Business_Plan

A BUSINESS PLAN FOR THE ESTABLISHMENT OF A COFFEE SHOP IN PANAMA CITY, PANAMA PROPOSAL FOR MSA 699 PROJECT Submitted in Partial Fulfillment of Requirements For the Degree of Master of Science in Administration (Concentration in Human Resources) Central Michigan University Submitted by Jamillah N. Mckoy 086-66-8368 Project Instructor Dr. Rick Barnes 28 May, 2012 Chapter I Introduction/Background Information In Panama City, there are many malls, some much more modern and others a bit older with stores where the goods are sold at prices to accommodate everybody’s budget. One can find cheap but durable clothes, as well as expensive brand name clothes, jewelry and electronics. There is almost everything to be found in Panama. You can find well-stocked supermarkets and modern malls in the Paitilla area. Tourist guides frequently refer to Panama City as a bargainer’s paradise or a shopping mecca because of numerous free trade zones. Shopping is the second most popular occupation in the city. The Panama Canal was called one of the seven wonders of the modern world when it was constructed, and it is still an endeavor. Many visitors are surprised how much of the canal looks like a wide, slowly flowing jungle river instead of a highly mechanical system of pumping stations and locks. Panama retains many evidence of the old colonial regime architecturally and culturally but Panama City is a highly sophisticated modern metropolis. One of the best places to view the canal is only an hour’s drive from Panama City, in the Soberania National Park (http://www.businesspanama.com/business_group/services.php). Purpose statement To develop a business plan to determine the feasibility of opening a coffee shop in Panama City, Panama. Problem statement Determine if tourism, language barriers and currency in Panama City allow for a successful market for a coffee shop. Sub-problems 1. Determine the start up and operation costs. 2. Determine if the demographics of Panama City and the surrounding area has a significant market for the product. 3. Determine the projected income to secure a business loan for the venture. 4. Determine the projected expenses. Assumptions 1. That the demand for the product will not change. 2. Interest rates will remain about the same. 3. The location will continue to attract tourist. 4. Inflation will remain the same. 5. There will be no significant competition. 6. There are no unforeseen changes in public health perception. Definitions of Terms Aftermarket- Not original or new equipment by the manufacturer. Corporation – A legal entity, distinct from those parties or individuals who own it. Differentiation- Separation or isolation. Direct Competition- A business offering the same product or service to the same market. Indirect Competition- A business offering the same product service but with a different target market. Franchise- A prepackaged business that operates under a contract with the parent organization. Free trade zone- No restrictions on trade laws. Market- Customers or potential customers with needs, authority and purchasing power. Market Analysis- The process of systematically gathering, analyzing and interpreting data pertaining to the company’s market, customer and competitors with the goal of improving marketing decisions. Market Share- Percent of total customer base. Niche- Function or role. Paitilla- A shopping strip. Panama Canal- A water passage that connects the Pacific Ocean to the Atlantic Ocean. Pro forma Statements- Projected financial statements used to predict the future profitability of a business. Seven wonders of the world- An unknown or mystic place. Secondary Data- Information that has already been assembled, having been collected for some other purpose. Target Market- a specific group of customers at which a company aims its products and services. Terms of trade-Number of units that must be given up for one unit of goods received, by each party to a transaction. Chapter II: Review of the Literature Introduction The literature review will include information on the history of the tourist area of Panama City, Panama. It will also include the market and the probability of success in the area. It will contain information on acquiring a business, the legal forms of businesses, problems and setbacks of starting a business overseas and how to avoid them. The review will also focus on writing a business plan the necessary requirements for opening a coffee shop. Panama City Panama is one of the world’s most visitor-friendly countries. It has the highest rating for tourist safety from the prestigious Pinkerton Intelligence Agency. The people are warm and friendly. Panama has always been an international crossroads. Panamanians are accustomed to meeting people from other lands and English is a second language. Another great visitor convenience is that the US dollar is the Panamanian currency. Besides being the central hub for tours going anywhere in the country, Panama City is a fascinating tourist destination in itself. It is Central America's most attractive Capital City with a blend of old Spain, modern America and the bazaar atmosphere of the East. Panama is best known for the Panama Canal and also borders one of Central America’s richest rain forests ( http://www.enjoypanama.com/panama_city.htm). Because tourism is just beginning, prices are still modest and you can really stretch your tourist dollar. Within Panama City, taxis and meals and hotel prices in all categories are particularly pleasing. Yet, even though it is economical, you will find that Panamanians know how to do things right. They want you to be happy and come back again. (http://www.businesspanama.com/tourism/retire_live.php). The target market would include the mobile individual who has more money than time, and excellent taste in a choice of beverage, but no time to linger in a cafe. To penetrate the target market, there will be a drive thru located in a high traffic, high visibility area. Marketability Business practices in Panama are very similar to those in the United States. Business tends to be direct and straightforward. On average, Panama City accounts for 65% of total national sales of consumer goods, the remaining 35% is distributed among the principal cities of David, Colon, Santiago and Chitre. Generally, the marketing channel structure in Panama is simple. Direct importers act as wholesalers and in many cases also as retailers. This situation is common in the case of apparel, automotive parts and hardware products. In the case of consumer goods, food and medicines, the retail operation is separate from the wholesale operation. Industrial goods and sales are normally handled by local, exclusive agents or distributors. In other cases, local firms order directly from U.S. brokers or the manufacturer. Key factors for market success in Panama are: high quality, customer service, brand-name recognition and attractive packaging. U.S. products targeting the middle to upper-middle income market come with first-rate terms of trade and are usually competitive. Panamanians have a fondness for high quality U.S. products (http://www.businesspanama.com/business_group/services.php). Consumers with high disposable income follow sophisticated U.S. and European consumption patterns. Most high-end U.S. and foreign brand names are represented in Panama. An aggressive marketing strategy is usually necessary to succeed in this trend-conscious market. Panama has the highest per capita income in Central America. The majority of income is skewed to a small, consumer goods oriented economic class. These upper-middle and upper class families have high levels of disposable income. They are interested in purchasing high quality, trend-setting goods. Price is less of a factor in purchasing decisions made by this class than for the middle and lower income classes. The majority of Panamanians are interested in quality but price plays a more important role in the purchase decision (http://www.businesspanama.com/business_group/services.php). The use of the U.S. dollar as legal currency and consumer preference for high quality products at competitive prices are two reasons for high acceptance of U.S. products in Panama. Overall, U.S. products are well accepted in the market and are considered of good quality. However, in many instances, U.S. products must compete against lower priced products especially from the Far East. For example, as in the U.S. itself, Japanese and Korean electronics dominate the market because of aggressive market entry techniques and good quality at competitive prices (http://www.businesspanama.com/business_group/services.php). Starting from Scratch Competition The location is a great area to have a coffee house. There are no other venues in the area like it. Our coffee house would stand out from that of the competition. We would prepare everything from coffee, tea, bagels, sandwiches and more. Our customers would want these items because it provides them with a point of differentiation to specialty items not commonly found in the area. We would sell superior products, yet they can be considered as a commodity. It is therefore important that we effectively advertise the unique aspects that make it ideally suited for a niche market. The unique aspects of our products include superior product selection and preparation, quality assurance, and efficient distribution. The terms of trade are said to move in favor of the party that gives up fewer units of goods than it did previously for one unit of goods received, and against the party that gives up more units of goods for one unit of goods received. In international economics, the concept of terms of trade plays an important role in evaluating exchange relationships between nations (Duke, 2002). Business Plan Many businesses run out of cash before they can succeed. When that happens, you are faced with a terrible dilemma. One option is to go past your limit. The other option is to give up. Business owners need professional business plans to help get organized, apply for bank loans or bring in new partners (Baron, 2003). According to small business consultants like McKinley Howell, assistant regional director of the Rutgers Small Business Development Center (SBDC) in Newark, New Jersey, the top three small business killers are inadequate capital, inability to find clients or customers, and lack of good management skills. Also high on the list is a lack of realism about one's own abilities and not having the right information to work with (Guffey, 2002). Managing Business Crisis A crisis is a problem, but not every problem is a crisis. At least that is the view of most crisis experts, who define a crisis as something much more serious than a problem. Some well-known crises examples include the Exxon Valdez oil spill, the Pepsi syringe-in-the-can scare, and the Johnson and Johnson Tylenol deaths. Few would argue that these problems clearly constituted crises for the companies involved. But John Burnett's definition of a crisis is much broader, and perhaps more practical for most businesses than the traditional casebook approach to crisis management (Fairholm, 2004). Burnett points out those events must be seen from the eyes of the beholder. Therefore, he rejects the view that the only crises that need to be managed are catastrophes. Instead, he suggests that crisis management must become a natural part of corporate culture and that crisis management must be viewed on a continuum. As he asserts, any minor disruption can become a catastrophe if it is not well managed (fairholm, 2004). This approach should make good sense to most businesses and might even persuade those who do not have a crisis plan to develop one. Burnett urges all businesses, both large and small, to make their crisis plan part of their business plan allocating the necessary resources to do so. His broader definition of what constitutes a crisis recognizes that any disruption, not just something catastrophic, may be viewed as a crisis (Fairholm, 2004). Burnett's examples range from the high profile ones, including Coca-Cola's handling of reported illnesses related to its product in Belgium and Northern France, to a press release from J.D. Power that contained a single typographical error. Burnett provides a model of crisis management that could be adapted by any business to handle any situation. He also points out that those businesses best equipped to handle and to actually prevent a crisis are those that are well organized. Burnett suggests that businesses test their crisis plan by staging a mock crisis of the type that could actually occur in real life. Planning Behavior for another country Although planning is a prerequisite for business growth, profitability, and job creation is just as important. Does the planning behavior of small and medium-sized firms from this developing country differ significantly from the planning behavior of their counterparts in the Western world (Anderson, 2003)' This study examined the planning activities of more than 900 Vietnamese SMEs from seven different sectors. It supports the generally accepted importance of scale for planning. Larger businesses more often work with a business plan than do smaller firms. Within the group of businesses that plan, there is also a scale effect for planning characteristics such as the integration of a financial budget with the investment plan and the period covered by this plan. The presence of a business plan also has its merits for generating profits (Anderson, 2003). Much has been written about the planning behavior of SMEs. Two different conclusions regarding planning have been drawn: (1) the adoption and consistent use of planning are not widespread; and (2) planning is useful for the attainment of external validation. The partial adoption and the inconsistent use of planning can be explained by entrepreneurs' widespread perception that planning reduces their freedom and their ability to use their intuition (Ferch, 2003). The relationship between planning and external validation is quite obvious, given the demands of outside investors for more certainty as they invest financial resources in these firms. Much of the small business planning literature is focused on the relationship between planning behavior and SME size, the latter normally being expressed in terms of employment or sales. The relationship is generally found to be positive for several reasons. Larger businesses plan more often and more intensively than do smaller businesses, and small Business plan operationally rather than strategically (Risseeuw and Masurel 1994; Robinson and Pearce 1984; Shrader, Mulford, and Blackburn 1989). According to Fairholm, Vietnamese entrepreneurs should therefore be encouraged to make business plans. The staff of both governmental and non-governmental organizations should be given instruction in how to train entrepreneurs in the field of business planning. Workshops should also be organized to show the entrepreneurs the practical benefits of working with business plans. The use of business records and, to a smaller degree, of formal job descriptions can be important starting points for the development of small business planning because many entrepreneurs already have some experience with these instruments. The use of a business plans should help Vietnamese businesses grow, which will result in the creation of more jobs. These small businesses can also play an important role in linking rural and urban areas, as small businesses generally have strong local roots. Opening the Coffee Shop Building the business from the ground up can prove to be most satisfying. You get to choose your location and furnish it with your own personal touch. It gives you the opportunity to truly price items without worries of unanticipated renovations. It may be hard to anticipate what the profit will be so it is very important to create a realistic budget anticipating for slow starting revenue. Chapter III: Methodology Introduction The methodology that was used to determine feasibility of a coffee shop in Panama were the collection of data and information. The collection of documentation to support it; sorting of the information that was gathered and data; analysis and decision making of the information. Finally the summary of the data and development a business plan. The first step in my methodology was the collection of data and information to solve the problem and sub-problem. The gathering of data and information included the following processes: 1. Collection of data and information for the literary review. 2. Conducting research on how to secure a small business loan. 3. Start-up and on-going operating cost for a coffee shop in Panama City, Panama. 4. Collection of data on the regulations and legal requirements for this business. Hypothesis It is feasible and beneficial to open a successful coffee shop in Panama City, Panama. Target population Data for tourism, cost of equipment, food, and records for the past 3 years will be obtained from journals and internet searches. The information will effectively project current and potential customers. The researcher will be able to determine an approximate amount of production within three years of operation. The tactics that will be used to relay the information to the customers include, personal selling, targeted print advertising, and improved contact capabilities via information system improvements and a sophisticated website. Sample selection A convenience sample and historical data of other businesses in the area was used. The researcher compared data and samples collected. Data collection and analysis The researcher had accounts of previous financial records to help predict future earnings in order to develop a business plan from the gathered information and research. The end results will allow the researcher to provide a business plan that includes an executive summary, an organizational plan, market analysis and financial statements. Reliability and validity The researcher obtained data that is of public record. The information reflected the past three years of cost data to assess the consistency and longevity. Scope and limitations To determine the feasibility of a coffee shop in Panama, start-up and operation cost of businesses in the area that have lasted at least three years. The research examined: 1. How the business will be acquired' 2. What are the legal requirements' 3. What are the causes of business failures and how can they be avoided' 4. Why the business plan is necessary and what should be included' 5. What is the start- up cost' 6. What are the anticipated operating cost for 3 years. The researcher will have an accurate account of financial risk involved because there are other facilities like the coffee shop in the area. CHAPTER IV: ANALYSIS OF THE DATA Introduction In this chapter, data, which was collected regarding the opening of a coffee shop in Panama is analysed. Data was sorted as it pertained to the sub-problems. The analysis covered the following areas; 1. Pilot survey data. 2. The start-up and on-going operating costs of a coffee shop in Panama. 3. The need to secure a small business loan and how to accomplish it 4. Regulations and legal requirements data 5. Demographic data. Pilot survey data The Pilot Neighborhood Marketing Survey was (Appendix I) conducted came from Surveymonkey.com and was given to 40 people. Twenty-five of the participants responded. The results are not a true representation of the demographic area, but did provide the following data: 1. How much coffee (or espresso) do you drink in a day' The average response drank 2-4 cups a day. 2. How frequently do you get coffee from the following places' The average response was from a starbucks. 3. If you make coffee at home, how do you make it' Check all that apply. The average response was from an auto drip coffee maker. 4. How many times in a week do you go to cafes' The average response was 3-5 times a week. 5. What time of day do you usually go to cafes (click all that apply)' The average response was in the morning 6. How often do you go to a cafe to do the following' The response to this question was split between coffee on the go, work and hang out with friends. 7. Are you interested in a cafe that keeps late hours' How late' The average response was yes between the hours of 7-9 pm. 8. How often do you order pastries with your drinks' The average response was often. 9. How often do you order the following drinks' The average response was espresso/milk drinks. 10. How important are the following criteria in a cafe to warrant a return visit' The average response was split between high quality of beverages and pastries in general and price. Start –up and operating costs The estimated start-up cost and monthly expenses for a coffee shop are represented in Table 1-1. The dollar amounts were gathered from marketing plans for Starbucks and Green Beans Coffee shops. Provided are the expenses for the cost of furniture, office equipment, utilities, inventory and other expenses. The ongoing operating costs are represented in the income statements for year one and two of operation. Table 1-2 represents income statements for three consecutive years. Securing A Small Business Loan The process of securing a small business loan can be simple if one has reasonable expectations and a practical business plan. The average cost for Starbucks and Green Beans coffee shop ranged between $191,000 and $250,000. The U.S. Small Business Administration (SBA) is a major source of financing for small businesses in the United States. The SBA's various loan programs have provided needed funding for thousands of small enterprises who were unable to secure loans from lending institutions on their own; indeed, businesses cannot solicit loans from the SBA unless they are unable to get funding independently. Types of garaunteed Loans The SBA's 7(a) Loan Program is the most popular of the agency's programs. Under this program, the SBA does not make direct loans to small businesses. Instead, it assures the institution that is making the business loan usually a bank—that it will make payment on the loan if the business defaults on it. Since the SBA is taking responsibility for the loan, it is usually the final arbiter of whether a loan application will be approved or not. The 7(a) Loan Program was formed to meet the long-term financing needs of small businesses. The primary advantage of 7(a) loans is that business enterprises are able to repay the loan over a very long period of time. Ten-year maturities are available for loans for equipment and working capital (though seven-year terms are more commonplace), and loans for real estate and major equipment purchases can be paid back over as long as 25 years. The SBA can guarantee 75 percent of loans up to $750,000, and 80 percent of loans of less than $100,000. The interest rate of 7(a) loans does not exceed 2.75 over the prime lending rate. The SBA maintains several individual loan programs under the 7(a) umbrella. These include CAPLines, LowDoc, SBAExpress, EWCP, DELTA, and an assortment of other lending initiatives targeted at specific sectors of the small business world. CAPLines are limited to $750,000, CAPLines loans are given to small businesses with short-term working capital needs. "Under CAPLines," notes the SBA, "there are five distinct short-term working capital loans: the Seasonal, Contract, Builder's, Standard Asset-Based, and Small Asset-Based lines. For the most part, the SBA regulations governing the 7(a) Program also govern this program." The Low Documentation Loan (LowDoc) Program is a simplified version of the 7(a) loan for businesses with strong credit histories seeking less than $150,000. It combines a streamlined application process (for many loan requests, the application is only one page long) with the elimination of several bureaucratic steps to improve response time to requests. Any small business that posted average annual sales over the previous three years of $5 million or less and employs 100 or few individuals (including all owners, partners, and principals) is eligible to apply for a Low Documentation Loan. Since its inception, the LowDoc Program has proven enormously popular with small business owners and entrepreneurs. SBAEXPRESS is a relatively new pilot program and is only available through selected lending institutions. It makes loans of up to $150,000 to qualified businesses. The Export Working Capital Program (EWCP) guarantees loans for qualified small businesses engaged in export transactions. It replaced another SBA program known as the Export Revolving Line of Credit Program. Most of the SBA regulations governing the 7(a) Program also govern this program. Loan maturities, however, may be for up to three years, with an option for annual renewals. EWCP loans can be extended for either single or multiple export sales. The Defense Loan and Technical Assistance (DELTA) Program was implemented to help ease the impact of national defense cuts on defense-dependent small businesses. According to the SBA, DELTA loans of up to $1.25 million must be used to retain jobs of defense workers, create new jobs in impacted communities, or to make operating changes with the aim of remaining in the "national technical and industrial base." While listed under the 7(a) umbrella of loan programs, DELTA actually uses the 504 CDC program as well. SBA MicroLoans are short-term loans of up to $25,000. Disseminated through non-profit groups, MicroLoans are intended for the purchase of machinery and other equipment, office furniture, inventory, supplies, and working capital. INTERNATIONAL TRADE LOAN (ITL)provides long-term financing assistance to small businesses who are involved in international trade or who have been hurt by imports. Under this program, the SBA guarantees loans for up to $1.25 million for a combination of fixed-asset financing and working capital needs (though the working capital portion of the guarantee is limited to $750,000). POLLUTION CONTROL PROGRAM extends loans to small businesses engaged in the planning, design, or installation of pollution control facilities. The Small Business Administration's other major loan program is the 504 CDC (Certified Development Companies) Program. CDCs are nonprofit corporations established to aid communities in their economic development efforts. The 504 CDC Program is designed to provide growing businesses with long-range, fixed-rate financing (up to $1 million for qualified applicants) for major expansion expenditures in the realm of fixed-asset projects. These include: real estate purchases and improvements, including existing buildings, grading, street improvements, parking lots and landscaping, and utilities; long-term machinery and equipment; renovation of existing facilities; and building construction. Monies from the 504 CDC Program cannot be used for refinancing, working capital or inventory, or consolidating or repaying debt. The SBA describes the program thusly: "Typically, a 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped. The maximum SBA debenture generally is $750,000 (up to $1 million in some cases)…. The CDC's portfolio must create orretain one job from every $35,000 provided by the SBA." Finally, the SBA offers Physical Disaster Business Loans to businesses that have been victimized by various natural disasters (fires, floods, hurricanes, earthquakes, etc.). These loans, limited to $1.5 million and not available to firms that were insured for their losses, are available to businesses of any size that need to repair or replace facilities to "pre-disaster" condition. Economic Injury Disaster Loans are also made available to companies that suffered severe economic damage as a result of a given disaster. These loans, which are capped at $1.5 million, are meant to help businesses cover ordinary operating expenses "which would have been payable barring disaster," according to the SBA. It is worth noting that businesses can apply for either type of disaster loan assistance, but they can be awarded no more than a total of $1.5 million from the two programs unless they qualify as a major source of employment for the region in which they operate. Interest Rates on Sba Loans The interest rates on SBA-guaranteed loans are negotiated between the borrowing business and the lending institution, but they are subject to SBA-imposed rate ceilings, which are linked to the prime rate. Interest rates on SBA loans can be either fixed or variable. According to the SBA, fixed rate loans are not allowed to exceed the prime rate plus 2.25 percent if the loan matures in less than seven years. If the maturity of the loan is seven years or more, however, the rate can be boosted to the prime rate plus 2.75 percent. For SBA loans totaling less than $25,000, the maximum interest rate cannot exceed the prime rate plus 4.25 percent for loans with a maturity of less than seven years (for loans that mature after seven years, the interest rate can be as much as the prime rate plus4.75 percent). For SBA loans between $25,000 and $50,000, maximum rates are not permitted to exceed3.25 percent (for loans that mature in less than seven years) and 3.75 percent (for loans with longer terms of maturity). Variable rate loans, notes the SBA, may be pegged to either the SBA optional peg rate or the lowest prime rate (the optional peg rate is a weighed average of rates that the federal government pays for loans with maturities similar to the average SBA loan). Under variable rate loan plans, the lender and borrower negotiate the amount of the spread to be added to the base interest rate. Such agreements also provide for regular adjustment periods wherein the note rate can be changed as needed. Some agreements call for monthly adjustment periods, while others provide for quarterly, semiannual, or annual adjustments. Eligibility Issues The Small Business Administration defines businesses eligible for SBA loans as those that: operate for profit; are engaged in, or propose to do business in, the United States or its possessions; have reasonable owner equity to invest; and use alternative financial resources (such as personal assets) first. In addition, to secure SBA assistance, a company must qualify as a "small business" under the terms of the Small Business Act. That legislation defined an eligible small business as one that is independently owned and operated and not dominant in its industry. Since the passage of the Small Business Act, the SBA has developed size standards for every industry to gauge whether a company qualifies as a "small business" or not. Size standards are arranged by Standard Industrial Classification (SIC) code, but in general, the following guidelines apply for major industry groups: Manufacturing—A key criteria for manufacturing establishments is the size of their work force. Generally, 1,500 employees is the cut-off point for SBA consideration, but even establishments that have between 500 and 1,500 employees may not qualify as small businesses; in such instances the SBA bases its determination on a size standard for the specific industry in which the business under consideration operates. Wholesaling—Generally, wholesale establishments seeking SBA financial assistance should not have more than 100 employees. Retail and Service—Financial information is the key consideration here; ideally, retail and service industry businesses seeking SBA assistance should not have more than $3.5 million in annual receipts, although the requests of larger establishments are considered (depending on the industry). Establishments engaged in construction or agriculture industries are also evaluated on the basis of their financial reports. The Small Business Administration also considers other factors in determining whether an establishment qualifies as a small business. For example, if a business is affiliated with another company, the owners must determine the primary business activity of both the affiliated group and the applicant business before submitting a request for SBA assistance. If the applicant business and the affiliated group do not both meet the SBA's size standards for their primary business activities, then the loan request will not be considered. The SBA also has a number of eligibility rules that apply to specific kinds of businesses. Franchisees, for example, are often favored by the SBA because their businesses enjoy a higher success rate than do other businesses. Nonetheless, SBA officials will examine a franchisee's franchise agreement closely before extending any loan guarantees to him or her. If the officials decide that the franchisor wields so much control over the franchise's operations that the franchisee is basically an employee, then the SBA will turn down the request. Other types of businesses, such as those in agriculture or the fishing industry, are free to apply for SBA assistance, but they are directed to first look to government agencies that deal directly with their industries. Farmers, for example, are supposed to first explore loan programs available through the Farmers Home Administration (FHA), while some members of the fishing industry—depending on the nature of their need—should first consult with the National Marine Fisheries Service (NMFS). The SBA also notes that some businesses are disqualified from consideration from the outset by the industry in which they operate. Businesses that operate in gambling, investment, or media-related fields, for example, are all ineligible for SBA loans. Finally, the SBA notes that loans that they guarantee are only to be used for specific business purposes, including "the purchase of real estate to house the business operations; construction, renovation, or leasehold improvements; acquisition of furniture, fixtures, machinery, and equipment; purchase of inventory; and working capital." Using the money for other purposes—payment of delinquent withholding taxes, acquisition of another business, refinancing of debt, and a whole host of other actions—is not allowed. Applying for an Sba Loan The chief challenge of any business seeking to secure a loan from the Small Business Administration is to convince the SBA that it has the ability to be successful in its chosen field. To do so, the small business owner should be equipped with a complete understanding of his or her operation (whether existing or proposed) and the benefits that a loan, if granted, will bring to the business. Of course, it is also necessary to effectively articulate this information to the SBA. Business owners disseminate this data through a variety of documents. Principal documents that should be submitted by the entrepreneur who hopes to start a new business include: resume (and resumes of any other key people involved in the proposed enterprise); current financial statement of all personal assets and liabilities; summary of collateral; proposed operating plan; and statement detailing revenue projections. Perhaps the most important document, however, is the loan request statement itself, for it is this document that should detail all aspects of the proposed business. For established business owners seeking an SBA loan, the most important documents—besides the loan application—are the company balance sheet, personal financial statements, and business income statements. Consultants urge small business owners to be both careful and realistic in preparing these records. They also caution entrepreneurs and small business owners not to distort figures or facts in their presentation. The SBA does not look kindly on misrepresentations in financial statements or any other part of the loan application. THE LOAN APPLICATION. The SBA loan application form serves to summarize much of the information detailed elsewhere in the total application package. Applicants are directed to furnish basic information about themselves and their businesses, including personal information (full legal name, street address); basic business information (employer ID number, type of business, number of employees, banking institution used); names and addresses of management personnel; estimated business expenditures and costs (including details on the SBA loan request); summary of collateral; summary of previous government finsancing; and listing of debts. The SBA loan application form also provides a complete listing of the various other items of information that must be provided for a business's application to be considered. These include a personal history statement; personal and business financial statements; business description; listing of management personnel; equipment list; cosigners; summary of bankruptcies, insolvencies, and lawsuits (if any); listing of any familial relationships with SBA employees; subsidiaries, either proposed or in existence; franchise agreements; and statements of financial interest in any establishments with which applicant business does business, if applicable. Some of today's most successful businesses, including Intel, Apple, and Federal Express, were given much needed boosts in their early days by SBA loans. This record of success, coupled with the trend toward small-business start-ups and entrepreneurship in America, has encouraged both the SBA and its lending partners to continue to expand its loan programs. The SBA has subsequently set new records in various loan guarantee categories since the mid-1990s. In fiscal year (FY) 1996, it made $10.2 billion in loan guarantees through its primary commercial lending programs, and a year later it made a record $10.9 billion in loan guarantees. By fiscal year 2000, the total amount of approved SBA loans reached $12.34 billion. The main component of the SBA loan system—its 7(a) programs—annually accounts for the vast majority of the loan guarantees distributed to small businesses. Loan guarantees made through the 7(a) programs totaled $10.5 billion in FY 2000, accounting for approximately 91 percent of the total of all SBA loans made during that time. Summary The data shows that it is feasible to establish a Coffee Shop in Panama based on location, legal requirements and the demand and love of coffee. The data also shows that it may be difficult to acquire a business loan, once financing is established a coffee shop will prove to be luctative and a successful business. APPENDIX I: Pilot Survey 1. How much coffee (or espresso) do you drink in a day' None1 Cup2-4 Cups5-7 Cups8-9 Cups10+ Cups | | 2. How frequently do you get coffee from the following places' | Always | Most of the time | Often | Sometimes | Rarely | Never | Make it at home | Make it at home Always | Make it at home Most of the time | Make it at home Often | Make it at home Sometimes | Make it at home Rarely | Make it at home Never | Cafe | Cafe Always | Cafe Most of the time | Cafe Often | Cafe Sometimes | Cafe Rarely | Cafe Never | Coffee-centric Cafes | Coffee-centric Cafes Always | Coffee-centric Cafes Most of the time | Coffee-centric Cafes Often | Coffee-centric Cafes Sometimes | Coffee-centric Cafes Rarely | Coffee-centric Cafes Never | Deli / Bodega | Deli / Bodega Always | Deli / Bodega Most of the time | Deli / Bodega Often | Deli / Bodega Sometimes | Deli / Bodega Rarely | Deli / Bodega Never | Cart | Cart Always | Cart Most of the time | Cart Often | Cart Sometimes | Cart Rarely | Cart Never | Starbucks | Starbucks Always | Starbucks Most of the time | Starbucks Often | Starbucks Sometimes | Starbucks Rarely | Starbucks Never | Dunkin Donuts | Dunkin Donuts Always | Dunkin Donuts Most of the time | Dunkin Donuts Often | Dunkin Donuts Sometimes | Dunkin Donuts Rarely | Dunkin Donuts Never | 3. If you make coffee at home, how do you make it' Check all that apply. . Auto Drip Coffee MakerPouroverChemexVacpotFrench PressMoka Pot (stove-top coffee maker)Espresso Machine | Did we forget something' | . APPENDIX : Pilot Survey 4. How many times in a week do you go to cafes' 01-23-57+ | 5. What time of day do you usually go to cafes (click all that apply)' MorningAfternoonEvening | Additional comments | 6. How often do you go to a cafe to do the following' | Always | Often | Sometimes | Rarely | Never | Pick up a coffee to go | Pick up a coffee to go Always | Pick up a coffee to go Often | Pick up a coffee to go Sometimes | Pick up a coffee to go Rarely | Pick up a coffee to go Never | Have coffee to stay for a quick break in the day | Have coffee to stay for a quick break in the day Always | Have coffee to stay for a quick break in the day Often | Have coffee to stay for a quick break in the day Sometimes | Have coffee to stay for a quick break in the day Rarely | Have coffee to stay for a quick break in the day Never | Read a book | Read a book Always | Read a book Often | Read a book Sometimes | Read a book Rarely | Read a book Never | Hang out with friends | Hang out with friends Always | Hang out with friends Often | Hang out with friends Sometimes | Hang out with friends Rarely | Hang out with friends Never | Do work | Do work Always | Do work Often | Do work Sometimes | Do work Rarely | Do work Never | Go on a date | Go on a date Always | Go on a date Often | Go on a date Sometimes | Go on a date Rarely | Go on a date Never | See a live performance | See a live performance Always | See a live performance Often | See a live performance Sometimes | See a live performance Rarely | See a live performance Never | Something we missed: 7. Are you interested in a cafe that keeps late hours' How late' | APPENDIX I: Pilot Survey 8. How often do you order pastries with your drinks' AlwaysOftenSometimesRarelyNever | 9. How often do you order the following drinks' | Always | Often | Sometimes | Rarely | Never | Straight espresso | Straight espresso Always | Straight espresso Often | Straight espresso Sometimes | Straight espresso Rarely | Straight espresso Never | Espresso/milk drinks (Lattes, Cappuccinos, etc) | Espresso/milk drinks (Lattes, Cappuccinos, etc) Always | Espresso/milk drinks (Lattes, Cappuccinos, etc) Often | Espresso/milk drinks (Lattes, Cappuccinos, etc) Sometimes | Espresso/milk drinks (Lattes, Cappuccinos, etc) Rarely | Espresso/milk drinks (Lattes, Cappuccinos, etc) Never | Regular brewed coffee | Regular brewed coffee Always | Regular brewed coffee Often | Regular brewed coffee Sometimes | Regular brewed coffee Rarely | Regular brewed coffee Never | Pourover, Chemex, and other manual brews | Pourover, Chemex, and other manual brews Always | Pourover, Chemex, and other manual brews Often | Pourover, Chemex, and other manual brews Sometimes | Pourover, Chemex, and other manual brews Rarely | Pourover, Chemex, and other manual brews Never | Tea | Tea Always | Tea Often | Tea Sometimes | Tea Rarely | Tea Never | Ice Coffee | Ice Coffee Always | Ice Coffee Often | Ice Coffee Sometimes | Ice Coffee Rarely | Ice Coffee Never | Chai | Chai Always | Chai Often | Chai Sometimes | Chai Rarely | Chai Never | Did we forget your favorite drink' APPENDIX I: Pilot Survey 10. How important are the following criteria in a cafe to warrant a return visit' We welcome any elaboration. | Mandatory | Very important | Somewhat important | Not important | High quality of coffee | High quality of coffee Mandatory | High quality of coffee Very important | High quality of coffee Somewhat important | High quality of coffee Not important | High quality of beverages and pastries in general | High quality of beverages and pastries in general Mandatory | High quality of beverages and pastries in general Very important | High quality of beverages and pastries in general Somewhat important | High quality of beverages and pastries in general Not important | Welcoming atmosphere | Welcoming atmosphere Mandatory | Welcoming atmosphere Very important | Welcoming atmosphere Somewhat important | Welcoming atmosphere Not important | Good Service | Good Service Mandatory | Good Service Very important | Good Service Somewhat important | Good Service Not important | Ample seating | Ample seating Mandatory | Ample seating Very important | Ample seating Somewhat important | Ample seating Not important | Ample table space | Ample table space Mandatory | Ample table space Very important | Ample table space Somewhat important | Ample table space Not important | Music choices | Music choices Mandatory | Music choices Very important | Music choices Somewhat important | Music choices Not important | Price | Price Mandatory | Price Very important | Price Somewhat important | Price Not important | Wifi | Wifi Mandatory | Wifi Very important | Wifi Somewhat important | Wifi Not important | Power outlets | Power outlets Mandatory | Power outlets Very important | Power outlets Somewhat important | Power outlets Not important | Quirky/unique details (for example...) | Quirky/unique details (for example...) Mandatory | Quirky/unique details (for example...) Very important | Quirky/unique details (for example...) Somewhat important | Quirky/unique details (for example...) Not important | Something we missed / Details References Anderson, Alistar R., Li, Jin-Hai, Harrison, Richard T. (2003). The increasing role of small businesses in the Chinese Economy. Journal of Small Business Management, 41. Cohen, William. The Entrepreneur and Small Business Problem Solver. Wiley, 1990. Duke, Shearlean, Burnett, John (2002). Managing business crisis: From anticipation to implementation. Quorum Books, Westport, Conn. Fairholm, Matthew R. (2004). Different Perspectives on the practice of leadership. Public Administration Review, 64(5), 577-590. Ferch, Shann R., Mitchell, Matthew M. (2001). Intentional Forgiveness in relational Leadership: A technique for enhancing effective leadership. Journal of Leadership Studies, 7. Gale Encyclopedia of Small BusinessEncyclopedia of Small Business. Copyright © 2002 by The Gale Group, Inc. Guffey, Robert, W., Nienhaus Brian J. (2002). Determinants of employee support for the strategic plan of a business unit. SAM Advanced Management Journal, 67. SBA Profile: Who We Are and What We Do. Small Business Administration, 2000. http://www.businesspanama.com/business_group/services.php http://www.businesspanama.com/tourism/retire_live.php http://www.enjoypanama.com/panama_city.htm http://www.thepanamanews.com/ http://www.surveymonkey.com/s.aspx'sm=oS6xVaGhTuzKuqWkHNXTN1mWKnqBL6hCNWsuioMx0ps%3d