Opportunity

Problem

People living near the University of Oregon require more than just coffee and tea. They need somewhere to sit, study, do research, and have quiet conversations. That is available now near the University of Oregon campus, but too crowded too often, and not the right combination of factors for everybody.

Solution

Java Culture coffee bar is determined to become a daily necessity for local coffee addicts, a place to dream of as you try to escape the daily stresses of life and just a comfortable place to meet your friends or to read a book, all in one.

Market

Java Culture will target university students and faculty, as well as people working in coffee bars near their offices. Our market research has shown that these are the best customer groups for gourmet coffee products. The proximity of the University of Oregon campus, which is accessible to the targeted customer group, will enable gourmet coffee consumption to be universal across all income levels.

Competiton

Java Culture’s direct competitors will be other coffee bars located near the University of Oregon campus. These include Starbucks, Cafe Roma and The UO Bookstore.

Why Us?

Coffee, pastries, extra options, etc. Great atmosphere, good wireless and desk space. Good pastries.

Expectations

Forecast

Our sales forecast shows that we expect to grow in the following chart. We are committed to maintaining a industry-standard 60% gross profits margin and reasonable operating costs and producing reasonable profits the second, third and fourth years.

Financial Highlights by Year

Financing Needed

To finance the initial expenses, assets, and deficient spending in the beginning months, the owners will put $140,000 into the business and borrow $30,000 from a bank.

Start-up costs of $27,000 include:

• Legal expenses for obtaining licenses and permits as well as the accounting services totaling $1,300.
• Marketing promotion expenses for Java Culture’s grand open were $3,500. Flyer printing (2,040 copies at $0.04 each) was also included in the total of $3,580.
• For the assistance in setting up the coffee bar, consultants fees of $3,000 were paid to ABC Espresso Services (name changed).
• A total premium of $2,000.
• Pre-paid rent expenses per month for a total of $4,400 at $1.76 per sq.
• Premises remodeling in the amount of $10,000.
• Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).

These expenses will be incurred before launch, so they take their place in our financial projections as negative retained earnings of $27,680 at the end of the month before we begin. That number shows up in the balance sheet.

The start-up capital required for $143,000 includes:

• Cash in Bank in the Total Value of $67,000. This includes enough to cover owner and employee salaries of $23,900 for two months and cash reserves (approximately $14,400 per month).
• Start-up inventory of $16,000, which includes:
  • Coffee beans (12 brands, five decaffeinated) #8211 $6,000
  • Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – $7,900
  • Retail supplies (napkins, coffee bags, cleaning, etc.) – $1,840
  • Supplies for offices – $287
• Equipment for the total amount of $60,000:
  • Espresso machine – $6,000
  • Coffee maker &#8211: $900
  • Coffee grinder &#8211: $200
  • Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000
  • Storage hardware (bins. utensil rack. shelves. food case.) #8211 $3,720
  • Counter area equipment (counter top, sink, ice machine, etc.) – $9,500
  • Flatware (plates/glasses, flatware and serving area equipment) #8211 $3,000
  • Store equipment (cash Register, security, ventilation. signage) #8211 $13,750
  • Office equipment (PC, fax/printer, phone, furniture, file cabinets) – $3,600
  • Other miscellaneous expenses – $500

The company is funded by two main sources: bank loans and investments from owners. Two major owners, Arthur Garfield and James Polk, have contributed $70,000 and $30,00 respectively. All other investors have contributed $40,000, which brings the total investments to $140,000. The $30,000 remaining to cover start-up expenses, assets and costs came from two bank loans: a $10,000 one-year loan and $20,000. long-term (20 years) loans. Both loans were secured by Bank of America. Thus, total start-up loss is assumed in the amount of $27,000.

The balance sheet shows the amounts in the month preceding opening. Paid in Capital shows the $140,000 capital investment. The $27,000 expenses can be referred to as negative retained earnings. There are assets as well as liabilities. This is all according to financial standards.