Thursday, March 27, 2014

Sweetly frozen

What if I were to open an ice-cream parlor? Frankly speaking, this question caught me at unawares: that is probably a thing I would never think of. Some years ago, however, I came up with an idea of opening my own veterinarian clinic. I still have this dream, but I never thought about it seriously, in detail. This exercise is a good practical. I tried to explain what I would be going to do thoroughly, but at the same point keep the article as brief as possible.
So, I am opening an ice-cream parlor. Let us think that I got all the official resolutions and state permissions and attended some training and counseling services for beginners, we’ll miss this part. At this point, first of all I have to do is to choose a location of my future business site. This is probably the most difficult thing to do since even a tiny mistake can lead to bankruptcy. Let’s take a closer look at the problem: the place should be located at a very common area or at least where it’s not far from common areas (if I will make a good advertisement of my shop at a common area announcing that it’s right here, in a two steps behind the corner, people will come). However, all the places of common attraction are usually in the center of the city and their lease and, moreover, purchase, costs a lot. The only alternative is a transport hub. People, whether workers or students, usually spend most of their day in the city and live in the suburbs; all of them take transport to commute, the most popular of which are subway and buses. In Boston, the five most popular transport hubs, not counting the ones in Downtown, are located on the following subway stations: Malden center, Forest hills, Dudley square, Ashmont and Mattapah. From the listed above I would choose Ashmont, because it is the most distanced from the center, which lowers the prices a lot; but at the same time one of the busiest. What is more, the bus stopping is located not at the same place with subway lobby, but in several meters from it, so to change from subway to bus or vice versa, people should walk for a couple minutes from one place to another. There is also a peabody square, which is very convenient for a small shop-parlor, and the most important thing is that now there are no alternate ice-cream shops around, so I will benefit from the number of customers for sure.
The next stop will be taking a loan. Whether it’s a government backed loan, venture capital or grants, there is a lot of work to do. At the first row I will have to evaluate how much money exactly I need and explain to whoever I will take them from what am I going to spend them for. Let’s see:
  • For long-time business keeping it makes sense to buy a place, not to rent one. To do that, I will need up to $150000, which is a common price for that location for unprofitable time to start a business, so in regular time it would cost less and those money will definitely be enough. It’s important to note that in such a situation I won’t buy the property immediately at the moment of deciding to to so. It is always wise to wait until the business and its revenues have time to grow. Fees and taxes play a big role too.
  • The first thing to do is to make a renovation of the place. On average it costs about $20000 for workers employment, paint, floor, ceiling, central heating and other smaller spendings. It is important here to make a good design. The parlor should have colorful, sweet, dolly interior so the visitor will feel himself inside a gingerbread house.
  • Then I’ll have to buy an equipment. The cost, $13600, breaks down as following:
    • Two big refrigirating showcases for demonstrating types of ice-cream available, each for $1000
    • Two lamps and four sconces for $300 for all
    • Ice-cream making machine for $3000
    • Coffee machine for $1000
    • Five dining tables for $400 each
    • Ten tablecloths for $30 each 
    • Fifteen chairs for $60 each
    • Cash register for $200
    • Cashier’s table for $200
    • Two signboards for winter and summer, $600 each (summer announcing fresh ice-cream and the name of the parlor, “Sweetly Frozen” and winter one with more accent on coffee)
    • Air conditioner for $1000
    • Plus $500 for delivery of the supplies
    • Promotional spendings for printing brochures and advertisement in a newspaper - $1000
Any prices, of course, cannot be counted to a single penny accuracy. I looked up how much in average the equipment can cost, and indicated the expected prices for each purchase to find out which amount of money it would be wise to ask for. Hence, it is normal to ask for $150000 + $20000 + $13600 = $183600 for a startup.
Employment and hours of operation are the things which are much easier to decide. It makes sense to be opened during rush hours, which are from Monday to Friday eight to half past ten in the morning and half past five to eight in the evening, so my shop will remain opened five days a week for 12 hours, from 8 to 8. I will have to hire six persons: three will work for six hours in the morning from eight o’clock to two - one cashier, one cleaner and one cook, and three for six hours in the evening, from two o’clock to eight. To hire (and, possibly, fire at the first time) I will need my own common sense. To those who will make a good first impression on me (which is also an important skill for working with customers), I will give a chance. The satisfaction of the customers with the service will play a big role. Each worker should wear a badge with his or her name, so the customer will have an opportunity to leave a review, whether positive or negative, about the particular worker. Based on such a “rating” and, of course, checking the register every day and double-counting money in it, I will make my final decision about an employee. The salary for each will be approximately $10 per hour which will be less at the beginning and more during promotion and experience (depending on the efficiency of sales).
At this point another problem pops up: how soon will I start benefiting from my business? The monthly spendings can be counted as following:
- electricity bills - $700 (average for ice-cream shops - for refrigerators and light)
  • employee salary - $7920 (10 dollars an hour multiplied by six hours a day multiplied by 22 working days per month multiplied by six employees)
  • plastic cups, tea spoons, coffee, tea, hot chocolate, sugar, milk - $400
  • ice-cream itself - $500 (but its price, same as sales, depends on the time of year)
  • income tax (missed but should also be calculated)
TOTAL - $9520
Monthly income is even more hard to count, without mentioning annually. During the spring sales can raise dramatically while in the autumn the opposite happens. But in average somebody buys an ice-cream (let it cost $5 for the beginning) every ten minutes (i.e. every two minutes during rush hours and twice an hour all the rest of the time). By claiming that, next data can be calculated:
$5 multiplied by 6 times an hour multiplied by 12 hours multiplied by 30 days turns into $10800 a month multiplied by 12 months turns into $129600 a year. Therefore, every month the parlor will benefit about $10800 - $9520 = $1280, which is $15360 - rough, but realistic data.
The main goal of the business is to make client service better, so the more customer is satisfied, the more recommendations he will spread. With some practical experience it will be clear how to make the price of one ice-cream (which is an important detail) decrease to increase the demand and hence amount of ice-cream purchased by customers. To do that, the actual price of bought and the value of keeping the parlor should be calculated.
That is a basic outline for the beginning. As soon as I will start benefitting, I will make a program for improving the client service. Every visitor will have an opportunity to leave a comment in a book for reviews and suggestions, according to which the improvements will be made. More food will soon be introduced: fresh fruits, drinks, chocolate, yoghurts, toppings, ice-cream truck or anything on what the demand will be. On the other extra money the internet site will be started on which the review section will also be available.

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