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Small Business Idea Case Study


Abstract: This case study discusses a comprehensive business plan for a café. Instead of owning a franchise like Starbuck’s, my projected plan will put emphasis on a fun-themed coffee shop and harp on the premise of “nostalgia”, effectively recreating the décor and ambience from the 1970’s/80’s.

This topic addresses various essentials of starting a successful small business which include the following: creating a unique selling proposition (USP), formulating the precise type of business model, setting up a premise and handling tax, legal and accounting implications.

Proposal: A café is a place where people of all age groups enjoy coffee and light refreshmentsm, that too in a soothing ambience where they can relax and share a conversation. Compared to multiple location franchises like Starbuck’s that have gone past their café appeal to sell frugal food items like donuts, at its core, a café should still be about a place which allows people to unwind themselves and not be rushed to place an order.

Most entrepreneurs need to be at the helm of their creative process (Abrams & Kleiner, 2003, p.10). For that reason, my USP is about a themed coffee store which essentially recreates the 1970’s/80’s glam rock era.

Before the advent of the pop age (which is still fresh in the memories of many people), the 70’s/80’s represented a forgotten period of contemporary fashion and music which, however, will have immense nostalgic value for middle-aged consumers.

The above period was marked by phenomenal events including psychedelic rock, guitars and drums, casual attire, afro hairstyles, mini skirts and marijuana use. Even teenagers, and those of the present generation, are well familiar with the cool values represented by that era.

To develop the concept of the cafe, I will have to analyze different aspects of the proposed business model including establishing a brand logo, writing down brochures, flyers and more.

Making investment in retail ventures like a café would require gathering information on a number of parameters including how many coffee shops are serving the neighborhood at any given point of time, how profitable they are, the demographic trends in the city and laws and regulations concerning food establishments (Abrams & Kleiner, 2003, p.15).

First, I would be taking the help of research services available on the Internet to learn more about parameters including competitors, potential customers, suppliers, articles, statistics and surveys (Abrams & Kleiner, 2003, p.18).

Some of the other research sources include the US governemnt Census Bureau, State Government Sales Tax offices, community services, paid services like surveys and polling firms (Abrams & Kleiner, 2003, p.19).

Business organization type: One of the key steps here would be acquiring required funds for such a proposed venture. My plan would be to earn the seed capital based on internal accruals and savings from other income sources.

The property, especially if in an upmarket locality, would have to be leased on a 10-year rental basis with the break-even objective to be achieved within the first year itself. I will also avail myself of microcredit from agencies which promote small businesses (Kimmel, Weygandt & Kieso, 2006, p.141).

If the funds available with me fall short of expected capital and operational expenses for a year, I would need to transform the café venture from a sole proprietorship to partnership with an angel investor. There are several advantages and disadvantages to both approaches.

Having your own establishment means a shorter time period to recover the loan amount, and the ability to achieve a greater percentage of profits (Abrams & Kleiner, 2003, p.192). However, an angel investor brings greater financial potency to the overall venture and would allow the desired funds required for expansion into an upmarket locality; although, this would mean a relinquishing of controls.

Financial statements, accounting and tax planning: Of course, no venture can succeed without doing proper arithmetic on the financial viability for key aspects of the business (Kimmel, Weygandt & Kieso, 2006, p.47).

To understand tax implications for a café, one needs to be in touch with the local sales tax office and municipal corporation who are able to offer tips and suggestions on various taxation issues for restaurants and food establishments.

This would include guidelines on payment processing, property licensing and other important attributes (Kimmel, Weygandt & Kieso, 2006, p.67). The taxation amount is to be deducted from overall profits that are being made, and will serve as a helpful guide towards preparing the first year cash flow analysis for a new business venture (Kimmel, Weygandt & Kieso, 2006, p.121).

Knowing the exact financial health of the business is critical if one wants to stay mindful of future expenses and if there are ongoing plans for expansion. It is recommended to hire the services of a chartered accountant who is in a better position to guide with financial planning.

The objective for the first year should be to achieve positive cash flow. For this, it is important to ensure cash flow receipts are greater than overall expenses (Kimmel, Weygandt & Kieso, 2006, p.122). With a firm financial foundation to lean on, a business venture is able to show more promise in future.

A business venture, including a food establishment, has to comply with accounting implications such as SOX and FASB because of corporate governance norms (Kimmel, Weygandt & Kieso, 2006, p.171). The norms are certified by federal agencies who look into aspects affecting the financial health of companies.

Business promotion activities: As discussed earlier, no business can sustain for a long run if it does not offer unique benefits to the customer. The proposed café has been established on a 1970’s-style glam rock theme. If it suits the budget, it might be helpful to rope in popular artistes and celebrities, decked in the 70’s attire, who will help make the first call of promotion to the establishment.

It is also possible to generate leads through newspaper advertorials and other food publications (Abrams & Kleiner, 2003, p.31). Pamphlets, leaflets and brochures are a low-cost alternative to reach thousands of target customers in the neighbourhood. Since, the café theme is simply about having a relaxing conversation, the ambience would recreate the tranqui, feel good environment.

The importance of word-of-mouth publicity cannot be entirely overlooked. Organizing a special 70’s themed party may help attract the first customers.

It is important to add value with service (Abrams & Kleiner, 2003, p.32) which means there should be greater synergy between the food being offered and cultural expectations one has from the end consumer. Young people are often attracted to the establishment in the course of new age themes such as Goth. Being an establishment, there is also the possibility to launch weekend promotion schemes.

Conclusion: The rationale for the proposed café venture lies in the fact that even in a recession-driven economy, businesses are increasingly looking for ways to make profits through the average earning consumer. The food and beverage industry has shown consistent growth with each year, and the proposed plan will rightly fit consumer demands for a proper establishment.

References

Abrams, R., & Kleiner, E. (2003). The Successful Business Plan: Secrets & Strategies. Palo Alto, CA: Planning Shop.

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Accounting: Tools for business decision making. Hoboken, NJ: John Wiley & Sons

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IvyPanda. (2019, May 14). Small Business Idea. Retrieved from https://ivypanda.com/essays/small-business-idea-case-study/

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"Small Business Idea." IvyPanda, 14 May 2019, ivypanda.com/essays/small-business-idea-case-study/.

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IvyPanda. "Small Business Idea." May 14, 2019. https://ivypanda.com/essays/small-business-idea-case-study/.

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IvyPanda. 2019. "Small Business Idea." May 14, 2019. https://ivypanda.com/essays/small-business-idea-case-study/.

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IvyPanda. (2019) 'Small Business Idea'. 14 May.

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