Assignment 29A: Venture Concept No. 2

For this post, students have been asked to do some reflecting on their Venture Concept assignment. I will be posting my original venture concept below, and a reflection below that. Let’s get started!

Opportunity: The directions for this assignment define an opportunity as “a group of customers with unmet or under-met needs.” If you have been following my blog posts throughout the semester, you know by now that my business idea is to open a coffee shop on the grounds of Laketown Wharf Resort in Panama City Beach, Fl. You may not know, however, just what makes this opportunity so viable. The assignment has instructed us students to break down our opportunity in two different categories. The fist category is “who has the need,” the second is “the nature of the need.”

Who has the need: A few weeks ago, we were asked to do a post in which we created our typical customer avatar. For that post, I described a college spring breaker, which is a very normal visitor for Panama City Beach around this time of year. However, that would not be an accurate representation of my entire potential customer base. My opportunity is much broader than just satisfying the unmet need of my avatar description. The tourism industry in Bay County, Florida is largely the driving force behind my opportunity. This industry attracts visitors to the area from a very wide demographic. My potential customer base is truly people from almost any walk of life.

The nature of the need: Currently, potential customers are using a multitude of ways to satisfy their coffee needs. Some brew at home, while others go to big chain coffee shops, and some buy the convenient store pre-made cappuccinos. This particular opportunity is not huge, approximately the size to justify one brick and mortar location. However, further research will most likely indicate that this opportunity could be scaled and repeated. This opportunity really excites me for its potentially franchisability. I do not see this opportunity going anywhere as long as people are still traveling, and nobody beats me to the punch. However, as we have learned during this semester, the opportunity is only part of the entrepreneurial equation.

Innovation: The assignment instructions define innovation as “a new or creative service, product, or process that may be applied in the marketplace to address customer needs.” My coffee shop’s products and services should be thought of as incrementally innovative, because while we don’t plan on shaking up the coffee industry, we will be doing something new in our location and market. For simplification and transparency, I will break this section down into a few key bullet points.

 –What it is: Our shop will be in one of the available retail spaces along the Laketown Wharf boardwalk. We will provide an enjoyable way for guests, residents, staff members, and locals to have a cup of coffee and choose from a selection of pre-made breakfast items.

 -What it does: Our shop will primarily focus on enhancing the guest experience at Laketown by providing a high-quality coffee selection.

-How it works: Starting off small, our shop will try to establish a favorable relationship with multiple suppliers in the coffee industry, and for the food we will try to sign an exclusive deal with a big-box type supplier to keep costs low. From there we will use the revenue gained during our busy season (March-October) to reinvest in our business during the winter and make improvements to quality, operations, and marketing.

-How we will make money:

Expenses: Our expenses will be as follows:

-          Rent/Utilities

-          Employees

-          Cost of goods: (coffee, cream, sugar, food, cups/lids, napkins, utensils, etc.)

-          Cost of machinery: (coffee making and cooking machinery)

-          Taxes

-          Marketing

Revenues: Our revenues will be as follows:

-          Coffee sales

-          Food sales

-          CateringIt will be imperative that we have a solid handle on our inventory and production to keep variable costs down. The average cost of a pound of coffee for a U.S. café is around $7.50, according to this article. http://www.scanews.coffee/2014/09/15/the-cost-of-a-cup-of-coffee-where-does-the-money-go-2/ The article also goes on to say, that with an average order being a 16 oz coffee, the café can expect to get 15-17 coffee’s out of each pound, or, at $3.50 per cup, $52.50-$59.50 per pound. Obviously, there are some assumptions built in, like selling all 16 oz coffees, and selling out every order, but a $45-$50 margin per pound is not a bad starting point.

Venture Concept: The assignment instructions define a venture concept as “the application of a specific innovation to address a specific opportunity.” It is very simple, with lack of competition, and no true convenient way for customers to satisfy this need, my business is a slam dunk!  Obviously, location and customer experience are going to play a huge role in this business. Without success in those two elements, you can throw my opportunity and innovation out the window.   Organizing this business would be fairly simple. Structurally, I would form a one-person LLC, leaving the door open for equity rounds in the future. As far as employees go, I would like at least two per store at all times, but I could see us needing up to ten per store if business allowed it.

Most of the feedback that I received was overwhelmingly positive. For this post however, I’ve chosen some of the more negative feedback about my business. I will be making some changes in the following areas: marketing and B2B market focus. For marketing, I will focus on forming a strategic partnership with the Panama City Beach Chamber of Commerce. This will allow my business to be more recognizable to tourists. In the B2B sector, I will be launching my catering division and forming relationships with the largest employers in the area.