Professional Documents
Culture Documents
SAMANTA ANDRADE
PAMELA JAEL AVILA TORO
PATRICIA GARCIA
MAYO, 2014
QUITO ECUADOR
Table of Contents
1. Executive Summary
2. General Company Description
3. Products and Services
4. Marketing Plan
5. Operational Plan
6. Management and Organization
7. Personal Financial Statement
8. Startup Expenses and Capitalization
9. Financial Plan
10. Appendices
11. Refining the Plan
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EXECUTIVE SUMMARY
CUPS is a start-up business; we are pioneers in the production of
personalized cupcakes with unique and special characteristics. Our specialty
are cupcakes, but we also provide other kind of delicious desserts like pies,
muffins, mousses and cheesecakes and beverages like coffee, tea, sodas and
others.
In CUPS, you will be surrounded by worldwide culture; we have created
a culture shelter where all people can enjoy their desserts. Moreover, we offer a
high quality service and a very characteristic environment. We have shelves
with many books, so that customers can read a book while eating. Our books
are divided by sections and we will also have books in several languages. Then,
any customer can take a book home with the condition to leave another one in
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replace. In addition, our products are not expensive so they are available for all
public.
The owners of CUPS are Ms. Jael Avila, Ms. Patricia Garcia and Ms.
Samanta Andrade; we own 33% of the company each. Furthermore, CUPS is a
unique business in the market. Still, we should consider some important
competitors like Cupcake Factory and Torta y Fiesta. Taking into account this,
we have developed many strategies to increase our market share.
Low prices, high-quality products and publicity are one of the best
strategies to attract clients. Moreover, nowadays cupcake businesses are on
the raise and the cupcake industry is growing in Ecuador. Therefore, the main
goal at CUPS will be to differentiate itself, its products and its services from the
traditional cafeterias, by providing all clients a totally new experience while they
enjoy a coffee or a dessert.
In other, we will apply for a loan of 50 000$ which will be used to
purchase the local as we are not willing to rent the local. The reason why we
want to buy the local instead of renting it is because like this, the business will
be more profitable. If we avoid paying a rent each month, we will have fewer
expenses monthly. Plus, even if we have to pay for the loan, this payments will
help us to increase our assets because the local we be ours. In addition, this
will be really useful for CUP'S as it is part of a back-up plan. In the case CUP'S
is not profitable and we have to close, we can rent the local in order to pay the
loan, and it will give us incomes after we have paid the loan. We are willing to
pay the loan, in a period of 5 years; we will be able to pay each month with the
incomes of CUP'S.
GENERAL COMPANY DESCRIPTION
Cups is a new company in a relatively new market the market of
cupcakes. For this reason, there is not much competition, but still there are two
strong competitors The Cupcake Factory and Torta y Fiesta. We have many
strengths in the market, our products are unique and have fruit filling and
personalized frosting, based on cultural events, seasons, and special dates, not
only from Ecuador , but from around the world; also our products have designs
chosen by customers. At CUPS, we do not have a specified menu with the
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designs of our cupcakes, they will always be changing in new funny, creative
and unique designs and we also provide other desserts, in order to offer
delicious products to enjoy with embracing worldwide culture. Even if our
competitors are already well- placed in the market, we have arrived with a fresh
idea.
Prices and quality are strengths for us, because, we offer the lowest
price in the market and we guarantee high quality products. This is because;
our main competitors have already reached a high level, so they have increased
their prices and reduced their quality because of an exaggerated confidence. In
CUPS, the environment is as important as our products, which are affordable to
everyone. At CUPS, everyone can enjoy a cupcake, with a reasonable price
and in an ideal environment. On the other hand , national and international
consumers will be able to taste endemic fruits from Ecuador and, at the same
time, be surrounded by a polite environment and workers who will serve them
as if they were at home, making them feel comfortable and relaxed. Then,
customers will select us over our competitors because our company is
ecofriendly and the products we use to bake our cupcakes or desserts, and to
prepare our beverages, come from national industries; with whom we will have
arrangements to collaborate with the national market.
In spite of the stability that our competitors have established in the
market, we have absolutely trust in our capacity to take a percentage of that
market. The way to gain customer reliance is to show them the process by
which the hands of our workers transform some ingredients into delicious flavor
experiences.
Another thing we have taken into account is the reputation we must build
from the beginning. Our competitors have a well-established reputation, and
thats something we will have to work on.
represents different parts of the world. We want to give a cultural image more
than the typical bakery image.
Our competitors have sales that vary depending on the seasons,
specifically on special dates, which show to be the best moment to increase
sales. Taking into account this fact we thought about making every day a
special date. About credit the market we are in is not able to give credit to
customers, but we, as a business, have a wide range of credit to set up our
business. Also we have assured a very strict control over all our employees and
we will count on the necessary certifications for our proper operation; so we will
fulfill all the requirements needed to provide high quality products. The image
and advertising we want to project to the market is mainly related to or
philosophy and the cultural concept we want to implement; that is something
our competitors havent.
PRODUCTS AND SERVICES
Technical specifications
In CUPS, our specialty are cupcakes. But, we also provide other kinds
of delicious desserts like pies, muffins, mousses and cheesecakes. Also, we
offer many different beverages like coffee, tea, sodas, and others.
Moreover, we offer a high quality service and a very characteristic
environment. In CUPS, where you will be surrounded by worldwide culture. We
have shelves with many books, so that customers can read a book while eating.
Our books are divided by sections and we also have books in several
languages. Any customer can take a book home with the condition to leave
another one in replacement.
Advantages or disadvantages
First of all, we are not just a bakery or a cafeteria, but we have created a
culture shelter where foreigners and national people can enjoy of worldwide
culture and cinema. Plus, we have a huge offer of our specialty, cupcakes.
Our cupcakes are unique in the market because they have typical
Ecuadorian fruits inside the cake. They have not only the best quality and taste,
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but also they come in different sizes and we offer multiple options so people can
choose the one that better fits their cravings.
Other huge advantages we have from competitors are the environment
and services we provide. We are offering our clients a different environment
from the traditional cafeteria. The key to stand out from our competence is that
we have developed a space that does not exist in the country. CUPS offers our
clients a comfortable environment for all people; we have a social area, a
smoking area and a lecture area, so that our clients have a comfortable and
quiet space to read. We are also offering film functions each month where we
will present cultural movies in different languages.
Pricing
CUPCAKES
1.50$
1.80$
2,80$
1.00$
1.30$
2,50$
love reading, chatting, hanging out with a friend or spending some time with the
family, form part of our niche market, which is a wide one.
Strategy
Taking into account that Cupcakes are a niche market in the baking and
culinary industry, and cupcake businesses are on the rise, according to a 2009
article on Mainstreet, it is vital to show customers what the cupcake concept
involves, which has for example a historical connotation that comes from the
First World War. Since we want to offer an environment with literature involved,
the marketing strategy will join these two concepts. It means that we want
people to think of us not with the idea they bake cupcakes, but we want them
to ask themselves what can I learn in every bite? Our marketing campaign will
be based on the importance of acquiring knowledge, in a funny and delicious
way. We must differentiate our products and services from other cupcakeries to
ensure that our cupcake company becomes a staple of your community.
Promotion
The promotion of our products will consider the media, the Internet and
flyers, as the main elements to get the word out to customers. The media we
will use are the radio, because it is far more communicative and attractive for
customers. We will use them for a month till we get well-known. Then, the web
page of the company will be available 24 hours a day, 7 days a week, so it will
be constantly giving our customers information.
We have also planned to distribute a graphic image support including
our logo and designs in our brochures. Furthermore, we will have a system to
identify repeat customers by giving them a card in which they will fill in 10
purchases in order to get a free cupcake and a book.
Promotional Budget
We have considered prices for the items mention before, and we have
determined that $ 33600, 00 will fit with our requirements.
The Monthly Expenses:
Staffing = $3,500
Rent and utilities = $3,000
Inventory = $1,500
Rough monthly expenses = $8,000
Pricing
The prices of our products are set by considering the ingredients we
need for them and the complexity of elaboration. Although having low prices for
small business is not a good policy, we have decided that a good way to get into
the cupcake market is to have lower prices than our competitors. Since our
strongest competitor cupcake factory has already gained a solid market, we
need to attract some of their customers by offering the same product with better
quality and lower prices. After we have gained a solid market of our own, we will
increase our prices.
During our competitive analysis, we thought about our competitors and
how to win a market that is already taken, and we had decided that beginning
with low prices is one of the best strategies.
Apart from our lower prices, we will have more products to offer as other
desserts and beverages. Moreover, we have a special and unique customer
service. One of our policies is to make our clients feel at home and give them a
cultural environment to enjoy and learn. This is a great strength we have, as our
clients will search for and for this given time, our prices go up.
Proposed Location
After considering the customers we want to reach, we have decided that
the best location for Cups is in avenues Shyris and Republica del Salvador. The
reason for our decision is that these streets are located between the biggest
malls of Quito, so they are crowded most of the time. Also, our competitors are
located nearby. So, when customers are looking for their cupcakes, they may
find us instead.
Distribution Channels
CUPS is a new enterprise. Thats why we only have one location where
we produce and sell all our products. For this reason, we are using our own
sales force as a distribution channel. This is a fast, economical and direct
channel of distribution. Under it, we (the producers) have full control over the
distribution of our products. Moreover, this type of distribution channel will allow
us to sell directly our products to the consumers. We will also save money and
avoid unnecessary expenses as we wont need to pay an intermediary to
transport or sell our products.
In addition, our consumers will benefit from direct selling because of the
convenience and service benefits it provides, including personal demonstration
and explanation of the products and satisfaction guarantees.
Sales Forecast
CUPS expects a strong rate of growth at the start of operations. Due to
our marketing strategies, and our market research, we have prepared this
projection of sales. The total number of incomes we need monthly to break
even is $ 6000.
Best case
SALES
CUPCAKES
OTHER
DESSERTS
BEBERAGE
Worst Case
1st Month
(100)
SALES
$ 7000
$ 3000
$ 4000
CUPCAKES
OTHER
DESSERTS
BEBERAGE
1st Month
(35)
$ 3000
$ 1500
$ 1500
approximately of 150$.
In CUPS, we believe that conducting business ethically and striving to
do the right thing are vital to the success of the company. For this reason, we
managed our business under strict compliance with all relevant national and
international laws. Our business ethics aim to be responsible not only with
our consumers, our suppliers and our employees, but also with the local community
and society in general. In order to operate legally in Ecuador, the company needs
licensing and bonding requirements; we will register our name and company in
the Superintendency of Companies, write up the constitution of our company,
and get the Commercial Register and RUC. The process lasted approximately
65 days.
In Ecuador, all commercial business needs an operating permit which
contains the patent, permission of the Fire Department, Bureau of Health, the
Ministry of Tourism and Ministry of Interior. This operating permit must be
renewed each year. The renewal of this license has no cost.
All employees need to be insured in the IESS (Ecuadorian Institute of
Social Security). The payment of the insurance will be shared between the
employer and the employee. All employees will work in a safe environment free
of discrimination and under all health and safety laws, and under laws
regulating minimum wages. In Ecuador, contracts between employer and
employees are mandatory. The relevant environmental regulations in food
industry include proper waste management, recycling and reuse of products,
and use of eco-friendly products. Then the CUPS zoning or building code
requirements will consider for working a rented locale, so building code
requirements will not apply and the zone we have chosen does not have any
special regulations. In addition the company has signed a contract with AIG
Metropolitan Insurance Company. The total cost of the insurance will be $ 3600.
Another important aspect is that the patent of the company name is granted
during the registration of the Company in the Superintendent of Companies.
On the other hand, personnel in Cups will be considered the most
important part of the company, because without them, the company would not
be able to offer customers the quality service and products they want. The
company needs a qualified staff to ensure its prestige. For that reason, a
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company has to apply in order to attract more and more customers. The
production manager will control the quality of the products, the inventory, and
the relation with suppliers and so on.
With a brief description of the tasks, employees will have a schedule to
follow and specific activities depending on the day. The procedure code
employees receive in the induction training has in detail the description of each
job at the company, and all have the same importance, so in that way
employees internal communication its better. If it is necessary the company will
hire extra staff especially for the kitchen or for the service, when there is a
difficult period which requires more workers because of the demand.
To continue, the inventory is vital to take into account. The materials
Cups will need are principally raw materials as the cupcakes will be made daily
in the store, and books. The average value in stock of Cups is 500$ in books as
most of the books will be contributions from the clients and the books are not
going to be bought each month so they are a onetime expense. About 1100$ in
materials for the coffees and pastry will be needed each month in order to
provide the ingredients that are used in their elaboration. The rate turnover
which is computed by dividing the total sales revenue in a period by the average
inventory is 10000/1100 which equals 9, 09, while the average of other cupcake
stores is 6.39. Cupcakes are considered seasonal products because in some
holidays such as Christmas and Valentines Day they are more sold, so Cups
will need to produce more cupcakes during these periods. The lead time for
ordering will be really short because the products are storable and the fruits
should be bought daily.
In CUPS, we are committed to dealing ethically with our suppliers and
we want our suppliers to recognize the importance of Corporate Social
Responsibility. When CUPS purchases goods and services we want to
participate in a professional collaboration that creates long-term value for both
parties and to base our collaboration on trust and mutual interest.
Our policy with suppliers outlines our expectations of them as well as our
commitment with them. The guidelines for suppliers are intended to ensure that
our collaboration can develop and result in the greatest possible responsibility in
our supply chain. CUPS considers that the most important thing about
purchasing goods is quality. It is committed to work with our suppliers on
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innovative and proficient methods of obtaining lower costs for the highest quality
goods.
Moreover, CUPS is an eco-friendly company. For this reason we expect
our suppliers to:
Maintain
environmental impact.
Respect fundamental human rights including worker representation.
Maintain responsible health and safety practices.
Be committed to equal opportunities in employment.
Adopt ethical business practices.
effective
policies
and
procedures
to
manage
their
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Amount in Dollars
Samantha
A.
$ 6000,00
$25000,00
Jael A.
Patricia G.
$31000,00
$31000,00 $31000,00
$ 6000,00 $ 6000,00
$25000,00 $25000,00
Cups will have an annual revenue growth rate of 16% per year.
The Owners will acquire each one $5,000 of debt funds to develop the
business.
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The loan will have a 5 year term with a 19.05% interest rate.
Source of Funds
$ 72000,00
$13200,00
81,6%
$58800,00
$49000,00
$2000,00
$3500,00
$1000,00
$1000,00
$56500,00
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The CUPS Team will be able to secure to $31,000 from savings, as well
as from family and friends contributions. In addition, we plan on taking out a big
business loan in the amount of $50,000. Therefore, we are seeking $10,000
from interested persons who are willing join in this exciting venture. You are
invited to take advantage and join in this billion dollar industry.
APPENDICES
Advertising materials
MENU
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Pots
Bowls
Mugs
Pans
Promotional budget
/The Start-Up Costs:
Insurance = $3,600
Renting = $2,000
Start-up inventory =$5,000
Oven = $8,000
Pots, pans, tables and racks = $8,000
Decoration= $6,000
Permits = $1,000
Total start-up costs = $33,600
Sales forecast
Best case
SALES
CUPCAKES
OTHER
DESSERTS
Worst Case
1st Month
(100)
BEBERAGE
SALES
$ 7000
CUPCAKES
OTHER
DESSERTS
$ 3000
$ 4000
BEBERAGE
1st Month
(35)
$ 3000
$ 1500
$ 1500
wouldnt be productive to have a long term debt, and a payment period of less
than five years will make the payment quotes really high, resulting in low or
none profits.
For Investors
In a short term period, Cups needs funds for buying the equipment, the
locale and advertising the cupcake store. The short term funds will be recovered
as soon as the number of clients increases. The funds needed in two to five
years will be easier to have because after that period of time, Cups will be a
well-known cupcake store, attractive to investors. The funds needed, after this
period of time will be used to set up franchises in other cities of the country or
abroad, in order to expend the business and have a bigger profit. The reason
for why this investment is highly probable to be returned is that the more
franchises Cups has more money it will make.
In case the investors want to exit Cups, the strategy is that the shares
can be sold to other investors of Cups, to the owners of Cups, or to willing
investors. If the latter is the option chosen, then, it will be necessary that the
directive board decide if they agree with these new investors in Cups or not. As
well, the percentage of ownership we will give to investors will always be less
than 49%. Weve decided to give only this percentage, because this way, we will
always have the final word in any Cups decision. It is clear that we will be open
to our investors ideas and suggestions, but our point of view will be the most
important ones as we are Cups founders, and we know what we want Cups to
be.
The financial reports will be provided every month to all the investors, so
they will be able to keep track on how things are going in their investment. Also,
Cups will provide an annual financial report, with which Cups owners and
investors will have a meeting to think about changes that need to be made or
new directions that need to be taken.
Type of Business
CUPS is a retail business that will produce on a small scale.
Furthermore, we have prepared the planned production levels based in the
variation of the demand throughout the year. We are conscious that there are
special days such as Valentines Day, Christmas, and others, when the demand
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of our products will be higher. For this reason, we have chosen a dynamic
production plan; this involves that the production levels will depend on the
demand we received.
The image the company wants to transmit is a cultural one, because
through food, we will be able to communicate facts from the past and the
present. Then, the company is meant to be a place where people can open their
minds, their hearts and their appetite at the same time; since they use all their
senses to learn, we think in that way we are productive and aware of the
community around us.
Our prices were set according to our production costs and the benefit we
want to obtain. As we are starting our business, we considered what
competitors are charging for their products and we decided to adopt a
competitive pricing advantage. We expect our prices will help us to place CUPS
in the market. The markup policy we have is calculated in the same way, but
since each product has its specific price and cost of production, the benefit will
vary from product to product. However, we have established that any product
will cost us more than the price we sell it. Each product must return the
business at least of 50% of its cost. Furthermore, the inventory of the goods we
use in the production and the products we produce will be carried out very
strictly. The products we expect to sell, after opening our locale are: cupcakes,
all kinds of desserts, and hot and cold beverages.
To continue, it is vital to take into account the inventory. The materials
Cups will need are principally raw materials as the cupcakes will be made daily
in the store, and books. The average value in stock of Cups is 500$ in books,
as most of the books will be contributions from the clients, and the books are
not going to be bought each month, so they are a onetime expense. About
1100$ in materials for the coffees and pastry will be needed each month in
order to provide the ingredients that are used in their elaboration. The rate
turnover which is computed by dividing the total sales revenue in a period by
the average inventory is 10000/1100, which equals 9.09, while the average of
other cupcake stores is 6.39. Cupcakes are considered seasonal products as in
some holidays, such as Christmas and Valentines Day, they are more sold, so
Cups will need to produce more cupcakes during these periods. The lead time
for ordering will be really short, because the products are storable and the fruits
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