The Report And Business Plan Commerce Essay

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The UK coffee market is set to double in size by 2020, large, branded coffee outlets such as Costas and Starbucks currently have more than 3000 outlets in the UK. The current turnover of these large outlets is £1.3bn. This figure has grown by more than 15% annually since 2001. Such coffee outlets have expansion plans to extend to 6000 outlets with an increased turnover of £2.5bn by 2016. Once dominated by large, multinational coffee chains, new, smaller outlets are entering the coffee market. Over 11 million people each year purchase coffee from coffee shops; this provides a potential market for a small, local coffee shop to provide high quality coffee in comfortable surroundings. Our niche being that we will offer a more relaxed environment compared to the often hectic large chains in the centre of towns. As consumers become increasingly concerned with ethics and morals the fair trade coffee market is expanding and could form a potential market for the 'once upon a time' coffee shop. We believe that consumers need an antithesis to the global corporate coffee chains and we aim to put emphasis on fairly traded coffee where profits are shared fairly between the company and the coffee suppliers (Fair trade foundation, 1999). Fair trade coffee is the quickest growing sector of the UK coffee market. 2003 saw a 42% increase in fair trade coffee consumption to 2083 tonnes. Coffee shops in that same year saw an increase of 67% in sales of fair trade coffee (OXFAM, 2004). Fair trade products are worth an estimate £100million in the UK and the 'once upon a time' coffee shop could gain some of these sales by offering both fair trade coffee as well as other fair trade products such as cakes and snacks.

1.1 Description

Our intention is to set up a traditional coffee shop in Preston city centre. Our business is based on selling coffee from around the world at affordable prices in a unique environment. Further details can be seen in the sample menu at the end of this business plan; we feel this idea will work as from our market research we found that many people are curious to try new coffee styles/flavours and this will set us apart from our competitors; many of whom have very traditional coffee available. The 'once upon a time' coffee shop concept is simple, we aim to create a magical new coffee experience that offers high quality coffee in comfortable, traditional settings with sociable seating arrangements which encourage people to both read and relax. The business has been inspired by a need to break away from the large multinational corporations which are currently dominating the UK coffee market, we want to go against the current trends of globalisation and provide a unique setting where customers can receive personal customer service and great coffee. The theme of 'once upon a time' will feature around the coffee shop, including enchanting and inspiring coffee names, a book corner, and specially created mugs/coffee cups with famous story lines written on them. This is essentially our unique selling point.

1.2. Objectives

As a business we have the following objectives; we hope to fulfill each of this objectives in order to expand to other towns in the UK by the end of year2.Our focus is the customer, we must maintain high customer loyalty and this will be put into place by rewarding regular customers and providing an attractive setting. We appreciate that many UK towns are dominated by several coffee chains, however, we hope to tap into the student market as our primary customer base by offering a cheaper and better alternative; we therefore have to strive to keep customer service high and costs low.

  1. Create a relaxing and innovative designed coffee shop
  2. To provide excellent quality service to the public
  3. Create a comfortable social place where customers can escape the daily stresses of life
  4. Be widely known and be successful with the hope of expansion in the future.

2.0 Introduction

It is constitutional to us and our business plan to conduct thorough market research., Firstly, the business plan will look at our customer specification and market segments, secondly, the competition within Preston and close proximity will be reviewed, thirdly we will draw on the pricing strategy before reviewing the financial records of the company including a forecast balance sheet and profit loss account and this business plan will conclude with marketing strategies to promote the coffee shop including the plan for the launch of the business.

Customers: We are planning to look at areas that we want to set up the coffee shop in and who we would like to aim it at, the majority of this research will be taken from looking at Preston as a city and from our own questionnaire.

Competition: Here we would like to do the same; we will look at the competition within Preston and any potential competition in the future. Also, we will look in depth into their pricing policies and their services plus products.

Pricing: Depending on our links with our suppliers, we will have to draw up our pricing plan. This may already be set but first of all this will have to be discussed with our suppliers in the near future. It is obvious that our pricing strategy will depend on what our main competition prices at.

Promotion: This is the last section of the marketing plan. In this section we will look at our launch promotion and our promotion that will continue throughout the rest of the year and potentially beyond.

Organisation and Management The management and the organisation of our business is an essential part of the "Once upon a time…" business plan. As personal investors we will be responsible for the internal and external organisation of the company. Staff with previous experience will be recruited in order to minimize training costs, those with previous experience of working in coffee shops will be able to ensure an effective and efficient service. Our number one market segment is that of students, therefore, we will also recruit students from the area in order to help those students who may need part time jobs to support their studies, by employing students we will also be able to gain an insight into what students are looking for without carrying out further market research. Involving the staff will boost morale and ultimately ensure great customer service! The staff wage will be £5.85ph; on top of this any tips received during service will be split equally amongst the staff. In order to keep staff morale high we will offer staff discounts, and competitions which will not only keep staff happy but also boost sales. For example; one idea which will be put into place is that of bingo, each staff member will have a bingo card and the first person to complete the card will win a prize, in order to complete the card, the employee will have to for example; sell 10 coffees, upgrade 3 espressos to double espressos and sell cake with 4 coffees.

Our Suppliers

Without suppliers we would be nothing. A strong relationship with our suppliers is essential and all of our products will be supplied by Costco who provide great quality products. We feel that by building a strong, professional relationship with them we will be able to gain special deals on products and on any months where sales are low we may be able to come to certain financial arrangements with the company. The email and documentation they sent us will be included in our appendices at the end this business plan.

3.0 The Business and Investment

3.1 Finances

All together we will need a startup fund of £35.000 to get the "Once upon a time" coffee shop up and running. We would like our business to have a financial backing of £22,000 as we have already invested £13000 together from part time jobs and student loans. We will obtain other finance from a bank loan totaling £22,000. The intention is, after an initial good year of trading to be able to comfortably afford the bank repayments and look into possible expansion after 2 3 years of trading. According to financial projections we will end the year with £13,061, into our second year we will look to double sales, enhance promotions and look to expanding in order to finish our second year with a profit of £20,000.

3.2 Bank Loan A business plan will be presented to HSBC bank as we feel that they can offer us the best financial backing and support in the coming years. We have chosen HSBC due to the large amount of support they provide to new businesses, they provide a standard new business starter pack that we referred to during the development of the financial sheets. HSBC offer an APR of 6.9% which enables us to keep repayments relatively low, they are also able to offer an early payment scheme in which case if the business exceeds expectations we will be able to pay the loan back sooner than anticipated with no financial repercussions. It is important for a company to build a strong relationship with the financial lender. We have the intention of keeping up to date with all payments so if needed we can increase the loan if needs be at a later stage.

Balance sheet forecast.



Fixed Assets


Leasehold property






Total Fixed Assets




Current Assets








Total current assets (B)


Total Assets (A) + (B)




Capital and Liabilities






Profit and loss


Total Capital (C)




Medium term liabilities






Current Liabilities




Tax payable




Total Liabilities (D)


Total capital and liabilities (C) + (D)


4.0 Market Research

Once upon a time …we conducted a Questionnaire: On the 12/12/08 we conducted a questionnaire as part of our market research. The questionnaire targeted 100 people from the Preston area. The questionnaire was designed in order to gain information on what customers want, and who our competitors are. From the questionnaire we have established that there are twelve coffee shops in the Preston area and eight other establishments which sell low quality coffee, however, have no indoor seating areas and are therefore just targeting the take away market. The questions asked cover the main topic areas we need to look at in order to identify where there is demand for our product and how we can differ from our competitors. The questions are purposely short and simple in order to attract honest and straight to the point answers. Below is a copy of the questions asked which is followed by an analysis of the results.

4.2. The results

4.3. Customer Base

Customer value is at the basis of our commercial and marketing strategy. Profitability is at risk if customer value is low and therefore we aim to ensure a high customer value throughout the year to maximise potential loyalty to the company. Here at the coffee shop, we appreciate that customers have the power to affect our future performance, ultimately, if a customer has an enjoyable experience the probabilities of that customer returning increase. In the customer value framework, customer needs are described in terms of attributes that customers look for in a service. In order to measure customer value market research has been carried out to find out what the customers want. Market segmentation refers to identifying distinct groups of consumers who's 'purchasing behaviour differs from others in important ways' (Hill, 2009). Different segments exhibit different patterns of purchasing behaviour, and, therefore, marketing mixes must be tailored to meet customers' needs. To maximise profits at the coffee shop, we will endeavor to sell our services to different socio economic segments (Hill, 2009). The following customer profiles have been identified, each of these groups have been researched to find out what the customer's needs are and how the operations processes can be designed to meet the customer values. The aim being to produce a marketing message for each of the identified groups in order of priority.

  1. Students: The University of Central Lancashire has an ever growing population of students with 138 degree choices. After the results of the questionnaire, the student's main concern is that even though the University offers coffee shops inside the university; including their own Starbucks branch, they feel they can only purchase affordable coffee from coffee "to go" places". In order to receive better quality coffee they had to pay a much higher price. We appreciate that this market segment do not have vast amounts of disposable income and therefore it is our intention to provide high quality coffee, comfortable surroundings, at a price which won't break the bank! Students may not spend a lot but they do spend frequently on low cost items such as a cup of coffee, if we are chosen as the preferential place to drink coffee we should attract a healthy share of the market.
  2. Affluent 20 30yr olds: Many coffee shops position themselves on busy high streets and leave the doors open in order to entice customers in. From research we found that many customers often complain that these coffee shops are too cold. We intend to attract this segment by offering comfortable surroundings, where the temperature is monitored to ensure customers are happy.
  3. Senior market over 55s: This market could potentially fill the coffee shop during traditionally quiet periods. In order to attract this market we will be holding OAP coffee mornings where special deals are in place.
  4. Business Executives (take away market): this will be the market to boost our sales, in particular, early in the morning. Our take away coffee will be of the same high quality however will be cheaper as the customers will not be using our facilities.

4.4 Competitors

After the results of our questionnaire, customers are excited to experience a coffee shop with a difference. 86% responded that they would be excited and interested to visit our coffee shop. The questionnaire received great feedback and has provided extremely useful information which will enable us to tap into the market. Many of the major coffee chains are liked by customers, they enjoy the taste and the variety which many of these chains provide, however, most notably they are against the high prices and the often uncomfortable surroundings, for example; the temperature of many of these chains provided a concern. Customers feel that they must compromise on comfort in order to receive high quality coffee; this therefore suggests to us that there is room in the market for a coffee shop which can offer affordable, high quality coffee with unique and comfortable surroundings. We want to stand out from our competitors by offering the highest quality customer service to all customers; service will be efficient, effective and most importantly will have that personal touch. Many of the large chains almost operate a largely robotic way of service and we want to differ by engaging in personal conversation wherever possible, this will ensure we gain a customer base and increase customer loyalty. Our unique selling point is that we are able to offer something different, how many towns do you know which have countless starbucks and Costas? Well we want to challenge their dominance of the marketplace and offer a refreshing change; we will be offering the comfort and service customers want along with great coffee without the high prices often associated with branded products.

4.5 Customer service

PROCESSES (enabling operations to meet customers' needs). The following table highlights the process by which 'once upon a time' will undertake from initial proposal of customer value opportunities to an ongoing evaluation. At each level, various staff members are involved; all of whom will be trained to ensure high customer service levels throughout. Once each staff member is trained and educated on an individual market segment it will be easier to ensure customers have an enjoyable experience. The following standard will be expected from all staff at 'once upon a time' (Hollins, 1993);

  • An awareness of the customers interests and needs.
  • A commitment to quality and reliability.
  • A sincere and visible commitment to good design.
  • Motivated and involved staff.
  • A vision of the future and the provision of clear objectives.
  • The provision of adequate resources in terms of both personnel and equipment.
  • A fully understood organisational system.

5.0 Location

Luckily for us we are in the heart of St Georges centre, Preston. Therefore customer's who are already out shopping or staff from other stores can come in and visit us easily. Our main market - the students are only 5 10 minutes' walk away which puts us in a prime location. The decision not to have the café on the busy fisher gate high street is due to lack of available location, and, that 2 of the leading competitors are already on the same street.

The building we are looking to set up in is currently on the market for an asking price of £169,950 inclusive of Furniture / Fixtures and Inventory. The current company renting the building is 'the bakery' which is a well established sandwich bar and coffee shop situated in Preston, Lancashire 0.34miles away from the local university. The business has a loyal following of local customers who use its services on a daily and weekly basis. The business is well positioned along a very busy main road in Preston, Lancashire and close to the local university. Its superb position allows the business to pick up a large proportion of passing trade as well as a high volume of traffic, all of which contribute to the high takings. The business is well fitted with an array of fixtures and fittings including 2x coffee machines and deli counter amongst a variety of other expensive equipment.

6.0 Promotion and marketing strategies

We are extremely excited about promotion, we feel at ease with promotions as we have on board our promotions manager (Isra Ridha). Our key slogan is "Taste the experience" we intend to use this slogan in all of our promotions in order to attract customers and hope that customers will associate such a slogan with our company. With over 30 different varieties of beverages from all over the world, we really emphasis on the quality of the drinks we have and therefore it will take the main priority during promotions. In addition one of many aspects of the business that we're proud of is the experience customers are going to receive when they visit us. The interior of "once upon a time" is quirky yet conventional. The shop will include: a quiet room for people to read, our very own book shelf and a book swap will take place, quirky comments on the side of mugs and walls. It is a fun and relaxing place that all ages will appreciate. It is vital that we keep our customers aware of our promotions throughout out the year, ensuring that they visit us regularly and most importantly look forward to their next visit.

The SIVA marketing model (Daden, 2009) will be used to provide a customer focused market and one which involves understanding our customers. By understanding the customers in the above market segments we will be able to anticipate our customers' needs and ensure they have all the knowledge they need to lead to a decision whereby they use our facilities. From the information gathered by identifying the customer profile of each market segment, we will be able to translate the desires of our consumers to a service which is appealing; this service will then be presented to them in a productive way through a variety of marketing campaigns.

There are many outlets which we can use to promote our company, these will be targeted accordingly and are as follows;

  1. News paper articles including the university's student paper: this provides an effective, profitable and simple way to spread the word. There are many news papers within the Preston area including the Lancashire evening post where we intend to advertise our launch party. We will pay the premium in order to ensure that the adverts are in colour this way we can be certain our advert will stand out and attract potential customers.
  2. Local radio, Rock FM and Student union radio. We are looking into sponsoring a radio competition, whereby the winner will receive a week's worth of free coffee. In return we get plugged every time the competition is aired on the radio.
  3. Flyers and posters: these will be dotted around the university and around the town centre, news agents and posted in letter boxes in student halls.
  4. The Internet: The best places for free publicity are popular sites like Facebook and My space which are especially popular with students. We will also use the internet for future customer research, by asking members on Facebook what they think and what they would like to see in future. We are looking to start a group online where customers can join in order to view upcoming events and offers.

Word of mouth, the best way of advertisement, however we must ensure that it is positive word of mouth to be shared with friends and family. Free samples of our best coffees to the general public: especially on launch event (people don't say no to free coffee!)

These promotions will be the main promotions within the first year, possibly later throughout the year we could consider Bluetooth txt messages to customers offering them discounts or a loyalty card system. However currently we have chosen these marketing strategies due to the amount we have budgeted for marketing.

6.1. Launch: the big day!

We are hoping to launch on 03/10/09, this day will consist of promotions, free coffee, balloons and a celebrity chef to open the coffee shop for us. We are hoping to get the local radio station involved in the launch in order to spread the word. Due to our prime location we are likely to attract attention from passersby and this is exciting. Our main aim is to ensure we are noticed in order to get the people of Preston talking about our product. We will do this by providing samples to the public, greeting the public , handing out promotions leaflets for customers to come back and make use of and give some to their friends , we also intend to visit offices to give samples to the local businesses to ensure there staff visit us during their free hours. We also must ensure that we employ more promotions staff during busier parts of the day, e.g.: 9.00 the morning, 12.00 dinner time, and 5.00pm the end of working day and university.

7.0 Sample menu (Daily specials and seasonal changes will be added). Prices are subject to change however for the first few trading months we will keep these prices until they are reviewed early December, once the sales figures have been analysed.

8.0. Summary:

In conclusion, as noted in this business plan, four different market segments have been recognised, each of these groups have different values and the significance of each of these is determined by their potential to increase the profitability of 'once upon a time'. For the four market segments, each group has a customer value which is of particular significance and would be the main focus of any marketing campaign. For the senior market, the main priority is to achieve a coffee shop which is welcoming and appealing to an older generation. As discussed, this will involve relaxed coffee mornings, special promotions and smaller changes such as a reduced music volume during the off peak times and ensuring that the coffee shop is kept at a comfortable temperature. For students, the customer value of greatest significance is value for money; it is therefore a question of offering the highest quality coffee and surroundings at the lowest prices without eroding our profits. We need to ensure customer values are met at all times and that we work at various levels from development implementation  evaluation to ensure that customers feel like their needs are met and this will ultimately result in higher retention levels and customer loyalty. Staff from various areas of the company will be working together to produce a customer orientated market. All staff should be made aware of the customer's needs and the values which different market segments feel is important. As a small local coffee shop, customer loyalty and retention is a must and therefore this means the customer must be at the heart of everything from new service design to marketing campaigns. Too often service failure is caused by a lack of understanding of customer requirements (Hollins, 1993). Ultimately, as this report has outlined, to provide an effective service, a 'design ethos needs to be adopted whereby the concept of service is treated as in the development of products' (Hollins, 1993, 119).