National Systems of Entrepreneurship Measurement issues

Questions: 1. Craft a brief (1-2 pages) strategy for a business concept that would directly compete with the small business you selected. Explain the rationale for the strategy in detail. 2. Determine if it would make more sense to open the new business you describe or to purchase the existing business you selected. Explain your reasoning. 3. Discuss the most appropriate form of ownership for your new business (assuming your current financial situation). 4. Outline a business plan for your business. Visit https://www.sba.gov for tools and templates. ? Answers: Introduction: The cafe and restaurant sector of USA is occupied by both small as well as large organisations. However demand of customers in this market is still high. It indicates that opening a cafe in USA market will be profitable. The current paper contains discussion on business strategies for running a store in USA market. The paper also contains discussion on business strategies of 12 Corners coffee, a New York City based cafe. However the paper also contains outline of the business plan for running a cafe in New York City. 1. Strategy for business concept to compete with chosen organisation: 12 Corners Coffee is one of the most visited cafes in New York City. Management of the organisation gives importance on providing innovative product to the customers. However the management offers only coffee based products to customers. Customers of the new business can be provided with new deserts, cakes and pastries. The visitors of 12 Corners Coffee do not get opportunities for outdoor seating. In new business, the visitors will also be provided with opportunities for outdoor seating. Rationale for the strategy: The strategy of introducing new deserts and cakes will be effective for attracting children to the cafe. However the opportunity for outdoor seating will also be effective to attract all types of visitors. 2. Opening new business/ purchasing existing business: As the cafe and restaurant industry of New York City is highly profitable, competition among organisations is also high (Bosma, 2013). The industry comprises of both small cafes as well as large multinational organisations. Starting a new business in this industry may not be effective to earn high profit as availability of substitute products is also high (Bosma, 2013). 12 corners coffee is one of the most popular cafes in New York City. Acquiring an organisation will reduce the cost of setting new infrastructure (Chwolka Raith, 2012). However management of the new organisation will be able to utilize infrastructure of acquired business (Decker, Haltiwanger, Jarmin Miranda, 2014). Form of ownership: Analysis on strategy of new business indicates that the management is giving importance on acquiring 12 Corners Coffee. However partnership with existing owners of the organisation will be developed to run the cafe. As level of competition in market is very high, retaining customers will be difficult. Involving several partners with the business will enable the management to reduce risk (Hechavarria, Renko Matthews, 2011). Apart from this development of partnership will also be effective to lower the start up costs (Lind, 2012).It is evident that development of partnership will be more suitable to run the business. Outlining Business plan: Cover page: Company Name: 12 Corners Coffee Name of Owner: City: New York City State: New York Zip code: 10013 Executive summary: Company: 12 Corners Coffees Products and services: Coffee, Espresso, Latte, Cappuccino and other drinks Audience and target customer: Young people, working professionals, Teen agers, family Future of business and industry: Although competition is very high in small cafe market in New York City, demand for such cafes is also high (cs, Autio Szerb, 2014). It indicates that running a cafe in New York City will be profitable. Company Description: Key employees of business: CEO (I), store managers, cooks Mission statement: We offer customers with extra ordinary cafe experience along with superior products Details about product and services: Currently we offer coffee, espresso, latte, ice-coffee and other drink to customers. In future we will offer cakes and pastries to other customers. Qualities for success: We offer fresh products to customers. However we also give importance on offering innovative products to visitors. Market research: Description of industry: The cafe industry of New York City is highly competitive. Several small coffee shops such as Abraco , Blue Bottle Coffee, Cafe Grumpy along with large multinational cafe chains such as Starbucks (Mariotti Glackin, 2013, Romn, Congregado Milln, 2013). Description of larger customer: At 12 corners coffee, mainly teen agers and young adults are focused. However the families and children will also be given importance. Identification of competitors: The competitors of 12 Corners Coffee are both small firms as well as large multinationals. Competitors of the Cafe include Abraco, Blue Bottle Coffee, Cafe Grumpy, Joe the Art of Coffee etc. However the organisation also needs to compete with large multinational organisations such as Starbucks. Competitive advantages: At 12 Corners Coffee, the customers are offered with fresh and innovative products. Along with traditional coffee, espresso and ice coffee, the customers of 12 Corners Coffee is also offered with innovative products such as Ice Pumpkin Pie Latte. Offering customers with innovative products of high quality enables 12 Corners Coffee to remain competitive in market. .3. Legal requirements impacting company and business: Product / Service line: Detailed description of product: At 12 corners coffee currently products made from coffee such as latte, cappuccino, espresso and ice coffee are sold. These products are manufactured at the cafe. In future customers of the cafe will also be provided with frozen desserts, cakes and pastries. The products which are going to be included in menu of 12 corners coffee will be prepared by chefs of the cafe. Raw materials required for making the products will be supplied by local suppliers. Pricing structure: Currently price of the products are kept low so that sale of the product among target customers increase. Meeting needs of customers: At 12 Corners Coffee, the management ensures that customers are being provided with relaxing environment. The management will also ensure that the customers are getting fresh and high quality products. Benefits of product and service: The products offered by 12 Corners Coffee is available at lower prices. However the cafe also offers innovative drinks to customers. The customers are benefitted as they get fresh and tasty drinks at lower costs. Competitive advantage: The cafe industry of New York City is mainly occupied by several small and large cafes (Renko, Kroeck Bullough, 2011). The management of 12 Corners coffee gives importance on introduction of new products. It enables the organisation to remain competitive in market. Current development stage: The organisation is currently operating in cafe industry of New York City. However the new products are launched on experimental basis. If these products are accepted by customers, cafe management will introduce these products on larger scale. Intellectual property rights: As the cafe industry of New York City is highly competitive, management of 12 Corners Coffee will give importance on protecting their unique recipes such as Ice pumpkin pie latte. Research and development activities: The management will give importance on introducing new items in menu. The research and development activities will be based on making new drinks from coffee. Marketing and sales: Plans to grow: Although currently only coffee based products are available at 12 Corners coffee, later the management will introduce new desserts. Currently only two stores are available in New York City. Number of cafes will also be increased later. Size of the cafe will be increased so that sitting arrangements can be done outside of the restaurant also. Communication strategy with customers: Financial projection: The financial projection focuses on the companys financial position. This can be done by analyzing the financial statements, which involve the balance sheet statements, income statements and cash flow statements. It helps in explaining the financial stability of the company, which can be measured, from its profit position, capital structure, and asset liability proportion and cash availability. Profit and loss analysis: Income Statement (All amounts in thousands) Particulars Year 1 $ Year 2 $ Year 3 $ Sales $ 12,000 $ 16,000 $ 20,000 CGS $ 5,000 $ 7,000 $ 8,000 G P $ 7,000 $ 9,000 $ 12,000 Operating Expenses $ 4,200 $ 5,300 $ 6,400 Salary Expenses $ 600 $ 800 $ 900 Office Expenses $ 600 $ 700 $ 800 Maintenance Expenses $ 500 $ 700 $ 800 Rent Expenses $ 700 $ 900 $ 1,200 Payroll Expenses $ 500 $ 600 $ 700 Accounting Expenses $ 600 $ 700 $ 800 Legal Expenses $ 400 $ 500 $ 600 Telephone Charges $ 300 $ 400 $ 600 Operating Income/ EBIDT $ 2,800 $ 3,700 $ 5,600 Depreciation and Amortization $ 600 $ 800 $ 1,000 EBIT $ 2,200 $ 2,900 $ 4,600 Interest $ 300 $ 400 $ 500 EBT $ 1,900 $ 2,500 $ 4,100 Tax $ 200 $ 500 $ 800 EAT $ 1,700 $ 2,000 $ 3,300 CGS is the cost of goods sold. GP is the gross profit. EBIDT is earnings before interest, depreciation and tax. EBIT is earnings before interest and tax. EBT is earnings before tax. EAT or PAT is earnings after tax or profit after tax. PAT is the net profit. Cash flow projection: Cash flow (All amounts in thousands) Particulars Pre Startup EST Year 1 Year 2 Year 3 Total Item EST Cash on hand $ 4,200 $ 4,800 $ 4,850 $ 4,350 $ 3,300 Cash Receipts Cash Sales $ 2,300 $ 2,400 $ 2,500 $ 2,600 $ 2,700 Cash Collections $ 1,800 $ 1,900 $ 2,000 $ 2,100 $ 2,200 Loan $ 1,700 $ 1,800 $ 1,900 $ 2,000 $ 2,100 Total Cash Receipts $ 5,800 $ 6,100 $ 6,400 $ 6,700 $ 7,000 Total Cash Available $ 10,000 $ 10,900 $ 11,250 $ 11,050 $ 10,300 Cash Paid Out Purchases $ 500 $ 550 $ 600 $ 650 $ 700 Gross Wages $ 200 $ 250 $ 300 $ 350 $ 400 Supplies $ 300 $ 350 $ 400 $ 450 $ 500 Maintenance $ 500 $ 550 $ 600 $ 650 $ 700 Advertising $ 400 $ 450 $ 500 $ 550 $ 600 Legal Accounting $ 400 $ 450 $ 500 $ 550 $ 600 Insurance $ 300 $ 350 $ 400 $ 450 $ 500 Tax $ 200 $ 250 $ 300 $ 350 $ 400 Interest $ 300 $ 350 $ 400 $ 450 $ 500 Rent $ 200 $ 250 $ 300 $ 350 $ 400 Telephone $ 200 $ 250 $ 300 $ 350 $ 400 Subtotal $ 3,500 $ 4,050 $ 4,600 $ 5,150 $ 5,700 Loan payment $ 700 $ 800 $ 900 $ 1,000 $ 1,100 Other Costs (Startup) $ 400 $ 500 $ 600 $ 700 $ 800 Capital Purchase $ 600 $ 700 $ 800 $ 900 $ 1,000 Total Cash Paid Out $ 5,200 $ 6,050 $ 6,900 $ 7,750 $ 8,600 End cash Value $ 4,800 $ 4,850 $ 4,350 $ 3,300 $ 1,700 Projected balance sheet Balance Sheet (All amounts in thousands) Particulars Start Date Value End Date Value Cash in Bank $ 4,200.00 $ 3,300.00 Assets Inventory $ 500.00 $ 400.00 Deposits $ 800.00 $ 700.00 Accounts Receivables $ 800.00 $ 500.00 Total Current Assets $ 2,100.00 $ 1,600.00 Machines Equipment $ 2,000.00 $ 1,500.00 Land Buildings $ 2,000.00 $ 1,700.00 Total Fixed Assets $ 4,000.00 $ 3,200.00 Total Assets $ 6,100.00 $ 4,800.00 Liabilities Equity Interest Payable $ 300.00 $ 200.00 Current Debt $ 800.00 $ 600.00 Accounts Payable $ 600.00 $ 400.00 Current Liabilities $ 1,700.00 $ 1,200.00 Bank Loans $ 1,000.00 $ 800.00 Long term Borrowings $ 800.00 $ 700.00 Other Debts $ 800.00 $ 600.00 Fixed Liabilities $ 2,600.00 $ 2,100.00 Total Liabilities $ 4,300.00 $ 3,300.00 Equity $ 1,800.00 $ 1,500.00 4. Breakeven analysis: Particulars Fixed Costs Variable Costs % CGS $ 2,500 50% Raw Materials $ 500 20% Direct Labor $ 300 30% Salary Expenses $ 300 50% Office Expenses $ 150 75% Maintenance Expenses $ 150 70% Rent Expenses $ 280 60% Payroll Expenses $ 100 80% Accounting Expenses $ 300 50% Legal Expenses $ 200 50% Telephone Charges $ 180 40% References 12cornerscoffee.com,. (2015). 12 CORNERS COFFEE. Retrieved 8 July 2015, from https://www.12cornerscoffee.com/location.html  cs, Z., Autio, E., Szerb, L. (2014). National Systems of Entrepreneurship: Measurement issues and policy implications. Research Policy, 43(3), 476-494. doi:10.1016/j.respol.2013.08.016 Bosma, N. (2013). The Global Entrepreneurship Monitor (GEM) and Its Impact on Entrepreneurship Research. FNT In Entrepreneurship, 9(2), 143-248. doi:10.1561/0300000033 Chwolka, A., Raith, M. (2012). The value of business planning before start-up A decision-theoretical perspective. 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