What is operations management - Free Essay Example

Sample details Pages: 15 Words: 4525 Downloads: 5 Date added: 2017/06/26 Category Statistics Essay Did you like this example? 1. Context As can be seen from the data collected by the General office for population family planning , the number of divorces, separation and bachelor hood or spinster hood has been on the increase recently. In Ho Chi Minh City alone the bachelors and spinsters account for 28.4%, windows and windowers take up 6.7% divorces occupies 1% and 0.5% is for the separated. Don’t waste time! Our writers will create an original "What is operations management?" essay for you Create order The tragedy is partly caused by the bustle and hustle of the morden life since people from all walksof life are so busy with their job that they barely have time for other thing such as dating, social gatherings, which results in lack of mutual under standing. Our coffee shop named Venue, with slogan Venue where emotion begins is intended to offer dating people an environment to reveal themselves to each other, afew pratical ideas for couples wishing to fight the fade in love, rekindle the romance, strenthen their marrige and a good condition for partners to build up strong relationship. 1.1. Service ideas In oder for those who who hardly find time to meet with and understand each other to build friendship, strong love and a happy marrige as well as long lasting partnership, our coffee shop has come into being. The coffee shop has designed its own website easily accessible to anyone who wants to post their personal information such as age, sex, education, occupation, preferences, and marital status must be presented honestly and meet our requirement. Once the name of the coffee shop is on map, the shop will be defintely attractive draw a large number of people to the website so do the advertisers. As result of this, we can make considerable profit from advertising. 1.2. Coffee market research in HCM City and Vietnam. According to the data from the General statistics office in 2002 each vietnamese averages 1.25 kilogram of coffee annually spending approximately 9000 VND an equivalent of $0.4 per capita. 19.2% of the population drink coffee daily, increasing by 23% on new year holiday. It is remarkable that city dwellers use upto 2.3 kilograms of coffee per year, 2.72 times higher than that of rural people and the former. Also expend 20.280 VND on a cup a year 3.5 times higher than that of the former. According to a survey conducted by Trung nguyen in the 2 biggest cities: HCM and Hanoi,coffee consumers from these cities are aged under 40. Coffee using habit is closely related to occupation. While the retirees in Hanoi account for the largest number, the business men take up the biggest in HCM city (23%); closely followed by the students and the number of the retirees is the smallest. The results from the survey also indicate that Hanoians spend 48.000 VND on coffee annually while residents in HCM pay 121000 VND. Out of the 7 districts (district 1, 3, 6, 11, Govap, Tn ph, and Bnh thnh). Tan ph has the most coffee drinkers. People in HCM City prefer drip filter coffee the most with 38%, white coffee 27% and instant coffee 20% but 67% of Hanians use instant coffee. The proportion of coffee goers in HCM City is also higher than Hanoi. Coffee shop area in HCM is larger than that of Hanoi and coffee shops offers a better selection of beverages 40 types compared to 9 in Hanoi. 2. Project abstract 2.1. Objectives of the project Having 160 customers visit each day. Reaching a monthly turnover of 130 milion. Getting a profit ratio by 50%. Having 500 loyal customers. 2.2.Task Making an informal and relaxing atmosphere for clients to converse with each other and relax over nice and delicate refreshments. Being sure to offer the clients the best services, romantic dating service VIA the shopwebsite. 2.3.Factors for success Offering considerate and enthusiastic customer care services. Promoting and implementing dating services drastically for The Singles, Singgle parents, divorcees, widows and widowers. Holding chamber music concerts, guitar playing concerts. Offering music at the clients request Conveniently located in the proximity of office buildings; making favorable conditions for white collar staff to take lunch breaks (who are also our target loyal customers). 2.4.Clientele Office worllers aged 23 or above, with breakfast and lunch. Students, youth, business people in the evening. 2.4.1.Service offering Morning: coffee beverages and fruit juice. Noon: coffee beverages and fruit juice. Evening: coffee for the youth People in love Dates are designed for courtship through the website. Special events held at weekends such as the nicest offer of love, the sweetest offer of marriage. 2.4.2. Area (square meters) Approximately 555 square meters divided into three sections (54 tables or 224 seats in total). Garden area: 22 tables. Indoor area: air conditioned -30 tables. First floor area: air conditioned -Japanese sofas can be converted into 20 double bufferings. 2.4.3.Products and services: Buon me thuot, Trung nguyen coffees. Ice-cream, fruit juice extract. Fruit of some kinds. Beverages: pepsi, coke, xa xi, CO2, green tea. 2.4.4.Price 22.000 VND 80.000 VND 2.4.5.Marketing and promotion Adverticements, banners placed on our website Pamplets distributed at universities (1000 pamplets in the first month then distribution will be under consideration as to whether to continue or not). The customers with the pamplet are offered 10% off the regular price. Presenting customers loyal cards to whoever frequents the shops 20 times a month with 10% discount on drinks of all kinds (cards are valid within a month and marked with the managers signature). Presenting VIP cards to the 6 customer loyal card holders, who have 20% off the regular prices on all kinds of drinks. VIP cards expires in 1 year long. 2.4.6.Staffs Barista servers: 12 staffs Working hours: 6h30 14h30 Working hours: 14h30 23h00 Security (guard looking after vehicles): 4 staffs Working hours: 6h30 14h30 Working hours: 14h30 23h00 Housekeeping: 4 staffs Working hours: 6h30 14h30 Working hours: 14h30 23h00 Cashiers receptionists: 4 staffs Working hours: 6h30 14h30 Working hours: 14h30 23h00 Accountant: 1 staff Website administrator: 1 staff The staff numbers are adjusted after one month. 3. Service design 3.1. Blueprinting of coffee shop As you can see this is a service process blueprint that it can be updated, extended and rearranged as desired. This can be the better way of serving clients, and We can now devise customer defined service standards, that can be easily implemented. For instance if the coffee shop has a complaint about how dirty a certain table cloth is , this could be promtly responded to by the hygiene and safety division . Lets now take one area in our blueprint for example to see what we can do with it. Well take the fourth box under the line of interaction employee handling customer s grieavance she will come to solve the problem and gain back his or her sympathy and satisfation by listening and explaining to the unhappu customer and referring the feed back to the hygiene and safety. 3.2. Function of each line 3.2.1. Line of Interaction Customers access the website and are given an ID for the date with the partners at our shop. The Website administrator or the call center will assist customers with information posting 3.2.2. Line of visibility The patrons id date is given to a receptionist and he or she is led to a consultant ( who is responsible for facilitating the dialogue between the two partners and offering tips on how to order romantic refreshments ). Those who come to our shop for other purposes receive some serevice except for consultation. Other employees are in charge of talking orders, making delivering. 3.2.3. Line of internal interation Order are filled and checked for safety and hygiene. Whashing up is also done here 3.2.4. Line of support The duties are to take care of accounting, book keeping, billing and handling customers grievance 3.3.Front office 3.3.1.Coffee shop Drinks area The atmosphere at the drinks area is very important. Clients go to the coffee shops mostly to relax. Besides, this coffee shop is also a place for dating. So the atmosphere should be informal and relatively quiet, with soft, romantic music. This atmosphere will make the clients feel comfortable when conversing with each other and relaxing over nice and delicate refreshments. The garden area should be filled with plants and trees. A small pool with fish or waterfall will help clients to forget the busy city outside. The ground floor area is air-conditioned. Music can be offered to the clients requests in this area. The first floor is also air-conditioned, with 10 Japanese sofas, which can be converted into 20 double bufferings. The servers must be attentive and respectful to the clients. In addition, the servers has to be quick and accurate. With a lot of clients at three different areas, there will be quite a lot of orders to take. The servers have two minutes to take an order and one minutes to deliver an order. With only two minutes to take order, the servers have to be careful; on the first side, the server must not rush the clients, but on the other side, the server must not let the time extend too long. The standard service policy is that 95% of all customer orders will be served within 10 minutes of arrival at the coffee shop. Apart from free internet access, shelfs of magezines, newspapers, and music. The coffee shop will have decoration on the wall along with pictures of art schools in the world. This makes the client feel as if going to an art museum of the world. Vehicle guarding: Clients will get a ticket for each vehicle and the guard will keep the vehicles for them. The coffee shop shall offer free vehicle keeping. The vehicle keeping fee ususally is small but often causes bad feelings with the clients. By offering fee service, this will give a good impression on the clients. The guard must be friendly, honest and hardworking. He must greet the clients and help them park / take the vehicles. A friendly guard will make the clients feel comfortable right from the beginning. 3.3.2. Website message center The objective is to offer the clients the best services, romantic dating service VIA the shops website. The website shall be romantically designed and the user interface friendly. The website allows client to register their basic information so that other clients can find persons with similar interests. A sorting algorithm will help the client to select a person that best suit them. Another option is that the client can contact the consultant. 3.4. Back office 3.4.1. Routine operations: Supporting activities At the back office, the manager of the coffee shop must direct the daily activities. The manager must know which supplies are in short supply and when / where to order for the supplies. Everything necessary to make serve drinks must be ready. The manager also has to know whom to call to fix every arising problem. Making serving drinks: The standard service policy is that 95% of all customer orders will be served within 10 minutes of arrival at the coffee shop. This means that the person who makes drink only has approximately 4 minutes to prepare all the drinks for one table. This person has to be quick and accurate, especially on rush hours or weekends, when people go to the coffe shop in groups. The servers also has to be quick and accurate. The servers only have one minute to deliver an order and a lot of clients at three different areas. After a table of clients go home, the servers have to clean the table and prepare the table quickly to be ready for the next group of clients. Cleaning washing At the back office, the glasses, trays, spoons must be wash quickly to be ready for the next batch of orders. Cleaners must clean the coffee shop before opening hour and after closing hour. The WC is another small but important point because it leaves a long impression on the clients. The cleaner must also be on hand to clean the spilled drinks or other problems. Accounting Accuraccy is the most important thing for accounting. This includes billing the clients before the clients leaves. The accountant is also responsible for archiving the invoices, making account statements, paying taxes. 3.4.2. Database management After a database is designed and installed, a database engineer must be available to to routine maintainance for the website. This person is also the administrator to the website, to monitor the information flow on the website. Bad and unsuitable comments / links must be deleted and violators must be banned from the website. This will make the website useful and friendly to the clients. The clients must feel safe when using the website for dating. The process of providing ID through the website As the above figure, at the Line Interation, customers can publish personal information via the website and get ID easily. The personal information will comprise age, gender, married status ,and hobbies. A arranging employee who always is on site will receive information from customers, simultaneously review personal information of each customer, and make a suitable date number code through a granted ID to them. The customer will receive an date code as well as time. The process of providing ID through message service We will corporate with telecommunication businesses such as VTC, FPT, VNPT which proficiently provide added value service based on the fundamental of mobile phone service to exploit Prefixs of 1800, 1900 by receiving messages from customers who have demand of meeting their partners Call center Receiving question and responding it to customers. Making consultant of getting ID or a date code from website through skilled consulting employees. 3.5. Waiting Line analysis To assess the impact (cost and benefits) on service of different staffing strategies at a high-volume coffee shop. We will apply Probability/Queuing Theory for the coffee shop. A key measure of this objective is the time required to take and fill a customers order (i.e. the time between the moment a customer enters the waiting line, and the moment the customer leaves the counter with customer order). Clearly, one of the surest ways to achieve very rapid turnaround is to have many employees on hand at all times, ready to take and fill orders; however, this would be prohibitively expensive and, in any event, there are often other constraints on throughput (e.g. the number of espresso machines). At the other end of the spectrum, the shop could be staffed minimally, which would in turn minimize staffing costs; during peak times, however, the time spent waiting in line could grow to an unacceptable level. In order to assess the impact of different strategies, and recommend rational staffing levels, we must take as much as possible of the following into account: The average rate at which customers enter the shop including, ideally, a breakdown of customer order types (e.g. regular coffee vs. espresso) at different times of the day; The time required for a coffee shop employee to serve each of the different order types, and the amount (and type) of variation in these times; Shift staffing options (i.e. the limits upper and lower on the length of a shift); The hourly cost of an employee (including the impact on cost of different shift lengths); Other limiting factors (e.g. the number of espresso machines). 3.5.1.Working Problem: We will examine a simplified version of the problem, with the following characteristics: A standard service policy: 95% of all customer orders will be filled within 10 minutes of the customer joining the line; A single average arrival rate of 38 customers/hour, based on a Poisson arrival process; As a consequence of the previous point, no variation in staffing level over the course of the day we will simply examine different, constant levels; No distinction between different types of customer orders, and the time required to service each order distributed according to the Exponential distribution with an average service time of 40 customers/hour; Partly as a consequence of the previous point, we will not distinguish between types of employees; each employee costs the same, per hour, as any other employee. 3.5.2.Mathematical Model: The arrival rate: When arrivals into a queuing system are independent (i.e. the fact that a person or party enters the shop during a given minute has no effect on whether another party enters the shop during any other minute), the arrival process is said to be a Poisson process, and the time between arrivals is a random variable which follows the Exponential distribution. This distribution is described by the following probability distribution function: f(t) = e-t 1/ = average interarrival time The service time: The same distribution will be used for the service time (the time from the moment the customers order is taken to the moment the order is filled), but it is customary to employ (instead of ) for the service rate: f(t) = e-t 1/ = average time to service an order 3.5.3. Computational Model: From the Exponential distribution, we will need to transform the numbers returned from the Uniform distribution, as follows: tarrival = -ln(1-uarrival) / tservice = -ln(1-uservice) / The average number of customers in the system (L) 19.00 The average number of customers in the queue (Lq) 18.05 Average time in the system per customer (W) 30.00 minutes Average time in the queue (Wq) 28.50 minutes Propability that the server will be busy (U) 0.950 Probability that customers must wait P(0) 0.050 3.5.4. Psychology of Waiting Line Due to characteristics of coffee service, Waiting Line is different from this of other services. Apart from free internet access, shelfs of magezines, newspapers, and music. The coffee shop will have decoration on the wall along with pictures of art schools in the world. This make guest feeling of going to an art museum of the world. 4. Service layout 4.1. Site selection Location plays an important role in the success of project of services business. Good location ease the process of doing business, competitive and highly profitable. On the basis of business strategy, business objectives and financial capabilities, we selected sites based on the following criteria: Features and consumption habits of target customers: Focus on densely populated areas , office buidings, industrial areas . Focus on the segmentation: the white -collar workers . Cost: space, power, water, labor Conveniently situated on a two -way street in Tan phu district . The scene of the region: modern, close to nature Area landscape Through the actual conditions on familiar terrain, financial capability, we choose the site to open a coffe shop in Tan Phu District of 555 square meters,which is located in the densely populated area in the proximity of offices, industrial parks. Moreover the site asks for reasonable rent which makes favorable condition for us to put more capital into other services such as online connection service . It comes to our understanding that a good location in combination with quality product and a better service will ensure the successdensely-workers is an important ground for low-cost appropriate financial conditions, extensive grounds convenient we will focus on funding for service development online service. We understand that a business location should be accompanied by good quality good service, marketing and advertising activities policies customer care can help businesses succeed. 4.2. Service layout To develop an efficient store design and layout will be one of the most important factors in positioning business for success. The layout for a dating coffee service require a spacious and airy space. An area of 555 square meters constitutes a prerequisite for the success of the project. The type of layout we choose in our project is process layout functional layout, because of the variability in customer requests for service. The objective of system is to maximize service speed and customer satisfaction as much as possible. The section is divided according to the functions: management, consultancy, service, billing, facility management, kitchen and inventory. The following is the best layout for the coffee shop: This layout will allow maximum flexibility, save space, and facilitate communication, circulation among the customers cleaning up, order taking delivery and billing. It maximizes the usage of the area in customer section which helps bring in revenue and to increase the service speed will allow maximize your sales by serving as many customers as possible during peak business periods. The layout designates the front office (in full view of the customer) and the back office (invisible to the customer). Back office can be organized for efficiency and functionality, while front office layout must be aesthetically pleasing as well as functional. The layout satisfies a variety of customers needs for the seating or the typical purpose of the meeting. The space required for the service area, (cash register, brewing espresso equipment, pastry case, blenders, storage, prep, dishwashing and office areas etc.) at back of the house and restrooms, will consume about 80 square meters. The remainder will be seating area. The determine tasks will be performed by each employee position, so that the equipment and fixtures necessary to accomplish those tasks can be located in the appropriate places : cashier will operate the cash register, barista will make all espresso-based beverages, tea, chai, hot chocolate, Italian sodas, as well as all the blender beverages. The design have the back door will be necessary to satisfy bureaucracies and facilitate. The back door will most likely have to serve as an emergency fire exit, so we have a hallway connecting it with customer area. And, the delivery of products will also probably occur through back door, having access to back of the house storage area would also be convenient. All the features have been designed into the back of the house. Thats a working area of the house and the customer seating area also is suitably arranged. In evening, the comfortable seating will be important for creating a relaxing ambiance, then by all means do it. Feature from the front door to the seating area should be arranged in a logical, sequential order. On the employees side of the counter, work and product flow are even more important. Any unnecessary steps or wasted movements that result from a less than optimal design will slow down employee production. All products should flow seamlesly in one direction towards the ultimate point of pick-up. Equipment be grouped together so that it is in the immediate proximity of the employee(s) who will be using it. Beyond the actual equipment, empty spaces must be left on the counter top to store ingredients and small wares (tools) used in product preparation. Counter top space will also be needed where menu items will actually be assembled. Creating defined work stations will allow put multiple employees behind the counter when needed. Keeping stations in close proximity to each other will allow one employee to easily access all equipment during very slow periods of business, thus saving labor cost. 5. Financial plan 5.1. Parameters Items USD Note Cups Sale (how much you sell 1 cup of coffee average) 2 Expenses Cups 0.08 Employee hourly pay 0.5 Hours employee works daily 8 Days employee works monthly 30 days Coffee per cup 0.5 Housekeeping 75 Security 75 Staff 5 persons Management 400 Website management 250 Fixed Cost Equipment 22000 Monthly Rent 2000 Monthly utilities 325 Unknown cost 20% Start-up cost 50000 5.2. Coffee Growth Projections Year 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cups sold 5040 5443.2 5846.4 6249.6 6652.8 7056 7459.2 7862.4 8265.6 8668.8 9072 9475.2 Employment schedule Barista 12 12 12 12 12 12 12 12 12 12 12 12 Security 4 4 4 4 4 4 4 4 4 4 4 4 Housekeeping 4 4 4 4 4 4 4 4 4 4 4 4 Staff 5 5 5 5 5 5 5 5 5 5 5 5 Website Management 1 1 1 1 1 1 1 1 1 1 1 1 Management 2 2 2 2 2 2 2 2 2 2 2 2 Total 28 28 28 28 28 28 28 28 28 28 28 28 25% 27% 29% 31% 33% 35% 37% 39% 41% 43% 45% 47% Growth rate per month 2% Days 30 Number of seats 224 Times of seat used per day 3 We assume that the monthly growth rate reaches 2% frequency at which a seat is occupied is 3 times. Year 2 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cups sold 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 Employment schedule Barista 16 16 16 16 16 16 16 16 16 16 16 16 Security 4 4 4 4 4 4 4 4 4 4 4 4 Housekeeping 4 4 4 4 4 4 4 4 4 4 4 4 Staff 5 5 5 5 5 5 5 5 5 5 5 5 Website Management 1 1 1 1 1 1 1 1 1 1 1 1 Management 2 2 2 2 2 2 2 2 2 2 2 2 Total 32 32 32 32 32 32 32 32 32 32 32 32 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% Growth rate per month Days Number of seats Times of seat used per day Salary payment made to staff amounts to $3040 a month, which is logical based on the scope of business and number of employees Year 3 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cups sold 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 9878.4 Employment schedule Barista 16 16 16 16 16 16 16 16 16 16 16 16 Security 4 4 4 4 4 4 4 4 4 4 4 4 Housekeeping 4 4 4 4 4 4 4 4 4 4 4 4 Staff 5 5 5 5 5 5 5 5 5 5 5 5 Website Management 1 1 1 1 1 1 1 1 1 1 1 1 Management 2 2 2 2 2 2 2 2 2 2 2 2 total 32 32 32 32 32 32 32 32 32 32 32 32 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% growth rate per month days number of seats Times of seat used per day 5.3. Monthly Income Statement Monthly Income Statement Year 1 Month 1 2 3 4 5 6 7 8 9 10 11 12 Sales Cups Sale (how much you sell 1 cup of coffee average) 10,080 10,886 11,693 12,499 13,306 14,112 14,918 15,725 16,531 17,338 18,144 18,950 Expenses Cups Sale (how much you sell 1 cup of coffee average) 403 435 468 500 532 564 597 629 661 694 726 758 Coffee per cup 2,520 2,722 2,923 3,125 3,326 3,528 3,730 3,931 4,133 4,334 4,536 4,738 Gross margin 9,677 10,451 11,225 11,999 12,773 13,548 14,322 15,096 15,870 16,644 17,418 18,192 Expenses Salaries Payable 3040 3040 3040 3040 3040 3040 3040 3040 3040 3040 3040 3040 equipment 22000 Monthly Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 Monthly utilities 325 325 325 325 325 325 325 325 325 325 325 325 start-up cost 50000 unknown cost 5,473 1,073 1,073 1,073 1,073 1,073 1,073 1,073 1,073 1,073 1,073 1,073 Total Expenses 82,838 6,438 6,438 6,438 6,438 6,438 6,438 6,438 6,438 6,438 6,438 6,438 Net Income -73,161 4,013 4,787 5,561 6,335 7,110 7,884 8,658 9,432 10,206 10,980 11,754 total expenses for breakeven analysis 85,761 9,595 9,829 10,063 10,297 10,530 10,764 10,998 11,232 11,466 11,700 11,934 Monthly Income Statement Year 2 Mont 1 2 3 4 5 6 7 8 9 10 11 12 Sales Cups Sale (how much you sell 1 cup of coffee average) 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 Expenses Cups Sale (how much you sell 1 cup of coffee average) 790 790 790 790 790 790 790 790 790 790 790 790 Coffee per cup 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 Gross margin 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 Expenses Salaries Payable 4020 4020 4020 4020 4020 4020 4020 4020 4020 4020 4020 4020 equipment Monthly Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 Monthly utilities 325 325 325 325 325 325 325 325 325 325 325 325 start-up cost unknown cost 1,269 1,269 1,269 1,269 1,269 1,269 1,269 1,269 1,269 1,269 1,269 1,269 Total Expenses 7,614 7,614 7,614 7,614 7,614 7,614 7,614 7,614 7,614 7,614 7,614 7,614 Net Income 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 total expenses for breakeven analysis 13,343 13,343 13,343 13,343 13,343 13,343 13,343 13,343 13,343 13,343 13,343 13,343 Monthly Income Statement Year 3 Month 1 2 3 4 5 6 7 8 9 10 11 12 Sales Cups Sale (how much you sell 1 cup of coffee average) 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 Expenses Cups Sale (how much you sell 1 cup of coffee average) 790 790 790 790 790 790 790 790 790 790 790 790 Coffee per cup 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 4,939 Gross margin 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 18,967 Expenses Salaries Payable 4520 4520 4520 4520 4520 4520 4520 4520 4520 4520 4520 4520 equipment Monthly Rent 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 Monthly utilities 325 325 325 325 325 325 325 325 325 325 325 325 Start-up cost Unknown cost 1,369 1,369 1,369 1,369 1,369 1,369 1,369 1,369 1,369 1,369 1,369 1,369 Total Expenses 8,214 8,214 8,214 8,214 8,214 8,214 8,214 8,214 8,214 8,214 8,214 8,214 Net Income 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 Total expenses for breakeven analysis 13,943 13,943 13,943 13,943 13,943 13,943 13,943 13,943 13,943 13,943 13,943 13,943 5.4. Monthly Balance Sheet Monthly Balance Sheet Year 1 Month 1 2 3 4 5 6 7 8 9 10 11 12 Assets Cash 9,799 13,005 16,986 21,741 27,270 33,573 40,650 48,502 57,127 66,527 76,701 87,649 A/R 10,080 10,886 11,693 12,499 13,306 14,112 14,918 15,725 16,531 17,338 18,144 18,950 Total Assets 19,879 23,892 28,679 34,240 40,575 47,685 55,569 64,226 73,658 83,864 94,845 106,599 Liabilities A/P 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 Total Liabilities 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 3,040 Equity Paid in Capital 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 Current Earnings -73,161 4,013 4,787 5,561 6,335 7,110 7,884 8,658 9,432 10,206 10,980 11,754 Retained Earnings 0 -73,161 -69,148 -64,361 -58,800 -52,465 -45,355 -37,471 -28,814 -19,382 -9,176 1,805 Total Equity 16,839 20,852 25,639 31,200 37,535 44,645 52,529 61,186 70,618 80,824 91,805 103,559 Total L and E 19,879 23,892 28,679 34,240 40,575 47,685 55,569 64,226 73,658 83,864 94,845 106,599 Monthly Balance Sheet Year 2 Month 1 2 3 4 5 6 7 8 9 10 11 12 Assets Cash 99,175 110,527 121,880 133,232 144,585 155,937 167,290 178,643 189,995 201,348 212,700 224,053 A/R 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 Total Assets 118,932 130,284 141,637 152,989 164,342 175,694 187,047 198,399 209,752 221,104 232,457 243,809 Liabilities A/P 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 Total Liabilities 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 4,020 Equity Paid in Capital 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 Current Earnings 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 Retained Earnings 13,559 24,912 36,264 47,617 58,969 70,322 81,674 93,027 104,379 115,732 127,084 138,437 Total Equity 114,912 126,264 137,617 148,969 160,322 171,674 183,027 194,379 205,732 217,084 228,437 239,789 Total L and E 118,932 130,284 141,637 152,989 164,342 175,694 187,047 198,399 209,752 221,104 232,457 243,809 Monthly Balance Sheet Year 3 Month 1 2 3 4 5 6 7 8 9 10 11 12 Assets Cash 235,305 246,058 256,810 267,563 278,315 289,068 299,820 310,573 321,325 332,078 342,830 353,583 A/R 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 19,757 Total Assets 255,062 265,814 276,567 287,320 298,072 308,825 319,577 330,330 341,082 351,835 362,587 373,340 Liabilities A/P 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 Total Liabilities 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 4,520 Equity Paid in Capital 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 Current Earnings 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 Retained Earnings 149,789 160,542 171,294 182,047 192,800 203,552 214,305 225,057 235,810 246,562 257,315 268,067 Total Equity 250,542 261,294 272,047 282,800 293,552 304,305 315,057 325,810 336,562 347,315 358,067 368,820 Total L and E 255,062 265,814 276,567 287,320 298,072 308,825 319,577 330,330 341,082 351,835 362,587 373,340 The amount of money invested in the project is $90000. 5.5. Monthly Cash Flow Year 1 1 2 3 4 5 6 7 8 9 10 11 12 Sources of Cash Paid in capital 90,000 0 0 0 0 0 0 0 0 0 0 0 Beg Cash Flow 90,000 -63,362 17,018 21,773 27,302 33,605 40,682 48,534 57,159 66,559 76,733 87,681 Increase in A/P 3,040 0 0 0 0 0 0 0 0 0 0 0 Net income -73,161 4,013 4,787 5,561 6,335 7,110 7,884 8,658 9,432 10,206 10,980 11,754 Change in Retained Earnings -73,161 77,174 774 774 774 774 774 774 774 774 774 774 Total Sources -53,282 17,825 22,580 28,108 34,412 41,489 49,340 57,966 67,366 77,539 88,487 100,209 Uses of Cash Increase in A/R 10,080 806 806 806 806 806 806 806 806 806 806 806 Total Uses 10,080 806 806 806 806 806 806 806 806 806 806 806 Net Change in Cash -63,362 17,018 21,773 27,302 33,605 40,682 48,534 57,159 66,559 76,733 87,681 99,403 Cash Balance -63,362 17,018 21,773 27,302 33,605 40,682 48,534 57,159 66,559 76,733 87,681 99,403 Year 2 1 2 3 4 5 6 7 8 9 10 11 12 Sources of Cash Paid in capital 0 0 0 0 0 0 0 0 0 0 0 0 Beg Cash Flow 99,403 110,527 121,880 133,232 144,585 155,937 167,290 178,643 189,995 201,348 212,700 224,053 Increase in A/P 980 0 0 0 0 0 0 0 0 0 0 0 Net income 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 11,353 Change in Retained Earnings -402 0 0 0 0 0 0 0 0 0 0 0 Total Sources 111,334 121,880 133,232 144,585 155,937 167,290 178,643 189,995 201,348 212,700 224,053 235,405 Uses of Cash Increase in A/R 806 0 0 0 0 0 0 0 0 0 0 0 Total Uses 806 0 0 0 0 0 0 0 0 0 0 0 Net Change in Cash 110,527 121,880 133,232 144,585 155,937 167,290 178,643 189,995 201,348 212,700 224,053 235,405 Cash Balance 110,527 121,880 133,232 144,585 155,937 167,290 178,643 189,995 201,348 212,700 224,053 235,405 Year 3 1 2 3 4 5 6 7 8 9 10 11 12 Sources of Cash Paid in capital 0 0 0 0 0 0 0 0 0 0 0 0 Beg Cash Flow 235,405 246,058 256,810 267,563 278,315 289,068 299,820 310,573 321,325 332,078 342,830 353,583 Increase in A/P 500 0 0 0 0 0 0 0 0 0 0 0 Net income 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 10,753 Change in Retained Earnings -600 0 0 0 0 0 0 0 0 0 0 0 Total Sources 246,058 256,810 267,563 278,315 289,068 299,820 310,573 321,325 332,078 342,830 353,583 364,336 Uses of Cash Increase in A/R 0 0 0 0 0 0 0 0 0 0 0 0 Total Uses 0 0 0 0 0 0 0 0 0 0 0 0 Net Change in Cash 246,058 256,810 267,563 278,315 289,068 299,820 310,573 321,325 332,078 342,830 353,583 364,336 Cash Balance 246,058 256,810 267,563 278,315 289,068 299,820 310,573 321,325 332,078 342,830 353,583 364,336 5.6. Break-even analysis Break even analysis Year 1 Year 2 Year 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Sales 32,659 72,576 119,750 174,182 233,453 292,723 351,994 411,264 470,534 529,805 589,075 648,346 paid in equity 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 Total Cost 105,185 136,075 169,070 204,169 244,199 284,230 324,260 364,291 406,121 447,951 489,782 531,612 Pay-Back 195,185 226,075 259,070 294,169 334,199 374,230 414,260 454,291 496,121 537,951 579,782 621,612 Based on the total cost, total sales, payback, paid in equity we calculate that the breakeven point should fall on the second quarter of the second year. 6. Conclusion and recommendation Based on, the idea, rather orginial in Viennam, on the service design, on social needs and on financial analysis, the shop will be able to reach the break-even point in the second quarter of the second year from then on. The coffee shop target a segmentation left open on the market. Solution is rather feasible and the service is differentiated. The project will be successfully implemented and economically effective. The business will be expanded into other areas.