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Coffee Shop Equipment
Sep 14, 2017 in Business
The most important and complicated stage of implementing a business idea is to plan time, money, and effort that are needed for project realization. Precisely researching the feasibility of a project allows investors to have a clear picture of the whole process. Moreover, it helps to predict possible outcomes of the business project. Therefore, the main aim of this paper is to further research the feasibility of the project I have proposed which involves opening a coffee shop in the food court of the Utah Valley University.
Feasibility of the Project
The project idea is based on Utah Valley University having only one coffee shop which does not have a convenient location for a large number of students. Thus, it was suggested to open another coffee shop in the food court or nearby where many students have their classes and spend most of their time. The obvious need of a new coffee shop in the university campus determines an expected high demand from students and projects high profits for the business.
In order to prepare necessary planning on the business idea, it is crucial to research the feasibility of the project. It involves exploring some details of the three main aspects â€“ financial calculations, time schedule, and efforts that are required to implement the coffee shop.
Financial calculations are based upon estimating the total cost and comparing it to expected outcomes. It demonstrates if the project is going to be profitable and if it is worth working on. Hence, it was estimated that the total budget of the project is $25,000. The initial investment requires making a rental deposit, receiving permits and licenses that are necessary to operate a coffee shop, and making an insurance deposit for the rented premises, which amounts up to $7,000 in total. Additionally, minor expenses connected to hiring employees are included into the sum mentioned above. The next step is based on designing the interior and remodeling the premises which would cost $3,000.
The main part of the expenses is connected to buying necessary equipment and preparing the building for the coffee shop. The realization of the project requires investment for buying a coffee machine ($7,500) and other equipment such as a coffee grinder ($250), a microwave ($150), a fridge ($600), a dishwasher ($800), serving equipment ($1,000), storage utensils ($2,200), and a cash register ($800). Next step is to source coffee beans of four types, tea, snacks, beverages, plastic cups, spoons, sugar, and other supplies. The first order requires spending $700 that will be continuously renewed to maintain fresh stock in the coffee shop. The total cost of buying the equipment and supplies equals $12,500. Additionally, $1,000 is needed for covering unforeseen expenses. It is important to have a certain amount of money that can be used in case some additional costs need to be paid. Even the most precise calculations made on a business project can leave out some details, that is why extra costs must be foreseen.
The coffee shop expects to have $30,000 of profit in the first month, and a profit of approximately $45,000 for every following month. However, there will be a seasonality of sales because the coffee shop is going to be located in a studentsâ€™ campus. Profits will be going down in the university vacation periods. It is projected to maintain a 65% gross margin, which in addition to other expenses such as employeeâ€™s salary and other operating expenses would means the net profit of $6,000 in the first month and $14,000 for every following month. Therefore, investments made on the project will be returned in two and a half months.
The time factor is another aspect that has to be taken into account. The project is expected to be launched in one month, which is a reasonably short period of time for developing a business project. This period can be divided into few stages of the project realization:
(1)Â Stage 1 â€“ preparing a business plan (8 days); (2) stage 2 â€“ receiving permits and licenses needed for starting a coffee shop (6 days); (3) stage 3 â€“ designing the interior and remodeling the premises (10 days); (4) stage 4 â€“ purchasing necessary equipment and supplies (4 days); (5) stage 5 â€“ hiring personnel (2 days); (6) stage 6 â€“ launching the coffee shop (1 day).
Finally, the efforts for implementing the project are based on the work of employees. Thus, only four employees have to be hired for working in the coffee shop. One person is needed for a position of barista and one employee will be taking orders and accepting payments. The coffee shop will be run by a manager who is going to be responsible for controlling the work of the employees, making decisions about how to improve the coffee shop, ordering items from suppliers, supporting stock, maintaining everyday operations, making amendments to the employeesâ€™ work and making sure that customers are satisfied with the quality of coffee and the service. Additionally, a cleaner will be hired on the part-time basis.
Thus, researching the feasibility of the project of opening a coffee shop in the university demonstrates that it will have positive financial outcomes for investors. The investments will be returned in a short period of time, and high demand from the students will maintain reasonable and stable income although an allowance has to be made on seasonality. Another positive aspect of the projects is that it does not require a long period of time and effort for being launched.