Business Model of a tea stall

         No venture or business should be disrespected by its mere scale. Be it a lemonade shop, a newspaper shop or for that matter a tea stall. Every business in its inception is small and it should be  because the loss would also be minimal in case it fails. And once an entrepreneur gets hold over it, it slowly and gradually grows.

           
             Before getting hands-on experience over any business, it is essential to gain knowledge of the same. Therefore, following points, in my mind, are worth noticing:
                                       

1. Location - The place where you start your business is very important because you need revenue and that comes from customers. By customers, I mean 'repeat customers' or ' new customers in large numbers'. So, any area which is in the development phase of a city would be an ideal location for a tea business or a tea stall near commercial complex would be best suited.

2. Price - This business comes under the category of perfect competition, so obviously the owner cannot decide the price. He is the price taker and not the maker. So, the price will be determined by the city and area in which the owner operates.

3. Employees - Depending on the scale of the business, the number of employees will be determined. Assuming that the business will be started on minuscule, one will be needing a maximum of 2 employees. It would be great if the family members or relatives step up and fulfill the role of employees. This way, the recurring cost can be reduced to a large extent.  

4. Assets - The capital expenditure or the capex which we call in the finance world, will be a lorry, a gas cylinder, stove, vessels ( to fill sugar, milk, tea) cups to serve the customers and a battery to supply electricity.

5. Creditors - One needs to have good contact with the suppliers of tea ( raw material of this business) so that it can be fetched at a reasonable price. By reasonable price, I mean not to compromise with the quality. Also to have a contact with the dairy guy who can provide sufficient quantity of milk on a daily basis.

6. If the tea quality is superior which obviously the customers footprints will decide in due time, soon the tea vendor might get a contract to supply the tea in nearby offices or a bank. In that case, he will have to increase the number of employees to finish the task in time.

7. In the initial stage, the objective would be to reach at-least break-even point. Being a small venture, it is not expected that we can burn out the cash and expect something good will happen in the future. One needs to be pragmatic.

8. Cash business - This is a cash business. So, the owner will have to arrange only for the capex in the initial stage. Later on, recurring expenses can be met from the revenue generated on a daily basis.

9. Municipal Corporation - It may happen that a tea vendor will have to satisfy the needs of municipal corporation guys. He needs to keep cash in reserve to that extent.

Following data shows the initial investment to be made by a tea vendor:

1. Table ( on which he will conduct business)   -          Rs.   800

2. Vessels                                                            -          Rs. 1000

3. Ingredients ( to make tea )
    

                                                     Sugar (5kg)   -          Rs. 200                     

                                           
                                                     Jivraj 9 Tea    -         Rs. 370   

                                                     (1 kg)

                                                     Milk ( 500 ml) -       Rs. 27

 
                                                     Gas cylinder   -        Rs. 700
                                               (Non subsidized)
                                                     Stove              -        Rs. 600

                                    Salary of an employee    -        Rs. 10,000 p.m.

4. Municipal Corporation officer                       -         Rs. 600 p.m.
                                               
* The above data has been fetched from websites and also by having a chat with a tea vendor in Surat.

* Depending upon the city where a tea stall would be deployed, rates can vary.

   ( website source : Amazon.com)