Download - The Bakery Business Plan Heather Haeusler, Whitney Block, Nicole Greenbank, & Andrew Spencer
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The BakeryBusiness Plan
Heather Haeusler, Whitney Block, Nicole Greenbank, &
Andrew Spencer.
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Project Overview
• The bakery is proposed as a means of additional income for the family farm.
• Products are homemade and of high quality.
• The bakery will be run the women family.
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Operations Plan
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Start Up
• The bakery will be constructed on the farm.
• Construction will commence in January 2006.
• The bakery is scheduled to open in May 2006.
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Organizational Structure
Board of Directors
President/Manager
Head Baker
Assistant Baker/Delivery Person
Assistant Baker
Assistant Baker/Delivery Person
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Floor Plan
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Work Plan• 4:00am – Start Baking• 8:00am – Bakery Opens• Leave for farmers market:• 5:00 pm Bakery Closes
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Quality Control Program
• Regulations– Local– Consumer Protection Branch– CFIA– Labour– Sanitation
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Capital BudgetDescriptionDescription Estimated Estimated Source of EstimatesSource of Estimates
Cost ($) Obtained
Buildings: 1000ft2
Bakery $ 85,000 Humboldt Lumber Mart Ltd
Total Building Costs $ 85,000
Equipment:
Oven $ 2,400 Ace Mart Restaurant Supply Co
Proofer $ 2,000 Ace Mart Restaurant Supply Co
Showcase $ 560 Ace Mart Restaurant Supply Co
Refrigerator $ 2,600 Sears Canada
Freezer $ 750 Sears Canada
Used Mixers 20qt $ 3,200 Nicholson Equipment Ltd.
Shelves/dollies $ 525 Ace Mart Restaurant Supply Co
Additional equipment $ 5,000
Furniture $ 640 Ace Mart Restaurant Supply Co
Total Equip. Costs $ 17,600
Total Working Capital $ 1200 Monthly requirements for capital*
Total Capital Required $ 103,800
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Cost of Goods Manufactured 2006
Total Direct Labour $30,500
Total Direct Materials $16,700
Manufacturing Overhead $10,440
total $57,640
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Inventories
• Desired Inventory = 0
• Average Days for Inventories– Raw Material Inventory = 30 days– Finished Goods Inventory = 2 days
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Accounts Receivable/Payable
• Receivables– From Bulk Cheese Warehouse and Sask Made
Market Place– Have 30 days from date of billing to pay– No discounts offered
• Payables– Saskpower, and Sasktel– Have 21 day grace period
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Administration, Marketing, and General Expenses
• Accounting• Bookkeeping• Management• Fuel for delivery• Benefits• Income Tax• Interest on Debt• Marketing
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Human Resources
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President/Manager
• Responsibilities:– Oversees daily production– Work Schedules– Assigning Employee Tasks– Traveling – Ensures product quality– Purchases raw materials– Keeps facility running, and clean– Accounting Duties
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Head Baker
• Responsibilities:– Working long hours– Ability to follow recipes– Ability to produce quality product– Ability to use ovens and mixers– Dishwashing and janitorial skills
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Assistant Baker/Waitress
• Responsibilities:– Assist in baking– Operate Cash register and serve
customers– Dishwashing, and basic janitorial skills
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Delivery Persons
• Responsibilities– Deliver product to Bulk Cheese Warehouse
& Sask Made Market Place– Deliver products to and work at Farmers
Markets in Saskatoon, Melfort, and Wakaw
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Additional Training
• All staff members will take the one day Safe Food Handling Course
• Other food safety programs offered by SIAST will be taken
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HR Stratagies
• Motivation:– Family Business– Membership benefits
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Marketing Plan
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The Marketing Mix
• Products/Services– Breads-various varieties– Buns– Tarts– Muffins– Cookies– Sitting area with coffee/tea and in-store
products
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Marketing Mix
• Price– High, but still
competitive
• Promotion– Fresh, homemade,
good quality, down home farm feel
• Place– Wakaw, Saskatoon,
Melfort
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Segmentation, Targeting and Positioning
• Population of Saskatoon and rural and urban centers of Wakaw and Melfort
• Target markets– Saskatoon– Rural/small centers– The Country Oven
• Positioning– Bulk Cheese Warehouse/Sask Made Marketplace– Farmer’s markets
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SWOT Analysis
• Internal Strengths– Family business– Location– Homemade recipes
• Internal Weaknesses– Location– Inexperience– Increased prices
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SWOT
• External Opportunities– Desire for healthier lifestyle– Niche market in urban areas– Large target market area
• External Threats– Change in lifestyle trends– Increased fuel prices– Competitors having lower prices
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Competition Prices EdgeCountry Crossroads Very High -located just off highway 41
-many services; gasbar/ Subway/c-store/restaurant
-make product from scratch and Ready-Make
Wakaw Fine Foods Very Low -use pre-mixed frozen dough, which cuts costs
-located downtown Wakaw
Melfort Co-op Very Low -located right in co-op grocery store
-very wide variety of products
Golden Grain Bakery Average -viewpoint of customers is very positive
-charge more for individual items
-is a café/bakery
-located in the city of Melfort
Farmer’s Markets Average-High -located down-town
-charge more for individual items
-large number of customers
-wide variety of products
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Compared To….The Bakery Products Prices Edge
Bread/loaf Bread High -brand new facilities
Buns/dz Buns -products made from scratch
Other Muffins -family owned/operated
Tarts -is a café/bakery
Cookies
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Sales and Profit Objectives
• 26,300 units @ 3 farmers markets• 6,200 units @ Sask Made and Bulk
Cheese Warehouse• 5,000 units at Country Oven• Objective: achieve a yearly revenue of
$121,500
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Marketing Plan Budget
Marketing Budget
Advertising Expenses/year
Newspaper
Western Producer $400
Other
Billboard $100
Bulletins $60
Promotion and Development
Business cards $90
Travel expenses $200
Total Marketing Expenses $850
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Financial Plan
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Financing
Total Financing Required
$104,000
Long Term Bank Debt $150,000
Owner Equity $30,000
Total Financing $180,000
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Balance Sheet as of December 31, 2006
Assets Liabilities
Current Assets Current Liabilities
Total Current Assets 44587 Total Current Liabilities -6538
Long Term Assets Long Term Liabilities
Total Long Term Assets 94431 Total Long Term Liabilities 144477
Owner Equity
Total Owner Equity 1080
Total Assets 139018Total Liabilities and Owner Equity 139018
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Ratio AnalysisRatio Company Average
1. Liquidity Ratios
Current Ratio -6.67
2. Investment Utilization Ratios
Inventory Turnover 26
Total Asset Turnover 1.44
Fixed Asset Turnover 2.93
3. Solvency Ratios
Debt Ratio 86.4%
Debt to Equity Ratio 6.34
4. Profitability Ratios
Gross Profit Margin 52.9%
Net Profit Margin 9.8%
Return on Assets 14%
Return on Equity 103%
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Risk AnalysisCritical Value IRR=0% IRR = 15% Base
CaseAllowable % Change
(when IRR = 15%)
Interest rate on debt
29% 15.2% 8% 90
Fuel Prices $21,346 $1,2978 $1,200 981.5
Driver Wage $14.66 $11.64 8.50 36.9
Quantity of Bread (farmers market)
4,571 7001 10,608 55.1
Quantity of Buns (farmers market)
2,485 5,447 8,352 53.3
$ of farmers market bread
$1.31 $1.78 $2.50 40.4
$ of farmers market buns
$1.43 $2.15 $3.06 42.3
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Breakeven price of Farmers Market Bread
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
year
pri
ce
Base Case
Cash
Net Income
NPV
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Contingency Plan
• If price of bread decreases:– have to either increase sales to a break even level– the bakery would have to find a way to decrease
fixed costs
• Methods – additional stall at the Saskatoon farmers market– craft sales throughout the province
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Questions/Comments?