Tea Room Business Plan
Tea Room Business Plan
1.0 Overview
Jolene tea house is a start up business located on a well trafficked street in Simsbury. The primary focus of the business is in over 50 types of loose tea that the company will offer. The types of tea will include green teas, herbal teas, black teas, and flavored teas. The house sells loose teas by the ounce, and serves the teas when iced and hot. Additionally, the house sells gift baskets and premium chocolates. It also offers daily pastries that accompany tea orders. The company does not wish to compete with giant companies such as Starbucks; therefore, it brews only one type of coffee daily as a courtesy to the customers. Jolene tea house is a limited liability corporation managed by the owners who are Joe and Noelene. Joe has a 6 year experience having managed a successful coffee house in Maryland. Noelene has three years of training as a herbalist, and she has worked for 3 years as a tea tender in Maryland.
1.1 Competitive advantage
Jolene’s chocolates and teas provided at a price premium, which discourages customers asking for cheap, low quality goods. This enhances the feeling that prestige customers have when they are patronizing Jolene tea house, and it also ensures that customers have similar expectations of quality and service. Jolene’s key competitive strength is Joe’s experience in managing a successful coffeehouse and Noelene experience as a tea tender and three years training as a herbalist. Jolene has arranged a competitive distribution contracts with high tea growers around the world. This is the only retailer that is offering a wide array of chocolates east of the river. The interior design of the company will give the business a comfortable, cozy, and a good feeling without reminding the customers of lace (Jinnett, J & Pinson, L 2006).
2.0 Management section
2.1 Business owners
Jolene is a small company operated and owned by Joe and Noelene. Noelene is the wife to Joe. This is a limited liability corporation where Noelene is the marketer and designer of the products while Joe is responsible of managing the store. The owners of the business have extensive experience in this industry, and they will be leveraging their knowledge concerning tea brewing, purchasing, and marketing. They have the knowledge of running this small beverage business in making Jolene a successful business.
2.2 Management team
The management style of the business reflects on the participation of the owners. The business is not exceedingly hierarchical; therefore, encouraging employees to learn more about all aspects of the business. Jolene tea house respects its co workers and aimed at treating all the workers well. Every part, time tea tender, will be trained in proper brewing, storage and serving of the 50 types of tea. The company understands that the tea tenders, cleaners, and all the rest of the workers are individuals with their own lives, hopes, and personalities.
2.3 Personnel plan
The personnel plan of the Jolene tea house chronicles on the growth of the business to almost four employees within the first three years. However, in the future years, the company will require adding few more employees besides the ones present at the start of the business. This will depend on the growth of the business. Within the first three years of the organization, the total number of employees will be four. This includes Joe, Noelene, and two part time tea tenders.
2.4 Personnel plan
| Year 1 ($) | Year 2 ($) | Year 3 ($) | |
| Joe | 24 000 | 30 000 | 35 000 |
| Noelene | 6 000 | 12 000 | 14 000 |
| Tea tender 1 | 6 800 | 7 000 | 7 250 |
| Tea tender 2 | 6 800 | 7 000 | 7 250 |
| Total payroll | 43 600 | 56 000 | 63 500 |
3.0 Marketing section
3.1 Tea market
The tea market in America is growing extremely fast. The sales of tea have increased by 165 % since 1990. The number of tea rooms has also increased to almost 15 %. That is about 1500 tea shops. The increased interest for Americans tea is because of the increase in the proliferation of gourmet coffee shops across the country. Most of the Americans who are working have accepted the idea of expensive beverages as affordable luxuries. Simsbury is a rural town that is slowly gentrified, and it is adapting the sophisticated tastes of tourists in the town.
3.2 Market size
The county population of Hartford is 885, 000 people. There are 80 000 people living within the five mile radius of Simsbury Center. 37% of this people are between age 25 and 60, which is the target age group of Jolene tea house. The company estimates that two thirds of this population has pre existing brand loyalties, which would discourage them from visiting the tea house. Therefore, Jolene estimates a local target of about 10 000 people.
In Connecticut, tourism and travel is among the fastest growing industries. This is a good aspect since Simsbury also benefits economically through the year round tourism visits. There is a combination of seasonal cultural activities and scenic outdoor activities. Therefore, based on this information, Jolene tea house estimates that the company will have a potential market of almost 100 000 tourists in a year.
3.3 Target market segment
The business anticipates a split between tourists and locals and all the members of the target market are between the age of 25 and 60. Jolene tea house has a moderate to sizable disposable income. Jolene will provide local middle upper class community a place where they can socialize, and indulge themselves as they enjoy the magnificent pastries and tea. The locals will also be able to get unique chocolates and tea for gifts. The management of the company is planning to make Jolene tea house the destination stop for tourists while on their tour in the town either while on a warm up visit after skiing, break from shopping, or a place where they can buy unique gifts such as souvenirs for their holiday. All the company’s customers will be happy to pay the price premium for the products they provided with in exchange for the great taste, high quality, and sense of prestige that they receive. Higher prices for some of the products offered may attract higher sales because some customers usually have the idea that high prices equal higher quality (Hartline & Ferrell 2008). Therefore, since they want to buy high quality products, they will go to that extent of purchasing the products with high prices regardless of if their palate educated enough to appreciate the slight difference.
3.4 Competition and buying pattern
In the tea house industry, competition usually depends on knowledgeable tea tenders, quality of teas, and education and cultivation of a loyal customer base. When customers offered with a good cup, they will probably return to the store for the rest of their lives. One key challenge that this business faces are getting customers to enter the store. Jolene potential customers vary in the knowledge of tea, and they are seeking a wide range of products and experience.
3.5 Tea drinkers
This people are looking for pleasing, relaxing places where they can indulge their love for tea, learn more about tea varieties, and share with their friends. Tea drinkers committed will always choose quality over the price where they seek out the fleshiest whole leaf and tippy varieties in the area. Many are the people who have driven miles away to go and buy quality loose tea to bring with them home. The main challenge with these customers is informing them about Jolene tea house, and also holding events in order to showcase the quality of the products.
3.6 Local socializers
The upper middle and middle class women in Simsbury and the towns surrounding the place currently do not have a place where they can go and enjoy at a moderate price. Starbucks, which is five miles away, can be inconvenient, overcrowded with teenagers, and noisy. The local restaurants can also be noisy and requires a large amount of money to go outing. The market segment is seeking a comfortable, exclusive locale with similar clientele, where people can meet friends, have good beverage and food, and stay as short or as long as they want. The challenge that Jolene will face with the socializers is creating a buzz from the start that the business is pleasant, exclusive, and high quality, generating no overcrowding.
3.7 Tourists
There are various reasons as to why tourists visit Simsbury and they also vary; however, they share a sophisticated urban palate, and the desire to discover pretty local charm. Tourists seek high quality beverage, gifts, foods, and services, and when they are here they tend to prefer small scale businesses to larger chains. The challenge that the business will face with the tourists is ensuring enough visibility for it to be noticed without losing its local charm. When the tourists visit Jolene store and tried the products offered, they will undoubtedly want to come back for more.
3.8 Communication and promotional strategies
Jolene will combine momentous events and print advertising and targeted promotion in introducing Jolene tea house to Simsbury tourists and residents. The business aims at making customers aware of Jolene tea house location and opening and educating customers of what tea house is and the reason as to why it is magnificent. Jolene is located at a highly visible location in the shopping district of downtown Simsbury; thus, encouraging walk in traffic. The budget for marketing business will not be more that 3% of the annual gross sales.
Getting the word out to the customers will be through advertisement. The advertisement will be in the entrée and food sections of every local paper in a thirty mile radius. Flyers will be used in the coffeehouses and grocery stores in the same areas. Ads will also be posted on the local magazines such as Connecticut magazine, Fairfield review, and Westchester magazine. For socializers, the company will significantly target women who are looking for gathering space. Advertisement that will target this group of people will be through women organization and local churches (Butler, D 2000). Flyers will be located in local upscale salons, restaurants, and salons.
4.0 Financial section
The financial plan of the business is based on sound research on small businesses, and the cost estimates for obtaining rent, equipments, and other operating expenses. Since the business is owner operated, it has some scope in adjusting its own compensation incase the sales go down in a certain month. The top financial priorities within the first 3 years are repaying the long term loan, covering the expenses on time, paying employees fairy, and generation of the modest profits. There will be aggressive sales growth in the first one and a half months when the business is sharpening its merchandise assortment, stock levels, and size scales to meet the requirements of the customers. It is anticipated to have a sales increase of about 10 % in the second year of operation. Budget for marketing expenses is approximately 3 % of the total sales.
4.1 Startup summary
The inventory and equipment will make up about 75 % of the startup requirements. General expenses and leasehold improvement will comprise of the 25 percent that is remaining. Joe and Noelene are planning to contribute approximately $ 10 330 investments into the business. The business requires to have a total of $ 63 963; therefore, it is planning to seek a long term loan of $ 50 633. The owners of the business will pay back the loan amount at an interest rate of 9.25 % within six years.
The requirements for the start up business will require long term assets of $ 13 808. This include
| Long term assets | $ 3 500 |
| Tea racks | $ 2 300 |
| Coffee maker | $ 908 |
| Refrigerated chocolate case | $ 3 500 |
| Hot water and steam machine | $ 1 100 |
| Dish washer | $ 3 000 |
| Any other hardware and appliances | $ 3 000 |
| Short term assets | $ 6 605 |
| Furniture | $ 5 500 |
| Coffee grinder | $ 564 |
| Iced tea shakers | $ 541 |
| Expensed supplies | $ 1 200 |
| Cleaning supplies, napkins, tasting cups, stirrers, and tea balls. |
4.2 Sources of finance
The owners of the business plan are investing $ 10 330 of their own money. According to the cash projections, it indicates that in order to start the business, approximately $ 63 963 of working capital needed during the 1st years of its operation. The business has also identified two options in case the business will require additional funds. The options for raising further funds include applying for a loan. The owners will approach their bank with the view of raising a long term loan. A family friend could provide any lender with security for part if not all of the facility.
Another option that could be used for raising enough money to start the business is borrowing money from friends (Pinson, L 2008). Joe and Noelene have a friend who owns a leading company; therefore, they have already communicated with this person who will assist them with funding if the need arise. The money borrowed from the friend will be paid back as per their agreement.
Reference
Butler, D (2000). Business planning Routledge
Hartline, M & Ferrell, O (2008). Marketing strategy Cengage Learning
Jinnett, J & Pinson, L (2006). Steps to small business start up Kaplan Publishing
Palich, L Petty, W & Longemecker, J (2011). Small business management Cengage Learning
Pinson, L (2008). Anatomy of a business plan Cengage Learning
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