Starting a Bakery in Cardiff, Welsh - Example

BUSINESS PLAN-STARTING A BAKERY IN CARDIFF, WELSH Personal Details Contact Address Telephone Number Home Mobile E-mail Address Account Details First Year Sales Figure: 73,500 Pounds First Year Sales Profits: 58,500 Pounds Prepared by: Date: Content: 1.Introduction 2 1.1Exective Summary 3 a)History and Background 4 2.Market Research 5 2.1 Field Research 5 2.2 Competitors 6 3.Products or Service 7 4. Legal Obligations 8 5. Business Aims and Objectives 9 5.1 Aims 9 5.2 Objectives 9 5.3 Goals and Core Values 11 6. Sales Activity Plans 13 7. Pricing and Production Cost 14 8. SWOT /PEST Analysis 15 9.Contingency Plans 16 10.Staffing Requirements 16 11.Resource Requirements 17 12.Sources of Funding and Investment 17 13.Personal Survival Statements 17 14.Conclusions 18 15.Cash Flow Forecast and other Financial Statement 18 16.Appendices 21 17.References 22 Starting a Bakery in Cardiff, Welsh 1. Introduction Starting a business involves planning, making key financial decisions, and completing a series of legal activities. It is an exciting proposition but it’s also an incredibly challenging undertaking. A business plan however is an essential road map for business success amidst various challenges. This paper constructs a business plan for the opening of a bakery known as Annex House in Cardiff, Welsh. 1.1Exective Summary Annex House will be a small entrepreneurial startup bakery located in Roath Cardiff in Welsh. Cakes, pastries, pies and special cupcakes will be offered in a variety of flavors for example (duck and pork hand pies, saffron coils, chocolate paper pie, chocolate ganache and classic brioche loaf amongst others).frostings (whip cream, glazes and cooked frostings), sizes, styles, toppings and decorations. The bakery will contain a luxurious lounge of 1650 square feet seating area enabling customers to stop by in large numbers. Besides, Annex House will also provide a catering service to deliver large orders during huge events hence creating convenience for consumers. Compared to goods, the parameters of service quality are more complex and vary (Lewis 1989, p48). Therefore a full- fledged understanding of customers’ needs and expectations is a critical issue on the today’s service rendering agenda. Being a bakery, the business will experience an extensive target market because most people of all ages enjoy delicious cakes, pastries and pies not forgetting the fact that the products are low-priced items that are nearly affordable to anyone despite their varying levels of income hence keeping the target market large. In relation to the several product options, convenient services, and a broad target market, this bakery will be able to meet the needs of a wide number of consumers. A company’s website will be opened both on Facebook and twitter to create a platform for potential buyers. As stated by Gardner (2011, p4), product quality is critical concept in the food industry thereby Annex House will ensure product quality through the use of fresh ingredients, sale of specifically fresh cakes, pastries and pies and most importantly focus on cleanliness. Innovation being a goal for the company will be achieved through creating new flavors and frostings after every three weeks and offering them for a limited time. Although the bakery will open as a single, overtime the business will strive to expand to a wider range of locations. Moreover, prices on the other hand will strive to be competitive with the industry for instance costs and expenses will be calculated to provide the bakery with a minimum price option. As long as the industry prices are high enough to cover the calculated costs, Annex House will chose prices similar to its competitors. With the compelling market opportunity in the neighborhood of Cardiff, the developing commercial capital will drive Annex House retail revenues of 73,500 Pounds in year 1, 146,250 Pounds in year 2, and 324,450 Pounds in year 3. With an understanding the difficulties in establishing a new business, we plan to become cash flow positive on a monthly basis. Our financial plan is conservative with a focus cash flow, diverse revenue streams and prudence in considering risks. The plans of Annex House are intended to help the business thrive and become profitable. However through the use of financial analysis, customer surveys and market share comparisons, the bakery will be capable of determining which strategies are bound to boost the business (Gardner, 2011). Evaluating the effectiveness of different methods of marketing, Annex House will learn what is needed for the company to become successful. The team and personnel that will make the vision of Annex House reality includes an experienced successful chef/entrepreneur, bakery directors consisting of three partners (Chose the names of your 2 business partners…), driver and receptionist, and ten professional bakers. a) History and Background My partners and I have had interest in baking cakes, pastries and pies for seven years now. Raised by families who were excellent bakers, I believe we have got the best of the greatest ideas about baking. This has motivated us to open a bakery to explore our bakery talents as well as a source of income. The significant factor I considered crucial to the success of the bakery was the target market. People of all ages, children though adults enjoy delicious treats therefore are incorporated in the target market. Located in an area with high demographics, the services provided will be largely utilized by locals for large events and celebrations. Annex House will be able to rely on locals for more year-round business. 2. Market Research 2.1 Field Research While planning to open Annex House, we found out that fresh cakes, pastries and pies is of course better. Walking into the bakery, the warmth from the ovens, the sweet yeast smell in the air, tantalizing pastries waiting in the display case makes the bakery a friendly place visited by many. By doing par baking, products will be baked until approximately 80% cooked, then flash-frozen to allow for grocery stores and restaurants to finish the process. This will be a way for supermarkets and restaurants to cut costs while still providing fresh baked goods to the customers. This will be an advantage because the other competitors are not doing this. In addition, field research showed increasing the levels of emulsifiers and enzymes and new packaging techniques will extend the shelf life of the products. This will also work as a control feature where double wrapping techniques make it more apparent when products have been tampered with. Annex house will also increase the levels of organic food in their products as the research showed increase in demand for organic foods. 2.2 Competitors Annex key competitors include; Fabulous Welsh Cakes, located at the Mermaid Quay and Francesca Cake, located in Barry Vale of Glamorgan The following are some of the Unique Selling Proposition (USP) of Fabulous Welsh Cakes: -They have a unique ingredient of Chocolate Chip and original lemon present in their cakes -Advantageous location in the new shopping area in Cardiff Bay pitched with tourists -Sales of local gift products apart from cakes in the area such as Welsh slate, earth pure skin care products, Melin Tregwynt textiles, Welsh love spoons, books, traditional Welsh sweets, handmade chocolates and locally made jewellery -Excellent attitude of professionalism and good accommodative staff Weakness -In terms of pricing, they are expensive due to their location -Language limitation when it comes to foreign customers that leads to dissatisfaction -Delivery time takes a little longer compared to Francesca because of traffic snarl up. Secondly, the following are some of the USP of Francesca Cakes: -Products are in different models and flowers which tends to attract more customers -Inexpensive price range as compared to Fabulous Welsh Cakes -Immediate delivery Weakness -It is a home based bakery hence wholesale is limited How Annex House will compete; In dealing with different competitions from such bakeries, Annex House will ensure unique dining experiences customers get to enjoy when they visit the bakery. These experiences consist of a novel and fun approach to taking customers’ orders and an atmosphere that is fresh and friendly. At the point of sale each customer order will be recited in a form of song and other employees will be encouraged to take this cheerful approach to the rest of the service. This approach fits in well with the premise of cupcakes and I believe it will resonate well with the target of our customers. By engaging with audience from their first visit and from a young age, Annex House aims at creating lifetime brand ambassadors. Other sources of competitive advantage involve the use of fresh ingredients (including a secret ingredient which ensures cupcakes are moist and affordable) and the fact that the products are made fresh daily. Plans are also underway to open the bakery until 10-11 pm. Very few others can achieve and maintain this balance between novel excitement and taste but the bakery is confident it will achieve this and will enjoy the rewards through ongoing profitability and success (Uhl, 2008). 3. Products or Service Annex House will be a small bakery of 2200 square feet offering cakes, pastries, pies and special cupcakes. The business will be entrepreneurial with sixteen employees to assist the bakery run efficiently at the start. A group of seven employees will be designated bakers who will prepare the delights in the kitchen whereas the remaining three employees will take orders manually or online and fulfill the customers’ needs. A variety of flavors such as vanilla and strawberry, frostings such as whip cream and royal icing, sizes, styles, topping, and decorations will be available at the bakery. To rise above competitors like Fabulous Welsh cakes, Annex House will offer several options to satisfy common health and diet needs for customers. Whether required by allergies or simply by choice, a desire for gluten-free, organic, naturally sweetened, reduced fat and vegan foods has risen. Therefore by baking and offering cakes meeting these requests, more consumers will feel welcomed to the bakery their needs are recognized and satisfied. The bakery will have a luxurious lounge of 1650 square feet area with eight tables having four chairs each open to any customer allowing them to stop in and sit thereby motivating them to taste the delights of Annex House. It will also provide a catering service with a van and one driver designated for deliveries of large orders for events such as birthdays and weddings hence providing a significant convenience to customers. The location of Annex House which is around 6.1 miles away from Francesca; without similar business nearby will ensure minimal competition. The bakery will be established out on a store front on the city’s main street making it easily visible and accessible to new and potential customers. 4. Legal Obligations As stated by Lily et al (2011, p 6). Starting a bakery is not as easy as it sounds and to successfully run the business, one has to comply with local laws and comply with food safety laws specific to UK before running a bakery. Annex House providing both retail and wholesale, will require specific license and permits. Public liability insurance for the bakery will be acquired to ensure policy cover for instance legal liability in the event of injury to a customer or an employee in the course of work or property damage due to negligence (Smith, 2011). This will take 400 pounds a month for every employee. Although public liability is not mandatory at this point, the bakery will have a policy in place in case of any emergencies. Moreover Annex House will consider employers and product liabilities. 5. Business Aims and Objectives 5.1 Aims Annex House in future will intend to adapt through marketing and technology to sustain our modern edge to be customer friendly as possible and provide the best vegetarian restaurant in Roath, Cardiff. Our mission will be to nourish the community and make the world a better place. 5.2 Objectives Accomplishing and maintaining the aim and mission help enliven the bakery and enhance the wholesome spirit we want to project. These objectives are long term, ongoing and ever evolving as we grow and learn the bakery business. Below is a table showing a list of objectives Annex House hopes to achieve in three years. YEAR OBJECTIVE TIMESCALE STATUS Year 1 To open a Business Bank Account Produce Business Cards Create and Publish Website Organize open Day Achieve year 1 turnover of 96,450 Pounds Gain 45customers within 3 months (can be more) Gain 100 customers within 12 months Advertise in local theatre pap Advertise in local newsletter/magazine Register website with local search engine December 2014 December 2014 December 2014 January 2015 December 2016 March 2015 December 2016 January 2015 January 2015 December 2014 Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Year 2 Maintain the customers gained in 1st year Introduce extra product/services: Become a limited company Research potential areas/premises for location of sub-branches Achieve projected profit/loss target Employ extra staff and administrator Purchase an extra van for delivery Focus on Wholesale Production January 2016 February 2016 October 2016 Jan / Feb 2016 October 2016 October 2016 October 2016 Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Incomplete Year 3 Research franchising the company Maintain employment of 3 employees Achieve projected profit/loss targets March 2017 May 2017 January 2017 Incomplete Incomplete Incomplete 5.3 Goals and Core Values Annex House bakery has listed specific goals and core values to help guide the entire staff and customers towards a rich experience, creative spirit and pursue excellence and creativity in every activity performed. Some of the goals of Annex House include; To maintain positive balance in our lives so that the business rounds us out and reflects our values. To embody the meaning of hospitality through a strong reliable staff. To offer our community wholesome foods that are health friendly, satisfying, great tasting and worth every penny. To have our employees and customers feel appreciated, supported and satisfied every time they come in. To remain connected to the community through participating in charities To have business comfortably support our employees’ families in all ways possible. Core values on the other hand involve; Respectful curiosity which is the desire to learn about the values, beliefs and foundations that others stand on turns all fears into learning tools. Integrity where we strictly follow our values which is reflected back to us in the people that are attracted to our lives. Creativity; to remain open to exploring the creative process in any form. Honoring spirit; when we strive to honor the true spirit in others, our spirits cannot help but grow. Generally, the intentions of core values are to allow business to grow and expand in different competitive markets. Marketing Strategies In order to ensure product quality, this bakery will emphasize cleanliness and sanitation, use of quality ingredients, and will always ensure all cakes, pastries, pies and cupcakes are properly baked. Innovations being an important factor in the growth of a successful business, the bakery will start offering a variety of options from simple flavors like chocolate and vanilla to more decadent ones such as red velvet and German chocolate cakes as well as different kinds of frostings, and numerous decoration styles for all types of occasions. However, to grow a business, it is important for Annex House to innovate their products. To achieve this bakery will continually work to develop and test new recipes for cakes and icings. Doing so will allow the bakery to have more variety to offer for retail and wholesale and possibly attract new customers. Along with this Annex House will create a couple of seasonal cupcakes and cakes such as pumpkins during the months of autumn, or coconut lime throughout the summer which will only be available during certain times of the year. This will motivate customers to look forward to something new in upcoming months as well as increase business as customers splurge on cupcakes, pastries, pies and cakes they enjoy that are only around for a limited time. In addition this will increase sales (Blumenthal & Kilo, 1988). Customer awareness is a significant step in promoting a new business. Annex House plans to achieve this through various means prioritizing on a grand opening. The event will be promoted through flyers around the local Roath area in Cardiff, an advertisement in the newspaper, and hopefully through the word of mouth. At the grand opening, Annex House will offer free samples to give consumers a risk free trial of the tasty treats. Consumers will be able to taste an assortment of what the bakery has to offer allowing them to discover the delicious delights to indulge in. These free samples will also contribute to the final aspect of successful promotion, moving the customer to make a purchase. One way to demonstrate public relations is though community involvement such as sponsoring and taking part in local events like sports and rodeos. This will not only show the business participation in community events but will also be an excellent form of advertisement to increase consumer awareness. Donating baked delights for fundraiser and in charities will also be a way for Annex House to promote itself. This will show the company’s desire to get involved and help out the community which is exceptionally appreciated by community members. Public relations are therefore essential as stated by Sharon & Douglas (2004) for Annex House to be successful. 6. Sales Activity Plans The marketing strategies Annex will use as stated in section (6) include newspaper activities, flyers, word of mouth and having a grand opening. The date already set for the grand opening in sub-section (5.2) is on July 2014. Annex House plans to advertise itself in three newspapers; two within the locality of Cardiff and one outside the city. For instance the bakery will team with South Wales Echo, a daily tabloid format newspaper that publishes latest news in sports, businesses, entertainment and book reviews to advertise on the place, products and services every Thursday for the seven months at a cost of 1400 Pounds. The other newspapers to advertise on will be Western Mail and Sun with the same cost and time period as South Wales Echo. Annex House also intends to publish flyers weekly for the first ten months to ensure sufficient circulation. 7. Pricing and Production Cost Pricing is a major contributing factor to the overall success of Annex House. Before it can open it will have to make multiple investments including the building it will work out of, equipment and supplies for baking, furniture for the seating area, a vehicle for catering services and costs of sales activity plan. Likewise the bakery will have continuous costs of supplies for baking, employee wages and any upgrades or repairs that may be required. In order to return investment and eventually earn profits, all these things must be considered when determining the price. The cost of simply making a cake, pastry, pie and a cupcake will be calculated. The owner will also look into the employee wages as well as how much income is needed to return investments. Based on all these calculations, a business will develop an idea of a minimum price option. Later, the bakery will research the prices of comparable products of other similar business in the area such as Francesca cupcakes. As long as the prices of competitors are high enough to cover the costs calculated the bakery will opt for prices that are competitive with the industry (Reynolds, 2008). Annex House Production and Cost Item Quantity/day Revenue(Pounds) Labor(1) Production Cost(Pounds) Chocolate Ganache 20 44 2 7 Classic Brioche Loaf 10 30 2 5 Saffron Coils 15 37.5 2 6 Total 111.5 6 18 8. SWOT /PEST Analysis According to Roe’s (2007) analysis on Porter’s Five Forces, it is useful to understand the competitive environment facing a given industry. SWOT analysis looks at internal and external competition, barrier to entry, profit-appropriating power and substitutes to the goods produced (Chaffee 1985, 46-89). As stated earlier in sub-section (2.2), Annex House intends to exploit the opportunity of fair pricing as compared to their competitor Fabulous Welsh cakes industry that are a bit expensive. This involves adopting a price affordable to consumers from any levels of income. Besides this will raise the number of customers and costs calculated will be covered hence minimizing threats. The bakery being a startup company will have few customers in the beginning but Annex House will not wait for customers come to them but instead they will go to them by holding grand openings, sponsoring charities and participating in community service. In relation to PEST analysis, the micro-environment in Cardiff will favor the bakery. For instance Cardiff, Roath has several buyers and customers for their products such as supermarkets, grocery stores, hotels chains and convenience stores. Besides, the bakery will open online websites for advertisement and also to receive customer’s orders. This expands their market target and ensures high distribution of sales. Annex House also intends to employee experienced and efficient staffs who will strive to meet the needs of the customers. In addition, the micro-environment factors in Cardiff are favorable to the growth and expansion of the bakery for example the booming economic activities in the city such as sports and entertainment (Rush, 2012) 9. Contingency Plans Just like any other business, the bakery will equip itself with contingency plans in case of any setbacks. For instance when the sales of pears brioche loaf goes down due to few supplies of the ingredients, the company will have a substitute menu of breakfast cereals with similar taste. In addition, when revenue goes down, the bakery will analyze the product with least sales and reduce the production for a while so as to pick up. Having a contingency plan in place is a good thing even if you never have to use it (Matuson, 2011). 10. Staffing Requirements In year two the bakery intends to employ extra staff and administrator to meet the rising demand whereas year three objective (5.2) it intends to maintain employing three staff members. The requirements to be a staff member in Annex House involve filling a benefit form specifically on medical cover to cover their medical expenses in case of emergencies. Advertisement for staff members will be done online regardless of which position. Thereafter successful candidates will be shortlisted via e-mail addresses for an interview by the management personnel which is made up of the bakery director and the head chef. The new employees are the trained for a week and should be able to know the bakery’s mission, vision, objectives and core values. 11. Resource Requirements The bakery will own one van for catering services and deliveries in the beginning. In addition, three computers will be available for the manager for computation of financial statements, receptionist for recording the number of products consumed in a day including receiving orders and the head chef for ordering for supplies. Mainly the startup cost for the bakery will be from a bank loan of 7500 pounds. 12. Sources of Funding and Investment The main source of funding for the whole business project is a bank loan of . However, part of the investment will come from personal account and contribution from family and friends of 7500 pounds totaling to 15,000 Pounds as startup costs. For investment projects, the company will liaise with Light blue IFA Limited located in Charles Street to assist the bakery in corporate financial planning and investment management 13. Personal Survival Statements My expenditure on a monthly basis involves: Monthly Expenses( Pounds) Food 1000 Clothes 650 Rent 2700 Electricity 300 Mobile Phone 500 Total 5150 14. Conclusions Financial analysis through the use of customer surveys and market share comparison will enable Annex House to find improvements to be made to ensure company success. Financial statements will release which products and services benefit the bakery based on the income for each particular product and service (Gaines, 2013). Customer surveys will expose the level of product quality and customer service based on the opinion of the customer (Gorman, 2009). These reviews will show the business which aspects need improvement and which are adequate. Market share comparisons will allow the business evaluate its successes in relation to its competitors and determine what modifications need to be made in order to surpass the competition (Dress, Lumpkin $ Taylor, 2004). Evaluating the company’s marketing through these methods will allow the bakery to make necessary changes to guarantee the success of Annex House. 15. Cash Flow Forecast and other Financial Statement Cash Flow Statement for Annex House Bakery for Year 1,2 and 3 Year 1 CASH FLOW FROM OPERATING ACTIVITIES: Cash Receipts from Customers Cash paid to suppliers and employees Cash generated from operations CASH FLOW FROM INVESTING ACTIVITIES Advertisement in 2 Newspapers Replacement of Equipment Proceeds** from sale of Equipment Net Cash Flow from Investing Activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from capital contributed Proceeds from Loans Payment of Loan Net Cash Flow from Financing Activities NET INCREASE/DECREASE IN CASH Cash at the Beginning of the period Cash at the end of the period (Pounds) 134,000 83,000 50,500 2800 500 3200 6200 7500 2000 8800 16000 15,000 184500 Year 2 CASH FLOW FROM OPERATING ACTIVITIES: Cash Receipts from Customers Cash paid to suppliers and employees Cash generated from operations CASH FLOW FROM INVESTING ACTIVITIES Addition of Equipment Purchase of an Extra Catering Van Proceeds** from sale of Equipment Net Cash Flow from Investing Activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from capital contributed Proceeds from Loans Payment of Loan Net Cash Flow from Financing Activities NET INCREASE/DECREASE IN CASH Cash at the Beginning of the period Cash at the end of the period 302,050 120,000 129 777 0 11000 5000 90335 15,000 5000 3000 23,000 73,000 362460 Year 3 CASH FLOW FROM OPERATING ACTIVITIES: Cash Receipts from Customers Cash paid to suppliers and employees Cash generated from operations CASH FLOW FROM INVESTING ACTIVITIES Addition of Equipment Replacement of Equipment Proceeds** from sale of Equipment Net Cash Flow from Investing Activities NET INCREASE/DECREASE IN CASH Cash at the Beginning of the period Cash at the end of the period 446,000 189,600 160,195 5000 15000 3000 23,000 146,250 492,311 ** proceeds means cash received. The cash flow forecast shows positive cash flow. 16. Appendices Roath Map in Cardiff https://www.google.com/maps/place/Roath/@51.4907845,-3.156756,15z/data=!3m1!4b1!4m5!1m2!2m1!1sbusiness+development+in+cardiff+map!3m1!1s0x486e1cbf19342b61:0x8982bfec910de56e Business Brochure 17. References "Bakery Product Manufacturing." (2011)Hoovers. Retrieved on 31 March 2014 from http://www.hoovers.com/industry/bakery-product-manufacturing/1365-1.html Blumenthal, D. & Kilo, C. (1998)” A report card on quality improvement,” Milbank Memorial Fund Quarterly.76 (4) 625-48 Chaffee, E. (1985) “Three Models of Strategy” Academy of Management Review.10 (1)46-89 Dress, G., Lumpkin, G., & Taylor, M. (2004) Strategic Management: Creating Competitive Advantages. McGraw-Hill Gaines, M. (2013) Guide to the Bakery Business. Retrieved on 31 March 2014 from http://smallbusiness.chron.com/guide-bakery-business-2400.html Gardner, A. (2011) Marketing principles. Oxford print Gorman, B. (2009). 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