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Market SegmentsThe Cooper’s Cup is targeting the three top segments of the populationrepresenting 39% of the population in the Phoenix area:Boomburbs (29%) – Younger families with a busy, upscale lifestyle. TheTo unlockhelp tryUpmetrics!median age of 34. Most households operate on twoincomes;themedian Start Writing here.Market TestsResearch from Yelp, FourSquare, and google places, indicates the Phoenixmarket is in need of a new local cafe. The locals have been clamoring for thecurrent private shops to improve service and/or reduce prices to keep pacewith larger chains and franchises, thus providing a unique niche for the rightTo unlock help try Upmetrics! entrant.Start Writing here.Target Market Segment StrategyMost adult coffee drinkers said their lifelong habits began during their teenageyears. In fact, 54% said they began drinking coffee between 13 and 19.Another 22% reported their coffee cravings started between the ages of 20 and24. This means that 76% of adult coffee drinkers began drinking coffee by theTo unlock help try Upmetrics! time they were 24. So, despite a large amount of marketingand advertisingStart Writing here.Unique products (specialized roasts, local ingredients, locally-themed ornamed drinks, custom drinks by the‘star’ barista, etc.)Games, puzzles, mind benders, and other activities that encouragecustomers to linger over their coffeeTo unlock help try Upmetrics! Hosting or sponsoring local events (entertainment, readings, book clubs,Market NeedsStart writing here.[YEAR ] Bus ines s Plan C offee Shop16 / 37

Despite the economic woes, 37% of total coffee consumed in the United Statesin 2011 was classified as “Gourmet.” According to the National Coffee DrinkingStudy, This suggests consumers were set on drinking good coffee and visitingtheir local coffee shop even in the face of an uncertain economy. (FirstTo unlock help try Upmetrics! Research).Market GrowthStart writing here.The Russet Mug will position itself as a local coffeehouse or a ‘suburban’coffeehouse providing a sanctuary for those in the ‘burbs’ without the hassle ofhaving to drive downtownTo unlockhelpandtry Upmetrics!By charging similar prices as the large chains – theservicequality of PositioningStart writing here.[YEAR ] Bus ines s Plan C offee Shop17 / 37

5.CompetitiveAnalysisCompetitive ComparisonMain Competitors[YEAR ] Bus ines s Plan C offee Shop18 / 37

Competitive ComparisonThe research methodology is based on unique coffee shops/cafes in thegreater metro area and omits larger chains or franchises. The findings revealeight unique competitors.RoasterieCafe4511 W119th St Leawood, KS 66209To unlock help try Upmetrics! Start Writing here.Main CompetitorsThis competitor has been operating in the greater MSA since 2005 opening itsfirst cafe in Brookside, Arizona, and then at the Leawood location in 2010. The3,300 square foot cafe offers an assortment of pastries, bagels, and cookies.Beverages include Harney and Sons teas, signature blends, espresso, andTo unlock help try Upmetrics! specialty drinks. The cafe has 11 employees and generated 11 million inRoasterie CafeStart writing here.This competitor operates from a 3,300 square foot space. The cafe has WI-FI.In addition to serving coffees and smoothies, the cafe offers more foodofferings with a full-service kitchen offering light breakfasts, and sandwiches,and wraps. In the evenings the cafe has musicians performing on a smallTo unlock help try Upmetrics! stage. The Cafe also has a full liquor license. The broadofferings of amenitiesTake Five Coffee BarStart writing here.This competitor operates from a 6,300 square foot space in a shopping center.The shop was established in 2001 and in 2011 reported 2 million in revenues.The shop employs 21 employees and provides music on the weekends. Thesubject’s advantage is its smaller, cozier, and quieter environment.To unlock help try Upmetrics! Address:Homer’s Coffee HouseStart writing here.[YEAR ] Bus ines s Plan C offee Shop19 / 37

6.Marketing AndSalesSWOT AnalysisStrategy PyramidUnique Selling Proposition (USP)Competitive EdgeMarketing Strategy and PositioningSales StrategyLegalMilestonesExit Strategy[YEAR ] Bus ines s Plan C offee Shop20 / 37

SWOT AnalysisThe SWOT analysis examines the cafe’s strengths and weaknesses that needto be addressed. Further, this section examines the opportunities presented toCafe as well as potential threats.To unlock help try Upmetrics! Start Writing here.[YEAR ] Bus ines s Plan C offee Shop21 / 37

StrengthsWeaknessesBased on its smaller size, the fact that it isnot a franchise, the Cooper’s Cup is aunique coffee shop concept unlike anyother in the Phoenix market.Franchises are the easiest way and oftenthe safest conduit to start a cafe; the cafewill not have the backing of one of theseestablished entities.The owner has firsthand experience, inoperating and starting new restaurants,The Cooper’s Cup has a minimal budgetand is competing against larger and moreestablished coffeehouses for marketshare.Handpicked baristas will bringprofessionalism and enthusiasm to theshop.SWOpportunitiesThreatsThe Phoenix demographics support theneed for a unique coffee shop. Additionalopportunities to target the active andrecently retired target market and 45years age group.The Morning Glory Coffee shop iscurrently for sale; should anotherindependent purchase this cafe, it couldpose a significant threat to market share.A small slice of a much bigger pie is thegoal. Only40 percent of the nation’s coffeedrinkers are consuming premium groundand whole bean coffee. Encouragingcoffee drinkers to become coffeeconnoisseurs is the key to continuedgrowth.The local coffeehouse/cafe market is 54millionOTStrategy PyramidIn the short-term, a number of promotions and activities are plannedaround the launch of the business to create awareness. The coffee shopwill have a contest offering 20 bottomless mugs and will publicize thispromotion via radio advertising, as well as countertop displays andTo unlock help try Upmetrics! posters in the shopping plaza.[YEAR ] Bus ines s Plan C offee Shop22 / 37

Start Writing here.Unique Selling Proposition (USP)The Cooper’s Cup truly stands out from a crowded sea of coffee chains andfranchises. What sets them apart from the competition is primarily its smallercozier size combined with premium coffees served by knowledgeable baristasproviding so much energy and enthusiasm for the products they sell.To unlock help try Upmetrics! Start Writing here.Competitive EdgeThe Cooper’s Cup’s competitive edge, its size, is also its greatest attribute.Because they are small there is no red tape, and they can easily adjustbusiness hours to say accommodate an after-hours book reading sessionwhereas the corporate chains do not provide such accommodation. TheTo unlock help try Upmetrics! Cooper’s Cup will truly cater to its patron's needs.Start Writing here.Marketing Strategy and PositioningThe Cooper’s Cup utilizes a focus strategy on its market. By specificallytargeting three primary segments they can cater specifically to their needs.Senior Market (age 45 )To unlock help try Upmetrics! The Cooper’s Cup will target this market simply by its well selected location.Start Writing here.The Cooper’s Cup is a gourmet coffee lover’s gem. It is truly one of a kindcoffee house offering outstanding gourmet coffees and blends, served byenthusiastic and knowledgeable baristas, in a warm, relaxed environment. It isthe place to go to visit with friends or cozy up in a quiet corner with a goodunlock help try Upmetrics! book either from the library or from one of the patron’s TopersonalE-Books.Positioning Statement[YEAR ] Bus ines s Plan C offee Shop23 / 37

Positioning StatementStart writing here.The Cooper’s Cup primarily utilizes competition based pricing. The cafe doesnot utilize coupons and discounts (other than opening promotion) because theybelieve that the most valuable customer demographic of daily coffeeconsumers is not influenced by discount programs or coupons.To unlock help try Upmetrics! Pricing StrategyStart writing here.Online Advertising - The Cooper’s Cup will advertise regularly on popularsocial media sites, such as Facebook. Compared to traditional printadvertising, this is a cost-effective tactic that will allow them to reach prospectsin a highly targeted way (e.g., based on criteria such as age, gender,To unlock help try Upmetrics! geography, etc.).Promotion and Advertising StrategyStart writing here.The Cooper’s Cup will have a simple website identifying its menu items ofgourmet coffees, smoothies, and pastries, along with the address, map andhours of operation. The website will also have a calendar of any upcomingevents or sponsorships.To unlock help try Upmetrics! The site will also have links to their social media sites – such as Facebook,WebsiteStart writing here.The cafe will also rely on signage and draw to its location. Price Chopperbrings 10,000 shoppers weekly to its location.To unlock help try Upmetrics! Marketing ProgramsStart writing here.Sales Strategy[YEAR ] Bus ines s Plan C offee Shop24 / 37

The Cooper’s Cup will use the following methods to increase sales revenue (asrecommended by Andrew Hetzel on Better Coffee, Better Business):The menu will focus on the most profitable products sold. The cafe willTo unlockhelp try Upmetrics! always draw customer attention to the most profitableproducts.Start Writing here.Sales ForecastThe sales forecast assumes a conservative 5% increase in revenues during Year Two and 10%increase in Year Three. The following chart shows estimated sales over the next three years.Annual Sales Forecast:Annual SalesForecastYear1Year2Year3Products/Service 1Products/Service 2Products/Service 3Total IncomeCost of SalesProducts/Service 1Products/Service 2Products/Service 3Total Cost Of SalesGross MarginThe Cooper’s Cup will run employee sales contests – The baristas are thesalespeople and have a great deal of influence over the customer orderingprocess. All baristas will be required to have sales and customer servicetraining to make each transaction. The sales contests will emphasize highTo unlock help try Upmetrics! margin items and cross-selling.Sales ProgramsStart writing here.[YEAR ] Bus ines s Plan C offee Shop25 / 37

LegalThe Cooper’s Cup is organized as an S-Corporation formed in the state ofArizona.To unlock help try Upmetrics! Start Writing here.MilestonesListed below are the milestones for the Cooper’s Cup:MilestoneDateSecure occupancy Phoenix location[Date]Tenant improvements and build outs[Date]Purchase furniture and décor[Date]Assemble and hire barista team[Date]Advertise on local radio station/mail fliers[Date]Open for Business[Date]Exit StrategyIn the event the store would have to close for business all assets would be soldat auction.To unlock help try Upmetrics! Start Writing here.[YEAR ] Bus ines s Plan C offee Shop26 / 37

7.Organization andManagementOrganizational StructureManagement TeamManagement Team GapsPersonnel Plan[YEAR ] Bus ines s Plan C offee Shop27 / 37

Organizational StructureThe Cooper’s Cup is formed as an S-Corporation wholly owned by John Doe.Management TeamThe Cooper’s Cup will be owned 100% by JohnDoe.Mr. Doe a graduate ofArizona State University, has an undergraduate degree in businessadministration. During high school, he worked as a waiter in a local hospitalcoffee shop that purchased its beans from a local roaster. In addition to beingTo unlock help try Upmetrics! an avid coffee drinker himself, this job allowed him to learnabout the businessStart Writing here.Management Team GapsThe Cooper’s Cup will rely on its POS (Point of Sale) system to generate dailyaccounting and cost activity reports. Mr. Doe will supply these to an outsidebookkeeper for the preparation of annual income taxes.To unlock help try Upmetrics! Start Writing here.Personnel PlanInitially, the cafe will hire 1 manager, 5 baristas, and 2 part-time servers. In Year 2, the cafe plans tohire 1 additional full-time barista.Year1Year2Year3ManagerFull-time baristaFull-time baristaFull-time baristaFull-time baristaPart-time employeePart-time employee[YEAR ] Bus ines s Plan C offee Shop28 / 37

Year1Year2Year3Total Personnelcosts[YEAR ] Bus ines s Plan C offee Shop29 / 37

8.Financial PlanImportant AssumptionsStart-Up CostsSource and Use of FundsProjected Profit and LossBalance Sheet ProjectionsCash Flow Statement[YEAR ] Bus ines s Plan C offee Shop30 / 37

Important AssumptionsThe sales forecast is conservative and assumes a 5% increase in Year 2and a 10% in Year 3.The analysis accounts for economic seasonality – wherein some monthsrevenues peak (such as holidays ) and wanes in slower months.To unlock help try Upmetrics! The analysis assumes the owner will take a much smaller salaryStart Writing here.[YEAR ] Bus ines s Plan C offee Shop31 / 37

Start-Up Costs[Amount]Following are the needed start-up costs associated with the Russet Cup:Startup ExpensesAmountOperating Capital[Amount]Salaries & Wages[Amount]Insurance Premiums[Amount]Beginning Inventory[Amount]Legal and Accounting Fees[Amount]Rent Deposits[Amount]Utility Deposits[Amount]Supplies[Amount]Advertising and Promotions[Amount]Licenses[Amount]Other Initial Costs[Amount]Working Capital (Cash on hands)[Amount]Total Startup Expenses[Total Amount]Startup AssetsAmountReal Estate[Amount]Buildings[Amount]Leasehold improvements[Amount]Equipment[Amount]Furniture and Fixtures[Amount]Vehicles[Amount]Other Fixed Assets[Amount]Total Startup Assets[Total Amount][YEAR ] Bus ines s Plan C offee Shop32 / 37

Source and Use of FundsSource Of FundsAmountOwner's Contribution[Amount]Commercial Loan[Amount]Commercial Mortgage[Amount]Line Of Credit[Amount]Total Source Of Funds[Total Amount]Use Of FundsFixed Assets[Amount]Operating Capital[Amount]Total Use Of Funds[Total Amount][YEAR ] Bus ines s Plan C offee Shop33 / 37

Projected Profit and LossYear1Year2Year3Year4Year5Product/Service-A 151,200 333,396 367,569 405,245 446,783Product/Service B 100,800 222,264 245,046 270,163 297,855 252,000 555,660 612,615 675,408 744,638Cost of goods sold 57,960 122,245 122,523 128,328 134,035Lease 60,000 61,500 63,038 64,613 66,229Marketing 20,000 25,000 25,000 25,000 25,000Salaries 133,890 204,030 224,943 236,190 248,000Other Expenses 3,500 4,000 4,500 5,000 5,500Total Expenses & Costs 271,850 412,775 435,504 454,131 473,263EBITDA( 19,850) 142,885 177,112 221,277 271,374 36,960 36,960 36,960 36,960 36,960( 56,810) 105,925 140,152 184,317 234,414 23,621 20,668 17,716 14,763 11,810PRETAX INCOME( 80,431) 85,257 122,436 169,554 222,604Net Operating Loss( 80,431)( 80,431) 0 0 0Income Tax Expense 0 1,689 42,853 59,344 77,911NET INCOME( 80,431) 83,568 79,583 110,210 144,693Net Profit Margin (%)-15.00%13.00%16.30%19.40%RevenuesTotal RevenuesExpenses & CostsDepreciationEBITInterest[YEAR ] Bus ines s Plan C offee Shop34 / 37

Balance Sheet ProjectionsYear1Year2Year3Year4Year5Cash 16,710 90,188 158,957 258,570 392,389Accounts receivable 0 0 0 0 0Inventory 21,000 23,153 25,526 28,142 31,027 37,710 113,340 184,482 286,712 423,416Fixed assets 246,450 246,450 246,450 246,450 246,450Depreciation 36,960 73,920 110,880 147,840 184,800Net fixed assets 209,490 172,530 135,570 98,610 61,650TOTAL ASSETS 247,200 285,870 320,052 385,322 485,066Debt 317,971 272,546 227,122 181,698 136,273Accounts payable 9,660 10,187 10,210 10,694 11,170 327,631 282,733 237,332 192,391 147,443Share Capital 0 0 0 0 0Retained earnings( 80,431) 3,137 82,720 192,930 337,623Total Equity( 80,431) 3,137 82,720 192,930 337,623TOTAL LIABILITIES & EQUITY 247,200 285,870 320,052 385,322 485,066ASSETSTotal Current AssetsLIABILITIES & EQUITYTotal Liabilities[YEAR ] Bus ines s Plan C offee Shop35 / 37

Cash Flow StatementYear1Year2Year3Year4Year5Net Income (Loss)( 80,431) 83,568 79,583 110,210 144,693Change in working capital( 11,340)( 1,625)( 2,350)( 2,133)( 2,409)Depreciation 36,960 36,960 36,960 36,960 36,960Net Cash Flow from Operations( 54,811) 118,902 114,193 145,037 179,244Investment( 246,450) 0 0 0 0Net Cash Flow from Investments( 246,450) 0 0 0 0Cash from equity 0 0 0 0 0Cash from debt 317,971( 45,424)( 45,424)( 45,424)( 45,424)Net Cash Flow from Financing 317,971( 45,424)( 45,424)( 45,424)( 45,424)Net Cash Flow 16,710 73,478 68,769 99,613 133,819Cash at Beginning of Period 0 16,710 90,188 158,957 258,570Cash at End of Period 16,710 90,188 158,957 258,570 392,389CASH FLOW FROM OPERATIONSCASH FLOW FROM INVESTMENTSCASH FLOW FROM FINANCINGSUMMARY[YEAR ] Bus ines s Plan C offee Shop36 / 37

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The US coffee shop industry includes about 20,000 stores with combined annual revenue of about 10 billion. Major companies include Caribou Coffee, International Coffee & Tea (The Coffee Bean & Tea Leaf), Peet’s Coffee, and Starbucks. The industry is concentrated: the