New Venture Financing

New Venture Financing

Fall 2013

Professor Chowdhury

TABLE OF CONTENTS

EXECUTIVE SUMMARY …………………………………….………………………3-4

STARTUP SUMMARY...................................................................................................4-6

FUNDING OPTIONS  …………..…………………………………………...………..6-10

CONCLUSION ……………………………………………..…………….......................10

REFERENCES ……………………………………………..……………...................11-12

Executive Summary

Mission: At OQLC, the mission is to offer quality coffee and a variety of unique pastry products at an affordable price to meet the demands of the New York City population, particularly residents and businesses in the North section of the Bronx.

Vision: At OQLC, the vision is to provide an accessible café/bakery with affordable and high quality products and excellent customer service in order to attract and retain customers.

The Company: The owner and chief, is the creator of OQLC. At the age of fourteen she engaged in the business world with absolutely no experience. She has been employed as the Human Resources Specialist at the Company ABC, Inc., a non-profit organization for a period of six years. Her experience in the Human Resources and Finance field has given her an overall sense of the many steps to own a business. The owner and chief is currently working on obtaining a BA in Business Administration.

The owner is expected to be in total charge of the company’s overall production, operations and management of the business. The business plans to initially hire three full-time and two part-time staff.

The Product: OQLC plans to offer a distinctive variety of coffee and pastry products. The coffee served will be brewed from imported Dominican coffee beans. Cakes and other pastries will be baked by a Dominican baker, which will add Dominican ingredients to make it unique and flavorful. The baker will also be responsible for the exclusive design of the cakes and pastries. OQLC will produce fresh coffee and pastry products during the entire day and operations. OQLC plans to brew new coffee every hour to maintain good flavor. Pastry products will not be sold the next day.

The Market: The café/bakery business in the United States has been growing over the years. The cold temperature in New York pushes people to consume hot drinks especially during the cold months. People’s relationship and unity forces them to celebrate occasions such as birthdays, graduations, weddings, baby showers, and the celebrations usually calls for a cake or pastry. Coffee drinkers and pastry lovers in the north area of the Bronx do not have many Spanish coffee and pastry options. The current population is mostly from the African American and Hispanic race, whereas before, residents were more from an African American background (City-data.com, 2012). Businesses consist mostly of Jamaican retail stores and some well-known companies such as T-Mobile and Chase bank. The placement of OQLC in this area will not only satisfy the new Hispanic population but also the long-lived African American residents. The current residents will get to enjoy a new tasty and delicious coffee and pastries. OQLC’s goal is not only to fulfill the target product needs but also to provide the best service possible in order to maintain our customers happy.

Startup Summary and Expenses

OQLC start-up costs is expected to cover the purchase of equipment, site renovation, startup inventory, permits and insurance, security deposit for leasing of space, marketing expenses, prepaid car insurance, and purchase of company vehicle.  

The purchase of high quality equipment is necessary in order to provide the customers of OQLC with the best products. The purchase of the equipment will make up a large portion of the start-up costs. The equipment costs will include the ovens, stove, refrigerators, dishwashers, displays, mixers, working tables, slicers, utensils, mobile proof box, pans, blenders, coffee machines, cookie machine, freezers, racks and other miscellaneous items.

        The site location will require funds for renovation. A single estimated figure of $25,000 will be allocated for this purpose. The renovation cost estimate will include the costs associated with preparing the site for opening business. This will include any construction, painting, plumbing, purchases of decorations for business, and other necessary repairs of site.

The start-up expenses will go as follow:

• Equipment:                                         76,500
• Site Renovation:                                 25,000
• Start-up Inventory:                                 3,000
• Permits and Insurance:                        2,000
• Security Deposit for Leasing of Space:        19,200
• Marketing Expenses:                                2,000
• Vehicle Purchase:                                20,000
• Pre-paid Car Insurance:                        900
• Miscellaneous: 3 months of payroll:                61,400

By taking a look at OQLC’s estimated annual income statements you can predict the growth and expectancy of the business. OQLC anticipates sales of about $491,000 in the first year, $567,105 in the second year, and $655,006 in the third year of the plan. The increase of sales means that there will be an increase in the net profits. OQLC’s projected net profits for the first year is very little, however, there is a significant increase for the second and third year. Net profits for the first three years are expected to be as follows:  $11,925 for year one, $44,543 for year two, and $65,194 for year three.

OQLC’s estimated annual cash flow statements reveal that the business will not have any cash flow issues. It indicates a positive increase of cash from year one to year two to year three. This positive increase of cash will allow OQLC to pay its debt quicker.

OQLC’s estimated annual balance sheets reveal that the business will make satisfactory progress over the years. Since there is a constant increase in the company’s profits, OQLC will be able to make payments on their long-term liabilities.

Funding Options