The Bakery Business Plan Heather Haeusler, Whitney Block, Nicole Greenbank, &
The Bakery Business Plan Heather Haeusler, Whitney Block, Nicole Greenbank, & Andrew Spencer. 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. Operations Plan 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. Organizational Structure Board of Directors President/Manager Head Baker Assistant Baker/Delivery Person Assistant Baker/Delivery Person Assistant Baker Floor Plan Work Plan • • • • 4:00am – Start Baking 8:00am – Bakery Opens Leave for farmers market: 5:00 pm Bakery Closes Quality Control Program • Regulations – Local – Consumer Protection Branch – CFIA – Labour – Sanitation Capital Budget Description Estimated Source of Estimates Cost ($) Obtained Buildings: Bakery 1000ft2 $ Total Building Costs 85,000 Humboldt Lumber Mart Ltd $ 85,000 Equipment: Oven $ 2,400 Ace Mart Restaurant Supply Co Proofer $ 2,000 Ace Mart Restaurant Supply Co 560 Ace Mart Restaurant Supply Co Showcase $ Refrigerator $ 2,600 Sears Canada Freezer $ 750 Sears Canada Used Mixers 20qt $ 3,200 Shelves/dollies $ 525 Additional equipment $ 5,000 Furniture $ 640 Total Equip. Costs $ 17,600 Total Working Capital $ Total Capital Required $ 103,800 1200 Nicholson Equipment Ltd. Ace Mart Restaurant Supply Co Ace Mart Restaurant Supply Co Monthly requirements for capital* Cost of Goods Manufactured 2006 Total Direct Labour $30,500 Total Direct Materials $16,700 Manufacturing Overhead $10,440 total $57,640 Inventories • Desired Inventory = 0 • Average Days for Inventories – Raw Material Inventory = 30 days – Finished Goods Inventory = 2 days 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 Administration, Marketing, and General Expenses • • • • • • • • Accounting Bookkeeping Management Fuel for delivery Benefits Income Tax Interest on Debt Marketing Human Resources 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 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 Assistant Baker/Waitress • Responsibilities: – Assist in baking – Operate Cash register and serve customers – Dishwashing, and basic janitorial skills 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 Additional Training • All staff members will take the one day Safe Food Handling Course • Other food safety programs offered by SIAST will be taken HR Stratagies • Motivation: – Family Business – Membership benefits Marketing Plan The Marketing Mix • Products/Services – – – – – – Breads-various varieties Buns Tarts Muffins Cookies Sitting area with coffee/tea and in-store products Marketing Mix • Price – • Promotion – • High, but still competitive Fresh, homemade, good quality, down home farm feel Place – Wakaw, Saskatoon, Melfort 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 SWOT Analysis • Internal Strengths – Family business – Location – Homemade recipes • Internal Weaknesses – Location – Inexperience – Increased prices 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 Competition Prices Edge Country Crossroads Very High -located just off highway 41 -many services; gasbar/ Subway/cstore/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 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 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 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 Financial Plan Financing Total Financing Required $104,000 Long Term Bank Debt $150,000 Owner Equity $30,000 Total Financing $180,000 Balance Sheet as of December 31, 2006 Assets Current Assets Total Current Assets Liabilities Current Liabilities 44587 Total Current Liabilities Long Term Assets Long Term Liabilities Total Long Term Assets 94431 Total Long Term Liabilities -6538 144477 Owner Equity Total Owner Equity Total Assets Total Liabilities and Owner 139018 Equity 1080 139018 Ratio Analysis Ratio 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% Risk Analysis Critical Value Interest rate on debt IRR=0% IRR = 15% Base Case Allowable % Change (when IRR = 15%) 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 Breakeven price of Farmers Market Bread 8.00 6.00 price 4.00 Base Case 2.00 Cash Net Income 0.00 2006 2007 2008 2009 2010 2011 2012 -2.00 -4.00 -6.00 year 2013 2014 2015 NPV 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 Questions/Comments?
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