Fine Bakery Business Strategies - Example

Name Professor Class Date FINE BAKERY BUSINESS PLAN. Table of Contents Bakery business plan. 3 Executive summary 3 The Company 3 Production 4 Competition 4 Risks 5 MARKET FEASIBILITY. 5 Technical Feasibility 7 Laws and regulations 8 Sales 9 Finance Sources 11 Human Resource. 12 Management Summary 12 Ownership Structure. 12 Manpower Requirements. 12 Motivation. 12 Training 13 Growth Strategy 13 References 13 Appendix A 14 Bakery business plan. This is a formal statement that outlines business goals, how they will be attained and on ways on how acquire these goals. The business plan also sheds some light about the company or the organization. Executive summary Fine Bakery is a start-up bakery and coffee retail establishment located in south-east Australia in Victoria City. With the broad pastry products and coffee it expects acquire a regular and loyal customer base. The bakery has an aim of providing quality products and services at a competitive price so as to meet the demand of the middle and high income earners in the market. The Company Fine Bakery will be created to serve Victoria and its environs. It will offer a variety of quality bakery products such as cakes, breads, muffins, pies and other delicacies that will be baked fresh in its storefront bakery. This will have the targeted consumers spoilt for choice on which category to choose from. The company’s goal is to achieve start up by mid this year. A long term goal of the company is to have opened up not less than three other branches within the country so as to cater for consumers in other countries. Fine Bakery intends to outdo its current competitors who include super-markets, other bakery shops, pastry shops and other cafes in the vicinity. Production The production of these products is set to begin just as soon as the company starts up in mid-year. A system has been drawn up in which raw materials will be ordered for in the beginning of every week. The suppliers are yet to finalize the final touches on the agreement to the above wishes of Fine Bakery. The ingredients will be stored in large dry stores and walk-in coolers. Equipment such as ovens and coolers will be bought once the company has acquired the full start-up capital. The two managers will see to it that the storefront will always be open by 7.30 AM and closed later in the evening by 6.00 PM. This will be from Monday to Friday. On the weekendsthe bakery will be operating only on Saturdays as from 9.00 AM to 4.00PM. This will enable the employees not to be overworked. They will also have some quality and leisure time to spare for their families and friends. To cut on costs book-keeping and accounting activities will be handled by one of the managers Marcus who has experience and is quite good in this field. Competition Fine Bakery will face fierce competitions from several bakery shops. This includes shops such as, La Belle Miette, Le Petit Gateau, Shortstop Coffee and Donuts which boast a staggering 4.5 ratings out of a possible 5 star ratings. The ratings are courtesy of customers who go an extra mile and rate the above shops online. Supermarkets such as Coles Supermarket, Hometown Asian Supermarket just to name but a few also venture into this lucrative business and own a sizable market share. Risks There are enormous risks that face any business. One that faces Fine Bakery is the seasonality of the customers. Bakery products do not have record a huge demand during the cold weathers as opposed to when the climate is favorable. So the demand during this kind of times drops and reports a decrease in businesses. To combat this problem Fine Bakery should take advantage of when such business is booming. This will at least cater for the dull business days. In the case that demand dwindles by a large scale and the returns very low, the company will be coerced to layoff some workers. This will at least reduce the risk of the company completely being liquidated. MARKET FEASIBILITY. The bakery will target individuals from Victoria City. This city is the second largest densely populated in the country. It contains a population of about six million people in total. The market has a sizable and above average number of buyers and sellers. This industry is growing at a faster rate as the demand is quite high in the city. The managers plan to set up the bakery near a shopping center, where it will be conveniently allocated and it will be within the busy heart of the city. The place should be easily accessible from the road. There has been a rapid growth in the retail pricing of flour products and coffee. People have a knack for eating pastry and bakery foods. The coffee and tea are also high demand beverages in the city and the country at large. Buyers currently get these food stuff from other pastry and bakery shops in the city. There are a good number of these shops in the city so business is booming in this field. The customers mainly contain just about everyone the specific target market will be the locals in the city. From the statistics and the journals written in the magazine an estimate of about 5% of the customers would be buying from my shop. This goes in line as the products and services have got a good rating after giving out a few samples to individuals in the city. The industry is not at full capacity so this is one of the reasons I decided to venture into this market. The government has also played major part as it has supported and advising people to take up initiatives and venture into their own businesses. However, there has been some limiting factors and inhibits in the industry. One major flaw is the lack of capital. Individuals find it hard to come up with the starting capital for their businesses. It is hard to meet the criteria to acquire loans from banks or any other financial institutions. There is also lack of expertise to manage such sole-ownership businesses. Not many people know how to go about managing business as they do not have the acquired skills needed to do so. The present flourishing businesses make it hard for new entrants as they may decide to lower the prices of the products so as to attract large number of customers, amass great profits and this will frustrate the new entrants as they will only getting peanuts in terms of the market size and profits. In relation to marketing and advertising the mangers will use printed fliers so as to make the customers more aware of the place. Technical Feasibility From the research conducted the bakery will invest in two options for its opening. The bakery will be an online bakery and also a counter service bakery, this will go a long way into realizing the company’s missions and goals of attaining a large market share in the industry. The first step in the online platform will be to have a killer website. The website will provide the customers with pictures and videos of the company’s work, it will also provide a platform where they can order online and it will provide steps on how to do this so as to make it easy and convenient for customers at large. On the other hand, so as to enhance counter service platform/in house platform, the company will acquire a rental in the city where the customers will be able to access the pastry products and be able to pick them at will. The in-house platform will be beneficial to the company as this is also where the products will be produced. This will go a long way into cutting on costs. The hand on skills that will be required to produce the products will be outsourced. The company plans on also hiring and recruiting competent and qualified individuals who are well versed in the bakery business. They will be vetted and if hired will be on probation for the first few months. This is so as to set a high bar and create a professional environment. The company intends to hire three full time pastry bakers and five part time baristas to handle the day to day operations and services to the customers. The raw materials will be acquired from the local confectionery shops in Victoria. The research conducted has shown that the raw materials are easily accessible in the local area. If need be the company will import products such as coffee beans and other pastry products from abroad so as to diversify and attract a large market size. Products such as baking powder, cheese, butter, milk, flour, cocoa powder will be acquired locally. The company has made initiatives to converse with several suppliers and currently it is in the process of deciding on the best deal from the different suppliers of various pastry products. The company has made arrangements with renowned bakeries and other factories that make and supply equipment such as ovens, proof boxes where bread and dough rise to the right temperature, baking sheets and racks, mixers such as dough mixers, work tables and other will to acquire the equipment. Some equipment are second hand but are in great conditions and they are very affordable. Laws and regulations The partners of the company visited the offices of the food and beverage industry regulations and compliance so to be aware of the rules to follow in the industry. This activity was called for as it will help in avoiding facing fines and prosecutions when the obligations are not met. Generally it will lead to supplying customers with products that are standardized and accepted. Several competitors had placed patents on their products and recipes. The partners also applied for licenses so as to be granted the permission to venture into the industry. Competitors have fully embraced the use of the internet so as to advertise their products. Others have come up with better ways of producing certain products and inventing and innovating of new pastry and bakery products. These factors will affect the business and will put extra pressure on the founders as we will have to come up with ways to be at par or beat off the competition from the other business people. FINANCE Sales The Fine Bakery expects the projected sales revenue to grow slowly in the first year of its business. An increase in the next two consecutive years by about 40%. It anticipates a sale of 500,000 in the first year and to $700,000 by the third year.This is illustrated below Sales Forecast Year 1 to Year 3 Unit sales Pastry Items 300,000 Espresso Drinks 100,000 Other 0 Total Unit Sales 400,000 Unit Prices Pastry Items $1.50 Espresso Drinks $2.50 Other $0 Sales $450,000.00 Pastry Items Espresso Drinks $250,000.00 Other $0 Total Sales $700,000.00 Direct Unit cost year 1 to year 3 Pastry Items $0.50 Espresso Drinks $0.30 other $0 Direct cost of Sales Pastry items $150,000.00 Espresso Drinks $30,000.00 Other $0.00 Total Direct cost $180,000.00 PRO FOMA PROFIT AND LOSS FOR THE THREE YEARS. Sales $700,000 Direct Cost of Sales $180,000 Other $0 Total Cost of Sales $180,000 Gross Margin $520,000 Gross Margin % 74.28% Investment Required Start-up expenses Plant and Equipment $50,000 Lease hold Improvements $2,000 Initial Inventories $1,500 Research and Development $1000 Legal $1000 Experts $1,000 Operating Expenses prior to break even $56,500 Break even Analysis. The break even analysis for Fine Bakeries is based on average of the first year figures for total sales by units and by operating expenses. This is presented as Monthly units break-even $20,000 Monthly Revenue Break-even $39,000 Assumptions Average per unit Revenue $2.5 Average per unit Variable Cost $ 0.40 Estimated monthly Fixed Cost $ 35,000 Finance Sources Fine Bakery expects to raise $177,000 of it starting capital. $70,000 will come from the partners who will have an equal share. The rest $100,000 will be borrowed from financial institution of their choice. Human Resource. Management Summary To be able to have a worthwhile business the business will require to have managers who are the two partners. Benjamin Archer and Marcus Austin. They both have extensive experience in different fields. Benjamin Archer has experience in sales and marketing. While Marcus has gained experience in the field of finance and administration. Ownership Structure. This being a partnership between the two individuals. They will both have equal position and shares in the company and the other members will include the subordinate stuff that they will hire. Manpower Requirements. The bakery will strive to hire competent and qualified individuals who will be experienced in their respective fields. Pastry bakers will be hired on the basis of their experience and innovation while the baristas will also be required to have experience and be good in their fields. Motivation. Employees will be paid on a monthly salary when they begin working. In order to get the best from the employees the company will take up on motivational activities for the employees. After the first year of completion as an employee, the company will provide the employees with vacations to designated areas as deemed fit by the company. There will also be salary increments after the first year as an employee. Training Annual quarterly training will be provided to the employees in their respective fields. This will bring out the best from the employees and will help them financially. Growth Strategy The owners will make it their aim to see to it that the company’s mission and goals will forever be upheld and to better them. Quality of the products will be upheld by aiming to provide unique products as opposed to the competitors. The service in Fine Bakeries will be second to none. By making sure that both employees and management do their part. As the organization grows it will increase its staff members in the ratio to the growth in customer base. More pastry bakers, baristas and tech support will be employed. After fully establishing itself in the market it will hire executive managers to help the partners. References Appendix A Start-up Expenditures and Expenses Worksheet Item Total Cost Cash Required Land ___$50,000_______ __________ Capital Equipment ______$50,000__ __________ Computer _________$10,000_ __________ ___________ __________ __________ ___________ __________ __________ Beginning Inventory ________$1,500__ __________ Start up Supplies ________$1,000__ __________ Licenses and Permits _________$1,000_ __________ Leasehold Improvements __________$2000 __________ Utility hookups & Installation __________ _$500_________ Advertising (Preopening) _________$500_ __________ Insurance _______$2000___ __________ Other __________ __________ _______________ __________ __________ Total Estimated One-Time Cash Requirements $118,500_____ Start-up Operating Expenses Estimate No. of Months Total Cash Item Monthly Expense X Before Break even = Required Owners Salary __________ ______$8,000____ __________ Employee’s salary, wages, benefits __________ __$13,000________ __________ Rent __________ $3,500__________ __________ Promotion expenses __________ _$500_________ __________ Supplies and postage __________ _$1,000_________ __________ Vehicle Expenses _________$10,000_ __________ __________ Telephone __________ _$300_________ __________ Travel __________ __$2,000________ __________ Interest __________$2,000 __________ __________ Maintenance __________ _2,000_________ __________ Other __________ __________ __________ ____________ __________ __________ __________ Total Cash Required to Cover Operating Expenses __$42300_______ Plus: Total One-Time Cash Requirements (Previous Table) ___$118,500_______ Add 10% Safety Factor ___$16080_______ Total Cash Required for Start-up _$176,880________ Read More