TEAM 9

The Student-run Business ModelTom Fetsick

Tf150006@ohio.eduGordy Jones

Gj291906@ohio.eduConor Larkin

Cl609607@ohio.eduAndrew Urban

Au323806@ohio.edu

May 19, 2010

i

Executive Summary

The OUr Oasis proposal blends the long-standing Ohio University tradition, The Oasis, with the

innovation of a student-centered and student-run enterprise. This proposal creates a student-run

business in order to develop students’ practical business experience, cultivate students’

entrepreneurial spirit and utilize our students’ talent to create a sustainable business while

capitalizing on an untapped market on campus. This reciprocal relationship, which is rooted in

university tradition, promotes healthy food options for students in an accessible social-setting

that is alcohol-free.

The vision is to create a student-centered and student-run organization throughout the entire

business operation. This model has been a successful endeavor on other campuses such as

Georgetown, Cornell, and the University of Dayton. Through contact with these organizations,

insight into the function of the operation that has successfully prospered at their respective

universities. This insight provided the framework onto which the creation of the model structure

and plan for implementation for Ohio University’s campus.

Primary research indicates that healthy eating options are both limited and desired by the student

body. This is an opportunity to provide a healthy food-focused option for the entire campus

community. This creates a market that has no distinct competitors, thereby presenting a new and

profitable opportunity for the university, responding to campus needs. Our concept is a

specialized restaurant based completely in smoothies and fruit juice, with ancillary snack items

to supplement the main offering.

OUr Oasis will provide students with health conscious alternatives to their current food

selections. The use of fresh fruit and healthy items will add diversity to the diet of the students

ii

and faculty. Incorporating made-to-order smoothies with a variety of options gives students a

menu option that is not currently available on-campus, or in the Athens area.

The invaluable wealth of knowledge that can be acquired through the participation and operation

of this endeavor will impact students across all disciplines for the duration of their careers. It is

important to recognize the difference between learning in a classroom and learning in action.

Working in the capacity that will be required of our officers will, add experience, knowledge,

and entrepreneurial insight to their academic experience.

The location of the Oasis is positioned in way that naturally attracts students, especially those

living in the dormitories located at the bottom of Morton Hill. It is the estimate of Residence Life

that 6,000 students live on South and East Green. Also, it is located in the middle of six different

academic buildings. This will attract faculty, students not living in the dorms, and other foot

traffic, establishing a solid target market that can easily be capitalized upon.

Renovation to the building is necessary. Our estimate of the capital improvements is realistic, but

conservative. The renovation costs are broken into first and second priority levels. This includes

changes to the outside of the building to conform to campus architecture, as well as interior

alterations to fit the operational needs of the venture and to create a desirable look and feel.

Extensive background research was conducted in order to substantiate the representation of our

financial statements. Our figures were, again, conservative, as we see it more damaging to

overstate income and understate expenses than the opposite. Using true financial statements from

companies and organizations of similar size and capacity, we developed realistic financials for

our business venture that have potential to be significantly higher than stated.

iii

Table of Contents

Executive Summary i

Introduction 1

Mission Statement 1

General Description 2

Feasibility 3

Goals 4

Industry Information 4

Market Diagnostics 5

Competition 5

Target Market 6

Marketing Tactics 6

Management & Organization 8

Management Team 9

Organizational Implementation and Operation 10

Board of Directors 11

Initial Recruitment 11

Risk Management & Operational Requirements 13

Construction and Renovation 13

Necessary Improvements 13

Style Improvements 14

Cost Analysis 15

Financial Predictions 15

Revenue 16

Other Financial Data 17

Breakeven Analysis 18

Combating Seasonality 19

Net Income vs. Net Income before Distributions 19

Conclusion 20

Appendix A – Menu 21

Appendix B – Survey Results22

Appendix C – Marketing Techniques 23

Appendix D – Organization Chart 24

Appendix E – Officer Roles 25

Appendix F – Implementation Timeline and Meeting Schedule 26

Appendix G – Daily Activities 27

Appendix H – Construction and Renovation Costs 28

Appendix I – Financial Statements 29

References 31

iv

Introduction

When looking at this project, and considering our best options, our research group wanted to

develop an idea that gave back to the students, the university, and the community. From that

vision, we spawned the idea of a student-run business, with top-to-bottom operations solely run

by students at Ohio University. Our preliminary research suggested that, not only was this idea

possible, but a prosperous concept used on many campuses across the country.

Once settled that a student-run business would be most beneficial to both students and the

University, we set out to establish a sustainable business that could function at the location of 70

University Terrace. After additional research, we decided that an unexploited market in Athens

was that of a smoothie and juice bar. This would give students a different and unique new option,

allowing for a stable revenue stream, and continuing success. We hope that the long tradition of

the Oasis can return to Ohio University, renaming it OUr Oasis.

Mission Statement

“OUr Oasis is built on the principle of creating a thriving student-run business,

which will offer a unique entrepreneurial experience benefiting both the university

and student body.”

Our mission does not take shape until looking at both halves of it, the product and the

management concept. First, the management concept embodies a business “Run by Students,

Run for Students”. Second, the product, a smoothie and fruit juice bar, gives students a healthy

option while providing something they enjoy at a reasonable price. Our goal is to have students

take a vested interest in this business because it is run entirely by their peers.

v

In order for this idea to succeed, it must be built upon the foundation of a solid business plan.

Running a company that is sustainable will ensure that the organization itself will continue to

flourish for years to come, thus enabling many generations of students to experience the

academic benefit of running their own business. Schools such as Dayton, Georgetown, and

Cornell have put together organizations that allow students to run businesses from top-to-bottom,

making all the daily decisions. More importantly, all of these schools have received national

recognition for the programs they run. We see Ohio University as a progressive institution, and

an organization such as OUr Oasis would contribute invaluable experiences to students across

campus.

General Description

OUr Oasis will be centered around the idea of creating a more healthy uptown eating option for

students. There has been a national push for a healthier America, and Ohio University students

have paralleled that motion. Based on survey results, there are limited healthy options for

students in the Athens area. Our concept of a Smoothie and Fruit Juice bar will satisfy that need.

The main scope of OUr Oasis menu will have a focus on fresh ingredients prepared each day,

focused on health and nutrition. The fruit juices will be pre-blended, per the demand forecast

each day, as will the salads, sandwiches, and wraps. The menu’s feature item, smoothies, will be

made to order on a customer by customer basis.

Items on the menu will be priced between 3 to 6 dollars depending on size and the item. Drink

customization will also be available to add variety and personal touch to the menu so that

customers can “create their own smoothie,” by having the option to mix healthy add-ins like

protein shots, wheat grass, Red Bull energy shot, and green tea extract. A sample menu can be

vi

seen in Appendix A. The overall focus is on healthy wholesome eating options based around

wellness and nutrition. These are obvious concerns for the Ohio University student body,

therefore the demand is present.

Feasibility

In an attempt to decide if this option could be a feasible and a positive asset to our campus, our

research group conducted a survey at the location, during what we observed as a peak time for

business, between 2 pm and 4 pm. We asked 100 random Ohio University students what they

thought about our concept of offering a way to easily obtain natural juice, smoothies, yogurt,

healthy sandwiches and snack foods. The results we found were overwhelmingly in favor of

executing our idea in the Oasis. The complete survey and results can be found in Appendix B.

The response that we received regarding healthy options in Athens was as expected; the students

feel that Athens, including the dining halls, does not provide sufficient opportunities for

consumers to easily obtain and maintain a healthy lifestyle. We asked the random sample of

students to rank, on a scale of one to five, one being unsatisfied, five being very satisfied, if they

were happy with their healthy eating options. The average response was tallied at 2.35, with only

one response as saying they were “very satisfied”. In response to being health conscious, 93

percent said they considered themselves to be healthy. Additionally, 90 percent said they worked

out frequently (three or more times per week) or occasionally (one to two times a week). The

most interesting result of our survey was that 92 percent of our sample consumer population said

that they try to eat healthy usually, 26 percent of which said that they always try to eat healthy.

We concluded, based on the results of our survey, that it is necessary for our campus to make a

proactive move in a more healthy direction for students. We asked the same sample population

vii

of students if they would take advantage of our proposed business. Over 90 percent said that

would be interested in having this option on campus. This brings us to our mission statement.

Goals

The goals for our business plan are different for each half of the proposal. For the organization,

our short term goal is to have enough students join the organization to do more than just

function, but to grow and cultivate new ideas. Our projection is that 25 students would be a large

enough number to accomplish controlled sustainable growth. Long term goals for the

organization are to streamline the meeting and operation processes to increase efficiency and

help students to be as inventive as possible. An ever-expanding Alumni base would facilitate

equitable technological expansion and student-alumni networking opportunities.

The goal for the business itself in the short run would be to turn a profit and see progressive sales

figures as the year moves on. One realistic long term goal would be to turn a strong enough

profit to continue to operate while contributing a significant amount of money back to the

university in the form of distributions. Also, we want to see OUr Oasis established as a campus

landmark, having it mentioned during student tours, student and faculty presentations, and

regular conversations.

Industry Information

The smoothie market has a special niche in the food and beverage industry, much like the market

for ice cream and other snack type niches. It is not limited to set meal times, allowing for a

consistent flow of customers throughout the day.

According to market and industry research, this industry is growing at one of the most vibrant

rates of any food or beverage industry. Smoothie sales have increased over 207 percent since

viii

2002. In 2007, the “Functional Beverage Market”, which encompasses the smoothie market, had

revenue of $9.8 billion (Juice Bar Solutions, 2008). Clearly, this is a market that is gaining

popularity, on a national level, but remains virtually untapped here in Athens, Ohio.

We see this industry continuing to grow over the next decade due to the push for healthy

lifestyles. The goal for a smoothie bar using fresh, natural ingredients directly compliments this

trend. This is incredibly important when considering our target market of college students, as

they tend to be early trend adaptors.

Market Diagnostics

Studying the market demand as well as the competition is a crucial part of maintaining a

profitable business. There is very little direct competition for our business plan. The following

paragraphs analyze competition, the Athens market, the marketability of our product, and our

competitive advantage.

Competition

Cold Stone Creamery is the only establishment that has a smoothie offering on the menu, and

thus the only one that poses any kind of threat. Cold Stone has the advantage of capturing more

of the local market, as Court Street is a more appealing place for local people to go for a frozen

treat. Also, the brand recognition associated with Cold Stone will create a disadvantage for OUr

Oasis. However, smoothies are a secondary item on the Cold Stone menu, and according to the

General Manager there, he thinks that ice cream products and cakes make up about 95 percent of

sales (Boch, 2010).

Our competitive advantage rests in the location, the product, and the unique ability to be

associated with the school. The location of the Oasis has almost 6,000 students walking by from

ix

the dorms to class every day (Ohio University, 2010). Cold Stone cannot make that claim.

Although it offers smoothies, Cold Stone does not specialize in them, which creates a

competitive advantage for our company. Also, using the university’s flex point system will

create more sales from students who are more likely to use flex points instead of their own

money.

Target Market

While defining a market with a demographic skewed toward students, the primary customers of

OUr Oasis will consist of the student body. The residence halls require every student housed

within them to have a meal plan, meaning that over 9,000 students have flex points to use at the

Our Oasis location. Close to 6,000 of those students live on south and east green (Ohio

University, 2010). This situates over 75 percent of them within a 5 minute walk to OUr Oasis.

There are also six academic buildings that are within a short walk to the location, including

Gordy Hall, Morton Hall, Ellis Hall, Clippinger Labs, Alden Library, and Baker Center. This

will bring a significant number of students and faculty close to the location and draw more

customers. Outside of the academic buildings, the Ping Center attracts on average 3,800 students

daily during the academic year and 500,000 to 600,000 annually (Benhadj, 2010). Many of them

are walking, and walk directly by the business. These people are obviously health conscious

individuals and will contribute substantially to the target market.

Marketing Tactics

Having a target market that consists of students, our strategic marketing approach will be to get

consumer awareness to a level, advertising that customers not only enjoy the product, but also

respect the concept of their fellow students running the business. The advantage of the student-

x

run portion is that it will work concurrently with the business to help market the product. Those

interested in the organization will be attracted to the product, while those who enjoy the product

will be interested in the organization.

Promotions will be held offering free smoothies and shirts, at both our on site location and areas

that are predominately occupied by our sub-target markets such as South Green, Ping, and at

various sporting events. We will also utilize the campus special coupon books that are given

away to all students at the beginning of the year. An example of the proposed coupon that will be

given away and the T-Shirts can be seen in Appendix C.

Another key tactic will include the tour guide service here on campus. Paul Kolbe, the Director

of Campus Tours, told us that 99 percent of tours pass by the Oasis building and that he is

constantly asked about the building (Kolbe, 2010). If tour guides were to mention the

organization/business while passing by it, it would significantly increase consumer awareness to

incoming students. One possible marketing technique could involve giving each prospective

student a coupon for a free smoothie. This will cultivate interest in the establishment and

organization for students who are not even part of the student body yet. In addition to drawing

profits from family and friends that may be on the tour with them, it will help increase cash flow

in summer months.

In order to take advantage of technological marketing, the business will have a website that is

run by the students, increasing visibility for OUr Oasis. We also will set up a Customer

Relationship Management system (CRM) that will help gain in depth information of our

customer base. By offering a 50 cent promotional deal if a student swipes their OAK ID, we gain

instant information regarding all the demographical figures that are supplied by the ID card. This

xi

information can then be formatted to help determine trends, forecast demand, and offer

promotional incentives to repeat customers.

Our data clearly shows that a smoothie bar would not only be sustainable, but highly profitable.

This business venture is even more of a positive benefit to the University because this will not

compete with dining hall attendance, or with revenue received from sales at Baker Center’s West

82 food court. The proposed business plan shall ultimately provide a positive working

relationship with the school, through the implementation of the student-run business aspect.

Management & Organization

In order to create a model structure for a student-run business that would insure maximized

learning opportunities as well as stable profits, we studied two already successful student-run

businesses. These companies are Flyer Enterprises located in the University of Dayton, and The

Corp. which is run by the University of Georgetown. Both schools have gained national

recognition and have seen growth from what was a startup company to multiple-store operations

with over a million dollars in revenue (Flyer Enterprises, 2009). Each organization has thrived by

utilizing different methods; therefore through extensive research we took their strengths and

weaknesses and developed a workable concept that can realize great success.

Both organizations agreed that the key to success is a positive working relationship with the

school. Our goal is to work hand-in-hand with the institution, in order to capitalize on the strong

resources that it has to offer. The top of our organization, known as the Board of Directors, will

be comprised of a diverse group of faculty. Brad Glasser, the current CEO of The Corp.,

acknowledged that the biggest shortcoming of their organization was the lack of faculty

xii

involvement (Glasser, 2010). In essence, it is an essential goal to have professors take a vested

interest in this organization and tap into their insight, knowledge and experience.

Management Team

The organizational structure, which can be

seen to the right, will consist primarily of

students using real-life skills to operate a

successful business. A full organization chart

can be found in Appendix D. The top tier of

the organization will be the only non-student-

run portion of the organization, made up of faculty members. Their job will be to oversee the

business and provide an advisory role towards any challenges the students would come across

themselves. The next tier will initially be made up of 3 positions, led by the Chief Executive

Officer (CEO). The CEO will be in charge of leading both the organization and the business.

Additional roles include handling all major problems and being the main contact to the board of

directors. Directly under this position will be the two other executives, the Chief Operating

Officer (COO), and the Chief Financial Officer (CFO). The COO will work with the operational

section of the business, managing directors and producing maximum efficiency. The CFO will

work directly with all financial data produced, maintaining budgets and ensuring profitability.

This will complete the upper tier level of the organization that if properly managed, will create

the strong structure needed to run a business effectively.

In an attempt to reduce wages, Joe Guy, CEO of Flyer Enterprises, suggested we offer some type

of internship credit to upper management (Guy, 2010). We exchanged emails with Dr. Hugh

Sherman, Dean of the College of Business, and he gave us some direction that we see as support

xiii

to our organization. When we asked how hard it is to be approved for internship credit, he

assured us that it would not be overly difficult, especially in the next year or so. In his email he

said that he is “promoting a new certificate in entrepreneurship”, which he thinks could “include

an experience like this as internship credit”. Also, a strategic leadership certificate is in the works

that could use this opportunity to offer internship credit (Sherman, 2010).

Below the upper tier will be the directors, who will take on a specialized section of the business

and develop it through applying their area of expertise. This group will be made up of three

directors and one general manager, and each director will have a committee of students working

with them to achieve set goals. The Director of IT and Director of Marketing will work

congruently to promote and advertise through the use of the web site and CRM system

mentioned earlier. The final director, the Director of Human Resources, will handle all personnel

management issues. They will also work with the General Manager to avoid any employee

problems. The General Manager will be on the forefront of the business and therefore will be

able to identify issues and pass along that information to the proper personnel. Each director will

have an experienced adviser on the Board of Directors. A more in depth breakdown of each

position’s tasks, and time commitment can be seen in Appendix E.

Organizational Implementation and Operation

When speaking to many different organizations on campus, they each reiterated the emphasis

that needs to be placed on meeting frequently. Our organization will meet weekly, avoiding all

mishaps that can be caused through lack of communication. Each position will be equally

transparent, so their objectives are clear and defined. A detailed schedule of the meetings can be

seen in Appendix F. The meeting structure we have devised reflects what most businesses strive

for in effective communication.

xiv

The most foreseeable problem in the creation of a student-run business/organization involves

implementation. Building something from scratch presents many challenges, which if not

prepared for, will cause many nuisances. In order to avoid this, we have laid out a timeline that

can be viewed in graphical form in Appendix F.

Board of Directors

If our recommendation is selected, the implementation process will start immediately. First, the

Board of Directors must be established. Faculty and staff will be notified about the available

opportunity. Our preliminary research shows that faculty and staff will be receptive to this idea.

Once the Board is established, they will make recommendations of capable students to lead the

new organization.

Addressing the need for teachers to get involved was an initial concern. Our concerns were

quickly neutralized after presenting the idea to some faculty and staff. Dean Sherman said that he

was interested in getting involved as part of the Board of Directors (Sherman, 2010), as did Jane

Sojka and Kate Keifer (Sojka, 2010). The quick reaction from the few professors we did talk to

confirmed that we will have plenty of advisory backing from faculty and staff.

Initial Recruitment

It is so important to get an early start and be fully prepared to enter the fall ready for recruitment.

This will be the most important recruiting period the organization will face, since this class will

be charged with the difficult initial development of the business. Information sessions will be

held in weeks two, three, and five, which will finalize the fall quarter recruitment class. It is our

realistic goal that 25 students can be recruited during this period.

xv

During the recruitment process, it is important to stress that students from all different areas of

concentration are involved in this endeavor, not just College of Business students. Majors from

the College of Engineering and Technology, such as Industrial Technology majors, could work

as the Director of IT and on that committee. Students from College Health and Human Services,

such as those from the Restaurant, Hotel, and Tourism major, could be some of the most

prepared to run the organization at every level. Many different creative majors like Interior

Architecture students and Graphic Design majors could also help with the design of the

restaurant and the designing of the marketing materials and campaigns. We see the possibility for

many different colleges and students with different educational backgrounds to come together

and accomplish this project.

Weekly presentations will be made by the board of directors on the skills and mindset needed to

run a business. Along with this there will be three training sessions from the Innovation center,

which specializes in helping entrepreneurs get their businesses off the ground. These sessions

will build team unity and solidify the structure that is essential to the realization of our

ambitions. The daily activities that employees would plan on doing can be found in Appendix G.

Elections will be held during week one of winter quarter, and voting will be done by the Board

of Directors. This will allow each position the proper time needed to settle in before business

opens. It will also provide the organization the structure needed to recruit during the winter.

The structure has been simplified to avoid implementation problems. However, over time

positions will be created and adapted to better suit the business. This is the greatest strength of

the organization, the ability to constantly evolve. As the business grows so will the opportunities,

and with more opportunities, involvement will also increase. Looking at the history of The Corp.

xvi

and Flyer Enterprises, this venture, like the aforementioned, could very feasibly grow to an

organization overseeing and operating multiple storefronts.

Risk Management & Operational Requirements

Every establishment serving food in the state of Ohio needs a license to do so. Because our

business will be operating through Ohio University, the fees and inspections will be minimal to

add a new license to account for OUr Oasis. According to the Ohio Administrative Code section

3701-21-02(F), because Ohio University already has the appropriate license, it will only cost $48

to add additional licenses for each establishment under 25,000 square feet (Ohio Adminstrative

Code, 2010).

Insurance is another cost that can be carried over from the University. The increase in premiums

to add additional locations is very small and generally covers a significant amount of liability.

The large policies that the University is required to hold can easily cover and mishap or

malfunction involved with running OUr Oasis.

Construction and Renovation

The architectural styling will consist of simple modern design with the theme centralized around

clean, simple lines and design elements. The architectural elements above play a significant role

in the development of the product, and the fostering of an atmosphere in which our target market

will feel both attracted to, and comfortable in. The simple modern design is traditionally cost

effective while also being transitional to design adjustments.

Necessary Improvements

Certain improvements are necessary not only for the structural integrity of the building, but also

important for the style to fall into the Ohio University landscape. Due to the current condition on

xvii

the roof and back deck area, complete renovation must occur. Furthermore, due to vandalism and

the elements, the windows and doors will also need to be replaced. The building has suffered

obvious signs of weathering and, without these changes; a direct threat to the existence of the

property is present (Braun, 2010).

Externally, the Ohio University Georgian style architecture should be incorporated into the

design in an attempt to signify it as an Ohio University landmark. The external portion of the

building will remain similar to its current styling, with several necessary modifications. The front

entrance will remain similar to its current style. The siding around the majority of the building

will need to be repainted, including the window sills and frames on the second floor.

Style Improvements

An important element that will need to be restored will be the back deck area. It will be

important to restore the current design and by adding small tables and seating. This will create an

area for the customers during our peak warmer months to sit and enjoy their beverages. Seating

in the back patio will be for approximately 20 to 25 customers; this will create an inviting,

comfortable atmosphere for the customers. The tables and chairs will be stainless steel and be

able to be moved and tied down upon the closing each day of the store.

Internally, the main layout of the restaurant will need to change

in order to accommodate the new product. The entrance and

kitchen area will remain the same; however, stainless steel

counter tops and a glass front cooler will separate the

preparation area from the dining area. Furthermore, a stainless

steel bar top will outline the front of the store and customers

First Floor Design

xviii

will be able to sit on circular attached bar stools to enjoy their beverages while looking out the

front window (see Appendix H). Within the restaurant, seating will be in the range of 20 to 25

people. By having the central part of the restaurant open this will allow for more people to stand

in line, thus being able to handle the large quantity of customers throughout the day.

The second floor of the 70 University Terrace property will be turned into a small office area as a

main headquarters for the student managers and the executives. It will be a simple office with

multiple desk areas containing computers and phones. This area will be connected to the

restaurant through the internal staircase, and its rear door staircase. It will be important to

develop this space into a professional area in order to foster the student organization’s functions.

Cost Analysis

Costs of the renovations are estimated to be a total of approximately $1.05 million with external

costs comprising 32.8 percent, internal 40.2 percent, kitchen infrastructure 15.1 percent, and

gutting costs of the property 11.8 percent respectively (Braun, 2010). Additionally, different

items within the costs of renovations are broken down into a priority system (see Appendix H).

The total cost of first priority items is $827 thousand while the total of the second priority items

is $230 thousand; therefore the brunt of the cost is centered on making the property usable again.

Financial Predictions

Our group considers the financial status of the proposed venture to have a direct correlation with

the success of the organization. Accordingly, we have spent a significant portion of time

researching, estimating, and checking our financial data. A copy of Pro Forma financial

statements, including a “worst case” and “cautiously optimistic” balance sheet, income

2011 2012 2013 2011 2012 2013Revenue

Sales Revenue 325,000$ 344,500$ 351,390$ 450,000$ 477,000$ 486,540$ Cost of Goods Sold (130,000) (137,800) (140,556) (180,000) (190,800) (194,616) Gross Profit 195,000$ 206,700$ 210,834$ 270,000$ 286,200$ 291,924$

Operating ExpensesWages (70,000)$ (70,700)$ (71,407)$ (96,000)$ (96,960)$ (97,930)$ Utilities, Dues, & Memberships (2,438) (2,584) (2,635) (3,375) (3,578) (3,649) Repairs & Maintenance (9,750) (10,335) (10,542) (13,500) (14,310) (14,596) Rent Expense (13,000) (13,780) (14,056) (18,000) (19,080) (19,462) Interest Expense (1,250) (1,250) (1,250) (1,248) (1,246) (1,244) Supplies (13,000) (13,780) (14,056) (18,000) (19,080) (19,462) Selling & Administrative (6,500) (6,890) (7,028) (9,000) (9,540) (9,731) Depreciation (7,143) (7,143) (10,143) (7,143) (7,143) (10,143)

Total Operating Expenses (123,080)$ (126,462)$ (131,116)$ (166,266)$ (170,936)$ (176,216)$

Net Income Before Distributions 71,920$ 80,238$ 79,718$ 103,734$ 115,264$ 115,708$

LESS: Distributions (41,920) (70,238) (73,750) (73,743) (105,264) (109,600)

NET INCOME 30,000$ 10,000$ 5,968$ 29,991$ 10,000$ 6,108$

"Worst Case" "Cautiously Optimistic"

xix

statement, and cash flow statement for the first three years of operation is attached in Appendix I,

as well as a “break even” income statement.

Revenue

Based on the research conducted, our group is presenting the financial data that is a “worst case”

scenario and a “cautiously optimistic” scenario. The first year revenue is projected at 325,000

dollars for the worst case data. When taking the approach that revenue could be much higher, we

estimated it at 450,000 dollars. Based on the results of our survey, in which students said they

would pay four to six dollars for a smoothie, and considering the prices on alternative items, we

estimate the average sale will be approximately four dollars. In order to achieve our projected

revenue numbers, it would take about 80,000 and 112,000 sales annually in the first year for the

“worst case” and “cautiously optimistic” numbers respectively. This works out to roughly 220

and 330 sales per day.

xx

These numbers seem daunting, but data from Residence Life suggests otherwise. According to

the Residence Life website, there are 2,500 students that reside on East Green and 3,200 students

that reside on South Green. In essence, the number of residents in the immediate surrounding

dormitories suggests that almost 6,000 students walk past OUr Oasis on their way up and down

Morton Hill every day (Ohio University, 2010). Our financial model indicates that if just 4

percent of those students made a purchase every day, our revenue number of 325,000 would be

met. More importantly, as mentioned in our target market analysis above, the traffic that we can

capitalize on from other students, faculty, and staff could easily create a revenue stream that will

meet or exceed our projected optimistic figures.

Our rationalization for the larger revenue data is easily validated. If you account for the 6,000

students living on the adjacent greens, the 3,800 people that go to Ping Center daily, and the

countless classrooms, offices, and labs in the surrounding buildings, a significant number of

potential customers are readily available. If the average daily sales needed to achieve the higher

revenue is 330, and there are close to, if not more than, 10,000 people within a close proximity,

only 3.3 percent need to make a purchase. Again, even though this number is above what we

consider worst case, we still feel the revenue can be larger in the first year and years following if

the marketing and management of the organization situates itself to do so.

Other Financial Data

The other data included in our financial statements was gathered by reviewing statements

available for public use from other similar businesses and organizations (Flyer Enterprises,

2009). By examining the available data with respect to revenue, location and size of the

businesses, we were able to determine utilities, repairs and maintenance, and supplies, among

other expenditures, directly related as a similar proportion of revenue. Wages were calculated

xxi

based on the number of employee hours necessary and factoring the typical wage rate for the

surrounding area. Depreciation was calculated following the Generally Accepted Accounting

Principles.

As our group extended our financial projections on the income statement, we incorporated a

small annual percentage increase on items that tend to be variable costs (such as cost of goods

sold, supplies, and utilities). In addition, by utilizing knowledge we acquired through our

academic backgrounds, we were able to estimate changes in interest expense, rent expense, and

the distributions.

Georgetown’s student-run organization, The Corp, appears to have similar looking financial

projections (The Corp, 2009). Georgetown also charges their student organization rent for the

location of the various business entities; however, the rental income is then given back to

students within the organization in the form of scholarships (Glasser, 2010). This concept of

returning rental fees back to the students is another potential benefit to be examined to support

the students even more after the business has established its sustainability.

The figure for rent is estimated at 4 percent of sales revenue. Being a student-run organization,

operating as the same taxable entity as the University, and giving back all income above

operating cash flow in the form of distributions, we felt that rent is really an arbitrary number.

The combination of rent and distributions will create a situation in which the University is

receiving a significant amount of funds from our operation regardless of the price of rent.

Breakeven Analysis

Given that we are representing a “worst case” financial scenario, it is also important to look at a

breakeven number of sales. In order to see how significantly below our projections the sales

xxii

figures could fall, we recalculated our income statement so that our Net Income before

Distributions is equal to zero.

Continuing the assumption that the average sale is 4 dollars, we would need to make 42,500 sales

annually. This is only about one half of the sales we have projected. This is a very low number,

considering the in-depth research we did to arrive at our “worst case” scenario.

Combating Seasonality

In order to get a better picture of the problems associated with seasonality and the change in

customer volume during breaks, we met with the General Manager at Cold Stone Creamery.

According to him, the summer months are a slower time for the store. However slow it is, he

claims that the heavy volume in spring quarter sales makes up for it, “we just plan to keep extra

cash reserves on hand to cover utilities and other expenses” (Boch, 2010). As long as the CFO

and Director of HR plan accordingly, the summer months will not be a problem for the

sustainability.

Winter break and spring break are other issues that concerned us. The manager said that based on

past experiences, the best option is to close. Cold Stone’s market classification will be similar to

that of a smoothie bar. Based on the cold winter months and lack of student presence, he

recommends closing down for those portions of the year, and our financials reflect this opinion.

Net Income vs. Net Income before Distributions

It is important to recognize the difference the “Net Income before Distributions” (NIBD) and

“Net Income” figures. The NIBD figure truly represents the income that will be realized by the

organization, as the rest represents distributions to the University. The goal of our financial

statements is to present data that is conservative, yet realistic. As mentioned above, if this

xxiii

business plan is executed properly, the financial yield could exceed even our optimistic figures,

benefiting the University, student body, and Ohio University Foundation, alike.

The reason for the distributions stems from tax laws. Being that this is a student-run

organization, and will be taxed in the same way that Ohio University is, as a 501(c)-3. According

to the rules for operating as a Not-For-Profit entity per the 2009 US Master Tax Guide, ¶602, its

net earnings must not “inure in whole or in part to the benefit of private shareholders or

individuals” (CCH Tax and Accounting Publishing, 2008). Therefore, any remaining income not

necessary for operation must be transferred to the University as distributions, to then be further

used to benefit the interests of the University and its students. When looking at the cash flow, we

allotted proper distributions to retain enough cash to remain functional while maintaining a tax-

exempt status.

Conclusion

The marriage of these two ideas could lead to a symbiotic relationship that benefits students,

faculty, alumni, and the community for many years to come. The business itself, an alcohol-free

smoothie, sandwich and salad bar, is highly sustainable. The financial data shows, coupled with

the survey results that this business will be profitable now and in the future.

Creating a sustainable business concept is critical and achievable as outlined throughout the

proposal. However, the intangibles that arise from a student-run business are much more

important. It will foster entrepreneurial spirit and enhance educational experiences for students

beyond the classroom. Students that participate in this program will leave our University more

prepared to tackle real world problems, promoting the school’s name and reputation, and

improving the quality of graduates that Ohio University proudly calls ‘Alumni’.

xxiv

Appendix A – Menu

Here is a sample menu we put together in order to give an idea of the feel of the restaurant.

xxv

Appendix B – Survey Results

Gender: __57__ Female __43__ Male

Rank: _54_ Freshman _21_ Sophomore _11_ Junior _10_ Senior

Do you consider yourself a healthy person?

_93_ yes _7_ No

I work out: _45_ Frequently _45_ Occasionally _10_ Rarely

I try to eat healthy: _26_ Always _66_ Usually _8_ Never

Would you go to a healthy alternative snack bar if it was in the former Oasis?

_90_ yes _6_ no _4_ maybe

If yes, what would your price range be?

Majority of students said between $3-$7

Are you satisfied with the healthy eating options in Athens? (1= not satisfied, 5=very

satisfied)

Average of 2.35

xxvi

Appendix C – Marketing Techniques

The Campus Specials booklet is an easy way to reach a many of students at a cost effective rate.

Employee shirts will be available for sale that will literally be a walking marketing campaign.

OUr Oasis Upper Management

xxvii

Appendix D – Organization Chart

xxviii

Appendix E – Officer Roles

Board of DirectorsTime Commitment: 2-3 hours a week

-Meet Monthly (With CEO) -Initial recruitment -Handle difficult decisions -Approve major purchases -Advisory role

Chief Executive OfficerTime Commitment: 10-12 hours a week

-Meet bi-weekly (With organization, and with other chiefs)

-Vital in managing strategic vision and direction

-Creates goals of business -Oversees company -Develops term end Review Report

Chief Financial OfficerTime Commitment: 8-10 hours a week

-Meet bi-weekly (With organization, with other chiefs)

-Oversees budget and purchases -Creates financial statements and

quarterly/financial year end report -Determines profitable margins

Chief Operating OfficerTime Commitment: 8-10 hours a week

-Meet bi-weekly (With organization, with other chiefs)

-Manages directors -Oversees operating activities

Director of ITTime Commitment: 4-6 hours a week

-Meet weekly (organization meeting) -Create Customer relationship

management system and find trends -Develop and maintain website

Director of MarketingTime Commitment: 4-6 hours a week

-Meet weekly (organization meeting) -Promote Business -Develop strategy to enhance

consumer awarenessDirector of Human ResourcesTime Commitment: 4-6 hours a week

-Meet weekly (organization meeting) -Handle Personnel management -Recruitment to organization

General ManagerTime Commitment: 6-10 hours a week

-Meet weekly (organization meeting) -Inventory control -Scheduling -Identify potential issues

xxix

Appendix F – Implementation Timeline and Meeting Schedule

Implementation Timeline

Meeting Schedule

xxx

Appendix G – Daily Activities

Typical weekday during Spring Quarter

9:15-Employee #1 arrives

Reconciles previous days register Balances current days register Prepares fruit for forecasted morning rush

10:00 Open store

Initial morning crowd of customers begin Employee continues prep for afternoon

12:00 Lunch Rush

Employee #2 and #3 arrive relieving employee #1 Steady flow of students Students begin to congregate both indoors and outdoors to socialize and work on projects Outdoors furniture is taken out/music is turned on

2:00 Afternoon Rush

Employee #4, and #5 arrives to handle 2-4 rush relieving employee #2 Major rush of the day Large crowds gather outside on back deck

3:00 Mid Afternoon rush

Employee #6 arrives relieving employee #3 Rush continues

4:00 Rush ends

Employee #4 leaves Average crowd continues Crew begins preparation for night rush

6:00 Night Rush

Employee #7 and #8 arrive relieving employee #5 and #6 Night rush begins Outside lights are turned on, setting the atmosphere

9:00 Closing

Count out drawer for the day Clean restaurant and equipment Bring in deck furniture Lock up

xxxi

Appendix H – Construction and Renovation Costs

Construction CostsPriority

Gutting Costs 125,000 1

External ImprovementsDeck and back area 15,000 1Stairway up to 2nd floor 7,000 1Windows 70,000 1Paint 35,000 1Awning and canopy 40,000 1Roof Improvements 150,000 1Gutters/water drainage system 30,000 1

Total External 347,000Internal Imporvements

Flooring 30,000 1Walls 30,000 1Ceiling 20,000 1Structural 75,000 1Lighting 25,000 2Electrical 100,000 1Plumbing 100,000 1Paint 20,000 2Seating 25,000 2

Total Internal 425,000Infastructure for Restaurant

Counters 55,000 2Kitchen Infastructure 55,000 2Equipment 50,000 2

Total Infastructure 160,000

Total Cost 1,057,000

1 2 3 4 5 6 7 8 9 10

1 1

2 2

3 3

4 4

5 5

6 6

7 7

8 8

9 9

10 10

11 11

1 2 3 4 5 6 7 8 9 10

First Floor

Second Floor

Scale: 1 square = 25 sq. ft.

xxxii

Taken from: (Braun, 2010), (Dalvit, 2009), (Saylor Construction, 2007)

Appendix I – Financial Statements

OUr OasisStatement of IncomeFor the years ending June 30th 2011, 2012, 2013

2011 2012 2013 2011 2012 2013Revenue

Sales Revenue 325,000$ 344,500$ 351,390$ 450,000$ 477,000$ 486,540$ Cost of Goods Sold (130,000) (137,800) (140,556) (180,000) (190,800) (194,616) Gross Profit 195,000$ 206,700$ 210,834$ 270,000$ 286,200$ 291,924$

Operating ExpensesWages (70,000)$ (70,700)$ (71,407)$ (96,000)$ (96,960)$ (97,930)$ Utilities, Dues, & Memberships (2,438) (2,584) (2,635) (3,375) (3,578) (3,649) Repairs & Maintenance (9,750) (10,335) (10,542) (13,500) (14,310) (14,596) Rent Expense (13,000) (13,780) (14,056) (18,000) (19,080) (19,462) Interest Expense (1,250) (1,250) (1,250) (1,248) (1,246) (1,244) Supplies (13,000) (13,780) (14,056) (18,000) (19,080) (19,462) Selling & Administrative (6,500) (6,890) (7,028) (9,000) (9,540) (9,731) Depreciation (7,143) (7,143) (10,143) (7,143) (7,143) (10,143)

Total Operating Expenses (123,080)$ (126,462)$ (131,116)$ (166,266)$ (170,936)$ (176,216)$

Net Income Before Distributions 71,920$ 80,238$ 79,718$ 103,734$ 115,264$ 115,708$

LESS: Distributions (41,920) (70,238) (73,750) (73,734) (105,264) (109,600)

NET INCOME 30,000$ 10,000$ 5,968$ 30,000$ 10,000$ 6,108$

"Worst Case" "Cautiously Optimistic"

xxxiii

OUr OasisBalance SheetAs of June 30th 2011, 2012, 2013

2011 2012 2013 2011 2012 2013AssetsCurrent Assets

Cash 14,100$ 21,967$ 12,897$ 14,100$ 21,967$ 13,037$ Inventory 9,793 9,989 10,189 9,793 9,989 10,189 Supplies on Hand 1,500 1,530 1,561 1,500 1,530 1,561

Total Current Assets 25,393 33,486 24,646 25,393 33,485 24,787

Plant Property and EquipmentEquipment 50,000 50,000 65,000 50,000 50,000 65,000 Accumulated Depreciation (7,143) (14,286) (24,429) (7,143) (14,286) (24,429)

Total Plant Property/Equipment 42,857 35,714 40,571 42,857 35,714 40,571

Total Assets 68,250$ 69,200$ 65,218$ 68,250$ 69,200$ 65,358$

Liabilities and Shareholders EquityInterest Payable 1,250$ 2,000$ 1,250$ 1,250$ 2,000$ 1,250$ Wages Payable 2,000 2,500 2,000 2,000 2,500 2,000 Accounts Payable 5,000 4,700 4,000 5,000 4,700 4,000 Debt to University (Equipment) 30,000 20,000 12,000 30,000 20,000 12,000

Total Liabilities 38,250 29,200 19,250 38,250 29,200 19,250

Shareholders EquityFund Equity 30,000 40,000 45,968 30,000 40,000 46,108

Total Shareholders Equity 30,000 40,000 45,968 30,000 40,000 46,108

Total Liabilities and shareholders equity 68,250$ 69,200$ 65,218$ 68,250$ 69,200$ 65,358$

"Worst Case" "Cautiously Optimistic"

Appendix I – Financial Statements (Continued)

OUr OasisStatement of Cash FlowsFor the years ending June 30th 2011, 2012, 2013

2011 2012 2013 2011 2012 2013Net Income 30,000$ 10,000$ 5,968$ 30,000$ 10,000$ 6,108$

Adjustments made to reconcile net Income to income provided by operationsDepreciation 7,143 7,143 10,143 7,143 7,143 10,143 Increase in Supplies (1,500) (30) (31) (1,500) (30) (31) Increase in Inventory (9,793) (196) (200) (9,793) (196) (200) Increase/Decrease in Interest Payable 1,250 750 (750) 1,250 750 (750) Increase/Decrease in Wages Payable 2,000 500 (500) 2,000 500 (500) Increase/Decrease in Accounts Payable 5,000 (300) (700) 5,000 (300) (700)

Net cash produced by Operations 34,100$ 17,867$ 13,930$ 34,100$ 17,867$ 14,070$

Cash Flows-Investing ActivityIncrease in Equipment (50,000) - (15,000) (50,000) - (15,000)

Net cash used by Operations (50,000) - (15,000) (50,000) - (15,000)

Cash Flows-Financing ActivitiesIssued Debt 50,000 - - 50,000 - - Repayment of Debt (20,000) (10,000) (8,000) (20,000) (10,000) (8,000)

Net cash produced by Operations 30,000 (10,000) (8,000) 30,000 (10,000) (8,000)

Net Cash 14,100$ 7,867$ (9,070)$ 14,100$ 7,867$ (8,930)$ Previous Year Ending Cash - 14,100 21,967 - 14,100 21,967 Net Cash at Year End 14,100$ 21,967$ 12,897$ 14,100$ 21,967$ 13,037$

"Worst Case" "Cautiously Optimistic"

xxxiv

OUr OasisStatement of IncomeFor the years ending June 30th 2011, 2012, 2013

2011 2012 2013Revenue

Sales Revenue 170,000$ 180,200$ 183,804$ Cost of Goods Sold (68,000) (72,080) (73,522) Gross Profit 102,000$ 108,120$ 110,282$

Operating ExpensesWages (70,000)$ (70,700)$ (71,407)$ Utilities, Dues, & Memberships (1,275) (1,352) (1,379) Repairs & Maintenance (5,100) (5,406) (5,514) Rent Expense (6,800) (7,208) (7,352) Interest Expense (1,250) (1,250) (1,250) Supplies (6,800) (7,208) (7,352) Selling & Administrative (3,400) (3,604) (3,676) Depreciation (7,143) (7,143) (10,143)

Total Operating Expenses (101,768)$ (103,870)$ (108,073)$

Net Income Before Distributions 232$ 4,250$ 2,209$

LESS: Distributions - - -

NET INCOME 232$ 4,250$ 2,209$

"Break Even"

Above is an income statement that shows what is necessary to stay operable and we expect to be

well above these figures.

ReferencesAnnabi, H. (2010, April 14). MIS Professor. (C. Larkin, & A. Urban, Interviewers)

Benhadj, H. (2010, May 10). Ping Cent Director. (A. Urban, Interviewer)

Boch, T. (2010, May 10). General Manager, Cold Stone. (G. Jones, & A. Urban, Interviewers)

Braun, F. (2010, May 7). General Contractor - Braun Custom Builders. (A. Urban, Interviewer)

CCH Tax and Accounting Publishing. (2008). 2009 Master Tax Guide. Chicago: CCH Group.

Dalvit, D. (2009, August 9). Cost per Square Foot of Commercial Construction by Region. Retrieved May 7, 2010, from EV Studio: Architecture, Engineering, Planning: http://evstudio.info/2009/08/06/cost-per-square-foot-of-commercial-construction-by-region/

Flyer Enterprises. (2009). Annual Report 2007-08. Dayton, OH: Flyer Enterprises.

Flyer Enterprises. (2009). Annual Report 2008-09. Dayton, OH: Flyer Enterprises.

Glasser, B. (2010, April 18). CEO Georgetown Corp. (C. Larkin, Interviewer)

Guy, J. (2010, April 20). CEO, Flyer Enterprises. (C. Larking, Interviewer)

xxxv

Juice Bar Solutions. (2008). J&SBC Consulting. Retrieved April 20, 2010, from Smoothie Facts & Trends: http://www.juiceconsult.com/index-5.html

Keifer, K. (2010, April 15). Finance Professor. (T. Fetsick, & C. Larkin, Interviewers)

Kolbe, P. (2010, May 6). Director of Campus Tours. (C. Larkin, Interviewer)

Ohio Adminstrative Code. (2010). 3701-21 Food Service Operations. Retrieved April 30, 2010, from OAC Ohio Laws and Rules: http://codes.ohio.gov/oac/3701-21

Ohio University. (2010). About Us: Residential Housing at Ohio University. Retrieved April 30, 2010, from Ohio University Residential Housing: http://www.ohio.edu/housing/about/greenstaff.cfm

Saylor Construction. (2007). Square Foot Building Costs (Replacement Costs). Retrieved May 8, 2010, from Saylor Construction: http://www.saylor.com/lacosts/

Sherman, H. (2010, May 18). Dean, College of Business. (G. Jones, Interviewer)

Sojka, J. (2010, April 26). Marketing Professor. (T. Fetsick, & C. Larkin, Interviewers)

The Corp. (2009). Annual Report 2007-08. Washington, DC: Students of Georgetown Inc.

The Corp. (2008). Annual Report 2006-07. Washington, D.C.: Students of Georgetown Inc.