Throughout this thesis, theories and findings about the internal and external environment of Anna’s green tea has been described, analyzed, and held against actual facts and trends regarding the coffee and tea (bar) branch in the Netherlands.
Primarily, it has been established that the Dutch tea and coffee market is promising. Findings showed that the Dutch tea and coffee consumption is very large. Furthermore society is expected to change in favor of the tea and coffee bars where consumers are much more on the-go creating demand of these types of stores.
It has also been established that the market is saturated. There are many competitors offering tea and coffee, and substitutes can be found everywhere. Furthermore there are established competitors who have already been able to capture most of the market and as threats of new entrants is high, companies could easily copy Anna’s green tea’s concept.
The internal analysis shows the many challenges this company would face. The biggest challenge is the financial situation of the company. Offering high priced products for something that is unknown to the Dutch market, in combination with the ongoing economic recession is a big hurdle the company must try to jump.
For these reasons this thesis will conclude that the viability of opening a green tea/coffee bar in the Netherlands is limited. Anna’s green tea startup can be successful but as mentioned in the previous chapter 5.0, there are some limitations that one needs to be aware of.
1. The Dutch market has many opportunities when it comes to tea. Traditional black tea consumption is declining, while green tea consumption is increasing.
2. Demand of green tea products might be too little. As mentioned in the financial part of the thesis, every day 160 people are expected to come to the store. If this does not happen, the company will be in financial trouble.
3. Dutch culture is becoming more Americanized and on the-go. However, this is still a slow process and the Dutch market might not be ready for something new like this at this moment
This does not mean that Anna’s green tea will fail, in fact I still believe the company can be successful, if some changes will be made, and if the company will focus on a couple of things. I recommend Anna’s green tea to:
1. Start smaller and in a different location. The location in the center of the city is very expensive, and is usually meant for successful companies. As this company is a startup, it is
unlikely that it will attract 160 customers on a daily basis, and because of that the company might be in financial trouble. Therefore, a different and cheaper location should be chosen and start with two employees instead of five which will result in a significant decrease of costs. No longer will that many customers be needed for the company to survive. Also, instead of buying machines, it might be better to lease machines. This will help to reduce costs as well.
2. Start an extensive but cheap advertising campaign. Most people have no clue about Matcha green tea and might be hesitant to try something new. Therefore it is very important to inform people about the product, familiarize them with the taste, and educate them about the numerous health benefits of the product. Providing samples outdoors might be a good idea for that.
If Anna’s green tea will be able to convey the message about Matcha green tea, while changing location and reducing costs, I believe the company will have potential and can be a successful company in the Netherlands.
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APP E NDIX
FINANCIAL APPENDICES
Explanation statement of financial needs Prepaid rent
The amount of prepaid rent is €4000 excl. VAT. Per year the total rent amounts to €4000 * 12 =
€48000. The monthly rent incl. VAT amounts €4000 + 21% = €4840. (VAT = €840) Rent deposit
The rent will be prepaid for two months in advance, so 2 * €4000 = €8000. This is excl. VAT. The rent deposit incl. VAT is €8000 + 21% = €9680. (VAT = €1680).
Stock food & drinks
Because the company is just opening, we need extra stock of food and drinks needed. Therefore we expect total food and drinks costs to be €5000 incl. VAT. This is mostly the green tea, roasted green tea, and red bean powder. Besides that we also need ice cream and milk, but buy those on a weekly basis due to the shelf life. Green tea powder is €185 / kilo. Hojicha (roasted green tea) powder is
€150 / kilo, and red bean powder is €85 / kilo.
To make the store ready to run, things need to be changed. Think about the placement of toilets, cables, etc. I expect the costs of this renovation will be €50000 incl. VAT. Exclusive VAT this will be
€50000 / 121% (*100%) = €41322. (VAT = €8678). The amount is based on expected elements of renovation that must be done, plus the extra man-hours to complete the renovation. Furthermore, this renovation will have a useful life of ten years, which means that per year €41322 / 10 = €4132 will be depreciated.
Inventory
Inventories are the tables, chairs, closets and lamps. The inventory costs are €30000 incl. VAT.
Exclusive VAT this will be €30000 / 121% (*100%) = €24793. (VAT = €5207). Also inventory needs to be depreciated. The useful life is 7 years, which means every year €24793 / 7 = €3542 needs to be depreciated.
Machines
Categorized under machines are: Vitrine, refrigerator, freezer, oven, stove, dishwasher, workbenches, tools, and a coffee machine. The total machine costs are €40000 incl. VAT. Exclusive VAT this is
€40000 / 121% (*100%) = €33058. (VAT = €6942). Also machines needs to be depreciated. The
Car
The Mercedes Benz Vito 110 CDI costs €28012 incl. VAT. Exclusive VAT the car costs €28012 / 121% (*100%) = €23150. (VAT = €4862). The car will have a scrap value of 20% of the total amount, so €23150 / 100 (*20%) = €4630. The car has a useful life of 5 years, so the yearly depreciation is €23150 - €4630 = €18520 / 5 = €3704
Computer / cash register
The cash register system costs €2177 inclusive VAT. Exclusive VAT the amount is €2177 / 121%
(*100%) = €1799. (VAT = €378). The cash register system has a useful life of 5 years, so each year the depreciable amount is €1799 / 5 = €360
Personnel uniforms
Uniforms are €574 incl. VAT. Exclusive VAT the amount is €574 / 121% (*100) = €474. (VAT =
€100). Uniforms are provided for 5 employees costing €57.40 (incl. VAT) per uniform. Each employee gets 2 uniforms.
Accessories
Total costs of accessories are €2000 incl. VAT. Exclusive VAT this is €2000 / 121% (*100%) =
€1580. (VAT = €420).
Permits
In order to open this company we need a permit costing €279 incl. VAT. Exclusive VAT this is €279 / 121% (*100%) = €245. (VAT = €34).
Insurance
When opening a store, one needs certain types of insurance such as fire, theft, etc. This insurance costs €63 a month, and must be prepaid.
Accountant
If the owner of the company keeps track of its administration on its own, an accountant costs €1800 inclusive VAT. Exclusive VAT this amount is €1800 / 121% (*100%) = €1488. (VAT = €312).
Table ware and glasses
In total, table ware and glasses cost €5380 inclusive VAT. Exclusive VAT this is €5380 / 121%
(*100%) = €4446. (VAT = €934).
Promotion
Promotion costs are €3000 inclusive VAT. This includes a website, and flyers. Exclusive VAT the amount is €3000 / 121% (*100%) = €2479. (VAT = €521).
Bank charges
Per month, bank charges of €3.50 must be paid for the bank account of this company
To fund this company, I will use own funding, in combination with a loan. As can be seen from the statement of financial needs, €185096 is needed to set up the company. €80000 will be paid from my own pockets, which are savings of the past 20 years. The remaining €185096 will be funded by obtaining a loan from the bank. The loan rate is 8 percent, and the full amount will be paid back in 60 months (five years). Each month €2130.97 must be paid which includes principal payment and interest expense. For more information about the commercial loan, you can find the amortization schedule which shows the payment of the loan in much more detail.
The salaries of each employee are based on a fix amount of €1500 per month. There are five employees so on a yearly basis each employee is paid €18000 and in total €90000. Of course on top of that, taxes and benefits should be paid for as well. These taxes and benefits consist of the social security tax, employee insurance (ZVW), and other employee benefit programs such as
“vakantiegeld”. So in total on a yearly basis for all five employees €130833 needs to be paid.
Amount Totals Months Loan Rate Monthly Payments
Owner's Equity 43.22% 80,000
Commercial Loan 56.78% 105,096 60 8.00% 2,130.97
Total 100.00% € 185,096 60 8.00% € 2,130.97
Sources of Funding
Salaries and Related Expenses # Assumptions Wage Base Quarterly 2014 2015 2016 2017 2018
Percent Change 0.00% 0.00% 0.00% 0.00% 0.00%
Salaries and Wages
Salaries 5 € 1,500 € 4,500 € 18,000 € 18,000 € 18,000 € 18,000 € 18,000 Wages
Total Salaries and Wages 5 € 22,500 € 90,000 € 90,000 € 90,000 € 90,000 € 90,000
Payroll Taxes and Benefits
Social Security (Tax) 36.90% € 1,500 € 8,303 € 33,210 € 33,210 € 33,210 € 33,210 € 33,210 Employee Insurance (ZVW) 0.47% € 106 423 423 423 423 423 Other Employee Benefit Programs 8.00% € 1,800 € 7,200 € 7,200 € 7,200 € 7,200 € 7,200 Total Payroll Taxes and Benefits € 10,208 € 40,833 € 40,833 € 40,833 € 40,833 € 40,833 Total Salaries and Related Expenses € 32,708 € 130,833 € 130,833 € 130,833 € 130,833 € 130,833
Salaries
I expect Anna’s green tea, to attract 160 customers per day. The reason for this is the very attractive position of the store, where many people will be walking by. People will be able to takeaway drinks quickly and therefore it is possible to attract the amount of customers stated. I expect beverages to be most popular, so 55% of sales will be beverages. Then the second best in sales are the parfaits, and finally ice cream and crepes. After the first year, sales are expected to grow 15% annually.
Products Percentage Price/unit Cost/unit
Beverages 55% 4.50 0.62 Per day 160
Parfaits 25% 6.00 1.30 Per week 1120
Crepes 10% 4.50 0.90 Per month 4800
Ice cream 10% 4.75 1.05 Per year 58400
2014 2015 2016 2017 2018
% change 0% 15% 15% 15% 15%
Sales
Beverages 144,540 166,221 191,154 219,827 252,801 Parfaits 87,600 100,740 115,851 133,229 153,213
Crepes 26,280 30,222 34,755 39,969 45,964
Ice cream 27,740 31,901 36,686 42,189 48,517
Total € 286,160 € 329,084 € 378,447 € 435,214 € 500,496 COGS
Beverages 19,914 22,902 26,337 30,287 34,830
Parfaits 18,980 21,827 25,101 28,866 33,196
Crepes 5,256 6,044 6,951 7,994 9,193
Ice cream 6,132 7,052 8,110 9,326 10,725
Total € 50,282 € 57,825 € 66,498 € 76,473 € 87,944 Gross Profit
Beverages 124,626 143,319 164,817 189,540 217,971
Parfaits 68,620 78,913 90,750 104,362 120,017
Crepes 21,024 24,178 27,804 31,975 36,771
Ice cream 21,608 24,849 28,577 32,863 37,793
Total € 235,878 € 271,259 € 311,948 € 358,740 € 412,551
Sales Projections
Total customers
Year One (2014)JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecemberInterest€ 700.64€ 691.10€ 681.51€ 671.84€ 662.11€ 652.32€ 642.46€ 632.54€ 622.55€ 612.50€ 602.37€ 592.18Principal€ 1,430.33€ 1,439.86€ 1,449.46€ 1,459.13€ 1,468.85€ 1,478.65€ 1,488.50€ 1,498.43€ 1,508.42€ 1,518.47€ 1,528.60€ 1,538.79Loan Balance€ 103,665.67€ 102,225.81€ 100,776.35€ 99,317.22€ 97,848.37€ 96,369.72€ 94,881.22€ 93,382.79€ 91,874.38€ 90,355.90€ 88,827.31€ 87,288.52Year Two (2015)Interest€ 581.92€ 571.60€ 561.20€ 550.74€ 540.20€ 529.60€ 518.92€ 508.17€ 497.35€ 486.46€ 475.50€ 464.46Principal€ 1,549.04€ 1,559.37€ 1,569.77€ 1,580.23€ 1,590.77€ 1,601.37€ 1,612.05€ 1,622.80€ 1,633.61€ 1,644.50€ 1,655.47€ 1,666.50Loan Balance€ 85,739.48€ 84,180.11€ 82,610.34€ 81,030.11€ 79,439.34€ 77,837.97€ 76,225.92€ 74,603.12€ 72,969.51€ 71,325.01€ 69,669.54€ 68,003.03Year Three (2016)Interest€ 453.35€ 442.17€ 430.91€ 419.58€ 408.17€ 396.68€ 385.12€ 373.48€ 361.77€ 349.97€ 338.10€ 326.14Principal€ 1,677.61€ 1,688.80€ 1,700.06€ 1,711.39€ 1,722.80€ 1,734.29€ 1,745.85€ 1,757.49€ 1,769.20€ 1,781.00€ 1,792.87€ 1,804.82Loan Balance€ 66,325.42€ 64,636.62€ 62,936.56€ 61,225.17€ 59,502.37€ 57,768.09€ 56,022.24€ 54,264.75€ 52,495.55€ 50,714.55€ 48,921.68€ 47,116.86Year Four (2017)Interest€ 314.11€ 302.00€ 289.81€ 277.53€ 265.18€ 252.74€ 240.22€ 227.61€ 214.92€ 202.15€ 189.29€ 176.35Principal€ 1,816.86€ 1,828.97€ 1,841.16€ 1,853.44€ 1,865.79€ 1,878.23€ 1,890.75€ 1,903.36€ 1,916.05€ 1,928.82€ 1,941.68€ 1,954.62Loan Balance€ 45,300.00€ 43,471.04€ 41,629.87€ 39,776.44€ 37,910.65€ 36,032.42€ 34,141.67€ 32,238.31€ 30,322.26€ 28,393.44€ 26,451.77€ 24,497.14Year Five (2018)Interest€ 163.31€ 150.20€ 136.99€ 123.70€ 110.32€ 96.85€ 83.28€ 69.63€ 55.89€ 42.06€ 28.13€ 14.11Principal€ 1,967.65€ 1,980.77€ 1,993.98€ 2,007.27€ 2,020.65€ 2,034.12€ 2,047.68€ 2,061.33€ 2,075.08€ 2,088.91€ 2,102.84€ 2,116.86Loan Balance€ 22,529.49€ 20,548.72€ 18,554.74€ 16,547.47€ 14,526.82€ 12,492.70€ 10,445.01€ 8,383.68€ 6,308.60€ 4,219.69€ 2,116.86(€ 0.00)
Am ort iza tio n S ch ed ule
Amortization Schedule
The income statement speaks for itself. Numbers are taken from the other statements such as the sales projections, salaries, and expenses from the cash budget. This compiled is the income statement.
Total Cost of Sales 50,282 57,825 66,498 76,473 87,944
Gross Profit 235,878 271,259 311,948 358,740 412,551
Business Licenses & Permits 245 245 245 245 245
Pin Machine 516 516 516 516 516
Bank Fees 42 42 42 42 42
Music & Entertainment 499 499 499 499 499
Repairs & Maintenance 6,000 6,600 7,260 7,986 8,785
Utility 6,180 6,798 7,478 8,226 9,048
Communication 720 720 720 720 720
Insurance 693 693 693 693 693
Payroll Taxes & Employee Benefits 40,833 40,833 40,833 40,833 40,833
Trash Removal 156 156 156 156 156
Table ware/Uniforms/Cleaning Supplies/Decor 5,000 5,500 6,050 6,655 7,321
Office Supplies 500 550 605 666 732
Facility 3,000 3,300 3,630 3,993 4,392
Transportation 6,403 7,043 7,748 8,522 9,375
Total Operating Expenses 229,125 231,883 234,917 238,255 241,926
Earnings Before Interest and Taxes 6,753 39,376 77,031 120,485 170,625
Interest Expense 7,764 6,286 4,685 2,952 1,074
Earnings Before Taxes -1,012 33,090 72,345 117,533 169,551
Taxes 1,351 7,875 15,406 24,097 34,125
Net Profit -2,362 25,215 56,939 93,436 135,426
Anna's Green Tea
Projected Income Statement - Yearly
Month: Pre-Start 1 2 3 4 5 6 7 8 9 10 11 12 Totals Receipts
Cash sales 15000 18000 25000 25000 30000 20000 20015 30000 30000 22000 22015 29130 286160
Collections from credit sales 0.00
New equity inflow 80,000 80,000
Loans received 105,096 105,096
Other 0
Total Receipts 185,096 15,000 18,000 25,000 25,000 30,000 20,000 20,015 30,000 30,000 22,000 22,015 29,130 471,256 Payments
Cash purchases 4,700 300 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 5,282 50,282
Payments to creditors 0.00
Salaries and wages 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 90,000.00
Employee benefits 635 635 635 635 635 635 635 635 635 635 635 635 7,623
Payroll taxes 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 2,768 33,210
Rent 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 52,000
Rent Deposit 8,000 8,000
Utiltities 1,545 1,545 1,545 1,545 6,180
Repairs and maintenance 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Renovations 41322 41,322
Music and entertainment 499 499
Insurance 63 63 63 63 63 63 63 63 63 63 63 63 756
Travel 959 254 254 959 254 254 959 254 254 959 254 789 6,403
Telephone 60 60 60 60 60 60 60 60 60 60 60 60 720
Facility 250 250 250 250 250 250 250 250 250 250 250 250 3,000
Interest expense 701 691 682 672 662 652 642 633 623 612 602 592 7,764
Loan repayments 1,430 1,440 1,449 1,459 1,469 1,479 1,489 1,498 1,508 1,518 1,529 1,539 17,807
Tax payments 31,208 31,208
Capital purchases 82,800 82,800
Table ware/Uniforms/Accessories 6,500 417 417 417 417 417 417 417 417 417 417 417 417 11,500
Total Payments 183,346 19,805 22,675 24,220 23,505 22,675 24,220 23,505 22,675 24,220 23,505 22,675 25,974 463,001 Cashflow Surplus/Deficit (-) 1,750 (4,805) (4,675) 780 1,495 7,325 (4,220) (3,490) 7,325 5,780 (1,505) (660) 3,156 8,255 Opening Cash Balance 1,750 3,500 (1,305) (5,980) (5,200) (3,705) 3,620 (600) (4,090) 3,235 9,014 7,509 6,849
Closing Cash Balance 3,500 (1,305) (5,980) (5,200) (3,705) 3,620 (600) (4,090) 3,235 9,014 7,509 6,849 10,005 Anna's Green Tea
Cash Budget - Monthly
This cash budget shows how much money comes in and out of the company. This is very important especially when the company needs a fair amount of working capital. Especially the first few months the closing cash balances of AGT are negative. During the last five months this becomes positive.
The first year of a company is always very unstable, but as sales is expected to increase during the second year, closing cash balances will also increase.
The balance sheet uses other statements previously made to show the value of a company at a certain point in time. Fixed assets are expected to stay the same due to no new purchases during the first couple of years. Total liabilities are gradually decreasing because of the steady payments of the commercial loan. As the company is expected to make a net profit during from 2016, the value of the company also starts to change in a positive way.
Beginning 2014 2015 2016
Assets
Current Assets
Cash 1,750 10,005 20,093
Stock 4,700 7,483 5,687
Prepaid expenses 45,545 14,337 14,337
Total Current Assets 51,995 31,825 40,117
Fixed Assets
Inventory 31,293 31,293 31,293
Machines 33,058 33,058 33,058
Car 23,150 23,150 23,150
Computer equipment 1,799 1,799 1,799
Renovations 41,322 41,322 41,322
Website 2,479 2,479 2,479
Total Fixed Assets 133,101 133,101 133,101
Total Assets 185,096 164,926 173,218
Liabilities and Owner's Equity Liabilities
Accounts Payable
Loan payable 105,096 87,289 68,003
Total Liabilities 105,096 87,289 68,003
Owner's Equity
Paid-in Capital 80,000 80,000 80,000
Retained Earnings 0 (2,362) 25,215
Total Owner's Equity 80,000 77,638 105,215
Total Liabilities and Owner's Equity 185,096 164,926 173,218
Pro Forma Balance Sheet
Anna's Green Tea
RESEARCH PROPOSAL
INTROD UCTI ON
Coffee and tea is deeply rooter into Dutch culture and history. Centuries ago, Dutch merchants brought coffee and tea with them from exotic regions. Through the years, coffee and tea have become an important part in the daily lives of the Dutch people. As society is changing, so is the demand for certain types of products and services. Dutch society is becoming more Americanized, and slowly becoming a “to-go” country. Changes in society bring new opportunities, which are currently happening in the coffee and tea branch. Starbucks-like formulas are opening up everywhere, and gaining much popularity. In Asia however, there is much more of a tea culture. It would be interesting to see if instead of a typical coffee bar, an Asian style tea/coffee (with emphasis on tea) bar could be successful in the Netherlands. That is the topic of this thesis proposal.
The structure of this proposal is as following:
1. Context
2. Research objective 3. Problem statement 4. Research questions 5. Research framework 6. Literature review 7. Methodology 8. Timeline 9. Bibliography
In deciding the structure of this proposal, my aim was to order the chapters in a chronological order, so that everything is aligned properly and makes sense.
1. CONT EXT
As an aspiring entrepreneur, I am constantly looking for opportunities to start a business. When I visited Singapore, I came across a nice tea bar, selling food and beverages made with green tea. As I enjoyed the experience, I noticed that this type of tea/coffee bar is still absent in the Netherlands.
This made me seriously consider the possibility to open a tea/coffee bar in this country. The company I would like to establish is called “Anna’s green tea”, or (AGT). AGT is a modern Japanese style tea bar, which offers food and beverages based on Matcha green tea.
The Dutch tea and coffee market is incredibly large, as these beverages account for 42% of the daily liquid consumption per capita in the Netherlands. There are continuous new developments happening in this market.1 The latest developments in this market are the coffee/tea bars. Unlike traditional cafes, these bars are marketed to the modern adults of today’s society. Since 1996, a few of these chains have been established. These chains all focus on mainly coffee, which is their core product.
Looking at the tea market, green tea is slowly gaining popularity among tea consumers. Consumers are starting to realize the health benefits of this type of tea, and as many people are looking to adopt a healthy lifestyle, Anna’s green tea wants to capitalize on this by mainly providing beverages with green tea as its main ingredient. Using green tea and Japanese culture as its competitive advantage, AGT wants to know if there is potential for such a formula in the Netherlands.
This paper focuses on the research and analysis of the company’s internal and external environment, and existing effective strategic management and planning theories to provide the best strategy for this company, and recommendations about the potential for this startup company.
2. R ES EARCH OBJ ECTI V E
The research objective of this research project is:
“To make recommendations of the potential of a green tea bar startup, by making an analysis of the current internal and external environment, using strategic- analysis and planning, and financial planning theories.”
3. PROBLEM S TATE ME NT
In chapter 1 I discussed the desire to start a green tea/coffee bar company. The focus here is the viability of starting this company in the Netherlands. To do this, one must analyze the company’s
In chapter 1 I discussed the desire to start a green tea/coffee bar company. The focus here is the viability of starting this company in the Netherlands. To do this, one must analyze the company’s