Zenity Tea HouseLLC Business Plan Redacted

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Business Plan:Zenity Tea House, LLC

December 2012

Team Members:Connor CaseyRichard Grepo

Katsiaryna PrasadAmanda Tran


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Executive Summary

Zenity Tea House, LLC is a small caf located in Seattle, Washington and will be open

for business starting January 1, 2015. We provide our customers various Chinese teas with

refreshments of pastries and appetizers known as dim sum. Unlike local tea houses in Seattle, we

offer our customers to experience the traditional art of Chinese tea making through tea tasting

classes and seminars. They can visit us for social reasons like business meetings or networking.

Due to the rise of health-related problems such as obesity, heart disease, and diabetes,

people are becoming more health-conscious by finding alternative ways to be healthy. However,

most people are resistant to consume healthy due to lack of knowledge. Hence, they are unable to

improve their lives to maintain a healthy lifestyle. Therefore, Zenity will provide our customers

with the benefits of a social environment sans the health costs.

Furthermore, there are people who are passionate about learning new cultures by

embracing the language, food, and social etiquette. Thus, they travel to other countries to acquire

such educated knowledge. Additionally, Zenity will provide a culturally sophisticated and

intellectual atmosphere for customers. We will also offer tea tasting and education classes to

further this cultural aspect of Zenity. Moreover, this will allow our customers to enjoy our

offered teas compared to our competitors.

Zenity offers both products and services that can be used by consumers that are either

health-conscious or culturally curious. Tea is one alternative product that is beneficial to one's

health. Thus, customers can come and enjoy our categories of tea offered without feeling self-

conscious. They could also try new types of tea that they have not tried before. Zenity also

educates our customers about the cultural aspects of traditional art of Chinese tea making along

with benefits of tea. By broadening our customers' understanding of tea, Zenity offers them a

place to obtain knowledge in terms of health and culture.

Currently, the U.S. industry market for tea has increased to 22% in the previous five

years and it has reached $6.5 billion in 2011. Moreover, retail sales of tea rose 5.2% to $5.4

billion. Despite the economic recession, this growth will help open new distribution channels as

consumers expand their recognition of tea's health benefits. There will be a continuance in the

expansion of tearooms and tea offerings by retailers, restaurants, and coffeehouses.1

1http://www.foodnavigator-usa.com/Market/US-tea-market-growth-to-continue-predicts-Packaged-Facts


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Zenity has both strengths and weaknesses as we start up. Some weaknesses we will face

upon opening are our limitation of tea products, low direct sales, and unrecognized brand

awareness. Our competitive advantages over our rivalry are:

Unique Experience:Customers can authentically experience the form of traditional art of

Chinese tea making performed by our Tea Expert with the assistance from our Sales

Associates in a tranquil and relaxing atmosphere.

Weekly Classes and Seminars:Zenity will offer tea tasting and tea education

classes/seminars that our customers can participate in by paying a fee. These classes and

seminars will educate our consumers on the benefits and cultural knowledge of tea.

Moreover, we will gain revenue from each payment transaction made with our customers.

Our customers will pay for tea either in cups or pots, Chinese pastries/appetizers (dim sum), tea

tasting classes, and tea education seminars. The pricing for a cup or pot of tea will varies

depending on what type of tea the consumers will order. Dim sum will have a set price based on

small, medium, or large size plates. The classes and seminars will range from $15 to $30.

The Zenity team will be comprised of three core members. Below are the names of each

team member, their role in the organization, and highlights of any relevant skill or career

experience that they each have.

Amanda Tran, Owner/General Manager: Amandas experience with the food and

beverage industry began in 2008. She has acquired various positions in the retail,hospitality, and food/beverage industry. Thus, she has a vast knowledge about managing

a business. Amanda will receive her double BA in Business Administration and

International Business in December 2012 from the University of Las Vegas, Nevada.

Holly Guan, Assistant Manager: Holly has worked for the Eastside Cannery Casino &

Hotel as a Marketing Coordinator. She handled several large projects in regards to

marketing strategies, advertisement, and public relations. With her expertise in

marketing, she will help Zenity promote itself in Seattle, Washington. Holly received her

BA in Marketing from the University of Las Vegas, Nevada.

Kirstyn Else, Tea Expert: Kirstynhas 6 years of tea and coffee expertise working for

Starbucks Coffee Company. She has demonstrated an expansive knowledge of different

types of tea, serving technique, and the history of tea. She is also a member of the

American Tea Masters Association.


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In terms of financials, Zenity will acquire lease for a retail location in Downtown

Seattle. The fixed costs for our business will be the location, equipment and technology that will

be required to operate the tea house. The variable costs will consist of the purchase of tea

supplies, tea products, and local produces for the creation of Chinese appetizers and pastries. It is

projected that we will break even at $498,144 or $41,512 each month for the first year.

The funding required for Zenity is as followed, we will seek $270,000 as an initial

investment for our start-up operations. The owner, Ms. Tran, will finance $120,000 into the

business and her friend, Ms. Thu Nguyen, will invest $150,000 for an expected 10% return of

profit. The capital invested into the tea house will be used for initial investment in personnel, our

leased location, equipment, furniture, and operating expenses.

Company Description

As a start-up business, Zenity will primarily serve our customers traditional Chinese tea

and light refreshments. Our caf's location will be in the King County, Downtown Seattle to

provide a place where our customers can enjoy Chinese tea in a quiet and relaxing atmosphere.

Our company's mission is to consistently provide high quality products that embody traditional

Chinese culture in a unique atmosphere, so our customers can experience serenity and socially

interact with family and friends. We will strive to broaden our consumers understanding of tea

by promoting healthier and better living style through our products.

The business structure of Zenity will be a limited liability company. Ms. Amanda Tran

will be the owner/manager and hold the most voting rights of this business. Her friend, Ms. Thu

Nguyen will be a LLC member with the second highest voting right. Ms. Tran will also consider

adding the tea expert, Kirstyn Else and Assistant Manager, Holly Guan, as additional LLC

members. Other future investors will be considered as LLC members as well in order to acquire

additional financial funding for the tea house.

Zenity will focus on the traditional aspect of Chinese tea-making by offering a variety of

tea such as black, white, green, oolong, and puer. These products are core to our business, thus,

we must obtain superior tea for our tea house. As for light refreshments of pastries and dim sum,

we will make them from products of local producers and health-oriented grocery stores in

Seattle. This will allow us to focus on providing our customers high quality products that are

both healthy and organic.


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As we open Zenity, one of our goals is to be one of the top Chinese tea houses in the

Seattle area. By accomplishing this goal, we will focus on satisfying our customers by providing

outstanding customer service. Our services consist of listening and acting on customers' feedback

while exceeding their expectations. By providing a place of tranquility, our service is beneficial

for our customers because it allows them to calm their soul while enjoying our products.

Based on this goal, Zenitys main customers will be men and women in Seattle who are

interested in learning about traditional Chinese tea making. Hence, their curiosity about this art

brings them to us among other tea houses in Seattle. We offer them an opportunity to learn and

appreciate the art of traditional tea making in a place of serenity, which is the value we provide

to our customers. Another value is being able to help them to continue living a healthy lifestyle

through the benefits of tea which will be discussed.

Furthermore, each customer will experience the tea-making process that is not known to

the general public, making us unique. This experience will serve as our competitive advantage.

Our service also includes educating the customers about the benefits of tea by offering tea

tasting, similar to wine tasting, and one-on-one education classes or group seminars. Thus, we

will educate and develop our customers' understanding of tea making. We will also teach them

how tea can enhance their lifestyles which are all benefits of our products.

During the tea-making process, customers will pick the type of tea they're interested in.

Our tea expert or an employee will measure the amount of tea needed for the number of people

served. Each tea requires different water temperature and different amount of water. Once the

water is poured into the teapot, the brewing time is also measured to bring out the flavor of the

tea. The tea is then served to each customer. As courtesy of The Chinese Tea Shop, refer to

Appendix A for the various teas Zenity will offer.

All refreshments offered by Zenity will be created in-house to cut unnecessary expenses.

Thus, Ms. Amanda Tran will learn how to create these refreshments by consulting dim sum chefs

in Seattle and Vancouver, B.C. Once she is qualified to make these pastries and Chinese

appetizers, she will teach our employees to assist her with this business operation. However, a

dim sum chef will be considered for the future as Zenity becomes profitable. Moreover, these

refreshments will be offered to our customers to cleanse their palate during the tea classes and

seminars. Customers can also purchase the refreshments with their pot of tea if they do not take

part in these classes.


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A second goal of Zenity is to participate as a community-oriented business to acquire a

customer base in our first year of operation. Zenitys managers and employees will attend

various non-profitable organizations and community activities to gain brand awareness. These

organizations will consist of local shelters, orphanages, and hunger relief centers. Community

activities would consist of walkathons/marathons, city cleanup, or support of local organizations.

Currently, we are establishing relationships with suppliers and building a customer base

to be able to bring our products and service to market. Once we have the products from our

suppliers and interested customers, we will be able to open the business within a year from start-

up. Moreover, we will be limited in our tea products offered in the beginning. This is due to

learning about and catering our products to our customers' preferences.

During the first operating year, we will have negative profitability due to advertisement

costs of promoting our business and the management of our cash flow. Additionally, to start the

business, we will obtain all required permits and licenses, including health inspection, license for

business operation, signed legal agreements, etc. Overall, our main risks are obtaining customers,

establishing our name in Seattle, and meeting financial ends.

Target Market

Zenity will have a niche market focusing on five specific target markets. As stated, our

customers visit Zenity because they are interested in traditional Chinese tea making and want to

learn this art. Thus, they will prefer our business compared to other tea houses that do not offer

this service. Moreover, our target markets in accordance of importance to what percentage we

will focus our market efforts on are: tea connoisseurs (35%), business professionals (25%),

customers of Asian ethnicity (20%), upper-middle to high class socialites (10%), and culture

passionate lovers, i.e. those who are passionate to learn about new culture (5%), see Appendix B.

Presently, there 200 or more places in Greater Seattle that serve both coffee and tea.

However, about 20 of them are tearooms in particular. 2Furthermore, Seattle has grown 23%

between 2000 and 2011 with a more racially diverse [population] than that of the city, county

and nation as a whole.3Also, about 14% of Seattles population is Asian Americans.4Thus,

Seattle is a credible location since this specific market is assumed to be knowledgeable about tea

and its health quality.

2 http://www.citylivingseattle.com/main.asp?SectionID=28&SubSectionID=173&ArticleID=889043 http://downtownseattle.com/files/file/SOD2012_EconReport.pdf4 http://www.seattle.gov/dpd/Research/Population_Demographics/Overview/default.asp


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responding by expanding their menu and promoting healthier food and beverage options.

Second, as the economy picks up, businesses will experience increase in sales volume which in

turn will have a positive effect on the industry profitability.

Competition will likely to be intense over the next five years. Industry main players are

Starbucks Coffee Company and Dunkin Donuts. Although Starbucks is the leader, with a

market share of 35.6%, it is known for being a global coffee company and coffee house chain

that offers the highest quality Arabica coffee. Dunkin Donuts has a market share of 29.5% as an

international doughnut and coffee retailer. It is famous for its variety of doughnuts and wide

range of bakery products. Market share of 34.9% belongs to other businesses in the industry,

including tea houses.8

Despite Starbucks and Dunkin Donuts being the leaders in the industry, they are not our

main competitors. Instead, we will directly compete with local tea houses in Seattle, such as

Floating Leaves Tea, Teahouse Kuan Yin, Vital T Leaf, and Miro Tea. Moreover, Vital T Leaf is

located in Downtown, Seattle, and the location helps them to attract more target customers

through high foot traffic; refer to Appendix C. They represent a relaxed tea rooms/tea shops that

offer a wide variety of brewed tea, including teas from India, Sri Lanka, Japan, Taiwan and

China, and sell numerous tea wares. Their main focus is to sell tea to the general public and

retailers while offering either occasional tea tasting sessions or prior to purchase tea tasting.

Another example; Teahouse Kuan Yin offers only twice a month tea tasting while Vital T

Leaf offers complimentary tea tasting before making a purchase. Unfortunately, some of the tea

houses force customers to purchase tea in a bulk of lb. with prices for some teas up to $320/lb.

Also, most of the tea houses have no waiter service and offer a heavy food menu with samosas

curry and cakes, which can overwhelm the process of tea drinking. For details, refer to Table 1.

8 http://clients.ibisworld.com/industryus/ataglance.aspx?indid=1973


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Table 1: Analysis of Competition

Strengths Weaknesses Positioning

Floating Leaves Tea

Tea from Taiwan, Japan and China;

sells tea through its website; freeshipping for purchases over $80;

sells tea ware; tea tasting three days a

week.

Small selection of tea and tea

ware; PayPal is the only onlineform of payment; closed on

Mondays and Tuesdays.

It is a Seattle-based tea

importer and retailer with apassion for Taiwanese,

Japanese and Chinese tea, tea

ware, and tea culture.9

Teahouse Kuan Yin

Wide selection of tea; also sell to

wholesalers and retailers; gift

certificates available; have its own

blog and Facebook account; offer

organic selection of tea.

Tea tasting only twice a month;

no sell phone policy; lack of

individual tea tasting sessions;

offer heavy food such as cakes,

samosas, and curry.10

It is a relaxed tea room that

offers a wide variety of loose

leaf tea from Asia to its

customers and wholesalers.

Vital Tea Leaf

Located in Downtown, Seattle which

helps them attract more target

customers; high quality and wide

variety (300 kinds) of tea; sells tea

ware; complimentary tea tasting

prior to a purchase.

Tea is expensive (up to

$320/lb.); minimum of lb. of

tea purchase is necessary; no

sitting area, except for a mini

bar.

It is a tea shop with a mini bar,

where customers can taste tea

before making a purchase.

Miro Tea

Open long hours, 7 days a week;

indoor and outdoor seating; offersgluten-free food; tea is served in a

tea pot with a candle underneath to

stay warm.

No waiter service; gets noisy

when crowded; limited seating;lack of tea tasting sessions.

It is a tea house that offers

many delightful teas and lightfood, such as crepes, salads

and pastries.

Zenity Tea House, LLC

Unique, authentic experience of the

art of Chinese tea making; wide

variety of teas; light snacks; great

customer service; weekly tea tasting

sessions; bi-weekly educational one-

on-one classes or group seminars;

having a tea expert present daily.

Limit in tea products offered

upon opening (because of still

developing relationship with

suppliers); limit in direct sales

upon opening (dont want

people to take tea home without

proper knowledge of tea

making).

It is a tea house that focuses on

specialize art of Chinese tea

making, while offering

excellent customer service,

tranquil atmosphere, proper tea

brewing, tea health and sharing

the knowledge of tea benefits.

9http://www.floatingleaves.com/10http://www.teahousekuanyin.com/info.html


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Zenity will differentiate itself from our rivals by sharing our love of tea with consumers

together with offering unique, authentic art experience of Chinese tea making, and delivering

excellent customer service. Not everybody knows that there are specific ways of brewing each

type of tea. Moreover, tea should not been drunk with a heavy meal, instead light snacks are

more appropriate to clean ones palate. The customers will observe a form of art that is slowly

diminishing today, making the experience more memorable.

Each customer at Zenity will have an opportunity to experience the tea making process

not known to the general public by visiting our tea house, participating in weekly tea tasting

sessions or taking our bi-weekly tea education classes. While tea tasting will help our customers

develop their palate for appreciating fine teas, tea education classes will broaden ones

understanding of best tea brewing, and help learn that tea isnt just tea but it can enhance ones

lifestyle. Finally, a vibrant social atmosphere, warm and cozy environment, carefully chosen

colors of the surroundings will make consumers experience more memorable and enjoyable.

Among the main risks related to this positioning are establishing our name in Seattle

while competing with local tea houses, attracting first customers, and scrambling for market

share to ensure Zenity can maintain profitability. Moreover, two main tea substitutes, coffee and

energy drinks, are extremely popular in American culture, with 9.39 pounds of coffee

consumption versus 0.90 pounds of tea consumption per person in 2011.11However, teas

popularity is ever-increasing due to its health benefits, and tea consumption is expected to rise

0.63% annually.12Thus, we plan to be a profitable business with a small market share of 2-3%.

With a new trend towards healthier lifestyle, Zenity will be focusing on gaining insights

into our customers values through surveys, growing relationships with current customers

through social media, and attracting new customers through local advertising and promotions. By

locating our tea house in a high-profile location, Downtown Seattle, with easy access and

parking for customer convenience, we will be able to better introduce our products to the target

market. Focusing on current trends such as marketing to baby boomers with their huge buying

power can also help us to gain projected market share. Moreover, cost control with minimal

waste and improved service is crucial in this low margin industry as it can help differentiate one

tea house from another.

11 http://clients1.ibisworld.com/reports/us/bed/default.aspx?entid=467012 http://clients.ibisworld.com/bed/default.aspx?bedid=4671


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After Zenity gains success with its main target market, we expect our market share to

increase as we discover potential secondary market of wholesalers and/or retailers who are

interested in selling our tea. One way to make it possible is setting up an account with a potential

wholesaler/retailer for online orders and giving them the ability to purchase tea over our website.

Marketing Plan and Sales Strategy

Our first main strategy is to teach our customers that tea is a healthy alternative to coffee

and help them learn the process of traditional tea making so they can enjoy it at home as well.

There are a few studies done on the subject and it has been found that tea has many beneficial

properties. Some of these properties could be inhibiting the growth of new fat cells, help with

losing weight, decreasing the chances of cancer, preventing and slowing the progression of Type

1 Diabetes, and tea is full of antioxidants.13 Unfortunately, not many consumers are aware of it.

Thus, our first job is to get the message out to our potential customers that tea is good for them.

Second, the service and unique experience that Zenity offers will attempt to soothe the

mind and soul of our consumers. With our quiet, relaxed, serene atmosphere, Zenity will be a

place to relax, enjoy, and experience rather than waiting for a barista to shout customers names

and a drink order. In the end, our message to the customer is Tea is great for the body. Come

experience it with us where you can relax and soothe the soul as well as learn the sophisticated

art form of traditional Chinese tea making.

Unfortunately, as there are a lot of coffee shops and baristas in Seattle, communicating

our message to potential customers will be the most difficult endeavor for our business. With the

limited resources at our disposal upon opening, we will be using hands on approach. First, Zenity

will have a website that offers comprehensive information regarding tea, its health benefits, and

the history of the art form of Chinese tea making. The site will be informative, simple, and easy

to navigate. The second step would be to retain the services of a local SEO Solutions Company

(Vetta SEO or EWS Seattle).14SEO Solutions Company can increase our web presence through

organic optimization, blogging, and other means.

Zenity would also offer to come to a radio station, like KJAQ 95.7, an adult

contemporary station in the Seattle area, put on a demonstration of tea making, serve tea, and

offer coupons and discounts to the listeners in return for air time and commercial spots. Through

13 http://www.webmd.com/diet/features/tea-types-and-their-health-benefits14 http://clients.ibisworld.com/bed/default.aspx?bedid=4671


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the radios, we would also hold a promotional contest. The promotion would be to sign up on our

site, or register for a chance to have Zenity come to ones place of business and serve tea.

Finally, we will use Groupon, deal of the day recommendation service, to promote our

tea house upon opening in order to attract new customers. Although Groupon earns a

commission of 50% of the coupon sell price, it promises a certain number of sales per day. 15Not

only will all this increase brand awareness, but it will also encourage people to try our tea, while

giving us a chance to showcase our unique brand of customer service, and allow us to obtain

valuable customer feedback.

Our outsourced sales team will essentially be comprised of one sales manager and a

Director of Sales and Business Development. As we utilize SAP data mining software for data

analysis, our sales/marketing team will use a close loop system. We want to show our customers

that we are receptive to their feedback from the outset. Also, should we choose to implement the

software later, it will cost more and inputting all historical data will take more time and money.

The Director will be in charge of interpreting the information gleaned from the data

mining to improve and implement sales and marketing strategies. Not only will he/she use data

on sales, costs, flavor popularity, but also customer feedback. Starting off, the Director and the

sales manager will have to meet weekly in order to reevaluate their objectives. As time

progresses, these objectives will have to be reassessed to ascertain whether they are achievable

because setting unreachable goals for sales team members generally leads to low morale and

high turnover.

Operations and Technology

The first important key to success is finding where Zenity Tea House will reside, and

how big the location will be. Downtown Seattle is our intended location for two reasons. First, it

is one of the most walkable neighborhoods in the country, and this makes downtowns

businesses highly accessible. Second, the city supports business growth by offering great

opportunities for start-up companies.16Our hours of operations are 7 days a week; Monday to

Saturday, we will be open from 10 am to 10pm and Sunday, we will be open from 11am to 7 pm.

Zenity will prospectively reside in the Sidney-Belltown building, which is located on the

4thand Vine Street, 0.7 miles North-West of Downtown. Our address is 2514 4th Avenue,

15www.groupon.com/faq16 http://downtownseattle.com/DoBusinessDowntown/BusinessIncentives


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Seattle, WA 98121. It is surrounded by residential and commercial facilities which are beneficial

for our business. Moreover, it has a strong presence of business professionals and customers of

Asian ethnicity, which compose approximately half of our target market and justifies our

decision for this location.

The facility for the tea house is 1,320 square feet with a lounge area that will fit twenty to

twenty-five guests comfortably. Approximately 900 square feet will be allocated to the main

lounge area with shelves filled with a variety of tea products. An estimate of 420 square feet will

consist of a small office and a stockroom. The facility will be leased for four years to lower our

initial start-up cost. However, this does not eliminate the possibility of owning a location, which

is a goal after we establish our reputation in Seattle.

Additionally, Zenitys non-recurring costs are tied to the start-up cost of the company.

Costs, such as computer systems, interior design and water boilers, are a small portion of our

assumed $95,000 budget for initial investment. The cost of leased location is listed at $26.00 per

square foot per year. The cost of necessary tea ware is $30.95 each, and we need 15 of them.17

Also, three 5 gallons water boilers needed would cost usabout $849.18Totals and additional cost

can be seen in Appendix E.

Zenitys sales and marketing will be outsourced to Creative Media Alliance, which is a

Seattle based advertising and marketing agency. It is a small business that has partnered with a

lot of great talent. They have an exceptional portfolio and are aligned with other local businesses

that target similar market as we do (for example, the Pacific Northwest Ballet (affluent and

cultured people) and the Seattle Chamber of Commerce (business people). Also, they will do a

free business/market analysis for us before taking us on as their client.

As for our suppliers, we plan to purchase our tea from China, Taiwan, and Hong Kong,

via Vancouver B.C. in Canada as a long term objective. Due to the low tariffs cost between

Canada and the United States (because of the World Customs Organization), Vancouver B.C is

an optimal solution to the supplies and equipment for the tea house. However, we will start off

by using Unilever Food Solutions, the worlds largest tea supplier, because they have created an

economy of scale with prices that are hard to match. When starting, we will need to take

advantage of their lower prices.

17 http://www.yishanteashop.com/Full_Teasets_Gifts/18 http://www.coffeeespressopro.com/bunn-h5m-automatic-hot-water-machine-commercial-dispenser.html


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As Zenity builds our client base and brand awareness, we will develop an exclusive

relationship with a few smaller local suppliers, such as Yishan Teashop, Lam Kie Yuen Tea Co,

and Seattles Best Tea, and because of our volume, they might become more flexible to our

demand. These three suppliers will acquire their products from China, Taiwan, and Hong Kong.

Therefore, this will help provide consistency in regards to quality and taste of our products.

Yishan Teashop will supply most of our teas and tea ware and will deliver our products in

one transition. The supplier appeals to Zenity because of the variety, taste, quality and cost

saving when we buy large quantities of products. Yishan Teashop gives discounts on unit prices

when buying an excess of 500g and charges nothing for shipping and handling. Building a

positive relationship with this distributor will be of importance to us.

Lam Kie Yuen Tea Co. provides exclusive Chinese tea of great quality. Although it is

more expensive compared to other suppliers, we will use it mainly for buying unique teas. Also,

the proximity of the tea supplier is optimal for us because the cost saving for shipping will be

allocated to other important operations and our tea expert can visit the supplier to taste and test

teas before buying them. Refer to Appendix D for a sample ordering catalogue of this supplier.

Finally, Seattles Best Tea distributes their tea both online and in their stores. Their

proximity to our location makes them ideal for when we need to replenish inventory the next

day. However, with their limited supply of tea, we will not be acquiring a lot of our tea products

from them. Thus, they will serve as a contingency plan when the other two distributors cannot

supply us with products when needed.

In terms of technology, Zenity will use computerized software called QuickBooks that

helps businesses perform accounting, bookkeeping, and financial reports. This software is crucial

because it helps simplify time-consuming functions and allow additional time to manage

important aspects of Zenity such as the store operations and employees. Moreover, this

computerized software will be held responsible by Ms. Tran, our general manager, in terms of

these accounting and financial operations.

Moreover, the implementation of a perpetual inventory system such as WASP Inventory

Control Software will be necessary to ensure that the business operates in an organized manner.

The inventory control is a vital aspect of the business, hence, this proper inventory database will

be obtained to minimize cost and to maximize accuracy. The database will let the general


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manager and tea expert refer back to previous inventory points for current and future references

based on the quality and freshness of the tea we offer.

Management and Organization

Zenity will be a three-tiered organization comprised of a staff of six. The Executive Level

will be held by the owner, Ms. Tran, who will also act as the general manager. The Management

Level will consist of the assistant manager and the tea expert. The Operational Level is

comprised of two full-time sales associates and one part-time sales associate. Management and

organizational structure is broken down as follows.

The owner/general manager, Ms. Tran, will have most of the responsibilities including

creating a tranquil atmosphere in the tea house by carefully choosing the colors and dcor of the

surrounding. She will also implement all strategic planning and oversee the financial and

accounting report of Zenity. The accounting will consist of payroll, accounts payable, and

accounts receivable. Moreover, Ms. Tran will be in charge of marketing through advertisement

and upholding our stores visual standards. She is willing to go without pay for the first year;

however, her capability to do so will end after the second year.

The assistant manager, Holly Guan, will assist the owner/general manager by overseeing

Zenitys organization, managing our human resource, and creating marketing strategies. She will

handle most of the public relations aspect of the business especially involving community-

oriented events and giving back to society. Ms. Guan will also help manage the stores operation

along with the general manager. Salary for this position will be $25,000 a year without benefits.

However, she will be earning a 10% share of the business when we become profitable.

The tea expert, Kirstyn Else, has demonstrated an expansive knowledge of Chinese tea.

She has 6 years of coffee and tea expertise. Not only she knows the various flavors of tea, but

also brands (quality/cost), serving technique, and the history of the Chinese tea making tradition.

Her responsibility will be to inspect quality and freshness of the acquired goods, and oversee

inventory and supply chain of Zenity by using our inventory database to maintain the flow of our

tea products and supplies. She will travel to our suppliers to find the best and highest quality of

tea while keeping positive relationships. Salary for this position will also be $25,000 a year

without benefits. Moreover, Ms. Else will become an LLC member and will be expected to

receive 10% of the profits made at Zenity.


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Finally, sales associates will be in charge of basic tea house functions such as

maintaining the cash register, stocking shelves, maintaining the cleanliness of the tea house, and

delivering great customer service. They will be trained to learn the proper tea etiquette and

process of tea making by the tea expert. While there are plans for future growth, during the first

year of operation the staffing structure of Zenity will remain static. They will be paid $10 hourly

without benefits for 30 hours per week work schedule. Additionally, both management and

personnel will get raises at 1% per year. These raises and benefits will have to be added or

considered at a later date, but currently the business cannot afford it due to start-up and financial

difficulties with finding capital funds.

Financials and Exit Plan

Sources and Uses of Funds

There are multiple and significant up-front funds required to be invested in the business,

such as owners capital contribution and Ms. Nguyens (Ms. Trans friend) investment of

$150,000 into the business. Ms. Nguyen will receive 10% of profit for her investment into Zenity

and she will hold 15% of shareholders voting rights.

Table 2: Sources of Funds

Owners Capital Contribution (Ms. Tran) $120,000

Investors Money (Ms. Nguyen) $150,000

Total Initial Investment $270,000

From the $270,000 initial investment, about $95,000 will be used to hire employees,

acquire a leased location, pay for advertisement expenses, and establish the business. With these

funds, we will also test our products during a pre-opening event before our first day of grand

opening. This will allow us to observe the operations of our products and service in terms of our

customers preferences (see Appendix E for uses of funds).

Financial Projections

All financial information related to Zenity is estimated two years in the future starting

January 1, 2015. Hence, we assumed the numbers are based on this data:

Variable Costs:

Tea: $15 average per pot (selling 100 pots per day at 1% growth over time)

Tea Classes: $15/person (120 people per month at 0.5% growth)


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16

Tea Tastings: $30/person (80 people attending per month at 2% growth)

Dim Sum and Pastries: $12 average per serving (Estimated 60% consumers buying tea would

also purchase appetizers)

Fixed Costs:

The retail space we will lease will be an average of $25 to $26/sq. ft. each year as our

rental cost. Our equipment will also be a part of our fixed cost. Please refer to Appendix E in

regards to Further Financial Assumptions for all required equipment. We will also hire a

marketing team and an outside accountant for our yearly business tax returns. Both the marketing

team and accountant will be paid about $500 per year.

Summary of the Financial Statements

Zenitys financials are based two years in the future; thus, we will start making net profit

of $420 in the first quarter of year 2015. Our gross sales and gross profit increases gradually

during the first year of operation and throughout the next five years, leaving Zenity with $11,448

of net profit at the end of the first operating year (2015) and $148,048 by 2019. Moreover, Zenity

is competing in a low margin industry, thus, the net profit is just a small part of our gross sales,

refer to the chart below.

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

2015 2016 2017 2018 2019

$11,448$37,251

$67,237$104,320

$148,048

5-Year Financials At-a-Glance

Gross Sales

Gross Profit

Net Profit


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17

In the first year of operation, Zenity will earn profit by selling our goods and service as

our best-case scenario assumptions for our cash flow projections. We will have a healthy cash

flow because cash provided for operations is more than sufficient to cover cash used for

investing (for example, total cash from sales in 2015 is $530,616 versus total cash from

financing is $151,571). Moreover, we might face financial crisis if we do not sell enough

products to meet our budget for the each month of business.

Thus, if these projections of cash flow continue to grow over the next five operating

years, then our profitability will be promising. The gradual increase of cash will provide us with

an ending cash balance of $261,249 in 2015 and $983,470 in 2019 (see Cash-Flow Projection in

Appendix E). This will allow Zenity to have enough cash on hands to pay necessary business

operation expenses such as rent, advertisement, and maintenance.

Furthermore, there should not be any cash flow problems since there is little seasonality

for our business. Also, Zenity will be acquiring profitable sales in a quick manner and will not be

selling on credit. Additionally, based on our cash flow projections, we calculated the value of

cash flows below to estimate the worth of our business. Thus, Zenity will be valued at

approximately $1,362,997 if we operate for six years, starting January 2015.

Discounted Cash Flow

Year Failure Sideways SuccessfulWeighted

Average

PV Factor

(1/1+r)t

)

Present

Value1 $ 52,250 $ 87,083 $ 261,249 $ 132,366 0.800 $ 105,893

2 $ 59,035 $ 98,392 $ 295,177 $ 149,556 0.640 $ 95,716

3 $ - $137,815 $ 413,445 $ 192,941 0.512 $ 98,786

4 $ - $212,107 $ 636,322 $ 296,950 0.410 $ 121,750

5 $ - $327,823 $ 983,470 $ 458,953 0.328 $ 150,536

Terminal value calculation TV=WAE5* (1+g)/(r-g)

6 $ 2,409,502 0.328 $ 790,316

Total Net Present Value $ 1,362,997

Assumptions:

0.2 weight for failure

0.5 weight for sideways

0.3 weight for success

25% = r, Discount Rate

5% = g, Growth Rate in period of constant Growth


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18

Moreover, our pro forma balance sheet indicates in the first year of operation that current

assets are greater that current liabilities by a comfortable margin, which is very attractive to

potential investors. For example, in the first operating year (2015), our projected current assets

are $383,885 while current liabilities equal to $41,316. Therefore, our total net worth is $342,569

in 2015 (see Appendix E: Balance Sheet).

Finally, Zenity will need to reach an average of $498,144 in gross sales annually in order

to break even. As the income statement indicates, we should be making $530,616 and $606,098

in gross sales in years 2015 and 2016 respectively (see Appendix E: Break-Even Analysis).

Therefore, the breakeven point should be reached within the first year of operation.

Exit Strategy

Zenitys LLC members will have several methods to exit their investment in the business.

However, the most reasonable strategy is for the departing LLC member(s) to sell their

provisions to current LLC member(s) or a person interest in becoming a member. Moreover, if

Zenity were to become extremely successful, then we would look into franchising the business to

investors who are interested in the traditional art of Chinese tea making. Thus, this will be

another method that will allow investors to exit the business more easily. Furthermore, if Ms.

Tran wants to keep the business within family and friends, then she can open a second location to

enhance the profitability of Zenity in Seattle.


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APPENDICES

Appendix A: Types of Traditional Chinese Tea 19

19 http://www.thechineseteashop.com/gong-fu-cha.html


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Appendix B: In-Depth Description of Target MarketsEach target market below cannot be really quantified in size and trends according to U.S. dollarsof the market they represent. However, below are description and current information of eachtarget market which Zenity spends our market efforts on.

Tea Connoisseurs: In a Seattle Times article, Ms. Rosanna Xia states that there is a newgeneration of connoisseurs of Chinese tea is emerging. She explains how these new generationis trying to teach themselves about a culture they were not born into, learning Chinese andtraveling to southern China's ancient tea mountains, where they hunt for the best tea ware andperfectly aged pu'er, some centuries old.20

Business Professionals: Currently, Seattle is one of the best cities for young adults andprofessionals according to Forbes (May, 2010) and The Business Journals (2011). Moreover,Seattle is also one of seven largest U.S. business centers for software/technology (OrigoTerraLLC, April 2010). In Seattle, downtown consists about 75% of the citys government job with57% of the citys services sector. From the Puget Sound Business Journal of Lists, DowntownSeattle is also home to the worldsmost well-known companies such as Amazon.com, Starbucks

Corporation, and Nordstrom, Inc.

21

Asian Ethnicity: In the 2010 U.S. Census, this ethnicity group is the second largest groupin regards to race residing in Seattle, Washington. The group currently has an estimate 13.8%share of the basic population.22Seattle has various organizations such as the NationalAssociation of Asian American Professionals (NAAAP) or the Asian Pacific IslanderCommunity Leadership Foundation (ACLF) in support of the Asian-American community. Thecity also has a Chinatown-International District that caters to this population.

Upper-Middle to High Class Socialites:Presently, the annual income of downtownhouseholds in Seattle for these socialites averages $200,000 and up. They make about 4.06% ofthe total Downtown Seattle households, 3.18% for $200,000-$499,999 and .88% for $5000, 000and more. These studies were conducted by the Nielsen Company.23With Zenity being locatedin Downtown Seattle with luxury brand name boutiques, we will attract this target market toenjoy a pot of tea before or after their shopping spree.

Culture Passionate Lovers: As a city filled with culture and passion, there is bound to bepeople who thrive on both. Thus, Zenity Tea House will focus on customers who have an interestin the traditional art of Chinese tea making. These customers are curious in learning aboutdifferent culture then what they raised. Moreover, they are similar to our customers who are teaconnoisseurs because they are passionate in investing their time in a new culture. Hence, we willuse this to our advantage in providing a unique atmosphere for them.

20 http://seattletimes.com/text/2017355651.html21 http://downtownseattle.com/files/file/SOD2012_EconReport.pdf22 http://www.seattle.gov/dpd/cms/groups/pan/@pan/documents/web_informational/dpds019189.pdf23 http://downtownseattle.com/files/file/SOD2012_EconReport.pdf


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Appendix C: Seattles Chinese Tea Houses Competition24

Based on the map above, we speculate that Downtown Seattle is a viable location forZenity Tea House. Most of our competitors are located 10-15 miles from each other. Therefore,if Zenity focuses on our competitive advantages while providing solutions to our customers

problems, then we will become profitable. Moreover, we are located near two major universities.This helps Zenity attract two of our target markets, culture passionate lovers and students ofAsian ethnicity. Furthermore, we anticipate to outbeat our competitons to achieve one of ourgoals as the top and number one Chinese tea house in Seattle, Washington. Hence, this locationwill benefit Zenity in obtaining our goals and gain brand awareness.

24http://maps.google.com/maps?hl=en&tab=wl

Floating Leaves Tea

Miro TeaTeahouse Kuan Yin


Vital T Leaf, LLC


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Appendix D: Sample of Lam Kie Yuen Tea Co., LTD Ordering Catalog 25

Tel: (852) 2543 7154 Fax: (852) 2851 0015

E-mail: [email protected] Website: www.lkytea.com

MAIL ORDER FORM

Name () : Email ():Telephone Number () : Fax Number () :Delivery Address () :I would li ke to order the below item(s) and please charge my credit c ard:

Item Unit Unit Price Quantity Amount(Green Tea)Crown Grade Bi Luo Chun 100g HK$250.00 HK$-

West Lake Yue Chin Lung Ching 150g HK$80.00 HK$-

Supreme Ming Chin Lung Ching 100g HK$600.00 HK$-

Shifeng Ming Chin Lung Ching 250g HK$550.00 HK$-

(White Tea)Silver Needle Pekoe 100g HK$140.00 HK$-

Organic White Peony 100g HK$60.00 HK$-

White Peony Supreme 150g HK$70.00 HK$-

Super Fine White Peony 300g HK$100.00 HK$-

(Oolong Tea)Golden Oolong 100g HK$50.00 HK$-

Ginseng Oolong 100g HK$60.00 HK$-

Osmanthus Oolong 100g HK$60.00 HK$-

Spring Tieguanyin 100g HK$70.00 HK$-

25 http://www.lkytea.com/member/16372/eshop/mailorderform.pdf


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Appendix E: Financial Statements and AssumptionsIncome Statement

Income Statements 2015 2016 2017 2018 2019

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TOTAL 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TOTAL .

INCOME

Gross Sales $125,754 $130,237 $134,893 $139,732 $530,616 $144,543 $149,094 $153,799 $158,662 $606,098 $693,466 $800,993 $926,

(Commissions) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

(Returns and allowances) $3,772 $3,907 $4,047 $4,192 $15,918 $4,336 $4,473 $4,614 $4,760 $18,183 $20,804 $24,030 $27,8

Net Sales $121,980 $126,330 $130,847 $135,540 $514,697 $140,207 $144,620 $149,185 $153,903 $587,915 $672,662 $776,963 $899,

(Cost of Goods) $62,877 $65,119 $67,447 $69,865 $265,308 $72,272 $74,546 $76,900 $79,331 $303,049 $346,733 $400,496 $463,

GROSS PROFIT $59,104 $61,212 $63,400 $65,673 $249,389 $67,935 $70,074 $72,285 $74,572 $284,866 $325,929 $376,467 $435,

EXPENSES - General and Administrative

Salaries and wages $23,301 $23,301 $23,301 $23,301 $93,204 $23,533 $23,533 $23,533 $23,533 $94,132 $95,073 $96,024 $96,9

Employee benefits $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Payroll taxes $3,495 $3,495 $3,495 $3,495 $13,980 $3,530 $3,530 $3,530 $3,530 $14,120 $14,261 $14,404 $14,5

Professional services $125 $125 $125 $125 $500 $125 $125 $125 $125 $500 $500 $500 $500

Marketing and advertising $3,450 $3,450 $3,450 $3,450 $13,800 $3,450 $3,450 $3,450 $3,450 $13,800 $13,800 $13,800 $13,8

Rent $11,563 $11,563 $11,563 $11,563 $46,250 $11,563 $11,563 $11,563 $11,563 $46,250 $46,250 $46,250 $46,2

Equipment rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Maintenance $450 $450 $450 $450 $1,800 $450 $450 $450 $450 $1,800 $1,800 $1,800 $1,80

Depreciation $789 $789 $789 $789 $3,156 $789 $789 $789 $789 $3,156 $3,156 $3,156 $2,88

Insurance $9,000 $9,000 $9,000 $9,000 $36,000 $9,000 $9,000 $9,000 $9,000 $36,000 $36,000 $36,000 $36,0

Telephone service $150 $150 $150 $150 $600 $150 $150 $150 $150 $600 $600 $600 $600

Utilities $6,000 $6,000 $6,000 $6,000 $24,000 $6,000 $6,000 $6,000 $6,000 $24,000 $24,000 $24,000 $24,0

Office supplies $150 $150 $150 $150 $600 $150 $150 $150 $150 $600 $600 $600 $600

Postage and shipping $60 $60 $60 $60 $240 $60 $60 $60 $60 $240 $240 $240 $240

Travel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Entertainment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Interest on loans $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TOTAL EXPENSES $58,532 $58,532 $58,532 $58,532 $234,126 $58,800 $58,800 $58,800 $58,800 $235,198 $236,280 $237,373 $238Net income before taxes $573 $2,679 $4,869 $7,143 $15,264 $9,135 $11,275 $13,486 $15,772 $49,668 $89,649 $139,093 $197,

Provision for taxes on income $153 $670 $1,217 $1,786 $3,816 $2,285 $2,818 $3,371 $3,943 $12,417 $22,412 $34,773 $49,3

NET PROFIT $420 $2,010 $3,652 $5,358 $11,448 $6,852 $8,456 $10,114 $11,829 $37,251 $67,237 $104,320 $148


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Cash-Flow Projection

Cash Flow 2015 2016 2017 2018 2019

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TOTAL 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TOTAL

CASH RECEIPTS

Income from Sales

Cash Sales $125,754 $130,237 $134,893 $139,732 $530,616 $144,543 $149,094 $153,798 $158,662 $606,098 $693,466 $800,993 $926,810

Collections $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash from Sales $125,754 $130,237 $134,893 $139,732 $530,616 $144,543 $149,094 $153,798 $158,662 $606,098 $693,466 $800,993 $926,810

Income from Financing

Interest Income $315 $361 $415 $480 $1,571 $505 $513 $530 $557 $2,105 $2,778 $4,179 $7,515

Loan Proceeds $37,500 $37,500 $37,500 $37,500 $150,000 $0 $0 $0 $0 $0 $0 $0 $0

Equity Capital Investments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash from Financing $37,815 $37,861 $37,915 $37,980 $151,571 $505 $513 $530 $557 $2,105 $2,778 $4,179 $7,515

Other Cash Receipts $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TOTAL CASH RECEIPTS $163,569 $168,098 $172,808 $177,712 $682,187 $145,047 $149,607 $154,328 $159,220 $608,203 $696,244 $805,172 $934,324

CASH DISBURSEMENTS

Inventory $69,450 $69,450 $69,450 $69,450 $277,800 $69,450 $69,450 $69,450 $69,450 $277,800 $277,800 $277,800 $277,800

Operating Expenses $57,743 $57,743 $57,743 $57,743 $230,970 $58,011 $58,010 $58,010 $58,010 $232,042 $233,124 $234,217 $235,322

Commissions/Returns & Allowances $3,772 $3,907 $4,047 $4,192 $15,918 $4,336 $4,473 $4,614 $4,760 $18,183 $20,804 $24,030 $27,804

Capital Purchases $11,563 $11,563 $11,563 $11,563 $46,250 $11,563 $11,563 $11,563 $11,563 $46,250 $46,248 $46,248 $46,250

Loan Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Income Tax Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Investor Dividend Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Owner's Draw $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TOTAL CASH DISBURSEMENTS $142,528 $142,662 $142,802 $142,947 $570,938$143,359

$143,496 $143,637 $143,783 $574,274 $577,977 $582,295 $587,176

NET CASH FLOW $21,041 $25,436 $30,008 $34,764 $111,249 $1,688 $6,111 $10,692 $15,437 $33,928 $118,268 $222,877 $347,148

Opening Cash Balance $163,547 $187,499 $215,963 $249,121 $261,891 $266,510 $275,657 $289,494

Cash Receipts $55,017 $56,547 $58,138 $59,794 $48,848 $50,385 $51,978 $53,627

Cash Disbursements $47,524 $47,569 $47,616 $47,665 $47,801 $47,847 $47,895 $47,944

ENDING CASH BALANCE $171,041 $196,477 $226,485 $261,249 $261,249 $262,937 $269,048 $279,740 $295,177 $295,177 $413,445 $636,322 $983,470


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Balance Sheet

Balance Sheet


2015

ASSETS

Current Assets

Cash $261,249

Accounts Receivable $0

Inventory $12,492Other Current Assets $0

Total Current Assets $273,741

Fixed AssetsLand $46,250Facilities $0

Equipment $57,000

Computers & Telecommunications $10,050

(Less Accumulated Depreciation) $3,156

Total Fixed Assets $110,144

Other Assets $0

TOTAL ASSETS $383,885

LIABILITIES

Current Liabilities

Short-Term Notes Payable $37,500Income Taxes Due $3,816Other Current Liabilities $0

Total Current Liabilities $41,316

Long-Term Liabilities

Long-Term Notes Payable $0

Other Long-Term Liabilities $0

Total Long-Term Liabilities $0

NET WORTH

Paid-In Capital $150,000Retained Earnings $192,569

Total Net Worth $342,569

TOTAL LIABILITIES AND NET WORTH $383,885

Balance Sheet


2016ASSETSCurrent Assets

Cash $295,177Accounts Receivable $0Inventory -$12,757

Other Current Assets $0Total Current Assets $282,420

Fixed AssetsLand $46,250Facilities $0Equipment $57,000Computers & Telecommunications $10,050

(Less Accumulated Depreciation) $6,312Total Fixed Assets $106,988

Other Assets $0TOTAL ASSETS $389,408

LIABILITIESCurrent Liabilities

Short-Term Notes Payable $0Income Taxes Due $16,233Other Current Liabilities $0Total Current Liabilities $16,233

Long-Term Liabilities

Long-Term Notes Payable $0Other Long-Term Liabilities $0


NET WORTHPaid-In Capital $150,000Retained Earnings $223,176


TOTAL LIABILITIES AND NETWORTH

$389,408


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Balance Sheet

Zenity Tea House, LLC2017

ASSETSCurrent Assets

Cash $413,445Accounts Receivable $0Inventory -$81,690Other Current Assets $0






Short-Term Notes Payable $0Income Taxes Due $38,645Other Current Liabilities $0


Long-Term LiabilitiesLong-Term Notes Payable $0Other Long-Term Liabilities $0


NET WORTHPaid-In Capital $150,000Retained Earnings $246,942


TOTAL LIABILITIES AND NET WORTH $435,587

Balance Sheet

Zenity Tea House, LLC2018




Fixed AssetsLand $46,250Facilities $0Equipment $57,000

Computers & Telecommunications $10,050

(Less Accumulated Depreciation) $12,624

Total Fixed Assets $100,676Other Assets $0TOTAL ASSETS $532,611


Short-Term Notes Payable $0Income Taxes Due $73,418Other Current Liabilities $0Total Current Liabilities $73,418

Long-Term LiabilitiesLong-Term Notes Payable $0Other Long-Term Liabilities $0


NET WORTHPaid-In Capital $150,000Retained Earnings $309,193Total Net Worth $459,193


$532,611


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Balance Sheet


2019








Short-Term Notes Payable $0Income Taxes Due $122,768Other Current Liabilities $0


Long-Term LiabilitiesLong-Term Notes Payable $0

Other Long-Term Liabilities $0Total Long-Term Liabilities $0

NET WORTHPaid-In Capital $150,000Retained Earnings $418,506Total Net Worth $568,506


$691,274

Break-Even Analysis

Break-even Estimates

Year 1 (2015-2016)

Monthly Average $41,512

Year 2 (2016-2017)

Monthly Average $41,702

Year 3 (2017-2018)

Quarterly Average $125,681

Year 4 (2018-2019)

Quarterly Average $126,262

Year 5 (2019-2020)

Ann ual A verag e $506,814


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Further Financial AssumptionsThe figures on the financial worksheet are based on the following assumptions:

Personnel/Management:Zenity consists of six staff (one General Manager, oneAssistant Manager, one Tea Expert, and three Sales Associates). The staff size will remainconstant during the first few years of operations. Once we establish breakeven point and remain

profitable, the staff size will increase to two tea experts and five sales associates.Key Expenses:

Financing: Currently, Zenity does not have any financing debt or loans that are projectedto be added or retired since it is a start-up business. Hence, our acquirement of $230,000 as loansfrom families/friends does not apply in this matter. However, once we do receive this capital,then interest rate will be projected for it in our finances.

Expansion:Zenity will currently remain the only location in Seattle, Washington. Withprofitability, we will open a second tea house if our present financial capitals allow us to expand.We will also consider franchising if the option is attractive in the future. However, for the timebeing, we will offer our customers additional service by packaging our products for purchase fortheir own personal usage or gifts to family and friends. We will also expand our product line toinclude more variety of tea to cater to different preferences of our customers.

Therefore, there will be some direct costs of equipment, furniture, inventory, and

advertisement. Also, the tea house will include additional operating costs of hiring a second teaexpert and two sales associates to aid in our future operations. Additionally, if Zenity obtainsmore business than we have projected, then we will increase our prices to drive away business.This allows us to maintain an atmosphere of tranquility and relaxation as part of our mission andvision statement.

ONE TIME START-UP COSTS ESTIMATED COST

Lease Location ($25/sq. ft./year) $37,500.00

Tea Tables (10) $2,000.00

Tea Equipment (15) $750.00

Water Boilers (3) $3,000.00

Silverware $1,500.00

Advertisement $2,000.00

Interior Design $40,000.00

Computer Systems $8,000.00

ESTIMATED TOTAL $95,000.00

COMPUTER SYSTEMS ESTIMATED COST

2 PCs with the latest version of Microsoft Office $2,250.00

QuickBooks Point of Sale Basic Plus $1,700.00

QuickBooks Pro $250.00

Wasp Inventory Control Software/Hardware $2,200.00

Touch Screen POS Terminal $1,600.00

ESTIMATED TOTAL $8,000.00

Zenity Tea HouseLLC Business Plan Redacted

Documents

Transcript of Zenity Tea HouseLLC Business Plan Redacted