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: 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
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 Edge
Country 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 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 $104,000

Required

Long Term Bank Debt $150,000

Owner Equity $30,000

Total Financing $180,000

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 Liabilities and Owner

Total Assets 139018 Equity 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 IRR=0% IRR = 15% Base Allowable % Change
Case (when IRR = 15%)
Interest rate on 29% 15.2% 8% 90
debt
Fuel Prices $21,346 $1,2978 $1,200 981.5
Driver Wage $14.66 $11.64 8.50 36.9
Quantity of Bread 4,571 7001 10,608 55.1
(farmers
market)
Quantity of Buns 2,485 5,447 8,352 53.3
(farmers
market)
$ of farmers $1.31 $1.78 $2.50 40.4
market bread
$ of farmers $1.43 $2.15 $3.06 42.3
market buns
 Breakeven price of Farmers Market Bread

8.00

6.00

4.00

Base Case
2.00
price

Cash
Net Income
0.00
NPV
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-2.00

-4.00

-6.00
year
 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?