Small business management To build or buy

Small business management To build or buy Introduction This article examines strategic planning process of purchasing an existing coffee business in Miami. We have based the business concept on News Cafà ©, which demonstrates affordability, growth, and comfort at the Ocean Drive of Miami Beach. New Cafà © is a 24-hour business with a great menu that consists of both national and international coffee and desserts. It has a great oceanfront view. However, the place experiences service lackluster during high tourists’ seasons. Business Concept Strategy Starbucks introduced coffee business to the US and coffee has become a common feature of Americans as millions of them consume coffee daily. These people are willing to spend money on quality coffee.Advertising We will write a custom research paper sample on Small business management: To build or buy specifically for you for only $16.05 $11/page Learn More Specialty coffee has become a growing coffee business in Miami as News Cafà © shows (Mona ghan and Huffaker, 1995). Market conditions such as recession and slow economic growths have not affected coffee consumption in Miami or the US. In fact, specialty coffee sales have increased. In addition, no coffee house closed due to recession unlike in other industries. News Cafà © and other coffee outlets serve quality coffee in Miami. However, most of these coffee outlets look like ‘fast food restaurants’ because of their services. Now Miami coffee consumers have increased, and their preferences for coffee and other products have grown. As a result, many consumers need fresh coffee, varieties, and coffee with health benefits. This means that there is a niche in the coffee market of Miami. Coffee consumers want fresh, high-end, quality, and health coffee served in high volumes and in a warm and conducive atmosphere. A new coffee business in Miami can meet these needs and fill the niche in the market. The business should provide high quality coffee products in upsca le locations of Miami. The location must also provide a mixed clientele base in order to ensure that the business has high-levels of activities throughout the session. Develop or Purchase Based on the performance of News Cafà ©, it is necessary to purchase an existing coffee business than developing a new one. The existing coffee business in Miami has existing customers, a stream of revenues, existing employees, recognized business name, and working business policies and procedures (Joseph, Nekoranec and Steffens, 1992). Purchasing an existing coffee business in Miami shall enable the investor to avoid risks associated with start-ups. Business pundits claim that nearly 80 percent of start-ups do not last for more than two years. In addition, start-ups may also lack adequate cash flows, which may affect their working capital. New businesses have financing and setup challenges. An investor who opts for an existing business with history avoids challenges associated with a new business that lacks a record of accomplishment. Therefore, the process of developing a new coffee business in Miami should be through purchasing an existing business. Still, it also eliminates a daunting task of finding capital for a new business.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Start-ups also undergo creation challenges. There are business procedures and policies, which the new business owner would not like in an existing. However, the new owner may make changes that fit his new business concept. The purchasing party can easily locate what areas or policies of the existing business need changes. The investor may also decide to overhaul all aspects of the business, but eventually gains from identifying factors that do not favor the business. Such existing business already has stability required to start operation. In addition, the interested party can rely on hist orical sales records in order to make sales projection. The new owner can realize immediate returns after the purchase. Any business for sale usually has a fair price. Furthermore, purchasing an existing business may not require all the capitals needed when buying a new business. The owner can make down payment and pay the rest of the debt in installment by using the generated cash flows from the business. A new start-up does not provide this advantage. Still, sellers also offer favorable financing terms for such existing businesses. This may be due to income tax reasons, enhance profitability of the business, and get a net for existing loans. A seller who may carry back any part of sales price indicates that he has confidence in the future performance of the business even under new management. Form of Ownership Aspiring entrepreneur has various forms of business ownership and can select the one that matches his business financial position. For this new coffee shop venture in Miami, we have settled on limited liability company (LLC). LLC has a hybrid structure that will provide the new owner with limited liability features of corporation, offer tax efficiency and eliminates cases of double taxation, and operational flexibility of a partnership business. However, this form of business ownership is complex and formal that a general partnership ownership. Business Plan Executive Summary This new coffee shop venture borrows the concept of News Cafà © in Miami, but shall be in upscale areas, provide high quality coffee, efficiency, and 24-hour services. The owner can introduce other partners or run it independently (McDonald, 2007).Advertising We will write a custom research paper sample on Small business management: To build or buy specifically for you for only $16.05 $11/page Learn More Financing shall be from the owner’s capital. The owner shall fund the rest with income generated from returns. After reviewing the operation of N ews Cafà ©, the new coffee business shall rely on the News Cafà © model for expansion to other areas of Miami. Mission The new coffee business goal is to be the coffee shop of choice in Miami for upscale consumers, tourists, students and the local business community by offering high quality coffee and coffee products. The business intends to be profitable with more than 20 percent returns annually. The business also intends to support local environmental initiatives at the beach and supports coffee farmers too. Objectives Make the new business highly attractive place for coffee consumers in Miami Make sales of $750,000 in the first fiscal year, $1 million for the second year, and $ 1.3 million for the third fiscal year Achieve over 20 percent net profit after the third year Start expansion within six months after opening Support community, coffee farmers, and conservation efforts Key to Success High quality coffee products Upscale markets with mix customer base Targets on tour ists, affluent population, students, working community, and pedestrians Well-trained staff Aggressive and continuous marketing Sales of coffee and related products for multiple revenue sources Provide online sales services in the Web Company SummaryAdvertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The business shall provide unique coffee to its consumers. Variety: the coffee shop shall have different varieties of coffee not found in Miami Location: the coffee shop shall occupy upscale environments with attractive views next to busy streets, shopping complex, tourists’ destinations, and entertainment locations The coffee shop shall expand within six months after successful takeover Ownership The coffee shop shall be LLC Products The coffee shop shall offer high quality: Coffee varieties Tea Juice Gift items Chocolate Bottled water Soft drinks Snacks Pricing of these products shall favor both high-end and low-end consumers. Market Analysis Summary The new venture shall launch a new coffee business by purchasing an existing business in a receptive and a growing market. America coffee consumers are increasing. The business shall consider: Affluent and popular locations Areas with tourists activities throughout the year Student locations Low media costs Busy streets Popular beach areas Market Segmentation The customer base in Miami shall consist of various customer segments: High-end local residents Local community business people Tourists Students Pedestrians and travelers These segments of consumers are strong and provide mixed benefits. They can provide consistent business and cash flows throughout the fiscal year. The business will also benefit from high tourist seasons during summer breaks when students break for their long holidays. Still, the other segments of the market shall be available throughout the year. Figure 1: Target Market Segments for the New Coffee Shop Competitors Competition consists of international, regional, and local coffee shops. Starbucks News Cafà © Cafà © Demetrio Joffrey’s Coffee and Restaurant Versailles Mercedes Coffee Shop Romeos Cafà © Greenstreet Cafà © These competitors have grown ever since their inception. In addition, no single chain of coffee shop has failed in Miami in the last 20 years . Marketing Strategy The new coffee shop shall rely on word of mouth, local media, and social media as marketing strategies in order to reduce costs of media promotions. The aim of the marketing campaign is to establish profitability for fast and continued growth of the business. The marketing strategy shall position the coffee shop as the only place that offers high quality coffee products in Miami Beach. Assumptions The market requires high quality coffee products There is a need for conducive environment Consumers want affordable luxuries Coffee market is stable Competitive Edge The business competitive edge in comparison to competitors includes: High quality products with great tastes Best locations in busy streets, areas with tourists’ presence throughout the year High-end locations Favorable prices to both high-end and low-end consumers Superior ambience 24-hour operation Varieties of products for various segments of the market Internet online sales The business sh ould have more than 20 shops within the next five years. However, this will depend on the financial performance of the purchased business. The managers must track all daily activities in order to provide clear perspectives for expansion. Web Plan Summary The coffee shop will have an established Web site from the previous business owner. The established Web site of the business guarantees the new owner high traffic from existing customers. The Web site shall act as a tool of marketing and offer online sales services. Management Profile Owner Chief finance officer Marketing head Operation manager Financial Plan Achieve sales growth of 15 percent annually Adequate cash flows Profit margins of 20 to 25 percent Marketing budget shall be five percent of the annual budget The profits shall fund expansion strategies Figure 2: Monthly sales by products Figure 3: Yearly sales by products References Joseph, R., Nekoranec, A., and Steffens, C. (1992). How To Buy a Business. New York, NY: Kaplan Publishing. McDonald, M. (2007). Marketing plans: how to prepare them, how to use them. Oxford: Butterworth Heinemann. Monaghan, J., and Huffaker, J. (1995). ESPRESSO! Starting and Running Your Own Specialty Coffee Business . New York: Wiley.