428000707 Business Plan for Pancakes and Crepes Cafe pdf PDF

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Business Plan for “Pancakes and Crepes Café”

Larisa Morozova

Bachelor’s Thesis Degree Programme in Hotel, Restaurant and Tourism Management 2015

Author Larisa Morozova Degree programme Hotel, Restaurant and Tourism Management Thesis title Business Plan “Pancakes and Crepes Café" Thesis Supervisor Pirjo Nuotio

Number of pages and appendix pages 53+31

Nowadays if one wants to establish a new enterprise, a written business plan is a must to have, as the external economic factors make an entrepreneur evaluate each action he or she takes. Particularly, the development of the project related to the restaurant business, is now needed, as the situation in the industry is constantly changing and actions, calculated in advance, will definitely help the entrepreneur in his activities. The goal of this project-oriented thesis is to create a business plan and justify the feasibility of the establishment of “Pancakes and Crepes Café” in Helsinki. The objectives of this project are the following: 1) Launch of the new café; 2) Development of the job descriptions for the staff of the café; 3) Development of the concept of business based on the location of the café; 4) Description of the services that the business will provide to the consumers; 5) Calculation of the financial side of the project. The approach used is the entrepreneurial one, as the business plan and the thesis are analyzed and created referring to it. We believe that our products will be in high demand, thanks to the location of the premises in the center of Helsinki. Firstly, we expect to have a small amount of customers, due to the new business establishment. But later on, by providing the customers with the high-quality products and by conducting an advertising campaign, we expect to attract more new customers. Our products pancakes and crepes, as well as beverages, will be produced only from the best ingredients, and by high-professional cooks using the modern methods of preparation and equipment. We believe that our product will be a success in the consumer market, as it has a reasonable price for this type of business entities, and most importantly - the high quality of the products and great taste. The business plan has been made based on the literature in entrepreneurship and business planning reviewed. The gained knowledge from the literature review has been implemented in the business plan writing. The business idea has been discussed, the mission established, organizational structure developed, and financial plans were provided. In the end, the business plan documentation can be used as a source for attracting investors. The business plan writing process has proved the viability of the new project and shown that this idea of the new company establishment is going to be profitable.

Keywords Business plan, entrepreneur, entrepreneurship, production process, financial plans

Table of contents 1 Introduction ................................................................................................................... 1 2 Entrepreneurship, its concept and definitions ................................................................ 2 2.1 Qualities of an entrepreneur .................................................................................. 4 2.2 Functions of an entrepreneur ................................................................................ 6 2.3 Characteristics of entrepreneurship....................................................................... 7 3 Business planning ......................................................................................................... 9 3.1 Why do you need a business plan?..................................................................... 10 3.2 Importance of planning........................................................................................ 11 3.3 Benefits of a major business plan........................................................................11 3.4 Business model and its types .............................................................................. 13 4 Business plan structure and development ................................................................... 15 4.1 Company formation package and additional supporting documents .................... 15 4.2 Company information .......................................................................................... 16 4.3 Industry outlook and environmental analysis ....................................................... 17 4.3.1 Industry overview ..................................................................................... 18 4.3.2 Sources of competitor information ............................................................ 18 4.3.3 Analysing competitors .............................................................................. 18 4.4 Business objectives and business idea ............................................................... 19 4.4.1 Define the business.................................................................................. 20 4.4.2 Identify your business objectives .............................................................. 20 4.5 Products and services ......................................................................................... 22 4.6 Service operations and manufacturing ................................................................ 23 4.7 Marketing ............................................................................................................ 25 4.8 Management and manpower............................................................................... 26 4.9 Financial plans .................................................................................................... 27 4.9.1 Cash flow statement................................................................................. 29 4.9.2 Sales forecast .......................................................................................... 29 4.9.3 Income statement.....................................................................................30 5 Business plan for “Pancakes and Crepes Café” .......................................................... 32 5.1 Overview ............................................................................................................. 32 5.2 Limited company formation package and additional supporting documents ........ 32 5.3 Company information .......................................................................................... 33 5.4 Industry outlook and environmental analysis ....................................................... 35 5.5 Business objectives and business idea ............................................................... 37 5.6 Products and services ......................................................................................... 38 5.7 Service operations and manufacturing ................................................................ 40 5.8 Marketing ............................................................................................................ 43

5.9 Management and manpower............................................................................... 45 5.10 Financial plans .................................................................................................... 47 6 Discussion................................................................................................................... 50 References ...................................................................................................................... 51 Appendices ...................................................................................................................... 54 Appendix 1. Memorandum of Association ................................................................... 54 Appendix 2. Start-Up Notification for Limited Liability Companies Y1 .......................... 57 Appendix 3. Personal data form (for authority use)...................................................... 61 Appendix 4. The lease of the business premises......................................................... 63 Appendix 5. Curriculum Vitae Larisa Morozova ........................................................... 65 Appendix 6. The menu example .................................................................................. 69 Appendix 7. Income Statement ................................................................................... 71 Appendix 8. Cash Budget............................................................................................ 73 Appendix 9. Equipment cost calculation ...................................................................... 75 Appendix 10. Portion cost and menu prices calculation............................................... 77 Appendix 11. Food usage and costs calculation (daily/weekly/monthly/yearly) ............ 79 Appendix 12. Appendix to Start-Up Notification ........................................................... 82

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Introduction

The world is constantly changing and developing nowadays. In the era of globalization and numerous opportunities in our fast-paced lives, there is always an excellent platform for creation and implementation of new concepts. The type of people who explore and bring these kinds of concepts and ideas to life are named entrepreneurs. In the recent years, there has been a huge need in evolving the entrepreneurship, as it is of a high importance due to the economic reasons: economy is developing; the new working places appear for the population. The theoretical part of the work will include various points of view on the notion of what an entrepreneurship is and who is an entrepreneur. The special qualities and characteristics needed to become a businessman will be presented. The business plan structure is going to be supported by the solid literature basis, which has been the result of many years’ work of a lot of researchers. The aim of the project is the creation of the business plan for the Pancakes and Crepes Café. The main goal and objective of the business plan is to make a plan, which some entrepreneur could follow in order to establish a new company. The plan will cumulate the most crucial points, which should be taken into account when preparing the business plan. It as well is a written proof for the possible investors and moneylenders, that this kind of business entity has all the potential to be viable and bring profits. The idea for choosing this exact type of the café originates from the author of the business plan’s vision of the future café. The pancakes and crepes are famous all over the world and are considered to be one of the most delicious dishes. Moreover, the preparation of pancakes and crepes has been a national tradition for a long time already in Russia, and being Russian by nationality the future entrepreneur has come up with the idea of the pancakes and crepes style café. The factor of the absence of heavy competition in this particular café type area has been taken into account. In the business plan author’s opinion, the main customers of the newly-established café could be young couples, families with children, women of different age variety, workers who have lunch break, tourists.

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Entrepreneurship, its concept and definitions

The term “entrepreneur” derives from the French word “entreprendre”, which stands for “to launch”. Referring to the business concept, it implies “to set up a business”. (Saroj & Mehndiratta 2009, 1).

Urmila Rai suggests that the notion of entrepreneurship is a convoluted occurrence. In a wider sense, it pertains to the entrepreneur, his or her perception and vision and the accomplishment of the latter. The main participant is the entrepreneur. Urmila Rai defines the entrepreneurship as “a process of action an entrepreneur (person) undertakes to establish his/her enterprise” (Rai & Desai 2008, 1). Whereas, an entrepreneurship is “a cycle of actions to further the interests of the entrepreneur” (Rai & Desai 2008, 1). Rai points out that one of the characteristics of the entrepreneurship is the capability to find an investment possibility and set up a company, thus to further the economy growth. It can be done thanks to the risk-taking and financial contribution, still under the typical for the entrepreneurship uncertainty conditions. An entrepreneur should be able to combine and get the advantage of all the possible factors of production, stock, manpower, natural resources, and as well of impalpable components, like the capability to put together science-based and industrial attainments. (Rai & Desai 2008, 1.)

The idea of entrepreneurship contains an extensive variety of significations. On the one hand, an entrepreneur can be referred to “a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population” (Saroj & Mehndiratta 2009, 1). On the other hand, “anyone who wants to work for himself or herself is considered to be an entrepreneur” (Saroj & Mehndiratta 2009, 1). A common and unique denotation of entrepreneurship does not exist, but eventually some educators and thinkers have invented denotations justified by their personal viewpoint. (Saroj & Mehndiratta 2009, 1.) In the Merriam-Webster Dictionary a notion of entrepreneur is defined as the one who composes, oversees, and expects the dangers and difficulties which may occur when creating a new company. (The Merriam-Webster Dictionary, 2015.)

A.H. Cole in his works discussed: “my own personal experience was that for ten years we ran a research center in entrepreneurial history; for ten years we tried to define the entrepreneur. We never succeeded. Each of us had some notion of it – what he thought was, for his purposes, a useful definition” (Cole 1959, 10).

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Cole, suggested that "Entrepreneurship is a purposeful activity of an individual or a group of associated individuals undertaken to initiate, maintain, distribution or aggrandize profit by production or distribution of economic goods and services" (Cole 1959, 13). Entrpreneurship is an evasive idea. The idea of entrepreneurship has been a matter of disputation, as it is decsribed variously by various authors. One part of them sees it as connected with risk, whereas the other one defines it as an invention and a search of adventure. (Havinal 2009, 106.)

As claimed by McClelland, “practically all theorists agree that entrepreneurship involves, by definition, taking risks of some kind” (McClelland 1961, 210). McClelland assumes, that two main features of an entrepreneur are the following: act and perform work in a more innovative and excellent manner and find the solutions in the conditions of unsteadiness and variability. Different explanations of the term entrepreneurship define two fundamental components of entrepreneurship: innovation and risk-bearing. (McClelland 1961, 210.)

Alternatively, in the opinion of Adam Smith, “the father of political economy, the entrepreneur was a proprietary capitalist, a supplier of capital and at the same time, a manager, intervening between labour and the consumer. Adam Smith also treated him as employer, master, merchant and undertaker, but explicitly identified him with the capitalist”. (Rai & Desai 2008, 3.)

As believed by Schumpeter, the pioneering economic theorist to have designated the entrepreneur a leading part in the economic evolution procedure, entrepreneurship is substantially a creative work. The entrepreneur is considered to be a pioneer who brings something fresh to the economy and therefore, makes changes. Entrepreneurs are regarded as work chiefs and not only capital possessors, but individuals of astuteness, motivation, energy and gift, who never miss their chance. (Rai & Desai 2008, 3.)

To put it differently, entrepreneurship corresponds to an activity of making something new, establishing, arranging, systematizing, taking risks and dealing with economic uncertainty. Higgins gives an explanation to the denomination consequently, "Entrepreneurship is the function of seeing investment and production opportunity, organising an enterprise to undertake a new production process, raising capital, hiring labour, arranging for the supply of raw materials and selecting top managers for the day-today operation of the enterprise." (Rai & Desai 2008, 6.)

Entrepreneurs continually try to find dissimilar, new, uncommon and the one of a kind things to do in order to qualify and fill demand of the consumers. Businessmen do not have to be creators of unique commodities or services, yet shall have the capability of taking advantage and utilizing the systems or items, that have already been created, for

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the purpose of benefit of the company (for instance, to meet up with a constantly altering requirements of consumers). Currently the fruit juice is catered in tins, in place of bottles, as it enables consumers to carry the product conveniently and discard the vessels afterwards. That is why in the concept of entrepreneurship it is necessary to take use of inventions steadily for the purpose of satisfying customers' needs for various products and services. Every time when a new business is set up, the owner takes a risk. It is always perilous to start doing something unique from a scratch. It can consequently result in gaining economic benefits, or functioning at a deficit, which is influenced and determined by many aspects, such as modification of consumers' tastes, growing competition, deficit of raw materials and etc. An individual with an entrepreneurial spirit should be brave in order to incur an associated risk, and thus an entrepreneur is defined as a risk-taker, not a riskescaper. A risk-taking feature makes an entrepreneur continue striving to win, until he or she scores a success. With no hesitation, the Japanese proverb can be employed to an entrepreneur: “Fall seven times, stand up eight”. While the denominations entrepreneur and entrepreneurship are applied as equivalents, still they are diverse conceptually. (Havinal 2009, 106-107.)

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Qualities of an entrepreneur

To get into the idea of what kind of qualities entrepreneurs should possess, we would like to pay attention to the question of what kind of features an entrepreneur should hold. According to Umesh Saroj, an entrepreneur possesses the following utterly essential traits and has the dower of the following qualities: competence to show and take initiative; energetic; self-assurance and self-reliance; inward motivation to win; having leadership traits; ambitious and pushing; comprehensive concentration and knowledge; goaloriented; capability to undertake properly calculated risk; looking for fresh concepts; singularity and uniqueness; craving for constant learning; farsight and prudence; ability to analyze; rational; ingenuity and originality; approval of constructive criticism; communicative and sociable; proper planning. (Saroj & Mehndiratta 2009, 4-7.)

In order to get a better understanding of the entrepreneurial nature described above, let's have a look at such a notion as habitual entrepreneurs. Rita Gunther McGrath and Ian MacMillan in their book “the Entrepreneurial Mindset, strategies for continuously creating opportunity in an age of uncertainty” define them as the ones, who “have made careers out of starting businesses, some working within existing businesses and some in independent start-ups. They have in common finely honed skills in forging opportunity from uncertainty” (McGrath, Gunther & MacMillan 2000, 9-10). They take advantage of and

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make money on uncertainty rather than evading it. They simplify problems, where others can perceive the same things as really complicated. They make use of the knowledge that descends from undertaking calculated risks. They notice when there is a temporary chance to gain something, and realize that it could cost more in case if they are not fast enough to take action, rather than not right. As a result, they will make ...