Business Analysis of Tim’s coffee shop
JOHN WATSON
May 24, 2009
Table of Contents
Table of Contents………………………………….2
Executive Summary………………………………….3
Regulations Subsection
Summary
Action Items………………………………………4
Management Subsection
Summary
Action Items………………………………………8
Finance and Accounting Subsection
Summary
Action Items………………………………………10
Financial Statements Subsection
Summary
Action Items………………………………………11
Problem Solving Subsection
Summary
Action Items………………………………………12
The Essay on Meetings Action Item
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Executive Summary
The analysis of Tim’s Coffee Shoppe is in my best interest to provide you with a summarized report broken down into two categories – strengths and weaknesses.
Tim’s Coffee Shop is a strong business with many years of a reputation in the heart of town near 2-bus stations and a University with traffic flowing through consistently at all times. The Coffee Shoppe’s newly remodeled establishment may have an impact towards having customers come from other parts of town as well as having live entertainment and this is a very positive aspect if you decide to purchase this establishment.
It appears inside the establishment holds a large square footage for storage space. This is beneficial in storing inventory on a larger scale while finding new venders. This may allow you to purchase items in bulk saving you money in supply costs, since supplies cost last year was up $135,827.
Looking into management decisions, out of the ten employees, most of them are happy while some are not. It would be in your great interest if you were to take over this business to appoint or hire a few new strong employees to management positions dividing them in two different shifts. In addition, employee’s salaries took considerable amounts of profits last year. Restructuring your wage’s and salary rates may be useful.
Regulations need taken seriously, they need to be enforced and properly posted. In addition, analysis shows that there is no credit card currently accepted at this establishment. Because of the importance of providing customers, a variety of payment methods you could limits the business to generate more revenue.
The financial statement looks promising with assets and shareholders equity ratio almost six times the amount of its liability, but some additional documents need overlooking.
One fact in any business is finding solutions to employee’s morale in which having them take on a better attitude towards work. I also recommend using computers to operate the business, and to find new menu items to add to the menu.
Overall, the new establishment has a long history and reputation. It will be profitable if marketed correctly with the right specials, prices, great menu, correct work crew, and by having a good accounting system.
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REGULATIONS
Summary
It is noticeable that no manager’s, employee’s, or even the owner in this Coffee Shop realizes that the break room message board is obstructed by clutter to view or to see clearly the rules, laws and regulations of the pertaining to the company based on federal and state laws.
In addition, there is no employee’s handbook found, which should cover the following below.
Action Items
1. Employees Handbook
* Introductory Material
* Affirmative Action
* Employment
* Conditions of Employment
* Classification/Compensation
* Benefits
* Employee Programs for Organizational Effectiveness Leaves and Absences
* Conduct and Discipline
* Grievance
* Termination Records
THE COMPILING OF THE EMPLOYEE HANDBOOK(A Sample)
The Introductory Material should be about The Staff Personnel Policies and Procedures Manual (SPP), and provide personnel-related information for the coffee shop, service professional and administrative employees and their supervisors.
The manual should include policies regarding equal opportunity and affirmative action, hiring, conditions of employment, position classification, compensation, benefits, training and development, leaves and absences, conduct and discipline, grievance, termination, and records.
To provide equal opportunity for the business, affirmative action has to be in employment and activities. For further information, discrimination prohibits race, color, religion, national origin, citizenship, sex, gender identity, sexual orientation, age, disability, Vietnam-era veteran status, other protected veteran status, newly separated veteran status, or special disabled veteran status and lastly women.
Equal employment opportunity includes but is not limited to recruitment, hiring, promotion, termination, compensation, benefits. The coffee shop should commit to taking affirmative action in increasing opportunities at all levels of employment, while increasing participation in programs and activities by all staff, and employees.
You should commit to a recruitment process that result in the hiring of the most qualified applicants. All individuals with authority to hire or terminate employees within a department hiring will be accountable for the recruitment, retention, and development of diverse classified, service professional and administrative staff.
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Conditions of employment should consist of the following like salaries, and fringe benefits, duties and responsibilities, reappointments, termination and release, which should cover suspension and pay and release to financial emergency.
The management should work together with H.R. to determine the appropriate classification for new, vacant, or filled positions. Classification or reclassification of vacant or filled positions is subject to availability.
Employment categories should have human resources and managers consulting one another to assign an appropriate employment category based on duties performed and reporting relationships within the organizational structure. Each employment category has specified benefits and conditions of service.
Factors considered in determining the appropriate classification includes:
1. The position’s duties, responsibilities, related experience, education or training, and other requirements, such as licenses or certifications, that are minimum qualifications for the job
2. The organization’s need for the identified classification
3. The minimum qualifications of the identified classification met by the incumbent (for filled positions)
Michael if you were to decide to provide benefits it would normally consist of retirement programs, tax sheltered plans, insurance programs like insurance coverage and workers compensation, and medical.
However, the size of the coffee shop and the amount of employees, because it consists of eight part timers working under 40 hours and you may need at least three managers you may want to consider a health insurance package plan and workers compensation for your employees.
You must state in your handbook when an employee can take sick leave. Normally it only when an employee:
1. is unable to perform assigned duties because of illness, injury, pregnancy, childbirth, or related medical conditions
2. must be absent from work to obtain health-related services not reasonably available before or after the employee’s regular work hours
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3. is absent due to illness or communicable disease within the employee’s immediate family, established household, or in situations that place primary responsibility for care on the employee
4. is absent due to the death of family members or “Bereavement Leave.” should set how many days accrued for sick leave and these purposes.
Your Handbook should stress to employees that they would adhere to the work rules of the coffee shop. Inappropriate behavior as described below by the regulations will result in disciplinary action up to and including termination of employment.
Inappropriate behavior that may result in disciplinary action includes, but is not limited to, the following:
1. Inappropriate appearance includes failure to maintain appropriate personal appearance or dress, including uniform or style of dress, according to departmental standards
2. discourtesy toward others (e.g., failure to work harmoniously with fellow employees or serve the public with courtesy)
3. gambling while on duty
4. hindering or limiting normal operations or interfering with another employee’s work
5. illegal conduct, conduct unbecoming to another employee, or conduct damaging to the coffee shops public relations
6. incompetency, neglect of duty, or unsatisfactory performance of assigned job duties
7. insubordination (i.e., failure or refusal to comply with a supervisor’s instructions, unless the instructions are illegal or endangering)
8. smoking in unauthorized areas
9. threatening or committing acts of intimidation or violence
10. refusal to obey the normal or emergency instructions of law enforcement officials or other proper authorities
11. Unlawful or unauthorized use, carrying, or possession of firearms, explosives, or other potentially dangerous weapons or drugs on property
Michael you should also recognize the importance of providing a prompt and efficient procedure for resolving grievances fairly and equitably, without fear of prejudice or retaliation for initiating a grievance or participating in its settlement on the part of the person involved. All grievant shall have clearly defined avenues of appeal and redress, which may include a) mediation, b) informal grievance or c) a formal grievance.
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Normally, termination of employment at any time during a limited employee’s appointment period is permissible. In addition, you may want to add that no advance written notice is required, but recommended.
Also included in Handbooks is employees who resign or retire are expected to give as much advance notice to the establishment as soon as possible with a minimum notice of two weeks given orally; however, the employee is responsible for providing the supervisor with a written letter of resignation or retirement. The employee may withdraw any resignation by written notification to the supervisor. If no withdrawal during a certain period of submission, the resignation shall be final unless both the supervisor and the employee agree that the resignation may be withdrawn.
Human Resources (HR) is responsible for the establishment and maintenance of official personnel records. HR handles all inquiries about personnel information.
Normally, HR will retain official personnel records for five years after a staff member’s termination date.
2. Lastly, when it comes to regulations the back room message board needs to be clean, organized, and maintained. No postings should obstruct the laws, rules, or regulations.
MANAGEMENT
Summary
Michael, because currently the Coffee Shop is a small business and run by one business owner and I don’t know how many owners you will have if you decide to pursue this venture, you must initiate a few managers from within the company who is best qualified to do the following requested in the action items section. In addition, restructuring of employee’s positions and shifts is something to work on.
Currently since there is no acceptance of credit and debit cards available, this is definitely something to consider to help customers as well as adding a tip jar which will make your employee’s happy and help you with their wages.
In addition, there have been suggestions by employee’s to upgrade to a better cash register in which you will find this investment being very beneficial towards the computations of sales and inventory. Similarly, menu prices and items are competitive with Queequegs this should bring you to researching what menu items customer’s want and make your store unique. The setting up of the new computer/s is going to be a plus in helping you run your business in many ways. Also, asking Tim if the name Tim’s Coffee Shoppe is included with the sale of the business. Of course, making changes to the live entertainment schedule will create more traffic and longer customer visits.
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Lastly, the storage room in which holds a variety of problem has an easy resolution. The storage room has a combination of food items, food equipment, cups etc. with cleaning products all on the same rack. Below is my action plan and suggestions to resolve this.
Action Items
1. Michael, here are my action items and suggestions in which management can incorporate. First, try to convince Michelle to remain at the Coffee shop if she would like to accept a manager’s position before she puts in her two-week’s notice. I would recommend her for the day shift on a Salary bases in which to help you with HR and office work when she is not managing the crew or helping up front. Below are some tasks in which she can do.
* Compensation
* Employee recognition and incentives
* Hiring and employee selection
* In house training
The reason I am recommending Michelle is her great performance, her ability to work well with employees, customers, and would be easy to train to handle HR responsibilities. She would also need to stop calling in sick so often if she wants this position.
2. Another action item in which immediately action must follow is the acceptance of credit and debit cards to increase revenue and allowing customers the convenience of easy payments while adding a tips jar to create incentive motivation towards your employees.
3. Because you are exclusively in the middle of down town near a University and 2-bus stations, your competitors are too far away for your customers to go elsewhere. If you were to take a survey, find out what food, and drink items, your customer’s prefer you could then create a new menu with little higher prices. Then offer more attractive promos and incentives, which I am sure you will increase your monthly revenue. Also, due to the stores popularity and reputation is may be that Tim might want to sell the name Tim’s Coffee Shoppe with the sale price of the business.
4. Safe serve certification teaches not to mix food and cleaning products on the same rack or near each other. It would be wise to separate these two from each other in the storage room. By storing, those separately away from each other will provide safety for your patronage.
5. Lastly, making changes toward the establishment would be to upgrade to a better cash register while installing computers to help you in the business as well as installing internet access. You may want to bring in live bands occasionally in the daytime especially on the weekends and have; the live bands play every night this will better your customer service while increasing your revenue.
FINANCE and ACCOUNTING
Summary
As of 2006, Tim’s Coffee Shoppe has a shareholder’s equity of $40,571.03 and earnings of $400,527 having taxes very attractable at $40,515.00. Wages for the ten employees at Tim’s Coffee Shoppe for 2006 totaled $101,600. Employer’s contribution and wage report for 2006 shows total wages paid $25,415.00 and a payment of amount due made for $279.56 for the quarter. You will also be taking over payments of a four-year-old Freezematic refrigerator with payments of $316.50 per month for another 48 months. Costs of supplies for 2006 were too high at $135,827.00.
An additional comment for you about finance and accounting is that I could not provide you with details regarding earnings per share and stock price because of missing data. Action to rectify this situation is in the following section.
Action Items
1. With changes of new prices and menu combined with new attractions and promos will significantly increase revenues having shareholders equity increase and produce you a higher net income. 2006, earnings to tax ratio is at a good 10% compared to some businesses that pays around 40%. Because your projected income is going to be on the rise, you may want to expect paying higher taxes.
In addition, your shareholders earnings ratio to your return of equity is around 10% as with taxes from your earnings. As stated above in action items #1 change of new prices, menu items, and marketing the numbers will increase.
2. Restructuring new employees and managers and their wages will create a better team. In turn, this will produce a better stream of income in which to afford to pay your employees to continue to do their good work, while providing them with training in which they can apply at work and take with them wherever the future will lead them.
Restructuring employees and managers will help you with internal work in which will allow you to concentrate on the actual operations of the business. With the addition of the tip jar, in which employees will make daily cash you may want to adjust your wages in accordance to the average of this tips amount to maybe minimum wages for employee’s while paying managers a little more with salary.
3. A four-year-old Freezematic freezer may be an asset that you may want to consider paying off instead of the continued monthly payments. Since, there is a remaining balance towards the refrigerator of $12,500.00 without the finance charges of $2692.00. By paying it off through adding, it to your cost of capital instead of having it on your accounts payable this may be something you might consider.
4. Also, bargaining for new vendors for supplies, while using the Coffee Shoppe’s large storage space you have the opportunity to purchase in bulk, saving you more money than in 2006.
FINANCIAL STATEMENT
Summary
The balance sheet shows a clear picture of the financial condition of assets being six times more than liability at $40,571.03 which is a good indication that you own quite more than what you need to pay to liabilities of $7214.00. It appears total liabilities and shareholder’s equity at $40,571.03 calculations do not seem to be correct. The prepaid Rent for 2006 is $14,400.00 with insurance costing $8,956.00. Tim’s Coffee Shoppe also has $21,250.14 worth of property, plant, and equipment, accounts payable at $1250.15, and two outstanding bank loans totaling $10,560.18. In 2006, Tim’s Coffee Shoppe earned income was $400,527.00 with a net income of $74,511.00 leaving the company with 68.5% in profits in 2006.
Although most of 2006 provides statements in which show how the business is operating, there are following years that are not. Missing data such as monthly journals, ledgers, statement of owner’s equity, and 2007 financial statements needs overlooking and provided to receive venture capital investors or business loans to finance the purchase.
Action Items
1. Since missing documents is misconstrued sometimes for hiding information or a business sold as a fraud, you will need to ask Tim for the missing financial statements and documents in which can support the configurations of the accounting cycle and other financial figures needed to make.
2. Overall, 2006 financial statements provided shows that the business is in good operating conditions with the exception of possibly keeping more of the earned income ( however, a 68.5% is a pretty good return).
Eliminating debt such as the loans during purchase with increase earned income a little and the possible of lowering expenses of supplies and wages might help.
PROBLEM SOLVING
Summary
Overlooking the comments that the employees have about how they feel about their job and Tim as a boss is quite complex. A few employees are happy, others are comfortable, while some may be contemplating leaving. Some employees seem to want to keep trying to make it to employee of the month for the $100.00 cash bonus that they can get that seems to be motivating them to work hard.
The marketing surveys indicate that the coffee shop has good comments with a few minor problems like the morning shift being rude, the coffee sometimes tasting burnt, and not providing the usage of credit cards and wireless internet connection available.
It appears there are no company or workers meetings held to keep the team in unity and stress important issues.
Since you will be installing internet access, it would be a great idea to create a web presence and a social networking sight for your marketing research and for everyone to express their opinions about the establishment.
In addition, the use of display-standing signs to advertise outside and inside the shop of specials, new items, and live entertainment provides valuable information to drive by traffic as well as those walking by.
Action Items
1. Creating good morale with the employees through new incentives and motivation combined with new employee training will tremendously help in providing great customer service. Therefore, arranging a specific time weekly for different shifts to hold employee and company meetings will ensure the employees about how the company is doing and in which the employees can improve. This will allow the shop to run a tight ship; do better quality business, and better customer service.
2. It is impeccable to ask Michelle on how she feels about being a manager and taking over the tasks of HR assignments. You will discuss with her about calling in sick all the time, and how this position requires dependability. This is a full time position and pays salary.
3. The restructuring of shifts if possible while hiring new employees if necessary will eliminates the negativity that taints the reputation of the business. By placing, the right employees in the right shifts, customer service this will conduct customer service warmly.
In addition, managers who dread closing at night will be better off if all monies, receipts, and paper work placed in a safe until morning when an HR person who will be in charge of completing that portion of the job does it.
4. In this day and time, having internet access and a website with social networking presence will also help the business and customer service. Knowing what the customers want gives you the upper edge of providing them with what will make them happy. Taking online surveys, getting feedback, and reading opinions of what customers have to say about the business will help and always be a positive critique for the business.
