Pro Forma Projected Expenses and Operating Costs for Bubble Tea Business
The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters) of the business.
Part 1
Build a pro forma Excel sheet estimating revenue and all operating cost items of the business for each of the first 3 years (12 quarters) of operation. Review the pro forma examples provided in the topic Resources. Pro forma estimates should be based on researched information and rational assumptions.
APA style is not required, but solid academic writing is expected.
Part 2
Write a 750-1,000-word summary of your pro forma spreadsheet. Include the following items:
Describe how you developed the pro forma projected expenses and operating costs.
Explain your revenue estimates, variable costs, fixed costs, margin, and how your arrived at your figures.
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.
General Requirements
Together, the Excel spreadsheet and summary should define and defend financial projections for your business idea as if you were presenting to key stakeholders. Submit both the pro forma Excel spreadsheet and the Word document.
In 2019, the bubble tea industry was expected to be worth $2.4 billion. It will be worth $4.3 billion by 2027. (Sangwai and Deshmukh, 2020). This means that between 2020 and 2027, the compound annual growth rate should be 7.8%. Bubble Tea is gaining popularity, and black tea now accounts for more than half of the tea market.
The origins of bubble tea can be traced back to Taipei. A tea-based mixture with fruits or milk, chewy tapioca balls (boba), and fruit jelly are common ingredients in bubble tea. Bubble tea can be made in a variety of ways. Fruit or syrup are frequently used to make iced mixtures, which give them a cold texture. Bubble tea is available in various flavors and with a variety of add-ons. Bubble milk tea with boba and bubble milk green tea with boba are popular beverages. The beverage is gaining popularity in Western culture, particularly among college students.
My business plan is to open a store near a college to reach the target market of students. According to rent estimates for a potential location, living there would cost $15,000 per year. It would serve as a drop-off location with a small seating area. Ingredients will set you back $2,000 for the first few purchases. The cost of creating a logo, branding your company, and marketing it is estimated to be $7,000. With $750 of that money, it would pay for licensing, insurance, and a health certificate. A shop worker's monthly salary will be $1,200. You'll need $10,000 to pay for the equipment, including the gas stove, shaker cups, sealing machine, and the fridge and stirrers.A cup of bubble tea is eighty cents; additional variable cost from drinking cups and marketing cost is expected to drive the total average cost of a single cup to $1.2. To attract sales and increase product awareness, the company would have to engage in social media marketing to realize the quarterly projects.
According to CSIMarket (2022), the gross profit margin in the non-alcoholic beverage market is 45 average percent, While Yu Tai Tea (2021) suggests that the gross profit margin in the bubble tea sector ranges between 70 percent to 80 percent. Hill (n.d) suggests that the common non-alcoholic beverages such as soda, ice tea, and juices, on average, range between $1 to $2.5. Therefore, considering that bubble tea is a niche market beyond normal ingredients, it would be reasonable to price it between $3.5 to $ 5.
<...