Feasibility Study (Bite 'n Sip)
Transcript of Feasibility Study (Bite 'n Sip)
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Chapter I
BACKGROUND OF THE STUDY
This chapter discusses the background of the study, its objectives and the
scope and limitation.
Introduction
Food and beverage is very essential to man’s life. It enables him to
survive and maintain life. Aside from that, food and beverage also helps man to
produce energy and stimulate growth. Being one of the basic needs of human
being, food and beverage has become an industry. Many entrepreneurs see
business opportunities with food and beverage. One of these is the
establishment of coffeehouses around the globe.
Coffee is a brewed drink prepared from roasted seeds, called coffee
beans, of the coffee plant. Due to its caffeine content, coffee often has a
stimulating effect on humans. In addition to that, it gives several health benefits
to coffee drinkers. Some of these are, drinking coffee cuts down the risk of liver
cancer by almost half. Antioxidants in coffee are beneficial for many ailments like
Alzheimer, Parkinson and type2 diabetes. Caffeine content in coffee acts by
stimulating the brain and nervous system. It improves alertness and mental
activity. Some people drink coffee to treat headaches and improve concentration.
Some studies claim that antioxidants in coffee decrease the tendency to develop
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depression. Drinking coffee also reduces the risk of gallstone disease and
prevents stroke. Coffee also helps the liver improve its performance; it prevents
the cirrhosis of the liver. Coffee is also beneficial for dealing with heartburn and
osteoporosis. Coffee has been one of the most popular beverages next to water
and tea. Many people had developed a habit of drinking coffee thus various
coffeehouses had existed. Majority of coffeehouses that exist today do have a
contemporary-styled ambiance which helps create youthful, modern, outward-
looking place. As the name suggests, coffeehouses focus on
providing coffee and tea as well as light snacks. Usually, pastries such as cakes
and cookies are being served alongside with coffee. The sweet taste of cakes
and cookies complements the strong flavor of coffee.
Though most coffeehouses or cafes served cakes and cookies which are
a bit costly, the proponents came up with the idea of instead having such;
doughnuts can be served with coffee. Doughnut is a comfort food that is good for
everyone because it relieve stress and makes you feel good. Doughnut is a food
rich in carbohydrates that can increase energy.
Due to the price constraints, some coffee lovers can’t afford to drink coffee
from cafes. That’s why instead of putting up a restaurant-like café, the
proponents consider having the food cart type store. With this, the proponents
can be able to provide their target market with aromatic coffee drinks and tasty
doughnuts in an affordable price that will satisfy their cravings.
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Brief Background of the Study
The establishment of coffeehouses can be traced back in Turkey where
coffee was such an important item during that period. Turkish coffee was served
strong, black and unfiltered. The idea of doctoring up one's coffee with cream
and sweeteners came into fashion in Europe around 1529, when the first coffee
house in Europe was established. Coffee establishments continue to spread and
its popularity grows. The main reason people went to coffeehouses during early
times was to conduct business meetings. Due to its popularity, many individual
developed a habit of drinking coffee thus more coffeehouses existed. They did
not only serve coffee, there are a few who also offered dinner menu.
Nowadays, most coffee chains serve cakes and cookies along with their
coffees. On the contrary, not all coffee drinkers can afford to take a sip at these
cozy coffeehouses because of high prices of their coffees. That’s where the
proponents get the idea of establishing a food cart type of store so that they can
provide the target customers with an affordable aromatic coffee and a flavorful
snack, doughnut.
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Objectives of the Study
The primary objective of this study is to determine the feasibility of
Production and Establishment of Coffee and Doughnuts corner at Batangas
State University – ARASOF Nasugbu, Batangas.
The specific objectives of the study are the following:
1. To put up a food cart type store for coffee and doughnuts at the
BatStateU ARASOF.
2. To improve the quality of coffee and doughnuts being offered.
3. To have an established name in the local market.
Definition of Terms
Coffee and Doughnuts corner. It is a food cart/stall that offers coffee and
doughnuts.
Coffeehouse. It is an establishment which primarily serves prepared coffee or
other hot beverages.
Compensation. It is a salary or wages that the employer pay to the employee for
the work they perform.
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Concoct. It is the act of making something by combining ingredients, to invent or
to devise mixed beverage.
Costly. It is costing a lot of money, or costing too much money; expensive.
Depreciation. It refers to a fall of value, especially of an asset through wear and
tear; an allowance for this deducted from gross profit.
Entrepreneur. It refers to a person who has possession of a new enterprise,
venture or idea and is accountable for the inherent risks and the outcome.
Espresso. It is a strong coffee brewed by forcing steam under pressure through
darkly roasted, powdered coffee beans.
Food cart type store. It is a type of store that is set up in one place to facilitate the
sale and marketing of one product.
Miscellaneous. Costs that are grouped tofether on a balance sheet because of a
lower monetary value.
Pastry. It is baked goods such as pies, tarts, or turnovers, made with paste of
flour, water, and shortening.
Satisfy. It is the feeling of a customer who has got what he wanted.
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Scope and Limitation
The study focuses on the production and establishment of coffee and
doughnuts corner. Instead of putting up a restaurant-like café, the proponents
are constructing a food cart type of store wherein coffee and doughnuts will be
available. The proposed business includes both production and marketing of
coffee and doughnuts. The doughnuts that the proponents are producing are
deep-fried ones. Different flavored dips will also be available for the doughnuts.
Customers may choose the dip they wanted and will also provide candy sprinkles
to make it more attractive.
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Chapter II
MARKET STUDY
This chapter deals with the marketing aspect of this study, the Production
and Establishment of Coffee and Doughnuts corner at BatStateU ARASOF.
Objectives
This chapter aims:
1. To identify the target customer, target market area and market share.
2. To gather more market information needed for marketing analysis.
3. To determine if there is a demand for the product the proponents are
offering.
4. To develop the marketing programs and strategy to be used in
promoting the products.
Research Method
The proponents used the descriptive method in gathering data for the
study.
Participants of the Study
The respondents of the survey were students from BatStateU-ARASOF
Nasugbu, Batangas who are also the target market of this study.
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Data Gathering Instrument
This study used survey as primary instrument in gathering data from the
target market. The survey was conducted to know the perception towards the
product. Interview is used to support the survey done. Please see Appendix A.
Data Gathering Procedure
The permission from the Associate Dean for the approval of the feasibility
study title was sought before conducting the study. In order to get the necessary
data needed in the study, the proponents conducted a survey to the target
customer. The proponents first got the total number of population of the target
customer. The proponents wrote a letter to the University Registrar to get the
total number of student enrolled at BatStateU ARASOF Nasugbu during the A.Y.
2010-2011. They used the Rule of Thumb Method by John Curry for them to
determine the sample size that will be used in the survey. The proponents also
prepared a survey questionnaire. The survey questionnaire made was checked
by the adviser. The survey questionnaire was distributed to the respondents and
had it answered by them. Interview was also done to support the data gathered.
After the respondents answered the survey questionnaire, the proponents
collected it and interpreted the data gathered that was used in the study.
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Statistical Treatment of Data
The statistical process utilized in dealing with the data gathered is the
percentage method. The formula is presented as:
PERCENTAGE = _________Frequency_______ Total number of respondents
In getting the sample size of the total population, the Rule of Thumb
Method by Dr. John Curry was used. An adequate sample of 3,891 students
enrolled at BatStateU ARASOF for A.Y. 2010-2011 would be a random sample of
5% or 195 students. The table for Rule of Thumb Method is shown in Table 2.1.
Table 2.1 Rule of Thumb Method
Size of Population Sampling Percent
0-100 100%
101-1000 10%
1001-5000 5%
5001-10000 3%
10000+ 1%
Major Consumers of the Product
The major consumers of the product were the students of Batangas State
University – ARASOF Nasugbu, Batangas.
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Demand
The following data were gathered based on the survey done:
95%
5%
Respondents who are will-ing to patronize Coffee and Doughnuts corner
Respondents who are not willing to patronize Coffee and Doughnuts corner
Figure 2.1 Willingness of the Respondents in patronizing the Coffee and
Doughnuts Corner
185 respondents answered they are willing to patronize the coffee
and doughnuts corner.
10 respondents answered they are not willing to patronize the
coffee and doughnuts corner.
Based on the result of the survey conducted, there is a high demand for
the coffee and doughnuts corner in the target market. Because of this, the
proponents saw that there will be customers who are going to patronize the said
business. The proponents also found out that the target customers liked the idea
of drinking their coffee with doughnuts.
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Supply
From the survey conducted by the proponents, it was realize that small
number of competitors exist in the target place thus only few are offering coffee
and doughnuts inside BatStateU ARASOF Nasugbu.
56%
22%
22%Canteen (doughnuts)
Canteen (coffee)
other stores inside the campus (coffee)
Figure 2.2 Available Supplies of Coffee and Doughnuts
Market Gap
5%
95%
SupplyMarket gap
Figure 2.3 Market Gap for Coffee and Doughnuts
The market gap analysis as shown in Figure 2.3 illustrates the unsupplied
demand in the target market.
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Market Share
The figure below illustrates the market share for coffee and doughnuts
corner.
4% 5%
89%
2%
Market Share
CanteenBite 'n SipUnsupplied Market Gapothers
Figure 2.4 Market Share for Bite n Sip
As presented in Figure 2.4, the proposed business gathered 5% of the
market share because it can provide unsupplied market in the
SWOT Analysis
SWOT Analysis is another strategic planning method that can was used to
evaluate the Strengths, Weaknesses, Opportunities and Threats of a business.
For this study, offering coffee and doughnuts with an affordable price is one of its
strengths. Moreover, the students and the employees of BatStateU ARASOF
drink coffee. With these, the proponents choose to establish the proposed
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business inside the university. However, being a newly established one, the
business may not be patronized because it is not well known.
On the other hand, having few competitors inside the campus, the
business has the opportunity to have more customers. In addition, the Coffee
and Doughnuts food cart/stall is the first inside the university thus the target
customers can be attracted to buy the proposed business’ products. Because
only few offer coffee and doughnuts inside the university, there is a good chance
that the target customers will patronize the food stall/cart. Though only few
competitors exist in the target place, these competitors do have a well
established reputation in the business and that can be a threat to the business.
Since the store is a food cart/stall type, it would be quite difficult for the
proponents to deal with unexpected weather conditions such as heavy rain and
flood.
Marketing Strategies
The following are the marketing strategies used in the study:
1. Product Strategy
Doughnuts and Coffee is the main product of this food stall.
Different flavored dips are also available for the doughnuts. Customers
are free to choose the dips they want and they can also choose the
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toppings for their doughnuts. In addition to that, different coffee
preparations like hot, iced and blended is also available in the
proponents’ stall. (See Table 2.2 and 2.3 for the menu list).
2. Place Strategy
The food cart or food stall will be located inside the Batangas State
University – ARASOF Nasugbu, Batangas.
3. Promotion Strategy
The proponents will administer several promotional activities so that
target customers will know that “Bite n Sip” already exists. Posters will be
placed around the campus and flyers will be distributed to the target
customers. The proponents will also give some promos such as free
tasting to the customers. Furthermore, for every purchase of a large size
blended coffee, customer will have a free doughnut. The promo will only
last for one week on its opening week. Word-of-mouth will be also
considered as one of the promotional strategies since it has become one
of the effective ways of getting a business known.
4. Price Strategy
Bite ‘n Sip formulated the prices based on the costing done by the
proponents. The doughnut’s price is Php 10.00 each and for the mini
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bite size is Php 5.00 each. The coffee’s price ranged from Php 25.00 –
Php 55.00 depending on the kind of coffee that the customer will order.
Table 2.2 Menu List for Coffee Beverages
Table 2.3 List of Doughnut Flavors
Product List Size and Price
Hot Coffee Small MediumBlack Coffee Php 30.00 Php 35.00Cappuccino Php 28.00 Php 30.00Moccaccino Php 30.00 Php 35.00
Iced Coffee Medium LargeMocha Igloo Php 30.00 Php 40.00
Caramel Igloo Php 35.00 Php 40.00Coffeemilk Igloo Php 30.00 Php 35.00Strawberry Igloo Php 30.00 Php 35.00
Blended Coffee Medium LargeStrawberry Ice Storm Php 45.00 Php 55.00
Cookie Ice Storm Php 45.00 Php 50.00Mallow Ice Storm Php 40.00 Php 45.00
Caramel Ice Storm Php 45.00 Php 50.00Chocolate Ice Storm Php 40.00 Php 45.00
Doughnut’s Flavor Size and PriceDip Flavors Doughnut Mini BitesChocolate Php 9.00 Php 5.00Strawberry Php 9.00 Php 5.00
Milk Php 9.00 Php 5.00Caramel Php 9.00 Php 5.00Mocha Php 9.00 Php 5.00
Add-OnsCandy Sprinkles Php 1.00 Php 1.00
Nuts Php 1.00 Php 1.00Mallows Php 1.00 Php 1.00Cookies Php 1.00 Php 1.00
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Chapter III
TECHNICAL STUDY
This study explains the technical aspects of the proposed business which
includes the description of production process, production schedule as well as
the machineries and equipments needed in the production.
Objectives
This chapter aims:
1. To give the technical description of the product.
2. To describe the process of production and the business process
flow.
3. To determine how the product could be produced at a highest
possible quality level with minimum cost.
4. To identify the equipment, tools and devices that will be utilized in
the production process.
5. To present/develop the design of the food cart.
Description of the Product
The main products of the business are coffee and doughnuts. The
proponents will offer coffee based beverages. There will be a variety of coffee
blended drinks that the customers are free to choose from. Espresso will be used
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as the main ingredient for the coffee blends. Aside from ice cold coffee, hot
coffees are also available in the food stall/cart. On the other hand, doughnuts are
deep fried flour mixture and they are served with different flavored dips and
sprinkles. Coffee and doughnuts can be a perfect pair for breakfast or snack.
Description of Production Process
The flow chart below presents the production process.
Figure 3.1 Flow Chart for the Production of Doughnuts
START
Preparing of Ingredients
Dissolving of yeast
Combining of ingredients
Kneading of dough
Fermenting of yeast
Cutting of dough
Frying of doughnuts
END
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The ingredients (milk, sugar, salt, egg, melted butter, vanilla, cake flour, all
purpose flour and the baking powder) will be first prepared and then dissolve the
yeast and sugar in half of the milk, set aside. In a bowl, combine all purpose flour
and cake flour to make the flour mixture needed. In a separate bowl, mix the
remaining milk, sugar, salt, egg, melted butter, vanilla, half of the flour mixture
and the baking powder. Add the yeast and continue adding the flour until mixture
doesn’t stick the sides of the bowl. Transfer the dough to a working table and
knead, adding in remaining flour for dusting, until smooth and elastic. Place in a
greased bowl and allow rising for 30 minutes - 1 hour or until double in bulk. Roll
out the dough and mold it into circle. Leave to rest until sizes of doughnuts
double. Heat oil in a deep fryer. Fry doughnuts until golden brown. Dust with
sugar or dip with your favorite flavors available at the food stall/cart.
For the production of coffee based beverages, the flowchart on the next
page shows the process to be executed.
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Figure 3.2 Flowchart for Production of Coffee based Beverage
The customer will choose what kind of coffee he/she will buy. There are
two kinds of coffee the customer can choose from, hot or cold. If the customer
prefers to have hot coffee, he/she can choose from black coffee or the flavored
one. For black coffee, espresso will be first made then it is ready to be served
with sugar and creamer. On the other hand, if the customer wants to have a
flavored hot coffee, espresso will also be made first then steamed milk and
START
SELECTION
BLACK COFFEE
HOT COLD
FLAVORED ICED BLENDED
Espresso Making Espresso Making Espresso Making Espresso Making
Serve Pour Steamed Milk PreparePour Milk
END Add Flavor BlendAdd Ice
Add EspressoEND Put in a Glass
END
END
Add Whip Cream
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flavorings will be added. Moreover, if the customer wants to have cold coffee,
he/she can choose between iced and blended coffee. For iced coffee, espresso
will be first made. After that, milk will be poured and flavoring will be added along
with ice and the espresso. If the customer prefers to have blended coffee, while
the espresso is being made, other ingredients such as sugar, milk and flavorings
will be prepared. After the preparations of the ingredients, it will all be blended
together with the espresso. When it is smoothly mixed, pour it in the glass, add
whip cream and toppings.
Production Schedule
The production of doughnuts will be scheduled at four in the morning
(4:00AM) weekdays. The proponents will produce 6 dozens or 72 pieces of
doughnuts per production schedule. While coffee drinks will only be made in the
food cart/stall upon order of the customer.
Machinery and Equipment
In producing and establishing the coffee and doughnuts corner, the
proponents need to use different machinery and equipment.
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NAME QUANTITY PRICE PER UNIT TOTAL AMOUNT
Espresso Maker 2 Php 8,000.00 Php 16,000.00
Blender 2 3,000.00 6,000.00
Deep Fryer 1 6,000.00 6,000.00
Ice Cooler 1 1,900.00 1,900.00
TOTAL: Php 29, 900.00
*Source: www.sulit.com
Factory Tools and Devices
Aside from the equipment that will be used in the production, different
tools will also be needed in the production process.
NAME QUANTITY PRICE AMOUNT
Measuring Cups 1 set Php 178.20 Php 179.00
Mixing Bowl 2 309.15 619.00
Tray 3 139.50 419.00
Weighing Scale 1 500.00 500.00
Tong 2 50.00 50.00
Doughnut cutter 1 160.00 160.00
Kneading Table 1 1,500.00 1,500.00
TOTAL: Php 3, 427.00
*Source: www.sulit.com
Furniture and Fixtures
NAME QUANTITY AMOUNT TOTAL
Table 3.1 List of Machinery and Equipment
Table 3.2 List of Factory Tools and Devices
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Monobloc Chair 1 Php 150.00 Php 150.00
Food Showcase 1 7,500.00 7,500.00
TOTAL: Php 7,650.00
Since the proponents will have a food cart/stall type of store, only few
furniture and fixture will be used. A chair for the storekeeper will be placed in the
store area. In addition, a food showcase will also be positioned in the food
cart/stall. This will serve as storage and display area for doughnuts in order to
maintain its freshness.
*Source: www.sulit.com
Raw Materials
Almost all of the raw materials needed in the production of coffee and
doughnuts are available in the grocery or public markets. The primary ingredient
needed in the production of doughnuts is flour such as All Purpose Flour and
Cake Flour. Others are yeast, sugar, milk, butter, egg, salt, vanilla, baking
powder and oil. For the production of coffee based beverages, the raw materials
to be used are grinded coffee, ice, chocolate sauce, sugar and other flavorings
such as strawberry syrup and caramel syrup. The Raw Materials presented in the
table below are good for 20 days of production.
Table 3.3 List of Furniture and Fixture
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Table 3.4 Raw Materials for Doughnuts and Coffee
Raw Materials Quantity Amount
Cake Flour 1 sack/ 25 kilos Php 1,040.00
All Purpose Flour 1sack/ 25 kilos 1,040.00
Baking Powder 1 bag 65.00
Sugar 1 sack/ 35 kilos 2,100.00
Yeast 1 bag 150.00
Vanilla Extract 2 liters 90.00
Milk 5 liters 325.00
Salt 1 pack 10.00
Egg 1 tray 120.00
Butter 20 bar 440.00
Cooking Oil 1 gallon 500.00
Water 1 gallon 25.00
Chocolate Sauce 1.5 liters 270.00
Condensed Milk 3 cans 105.00
Coffee beans 5 kilos 1,500.00
Strawberry Sauce 1.5 liters 250.00
Caramel Sauce 1.5 liters 270.00
TOTAL Php 8,300.00
Indirect Materials
Indirect materials were also used in order to make the production with the
good service possible. For the production of doughnuts, the proponents used
different toppings to enhance the taste of the doughnuts. The customers are the
ones who will choose the dips they want. Moreover, another indirect material to
Table 3.5 Indirect Material for Coffee and Doughnuts
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be utilized is whipped cream, chocolate sauce and marshmallows which will
serve as the coffee drinks’ toppings.
Indirect Material Quantity Amount
Whipped Cream 5 bottles Php 1,250.00
Mallows 1 bag 45.00
Crushed Cookies 1 bag 55.00
Nuts 1 bag 35.00
Paper Bag 100 pcs. 40.00
Clear Cup and Paper Cup 400 pcs. 1000.00
Lid 200 pcs. 319.00
Straw and Stirrer 200 pcs. 65.00
Sugar and Creamer Sachet 2 packs 210.00
Tissue Paper 1 pack 60.00
TOTAL: Php 3079.00
Office Supplies
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The office supplies that will be needed in the food cart/stall are presented
in the table below.
Table 3.6 List of Office Supplies
NAME QUANTITY AMOUNT TOTAL
Pens 2 Php 5.00 Php 10.00
Record Book 1 53.00 53.00
Folders 2 5.00 10.00
Stapler 1 55.00 55.00
Correction Fluid 1 33.00 33.00
Staple wire 1 box 7.00 7.00
Pentel Pen 2 34.00 68.00
TOTAL: Php 236.00
*Source: www.nationalbookstore
Miscellaneous
The miscellaneous expense of the proposed business includes the
emergency funds for the machinery and other emergency expenses.
Promotion
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The promotional strategies that will be employed are posters and flyers.
Tarpaulins will be printed and it will serve as posters that will be displayed in
some visible areas in the campus. Flyers will also be produced in small sizes of
papers and will be given to that target customers. This is one of the ways the
proponents can inform their target customer that the product already exists.
Aside from that, the proponents will also conduct promos which will only last for
one week. This is upon the opening of the food cart/stall.
Refer to Appendix K and L for sample poster and flyers.
Plant Layout and Plant Location
For the plant layout, refer to Appendices B, C, D, E, F, G, H, and I. The
food cart/stall will be located inside the BatStateU ARASOF campus. The
proponents choose to have the food cart/stall placed at Mini Forest Park because
many students spend their vacant periods in the said area. For the plant location,
refer to Appendix J.
Utilities
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Some of the utilities that will be used in the production are water, LPG,
and electricity. Water will be used in cleaning the equipment as well as the tools
and devices needed in the production. It will also be used as one of the materials
in the production. Another is LPG which will be used in frying the doughnuts.
Electricity will also be utilized. It will be used so that the equipment can function
well.
Waste Disposal
In view of the fact that the proponents are establishing the coffee and
doughnuts corner inside the BatStateU ARASOF, it is important that it complies
with the university’s requirement in terms of proper waste disposal. The
proponents will provide two trash bins beside the food cart/stall this is to avoid
littering of the cups and containers that are used by the customers. In addition to
that, the proponents plan to recycle the plastic waste by selling it to a junk shop.
Direct Labor Requirements
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Aside from the raw materials and indirect materials that will be utilized,
direct labor will also be necessary. The proponents will employ a staff that will
help them in running the business. The store keeper will be the one in-charge of
attending to the customers and will also be trained in concocting different kinds of
coffee beverages. The proponents will also train another staff in order to help
them in the production of doughnuts.
Chapter IV
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MANAGEMENT STUDY
This chapter discusses the management aspect of the proposed business.
Objectives of the Study
General Objective
This chapter aims to develop a clear and precise identification of duties
and responsibilities among the staff. It also tackles the flow of authority and
manpower requirement.
Specific Objectives
This chapter aims:
To identify and discuss the form of business ownership.
To determine the organization structure and benefits to be given to the
staff.
To identify the duties and responsibilities of each member and personnel.
To set organizational policies in order to have a harmonious working
environment.
Form of Business Operation
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The proponents prefer to have a partnership form of business. Partnership
is deemed as an advantageous form for the proponents mainly because it is very
much easy to establish. In addition to that, the capacity to raise fund for the
proposed business is increased because partners can contribute more funds.
The proponents can also combine their skills in order to have a wider pool of
knowledge needed in the proposed business. With partnership, the proponents
can have moral support for each other since they are business partners and it will
allow a healthier brainstorming.
Organizational Structure
Figure 4.1 Organizational Chart
The figure above shows the organizational structure of the business. It
also shows the relative ranks and position in the business. Since the proposed
business is a small one, there is no need of hiring more staff. For the smooth flow
Manager
Storekeeper Production Staff
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of the production process, the proponents will act as general manager,
production manager and store manager.
Manpower Requirement
The proposed business requires a manager, storekeeper and production
staff.
Position Title: MANAGER
Job Description
1. Responsible for the management and operation of the store.
2. Maintaining an active customer service.
3. Preparing and reviewing the financial statements.
4. Checking the sales and inventory of supplies daily.
5. Planning of strategies needed to improve the business.
Job Specification
1. Must have knowledge in business operation and management.
2. Strong effective communicator.
3. Demonstrates ability to manage and supervise a staff team.
4. Demonstrates ability to share skills and knowledge with others.
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5. Willing to multi-task.
Position Title: STOREKEEPER
Job Description
1. Attends to the needs of the customers.
2. Prepares coffee drinks and other beverages.
3. Maintains the cleanliness and orderliness in the store area.
4. Handles the everyday sales and profit.
5. Makes a daily sales report and inventory of supplies.
Job Specification
1. With knowledge on established material handling procedures.
2. With knowledge on inventory control procedures.
3. With knowledge of the operation, adjustment, and maintenance of the
equipment operated.
4. Has the ability to operate machines and related equipment to produce the
desired results.
5. Has the ability to perform simple arithmetic calculations.
6. Has the ability to follow instructions.
7. Has the ability to write legibly.
8. Has the ability to communicate effectively with others.
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Position Title: PRODUCTION MANAGER
Job Description
1. Helps the proponents in the production of doughnuts.
2. Maintains the cleanliness and orderliness in the production site.
Job Specification
1. Has the ability to follow instructions.
2. Knowledgeable with the basics of baking.
Compensation
The proponents will compensate the staff/employee depending on the
scope of the duties. The store manager and the production staff will be given Php
15.00 per hour each daily. For the general manager, he will be given Php 200.00
per business day. The salary of the staff will be given every 15th day and the last
day of the month.
Benefits
Since the proposed business is small and a newly established one, only
few benefits will be given to the staff. Each staff, specifically the store manager
and production manager will have a free meal during the time of their duty. The
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store manager will have a free lunch while the production staff will have a free
breakfast. In the event that the proposed business expands, the proponents will
have the ability to compensate the staff more. They will give back to their
employees in terms of awarding them with more benefits.
Organizational Policies
Like any other business establishments, the proponents constructed the
following rules and regulations to be followed by the staff and employee.
General Policies
1. Every employee shall report to the work on time and should
leave the work place at the proper time of dismissal.
2. Absence without official leave is not allowed by the authority.
Employees should inform the Management about their absence a day
before he/she leaves.
3. If the employee is absent for any apparent reason, the employee
will not be compensated.
4. Every employee shall observe the wearing of proper working
clothes and shall be properly groomed.
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5. Since the business is located inside the BatStateU ARASOF
campus, the storekeeper shall also observe the proper dress code
imposed by the University.
Administrative Policies
1. Every employee shall perform the duties and responsibilities
efficiently and effectively.
2. Every employee shall keep in mind that he/she represents the
business’ name.
3. If any of the equipment got damaged due to the staff’s
recklessness, the staff will be liable for the said damages.
4. In case there will be loss in sales; the storekeeper will be liable
for the said loss. But, in case the sales exceed the actual amount it will be
given automatically to the storekeeper.
Operational Policies
1. Satisfactory performance shall be observed in the workplace.
2. Every employee shall work 8 (eight) hours daily, from 8am to
5pm. In the case of the production staff, he/she will work at the time of the
production only.
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3. Every employee shall use mobile phones and other electronic
communications and media devices properly and discreetly.
3. The store and production manager shall wear apron and hair net
while performing their duties.
Legal Requirements
Before the establishment of the proposed business, the proponents need
to furnish the following legal requirements in order to start the business
operations:
1. Municipal License
2. Regulatory Fees
Mayor’s Permit
CTC/Cedula
Police Clearance
DTI Registration
BIR Registration
Sanitation
Fire Permit
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Generalization
The proponents decided to have a partnership form of business wherein
they will contribute an equal amount of money that will be used in the
establishment of the business. Moreover, the said form of business will allow
them to share their ideas and come up with better and sound decisions. This
chapter also includes the compensation and benefits that will be given to the staff
as well as the duties and responsibilities of each of them. In addition to that, the
organizational structure of the proposed business is also presented in this
chapter.
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Chapter V
FINANCIAL STUDY
This chapter discusses the financial aspect of the proposed business, the
total project cost and financial assumption for the first five years of operation.
This chapter will conclude if the proposed business is profitable or not.
Objectives of the Study
1. To determine the total project cost of the proposed business.
2. To identify the source of financing and the capital requirements that will
be utilized in the proposed business.
3. To illustrate the financial statements and financial assumptions of the
business for the first five years of operation.
4. To analyze the financial ratios of the proposed business.
Total Project Cost
The total project cost of the proposed business is presented on the next
page. It includes all the necessary components in order to complete the business
operation.
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Table 5.1 Project Cost of Bite ‘n Sip
Bite 'n SipProject Cost
Fees and Licenses Php
3,041.00
Equipments
Coffee machinePhp
16,000.00
Blender 6,000.0
0
Deep fryer 6,000.0
0
Ice cooler 1,900.0
0 29,900.0
0
Food Cart 7,460.0
0 Furniture and Fixtures
ChairPhp
150.00
Food showcase 7,500.0
0 7,650.0
0 Working Capital
MaterialsPhp
110,752.82
Traveling 2,160.0
0
Advertising 750.0
0
Utilities 480.0
0
Office supplies 870.0
0 Tools and devices
1,427.00
Wages 9,000.0
0
Miscellaneous 360.0
0 125,799.8
2
Total Project Cost Ph
p 173,850.8
2
40
The table above shows the total project cost of the proposed business.
The working capital presented above includes all the expenses that will be
incurred in the first month of operation.
Capital Requirements
The overall capital requirement needed for the proposed business is Php
160,000.00. The mentioned amount is enough to cover all the necessary
expenses needed in the operation of the said business.
Sources of Financing
In order to realize the proposed business, the proponents agreed to
contribute cash amounting to Php 53,333.33 each for a total of Php 160,000.00
as starting capital to establish a business.
Financial Assumptions
41
The assumptions are made by the proponents of the study.
Increase in sales is resulted from the 3% increase in quantity and
unit selling price per year.
Cost of sales, like sales is increased annually.
Expenses such as wages and depreciation remains fixed.
Other expenses such as utilities, travelling and miscellaneous are
increased by 3% annually.
Income tax expense is computed by having 30% based on
income before tax.
Financial Statements
The Financial Statements for the proposed business is presented on the
next pages. The Financial Statements are for the first five years of operations.
For the Financial Statements see page 42.
42
43
44
45
Notes to Financial Statement
1. Statement of Sales. See page 47.
2. Statement of Cost of Sales. See page 48.
3. Expenses
For breakdown of equipment, furniture and fixture see Table 3.1
page 21, and Table 3.3 page 22.
Liabilities are composed of Income Tax Payable which is paid
during on or before 15th day of April of the next year.
The partner’s equity which is increased by a net income that is
shared equally by all of the partners.
Income is composed of sales or computation of sales, see
Figure 5.1 page 41, and is increased by 3% annually in quantity
and unit selling price.
46
Expenses are composed of cost of sales see Figure 5.1 page
41, fixed (wages, depreciation and miscellaneous), and variables
(cost of sales, income tax) which is increased by 3% annually.
4. Statement of Inventory. See page 49.
5.Non-current Assets
Non Current Assets 1 2 3 4 5
Equipments 29,900.00 29,900.00 29,900.00 29,900.00 29,900.00 Food Cart 7,460.00 7,460.00 7,460.00 7,460.00 7,460.00 Furniture and Fixtures 7,650.00 7,680.00 7,680.00 7,680.00 7,680.00
Less: Accumulated Depreciation
1,511.00 3,022.00 4,533.00 6,044.00 7,555.00
6. Income Tax Payable
The tax for the first three quarters has been paid and the
remaining quarter will be payable on April 15 next year.
7. Statement of Changes in Partner’s Equity. See page 50.
8. Production Cost. See page 51.
47
48
49
50
51
52
53
54
55
Ratios
Financial Ratios
A. Profitability Ratio
Profitability ratio shows the combined effects of liquidity, asset
management, and debt on operating results.
Table 5.2 Return on Investment
Year Net Income InvestmentReturn on
Investment1 128,581.26 160,000.00 80%2 139,213.79 160,000.00 87%3 149,446.07 160,000.00 93%4 160,313.82 160,000.00 100%5 171,856.11 160,000.00 107%
Table 5.2 Return on Investment refers to the percentage of income
that serves recovery from the original investment. On the first year, there
is 80% return on the partner’s investments and there is a gradual increase
in the succeeding year. This is an implication that the partner receives
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such percentage as a return to the investment contributed. To show the
computation of the present value, please see Appendix N.
B. Profit Margin Ratio
Profit Margin ratio measures net income per peso of sales, it
is computed by dividing net income by sales.
Table 5.3 Profit Margin Ratio
Year Net Income Sales Profit Margin Ratio1 128,581.26 767,081.00 16.76 : 1
2 139,213.79 813,796.23 17.11 : 1
3 149,446.07 863,356.42 17.31 : 1
4 160,313.82 915,934.83 17.50 : 1
5 171,856.11 971,715.26 17.69 : 1
Table5.3 Profit Margin Ratio refers to the ratio of net income for
every peso of sale. For year 1, in every peso of sale 16.76% of it is its net
income.
C. Liquidity Ratio
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Liquidity ratio shows the relationship of a firm’s cash and other
current assets to its current liability.
Table 5.4 Current Ratio
Year Current Assets Current Liabilities Current/Quick Ratio
1 258,858.83 13,776.56 18.78 : 1
2 400,692.81 14,915.76 26.86 :1
3 552,746.20 16,012.08 34.52 : 1
4 715,735.42 17,176.48 41.66 : 1
5 890,339.20 18,413.15 48.35 : 1
Table 5.4 Current Ratio refers to how much peso of current assets is to be
paid for any peso of current liabilities. The table above shows that the
proposed business is capable of paying its short term debts.
D. Stability Ratio
Stability ratio proves that the business is stable by finding the debt
to equity ratio; it is computed by dividing the total liabilities to total partners’
equity.
Table 5.5 Debt to Equity Ratio
Year Total Liabilities Total Partner’s Equity
Debt to Equity Ratio
1 13,776.56 288,581.26 4.77: 12 14,915.76 427,795.05 3.49 : 13 16,012.08 577,241.12 2.77 : 1
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4 17,176.48 737,554.94 2.33 : 15 18,413.15 909,411.05 2.02 : 1
Table 5.5 Debt to Equity Ratio of the proposed business as
presented on the previous page shows that the business is a stable one and has
the ability to pay its long term debt.
Generalization
The proposed business has a total project cost of Php 173, 850.82. The
proponents agreed to contribute Php 53,333.33 each; the said amount will be
used as the capital for establishing the said business. In this chapter, the
Financial Statements for the first five years of the business is also presented.
Furthermore, financial ratios are also discussed and interpreted.
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Chapter VI
Socio Economic Contributions
This chapter discusses the social desirability of the proposed business
and its contribution to the nation’s economy.
Contribution to Nation’s Economy
The proposed business can contribute in the nation’s economy in several
ways. One of these is, as a producer of coffee and doughnuts, the proposed
business needs to buy raw materials from suppliers thus it also helps other
business in gaining profits. Another is it makes available of the products to their
customers which they need in a more affordable price. The proposed business
also employs workers who can help them in the business. In that way they are
able to give work opportunity to those who are unemployed. By establishing the
business it becomes subject to several taxes which goes to the government and
being utilize for construction of different infrastructures.
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Employment Generation
The proposed business will employ two staff who will help the proponents
in the operation of the business. Since it is a newly established business the
proponents will not employ a huge number of employees. But as soon as the
business grows and the proponents plan to expand the business, there will be a
need for more employees. Thus the proponents will hire additional staff. In that
way, the proposed business can somehow help in reducing the unemployment
rate in the community where the business is located.
Social Desirability
The proposed business is socially desirable to the government, the
customer and to its employees. With the taxes that the business will pay, the
government will use the said funds in building infrastructure that will benefit the
citizens. By establishing the proposed business, the proponents will be able to
provide the target customers with products that will satisfy them. On the other
hand, the employees that the proponents will employ will be compensated
properly and will be given benefits that can somehow help them improve their
way of living.
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Other Contribution
Aside from the business’ contribution to the economy and its social
desirability it can also contribute in other ways. The proposed business can
contribute to the community where it is located by making the products available
to its customers and it provides them with a wide selection of food to choose
from. In addition to that, the business can also contribute in the environment by
disposing the waste materials properly. The business will also promote the said
environmental awareness to its target customers.