After carefully analyzing your Coffee Shoppe, I have found several aspects that are considered strengths and weaknesses. Tim’s Coffee Shoppe has already established its presence in the busy downtown area of Sunnydale, Illinois. Your shop is located by a large college and Horvath and Arbanes Station, which are major bus stations. The shops’ location is great because of the steady traffic flow throughout the day and it is accessible from several parts of town.
The shop is lacking a few technological updates as well as organization.
From my analysis, I concluded that only accepting payments in the form of cash is making you lose some of your potential customers. The shop should accept several forms of payments to better accommodate the customers’ preference and increase revenue. Everything should be done electronic with hardcopies as back up documents. The menu should be revamped as well. The shops’ is spacious all around, however the back rooms are clutter especially in the storage area.
If you could clear the clutter, you would have more room for storing supplies.
You could buy materials at a larger capacity which would save you some money, since buying in bulk is more cost effective. According to the income statement in your file cabinet, your supplies for the previous year cost you $135,827. As far as management, you have ten employees and the majority of them seem satisfied with their employment there but you can sense the morale is low. One of the hardest challenges employers face is boosting morale.
We will need to think of creative ways to approach the employees and their overall opinions about their job.
It would be in wise to seek new employees or assign current employees, who are strong in leadership to management positions. If you were to go this route it would be in your best interest to assign one to each shift. Also with reviewing your income statement, I found that a lot of your profits went to paying out employee salaries; therefore you may want to consider evaluating payroll to adjust your hourly pay rates. Regulations are very important, and you should consider these a serious matter. You want to enforce the rules and make sure they are visible at all times.
After evaluating your balance sheet, I can safely say it looks great financially because your shareholders equity and assets are more than your liabilities; however there are some things that need to be overlooked to ensure that you continue to be financial successful. Overall Tim, your shop has a good reputation in Sunnydale and with the right marketing strategies, budgeting, goal setting, affordable prices, tasty menu selection , and outstanding customer service your business will prosper. Regulations and Management Summary: You are running your business as a sole proprietorship.
Being that you are a small business and it is only you running it, you may want to look into assigning managers within your company. You may want to reconfigure your employee’s shifts as there is a big issue with attendance and adhering to the schedule. As stated previous invest in a credit machine because this will help your checkout process run a lot smoother and make things easier for your customers who might not have cash on hand. Also there was a complaint by one of the employees that the cash register needs to be upgraded. An updated cash register would be a great investment along with the credit machine.
Having an updated cash register will help balance out your inventory and keep track of sales better. The break room is a mess. The message board that is located in the break room is cluttered with unnecessary papers. The laws and regulations are not visible because it is covered by announcements. The laws, regulation and general rules should always be visible. The message board should not have anything else on it besides regulations, announcements pertaining to the shop, current events such as passing inspections and employee of the month announcements.
Tim’s mission statement is: Striving to become the next neighborhood legacy by providing the perfect blend for the perfect price in an inviting and ambient atmosphere. Here are several short term goals I have set for you:
Here are several long term goals I have set for you:
Lastly, your storage area is a complete mess.
Your storage area has a mix of food and non food items including chemicals! Please see my action plan below for solutions to these problems. Action Items:
This will be more convenient for your customers because it allows them to pay easier. Clean storage areas
Safe Serv certification courses teaches employees and employers ways to reduce cross contamination, proper storage procedures such as not storing food items with chemical items (SafeServ,2012). Separate the food items from the non food items. These items should not be stored near each other. HR Analysis Summary: After carefully looking around the back rooms of the coffee shop, I determined that an employee handbook did not exist. Tim should work closely with his HR department because human resource management is the backbone of all businesses. From looking at the employee files, I saw that there aren’t any job titles.
You should come up with employment job titles and assign each employee an appropriate job based off of those job titles and responsibilities. Tim needs to be sure that he is complying with all equal employment opportunity and anti-discrimination laws. EEO is the terms in which all people have equal opportunities to obtain employment without their ethnicity, religion, gender, sexual orientation, age or disability being a determining factor (Noe, Hollenbeck, Gerhart, Wright). EEO also covers hiring employees, terminating employees, promoting employees, and paying employees.
You should make a commitment to discourage disparate treatment which is determining the way you treat people based off of their race, gender, religion, age or disability (Noe, Hollenbeck, Gerhart, Wright) and make advancement opportunities available to everyone who is qualified at all levels within the company. Since your company is not large, you do not have to comply with FMLA standards. The Family Medical Leave Act was formed in 1993 and is a federal law that lets employees who are eligible take off up to 12 weeks of unpaid leave 9Noe, Hollenbeck, gerhart, Wright).
During leave, the employee has the peace of mind that their job will be there once they return. Some situations that are covered by FMLA are the birth of a child, adoption, illness, and caring for ill family members (Noe, Hollenbeck, Gerhart, Wright). In order for a employee to take advantage of FMLA they will have had to be employed for 12 months and work at a minimal of 1250 hours within a year (Noe, Hollenbeck, Gerhart, Wright). If these terms are not met the claim will be denied. Due to the number of employees that you have, FMLA is not an option. Human resources is responsible for the upkeep of any personal records of the employees.
All contact information for your employees should be up to date. It is also important that records are retained for the appropriate length even after job termination for state reporting standards. Also Tim, you have the same employee winning the employee of the month contest. The contest should be fair to everyone to where each employee has a equal chance of getting the title. Action Items: An employee handbook should be created. Each employee should receive a copy of a handbook and sign to acknowledge that they received it. Your handbook should have the following in it:
The employee handbook should showcase the mission statement and display Tim’s Coffee Shoppe’s dedication to hiring employees who are highly qualified. The handbook should also stress the importance of following all rules and regulations and the consequences for not following them. It should clearly state the failure to comply with any rules of regulations will result in disciplinary action to possible employment termination. It should also outline what inappropriate behavior is since there were several employees who has repeat offenses in their files.
Inappropriate behavior could be outlined like this:
This means the issues are not being appropriately handled. You should recognize the importance of maintain a healthy and stable work environment for your employees.
On the subject of termination you may want to include in your handbook that a two week notice is not required for resignation, however, it is encouraged for a good reference. Also you want to provide plenty of in house training and balance out your employee recognition and any incentives for making employee of the month. Job titles should be detailed and based off of a reporting hierarchy. The job titles should be assigned according to the employees pay and performance review. All of Tim’s employees who hold upper management job titles will be should be held responsible for some HR duties such as payroll.
Marketing Analysis Summary: Tim, your business is in the downtown area which tends to be very attractive and busy because of the bus stations and college campus. You have a diverse target market of college students, business professionals and passerbyers. One marketing tool you have utilized is the use of surveys. These surveys can help you determine what kind of foods your customers like, which drinks they prefer, and ways to improve your service. You are currently running a promotion for a travel mug. The promotion says if the customer buys ten cups of coffee they will get a travel mug free.
You want your promotions to be attractive to the customers. Ten cups of coffee is a bit much for the mug. I feel that you should drop it down to a more reasonable number such a seven to represent for each day of the week. In addition to your promotions, your menu board needs to be attractive. Your menu board is rather plain. You want to keep your menu selection and prices parallel with Queequeg’s. You can find out more about their selection through your surveys. If you research their menu selection it can aid you with differentiating your store to attract new customers.
You have a lot of college students working for you. You could give student discounts as a way to generate more student clientele. Your hours of operation are perfect for students who cram or stay up late to work on assignments. Since you are in the middle of the downtown area you could look into incorporating some live entertainment on the weekends. Tim’s could be a great hangout spot on the weekends for couples, singles and people who are seeking to get out the house. If you were to go the route of incorporating a live band here and there, try to seek local performers to help them gain exposure.
This will show that you are supporting the arts and locals who are trying to gain exposure. Local bands usually have a strong following so on the nights they perform in your shop they will bring new customers. Action Items: Strengths: Your shop is located in the middle of the downtown area near a college campus and bus station. Weaknesses: There is no wifi or enough plug outlets to accommodate more than one laptop user Opportunities: Your competitor Queequeg Coffee is further away so our customers won’t be as prone to go there for coffee.
Threats: Queequeg is a threat to you because they have seven locations as opposed to your one location. Revamping your menu by adding new items such as breakfast sandwiches and combination deals, will expand your target markets. Offer promotions for free cups of coffee. Adding a variety of smoothies and continuing to sale Jenna’s baked goods in your shop. From the surveys, several customers like Jenna’s products and they like that they don’t have to travel to her shop location to enjoy her products. Providing free wifi will attract more students and business professionals. Keep the prices parallel with Queequegs.
You have received food reviews on your prices and we want to keep it that way. Finance and Accounting/Financial Statements Summary: After reviewing the balance sheet I concluded that as of 2008, Tim’s shop has a shareholders’ equity of $40,571. 03. Form his income statement; I concluded that he earned $400,527. His tax expense was $40, 515. 00. The total wages for his ten employees for the year of 2008 was $101,600. Tim’s State UI-3/40 form or the employer’s contribution and wage report shows that he paid $25,415. 00 in total wages, and contribution of $279. 56 was due for 2008.
Tim also has a Freezematic refrigerator that has monthly payments in the amount of $316. 50. There are 48 months left on the contract for these payments. Unfortunately, I did notice on the income statement that the cost of supplies for 2008 were very high at the amount of $135,827. 00. I am a bit concerned that there were missing documents Tim. I could not provide feedback about your earning per share or anything else related to stocks because those documents were not there. As stated earlier by creating new job titles and responsibilities you will be able to get more done concerning the running of your business.
You will be creating a more reliable team of employees and their pay will be adjusted to where you can afford to pay their salaries. The in house training is cost effective as you won’t have to pay a outside source for training them and it won’t take away from production. You could also incorporate a tipping jar. A lot of businesses use a tipping system to let the employees earn extra money. This could help reduce the amount you in wages as well. You could set pay at minimal wage and pay management position holders a little more. At the end of the day you could divide up the tips.
If you are going to pay your employees minimal wage, be sure that you are complying with federal, state, and local guidelines as they do change. Your balance sheet shows that your assets are more than your liabilities in the amount of $40,571. 03. This shows that you have the means to pay your liability that is $7,214. 00. I also concluded that the calculations for liabilities and shareholder’s equity are not right. The income statement indicates that you paid $14,400 for rent in 2008 and you paid $8,956 for insurance expenses.
I also concluded that you have $21,250. 4 worth of equipment and your accounts payable is $1,250. 14. You also have two bank loans that are $10,559. 22 (One is for $3,345 and the other is for $7,214. 22. In 2008 you earned $400,527. 00 and your net income was $74,511. 00. Action Items: * Your revenue is guaranteed to increase with the implementation of new menu items and prices. The attraction of using live entertainment and attractions such as poetry readings. Evaluating the current promotions and reducing the number of coffees the customer must purchase, in order to get the travel mug will ensure that participation in promotions will increase.
Seven cups of coffee is more realistic over ten cups. With the above changes, revenues and stockholders equity should go up which in turn will make your net income increase. Because your income is going to increase, you will be bumped up into a higher tax bracket which means you will pay more for taxes. Pay off the Freezematic as soon as possible instead of continuing to make monthly payments. This piece of equipment has some age on it. Also in 2008 you wasted a lot of money from buying supplies. You had to buy in smaller quantities more frequently because of the limited space.
Once the space is cleared you will have more room to store things. You may want to look into new vendors and buy in bulk to save money. Missing documents is sometimes viewed as fraud. Tim, you need to have all documents available. You want to have all financial documents and statements to show that your financial figures are correct. From my analysis of your 2008 documents, I concluded that your business is running smoothly. However, you need to retain more of your profits. You want to set goals to pay off any debts you may have.
Reevaluating your employees salaries and buying in bulk are ways to lower your expenses. Problem Solving/Recommendations Summary: In this section I will give five ways that you can improve your business Tim. Let’s start with your employees. After carefully evaluating their comments, I concluded that your employees are ok with their jobs; the morale is low overall amongst your employees. Some of your employees are content with their jobs, some are ok with their job and then some are considering leaving. There was also concern that the same person always wins the employee of the month contest.
There needs to be something done to ensure that everyone has a equal chance of winning such as travel mug selling contests, good attendance etc. The employees are motivated to strive for the employee of the month title for the $100. 00 bonus. I know everyone could use another $100. 00 added to their pay check. Cash bonuses are good for motivating employees, however you want to have non cash bonuses as well as incentives, you could run an attendance contest and let the winner have a longer lunch break. Your marketing survey shows that your shop has good ratings overall and you have minor complaints that are easy fixes.
There were complaints about your morning staff not providing good customer service because they were rude, your coffee tasted weird or burnt on a few occasions, your cash only policy, and lack of WIFI connection. I would recommend that you definitely get WIFI, a credit card machine, provide ongoing in house training, tweak your schedules and rotate your morning staff, make your contest employee friendly and fair, make sure your blend taste is consistent, clean out your stock area and break room and lastly create a employee handbook.
Make your expectations clear to your employees. With these changes Tim, I don’t see why Tim’s Coffee Shoppe wouldn’t be able to reach its long term goal of expanding! Cheers!