The BakeryBusiness 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

Assistant Baker/Delivery Person

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 BudgetDescriptionDescription Estimated Estimated Source of EstimatesSource of Estimates

  Cost ($) ObtainedBuildings:   1000ft2

Bakery $ 85,000 Humboldt Lumber Mart LtdTotal Building Costs $ 85,000       Equipment:    Oven $ 2,400 Ace Mart Restaurant Supply CoProofer $ 2,000 Ace Mart Restaurant Supply CoShowcase $ 560 Ace Mart Restaurant Supply CoRefrigerator $ 2,600 Sears CanadaFreezer $ 750 Sears CanadaUsed Mixers 20qt $ 3,200 Nicholson Equipment Ltd.Shelves/dollies $ 525 Ace Mart Restaurant Supply CoAdditional equipment $ 5,000  Furniture $ 640 Ace Mart Restaurant Supply CoTotal Equip. Costs $ 17,600  Total Working Capital $ 1200 Monthly requirements for capital*Total Capital Required $ 103,800  

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– High, but still

competitive• Promotion

– 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 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

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 BudgetMarketing Budget

Advertising Expenses/yearNewspaper Western Producer $400OtherBillboard $100Bulletins $60Promotion and DevelopmentBusiness cards $90Travel expenses $200

Total Marketing Expenses $850

Financial Plan

Financing

Total Financing Required

$104,000

Long Term Bank Debt $150,000Owner Equity $30,000

Total Financing $180,000

Balance Sheet as of December 31, 2006Assets   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

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%

Risk AnalysisCritical Value IRR=0% IRR = 15% Base

CaseAllowable % Change

(when IRR = 15%)Interest rate on

debt29% 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

-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

pric

e

Base Case

Cash

Net Income

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?