1

Executive Summary
Coffee houses are now facing a booming popularity due to the new trends and varieties of
coffee lovers all across the world. This craze did not miss to hit the coffee industry of
Bangladesh as well today. So Kiva Han is positioned to serve this whim through its foreign and
world class coffee beverages. This is a coffee shop that is going to be initiated in the Progress
Tower of Gulshan 2, Dhaka, Bangladesh. The name that is given to the shop is after the first
coffee shop in the world back in 15-16
th
century in Istanbul and it promotes the historic link of
this coffee shops image.
Kiva Han will provide a friendly, comfortable, where customers can receive food, service and
entertainment at a fair price. The basic product will definitely be coffee and the types will be
various. Juice, soda and non-alcoholic beverages will also be available according to customer
needs, but this shop is dedicated to the history of coffee and to producing as much recipes of
coffee known to coffee enthusiasts. No deficiency in the ability to serve meals is there as well.
Most of the dishes served will be of middle-eastern nature and taste.
The interior design will be done by the sole proprietor who is an architect as well. It will mainly
focus on projecting a rustic environment. The shop is be divided into different areas. Some with
tables and chair, another with have large antique stuffed couches and chairs, end tables, coffee
tables, book shelves filled with books and magazines, tiffany style lamps, music played, etc.
Free wi-fi is be there for customers. Overall the shop will try to produce an image relation
between coffee and Islamic History.

The shop operates in a 2000 square feet area. Kitchen covers 350 400 square feet, the rest is
serving place. The building is split level and Kiva Han is located in 5
th
floor according to the lift
and then 1 flight of stair above. Being surrounded by surplus corporate and multinational
sectors like Dell, Chevron, Bank Asia, etc, there is a huge opportunity to capture daily
consumers and grow fast.

The owners initial investment to the shop is BDT 5000000 lakhs. No, rent costs needed as the
owner owns the place as well. The company is also in a strategic alliance with the wi-fi provider,
so the wi-fi is free as well. The company is equity financed, there is no financial leverage in the
organization, as from our projected cash flow we have been earning profit. We suggest the
company to use some financial leverage to get some tax break. Our organization is following all
the ethical standard there is and always believe in providing the best service and best quality
product to the customer.


2

Introduction
Kiva Han is a Coffee shop determined to be a place where coffee addicts can quench the thirst
of their daily whims through world class and traditional coffee beverages. Along with coffee
loving consumers will also strive actively to meet the demands of youths, families and
corporate beings between various portions of their operating time. The shop is named after the
first coffee house in the world in Istanbul as it is widely known. It is quite different from other
coffee shops as it will try to promote and image of the interrelation of coffee and some Islamic
history.
Located in Gulshan 2, Dhaka, Bangladesh in a 2000 square feet area, Kiva Han has travel
agencies, multinational companies like Standard Bank, chevron and even Dell as its neighbor.
Thus it has the potential to target a wide range of customers from this corporate vicinity. As the
owner mentions, the day of operation will divided into three major parts in which the expected
customers are corporate people for breakfast, young generation in the afternoon and families
in the evening. This company is a unique and new introducer of exotic coffees along with their
history in the food business of Bangladesh.

Company Profile
The entrepreneur of this business in an architect whos initiating this business out of passion in
an inherited place. As a result the initial cost for the startup is quite lower than standard due to
the absence of any rental cost. The main product that this business wants to promote is coffee.
There will be different and unique foods served besides as well but the business emphasizes
highly on coffee, its variety and history. Other foods will have a middle-eastern touch in their
taste and the coffee beverages will consist of many flavors.

The main menu of Kiva Han coffee shop will be built around espresso-based coffee drinks such
as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with
whole, skimmed, or soy milk. Each of these coffee beverages is based on a 'shot' of espresso,
which is prepared in the espresso machine by forcing heated water through ground coffee at
high pressure. Such espresso shots are combined with steamed milk and/or other additives like
cocoa, caramel, etc., to prepare the espresso-based beverages. Raw beans will be grinded
properly for the coffee according to the direction of qualified barista. Proper preparation
techniques are of paramount importance for such drinks as a minor deviation from the amount
of coffee in the shot, the size of the coffee particles, the temperature of milk, etc., can
negatively affect the quality of the prepared drink.

3


Exotic and historic recipes of coffees will also be highly offered. Pizza, rice, middle-eastern
dishes, common snacks and beverages will also be very much available to serve customers
accordingly. Interior of the coffee shop will be designed innovatively by the owner himself
which will have an ancient touch. Consumers will experience a rustic environment inside with
colorful wood and metal furniture, music, carpet and free wi-fi.

Mission Meeting demands of enthusiastic desires of exotic coffee.

Vision Striving to become a global brand.

Objectives-
Hit desired profits within the first 6 months of operation.
Capture a strong recognition in the field of business.
Capture a large number of loyal customers.
Becoming one of the most dominating food businesses in the area.
Become the best coffee provider locally and later throughout the
country.
Getting into strategic alliance with different service based businesses.


















4

External Analysis
Data from the Coffee Research Organization and the National Small Business Development
Support Center Clearinghouse show that coffee is the most popular beverage in the world, with
more than 400 billion cups consumed per year. The typical and most committed coffee drinkers
are 25 to 45 year old, affluent, educated adults. Major products sold by coffee shops include
beverages as well as complimentary food items. Beverages include brewed coffee and tea;
espresso drinks (cappuccinos, cafe lattes); cold blended beverages; bottled water; soft drinks;
and juices. Food products include pastries; bakery items, desserts, sandwiches, and fast food.
There are a major number of competitors for Kiva Han and well established ones as well. Some
of these coffee shops names and location are:
ATRIUM LOUNGE
Westin Dhaka Hotels

BARISTA LAVAZZA
Gulshan, Kawran Bazar, Uttara


BITTERSWEET CAF
Gulshan

CAF ITALIANO
Banani

CAF MANGO
Dhanmondi

Gulshan

Lalmatia


CAF NEMO

Banani

5


COFFEE WORLD
Banani

Dhanmondi

Gulshan

Uttara

COFI 11
Gulshan, banani
EXIT LOUNGE

Gulshan-2

FIESTA CAF & LOUNGE
banana

FLOOR 6 LOUNGE & GRILL
Banani

GLORIA JEAN'S COFFEES



KOZMO LOUNGE

MLANGE COFFEE & CONVERSATION
Banani

MERMAID GALLERY CAF
Baridhara, Gulshan

NORTH END COFFEE
Badda

6

RED SHIFT
Gulshan

SMOKE MUSIC CAF
Banani

SPLASH (POOL SIDE CAF)
The Westin Hotel
Main Gulshan Avenue


TERRA BISTRO
Banani

THE BENCH
Gulshan-1


THE LIVING ROOM
The Westin Hotel


THE POOL CAF
Pan Pacific Sonargaon Hotel


TIME OUT
Banani

ZONE ZERO LOUNGE
Banani






7

Now lets look at the PESTLE analysis and the PORTERs model for the coffee shop industry

PESTLE analysis focuses on the factors that affect the industry as whole in order to judge
whether those factors affect the growth of the company in a positive or a negative way, thus
formulate a plan on how should the company meet those factors. Pestle analysis stands for
"Political, Economic, Social, and Technological analysis" and describes a framework of macro-
environmental factors used in the environmental scanning component of strategic
management.

POLITICAL FACTORS are basically to what degree the government intervenes in the economy.
Taxation policy: As Bangladesh is not a coffee producer this will not apply, if it was a coffee
producer then taxation on farmers coffee beans would have resulted in high prices paid for
coffee for Kiva Han.
International trade regulations/tariffs: If the exporting country imposes tariff on coffee then
the importing price for Bangladesh will be higher resulting in paying higher prices for
purchasing coffee for the business.

ECONOMIC FACTORS include economic growth, exchange rates and the inflation rate,
competitors actions. These factors have major impacts on how businesses operate and make
decisions.
Economic Growth: If growth is low in our country sales may also fall. Consumer incomes tend
to fall in periods of negative growth leaving less disposable income, this might cause low
customer levels. Consumer confidence in products can also fall if the economic 'mood' is low.
Exchange rates: Kiva Han can be affected by exchange rates. If the value of the currency falls in
the country of a coffee supplier this enables coffee importers to get more when importing the
goods to their country. This saving can be passed along to the customer. Exchange rates are
forever changing throughout the world in today's market.
Inflation rates: Inflation is a condition of increasing prices. It is measured using the Retail Price
Index (RPI) in Bangladesh. Business costs will rise for Kiva Han through inflation, as will shoe-
leather costs as they shop around for new 'best prices' of materials, menu costs will rise as the
shop have to create new price lists. Also, uncertainty is created when making decisions not
8

least because inflation redistributes money from lenders to borrowers. A firm that borrows TK
1000
during an inflation period will pay back less in 'real terms' as the value of this money will decline
over the period.
Competitors pricing: Competitive pricing from competitors can start a price war for Starbucks
that can drive down profits and profit margins as they attempt to increase, or at least maintain,
their share of the market.
SOCIAL factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
affect the demand for a company's products and how that company operates.
Income distribution

Income distribution: As the coffee shops location is on a posh area this gives it a competitive
advantage. Coffee is more of a luxury product so it is those people/places with the most
amount of disposable income to spend that should be targeted the most intensely.

Working conditions/safety

Those people with the most disposable income, e.g. young single professionals etc., will be
accustomed to high standards. Kiva Han must ensure its shop is clean and comfortable, service
is of the highest order and health and safety issues are fully addressed.

Location

Transport needs to the premises must be considered for both staff and customers. Easy access
is vital to ensure there is no excuse for staff to arrive late or for customers not to visit.

Health consciousness

Good health and foodstuffs associated with healthy living are important In today's market
place, as this is a trend that is occurring at the moment in different societies. Kiva Han can use
this information when deciding the additional products to sell, as well as coffee, as a large
number of their customers are looking for healthy alternatives to cakes and biscuits, which
have been associated with coffee in the past.

TECHNOLOGICAL factors include technological aspects such as R&D activity, automation,
technology incentives and the rate of technological change. They can determine barriers to
entry, minimum efficient production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.
9

IT development: The coffee shop can launch a website of its own and provide internet
connections in its premises as most other coffee shops
New materials and processes: Developments in the technology of coffee making machines and
the computers that Kiva Han will use to run their cash registers will enable their staff to work
more quickly and efficiently. This will result in customers being served quicker and create the
potential to serve more customers in a day. This will prevent customers from having to wait
around for long periods thus improving customer relations along with increasing the customer
base.
Software upgrades: In the short-term, the business must identify the most efficient software
upgrades to use to keep up with the competition. This applies to the improving the accessibility
of their website and also improving the speed and quality of the service provided on the shop
floor.
ENVIRONMENTAL factors include ecological and environmental aspects such as weather,
climate, and climate change. Furthermore, growing awareness of the potential impacts of
climate change is affecting how companies operate and the products they offer, both creating
new markets and diminishing or destroying existing ones.
As customers are becoming more cautious about their environment most businesses now have
taken this aspect seriously. As a coffee business Kiva Han can fulfill its ethics and responsibility
and also make customers happy by practices like recycling, using reusable cups, greener cups,
using water saving technology in its machines and power saving practices, these can bring the
business into customers good eyes.

LEGAL factors include discrimination law, consumer law, antitrust law, employment law, and
health and safety law. These factors can affect how a company operates, its costs, and the
demand for its products.
Government laws: Changes in employment laws of or country can have minor effects on the
staff of the coffee shop. Changes in consumer protection policy, competition regulation can
influence the business.
Competitive Forces that impact competition (Porter Model)
Porters 5 Forces is an industry analysis model developed by Michael E. Porter. Porter's five
forces model is an excellent model to analyse a particular environment of an industry. As we
are in the coffee shop business, we would use Porter's model to help us find out about:
1) Competitive rivalry 2) Power of suppliers 3) Power of buyers
10

4) Threats of substitutes &
5) Threat of new entrants.
In the industry
The above five main factors are key factors that influence industry performance, hence it is
common sense and practical to find out about these factors before we enter the industry. Lets
look at them below.
Competitive rivalry
A starting point to analyzing the industry is to look at competitive rivalry. Kiva Han has quit a
number of established competitor s around the Dhaka city like Caf mango, Bittersweet caf,
Coffee World, Coffee 11, etc. Competitors can also be found in other industries like
convenience stores, quick service, fast food restaurants, gourmet food shops, Pastry shops,
filter specialty coffee machines for home use, etc.
Competition can also come through special offers (new tastes), outstanding service/
environment (internet, music, comfortable seating areas, short waiting queues), loyalty
programs (bonus cards ensuring frequency of visits) and for premium locations (retail centers,
university campuses, etc.)
Power of suppliers
Suppliers are also essential for the success of a company. Raw materials are needed to make
the food items served. Suppliers do have power so it is worth considering but very limited
power of suppliers as they depend on producers help and sell a commodity. For the food items
raw materials can be bought from many suppliers but Kiva Han should consider factors like
quality of the goods, distance from the supplier, prices, etc. Coffee is imported from other
countries, price varies along with the economic and political situation of the export country. For
the Dairy products as well the retail prices vary a lot, used for specialty drinks.
Power of buyers
Buyers or customers can exert influence and control over most industries. There is a high
dependency of coffee shop chains on frequency of customer purchases so it is very important
force to remember. Most customers appreciate the nice atmosphere in the coffee shops but
Preferences of customers tend to switch as they might get bored with / tired of the same flavor.
So Kiva Han should remember to bring changes and newness into the flavors once in a while.
Very strong power of customers as coffee shops depends on word of mouth and customer

11

retention. Furthermore a customers opinion, preferences and shopping habits can be
influenced easily which creates a big threat for the company.
Threat of substitutes
There are alternative products that customers can purchase over the shops product that offer
the same benefit for the same or less price- this is the threat of substitute. There is Competition
with other drinks that are not the main focus of by coffee shops: Soft drinks, Soda, Juice, Water,
milkshakes, Sports Drinks, etc. There is Competition with other products because people are
spending their money on Ice Cream, Cigarettes and Sweets. Consumers have limited
discretionary budget to spend on consumer goods, such as cigarettes, beer and also coffee;
coffee shops are therefore fighting for a fraction of this budget. Very strong power of substitute
products as especially young people might prefer other products, such as soft drinks, cigarettes
or soda.
Threat of new entrant
The threat of new entrants is high because there arelow entry barriers: easy to open a single
small caf, rent a place which is a positive side for Kiva Han as the owner has his own place,
remodel, install the equipment, get license as needed.
However there are high entry barriers for the specialty level or big league/chain players as they
need high up-front investment needed to grow significantly (distribution system: shops,
equipment, premium locations; marketing: creation of brand awareness & brand recognition,
customer retention), Partnerships with large, international companies also serve as potential
entry barrier for new competitors, economies of scale (purchase advantages; centralized HR
and Marketing) realized by big players, a disadvantage for new entrants.


12

INDUSTRY ANALYSIS: SEGMENTATION
Market segmentation can be defined as the process of dividing a market into distinct subsets of
consumers with common needs or characteristics and selecting one or more segments to target
with a distinctive marketing mix. Segmentation studies are designed to discover the needs and
wants of specific groups of consumers so that the specialized goods and services can be
developed and promoted to satisfy each groups needs. For our coffee shop we did 2 types of
segmentation. The segments are following below:
Geographic segmentation:
In geographic segmentation the market is divided by location or area. The theory behind this
strategy is that people who live in the same area share some similar needs and wants and that
needs and wants differ from those of people living in other areas. As our coffee shop will be in
Dhaka, we divided Dhaka in to following segments:

1. Gulshan
2. Bonani
3. Baridhara
4. Uttara
5. Basundhara
6. Mirpur
7. Mohakhali
8. Md.pur



gulshan
bonani
baridhara
uttara
basundhara
mirpur
mohakhali
Md.pur
13

This geographic segmentation was done based on the most prominent areas of Dhaka city.
Age segmentation:
Product need and interest often vary with consumers age. People of different ages, have
different preferences for a same product. We categorized the age segment by following:
1. 13 or below: Mostly kids. Dont have individual preference.
2. 14-20: Teenagers. Mostly school college going teens having many restrictions in life.
3. 21-30: University students and young working / corporate people.
4.31-45: Matured working class/ corporate/ business people who are very knowledgeable
about market.
5. 46+: Aged people. Some may be retired. Not concerned with recent trend and market.
Target Market:
Market segmentation is just the first step in a three-phase marketing strategy. After
segmenting the market into homogeneous clusters, the marketer then must select one more
segments to target.
Based on the geographic segmentation, our target markets will be Gulshan, Bonani and
Baridhara area. The reason is our coffee shop will be in Gulshan. So Gulshan itself, and areas
near Gulshan like Bonani, Baridhara will be convenient. We can grab a large amount of
customers from these areas. Besides from the survey we found that people living in Gulshan,
Bonani and Baridhara are more interested in coffee shops and willing to pay for quality coffee.

percentage
gulshan
bonani
baridhara
uttara
basundhara
mirpur
mohakhali
Md.pur
14


And based on the age segmentation we targeted our customers to be age range 21-30 and 31-
45. Because from the survey we found that people of these age range are more interested in
trying different types of coffee.



Apart from the survey, from common sense we can predict that, as the coffee shop will be
located in a corporate area of Gulshan, corporate people will be a major part of our target. Of
them mostly young corporate people. Then there are many private universities near Gulshan.
So those young students are also our target.

POSITIONING:
Positioning refers to the development of a distinct image for the products or service in the mind
of consumers, an image that will differentiate the offering from competing ones and squarely
communicate to the target customer that the particular product or service will fulfill their needs
better than competing brands. Successful positioning centers around two key principals:
First, communicating the benefits that the service will provide. For our coffee shop we can say
that, it will be an upscale coffee shop with good environment. The customers can have a quality
time here with family and friends. The most important thing is, we will provide international
standard coffee. Dinner, lunch, bakery items will also be available.
0%
5%
10%
15%
20%
25%
30%
13 or
below
14-20 21-30 31-45 46+
interested in trying various coffee
interested in trying various
coffee
15

Second, because there are many similar products in almost any marketplace, an effective
positioning strategy must develop and communicate a unique selling proposition or
competitive advantage. For our coffee shop, our competitive advantage is we have a very
prominent and posh location. From evening we can provide a big parking space. And we will
have home made, hygienic bakery items.

The 4 Ps of Marketing:
The 4Ps or marketing mix consists of a companys service and product offerings to consumers
and the method and tools it selects to accomplish the exchange. The four elements are-
product, price, place, promotion. Based on our coffee shop, the 4Ps are described below:
1.PRODUCT: Our core product is coffee. In Bangladesh there is very limited scope for the coffee
lovers to taste different types of coffees. So well offer world class standard, different types of
coffees. Beside this, well also have lunch, dinner item and bakery items.
2.PRICE: From the survey we found that most of the peoples are not willing to pay more than
200 taka for a cup of coffee. Keeping that in mind well do price lining. Well set the coffee
menu as regular priced and premium priced. So that everyone can afford our good quality
coffee.
3.PLACE: Our location of the outlet will be in Progress tower, Gulshan. Its a very prominent
place in Dhaka city.
4.PROMOTION: We will mainly do our promotion through Facebook, twitter and other social
sites. We already have a fan page there.








16

SWOT Analysis:
SWOT is a tool that identifies the strengths, weaknesses, opportunities and threats of an
organization. Specifically, SWOT is a basic, straightforward model that assesses what an
organization can and cannot do as well as its potential opportunities and threats. The SWOT
analysis of our coffee shop is given below:

STRENGTH:
Personally owned floor space. No
monthly rent is to give
Lucrative interior as the design
will be done by the entrepreneur
himself
The bakery items will be supplied
by the entrepreneurs aunty
which ensure hygienic food and
good quality
Convenient location
WEAKNESS:
No established market as its
going to be just introduced
No parking place in day time
Financial limitation

OPPORTUNITY:
Expanding coffee business
Longer lunch breaks that allow
nearby corporate workers to visit
our coffee shop
The place can also be use as
meeting room


THREAT:
Increased competition from other
coffee shops
Health conscious people avoid
coffee
Caf culture is not yet established
in our country







17


BCG MATRIX:
It is the most renowned corporate portfolio analysis tool. It provides a graphic representation
for an organization to examine different businesses in its portfolio on the basis of their related
market share and industry growth rates.



Our coffee shop is in question mark part. Because as a new business it is entering a high growth
market in which there is also market share. Question marks represent business units having low
relative market share and located in a high growth industry. They require huge amount of cash
to maintain or gain market share. If huge investment is made, then it has potential of becoming
stars.





18

OPERATIONAL PLAN
Stages in the production process
The Production processes in our Coffee shop are basically for Food Materials and coffee. This is
represented in the flow chart in the next page.
a. The first step is to take the order from the customer
b. After taking the order from the customer we have to check if we have that in our list of
menu or not and if not can our chef prepare it or not and if it is in our menu we can take
the order
c. If in the above step we dont have that product in the menu we can offer something else
which we can prepare
d. If yes take the order and pass it to the chef and prepare the food
Or
If they dont have the product they can say sorry for the inconvenience
e. After taking the order clean the table.
f. Bill the customer for consuming the product.

19

Flowchart of Production Process:
Flowchart below shows the different steps through which the production process goes through.

Start
Check we
can serve
or not
YES


YES

YES
Take Order from Customer
Take order
Prepare it and serve it

offer something we
can serve.
Check we
can serve
or not
SAY SORRY FOR INCONVINENCE
END
YES
YES
NO
NO
20

Quality control to be maintained:
The manager will supervise the quality of the food not only that the supervisor , chief and
waiter will be trained to make food hygienic as the food may get contaminated during the
entire production process, so they will be trained to make it as hygienic as possible. We will be
providing hygienic food materials rather than using cheap to save some expenses.
2. Production Capacity
Product Time Quantity Unit Price
(average)
Taka
Espresso 1 year 3600 Tk 150 540000
Caffe Latte 1 year 3600 Tk 275 990000
Caffe Mocha 1 year 3600 Tk 325 1170000
Espresso Latte 1 year 3600 Tk 300 1080000
The Caf
Milano
1 year 3600 Tk 300 1080000
Vanilla
Cappuccino
1 year 3600 Tk 300 1080000
Vanilla Latte 1 year 3600 Tk 350 1260000
The Raspberry
Mocha Latte
1 year 3600 Tk375 1350000
White
Chocolate
Cocoa
1 year 3600 Tk 250 900000
Chocolate
Truffle Cocoa
1 year 3600 Tk 250 900000
The Espresso
Chocolate
Malt
1 year 3600 Tk 350 1260000
21

The Mocha
Smoothie
1 year 3600 Tk 350 1260000
The Vanilla
Smoothie
1 year 3600 Tk 350 1260000
Classic Iced
Tea
1 year 3600 Tk 175 630000
Earl Grey 1 year 3600 Tk 175 630000
Darjeeling Tea 1 year 3600 Tk 175 630000
Herbal lemon 1 year 3600 Tk 175 630000
Tropical Green 1 year 3600 Tk 175 630000
Fresh
Specialized
Orange Juice
1 year 3600 Tk 200 720000
Lemonade 1 year 3600 Tk 200 720000
Genesis Juice
(Mango and
Guava)
1 year 3600 Tk 300 1080000
Orange Soda 1 year 3600 Tk 200 720000
Strawberry
Soda
1 year 3600 Tk 200 720000
Apple Soda 1 year 3600 Tk 200 720000
Cheesecake 1 year 3600 Tk 250 900000
Brownies 1 year 3600 Tk 250 900000
Muffins 1 year 3600 Tk 250 900000
Black Forest
Chocolate
1 year 3600 Tk 500 1800000
cookies 1 year 3600 Tk 200 720000
Special
Chicken
1 year 3600 Tk 600 2160000
22

Sandwich
Vegetable
Soup
1 year 3600 Tk 300 1080000
Thai Soup 1 year 3600 Tk 350 1260000
Total 115200 31680000

3. List of Fixed Assets and their Depreciation
Fixed Assets Quantity Price Durability of
Assets
Depreciation
(In Taka)
Land - - - -
Machinery and
Equipment

1) Espresso
Machine
2 100000 10yrs 10000
2) Air condition 2 200000 5yrs 20000
3) Coffee
Equipment
2 75000 10yrs 7500
4) Refrigerator 2 150000 10yrs 15000
5) Microwave
Oven
3 120000 10yrs 12000
6) Cash Registers 3 45000 5yrs 9000
Total Machinery
and Equipment
690000

73500
Furniture and
Fixtures
10 sets 1000000 10yrs 200000
23

Van 2 3000000 15yrs 600000
Total 1,690,000

873,500

Rate of depreciation: Building@ 5% each year, Machineries & Equipment @ 10% each year,
Furniture & Fixture and Transport @ 20% each year may be considered.
4. Repairs and Maintenance Cost of Fixed Assets:
Fixed Assets Life Span Repair and Maintenance
Cost per year
Van 1 15yrs 180000
Van 2 15yrs 180000
Espresso Machine 10yrs 30000
Refrigerator 10yrs 25000
Microwave Oven 10yrs 20000
Coffee Equipment 10yrs 20000
Furniture and Fixtures 10yrs 100000
Floor Space (renovation) 500000
Cash registers 5yrs 2000
Total 1057000

5. Cost of Raw materials (yearly)
Description of Raw Materials Unit Quantity Unit
Price
Cost
(Taka)
Coffee bean Kg 180 kg 250 450000
Sugar

Kg 150kg 80 14400
24

Tealeaves

Kg 200kg 180 25000
Milk

Liter 7200 55 396000
Plastic Mugs 25000 25 625000
Baking soda

Kg 100 100 10000
Eggs

1000 10 10000
Water

Liter 10000 30 300000
Fruits

Kg 150 155 23250
Chocolate powder

Kg 50 300 15000
Cheese

kg 25 1000 25000
Butter kg 10 100 1000
Total 1894650

6. Workforce engaged in production:
In total our coffee shop will have 10 employees are directly and indirectly affiliated or engaged
in production processes. There will be one manager, one chef, two Baristas, 3 efficient waiters
and one cleaner.
We have to hire an experience chef and if he is without skills, he will be trained with the
necessary skills. The Baristas will be trained by getting involved in Barista courses which are
available online. The waiters will be trained by sending them to different conferences for
hospitality training. The hired waiters and a cashier will have good English communication skills.
25

The workers will be available round the year, since we will try to hire people from Dhaka area. If
they are not available there will be less impact on the production since we will be hiring
efficient and effective individuals who could carry out the load even if one or two is missing.

Designation Wages (yearly)-TK
Baristas *2 900000
Chefs *1 360,000
Waiters *4 384000
Cleaner and guard (1+1) 120000
Manager 360,000
Total 2124000

7. Factory Overhead Cost:
SI Description Cost Yearly
1 Utilities (gas, electricity,
water)
68400
2 Depreciation of fixed assets 1873500
3 Repair and maintenance cost 1057000
Total 2,998,900

8. Production Cost:
SI Description Cost (yearly)
1 Cost Of raw materials 1894650
2 Wages 2124000
3 Factory Overhead Cost 2998900
Total 7017550

26

9. Inventory management
In our coffee shop we will be following a simple accounting system. The Inventory is that part of
a business' assets that are available for sale to clients and customers. The inventory for a coffee
shop is specialized in that it consists in large part of goods that have an expiration date. We will
keep track of not only the Materials we dont have but also the expiry date as to become more
hygienic.
The in charge of Inventory system will be the manager and the chef will be notifying and
checking it every day id the inventory is sufficient or not, we will be using FIFO system, as food
may get Date expired or damaged because of storing it for long time so we will try to finish
those food materials before it is damaged saving our cash and reducing our expenses.

VII. Financial Plan
1. Fixed Assets:
Item Present (Tk) Proposed (Tk)
Machineries &
Equipment
750,000 690,000

Furniture & Fixture 700,000 1,000,000
Vehicle (Van, Truck if
any)
3,500,000 3,000,000
Total 4,950,000 4,690,000

2. Current Asset:
Description Duration Present (Tk) Proposed
(Tk)
Raw materials 5 2,000,000 1,894,650
27

expenditure
Wages 5 2,500,000 2,124,000
Factory Overhead
expenditure
5 3,500,000 2,998,900
Marketing expenditure 5 500,000 300,000
Administrative
expenditure
5 40,000 35,000
Total 8,540,000 5,552,568

The cost of fixed asset is Taka 4,690,000, and the cost of Current asset is taka 5,552,568. In total
we need Taka 10,942,568.


3. Start-up Cost = Taka 350,000
4. Total Investment = Taka 10,592,568
5. Sources of Fund:

According to our forecast we need a total of 10 million taka to start this business; the company
will be equity financed, but if we use some leverage, it may give us some tax break.

Description Loan Equity Total
Present Proposed Present Proposed Present Propose
d Bank/
FI
Other
s
Bank/FI Other
s
28

Land - - - -
Building - - - -
Machinerie
s
` 750,000 690,000 750,000 690,000
Furniture
and fixtures
700,000 1,000,00
0
700,000 1,000,00
0
Transportat
ion
700,000 1,000,00
0
700,000 1,000,00
0
Business Start
up cost

3,500,00
0
3,000,00
0
3,500,000 3,000,00
0
Total fixed
asset

400000 350000 400,000 350,000
Net current
assets

4,950,00
0
4,690,00
0
4,950,000 4,690,00
0
Total
Investment
1389000
0
1059256
8
13890000 1059256
8

7. Income Statement:

Items Current Year Year 1 Year 2 Year 3
Sales 10,080,000 11,000,000 11,500,000 12,000,000
(-) Net VAT (15%) 1512000 1650000 1725000 1800000
Net Sales 8,568,000 9,350,000 9,775,000 10,200,000
(-) Cost of Goods Sold 2570400 2805000 2932500 3060000
Gross Profit 5,997,600 6,545,000 6,842,500 7,140,000
(-) General
Administrative and
sales expenditure
2382400 2382400 2382400 2382400
Net Profit Before 3,615,200 4,162,600 4,460,100 4,757,600
29

Interest and Tax
(-) Interest on bank
loan
-
Net Profit Before Tax 3,615,200 4,162,600 4,460,100 4,757,600
(-) Tax 1355700 1560975 1672537.5 1784100
Net Profit After Tax 2,259,500 2,601,625 2,787,563 2,973,500

30



Sales forecast:
From the Forecasted income statement we have suggested a sales Forecast. The X axix
represents the year and Y axix represents the amount of Taka. The sales have been increasing
every year, and at the end of 3 years we can see in the table the sales forecasted has reached to
Taka12,000,000.
8. Break-Even Point
Description Fixed Cost Variable Cost
Variable Cost
COGS 2570400
Fixed Cost
Utility bills( electricity, water gas) 68400
Depreciation 873,500
Repair and maintenance cost 1057000
Administrative and sales expenditure 2382400
Total Fixed Cost 4,381,300
9,000,000
9,500,000
10,000,000
10,500,000
11,000,000
11,500,000
12,000,000
12,500,000
current year yr1 yr2 yr3
Sales Forecast (taka)
31

Total Variable Cost 2570400

Total unit sold: 115200
Average Variable cost per unit: 22.31 Taka /unit
Average Fixed cost per unit: 38.032 Taka /unit
Average selling Price: 87.5 Taka /unit
Contribution margin: Sales - Variable cost = 87.5 22.31 = 65.19
Now BEP in units:
= FC / Contribution Margin
= 4,381,300/65.19
= 67208.16076 units per year
= 5600 units per month
BEP in Dollars
= FC / (1- (VC/sales)
= 4,381,300/ (1-(22.31/87.5)
= 5,880,714.067 units per year
= 490,049.5055 units per month
Break even figure generated from Fast4cast.com.
32



From this figure and the above calculation we can see that break-even point (BEP) for1 year is
Taka 67208.16076 units per year and Taka 5600 units per month. The break even when
expressed in units is 5,880,714.067 units per year and 490,049.5055 units per month. For our
company to stay in break-even point in a situation where the company will be neither in profit
or loss but recover its cost involved.






33

9. Projected Balance Sheet
Item Current Year Year 1 Year 2 Year 3
ASSETS AND PROPERTIES
Current Assets
Cash and Bank balance 500,000 500,000 500,000 500,000
Inventory 200,000 200,000 200,000 200,000
Total Current Assets 700,000 700,000 700,000 700,000
Fixed Assets
Preliminary expenses 100,000 100,000 100,000 100,000
Machinery & equipment 750000 615000 553500 498150
Furniture & Fixture 1000000 998000 798400 638720
Security Deposits - - - -
Land & Building - - - -
Rental advance (prepaid
rent)
- - - -
Vehicles & Transport 3,000,000 2700000 2430000 2187000
Other fixed Assets
Less accumulated
depreciation on all fixed
assets 575000 531100 458030 396259
Total Fixed Assets 4,275,000 3,881,900 3,423,870 3,027,611
LIABILITIES AND OWNERS
EQUITY

Liabilities
(a)Short term liabilities/
Current liabilities

Cash credit 100,000 120,000 130,000 140,000
Accounts Payable - - - -
34

Interest Payable - - - -
Taxes Payable 1355700 1560975 1672537.5 1784100
Outstanding expenses - - - -
Total Short term liabilities 1,455,700 1,680,975 1,802,538 1,924,100
(b) Long term liabilities
Bank loan payable - - - -
Mortgage payable - - - -
(-) Current portion of long
term liabilities
- - - -
Total Long term liabilities - - - -
Total liabilities 1,455,700 1,680,975 1,802,538 1,924,100
Owners Equity
Initial capital 5,000,000 5,000,000 5,000,000 5,000,000
Retained Earnings 564,875 650,406 696,891 743,375
Profit for the year 2,259,500 2,601,625 2,787,563 2,973,500
Total Owners Equity 7,824,375 8,252,031 8,484,454 8,809,694
Total Liabilities & Equity 9,280,075 9,933,006 10,286,992 10,733,794









35

10. Projected Cash Flow Statement
Projected Cash Flow
[Year]
Current
Year
Year 1 Year 2 Year 3 Year 4 Year 5
OPENING BALANCE
Cash inflows
Sales 10,080,00
0
11,000,
000
11,500,
000
12,000,
000
12,500,
000.00
13,000,0
00
Equity 7,824,375 8,252,0
31
8,484,4
54
8,809,6
94
8,809,6
94.00
8,252,03
1
Loan - - - - - -
Asset sales - - - - - -
Debtor receipts
Other income
Total Cash inflows 17,904,37
5
19,252,
031
19,984,
454
20,809,
694
9,074,3
75
21,252,0
31

Cash outflows
Marketing Expenses 300,000 300,00
0
300,00
0
300,00
0
300,00
0
300,000
Capital Expenses
Cost of raw materials 1894650 198938
2.5
208885
1.625
219329
4.206
189465
0
1989382
.5
Wages 2124000 212400
0
212400
0
212400
0
212400
0
2124000
Factory Overhead
Expenses
(Utility,
repair&maintenance,
2,998,900 2,998,9
00
2,998,9
00
2,998,9
00
2,998,9
00
2,998,90
0
36

rent)
Start-up cost 3,000,000 3,000,0
00
3,000,0
00
3,000,0
00
3,000,0
00
3,000,00
0
Office Equipment
Salary 2124000 212400
0
212400
0
212400
0
212400
0
2124000
Administrative expenses 2382400 238240
0
238240
0
238240
0
238240
0
2382400
Bank fees & charges 2000 2000 2000 2000 2000 2000
Income Tax 1355700 156097
5
167253
7.5
178410
0
185410
0
1970000
Total Cash outflows 16,181,65
0
16,481,
658
16,692,
689
16,908,
694
16,680,
050
16,890,6
83

Cash balance 1,722,725 2,770,3
74
3,291,7
65
3,901,0
00
4,629,6
44
20,676,8
56
OPENING CASH BALANCE 0 1,722,7
25
4,493,0
99
7,784,8
63
11,685,
863
16,315,5
07
CLOSING BALANCE 1,722,725 4,493,0
99
7,784,8
63
11,685,
863
16,315,
507
36,992,3
63

37



The X axis represents the no of years, and Y axis represents the cash balance, as we can see the
cash balance is increasing every year and the overall cash flow is increasing. The trend that we
can see is the cash balance is increasing every year and with that the opening balance and the
closing balance are also increasing.





0
5000000
10000000
15000000
20000000
25000000
0 1 2 3 4 5
T
a
k
a

year
Projected Cash Flow
Cash balance
Opening Balance
Closing Balance
38

Annex-I: Financial Ratio Analysis

Ratios related to Income Statement
Ratio Ref. Result
Return on Investment or ROI
%
= 2,259,500
X 100/
10,592,568
21.3309936


Gross Profit ratio/ Margin = 2,259,500
/
8,568,000
0.26371382


Operating Profit Ratio = 3,615,200
/
8,568,000
0.42194211


Net Profit Ratio/ Margin = 2,259,500
/
8,568,000

0.26371382


Interest Coverage Ratio = 3,615,200
/
0
0



39

Balance Sheet related Ratios
Ratio Ref. Result
Acid-Test/ Quick Ratio = 5,552,568-200,000
/
100,000

53.52568

Current Ratio 5,552,568
/
100,000
55.52568

Net Working Capital = 5,552,568
100,000

5,452,568

Debt Equity Ratio = 1,455,700
/
10592568
0.13742654

Return on asset (RoA) = 2,259,500
/
4,690,000+5,552,568
0.22059897










40


Internal Rate of Return (IRR)

According to the calculation the NPV and IRR of our project are as follows, we have used excel to find
this amount. Our IRR is greater than the Cost of capital rate which means we get more return from the
project than we have invested.
cost of
capital 16%
year Coffee Shop
0 -10,592,568
1 2,770,374
2 3,291,765
3 3,901,000
4 4,629,644
41

5 20,676,856
IRR 38%
NPV 7,881,586.28















42

Organizational Structure of KIVA HAN











In organizational structure owner is the head of the company. He runs the business.
Additional managers who will responsible for overall management of the staff, handling
customer complain, scheduling staff etc. He directly report to owner. A high qualified and
experience chef who make the food. An assistant chef, who also experiences this field, helps
the chef. A barista who have outstanding knowledge and experience to make different type of
copy with flavor. There are two coffee services and one food service man is serving the coffee
and food from counter and they also collect the money. A cleaner who clean the coffee shop,
washroom, table etc. A guard who open the door and give the greetings when people enter the
coffee shop.
There are four people like owner, manager, chef and barista will be in the management team.
The owner who is an architectural degree from abroad. He has lot of experience about coffee
shop and strong management quality. The manager who have the bachelors degree in hotel
and restaurant management and three years of experience in a reputed restaurant as a
manager. The chef who have five years of experience. He also attends different training in the
field of cooking and has a great knowledge about Thai, Chinese, France, Italian, Indian food. He
has a great knowledge about nutrition. The main person of the coffee shop, who makes the
copy, is called barista. He has great experience to make the copy. He worked different five star
hotels as a copy maker. He is well trained and experience to make the copy favorable.
Owner
Chef Barista
Manager
Barista
Food serviceman Coffee serviceman

Coffee serviceman

Cleaner Guard
43

Associate organization: The owner of the kiva han do not partnership or associate with any
other organization.
Succession plan of Kiva Han:
The absence of the owner, the manager will run the coffee shop. For this reason, the owner
need to follow three steps like identifying and analyzing key jobs, creating and assessing
candidates and selecting those who will fill the key position. So identify the position of owner
and create and assess the manager for this position.
Business start up activities:
There are so many activities to start a new business. The first one is business plan. For a
business plan, the owner thinks that he will run a coffee shop. Then he starts to make a plan.
First he thinks about the location. He found a very nice location at gulshan of the top floor of his
own building. Then he starts to decorate the place. He also applies for trade license. He also
collect information about coffee shop business like what are the equipment are need, what
kind of machineries are uses to make a copy, what are promotional strategy, how to recruit the
baristas, chef, manager, service man. Then he collects equipment for the coffee shop.
The list of the equipment for a coffee shop is given below:
1. Expresso machine.
2. Copy maker
3. Copy grinder
4. Food service equipment (microwave, toaster, refrigerator, dish washer, blender etc)
5. Storage hardware (bins, utensil rack. shelves, food case etc)
6. Counter area equipment (counter top, sink ice machine
7. Serving area equipment (plates, cups, flatware)
8. Office equipment (telephone, cash machine, computer, sound system, furniture etc)
9. Cleanning equipment.



44

The recruitment process:
In recruitment process first decide what position to fill. The owner of kiva Han, realize that he
has nine people to run the business. The position is manager, two baristas, chef, two coffee
servicemen, one food serviceman, one cleaner and one guard. So he uses the external source of
recruitment. He gives vacancy announcement at newspaper. Than collect CV from the
candidates. Then take the interview and primary select the candidates. Then he observes the
candidates in doing the job. Then he finally selects the candidates for his coffee shop.
The fund of starting business will collect from different sources like dank deposit; friends,
relatives and commercial bank .He apply twenty lakhs taka loan for his coffee shop. For this
reason, he mortgages his fixed asset. For getting loan he expenses some money to prepare the
loan
Business start up cost:

Sl Business Start-up Activities Time Cost
1 Business Plan preparation 6 months 100000
2 Registration and license for business 3 months 500000
3 Application for loan 6 months 10000
4 Contract/Agreement 0
5 Purchase of land/ Rent (only time) 0
6 Purchase of land/ Rent (only time) 5 years 500000
7 Recruitment 2 years 200000
8 Others 100000
Total

5. Office Equipment:


Fixed Asset Cost Duration Depreciation
Air condition 200000 2 years 20000
Furniture 1000000 10 years 200000
Cash register 4000 5 years 2000
Total 1204000 222000






45

6. Salary of the Employees:

Sl Designation Salary (monthly)
1 Manager 30000
2 Chef 30000
3 Baristas 30000
4 Baristas 30000
5 Service man 20000
6 Cleaner 8000
7 Guard 12000
Total

7. Administrative Expenses:


Sl Description Cost (In Taka)
1 Depreciation of Office
Equipment
229000
2 Salary of Employees 200000
3 Office Rent 0
4 Office Utilities (gas, electricity,
water etc.)
100000
5 Postage, Telephone etc. 300000
6 Stationeries 3000
7 Entertainment 500000
8 Others (Specify) 100000
Total


Monitoring and Evaluation: As owner of the Kiva Han, the manager is responsible for
everything. It is his job to hire well qualified and trusted employees. The owner will set aside
duties for himself. The monitoring tusks are given below.
Schedule and contact employees.
Give proper job descriptions and schedules.
Make sure facilities and equipment are running correctly.
Make sure supplies are adequate.
Clean and organize the store.
Deal with promotions and advertising.
Promote good customer service.
Encourage employee morale.
46

Evaluation system of this coffee shop is much upgraded. Monitoring system is arranged in a
system that helps to evaluate the whole procedure. Evaluation feedback is given weekly basis
and monthly basis.
The regular monitoring and evaluation system will help to improve the facility system of the
shop. Thus, it will be possible to give customer best quality of service.
Business social responsibility: social responsibility comes first to our mind besides business
tusks. Hygienic environment awareness is necessary to get fresh air and safe from the pollution.
We are very much aware of our produced waste. We use eco friendly raw materials to make the
parcel packets. On the other hand, we are careful about other responsibility like distributing
warm clothes in winter to poor people. We are not only bounded with just these responsibilities,
besides we are interested to involve with others responsibility where we get opportunity to help.
Research and Development: As a new business it will provide further more service in future. It
will enlarge its sitting arrangement. Other delicious items that are popular to customers will be
provided to the customers. Parking facility will be enlarged within next 2 years
Training and development:
The most basic purpose of training and development is to provide new or current employees
with the skills they need to perform their jobs (Dessler 266). For kiva han this is very much at
the core of their business. Unlike other jobs where employees could potentially pick up the
skills their position requires, kiva Han is a business with a reputation of product uniformity.
Poor or lack of training would not only tarnish their reputation but also result in potential loss
of sales.

The training process traditionally occurs in four steps (Dessler 267):

1. Needs Analysis Identify specific knowledge and skills for the job, then compare to trainees
knowledge and skills.

2. Instructional Design Formulate objectives, review training program content, and estimate a
budget for the program.

3. Implement Actual training of the employees.

4. Evaluation Assess programs strengths and weaknesses for future adjustment


47

Other Course of Action
Environmental Issues
In todays world our environment is getting polluted and we all talk about it but we will design
our coffee shop to be as eco friendly as possible, we will be depending on the natural ambient
to light up our coffee shop, and use Less packaging as possible and if it is possible try avoiding
packaging, we will be using bio-degradable jute back which can be reused again. We will treat
the waste material created from our coffee shop. Not only this will be our small Contribution to
the Society but will also give the impression that we are worried about the people and their
environment.
We will also try to select the suppliers who are not polluting the environment so it will be the
whole system rather than an individual coffee shop working to protect the environment. If
there are any shops which is polluting the environment and is blacklisted and affiliated to our
organization we will work on to find another supplier to find a more eco friendly product.
Ethical Issues
A monopoly is a system where the supply is less compare to the demand and the supply is
coming from only one source in that situation the seller will have the more power. As being a
new business where there are already established franchises and companies the chance of our
coffee shop having a monopoly is very small and rare. We will get the customer without doing
any unethical work, as people will start using and like it once they experience they coffee and
the environment that we provide them. As being a responsible coffee shop of Bangladesh we
will be filling for our taxes properly and contributing something for our nation other than our
service too.
Legal Issues
We will be following all the rules and regulation of Bangladesh from health standard to safety
measures to ensure the safety of our customer. We will follow the food and safety act of
Bangladesh. There may be some surprise visit from food inspector to check the quality of the
48

food we will give our full support and cooperate with their work as Safety of our customer is
also our concern. We will be respecting the rights of the employees but they will not be allowed
to form any union, they will be well paid and one of the requirement will be they should be
above 18 as they are not minor and can work without any legal restriction.
Intellectual Property Issue
Our company will be registered and because of that the logo and its name cant be any other
company in Bangladesh as it is a unique name. We dont have any new patent or new product
but later on if we develop it we can patent it and have a competitive advantage.

Working Environment
Our working environment will follow OSHA standard to protect and ensure the health and
safety of the employees not only that the employees will have a fun environment in which they
will enjoy their work. The environment will be friendly in the workspace. Employees will only be
allowed to smoke during break and out of the working area as customer may get annoyed
because of the smell and they make take frequent break to go and smoke. We will be taking
complains from the customer about our customer and enquire about it and if there was
anything wrong we will try to solve it.

Networking Linkage/ Partnership
Individuals who are affected by a business directly or indirectly are identified as stakeholders.
Suppliers, customers, government, employees etc are some examples of stakeholders. As our
coffee shop is new we should try to get as much networks as possible, as we will start to create
friendship with them we may get some privilege, discount while doing some business.
We can do this by being a good creditor, paying bills on time and doing more business with
them.
49


CONCLUSION:
We give a green signal to this project as it is earning good NPV which measures the return on a
project until 5 years and not only that it is giving higher IRR which is greater than the market
rate, IRR is the return from the project irrespective of how the company is financed, who is
running it or other factors. (Calculation shown on the appendix).
The sales forecast as shown above is increasing every year, and this business is a profitable
business, if we can reduce different fixed cost and variable cost this business would generate
more profit.
The break even point (BEP) for1 year is Taka 67208.16076 units per year and Taka 5600 units
per month. The break even when expressed in units is 5,880,714.067 units per year and
490,049.5055 units per month.











50

Recommendation:
While pricing the product use odd pricing if u want to make the customer think its
cheaper and they would buy more. Example of odd pricing are ( .99, 99, 199)
Turn off the wi-fi : Starbucks move into free Wi-Fi may have helped their business ini-
tially. 42% of Starbucks customers have used the free Wi-Fi and half of those people
tend to buy more coffee when doing so. (survey.com) it may be a short lived phenom-
ena based on what some other independents are doing. Other coffee houses are going
in the other direction, Caf Coupa in Pala Alto California turns off the Wi-Fi on the week-
ends. They found that customers were unable to get seats because people just sat on
their computers, took up space and didnt order more coffee or food. Four Barrel Coffee
in San Francisco also cut off the free wi-fi and the owner, Jeremy Tooker, said it made
business boom Victrola Coffee also has changed its free Wi-Fi policies because they
found that customers no longer talked to one another.
Having few items but having specialty in producing them. When the items to produce
are less we need less material because of that our raw material cost goes down not only
that according to experience curve as people engage in a similar kind of work their
efficiency increase because of this our employees can work with more efficiency.