New Venture Creation and Business Planning - Tea Infusions - Essay Example

Particularly, the cash flow forecast indicates Tea Infusions will sustain cash reserves of £0.18 million at the end of Year 1 of operations. This is achieved by keeping labour costs low, procuring cost-effective raw products from China, and the high mark-up rate on the finished products compared to raw materials costs. The business anticipates long-term profitability and will have substantial retained earnings throughout the first year of operations to pay salaries to executives and employees working in the organization.

Payback of all start-up capital will occur within Year 2 of operations. The business is proactive in identifying potential risks, including information technology failures, equipment failures and issues with supplier competency in delivering timely and fresh products. The company, to explore all potential risks, will be creating a steering committee that reports directly to the Board of Directors as a means of establishing a competent and well-developed risk management system. Tea Infusions recognizes that there is a gap in the market for distributing Chinese teas with limited suppliers selling foreign teas.

In Brighton, on the Southern coast of England, there are 480,000 citizens that are not being serviced with different Chinese tea products. In the UK as a whole, there is a substantial increase in the population of Asians and the Asian tea culture has gained popularity in the country in recent years. Hence, this illustrates an opportunity to bring top-quality Chinese teas to a market with demand for these products and where many rare Chinese teas are unfamiliar to consumer demographics. In the Brighton area, rare teas include Dragon Well Tea (Long Jing Tea), Bi Luo Chun Tea, Keemun Black Tea and Ba Bao Tea.

Common infusions which accompany a well-bodied cup of tea include the foreign goji berry, lyceum berry, and the red jujube, each with a sense of mystical intrigue and physical wellness. Tea Infusions will identify suppliers of these intriguing teas to bring a taste of China to the Brighton region.