Tea Room Business Plan
Jasmine Teahouse is a new tea room in Simsbury, Connecticut. It is managed by owners Earl and Lady Grey. Earl Grey has five years of experience managing a successful boutique coffeehouse in Maryland. Lady Grey has 3 years of herbalist training and 4 years of experience as a teatender in Boston. She is also training to be a nutritionist.
Jasmine Teahouse offers a full range of teas, pastries, premium chocolates, tea accessories, and loose teas. Earl has been learning brewing techniques from Lady Grey for the last four months, and all our teatenders will be trained in the proper storage, brewing, and serving of each tea.
The American tea market is growing rapidly, with the number of tea rooms rising about 15% to 1,500 shops. Tea sales have increased 165% in the last fifteen years. This increase can be partly attributed to the popularity of gourmet coffee shops like Starbucks and Seattle’s Best. Starbucks estimates that 7% of its annual sales come from tea.
In Simsbury, our potential clientele includes local residents and tourists (about 100,000 per year). We expect to attract committed tea drinkers who will recognize the quality of our products and services. For those not familiar with premium teas, we will market our atmosphere, prestige-value, and wide array of potential gifts. Sales to tourists will depend on a highly-visible location, association with the town’s charm, and promotional efforts.
We have no direct competitors in our area. Our upscale approach sets us apart from Dunkin’ Donuts and the local cafe, and the nearest Starbucks is 5 miles away. Simsbury’s growing affluence and gentrification work in our favor.
Our well-researched sales forecasts project sales of over $190,000 in the first year, with continued moderate increases. We project a net profit of over $13,000 in the first year.
The owners are investing $10,330 into the business. Jasmine Teahouse is seeking a 6-year loan of $53,633 to fund startup costs.
1.1 Mission
Our goal is to provide the finest premium teas and chocolates to Simsbury residents in a relaxed and fun atmosphere.
1.2 Objectives
- To operate a successful tea and chocolate store in Simsbury, employing one to two employees in the first year.
- To obtain a minimum of 200 regular customers in the Simsbury market in the first year.
- Achieve first year sales of $190,000.
- Maintain an average gross margin of 58 percent.
- To produce a reasonable net profit by the end of the third year.
1.3 Keys to Success
- Experienced Owners/Managers.
- Product Quality.
- Excellent Customer Service.
- No direct competition within 20 miles.
- Enough working capital to survive the first year.
- Broad cross-seasonal offerings.
Jasmine Teahouse is a start-up business located in Simsbury, CT. Our main focus is the variety of loose tea we offer, including black, green, herbal, and flavored teas. We serve both hot and iced tea and sell loose tea by weight. Additionally, we sell premium chocolates, gift baskets, and pastries to accompany tea orders. While we don’t aim to compete with coffee giants like Starbucks, we do brew one type of coffee daily as a gesture to our customers. Simsbury, incorporated in 1670, is one of Connecticut’s oldest communities. The population has grown from 5,000 in 1950 to over 23,000 today. Simsbury is committed to preserving its rural environment and historic charm, making it a popular tourist destination. The town offers four state parks, wildlife habitats, and Talcott Mountain, a great destination for hiking. Visitors come year-round for outdoor activities, historic sightseeing, and shopping. The Talcott Mountain Music Festival in the summer and antiques and craft fairs in the autumn attract crowds from Hartford, Boston, and New York City. Winter brings cross-country skiers, historic downtown tours, and ice skating, while spring offers the Simsbury Light Opera season and the River Run Road Race. Jasmine Teahouse is a Limited Liability Company in Connecticut, owned by managers Earl Grey and Lady Grey, each controlling 50% of the business. Earl Grey has five years of experience managing a boutique coffeehouse in a similar location in Maryland, and Lady Grey has three years of herbalist training and four years of experience as a teatender in Boston. She is currently training to be a nutritionist. When it comes to start-up requirements, equipment and inventory make up 75% of the budget, while leasehold improvements and general expenses account for the remaining 25%. The owners are investing $10,330 in the business and are seeking a long-term loan of $53,633 with a 9.25% interest rate, which they plan to repay in full within six years.
Jasmine Teahouse specializes in premium teas, fine chocolates, and gift baskets. We offer a full teahouse experience with an assortment of loose teas, premium chocolates, tea accessories, and gift baskets suitable as souvenirs and gifts. Our goal is to be a destination store for visitors and a resource for locals seeking unique gifts, new experiences, and tea knowledge.
We offer 52 kinds of tea, including black teas like Assam, Ceylon, Darjeeling, and Keemun, blends like Chai and Earl Grey, and our own creations like "New London Garden Party." We also have a variety of green teas and herbal infusions. All our teas can be enjoyed hot, iced, or purchased loose for home brewing.
To complement our beverages, we offer freshly-baked pastries from a local bakery. These items help create the feeling of a real teahouse without requiring additional kitchen equipment. Market research suggests that up to 2/3 of our sit-down customers will order a pastry with their tea, so offering these treats is important.
We also sell premium chocolates such as Godiva, Scharffen Berger, and Garrison, as well as environmentally-friendly options like Dagoba and vegan chocolates. Our selection includes truffles, dipped chocolates, loose bars, and chocolate gift baskets.
While we focus on tea, we also brew one kind of coffee daily for those accompanying tea lovers.
Our store offers specialty teapots, teaballs, tea tins, books, and various small, seasonal, non-food, tea-related items as part of our tea paraphernalia.
We have a selection of pre-made gift baskets and can create custom baskets for any occasion. Our tea tins come in various sizes and designs, and we always have at least five colors of baskets and liners in stock.
The American tea market is growing rapidly, with tea sales increasing 165% since 1990. Additionally, the number of tea rooms offering sit-down service has risen by about 15%. American consumers are turning to tea as a more unique and affordable luxury, thanks to studies highlighting its health benefits and increasing familiarity with Asian and South Asian cuisine.
Simsbury, the location of our teahouse, is a rural town that is gradually adopting sophisticated tastes and priorities. The community’s affluence is growing, leading to increased interest in specialty establishments like ours.
According to market research, the premium chocolate market in the United States is expected to grow from $408 million per year in 2002 to $1.2 billion per year by 2005. Europeans consume twice as much chocolate as Americans, indicating potential for growth in the U.S. market.
Our target market consists of approximately 10,000 local residents between the ages of 25 and 60. Additionally, Simsbury attracts around 100,000 tourists annually, providing a substantial customer base for our business.
All members of our target market have moderate to sizable disposable income and a preference for quality products.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Local Residents | 5% | 10,000 | 10,500 | 11,025 | 11,576 | 12,155 | 5.00% |
Tourists | 3% | 100,000 | 103,000 | 106,090 | 109,273 | 112,551 | 3.00% |
Total | 3.19% | 110,000 | 113,500 | 117,115 | 120,849 | 124,706 | 3.19% |
4.2 Target Market Segment Strategy
Jasmine Teahouse will provide the local upper-middle-class community with a place to socialize, indulge in fine teas and pastries, and find unique chocolates and tea for gifts. For tourists, Jasmine Teahouse will be a destination stop in their tour of the town, whether as a break from shopping, a warm-up visit after skiing, or a place to buy unique souvenirs of their holiday.
Customers will gladly pay a premium for our products due to the high quality, great taste, and sense of prestige they offer. In fact, higher prices may actually encourage higher sales as these customers believe that higher prices equal higher quality. They want to buy "only the best," regardless of whether their palate is educated enough to appreciate the subtle differences.
4.3 Service Business Analysis
The tea market is relatively new in rural and suburban areas like Simsbury. Currently, locals and sophisticated tourists looking for coffee or tea can go to Dunkin Donuts, Peaberry’s cafe, or travel up to five miles to reach the nearest Starbucks. None of these options cater to tea drinkers or offer the convenience and upscale feeling available at Jasmine Teahouse.
Teahouses have done well in urban areas like Boston and New York, as well as in smaller tourist areas like the Berkshires. In areas like Simsbury, teahouses’ success relies on word of mouth, visibility, and year-round tourist appeal. We aim to capitalize on these factors to build a strong customer base.
- Most people do not consume tea as a morning ritual like they do with coffee.
- Tea is consumed in the afternoon and before bed.
- People drink tea mainly during cold weather, making the business seasonal.
- Tea is associated with an image of old ladies, china cups, and doilies.
- Tea is growing in popularity and more people are drinking it in the mornings as a substitute for coffee.
- Tea is being consumed throughout the day due to its milder caffeine effect.
- Today’s tea drinkers do not limit their purchases to one season but drink tea all year long.
- Tea has become the drink of choice for today’s baby boomer and has a more active, youthful, and healthy image.
Premium Chocolate Sales
In the Hartford area, the premium and near-premium chocolate market is made up of three major competitors: Godiva, Munson’s, and Lindt. Lindt is expanding in the market, while Godiva’s sales are expected to be stronger in 2004. According to chocolate statistics, Americans purchase 3.1 billion pounds of chocolate a year, translating into $13.7 billion dollars. The outlets for chocolate fall into three categories: premium, boxed chocolates, and mass market boxed chocolates. Jasmine Teahouse offers only premium chocolates.
- Valentine’s Day is a significant holiday for chocolate sales, with Americans spending $1.06 billion on candy.
- American men over the age of 50 prefer receiving chocolate over flowers on Valentine’s Day.
4.3.1 Competition and Buying Patterns
In the gourmet teahouse industry, competition depends on the quality of teas, knowledgeable teatenders, and cultivation of a loyal customer base. Consumers used to low-quality tea bags are often amazed at the range of tastes, textures, and fragrances of real, high-quality tea. Our challenge is to attract customers to our store in the first place.
Our potential customers vary in their knowledge of tea and their desire for different experiences and products.
Tea Drinkers
Tea drinkers are looking for a pleasant, relaxing place to indulge in tea, share it with friends, and learn more about tea. Committed tea drinkers value quality over price or convenience and seek out the freshest teas in the area. Our challenge with these customers is to spread awareness of our store and hold events to showcase our quality.
Local Socializers
The middle and upper-middle-class women of Simsbury and surrounding towns currently have no place to be spoiled at a moderate price outside of a full restaurant. Our challenge with socializers is to create a buzz that we are exclusive, pleasant, and high-quality without generating overcrowding.
Comestible Gift Buyers
Currently, upscale comestibles suitable for gifts in the Simsbury area are limited. We will offer residents a convenient, attractive, and satisfying gift-buying experience at a reasonable price, with a bit of prestige.
Tourists
Tourists have a sophisticated urban palate and seek high-quality food, beverages, gifts, and service. Our challenge with tourists is to be visible without losing our local charm. Once they try our teahouse, they will want to return.
Other Potential Customers:
- New Tea Drinkers
- Health-Food Aficionados
Strategy and Implementation Summary
We will combine print advertising, special events, and targeted promotions to introduce Simsbury’s residents and tourists to Jasmine Teahouse and premium teas. Repeat sales depend on high-quality products and service. Our teatenders will be trained in the proper storage, brewing, and serving of our teas.
We offer our teas and chocolates at a price premium to discourage customers seeking cheap, low-quality goods. This enhances the feeling of prestige when patronizing our teahouse and ensures that customers have similar expectations of service and quality. The status and sophistication associated with our brand will become valuable in themselves.
5.1 Competitive Edge
Key Competitive Strengths
- Earl Grey’s experience managing a successful boutique coffeehouse in a similar locale
- Lady Grey’s four years of experience as a teatender and training as an herbalist
- We are the only full-scale teahouse within 20 miles
- We have competitive distribution contracts with high-end tea growers
- We are the only retailer offering a wide array of premium chocolates in the area
- Our interior design gives Jasmine Teahouse an intimate, cozy, comfortable, and chic feeling
- We are committed to providing high-quality products and services
Our primary weakness is that we are a new business competing against established chains. To build sales, we must not only find new customers but also take customers away from existing stores. We can accomplish this by offering a superior selection of teas and chocolates and focusing on high-quality service and delivery.
5.2 Marketing Strategy
Our marketing strategy needs to make potential customers aware of Jasmine Teahouse’s opening and location, as well as educate them about what a teahouse is and why it is wonderful. Our highly visible location in the historic shopping district of downtown Simsbury will encourage walk-in traffic.
The marketing budget will not exceed 3% of our gross annual sales.
Tea Drinkers
Appeal to their gourmet palates:
- Advertisements in local papers
- Flyers in gourmet grocery stores and coffeehouses
- Ads in local magazines
- Review by the food writer for the Hartford Courant
Socializers
Appeal to their sense of prestige and good taste:
- Advertise through local churches and women’s organizations
- Monthly "Tea Tasting" party with a different theme each month
- Coupons in local papers for "free friends" pots
- Flyers in local upscale boutiques, salons, and restaurants
Gift Buyers
Focus on our wide gourmet selection and convenient location:
- Ads in all local papers
- Press releases to local papers
- Walk-ins: Increase the visibility of our store to encourage visits from tourists.
- Destination Visitors: Advertise in event programs and provide brochures in local sites
- Alliances with local Inns: Provide coupons and brochures to guests at local inns and bed & breakfasts
5.3 Sales Strategy
Because Jasmine Teahouse is a new entity, we must prove our company’s worth to upscale tea and chocolate buyers to earn their respect and business. Repeat business depends on consistently high-quality products and service. Every customer, whether on their first visit or their hundredth, will be treated graciously and with respect.
Part of our mission is to educate our customers about tea and tea brewing, but this must be done respectfully. Our knowledge is a resource and must never be used to make a customer feel uncomfortable or ignorant.
Tea Profiles
In addition to our menu, we have developed a "Tea Profile" card for new tea drinkers or customers looking to expand their tea experience. These cards include questions about taste preferences to help our teatenders guide customers to teas they will enjoy.
"Tea Tasting" Plates
Every week, we will offer a different selection of teas as a "tasting." These plates will allow customers to try new teas without committing to a full pot.
Special Events
In addition to monthly tea tasting parties, Jasmine Teahouse will offer the option of reserving the entire teahouse for a party or special event.
5.3.1 Sales Forecast
The following table and chart highlight our sales forecast. We expect sales to start conservatively and increase during holidays like Christmas, Valentine’s Day, Easter, and Mother’s Day.
Jasmine Teahouse expects average monthly sales of just over $16,000 in the first year. In the second and third years, we anticipate approximately 10% annual sales growth as we gain a larger market share and expand beyond Simsbury.
- Hot Tea: We offer small and large pots of tea for sit-down customers, as well as to-go cups
- Iced Tea: Available in different sizes
- Pastries: A range of prices depending on the item
- Chocolates: Prices vary based on the type of chocolate
- Gift Baskets: Prices start at $15 with an average sale of $25
Review:
Sales Forecast:
Year 1 Year 2 Year 3
Sales
Hot Teas $52,400 $62,000 $66,000
Iced Teas $22,400 $24,000 $25,500
Pastries $14,400 $15,000 $16,000
Chocolate $88,000 $92,000 $100,000
Tea Paraphernalia $3,000 $3,200 $3,400
Gift Baskets $3,895 $4,000 $4,200
Loose Teas $10,150 $10,920 $13,104
Total Sales $194,245 $211,120 $228,204
Direct Cost of Sales:
Year 1 Year 2 Year 3
Hot Teas $15,720 $18,600 $18,480
Iced Teas $7,168 $7,680 $7,650
Pastries $9,504 $9,900 $10,240
Chocolate $39,600 $41,400 $43,000
Tea Paraphernalia $1,500 $1,600 $1,666
Gift Baskets $1,558 $1,600 $1,596
Loose Teas $4,060 $4,368 $4,980
Subtotal Direct Cost of Sales $79,110 $85,148 $87,612
Management Summary:
We are a small company owned and operated by Earl and Lady Grey, husband and wife, as a Limited Liability Corporation. Lady is the designer and marketer of the products, and Earl manages the store. Both partners have extensive experience in this and related industries and will leverage their knowledge of tea purchasing, brewing, marketing, and running small upscale beverage business to create success for Jasmine Teahouse.
Our management style reflects the participation of the owners. We encourage all employees to learn as much as possible about all aspects of the business. The company respects its community of co-workers and treats all workers well. As a family business, we understand that our teatenders, cleaners, and other help are not just workers, but individuals with their own lives, personalities, and hopes. In such a small town, many customers will know our part-time teatenders personally. Thus, it is important to us that they enjoy their jobs and feel well-rewarded.
Personnel Plan:
Personnel Plan
Year 1 Year 2 Year 3
Earl Grey $24,000 $30,000 $35,000
Lady Grey $6,000 $12,000 $14,000
Part-time tea-tenders $13,600 $14,000 $14,500
Total People 4 4 4
Total Payroll $43,600 $56,000 $63,500
Our Financial Plan is based on sound research into similar businesses in similar communities and cost estimates obtained for equipment, rent, and other operating expenses. As an owner-operated business, we have some leeway in adjusting our own compensation if sales are low in a given month, but our forecasts are conservative. Our top financial priorities in the first three years are repaying our long-term loan, paying our employees fairly, covering our expenses on time, and generating a modest profit.
We are opening this shop because we love tea, tea drinkers, and we will enjoy all the hard work we must do to maintain the business. We do not expect to get rich doing this, but we do anticipate steadily increasing profits and net worth as Jasmine Teahouse becomes well-known and establishes a loyal clientele.
Sales growth will be aggressive the first 18 months as we sharpen our merchandise assortment, size scales, and stock levels to better meet our customer’s requirements. We anticipate a sales increase of roughly 10% during our second year of operation.
Marketing expenses are budgeted at approximately 3% of total sales.
We will invest residual profits into reducing debt.
Company expansion, while not a necessity, will be an option if sales projections are met and/or exceeded. The location we have chosen contains an additional area we can annex for extra seating if and when it becomes necessary, for a small additional rental charge.
Important Assumptions:
Tax and interest rate assumptions for this plan are on the following table. In addition, there are some non-financial assumptions guiding our forecasts. We assume:
– No other teahouses opening in Simsbury in the next year. (A safe assumption)
– A continued gradual increase in the population and socio-economic class of the Simsbury area.
– Continued tourist interest in our area.
– Increasing consumer interest in tea and other “health” foods.
– That premium chocolates will continue to symbolize luxury and romance as gift choices.
General Assumptions:
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 9.50% 9.50% 9.50%
Long-term Interest Rate 9.25% 9.25% 9.25%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis:
Our break-even analysis is based on our cost and price structure for the first year. As we grow, the fixed costs will grow in proportion to the number of employees. We should surpass our Break-even point early on.
Break-even Analysis
Monthly Revenue Break-even: $11,612
Assumptions:
– Average Percent Variable Cost: 41%
– Estimated Monthly Fixed Cost: $6,883
7.3 Projected Profit and Loss
The table below shows our profit and loss projections for the next three years. We will become profitable early in the first year, with net profits continuing to rise as sales increase. Sales and Marketing expenses include the costs of advertisements and promotions such as monthly tastings and 1/2 off coupons for tourists. Depreciation reflects straight-line depreciation of our long-term assets over 10 years.
Pro Forma Profit and Loss
Year 1 | Year 2 | Year 3 | |
Sales | $194,245 | $211,120 | $228,204 |
Direct Cost of Sales | $79,110 | $85,148 | $87,612 |
Other Costs of Goods | $0 | $0 | $0 |
Total Cost of Sales | $79,110 | $85,148 | $87,612 |
Gross Margin | $115,135 | $125,972 | $140,592 |
Gross Margin % | 59.27% | 59.67% | 61.61% |
Expenses | |||
Payroll | $43,600 | $56,000 | $63,500 |
Marketing/Promotion | $5,400 | $6,000 | $6,000 |
Depreciation | $1,380 | $1,380 | $1,380 |
Rent | $18,000 | $19,000 | $20,000 |
Utilities | $8,010 | $8,200 | $8,600 |
Monthly disposable supplies | $1,200 | $1,200 | $1,200 |
Insurance | $5,000 | $5,000 | $5,000 |
Payroll Taxes | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $82,590 | $96,780 | $105,680 |
Profit Before Interest and Taxes | $32,545 | $29,192 | $34,912 |
EBITDA | $33,925 | $30,572 | $36,292 |
Interest Expense | $4,513 | $3,721 | $2,894 |
Taxes Incurred | $8,410 | $7,641 | $9,606 |
Net Profit | $19,622 | $17,830 | $22,413 |
Net Profit/Sales | 10.10% | 8.45% | 9.82% |
Projected Cash Flow
Our projected cash flow is outlined in the following chart and table. The table shows our planned loan principal repayment. We will be responsible for collecting and repaying sales tax at the 6% rate charged by Connecticut.
Pro Forma Cash Flow
Cash Received
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance
Projected Balance Sheet
Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Appendix
Sales Forecast
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Hot Teas
$1,500
$2,500
$3,000
$3,000
$3,200
$4,000
$6,000
$6,200
$6,500
$6,000
$5,500
$5,000
Iced Teas
$2,500
$3,000
$3,800
$3,400
$2,000
$1,400
$800
$600
$500
$900
$1,500
$2,000
Pastries
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
$1,200
Chocolate
$3,000
$5,000
$8,000
$7,000
$7,000
$7,000
$7,000
$7,000
$7,000
$14,000
$7,000
$9,000
Tea Paraphernalia
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
Gift Baskets
$200
$220
$225
$250
$300
$300
$800
$200
$600
$200
$400
$200
Loose Teas
$600
$500
$500
$600
$700
$950
$1,100
$1,000
$1,000
$1,100
$1,000
$1,100
Total Sales
Direct Cost of Sales
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Hot Teas
$450
$750
$900
$900
$960
$1,200
$1,800
$1,860
$1,950
$1,800
$1,650
$1,500
Iced Teas
$800
$960
$1,216
$1,088
$640
$448
$256
$192
$160
$288
$480
$640
Pastries
$792
$792
$792
$792
$792
$792
$792
$792
$792
$792
$792
$792
Chocolate
$1,350
$2,250
$3,600
$3,150
$3,150
$3,150
$3,150
$3,150
$6,300
$3,150
$4,050
$3,150
Tea Paraphernalia
$125
$125
$125
$125
$125
$125
$125
$125
$125
$125
$125
$125
Gift Baskets
$80
$88
$90
$100
$120
$120
$320
$80
$240
$80
$160
$80
Loose Teas
$240
$200
$200
$240
$280
$380
$440
$400
$400
$440
$400
$440
Subtotal Direct Cost of Sales
TABLE: Personnel Plan
Earl Grey | 0% | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000
Lady Grey | 0% | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500
Part-time tea-tenders | 0% | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,400 | $1,400 | $1,000 | $1,400 | $1,000 | $1,400 | $1,000
Total People | | 3 | 3 | 3 | 3 | 3 | 4 | 4 | 3 | 4 | 3 | 4 | 4
Total Payroll | | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,900 | $3,900 | $3,500 | $3,900 | $3,500 | $3,900 | $3,500
TABLE: General Assumptions
Plan Month | | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12
Current Interest Rate | | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50% | 9.50%
Long-term Interest Rate | | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25% | 9.25%
Tax Rate | | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00%
Other | | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
TABLE: Pro Forma Profit and Loss
Sales | | $9,250 | $12,670 | $16,975 | $15,700 | $14,650 | $15,100 | $17,150 | $16,450 | $24,050 | $16,650 | $18,850 | $16,750
Direct Cost of Sales | | $3,837 | $5,165 | $6,923 | $6,395 | $6,067 | $6,215 | $6,883 | $6,599 | $9,967 | $6,675 | $7,657 | $6,727
Other Costs of Goods | | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0
Total Cost of Sales | | $3,837 | $5,165 | $6,923 | $6,395 | $6,067 | $6,215 | $6,883 | $6,599 | $9,967 | $6,675 | $7,657 | $6,727
Gross Margin | | $5,413 | $7,505 | $10,052 | $9,305 | $8,583 | $8,885 | $10,267 | $9,851 | $14,083 | $9,975 | $11,193 | $10,023
Gross Margin % | | 58.52% | 59.23% | 59.22% | 59.27% | 58.59% | 58.84% | 59.87% | 59.88% | 58.56% | 59.91% | 59.38% | 59.84%
Expenses | | | | | | | | | | | | |
Payroll | | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,900 | $3,900 | $3,500 | $3,900 | $3,500 | $3,900 | $3,500
Marketing/Promotion | | $1,500 | $300 | $300 | $300 | $300 | $300 | $600 | $300 | $600 | $300 | $300 | $300
Depreciation | | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115
Rent | | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500
Utilities | | $621 | $621 | $621 | $621 | $621 | $621 | $621 | $621 | $621 | $621 | $900 | $900
Monthly disposable supplies | | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100
Insurance | | $417 | $417 | $417 | $417 | $417 | $417 | $417 | $417 | $417 | $417 | $417 | $417
Payroll Taxes | 20% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0
Other | | $0 | $0 | $0 | $0 | $0
Pro Forma Cash Flow
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $9,250 | $12,670 | $16,975 | $15,700 | $14,650 | $15,100 | $17,150 | $16,450 | $24,050 | $16,650 | $18,850 | $16,750 | |
Subtotal Cash from Operations | $9,250 | $12,670 | $16,975 | $15,700 | $14,650 | $15,100 | $17,150 | $16,450 | $24,050 | $16,650 | $18,850 | $16,750 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 6.00% | $555 | $760 | $1,019 | $942 | $879 | $906 | $1,029 | $987 | $1,443 | $999 | $1,131 | $1,005 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $9,805 | $13,430 | $17,994 | $16,642 | $15,529 | $16,006 | $18,179 | $17,437 | $25,493 | $17,649 | $19,981 | $17,755 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,900 | $3,900 | $3,500 | $3,900 | $3,500 | $3,900 | $3,500 | |
Bill Payments | $124 | $3,870 | $8,353 | $13,013 | $9,840 | $9,544 | $10,222 | $11,969 | $10,762 | $18,814 | $7,471 | $13,279 | |
Subtotal Spent on Operations | $3,624 | $7,370 | $11,853 | $16,513 | $13,340 | $13,444 | $14,122 | $15,469 | $14,662 | $22,314 | $11,371 | $16,779 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $555 | $760 | $1,019 | $942 | $879 | $906 | $1,029 | $987 | $1,443 | $999 | $1,131 | $1,005 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $745 | $745 | $745 | $745 | $745 | $745 | $745 | $745 | $745 | $745 | $745 | $745 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $4,924 | $8,875 | $13,616 | $18,199 | $14,964 | $15,094 |
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