Type of Business
The type of business chosen will be a coffee shop. Recent research by Cooper and Burke shows that the demand for coffee in the United Arab Emirates is on the rise, especially among the youths and young adults (44). It is one of the most preferred stimulants among the stated target group. After thorough market research, the entrepreneur was able to identify a location within the suburbs of Dubai city where the coffee shop will be located.
The firm will be offering different types of coffee and accompaniments such as cakes, doughnuts, hotdogs, and burgers. All the products sold by this firm will be made using materials sourced from the top suppliers. Coffee that will be used will be of very high quality, preferably those that have originated from East Africa. As Allen says, they are known for their high quality and are preferred by many coffee consumers (29). The business will have six employees at the time of its inception to work in various departments.
Mission Statement for the Business
According to Stokes and Wilson, the mission statement helps in defining the direction of the business and what it seeks to achieve in the market (57). It acts as a constant reminder to all the stakeholders within the firm about the direction that should be taken to achieve the intended goal. The following will be the mission statement of this coffee shop.
To Continuously Offer High-Quality Coffee to Clients within the City of Dubai Based on the Changing Needs and Tastes of the Clients
It is important to note that coffee will be the main product at this shop. That is why the mission statement has emphasized on this product. Other accompaniments will be provided to boost sales of coffee.
Business Plan
To achieve results in this competitive market, it will be important to have a clearly defined business plan. According to Tammi and Tage, having an effective business plan is very important in avoiding market failure (52). The plan acts as a guide that informs the entrepreneur about what should be done at every stage. Developing a business plan involves various stages, as discussed below.
Stage 1: Self-Assessment
One of the most important stages involved in the planning is self-assessment. Before starting a new business entity, it is important for an individual to assess the internal factors that make the business able to operate in a given industry. This assessment may take various approaches depending on the self-assessment tool that one chooses to use. The most popular tool that is used is the SWOT Analysis. Using this tool, one will need to identify the strengths that it has when entering a given market. In this business, the strength will include issues such as flexibility and vast knowledge in a particular field.
Most new business start-ups are always flexible to changes because they have not developed rigid business structures that are slow in adopting the change. This is a strength for this firm. The owner of the business and another team of experts operating it also have enough knowledge and skills in the field of hotel management, making it easy to develop successful models of business operations. Identification of weaknesses will be necessary so that the management can devise ways of addressing them before they can have any serious impact on the firm. In most of the new start-ups, common weaknesses may include limited resources that can be used to support the operations of the firm.
According to Phillips, the external environment may have some opportunities that should be exploited by the new firm once it starts the operations (11). These opportunities have already been identified prior to the market entry by the firm. Opportunities identified include the growing economy that makes it easy for the expansion of business entities. Another opportunity that was identified was the easy access to the capital market for new business start-ups. In many cases, financial institutions are always slow when it comes to giving loans to business start-ups. In this case, it was identified that accessing loans was not difficult as long as a proper business plan is presented to the committee. Common threats that were identified when developing the plan include issues like stiff competition from major players in this industry. Insecurity incidences by terror groups and cybercriminals were also identified, and mitigation measures clearly stipulated so that they may not disrupt the normal operations of the new business entity.
Stage 2: Extensive and Intensive Research Into the Industry
After conducting a self-assessment and identifying areas of strengths and weaknesses, the next important step is to conduct extensive research into the industry. According to Smith, a good business plan must have a clear understanding of the industry within which it intends to operate (78). This includes the current consumer trends when they purchase different items in the industry, the changing patterns of product delivery, the intensity of market rivalry, and the relationship between the industry and the government. Some of these important facts have already been gathered. For instance, it has already been established that the majority of the targeted consumers are couples aged below 45 years. There is a new trend where most of them prefer takeaway products instead of spending time in the store because of their limited time. This firm has already developed mechanisms on how these needs will be addressed.
Stage 3: Re-Evaluating Internal Resources
Reevaluation of internal resources is also another important step when developing a business plan. The management needs to understand its current and future resources that will sustain its operations. This will be discussed in the section below.
Stage 4: Ensuring That the Plan is Sensitive to Internal and External Factors
The entrepreneur has re-evaluated the business plan, especially the product delivery strategies that will be used to ensure that they are sensitive to both the internal and external environmental factors. Emphasis has been laid on delivering services of the right quality and the right time and in the manner that is expected by the clients.
Factors that Differentiate This Business from Its Competitors
This business will be different from other existing firms based on a number of factors. Market research conducted by the entrepreneur revealed that most of the players in this industry do not offer a variety of coffee. This will be one of the major areas of difference between this firm and other rival companies. The firm will offer a wide variety of coffee to meet the needs of different market segments. Another area of difference will be the internal structure of the shop. The entrepreneur talked with a number of potential clients on what they lack at some of the existing coffee outlets. The most common answer was the lack of privacy. This firm will provide privacy in terms of the seating arrangement for the clients.
Competitive Services in the Market
The level of competition in this market is very stiff, given the existence of some of the world’s top coffee makers such as More Café, RAW Coffee Company, Il Caffe di Roma, Chocolate Chic, and Circle Café. These five coffee shops are already established, and they have strong brand names in the market. For instance, More Café has identified a special niche among Dubai’s richest people. It offers high-quality products at very high prices. In fact, clients who go to this shop not only go for the product but also the class that is associated with the store. It brings out a sense of class to its patrons. The cheapest cup of coffee at this store goes for $ 100, an amount that is far much higher than the industry average.
Raw Coffee Company and Circle Coffee are very popular among couples that have children. They have beautiful theme parks within their facilities where children can have a good time as their parents have coffee. Security at these stores, especially for the children when they are playing in the theme parks, is very high. Chocolate Chic is popular among teenagers and young adults. It has been keen on providing the privacy that many youths need when they go to a coffee shop. Its employees are also youthful, a fact that has improved its capacity to attract youthful clients. However, its small size is its biggest advantage, and that is why this new start-up aims to emulate its business model. Its small size means that it will not pose a serious threat to this new start-up.
Start-up Costs
The entrepreneur has conducted research about the associated costs of starting this business. The cost of renting the facility will be $ 1200 per month. The firm will need to pay the rent for six months when starting operations, which means that it will require $ 7200 for rent alone. Furniture, fixtures, and fittings are estimated to cost $250,000. This will include the costs of seats, tables, decoration within the shop, lighting, carpeting, kitchenware, and all other fixtures that will beautify the shop. The firm will need $ 2500 as a startup operating capital and $ 28,800 as a salary for the six employees for the first six months. The average wage for the employees will be $ 800. The cost of registering the business and paying all the necessary fees is estimated to be $ 1000. This means that the start-up cost is estimated to be $ 354,300.
Funding Sources
The biggest challenge that the entrepreneur has to overcome is to get the needed funding to start up this business. The entrepreneur has $ 120,000 in savings that will be injected into this business. Friends and family members have already been contacted over the issue of funding, and the amount expected from them is $ 178,000. It means that the total amount of start-up capital that is already available is $ 298,000. The entrepreneur plans to get the extra $ 56,300 from financial institutions within the country in order to start operations.
Works Cited
Allen, Kathleen. Growing and Managing a Small Business: An Entrepreneurial Perspective. Boston: Houghton Mifflin, 2007. Print.
Cooper, Cary, and Ronald Burke. Human Resource Management in Small Business: Achieving Peak Performance. Cheltenham: Edward Elgar Pub, 2007. Print.
Phillips, Joseph. Project Management for Small Business: A Streamlined Approach from Planning to Completion. New York: American Management Association, 2012. Print.
Small Business Management and Entrepreneurship. Andover: Cengage Learning, 2010. Print.
Stokes, David, and Nicholas Wilson. How to Invest, Start, and Run Profitable Business in the United Arab Emirates Guide. New York: Cengage, 2013. Print.
Trammi, John, and Tracy Tage. Small Business Financial Management Kit for Dummies. Hoboken: John Wiley & Sons, 2013. Print.