Transcript The bakery - University of Saskatchewan

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
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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
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Accounting
Bookkeeping
Management
Fuel for delivery
Benefits
Income Tax
Interest on Debt
Marketing
Human Resources
President/Manager
• Responsibilities:
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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
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Breads-various varieties
Buns
Tarts
Muffins
Cookies
Sitting area with coffee/tea and in-store
products
Marketing Mix
•
Price
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•
Promotion
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•
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?