Week 6 Assignment – Feasibility Analysis

Creating a Small Business

The name of the company is Coffee Place. The business will operate within the food and beverage sector in the hospitality industry. It will entail serving different types of coffee and snacks to clients. Among the snacks that would be served include customized cakes, popcorns, cornflakes, and different nuts. The target market is travelers in towns, residents in neighborhoods, and students in universities; as such, the pricing model adopted is the low pricing model, which would be attractive to many clients, including students and academic staff, hence enjoy the economies of scale. The expansion strategy will include opening own stores and franchising to reach a wider market. The mission statement offers the best coffee to students, travelers, and neighbors at the lowest price.

To adhere to the mission, the business will ensure efficiency in operations cost-cutting measures in the supply chain to reduce costs and ensure low prices. Importantly, the organization will employ qualified personnel to offer quality services by making quality coffee and snacks. Among the competitors are Starbucks, Sey Coffee, DayglowCoffee, Cat & Cloud Coffee, and Mom ‘n’ Em Coffee.

Strengths and Weaknesses of Mom ‘n’ Em Coffee

Mom ‘n’ Em Coffee established in 2015 as a partnership business serving coffee to an executive clientele. It is a family-run business. Apart from coffee, it also serves wine, pastries, and toast. The business was first located in Camp Washington, Cincinnati, before expanding to other places.

Strengths

· The business partners with local organizations to give back to society through the corporate social responsibility strategy. For example, in Camp Washington, Cincinnati, the business partnered with the Local Fed to offer coffee and breakfast to healthcare workers at Cincinnati Children’s Hospital (Zummo, 2020).

· In addition, the business offers more products that include different types of wine, which attracts a wide range of clients, with coffee taking care of the needs of the non-alcoholic drinkers.

· Furthermore, the founders of the business have experience in business operations, they are knowledgeable; hence, they can manage its human resource effectively to increase performance and register profits.

· Importantly, the business has an established brand within the Cincinnati area; the brand is aggressively marketed as the best place for coffee in the uptown and downtown.

· The business also offers takeout and delivery services. That means wine takers and coffee takers can order products delivered to their offices or homes, depending on the requisition.

Weaknesses

· The main weakness of the business is limited outlets, which reduce the number of clients who can be served at any given time. The business is still in its development phase; it has not expanded widely to other areas

· In addition, the business is run as a family business, which means the sources of funds are limited to family resources, limiting the business’s geographical expansion.

The ownership structure of the new business

The new business will be structured as a Limited Liability Company- LLC. The structure is good for the business because it offers liability protection. That means the assets and liabilities of the owners would not be affected when the business faces bankruptcy or lawsuits (The Law Office of Aiden H Kramer, LLC. 2015). Importantly, as an LLC, the owners would pay self-employment tax contributions rather than corporate tax, which are relatively higher. Essentially, an LLC combines the protection of a corporation and pass-through and simplicity of a sole proprietorship. That means the losses and profits arising from the business would be passed through to the owners’ tax returns; they would be taxed at a rate of personal tax.

In relation to the cost of formation, it is relatively cheaper to form because the legal requirement is the state filing fee that ranges from $40 to $500, depending on the state. The low formation fee is good for the start-up business, which would direct most of the resources to the business’s operations to ensure it succeeds. Importantly, it is easy to start a business because there is no need for an attorney; there is no need for the board of directors, holding shareholder meetings and keep meeting minutes (Norman, 2015). As such, less time is required to create and maintain compliance-related documents.

In terms of managerial ability, the business will be based on the manager-managed structure; in this case, managing the organization will be delegated to the manager, who may or may not be part of the founders. Due to the lack of a board of directors, the manager would be independent while the investors would be passive. As such, whereas I am not experienced in the operations in the hospitality industry, employing a manager to run the business is a show or serious towards the success of the business. Moreover, adopting the LLC business structure increases the business’s credibility to the target market; hence, it is expected to attract more clients.

References

Norman, M. S.(2015). Entrepreneurship and effective small business management, 10th edition. New York: Pearson

The Law Office of Aiden H Kramer, LLC (2015). All Up In Yo’ Business: Sole Proprietor, LLC, or Corporation? Online video.

Zummo, M (2020), Locally Fed partners with Cincinnati restaurants t provide food to those most affected by COVID-19. City Beat, 10th July, 2020.