Tyler L. Baldwin and Dr. Hal Heaton, Business Manager
The American dream consists of having a nice home, a good job, and a family with 2.4 children. Many even dream of being the master of their own destiny by having a business of their own. Some people say all they need is a good idea to start a business. However, turning this kernel of thought from an idea into a reality is more difficult than most people realize. My creative research project consisted of evaluating an entrepreneurial opportunity of a crepery (a restaurant specializing in dinner and dessert crepes) and determining whether or not it could become a successful business.
The tool I used to evaluate this business idea was through the writing of a business plan. Business plans are the preferred mode of communication between entrepreneurs and potential investors. The business plan consists of, but is not limited to, a detailed plan of a company’s organizational structure, marketing plan, financial analysis, and operations plan. In order to evaluate the feasibility of a crepery, I created a plan for each of these areas.
The first task of creating an organization was to create a mission statement that will act as the foundation of the entire business. I wrote this in conjunction with my business partner, Ben Jensen. Our mission statement expressed our definition of success as measured by customers, employees and owners.
In addition to creating a mission statement, I determined the type of governance and company structure. In order to reduce confusion and keep good relations between business partners, the governance of company should be set forth as soon as possible in very clearly defined roles. It was determined that my roles would include the financing, accounting, and purchasing. Mr. Jensen’s roles include marketing, advertising, and operations. In addition to governance, I also determined what type of corporate structure would be most suitable for a crepery. A Subchapter S corporation provides all the liability benefits of a corporation without double taxation to investors. Although there are many regulatory requirements to maintain this status, an S Corp provides the most benefits to the company.
Extensive research was done on the demographics of the Provo and Orem areas. It was determined that Orem would be a more suitable area. The average revenue for a service establishment in Orem was nearly 3 times the average revenue in Provo. Based on the marketing data, we will attempt to carve out a niche in a booming area for service establishments. The target market will primarily be middle to upper class females between the ages of 18 – 34 seeking something different from the usual hamburger or ice cream.
Essentially, the Crepery will target this market offering a truly unique dining experience at a reasonable price. As part of this strategy, the Crepery will use a variety of methods of marketing to penetrate the market through a mixture of advertising campaigns, Internet ads, radio ads, newspaper ads and a variety of other innovative promotions and specials.
I created a cash flow projection of the crepery based on a steady increase in customers and an estimation of the costs that will be incurred. The crepery will start producing a positive cash flow after six months and reach the break-even point after approximately 14 months. The profit margin was determined to be approximately 75% and the initial capital required to start the Crepery would be $25,000 ($15,000 start-up cost and $10,000 in working capital.) After two years, the Crepery will average a net income of $50,000 a year.
The main portion of the operation plan, creating a menu is still in process. I have experimented with many different types of crepe recipes and in the process have determined the most efficient way of making them. Once a final menu is chosen, I will write instructions on how to make each of the crepes offered. I plan on conducting more research of companies in the same or similar business in order to deal with operational issues such as structural decisions, product specifications, material requirements, and labor requirements.
Writing a business plan for the Crepery helped be to accomplish my objective of determining whether or not a business idea I had would be a successful company. I learned that there are a lot more factors that go into making a business successful than I had previously realized. The act of writing a business plan forces the entrepreneur to plan for a variety of situations that he or she may not have otherwise done. I now more fully understand the process of what it takes to transform a kernel of thought from an idea into a reality. I believe with a lot of hard work and smart planning that the Crepery can be a great success.