish coffee service at local businesses Sell gift cards, frequency cards, pre-paid cards, and offer discounts to key groups Create an ongoing sampling program
ďƒś Conduct a consistent, aggressive marketing program ďƒś Be an active member of the community; be visible at charitable functions ďƒś Solicit customer feedback to constantly improve and streamline our operation
Key Strategy: an advanced and expandable point-of-sales system After carefully tracking the performance of the Chittagong store through an expandable and highly detailed point-of-sale system, we will use this as a "blueprint" for expansion. For example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. Even after paying higher than average wages we expect to allocate no more than 25% to labor costs. Sales are linked to inventory to both streamline the efficiency of ordering and reduce "shrinkage" by instantly alerting us to unusual shortages compared with revenues. Scheduling can be done online and easily revised to accommodate changes - all while projecting weekly, monthly, quarterly or annual labor costs. Schedules can be sent via email to staff members. Cost of goods can be monitored for increased efficiency too. As we continually research methods of delivering a high quality but cost-efficient product, and by making small incremental improvements in the costs of items we expect to increase overall COG by a minimum of 5% during the first year of operation. As expansion occurs, the POS system can be adapted to each individual location and allow the central office to monitor the stores remotely as well as the overall combined operation. Close monitoring will allow us to achieve a high level of communication between stores as well as spot problems immediately and take corrective action. 5.3.1 Sales Forecast Conservatively, we are forecasting an average of 200 customers per day during the first year with average guest check expenditure for all items of Tk300. This figure was arrived at by surveying the customer traffic at the nearest competing coffeehouses which have a range of 150 - 500 customers per day and an average customer expenditure of Tk300.We have estimated our customer expenditure to be slightly higher (2.5%) due to the premium price we will charge for some of our items. Total cost of sales is approximately 25%. We expect growth to occur across all categories at about 10% annually as the business becomes more established and well-known, reaching 300+ customers per day within a year and more than 400+ within three years. These estimates are likely conservative. However, it is possible we could attain a 500-per-day customer count within three year
Sales Forecast Sales Forecast FY 2009
FY 2010
FY 2011
Tk265,101
Tk344,631
Tk448,021
Tea, soft drinks, water, juice
167,007
217,109
282,241
Pastries, food items
154,126
200,364
260,473
2,105
2,526
3,031
0
0
0
Coffee service to businesses
3,300
3,630
3,993
Internet sales
8,500
10,625
13,281
Gift items
6,440
7,728
9,274
Total Sales
606,579
786,613
1,020,314
Direct Cost of Sales
FY 2009
FY 2010
FY 2011
Tk43,828
Tk44,266
Tk44,709
Tea, soft drinks, water, juice
26,054
26,315
26,578
Pastries, food items
55,241
55,793
56,351
1,280
1,293
1,306
0
0
0
760
768
775
3,925
3,964
4,004
10,109
10,210
10,312
Subtotal Direct Cost of Sales
141,197
142,609
144,035
Business/Marketing 2/1/2009 Plan
4/30/2009
Tk5000
N. P-S
Marketing
Secure Funding
2/1/2009
4/30/2009
5000
N. P-S
Marketing
Secure lease
2/10/2009
4/30/2009
TBD
N. P-S
Admin
name 2/10/2009
4/30/2009
TBD
N. P-S
Marketing
Sales Coffee drinks
Coffee beans Events/mobile kiosk
Coffee drinks
Coffee beans Events, mobile kiosk coffee service to businesses Internet sales Gift items
Secure
licensing Marketing plan
2/10/2009
4/30/2009
0
N. P-S
Marketing
Structure type
company
2/15/2009
4/30/2009
0
N. P-S
Marketing
Develop program
investor
2/15/2009
4/30/2009
0
N. P-S
Marketing
Attend Coffee Fest
2/27/2009
3/1/2009
5000
N. P-S/V. L Marketing
Health Dept.
3/1/2009
5/15/2009
TBD
N. P-S/V. L Admin
5/1/2009
6/15/2009
TBD
N. P-S/V. L Admin
3/1/2009
4/30/2009
TBD
N. P-S
Admin
Select construction 3/15/2009 contractor
4/15/2009
1500
N. P-S
Admin
Join Spec. Retailers
Coffee
3/15/2009
5/30/2009
2500
N. P-S/V. L Marketing
Select and lighting
order
4/1/2009
5/30/2009
TBD
N. P-S/V. L Marketing
4/1/2009
5/30/2009
0
N. P-S
Personnel
Alliance with water 4/1/2009 company
5/30/2009
0
N. P-S
Admin
Join Chamber Commerce
5/30/200
2500
N. P-S/V. L Admin
Select cash register 4/15/2009 system
5/30/2009
0
N. P-S
Business license, etc. 4/15/2009
5/30/2009
3000
N. P-S/V. L Admin
Select contractor
4/15/2009
5/30/2009
0
V. L
Choose paint palette 4/15/2009
5/30/2009
0
N. P-S/V. L Admin
Select and flooring
4/15/2009
5/30/2009
TBD
N. P-S/V. L Marketing
Gift items, suppliers, 4/15/2009 order
5/15/2009
TBD
V. L
Marketing
Select pastry supplier 4/15/2009
5/30/2009
0
V. L
Admin
Select supplier
4/15/2009
5/15/2009
0
N. P-S
Admin
4/15/2009
5/30/2009
0
N. P-S
Marketing
Select and furnishings
order
Site plans
Create manual
employee
of
paint
order
equipment
Graphics/brochure
4/1/2009
Admin
Admin
design Select suppliers
confection
4/15/2009
5/30/2009
0
N. P-S/V. L Admin
Select juice suppliers 4/15/2009
5/30/2009
0
N. P-S
Admin
Credit companies
4/30/2009
6/15/2009
0
N. P-S
Admin
4/30/2009
6/15/2009
0
V. L
Personnel
Select music system
5/1/2009
6/15/2009
2,5000
N. P-S/V. L Admin
Install Internet
wireless
5/1/2009
6/15/2009
TBD
N. P-S/V. L Admin
Hire baristas
manager,
7/1/2009
9/15/2009
TBD
N. P-S/V. L Personnel
7/1/2009
7/20/2009
TBD
N. P-S
Admin
7/15/2009
7/31/2009
1,0000
N. P-S
Admin
Pre-opening parties
9/1/2009
9/15/2009
1,0000
V. L
Marketing
GRAND OPENING
9/15/200
9/30/2009
1,0000
N. P-S/V. L
Admin/Marke ting
Achieve 700+ daily 12/12/2009 1/31/2010 customers
0
N. P-S/V. L
Admin/Marke ting
Totals
Tk7,9500
Create program
card training
Select insurance
business
Design, stationery
6.0 Web Plan Summary We plan to expand the functionality of our website so that it becomes a substantial revenue stream for The Kandi’s Coffeehouse. Although we've projected modest sales because of the difficulty in predicting online sales activity, we believe the potential exists for Internet sales to become a substantial percentage of our revenue. We will sell a number of items at our website, including: Whole beans Tea Chocolates Gift baskets Gift items Art glass
We will sell a variety of high design stained glass, glass artwork and accessories featured in our coffeehouse by establishing ourselves as an agent for the artist/manufacturers. We will process the order and the artist will fulfill it. In this way we provide exposure and additional sales activity for the artists, and The Kandi’s Coffeehouse creates an additional revenue stream that could become substantial over time. Special downloadable offers good at the retail stores will be posted from time to time on the website. Eventually, customers will be able to reload their The Kandi’s Coffeehouse Card online so they can use it in lieu of cash or credit when they make purchases. The website will also function as an online "brochure" for both The Kandi’s Coffeehouse quality story as well as enable visitors to "see" our retail store, get directions and maps, see our menu and find out about special events. 6.1 Website Marketing Strategy All communications materials will include The Kandi’s Coffeehouse website address. For the media, an online press kit will be available which will include downloadable photos, PR releases, stories of interest, testimonials, bios of key management and reproducible logos. Special PR will promote our gift basket business and the sale of our upscale design glass artworks. We will host online "events" for our customers. For example, a visiting author may go online to chat with visitors to our website. Or we may support charities' fund-raising activities. This will provide us with opportunities for media coverage. Eventually, when more stores are opened, the website will function as a means of internal communication through a password-protected area. Here, company rules, health department regulations, news, chat, "live" internal announcements and virtual meetings will take place. In-store Internet computing An appealing customer feature at The Kandi’s Coffeehouse will be two Internet access stations with 17" monitors. These will enable people to access the Internet while at the store. The price for this access hasn't been set yet but will be approximately Tk120 an hour with some fractional division rate structure at 15-minute intervals (perhaps Tk50 for every quarter hour). The Kandi’s Coffeehouse website home page will be the alwayson start page for the monitors. The Internet stations enable customers to check their email or access websites for business, study or travel information.
Internet access is provided more as a customer service than a revenue source. Although it will return a profit, the amount is difficult to determine now and so it hasn't been factored into the P&L. Our best estimate is that the two stations will be on for a total of four hours daily, producing Tk18000 a month in gross revenue. 6.2 Development Requirements The Kandi’s Coffeehouse plans to employ a graphic designer and back-end user interface technical developer to create our simple, classy, yet Internet focused site. The maintenance of the site will be done by contracted outside consultants. As the website is expanded and improved, future development may include items such as tracking, newsletters, and down-loadable menus, a coffee "chat" room and user Web pages. A technical resource may need to be contracted to build the track able download and the newsletter capabilities.
7.0 Management Summary The expansion of The Kandi’s Coffeehouse concept will be managed by Golam Masum Morshed, with assistance from our outside support team. 7.1 Management Team Within 2008, I will complete my graduation of management studies from university of Dhaka, and I have work experience in “HANDI”, the only Indian restaurant in Chittagong. Kamrul Ahsan Habib is a trusted family member with ten years experience in restaurant business. He is also an experienced Fast Food businessman who has an active interest in and understanding of Coffee business. 7.2 Personnel Plan The owner, Golam Masum Morshed, will need to cover her personal living expenses of Tk250000 per year during the first three years. A growth rate is assumed for cost of living. The employee, Morsheda Jesmin, will be paid a wage at Tk85.5 per hour, which averages to Tk16000 per month, with a raise of Tk90000 per year for the first three years, as sales increase. Personnel Personnel Plan
FY 2009
FY 2010
FY 2011
Owner
Tk250000
Tk260,000
Tk300,000
Employee
Tk192000
Tk200,000
Tk250,000
Total People
0
2
2
Total Payroll
Tk442000
Tk460000
Tk550000
8.0 Financial Plan Sales growth will be a minimum of 15% annually, margins excellent, profits at approximately 20% - 25%, cash flow adequate. Marketing will remain below 5% of sales. The company will invest residual profits into financial markets or real estate. Future cash investments will use NPV projections to achieve maximum return with limited risk. 8.1 Important Assumptions The 20-year record of positive growth for specialty coffee drinking will continue at a healthy rate. The survey report tells that the market is far from saturation and will not reach maturity until at least 2019. The resilience of the coffeehouse industry to negative national and world events will continue. Despite recession the coffeehouse industry has shown strong growth every year for the past two decades. The quality of other coffeehouse will remain the same or decline slightly rather than improve as they standardize their stores, increase automation of espresso drinks and mass-produce the roasting process. Coffee drinks will continue to be considered an "affordable luxury." 15% minimum sales growth rate over the next three years as The Kandi’s Coffeehouse becomes well known.
General Assumptions General Assumptions Plan Month Current Rate
Interest
Long-term Interest Rate
FY 2009
FY 2010
FY 2011
1
2
3
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
Tax Rate Other
15.00%
15.00%
15.00%
0
0
0
8.2 Break-even Analysis A break-even analysis table has been completed on the basis of average costs/prices. With fixed costs of Tk264000 and Tk450 an average sale, we need approximately Tk350000 per month to break-even. Break-even Analysis Break-even Analysis Monthly Revenue Break-even
Tk344220
Assumptions: Average Percent Variable Cost
23%
Estimated Monthly Fixed Cost
Tk264090
Break-even Analysis
8.3 Projected Profit and Loss We project high net profits starting in the first year. Our growth rate is based upon industry averages, factoring in the local conditions. We expect growth of 15% annually for the first three years before leveling off at the 600 - 700 customers per day average traffic rate.
First fiscal year gross revenues are expected to exceed Tk6000000 and after-tax net profits of approximately Tk990000 - increasing to more than Tk2600000 by the third fiscal year-end. Our margins are very good. This is due in large part to the low direct cost of sales as well as the low operating costs in general for coffeehouses. Higher staff salaries, owner/operator salaries, marketing costs and rent for a premium location depress profits but, conversely, they also ultimately contribute to higher earnings and profits. Profit and Loss Pro Forma Profit and Loss FY 2009
FY 2010
FY 2011
Tk606,5790
Tk786,6130
Tk1,020,3140
141,1970
142,6090
144,0350
24,0000
28,0000
32,0000
------------
------------
------------
Cost of Goods Sold
165,1970
170,6090
176,0350
Gross Margin
441,3820
616,0040
844,2790
72.77%
78.31%
82.75%
183,4000
337,0000
339,4000
12,5000
8,0000
8,0000
6,0000
4,0000
4,0000
45,9000
55,0000
60,0000
Utilities
9,2000
14,0000
16,0000
Insurance
2,4000
2,4000
2,5000
Legal/accounting
6,0000
6,0000
6,0000
Payroll Taxes
27,5100
50,5500
50,9100
Mobile Kiosk
0
0
0
24,0000
25,0000
25,0000
Sales Direct Costs of Goods Other Costs of Goods
Gross Margin % Expenses Payroll Sales and Marketing Depreciation Rent
Misc - maintenance, cleaning, training, fees
------------
------------
------------
Total Operating Expenses
316,9100
501,9500
511,8100
Profit Before Interest and Taxes
124,4720
114,0540
332,4690
EBITDA
130,4720
118,0540
336,4690
0
0
0
24,8940
22,8110
66,4940
Tk99,5770
Tk91,2430
Tk265,9750
16.42%
11.60%
26.07%
Interest Expense Taxes Incurred Net Profit Net Profit/Sales Profit Monthly 200000 150000 100000 50000 0 -50000
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Profit Monthly -9000 46000 54000 75000 24000 5000 82000 1E+0 1E+0 1E+0 1E+0 2E+0
Profit Yearly
3000000 2000000 1000000 0 Profit Monthly
FY 2009
FY 2010
FY 2011
900000
800000
2600000
Gross Margin Monthly 500000 400000 300000 Gross Margin Monthly
200000 100000 0
Dec
Feb
Apr
Jun
Aug
Oct
Gross Margin Yearly 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0
Gross Margin Yearly
FY 2009
FY 2010
FY 2011
8.4 Projected Cash Flow We are positioning ourselves in the market as a low to medium risk concern with relatively steady cash flows. Accounts payable is paid at the end of each month, while sales are in cash, giving The Kandi’s Coffeehouse an excellent cash structure. Fifty percent of cash above Tk200000 will be invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held. Our initial investor contributions are designed to provide us with a strong cash position at all times. Cash Flow Pro Forma Cash Flow FY 2009
FY 2010
FY 2011
Tk606,5790
Tk786,6130
Tk1,020,3140
Cash Received Cash from Operations Cash Sales
Subtotal Cash from Operations
Tk606,5790
Tk786,6130
Tk1,020,3140
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
606,5790
Tk786,6130
Tk1,020,3140
Expenditures
FY 2009
FY 2010
FY 2011
Tk183,4000
Tk337,0000
Tk339,4000
Bill Payments
275,9400
358,6490
406,4570
Subtotal Spent on Operations
459,3400
695,6490
745,8570
Sales Tax, VAT, HST/GST Paid Out
0
0
0
Principal Repayment of Current Borrowing
0
0
0
Other Liabilities Principal Repayment
0
0
0
Long-term Liabilities Principal Repayment
0
0
0
Purchase Other Current Assets
0
0
0
Purchase Long-term Assets
0
0
0
17,6000
26,4000
26,4000
Additional Cash Received
Expenditures from Operations Cash Spending
Additional Cash Spent
Dividends
Subtotal Cash Spent
476,9400
722,0490
772,2570
Net Cash Flow
129,6390
64,5640
248,0570
Tk131,1390
Tk195,7030
Tk443,7610
Cash Balance Cash
1400000 1200000 1000000 800000
Net Cash Flow Cash Balance
600000 400000 200000 0
Dec
Feb
Apr
Jun
Aug
Oct
8.5 Projected Balance Sheet All of our tables will be updated monthly to reflect past performance and future assumptions. Future assumptions will not be based on past performance but rather on economic cycle activity, regional industry strength, and future cash flow possibilities. We expect solid growth in net worth beyond the year 2008. Balance Sheet Pro Forma Balance Sheet FY 2009
FY 2010
FY 2011
Tk131,1390
Tk195,7030
Tk443,7610
Inventory
16,5910
16,7570
16,9250
Other Current Assets
15,0000
15,0000
15,0000
Assets Current Assets Cash
Total Current Assets
Tk162,7300
Tk227,4610
Tk475,6850
Tk62,00000
Tk62,00000
Tk62,00000
6,00000
10,00000
14,00000
56,00000
52,00000
48,00000
Tk218,73000
Tk279,46100
Tk523,68500
FY 2009
FY 2010
FY 2011
Tk33,2530
Tk29,1400
Tk33,7900
Current Borrowing
0
0
0
Other Current Liabilities
0
0
0
33,2530
29,1400
33,7900
0
0
0
Total Liabilities
33,2530
29,1400
33,7900
Paid-in Capital
250,5000
250,5000
250,5000
(164,6000)
(91,4230)
(26,5790)
Earnings
99,57710
91,2430
265,9750
Total Capital
185,4770
250,3210
489,8960
Total Liabilities and Capital
218,7300
279,4610
523,6850
Tk185,4770
Tk250,3210
Tk489,8960
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets
Liabilities and Capital Current Liabilities Accounts Payable
Subtotal Current Liabilities Long-term Liabilities
Retained Earnings
Net Worth 8.6 Business Ratios
We expect our net profit margin, gross margin, and Return on Assets to increase steadily over the three-year period. Return on Equity will decrease due to lower equity needs and higher cash inflow. Net working capital generated by the business will increase steadily each year, proving that we have the cash flows to remain a going concern independent of outside capital infusion. While our ratios are not all in sync with those of the industry, due to the unique nature of our business, it's important to point out that in key areas the numbers are excellent. Ratios Ratio Analysis FY 2009 Sales Growth
FY 2010
FY 2011
Industry Profile
0.00%
29.68%
29.71%
5.24%
Inventory
7.59%
6.00%
3.23%
4.34%
Other Current Assets
6.86%
5.37%
2.86%
35.11%
Total Current Assets
74.40%
81.39%
90.83%
43.74%
Long-term Assets
25.60%
18.61%
9.17%
56.26%
Total Assets
100.00%
100.00%
100.00%
100.00%
Current Liabilities
15.20%
10.43%
6.45%
18.93%
Long-term Liabilities
0.00%
0.00%
0.00%
25.48%
Total Liabilities
15.20%
10.43%
6.45%
44.41%
Net Worth
84.80%
89.57%
93.55%
55.59%
Sales
100.00%
100.00%
100.00%
100.00%
Gross Margin
72.77%
78.31%
82.75%
61.91%
Selling, General & Administrative 56.32% Expenses
66.62%
56.54%
39.08%
Advertising Expenses
0.00%
0.00%
0.00%
2.55%
Profit Before Interest and Taxes
20.52%
14.50%
32.58%
1.38%
4.89
7.81
14.08
1.14
Percent of Total Assets
Percent of Sales
Main Ratios Current
Quick
4.39
7.23
13.58
0.79
Total Debt to Total Assets
15.20%
10.43%
6.45%
49.97%
Pre-tax Return on Net Worth
67.11%
45.56%
67.87%
3.97%
Pre-tax Return on Assets
56.91%
40.81%
63.49%
7.93%
Additional Ratios
FY 2009
FY 2010
FY 2011
Net Profit Margin
16.42%
11.60%
26.07%
n.a
Return on Equity
53.69%
36.45%
54.29%
n.a
Inventory Turnover
10.10
8.55
8.55
n.a
Accounts Payable Turnover
9.30
12.17
12.17
n.a
Payment Days
27
32
28
n.a
Total Asset Turnover
2.77
2.81
1.95
n.a
Debt to Net Worth
0.18
0.12
0.07
n.a
Current Liab. to Liab.
1.00
1.00
1.00
n.a
Net Working Capital
Tk129,4770
Tk198,3210
Tk441,8960
n.a
Interest Coverage
0.00
0.00
0.00
n.a
Assets to Sales
0.36
0.36
0.51
n.a
Current Debt/Total Assets
15%
10%
6%
n.a
Acid Test
4.39
7.23
13.58
n.a
Sales/Net Worth
3.27
3.14
2.08
n.a
Dividend Payout
0.18
0.29
0.10
n.a
Activity Ratios
Debt Ratios
Liquidity Ratios
Additional Ratios