Business Idea
Coffee is a globally accepted and valuable agricultural cash crop that can be traded across a variety of market segments. However, the establishment of an influential coffee house requires the knowledge of the correct blend of coffee to be brewed by the coffee house. Consequently, there are various types of coffee which would produce different blends of the product. To ensure that this business will be successful as anticipated, there must be need for emphasis on the quality of the product to be offered to the customers. It is believed that freshly brewed coffee offers an opportunity for a business venture due to its high demand by the consumers. Thus, the business would be focused in processing fresh coffee to be provided in the coffee house. The rationale behind this business is that the acquisition of the product is quite easy since coffee is a globally available produce. Conversely, the coffee shop will offer coffee and other hot beverages such as tea and also provide some snacks to be accompanied by the drinks. Expanding the product portfolio of the business would be vital so as to tap any market that is available for the extra products present. The business will aim at making the coffee house to be a social spot where people from diverse backgrounds can come and take coffee as they interact together.
Thus, the target market for this business venture would be business people, youths and the general public. As a result, this means that the market of the business is quite comprehensive and thus this will call for more efforts to be utilized so as to reach out this large market for the business. The business shall strive to incorporate technology in the processing of coffee beans so as to produce high quality premium coffee for the consumers. However, the new business will require a lot of advertising and marketing so as to strengthen the brand name of our product. This would be useful in creating awareness to the people so as to increase the client base of the business. Consequently, marketing would also be enhanced by product promotion which will be performed occasionally in the coffee house and also in other places. For instance, the business would be participating in social local events and offer free coffee to a large sample of people in those areas. This will boost the brand of the business and thus improving the performance of this lucrative venture. The business also recognizes that the recent global advancement in technology has developed the area of social media which is an effective way of communicating to consumers. Thus, the business will take an active role in using social media as a platform of advertising the brands of the coffee house.
The design of the coffee house shall also be specially fabricated so as to provide an appealing interior decoration as well as providing the right atmosphere suitable for the consumption of coffee. The coffee house shall also be equipped with Wi-Fi so as to provide free internet to our esteemed customers. The business shall offer these and more services to the clients but it is also prudent to note that hygiene will be an important element of the coffee house. The provision of these services will be done so as to enhance customer satisfaction which will consequently result to retention and thus improved business performance. This business venture is to be established in the city of London and for that reason there is need to perform a feasibility study to ascertain the practicality of this venture in the given place. The paper intends to conduct a detailed study of the business venture and then provide a detailed feasibility report for the start up of the coffee house (Fullen, 2005). The vision of the business will be to become a renowned coffee house all over the world which offers quality products and services to the consumers. The beverage and drinks industry has experienced a tremendous growth in the recent years due to the increased demand for these products.
Hence, there is an opportunity of this business to grow and expand to greater heights given the level of trading that has been witnessed in this sector. The business will work hard to achieve this vision given the various efforts that will be put on board by the management team of the coffee house. Thus, it is also significant to realize that the business will have to absorb in a quality and professional workforce that would be efficient in helping to achieve the goals and objectives of the coffee house. Consequently, to ensure that the business will develop strong relations with the customers, the coffee house will be guided by various important values (Reuvid, 2009). To begin with, a significant value that the coffee house will uphold is quality. In the beverage industry, consumers are attracted by high quality products and services. Thus, it would be prudent for the business to maximize the quality of products and service delivery so as to acquire a large market share. This value shall be enhanced by ensuring total quality management in the business operations and activities. Secondly, the business shall also uphold the value of reliability to its esteemed clients as well as the stakeholders.
It is vital for customers to build trust on the products and services offered so that they may rely on the coffee house for their needs and preferences. This is an important aspect of promoting customer retention for the venture. Lastly, the business shall also be highly driven by the value of cleanliness. Since, the business is a food service investment it is inevitable to maintain excellent level of proper hygiene in every activity performed within the business premises. Coffee customers are keen to check the hygiene standards of a coffee house since they assume that the hygiene of the products and services is directly proportional to the quality being offered. Hence, the business will use this value as a way of assuring clients that apart from offering them with premium coffee blends, the cleanliness of the coffee is also guaranteed. Thus, the entire management of the business shall work under these values of the business so as to establish the desired brand recognition that the coffee house deserves. The basic market of the business will be London city which is a large location that is endowed with a huge population of people. Thus, this will offer a chance for the business to acquire clients from this big population of diverse people. However, the business will be more interested in attracting business people and the youths in this population.
This is due to the fact that business people would be providing market for our products at a large scale whereas the youths would be very effective in creating a network of customers for the coffee house. The business also intends to adopt social media as one of its marketing platforms and thus this will mean that it will capture most of the youths through social networking. The basic market that the business is entering has quite a number of some potential competitors who may pose as a threat to the coffee house. However, the marketing strategies to be utilized by the coffee house would ensure aggressive marketing so as to efficiently compete in this competitive market. For instance, the business would also create mobile coffee products for their customers using special vans which can distribute in selected parts of the city. This would also assist in marketing the business brand as well as increasing the sales revenue of our products. The coffee house shall also undertake product promotions in the startup period of the business so as to lure more customers for the business. A study of the market forces in this industry has revealed that there is a sharp increase in demand for aromatic coffee and ready to drink tea (FTF, 2012).
Therefore, the business shall also position itself in this market segment by availing the relevant products so as to fill this gap. Thus, market positioning and market segmentation will be a strategy for the business to acquire the willing consumers in the city. This will consequently help the coffee house in overcoming the high competition from its worthy competitors. The business shall also conduct an aggressive advertising in televisions as well as the print media. This will be significant in improving the familiarity of the brand name to the target customers in the city. In addition, the business shall also incorporate social media in its marketing strategies so as to create networks through the internet which would help in raising awareness about the coffee house and the products offered. Hence, the business will be able to startup and expand in due course despite the prevailing levels of competition from other coffee houses in the city. This is due to the innovative strategies that will be brought on board by the business leadership that will help in beating the bottlenecks created by the competitors. A survey on the economic environment of London discloses that this location owns a viable economy that would support a business sufficiently. The population of the city comprises of a majority middle class which means that they form a significant part in influencing the business.
The spending habits of this population are good for the business since a larger percentage of the population would not have a problem spending money on a cup of coffee. Hence, this is an encouraging factor which depicts that the business would be in a position to thrive well in these economic conditions. In the start- up phase of the business, there will be a particular pricing policy that the company would take depending on the prevailing prices of the products. It is important for the coffee house to offer better prices than the competitors so as to acquire a larger number of clients and thus expanding the business performance. The pricing policy will also be developed after a critical analysis of the economic environment of the business so as to ensure that the prices offered reflect the economic conditions of the customers. The business will aim at offering affordable prices to the customers so as to promote client retention. In the first two to three years of business operation, the main objective of the business will be to build up a strong client base in the city. The coffee house shall not emphasize on profit maximization in its early period of operation rather it will be concerned in retaining existing clients as well acquiring more clients so as to improve the business venture. However, in the prevailing economic conditions of London, the business is estimated to make good returns after operating costs.
The acquisition of the coffee to be used by the coffee house for the business is also very easy due to the cheap accessibility created by the network of transport and communication modes that are present in the city. Thus the process of sales and distribution will be efficiently achieved due to the high level of infrastructure that has been developed in the city. Thus the supply value chain would be effectively operational thereby ensuring a smooth business operation. There is also available labor in the city to be utilized in the business. Due to the developed economy of London, the relevant tools and mechanisms of the business will be easily acquired. Thus, the operational viability of the business is guaranteed due to the accommodating economic environment that the city offers. The government regulations of the United Kingdom (UK) also offer better legislation for business creation in the city. Thus, this makes it easy for the start up of the coffee house since the registration process will be done in minimal time. It is also a fact that the cost of doing business in the city is quite reasonable so as to ensure good profit margins. The lower cost of investment in the business will be significant in allowing the business to put resources in other important costs such as those involved in marketing.
Accordingly, the present regulations will be helpful in promoting the growth of the coffee house since they do not accrue a huge burden to the business. The feasibility study also took a focus on the cultural habits of the people of London with regards to the beverage products so as to find out if the people’s way of life would have an impact on the development of the coffee house. The study reveals that the culture of the people in this city has been supportive of coffee houses since the ancient times. People feel great by being associated with a particular successful and renowned coffee house and hence this would be an advantage for our business venture. The research also disclosed that in the recent times, a majority of the youths of London have embraced and appreciated the culture of visiting coffee houses with colleagues as way of having fun. Thus, the prevailing cultural conditions of the population in this city make it possible to conduct the coffee business without facing any difficulties. However, the business will strive to invent its own culture for its customers. This will be important in giving the customers a sense of belonging in the coffee house by associating themselves with the particular way of life suited for the business.
The culture that the business proposes to showcase in the market is drinking coffee and having fun at the same time. This will let a majority of the people to change their perceptions on coffee and hence would be attracted to the culture thereby promoting the business. Consequently, the geographical location of the coffee house is favorable for the business since it is situated at the hub of the city where there are a lot of people. The location is also easily accessible from the nearest airport and hence offering a strategic location for absorbing a majority of the population of the city into the coffee house. The competitive environment of the business is quite spirited with various top notch coffee houses which pose as a threat to our coffee house. The major competitors in the city includes; Starbucks and Java. However, the business is set to come up with innovative strategies to counter the levels of competition from other coffee houses. The start up of the business will involve a huge initial cost which is necessary for the outlay of the coffee house. One of the costs to be accrued will be dedicated to the premises of the business which might call for the purchase of a building or land. It is also important to note that the registration of business will also be a cost to be incurred in the business.
During the registration process some levies will be paid for the government which also adds up to registration expenses. The initial stock of the business will also present a huge expense to be incurred in the startup of the coffee house. This will involve the purchase of fresh coffee as well as the equipments required in the brewing of the coffee beans. This will be part of the capital for the business. It is also expected that the business will incur the cost of insurance to the coffee house which is a requirement by the authorities. The major cost that will be required for start up of the coffee house is advertising costs. Since, this is a new business the levels of advertisement will be so high so as to improve the awareness of the business and products to the people. However, this is an important aspect of the business that requires to be financed adequately. Hence, the start up of the business would require support from stakeholders or from lending agencies.
A summary of the start up costs for the business is provided below:
Therefore, the start up of the business would require not less than $151, 500 to establish the coffee house in the city. The business will call for support from various sources so as to increase the funds required for the business startup. However, the business is estimated to earn annual sales revenue of 1.5 million dollars which will provide a net profit of close to 1 million dollars. Hence, this means that the business would be in a position to pay any debts that would be accrued by the coffee house. In a nutshell, the coffee house business in London is a viable business idea given the prevailing factors of business start up. Thus, it would be prudent if this idea is put into action so as to realize the results of the business.
References
Fair Trade Foundation (FTF). (2012). ‘‘Commodity Briefly, May 2012’’ Retrieved from http://www.fairtrade.org.uk/includes/documents/cm_docs/2012/F/FT_Coffee_Report_May2012.pdf. Retrieved on December 11th, 2012.
Fullen, S. (2005). Opening a restaurant or other food business starter kit: How to prepare a restaurant business plan & feasibility study: with companion CD-ROM. Fla: Atlantic Pub. Group.
Reuvid, J. (2009). Start up & run your own business: The essential guide to planning, funding and growing your new enterprise. London: Kogan Page.
