Business Analysis of Tim's Coffee Shop
May 24, 2009
TABLE OF CONTENTS
Table of Contents........................................2
Finance and Accounting Subsection
Financial Statements Subsection
Problem Solving Subsection
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.
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.
1. Employees Handbook
Conditions of Employment
Employee Programs for Organizational Effectiveness Leaves
Conduct and Discipline
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
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
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
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
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
4. is absent due to the death of family members or “Bereavement
Leave.” should set how many days accrued for sick leave and
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
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.
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
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
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.
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.
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
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.
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
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.
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
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.
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
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.
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
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