Business Plan

20/December/2010

Lahore Business School University of Lahore 1-KM Defence Road, Bhoptian Chowk Lahore, Pakistan

Submitted To: Sir Irfan Sidique

Submitted By: Ali Arshad MBA02093152 Usman Ali MBA02093061 Sidra Shoukat MBA02093145 Sidrah Amin MBA02093146 Osman Pirzada MBA02093059

TABLE OF CONTENTS EXECUTIVE SUMMARY..............................................................................................................................4 INDRODUCTION........................................................................................................................................................4 COMPANY..............................................................................................................................................................4 PRODUCT & SERVICES...........................................................................................................................................4 MARKET................................................................................................................................................................5 FINANCIAL CONSIDERATIONS....................................................................................................................................5 OBJECTIVES...........................................................................................................................................................5 KEYS TO SUCCESS.................................................................................................................................................5

1. Executive Summary
CBS is a start-up business in Lahore, Model Town Area. It is the goal of the company management to acquire local market share in the bookstore industry through low price, a dominant selection of products, a competitive variety of services including hard to find book search and serving coffee, juices and snacks plus a relaxing, friendly environment that encourages browsing and reading.

Introduction

CBS will be a limited liability company registered in the state of Punjab. The company will be jointly owned by Mr. Ali Mughal and his partner Mr. Usman Ali. Mr. Mughal idea is to create a fusion of a coffee shop and a bookshop. The Place will have a sitting for readers to sit, relax, read a book and socialize with people. It will contain books from different genres to cater the needs of different people. The outlet will be located in C-Block Model Town, Lahore.

Company

The main service we offer is selling of books and serving of coffee & juices inside outlet and our products will be snacks of different kind and a small place for using internet & Wi-Fi for those who bring their own laptop. We are offering books of all genres that include fiction books, non-fiction, poetry, love & romance, mystery & crime, philosophy and many others. Coffee will be of different types that include Caff Misto, Iced Coffee with Milk and Frappuccino. juices will be Orange Juice, Strawberry Juice, Pineapple Juice, and variety of coffee and juices.

Product & Services

In Pakistan there is still a culture of reading books even if electricity is not available and people read books in street lights or candle lights. Talking about coffee, Pakistan is a tea culture. However with time we have seen Pakistan opening its doors to the coffee culture. Coffee culture has been so fast in spreading its wings with new coffee outlets opening left right and centre in Pakistan. These coffee shops have

Market

played an important role in introducing coffee to the masses in Pakistan. The company total invested money is 0.5 Million Rupees which is invested by Ali Arshad & Usman Ali. The business is expected to return complete investment before the end of third year.

Financial Considerations

These are the goals for the next three years for CBS Achieve Profitability before July of Year 2 Earn approximately 1,000,00 sales by the end of year 3 Pay owners and employees a reasonable salary when running at profit

Objectives

In order to survive and expand, CBS must keep the following issues in mind: We must attain a high level of visibility through the media, billboards, and other advertising. We must establish rigid procedures for cost control and incentives for maintaining tight control in order to become THE low-cost leader in books. In order to continually attract customers, we must be able to keep the maximum amount of inventory available and achieve a high level of customer service.

Keys to Success

The idea is to create a fusion of a coffee shop and a bookshop. The Place will have a sitting for readers to sit, relax, read a book and socialize with people. It will contain books from different genres i.e. current affairs, history, fiction and novels to cater the needs of different people. The outlet will be located in C-Block Model Town, Lahore.

1. Business Overview

To deliver the highest level of quality service, best reading environment at competitive prices.

Mission Statement

To become the leading bookshop in Pakistan with best reading environment

Objective & Goal

You can find coffee shops and book shops in every nook and corner of the city but the combination of both is absent. For those who like to have a warm cup of tea/coffee and choose a book of their liking after going through a page or two of it, it is an ideal place for such individuals. The young generation of today is finding a place where they can sit and read the book and if they like it, they can purchase the book. At the same time they can enjoy a warm cup of coffee/tea and also enjoy snacks of their choice present alongside the coffee caf. All in all, it provides them a real place to meet real people outside of the virtual world of Facebook or MySpace. The bookshop and coffee industry is a very large. A large number of bookshops and caf are open in markets that mainly provide their service separately to different customers. Our main idea is to attract university/collage students and provide them with a relaxing hangout where they indulge in constructive activities i.e. reading and interacting with their peers in a comfortable and cozy environment.

The Opportunity

2. The Management
CBS is owned by Ali Mughal who is the investor in the business and he has a lot of Experience in Asian markets. Started his work as a promoter, Ali became the supervisor in Mihmaz Advertising & Promotions where he worked with big brand names like Maxwell House, Dunkin Donuts & Starbucks. He then worked as a store manager in Bajsair. He was responsible for maintaining three store inventories. In addition to Mr. Mughal, team members, Osman Pirzada and Usman Ali will be moving into the new venture on a full-time basis, and Sidra Shoukat will be the pricing analyst. Sidrah Amin will be the Bookshop attendant of the outlet. Osman Pirzada, Outlet Manager. Prior to joining CBS, Mr. Osman worked as a supervisor and Shift manager in Ovex Tech Pakistan. His current responsibilities include outlet operations and outlet related issues. Usman Ali, Procurement Head. After completing his undergraduate degree at Punjab College of Commerce, Mr. Usman spent a year with his fathers business of Garments. He joined CBS as a partner and will work as procurement head and sales manager. Sidra Shoukat, Pricing Analyst. With experience of three years, Ms. Sidra is an emerging talent with an immense knowledge of local market needs. She will be working as pricing analyst in CBS. Sidrah Amin, Bookshop Attendant. Ms. Sidrah completed her undergraduate degree from Hailey College, Punjab University. Ms. Sidrah has a lot of knowledge of books and local market tastes. She works as bookshop attendant at CBS. Her main job will be to allocate books to racks. Ms. Sidrahs knowledge and guidance will be instrumental to the success of CBS. The volunteer members of the company provide guidance to the management and staff of CBS. The team will meet twice yearly to discuss policy changes, review the mission statement and update the business plan if needed

3. Company Structure, Intellectual Property and Ownership Organizational Structure

The company structure includes the top positions of outlet manager, procurement head and bookshop attendant. The lower positions include outlet cashier, Barista, pricing analysts and time keepers. The reporting line up in the organization will start from the lower staff and it is an essential task for each and every member of the organization to report to the concern department or to the concern line manger. In CBS there are three basic department heads and mangers that will stay in touch to the other members of the organization. The outlet cashier will be responsible for the cash balancing at the end of each shift and hand it over to the outlet manger. Similarly the Barista is liable to be connected with the outlet manger. Any suggestion or any changes which they feel to make it beneficial for the growth of organization must be delivered to the outlet manger. For the procurement department, the sales manager and the pricing analyst will be answerable to the head of the department. Daily sales report and all the budgeting strategies which will be implemented by them must pass by the acknowledgment of the department head. It will be legal obligation for department head and for the mangers to send all the queries regarding all the activity which is been placed by them or by the lower staff. In the Bookshop attendant department, the timekeeper will be liable to maintain all the schedules and if any changes are being made to the

schedules, they should report the head of their department. The bookshop attendant responsibility will be to keep the record of the books and to allocate books to different racks.

The international publishers suffer great losses due to piracy in Pakistan. In order to keep ethical values and to maintain the highest quality of books in the outlet, CBS will run under The Copyright Ordinance, 1962, The Amended Copyright Ordinance of 2000 & Intellectual Property Organization Ordinance of 2007. The business setup will be clean from piracy and books will be re-distributed according to the laws maintaining the highest quality of the books and be purchased only from approved distributors in Pakistan. The coffee and snacks will be maintained accordingly keeping them fresh and hygienic for the customers.

Legal Structure

CBS will keep its rights by adhering the Trade Mark which include the creating rights and as well as the formulation idea. The logo of the company will occupy the word rights and the logo style which will further include the ideas sequences, market plans, and the daily sales procedures which will adopted by the company operations and the Trade Mark will be registered under the ordinance of Intellectual property organization 2007. CBS Website is already registered as http://thecbs.yolasite.com/ . The website will run under the laws of internet made Pakistan Internet Exchange and Government of Pakistan.

Intellectual Property

4. Industry Analysis
Books are nothing if they dont get a publisher or a printer. Like every other thing in the region, the printing industry is with its own sets of problems the initial ones being the unfavorable socio-economic conditions, lack of mass education and the development of local languages. Given these conditions, the establishment of the publishing industry in present day Pakistan can be traced back to the 19th century. Still, the subject matter of the books dealt mainly with religious or philosophical themes and was also very restrained. Since after the World War 2 the publishing industry has been steadily growing despite

Industry Size

the many hurdles like the low purchasing power of the masses and the lack of facilities. The principle centers of publishing are Karachi, Lahore and Peshawar. Lahore stands out with its numerous publishing houses and has been the hub of the industry from the pre-independence era. Even now, getting a book published from Lahore is much easier than elsewhere. A very large number of books are imported in Pakistan mainly from UK and USA. The Inter-Media Growth program of Pakistan and USA has signed an agreement whereby Pakistan can import books and still pay for them in its local currency. The concept of coffee houses is gradually emerging in Pakistan, in every nook and corner. Each coffee house provide variety of services to their clients from regular grocery confessionary to simple shakes, juices and a sitting area where people come, enjoy chit chat and browse through internet. Such cafes are gradually increasing in major areas of Pakistan, Lahore, Karachi, Peshawar and Islamabad.

The caf industry and books industry are very attractive in Pakistan. Both have a lot of potential as both industries are in growth stage. The increasing demand in cafs brings attraction to many investors as they achieve economies of scale much easier. Plus with an addition of bookshop into a caf increases the ratio of profit. Combined the both businesses, they bring a lot of profit potential. The previous growth rate industry shows that there is a lot of profit potential in this industry. The annual reports show that the beverage industry which includes coffee and juices grew approximately 13% last year. Similarly the printing & publishing industry grew around 9% last year. This shows that the industry is very attractive to invest in. Both industries were in the top 10 growing industries of Pakistan.

Industry Attractiveness & Profit Potential

CBS is attracting university/collage students and businessperson and providing them with a relaxing hangout where they indulge in constructive activities i.e. reading and interacting with their peers in a comfortable and cozy environment. Customers are finding a place where they can sit and read the book and if they like it, they can purchase the book. At the same time they can enjoy a warm cup of coffee/tea and also enjoy snacks of their choice present alongside the coffee caf.

Target Market

Competitive Analysis

Competitive Forces

Bargaining Power of Buyers Threat of new entrants Bargaining Power of suppliers Threat of substitutes products Rivalry among competitors

Threat to industry Profitability Low Medium High

Bargaining power of Buyers: MEDIUM

The bargaining power of buyers is medium because the service we are offering is different from others. We are using integrated differentiation strategy in order to give best quality at reasonable prices. The costs are equal to the competitors, so there is very less to bargain. The presence of substitutes is low in the case of CBS. There is no firm that is offering the service we offer. And the reason for the bargain power to be medium is because the product is already very affordable to target customers.

Threat of new Entrants: HIGH Threat of new entrants would be high because, Other companies starting the business can achieve economies of scale easily. The product we offer is different but others can copy the idea. An International entrant with an established brand can reduce our market share. We dont have absolute cost advantage. It would be an emerging business so many competitors will try to enter the business. Threat of new entrant is high because the setup costs are low so new business can enter it easily. Moreover there is no govt. restriction to startup this business. The service we offer can be copied by existing firms or new firms Bargaining power of suppliers: LOW Bargaining power of suppliers will be low because,

 The product we require has no special attributes and is available from many suppliers. The cost from switching from one supplier to other is very low. No single supplier is dominating the market. So they are not price setters. The quality have significant role in our product, but looking at overall market size we can say it would not increase bargaining power of supplier. There is very less chance of supplier using forward acquisition. Threat of substitute products:MEDIUM Substituting the product is not high but not low as well. This is due to the following reasons The switching cost of buyer is low. The relative price of substitute is similar to what we offer. Rivalry among competitors in industry: LOW If we look to our business, we see that there is no similar business in the market. So the rivalry among competitor will be low because: We have first mover advantage. The business we run is mostly based on fixed costs. There is no margin of varying the cost. Our product differentiation is high as compared to the substitutes and competitors. The business we offer requires a lot of commitment, and there are very less businesses that are willing to compete against us. The exit barrier is low. So the company can easily exit the market.

1. Marketing Plan
From a market research, we see that Associated Press-Ipsos poll reveals that 1 in 4 adults read no books in 2006. Thats 25% of the adults are reading zero books. In Pakistan there is still a culture of reading books even if electricity is not available and people read books in street lights or candle lights. Talking about coffee, Pakistan is a tea culture. However with time we have seen Pakistan opening its doors to the coffee culture. Coffee culture has been so fast in spreading its wings with new coffee outlets opening left right and centre in Pakistan. These coffee shops have played an important role in introducing coffee to the masses in Pakistan. As discussed earlier in Industry Analysis section, both industries are in their growth state. Book reading is in some way at their

Market Research

maturity but still there is a lot of potential in both industries. So the demand of books is very high in the market as there is still a good trend of book reading. Our market is facing a decline in growth over the past two years. This is attributed to the overall weak economy. Book store industry sales rose only 3.6% for 2002 whereas overall Pakistan retail sales grew by 4.3%. Management believes that the economic slump may be an advantage to the bookstore industry. As customers cut back on purchasing economical books, bookstores will look more attractive to customers who still wish to purchase books. Therefore, management believes this may be a good time to get into the industry and gain market share. Bookstores serve the entire purchasing population of its geographical area but focuses on the customer who desire to purchase books at a competitive price and, with regards to books, often do not see a longterm attachment to the product. The main service we offer is selling of books and serving of coffee & juices inside outlet and our products will be snacks of different kind and a small place for using internet & Wi-Fi for those who bring their own laptop. We are offering books of all genres that include fiction books, non-fiction, short stories, poetry, essays, speeches, Adventure, comedy, drama, fantasy, books for young readers, Greek and roman, classics, history, horror, love and romance, mystery and crime, philosophy, science fact, science fiction, tragedy and many others. Coffee will be of different types that include Caff Misto, Iced Coffee with Milk, Frappuccino, Hot chocolate Coffee, Black Coffee, Cappuccino, Cafe Macchiato, Double Shot etc and juices will be Orange Juice, Strawberry Juice, Pineapple Juice, Banana Juice, Mixed Juice, and many other variety of coffee and juices. The benefit of CBS is that we offer all services under one roof with a pleasant environment. CBS also benefits its customers by opening its outlet right in the heart of Lahore City so they can purchase books and enjoy a cup of coffee while reading it at CBS.

Feasibility consists of two primary tests, concept testing and usability testing. The study looks at the entire structure, needs, and operations of our business. For CBS, the feasibility testing will consist of three basic factors the first one will be the entire structure of the firm in which we will include all the infrastructure of the firm that where it will be located

Feasibility Analysis

and which equipment we will require and how its going to work for the organization. The entire structure consists of management team, suppliers, and distributors. Further breaking down, these factors are also composed of equipment and other stuff to furnish the outlet. Need and consumer demand will be forecast on weekly basis. For casual specific category shoppers, the quires will often be taken before it carries out to the end user. Certain operations comprise of the sale and purchases of books from specific suppliers and the other raw material will be purchased in bulk. The working environment for the employees will be stated in the job description letter.

Product strategy includes these major factors: product, customer pain, understanding customer mind. In this phase the very first step is to describe our product, the kind of products we will lunch in the society. Our aim is to deal with the requisite of consumer need relating to the books & coffee industry and for this it is really important to understand the mind setup of the consumers. We will introduce different variety of books which will be presented in allocated shelves and other than this we will also serve coffee and snacks which also include different juices. Product strategy will be our momentous for the company because the entire profit ratio will depend on it. Our product strategies will be divided on two factors the first one will be our short term product polices and the second one will be our long term product strategy. Since CBS is a new venture in society, we will keep an eye on the trends by implementing our short term product polices. Our short term polices will depict on integrated cost leadership strategy and this is how we will create difference in our brand name. As already discussed, we will get the competitive advantage once we get in the society then we will move our long term product strategies in which we will adopt different ways to serve our product & services. It also depends on the expansion of our business in which sector we want to develop it. In the start we mentioned that we will target three segments and develop a concept of coffee & Book Shop outlets in different areas.

Product Strategy

In the concept testing we do represent our product by creating the best reading environment and serve coffee and snacks to customers. In Pakistani culture there is no trend of buying books in a clam

Concept Testing

environment and shopkeepers dont give time or right to read books in the bookshops. Our aim is to change the concept and provide customers with a peaceful environment where they have freedom to explore books they like and read in the bookshop while they can enjoy a cup of coffee reading it. The third purpose of our concept testing is to check how much market share we can get hold of and in the end we will check which questions arises against our product. Customer feedback will be taken to know whether customers are interested in the product or not. The changes might be made on the basis of their feedback.

Usability is particular important in every business. Usability testing is called some time user test, beta test or filed trials depending on the circumstances involved. For CBS we have decided a small budget to make a little cozy environment in classrooms of different universities where they can read and have a cup of coffee sample at the same time. On the basis of verbal feedback we will make an evaluation of the usability tests.

Usability Test

CBS is not complete without the help of its business partners and suppliers. With the help of business partners and suppliers, we venture to give the best service to our customers. So to start with and the most important part is the books.

Business Partners

The suppliers of books for CBS will be Ilmi Book House, Khalid Book Depot, Khokhar Book Store, Javaid Book Store and Pearson Education. The main supplier of coffee is Nescaf and for tea will be Lipton. The transactions, daily sales and VISA services will be accessible by Faysal Bank, Citibank & Allied Bank. Logistic services for P&H will be provided by TCS and Leopards. For internet and Wi-Fi, services will be taken from PTCL. Computers for internet use and for book record will be taken from Raffles and maintained by them.

The company anticipates serving the needs of all the potential customers within a forty to fifty mile radius in which the approximate population is 300,000. The majority of the residents in this area are Muslims (87.8%) Christians (7.2%) with occupations classified as

Market Segmentation

professional, homemaker, or retired. The majority of household incomes range from PKR 20,000 PKR 100,000 (20.3%). The median income in this area is PKR 28,926. The typical "head of household" age is 25 - 34 (22.4%) or age 34 - 44 (23.1%) with a median age of 44.4 years old and an average age of 32 years old. CBS serve the entire purchasing population of its geographical area but focuses on customers who desire to purchase books at discount prices because they are seen either as near commodity items or, in the case of books, are not considered to be a long-term investment. Because of this relatively low value placed upon our merchandise by potential customers, CBS can still flourish in an upscale environment. This is especially true with people seeking to cut costs with the bad economy. Even though we service the entire book reading population in Lahore and the surrounding area, we can divide our customers based on purchasing habits.

Casual Shoppers: These are customers who go to the bookstore with no set idea of what they want to purchase. They seek to spend a fair amount of time browsing the store and often are considered impulse buyers. Often they leave the store with small purchases or without buying anything. These customers are attracted to bookstores with low prices and large inventory. "Hard to Find" Shoppers: These are customers with very specific needs. They are looking for a difficult to obtain item, usually a book that is out of print. If we can satisfy this customer, then we are able to build significant customer loyalty. These clients are generally price insensitive and are also drawn to stores that have large inventory. Specific Category Shoppers: These customers are those types that generally buy books of one category, such as fiction or romance. These customers generally have a good idea of what they want to purchase and have the greatest buyback potential. These customers represent the highest volume purchaser, often leaving the store having spent PKR 500 PKR 1,000.

Segments

Market Analysis

Potential Customers Casual Shoppers "Hard To Find" Shoppers Specific Category Shoppers Total

Growth 2% 2% 2% 2.00%

Year 1 156,000 99,000 45,000 300,000

Year 2 179400 113850 51750 345000

Year 3 206310 130927.5 59512.5 396750

CAGR 2% 2% 2% 2.00%

Pricing Strategy

CBS intend to use penetrating pricing strategy for all segments because price charged for products and services are set artificially low in order to gain market share. Once our objectives are achieved, the prices are increased. Another reason for using penetrating strategy is because the bookshop and coffee market is large as a separate. In order to bring customers to CBS we offer those low prices and good quality. The benefit in this is that we can achieve economies of scale easily. The last and most big reason for this is the elimination of competition in the market and threat of potential businesses.

Promotions and Advertising

We plans to advertise CBS on radio, in newspapers and magazines because we intend to attract the people who love to read books and newspapers. The second thing we are going to do is to distribute fliers of CBS in the 15 mile radius of the shop. This way we can attract the near residents of the place to come and enjoy the environment at CBS. We also plan to advertise on radio so the message is not left from anyone. The ad on radio will be played for 1 month of opening. Afterwards only newspapers and magazines will be our mean of advertising along with fliers. We also intend to encourage customers to CBS by offering them a 15% discount on all books and 30% discount on coffee on the opening week of our outlet. Afterwards discounts will be regularly given on random genres at any time of month. Furthermore, discounts will be given on old books in order to encourage customers to buy it.

1. Operational Plan
CBS will deliver its customers a final product of books from different suppliers and publishers. They all are located in Urdu Bazaar, Lahore. We will obtain the books directly from publishers so costs are minimized. The books which are not available from the publishers will be purchased from variety of suppliers. All supplies will be purchased in bulk in order to reduce per unit cost. The suppliers and manufacturers will be contacted on a weekly basis for new stock of books. Orders will be made two days before the collection. Collection will be taken at the end of the week. Most suppliers are located in Urdu Bazaar Lahore, while other suppliers and publishers are located in Karachi. The books will be ordered around 50-100, depending on the demand and sales. For coffee, CBS will take coffee from Nescaf and brew it on shop using coffeemaker. The cups will be disposable and will be taken from Nescaf as well. The orders will be made on bulk. The office of Nestl is located on 308, Upper Mall, Lahore. Coffee will be ordered around five large bottles a week. The juices will also be provided by Nestl. The order to Nestl will be made on weekly basis. Juices quantity will be 200-300 on quarter month basis. Snacks currently include donuts and they will be purchased from Gourmet bakery, Lahore. Donuts will be purchased on daily basis in order to keep them fresh. Gourmet bakery is located in C block, Model Town, Lahore. Around twenty donuts will be purchased daily and will be reduced or increased according to sales.

Method of Service Delivery

As discussed earlier in marketing section, we will have different business partners and suppliers in order to keep the best and reliable service of CBS. The suppliers of books for CBS will be Ilmi Book House, Khalid Book Depot, Khokhar Book Store, Javaid Book Store and Pearson Education. The main partner of coffee is Nescaf and for tea will be Lipton. The transactions, daily sales and VISA services will be accessible by Faysal Bank, Citibank & Allied Bank. Logistic services for P&H will be provided by TCS and Leopards. For internet and Wi-Fi, services will be taken from PTCL. Computers for internet use and for book record will be taken from Raffles and maintained by them.

Suppliers & Business Partners

The quality of books will be maintained by cleaning them frequently. The book will be kept in non humid environment so they will be in good condition. All books will be displayed in their respective shelves so customers feel easy to find any book they like. The inventory will be checked and maintained by software, Inflow Inventory. Coffee quality will be maintained by ensuring every cup is clean and new. All cups will be disposable so customers can take it when going out. The coffee will be made fresh every time upon ordering by customer. The snacks quality is maintained by purchasing fresh donuts from gourmet bakery every day. The staff will be ordered to keep the place clean and all the employees will be responsible for any type of negligence in their respective areas. This way the store will be clean and the employees will be asked to use formal dressing to make them presentable to customers. The employees will be given time punch cards so they come on time to the outlet. Customer assistance is very important to us, so our employees first priority will be to keep an eye on a customer who needs help with books.

Quality Control

2. Financial Plan
The following is our financial projects over the next three years. Please note that we expect to be operating at a loss for the first couple of months before advertising begins to take effect and draw in customers.

In financial plan, it is very important for a business to make right judgment of funding and how much to save and check if the business is generating profit in the desired time period or not. For this sake, CBS has made different type of charts and projections to inform how we will be competing in the market and how much sale is generated over the next few years. First CBS would like to inform that he capital required to start business is 0.5 Million Rupees. These requirements include legal expenses, rent and setup costs. Further cash will be spent on advertising, inventory and equipment. After that the maintenance and cash in hand will be maintained to keep the balance positive. The total funds required are Rs. 500,000. All of this funding will be provided by the owner, Ali Arshad and Usman Ali and their partnership deed is made which is attached in the appendix. Their funding will be equal amount of 50% each and they will share the equal amount of profits. However, in case of CBS the profits will not be declared for anyone till the end of third year. The funds provided by Ali Arshad will be used to buy books and other material for store and maintaining the cash balance at store while the funds provided by Usman Ali will be used to buy furniture, print fliers and run advertisements in newspapers and radio. The remaining cash of both partners will be deposited in bank for future expense needs.

Capital Requirements

Firstly the sale of books is forecasted for the next 12 months, it is being assumed that few months will have fewer sales while sales increase during holidays and in when new book arrives. These projections include some of most popular genres of bookshop like fictional, nonfictional, poetry, philosophy etc Others include all remaining genres. The following stacked column chart shows the sales forecast results for the next 12 months of opening year.

Financial Projections

Similarly, the three year forecast for books is made. It is expected that sales will increase at average of 12.138% every year.

The details of monthly sales and yearly sales information is given in appendix. The remaining sales forecasts are made in Income Statement and Balance Sheet.

Income Statement
Following is the income statement for the year 2011, 2012 and 2013. The sales and cost of goods sold are given in the following statement below. Note that the tax has been assumed of 40% taking both industries into consideration.

Income Statement
Projected 31st December, 2011 Sales Books Coffee Juices & Snacks 708,168 127,888 63,944 900,000 0 661,631 (165,000) 496,631 Projected 31st December, 2012 795,210 159,860 79,930 1,035,00 0 165,000 640,000 (194,370) 610,630 Projected 31st December, 2013 890,512 199,825 99,913 1,190,250 194,370 70,000 (228,967) 35,403

Total Sales
Less: Cost of Goods Sold
Opening Inventory Purchases (Closing Inventory)

Less: Total Cost of Goods Sold

Gross Profit Operating Expenses

Salaries

403,36 9
70,000

424,37 0
82,460

1,154,8 47
97,138

Rent General & Selling Expenses Depreciation & Amortization

60,000 40,000 19,800 189,800 213,569 30,000 183,569 73,428 110,141

60,000 40,000 17,820 200,280 224,090 30,000 194,090 77,636 116,454

60,000 40,000 16,038 213,176 941,671 30,000 911,671 364,668 547,003

Total Operating expenses

Earnings Before Interest And Expense=EBIT
Less: Interest Expense Earnings Before Tax=EBT Tax (40%)

Profit After Tax

Cash Flow Projections

The following projections are given for the year 2011, 2012 and 2013. The NPV of the project is estimated to be 1,304,125.951.

Cash Flows
Projected 31st December, 2011 Projected 31st December, 2012 795210 159860 79930 610360 82460 60000 40000 17820 200280 834720 500832 Projected 31st December, 2013 890512 199825 99912.5 35403 97137.88 60000 40000 16038 213175.88 977073.62 586244.17 2

Sales
Books + Coffee + Juices & Snacks 708168 127888 63944

Total Sales

900000
496631 70000 60000 40000 19800 686431 213569 128141.4

1035000 1190249.5

Less: Cost of Goods Sold

Salaries + Rent + General & Selling Expenses + Depreciation & Amortization Total Cost of Goods Sold Earnings Before Interest And Expense=EBIT EBIT(1-T) = NOPAT

Add Back: Depreciation & Amortization Cash in Hand Trade Receivables Inventory Total Current Operating Assets Notes Payable Total Current Operating Liabilities Net Operating Working Capital NOWC GCE

19800 30000 111941.4 165000 306941.4 0 0 306941.4 (276941.4 ) 0

17820 35340 189255 194370 418965 0 0 418965 112023.6 0

16038 41630.52 685199.1 228967.86 955797.48 0 0 955797.48 536832.48 0

Cash Flows

424882. 406628. 8 4 Balance Sheet

65449.6 92

Following Balance Sheet shows the projected balance for the year 2011, 2012 and 2013.

Balance Sheet
Projected Projected Projected 31st 31st 31st December, December, December, 2011 2012 2013 Values in Pakistani Rupees (Rs.)

Liabilities & Equity

Current Liabilities Notes Payable
Trade Payables Total Current Liabilities 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000

Long-Term Liabilities
Bank Loan (Long-Term)

200, 000

200, 000

200,000

Total Liabilities

300, 000 200, 000 110, 141 610 ,141

300, 000 200, 000 226, 595 726 ,595

300, 000 200, 000 773, 598 1,273 ,598

Equity
Owners Equity Retained Earnings

Total Liabilities & Equity

Assets
Current Assets Cash in Hand
Cash at Bank Trade receivables Inventory Total current Assets 30, 000 125, 000 111, 941 165, 000 431 ,941 178, 200 610 ,141 35, 340 147, 250 189, 255 194, 370 566 ,215 160, 380 726 ,595 41, 630 173, 460 685, 199 228, 967 1,129 ,256 144, 342 1,273 ,598

Long-Term Assets Gross Fixed Assets

Total Assets

Payback and Exit Strategy

By the end of third year, CBS would recover all its investment and the equity investors i.e. Ali Arshad & Usman Ali can be paid back their investments along with profits. The business has a lot of future profit potential and the owners may wish to expand it further and diversify into other businesses as well. But as an investors their equity is fully returned and there is still cash left for more margins. The owners of CBS will exit this endeavor after they have created a flourishing business that could be sold for a substantial profit and/or as a franchise that could serve rural communities across the country. It is the owners' intention to run this business until they are ready to retire or have decided to sell the business and start another.

In the event the proposed plan is not successful, the owners will implement necessary measures to exit the business endeavor with minimal damage to the owners and investors. All equipment and merchandise will be sold to cover any outstanding debts. Any remaining debt will be paid by the owners in the form of monthly payments until all debts are paid in full. The success of the business will be monitored monthly in the first year and quarterly in subsequent years. The owners are aware that it usually takes new businesses three years to start turning a profit and that the business could operate at a loss during that time. The owners will keep this in mind when evaluating the state of the business, and make adjustments when possible to keep the business running with a positive cash flow. Acceptable loss has been determined; if the business exceeds this amount and is unable to compensate the owners, we will begin the process of closing the business and paying back debt.

1. Critical Risk Factors

We always believe that business is nothing without risks. It is always to consider risks and make alternate plans so at the time of need, we can make the adjustments. At CBS we try our best not to have any risks but at the occurrence of any incident or arising of any problem bay bring up the risk. In order to understand those risks, we will discuss them below.

We at CBS try our best to hire qualified and better staff to ensure quality and better service for customers. But if somehow there is a problem with any of the management team or any employee, we will look through it. The biggest risk will be of ineffective management. In this case we seek external services from other companies like human resources. If the management is underperforming, the staff training programs will be given to the management and employees. If somehow the management is destructive for business, they will be replaced by other trained employees or in worst case scenario the contracts will be given to hiring companies. And in case we dont find an appropriate person that meet requirements of our specified job from companies, we would give advertisement in newspapers for the job vacancies. This way the message will be spread out to all the unemployed and those who are looking for jobs. If that is not going to work, then as a last resort we will lookout for the employees on different job hunting websites. This would be the last but good way to find a person who can meet the requirement of the job.

Management Risks

If the CBS marketing plan fails, we will try to locate the cause of the problem and fix it as soon as possible. For example if the company marketing plan is not working, we will try to conduct a thorough analysis on whats going wrong. If there is a problem with marketing research, then a primary research will be conducted by CBS. If there is somehow a problem in one of the feasibility analysis, the business will reconsider on the different aspects on improving the business. The professional services of external company might be hired to achieve companys objectives. The pricing strategy is a critical risk for any business. The pricing should be very carefully offered to customers, otherwise they move on to next available outlet where they get more

Marketing Risks

benefits in fewer prices. If that happens, CBS will re-think its pricing strategy and change it according to what market can accept. The threat of potential competitors is always a risk for new and even old businesses. If there is a threat to us from these new entrants, the company will revise its marketing strategies and give more promotional discounts to customers to gain the market share and through better marketing we will try to create customer loyalty programs where loyal customers will get more discounts than other customers. The slower market adoption is also a problem for a new business. If customers adoption rate is slow, CBS will try to engage itself into public services and create public relations with customers so they feel comfortable when coming to CBS. The segmentation is very important for our business. In case we dont get the profits from all segments, the segments will be re-evaluated and the target market and segmentation will be increased.

Operating risks are very significant for a business to provide customers the products and services on time and satisfy their needs. In case any of the operation goes wrong, the customer will not be delivered the final product and they will not be able to get the books or coffee from us. In any of the case, our business will lose its market worth and customer loyalty. So in order to keep smooth running we will have not just one but contacts with different suppliers so if the book is not available from one supplier, it will be ordered to other supplying party. Same is the case of coffee, although Nescaf is very dedicated at supplying on time, if however they have any issues with us, we will subcontract with Maxwell House. In case of tea, if Lipton is not able to provide us the required amount of tea or if they dont meet our standards, we would switch to Tapal. If in case both of the requirements operational plans are failed, we will outsource the contracts to external parties to sell coffee to customers. For the quality control there is a very big risk to keep everything in good and healthy environment. If in any case the problem the quality is not up to the mark, the customers will never come to the store again. So if any of the quality is not up to the requirement of our store, we would inform and warn the suppliers of this. If even then the quality is not improved, the supplier would be changed and if other supplier is charging on higher price but providing better quality, it would be accepted because there is no negotiation on quality of the product. In case out quality control is not working good, necessary measures will be taken to improve quality control methods.

Operating Risks

Serious care should be taken for neatness of store, in case the staff is not cleaning the store, a sweeper will hired to clean the store from inside. In the last, if employees are not punctual, necessary notices will be issued to employees and if they are still not punctual, their small amount of salary will be deducted. This case they will either become punctual or leave job. In case they leave job, steps are discussed in management risks section.

Financial risks are the most important part of a business plan. We have already discussed some exit strategies. If the business starts operating at the greater loss than expected, the owner will ask for more investors to buy-in and help for the smooth running of the business. If the business does not find an investor, the owners would put in their own investments into the business and if somehow the business still not comes out of losses, the company will be sold to a higher party at price they offer to the business. The business is expected to give its full return on investment at the end of 3rd year. If the investment is not returned by the end of third year, the business will still be managed and will be kept running. If the owners wish to sell the business at the end of 3rd year, proper measures will be considered and market value of the business will be considered before selling the business.

Financial Risks

The company we try our best to do all the legal work and make our company work by laws. Somehow if the company laws are not according, we will revise and work on the laws as described by the government. The patents have already been told by our sources as unregistered. Somehow if someone has registered this logo or tagline as their trademark, then it will be changed to a new logo or trademark. The trademarks are very important for our business. In case the owners feel the need to change the logo or tagline, it will be changed upon agreement of both owners and will be switched to new logo or tagline. The website has already been registered as http://thecbs.yolasite.com/ . If the content on the website is considered illegal, it will be removed and replaced with new contents. If there is any issue with the logo, it will be removed and updated to a new one on the website as well.

Intellectual Property Infringement

Appendix A Rsums of Members

2.

USMAN ALI
Objective
To utilize Knowledge and skills for reputable organization that provides opportunity for personal growth where I can offer my services and have a chance to work hard in the chose career. ACADEMIC QULIFICATION DEGREE MBA B.Com I.Com Matric EXPERIENCES YEAR Third Semester (Continue) 2009 2006 2004 BOARD/UNIVERSITY University of Lahore Superior College Lahore Punjab College of Commerce Grand Chartered School

Worked in father business for 1 Year.

SKILLS

Computer & Ms Office Fluent in 3 Languages Good in Research & Development

INTERST Badminton Hard Working Making Relation With Good Peoples

PERSONAL INFORMATION

Fathers Name Cell: Date of Birth Marital status Religion Home Address REFERENCE

Muhammad Ijaz 0333-4541701 06-01-1988 Unmarried Islam 120.E/1 Johar town Lahore..

Will be furnished on demand 42-N Model Town Extension, Lahore, 54700. Mobile: +92-321-4436929 Email: ali_plus@hotmail.com

Objective
To obtain a position that will enable me to use my strong organizational skills, educational background and ability to work well with people. ACADEMIC QULIFICATION DEGREE MBA B.Com I.Com Matric EXPERIENCES YEAR Third Semester (Continue) 2009 2007 2004 BOARD/UNIVERSITY University of Lahore Leadership College Lahore Punjab College of Commerce Pakistan Intl. School, Jeddah

Worked as a promoter for 1 year in Mihmaaz Advertising & Promotions. Worked as a merchandiser for Afia cooking oil and Maxwell House. Worked as a scout for Saudi Environmental Society. Worked as an employee for a company to create their website. Worked as a store Manager for Bajsair Co. for watches and Jewelries.

SKILLS Expert Computer & Ms Office. Fluent in 5 Languages. Graphic Designer.

INTERST Badminton Hard Working Making Relation With Good People

PERSONAL INFORMATION

Fathers Name Date of Birth Marital status Religion REFERENCE

Muhammad Ijaz 06-01-1985 Unmarried Islam

References are available upon Request

Osman Pirzada House # 264, Street 12 Block J2 Wapda Town, Lahore 0323-7986661 osmanjpirzada@hotmail.com OBJECTIVE To apply knowledge, skills and attitude to achieve results in highly competitive telecommunications environment and to be well equipped with valuable experience that would help me in my personal and professional growth. Customer Service Professional and Telemarketer PROFILE I have over 18 months experience in Customer services environment working as a Customer Services Representative, Quality Assurance Agent and telemarketer in a call center industry. I am proficient in problem solving, planning and implementing proactive procedures and systems to avoid problems in the first place. I posses Basic and intermediate computer skills, including MS Word, MS Excel, MS Power Point and internet tools. I have managed to complete work tasks independently as well as being part of a team. I am a team player and acknowledged as Total Quality Customer Service Professional by my employers. I am able to train, motivate, and supervise customer services employees. I am able to resolve any problem while considering the macro effects at the same time considering its micro effects. ACHIEVEMENTS I managed to retain customers of the given accounts and helped my organization in attracting more accounts. I was assigned the role of backup supervisor whenever the shift supervisor was not on floor. I completed a telemarketing project for Sky Telecom where I was assisted by another colleague. I was declared Most Punctual CSR for the month of June, 2006. I was promoted to the position of a Quality Assurance Agent at Ovex Technologies after working for 7 months as a CSR.

EMPLOYMENT CARAMBA DEPARTMENTAL STORE (USA) Duty Manager Accounts Manager MULTIPLES PROFESSIONAL SERVICES (MPS) Customer Service Representative Telemarketer OVEX TECHNOLOGIES Customer Service Representative (October 2006 April 2007) Quality Assurance Agent (May 2007-September 2007) ACADEMIC ACHIEVEMENTS Masters in Business Administration ( 2009-Cont) Civil Superior Services 2009 Graduation (B.A) from Punjab University Intermediate from Lahore Board Matriculation from Lahore Board High school Junior At Lee High School (U.S.A) Call Center Training Course From Multiple Professional Services (MPS) CAT (Certified Accounting Technician) IELTS Diploma in Microsoft Word and Excel (Basic and Intermediate) INTERESTS I love to watch and participate in sports like cricket, soccer and tennis. I love composing and listening to music. I like to watch movies in my spare time. REFERENCE References will be available on request.

Sidrah Amin 42 E2 Joher Town, Lahore, Pakistan Tel: +92-321-0000000

A confident, enthusiastic and pro-active individual, with a proven record of achieving targets in difficult environments in an organised and efficient manner. A graduate with experience of international working environments. PROFESSIONAL QUALIFICATIONS University of Lahore Masters in Business Administration with current CGPA of 3.78 University of The Punjab Becholers of commerce (Honors) with a CGPA of 3.26 Lahore College for Women Matric with a second division (Sept 2009 - Current) (Jun 2006 - Jun 2009) (Jun 2004 Jun 2006)

PROFESSIONAL SKILLS

Very good writer Good at team coordination Have basic knowledge of Ms office

WORK EXPERIENCE New but very ambitious to show my skills to the companies. REFERENCES REFERENCES AVAILABLE UPON REQUEST

Sidra Shoukat Ali 36B Raiwand Road Lahore, Pakistan Tel: +92-321-0000000

To obtain a position in your Financial Planning group that utilizes the achievements, skills, strategic thinking, and leadership abilities, which enable me to consistently exceed earnings goals under less than ideal economic conditions. PROFESSIONAL QUALIFICATIONS University of Lahore Masters in Business Administration with current CGPA of 3.85 Punjab College of Commerce Becholers of commerce with a first division Punjab College of Commerce Matric with a first division (Sept 2009 - Current) (Jun 2006 - Jun 2009) (Jun 2004 Jun 2006)

PROFESSIONAL SKILLS

Very good writer Good at team coordination Have basic knowledge of Ms office Have a very good knowledge of financing and forecasting statements

WORK EXPERIENCE I am new but very motivated to show my skills to the companies. REFERENCES REFERENCES AVAILABLE UPON REQUEST

Appendix B Website Image

Yearly Sales Forecast:

Sales Forecast
Books Fiction Non-Fiction Adventure Poetry Mystery & Crime Philosophy Love & Romance Year 1 Rs99,143. 52 Rs84,980. 16 Rs49,571. 76 Rs92,061. 84 Rs35,408. 40 Rs42,490. 08 Rs21,245. 04 Year 2 Rs111,329 .35 Rs95,425. 16 Rs55,664. 67 Rs103,377 .25 Rs39,760. 48 Rs47,712. 58 Rs23,856. 29 Year 3 Rs124,671 .62 Rs106,861 .38 Rs62,335. 81 Rs115,766 .50 Rs44,525. 58 Rs53,430. 69 Rs26,715. 35

History Children's Books Business Books Other Total

Rs77,898. 48 Rs28,326. 72 Rs49,571. 76 Rs127,470 .24 Rs708,16 8.00

Rs87,473. 06 Rs31,808. 39 Rs55,664. 67 Rs143,137 .73 Rs795,20 9.64

Rs97,956. 27 Rs35,620. 46 Rs62,335. 81 Rs160,292 .08 Rs890,51 1.54

Sales Forecast (Monthly)

Month 2 Rs5,89 6 Rs5,05 3 Rs2,94 8 Rs5,47 5 Rs2,10 6 Rs2,52 7 Rs1,26 3 Rs4,63 2 Rs1,68 4 Rs2,94 8 Rs7,58 0 Rs42,1 12 Month 3 Rs6,31 1 Rs5,40 9 Rs3,15 5 Rs5,86 0 Rs2,25 4 Rs2,70 5 Rs1,35 2 Rs4,95 8 Rs1,80 3 Rs3,15 5 Rs8,11 4 Rs45,0 76 Month 4 Rs6,68 7 Rs5,73 2 Rs3,34 4 Rs6,20 9 Rs2,38 8 Rs2,86 6 Rs1,43 3 Rs5,25 4 Rs1,91 1 Rs3,34 4 Rs8,59 8 Rs47,7 65 Month 5 Rs7,22 0 Rs6,18 9 Rs3,61 0 Rs6,70 4 Rs2,57 9 Rs3,09 4 Rs1,54 7 Rs5,67 3 Rs2,06 3 Rs3,61 0 Rs9,28 3 Rs51,5 73 Month 6 Rs7,75 1 Rs6,64 4 Rs3,87 5 Rs7,19 7 Rs2,76 8 Rs3,32 2 Rs1,66 1 Rs6,09 0 Rs2,21 5 Rs3,87 5 Rs9,96 6 Rs55,3 64 Month 7 Rs8,00 7 Rs6,86 3 Rs4,00 3 Rs7,43 5 Rs2,86 0 Rs3,43 1 Rs1,71 6 Rs6,29 1 Rs2,28 8 Rs4,00 3 Rs10,2 94 Rs57,1 90 Month 8 Rs9,09 8 Rs7,79 9 Rs4,54 9 Rs8,44 9 Rs3,24 9 Rs3,89 9 Rs1,95 0 Rs7,14 9 Rs2,60 0 Rs4,54 9 Rs11,6 98 Rs64,9 89 Month 9 Rs9,58 0 Rs8,21 2 Rs4,79 0 Rs8,89 6 Rs3,42 2 Rs4,10 6 Rs2,05 3 Rs7,52 7 Rs2,73 7 Rs4,79 0 Rs12,3 18 Rs68,4 31 Month 10 Rs9,80 1 Rs8,40 1 Rs4,90 1 Rs9,10 1 Rs3,50 0 Rs4,20 1 Rs2,10 0 Rs7,70 1 Rs2,80 0 Rs4,90 1 Rs12,6 02 Rs70,0 09 Month 11 Rs11,2 52 Rs9,64 4 Rs5,62 6 Rs10,4 48 Rs4,01 9 Rs4,82 2 Rs2,41 1 Rs8,84 1 Rs3,21 5 Rs5,62 6 Rs14,4 67 Rs80,3 70

Month 1 Rs5,65 0 Rs4,84 3 Rs2,82 5 Rs5,24 7 Rs2,01 8 Rs2,42 2

Month 12 Rs11, 90 Rs10, 92 Rs5,9 5 Rs11, 41 Rs4,2 7 Rs5,0 6

Rs1,21 1

Rs2,5 8

Rs4,43 9 Rs1,61 4

Rs9,3 2 Rs3,3 7

Rs2,82 5 Rs7,26 5 Rs40,3 59

Rs5,9 5 Rs15, 87 Rs84, 30

Logo (Complete)

Logo (Small)

INVOI CE

C Block, Model Town Lahore, 54700 +92-321-4436929 Customer name

INVOICE # 2010 DATE: DECEMBER 20,2010

Irfan Sadique

SALESPERSON

JOB

SHIPPING METHOD

SHIPPING TERMS

DELIVERY DATE

PAYMENT TERMS

DUE DATE

Osman Pirzada
QTY

Manager
ITEM #

UPS

Due on receipt
DESCRIPTION

20/12/2010

by Credit Card
DISCOUNT

12/31/2009
LINE TOTAL

UNIT PRICE

2143649221 9

Guinness Book of World Records 2012

Rs.268.00

Rs.268.00

TOTAL DISCOUNT SUBTOTAL

Rs.268.00

Appendix C Inventory Software