Entrepreneurship Group Project

Names Batch No Lecturers Date : Bibu Johny, Sagar Baldwa, Shashank Bansode, Janani Amalraj, Theodore Paul, Sriram Ravichandran : MBBD51112A : Mr.Roland Kiew & Dr. Shahid Rasul :

We hereby certify that this assignment is our own work and within the guidelines of MDIS and Bradford School of Management. Word count: (Excluding tables, Charts, Appendix and References.)

Signature

GudFud Cooking Classes making cooking fun

Business Plan June 7, 2011

Table of Contents
Executive Summary: (Bibu) ......................................................................................................... 4 Service Description: (Shashank) ............................................................................................... 5 Business Concept: (Shashank).................................................................................................... 5
Analysis of the business opportunity ................................................................................................. 6 Analysis of the environment .................................................................................................................. 6

The Business Model Concept: (Janani) .................................................................................... 7 Assumptions and Gap analysis (Sriram) ................................................................................. 8 Financial Projections ..................................................................................................................... 8
Pricing Strategy .......................................................................................................................................... 9 Premises........................................................................................................................................................ 9 Break-even .................................................................................................................................................10 Source of funds .........................................................................................................................................10

Profit and Loss Statement (Sagar): ......................................................................................... 11 Cash Flow (Sagar):......................................................................................................................... 12 Sensitivity and Risk Analysis (Theo): .................................................................................... 13

Executive Summary: (Bibu)

Gudfud is a health food cooking school that serves Chennai, one of the main metropolitan cities in India. Gudfud offers creative, colorful and unusual cooking options for the mainly vegetarian crowd. The service offering is unique in India for the huge young working class crowd in the cities. Most people are tired of the ordinary, processed, boring food available in the canteens and restaurants. Gudfud will inject new life into the traditional restaurant and catering market. Even with the growth of fast food restaurants in India, the Indian people have a stronger connection with food and have a sensitive palate based on which region in India they are from. Allowing people into the food preparation process, guiding and teaching them, will increase their passion for tasty, well-prepared food. Our teams advanced skills, industry insight, and a great market opportunity will allow GudFud to reach profitability within one year and generate `6,048,000 in revenues for year three. The two primary market segments are young, employed individuals in Chennai who are not living with their parents and companies that are interested in using cooking classes as a social, team building event. There are many individuals in Chennai, who are from different states and do not have access to home cooked food. They mostly eat out in canteens and fast food restaurants. It is a known fact that unhealthy food with a sedentary lifestyle is posing as a major health hazard in our cities. Our goal is to promote good cooking skills, and easy and healthy recipes. GudFud estimates that the total market size for individual cooking classes in the city is 720 classes per year with 10 students per class. Cooking classes can also be seen as a fun, useful team building event for many companies. There are many women in job market; cooking would be a safe, fun and non-intimidating event that can be enjoyed by everyone.

GudFud will initially leverage its network of friends in the IT industry to promote the business. GudFuds goal is to secure repeat business by introducing new recipes and partnerships with restaurants. As, the general population becomes increasingly aware about the health risks from eating out constantly, and the benefits of improving their cooking skills, we will be in the unique position to help make that healthier choice. The social outcomes of GudFud are numerous and far reaching. We will hire outgoing freelance cooks and housewives with great personalities and train them in making easy, healthier food. Start-up costs for the business are estimated at `210,000. With realistic expectations about growth of the business, GudFud will service an average of 15 classes per week during its first year and grow to 33 classes per week by year 5. Following this growth schedule, GudFud will break even and become cash positive by the end of the first year. GudFud will raise money for initial investment from the founders and their friends and family. The company will raise additional funds from loans, investors and forming partnerships as the brand grows.

Service Description: (Shashank)

GudFud provides exemplary in-your-home culinary experiences such as dinner parties, cooking classes, wine tastings, team building events and more utilizing only the freshest ingredients available. Our personal chefs have fine dining experience with backgrounds as Executive Chefs, Culinary Directors and Private Chefs. GudFud will offer classes in an intimate and comfortable kitchen-classroom setting. Whether our guests are accomplished cooks looking to hone their skills, or beginners, GudFud will offer classes for all ages and all levels of experience, encompassing hands-on and demonstration classes and seminars on a variety of topics, including entertaining and dinner classes, food and wine pairing, Italian and French cuisine, pastry, bread making and more. Along with our staff chef-instructors, GF will bring in local chefs as guest-instructors to share their talents. GF will host groups for private cooking classes and corporate evenings for team building. Whatever the reason, GF will guarantee a fun time and great food.

Business Concept: (Shashank)

GudFud will be a gathering place for individuals interested in cooking, increasing their culinary knowledge and skill. It is common knowledge that young employees have a very busy office schedule and opt for fast-food which is bad for their health. The chef-instructor will focus on integrating superior cooking techniques and processes with gourmet, fresh, locally available ingredients to create delicious food. GudFud will also have special batches for low fat foods, which will help calorie conscious people to prepare and plan their own balance diet. Also there would be classes for children to prepare basic food items like sandwiches, pizza, pastas etc. Along with great food, GudFud will offer exceptional service and ambience to evoke unforgettable experiences for all its guests.

Analysis of the business opportunity

Indian people (especially males/children) now ready to learn cooking. People now are learning and take Cooking as a passion. Daily hectic activities pre-occupy most of us while everything else is done in a fast-paced manner to the point that even the food we eat is neglected in favor of instant, highly processed, acidic, and not to mention calorie-loaded meals. The results are unhealthy eating habits that lead only to the deterioration of our health. You can begin your cooking class business out of your own home, using a spare garage as your office. You can use your own kitchen (but be careful about Health Department regulations) or perhaps rent a kitchen in a restaurant, school or church on an as-needed basis. You dont need to employ any full-time waiters or bartenders etc. There's a whole army of part-time/free lancers people out there willing to work when you need them. Low investment cost business. If the business runs into loss, the exit cost from the business is very minimal. No need of high number of employees/labors. Marketing to the correct segment of people/area of city is important. If customers are satisfied, then word of mouth publicity plays a key role. Make the cooking class as a brand/product. The company should come up with its own cooking books/chefs books. For an edge in the cooking industry business, partner with a local popular grocery or retail store. Corporate companies can use the Cooking Class as team building and group dynamic activities.

Analysis of the environment

In India, now the families are adopting the Nuclear Family concept. Most of the couples are working. Education awareness is increasing and now-a-days people opting for jobs over traditional and hereditary businesses. People are willing to travel or stay away from their hometown and family for work and education. There are a lot of overseas work opportunities in certain business sector e.g.: Information Technology, Automobile and Banking. Due to globalization, Indian business man and self-employed people have to travel overseas for work and explore opportunities there. People tend to change their jobs pretty frequently and are on move. People have left with no option then eating outside food outside. India has a huge number of vegetarian people. Due to the culture and religion barriers, they usually find it uncomfortable eating food outside where non-vegetarian food is served. In India, there are a high percentage of people falling ill due to unhygienic food. Chennai has a population of 8.2 million people. The city is India's second largest exporter of software, information technology (IT) and information-technology-enabled services (ITES). The industry is poised to grow 15 to 20 per cent in the next five years. The Tamil Nadu Industrial Development Corporation is contriving to set up an IT Investment Region in Chennai. The project is also expected to generate approx. 4 lakh additional jobs. It is also a means for people to socialize with others.

The Business Model Concept: (Janani)

KEY PARTNERS -Corporates - cooking stores (suppliers) -hotels. -Space (IT companies), apartments etc. KEY ACTIVITIES -Promotional offers -suppliers contract -Additional classes for customers who require the same(subsidized cost involved) -Have more outlets depending on the demand from any particular area VALUE PROPOSITIONS -We have 5 day crash course, which will be innovative, entertaining and very useful -Easy accessibility, availability of products, flexible timing, -Exciting gifts for members -Take regular feedback from customers and work on it to improve the service which will bring in more customers and gain the respect of the existing customers CUSTOMER RELATIONSHIP -Discount based on Referral model -Company tie up 20% discount CUSTOMER SEGMENTS -Main target customers are IT professionals, mostly who come from other states of India to Tamil Nadu for work. They want to have simple, easy to make and delicious food

KEY RESOURCES -Bank loan (3 lac) -Individual funds(2 lac) -Space rental to conduct the classes -Hire chef to conduct classes( house wives, professionals)

CHANNEL -Adds on TV -Internet -Flyers - promotional offers -FM radio and -collaborating with corporate companies - direct marketing -sponsorship programs

COST STRUCTURE -Most importance cost will be towards; Rental of the space -Ingredients and utensils and the complete equipment (purchase in bulk and have a contract with the supplier) -Infrastructure, interior (AC, Lights, decorations) -Flyers, cost of advertising in the air(RADIO,TV,INTERNET,PAPER) -Stationary cost, administrative cost, insurance, bank loan(interest payment) -Miscellaneous expenses

REVENUE STREAMS -one-time fee collected from the customer (500rs) -Sell the product made by the customer during the class. -have stalls on a monthly basis- subsidized rates

Assumptions and Gap analysis (Sriram)

The adopted business plan has assumptions which are both implicit and explicit. Listed below are the assumptions which could be predicted for our business plan Implicit assumptions: The target audience will love the service because of its feasibility, acceptable fees, courses offered and unmatched customer service. The target audience will agree to our perception that this will be a successful and great service. The service will be marketed/advertised mostly through the existing customer base. We will be broadening our services by introducing new ranges/categories of cooking courses on time and available budget (eg. Andhra, Kerala, etc) Expecting rational response from competitors and we will be setting a benchmark/brand name for our service before competitors recognize its potential. We will have no trouble attracting the right staff for our service. Customers will experience high satisfaction through the service offered and might register for the speciality courses offered. Explicit Assumptions: Availability of space to conduct the course. Availability of staff and customers on time to conduct the course. Availability of necessary cooking utensils and groceries. Expecting no delay in the scheduled course duration and time due to surprise public holidays and bad weather conditions.

Financial Projections
For year to March 2012: Turnover INR 3,600,000 after tax profit INR 720,000. For year to March 2013: Turnover of 6,048,000 after tax profits of 1,209,600.

All of this to be financed through retained earnings and using the existing premises.

Pricing Strategy It is a service and therefore not subject to intensive price scrutiny. Currently pricing is based on Chefs cost + a standard hourly labor charge + cost of materials + 40% marketing & administration cost.

Premises
The company operates out of a 300 square feet office space leased from the builder in the heart of the city. The lease runs to the end of 2012 at a cost of 240,000 per annum. It is anticipated that the rent review will increase this by 50%.

Break-even
Fixed Costs: Rent 240,000 INR per annum Salary 168,000 INR per annum Variable Cost per Unit: Material Cost 200 INR Marketing (Advertisement & Promotion) 70 INR Misc. Expenses (Stationery) 10 INR Selling Price per Unit: 500 INR Break Event Units: (408,000)/500-(200+70+10) = ~1854 units

Source of funds
200,000 own money 300,000 bank loan for 10 years

Profit and Loss Statement (Sagar):

Profit and Loss Statement Year 0 Year 1 ----------------------------------------------------------------------------------------------------------------------------- -----------Revenue: Cooking Classes 3,600,000 INR Store Front (Food Stuffs/Equipment) 200,000 INR ----------------------------------------------------------------------------------------------------------------------------- -----------Total Revenue: 3,800,000 INR ----------------------------------------------------------------------------------------------------------------------------------------Expenses: Kitchen 300,000 INR 100,000 INR Management, Employee & Personnel 200,000 INR 270,000 INR Marketing 50,000 INR 200,000 INR Fixed Costs: Insurance 10,000 INR 15,000 INR Payroll 168,000 INR 240,000 INR Office Start-up cost 210,000 INR Office Upgrade/Maintenance Cost 60,000 INR ----------------------------------------------------------------------------------------------------------------------------------------Total Expenses: 938,000 INR 885,000 INR ----------------------------------------------------------------------------------------------------------------------------- -----------Profit: 938,000 INR 1,977,000 INR ----------------------------------------------------------------------------------------------------------------------------- ------------

Cash Flow (Sagar):

Cash Flow 0 Year 1 Year ----------------------------------------------------------------------------------------------------------------------------- -----------Beginning Cash Balance 0 INR 298,000 INR ----------------------------------------------------------------------------------------------------------------------------------------Cash Flows (Income): Cooking Classes 3,600,000 INR Loan 300,000 INR Private Investors 200,000 INR ----------------------------------------------------------------------------------------------------------------------------------------Total Cash Inflows 500,000 INR 3,600,000 INR ----------------------------------------------------------------------------------------------------------------------------- -----------Available Cash Balance 500,000 INR 3,302,000 INR ----------------------------------------------------------------------------------------------------------------------------------------Cash Outflows (Expenses): Marketing & Advertising 50,000 INR 200,000 INR Insurance 10,000 INR 15,000 INR Inventory Purchases 100,000 INR 300,000 INR Miscellaneous (Stationary, Travels) 20,000 INR 35,000 INR Payroll 168,000 INR 240,000 INR Rent & Lease 240,000 INR 360,000 INR Loan Interest 30,000 INR ------------------------------------------------------------------------------------------------------- ---------------------------------Sub Total 588,000 INR 1,150,000 INR ----------------------------------------------------------------------------------------------------------------------------- -----------Other Cash Outflows: Office Furniture 200,000 INR 50,000 INR Software Install & Printer Setup 10,000 INR 10,000 INR ----------------------------------------------------------------------------------------------------------------------------- -----------Sub Total 210,000 INR 60,000 INR ----------------------------------------------------------------------------------------------------------------------------- ------------Total Cash Outflows 798,000 INR 1,210,000 INR ----------------------------------------------------------------------------------------------------------------------------------------Ending Cash Balance 298,000 INR 2,092,000 INR ----------------------------------------------------------------------------------------------------------------------------- ------------

Sensitivity and Risk Analysis (Theo):

i) Incomes are going up, but people still prefer easy home cooked food. ii) People prefer healthier options than eating out all the time. iii) Cost is going up - inflation, finding good staff and affordable rental in the city will remain a challenge. Cash flow, the economic situation, competition are risks involved for starting and operating in an open market. Cash flow - Though we have the seed capital, timely availability of working capital is a challenge. Since marketing of culinary services is a important investment in a volatile economy, enough capital should be maintained to be channeled. There is a significant increase in rental cost, since classes should be organised closer to target audience (Malls/Corporate offices/Residential areas/Commercial locations). There are chances of increase in operational cost when expert chefs are needed to increase demand. Economic situation Unfortunately, economic situation in which the Business should succeed is quite challenging. Slow economy growth in US, Nation states defaulting in Europe, Japan earthquake has slow downed the recovery of global economic crisis. This scenario will definitely have an impact on Indian economy and purchasing power of the people. Additionally, recent instability in Middle East has created increase in oil prices and it will further increase inflation in India and other parts of the world. Adding to it, Goldman recently raised oil price forecast for 2012 to be $140. So, there will be high uncertainties in India and global economy. Competition - As more celebrities, TV stations are producing/running culinary classes through media, we have a huge competition for our business plan. Retail stores, malls, corporate houses, hotel chains running their own culinary classes as a value added services - would enable them to connect with people more easily and market there services in ease.