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 Cost ($) Source of Estimates Obtained

Buildings:
Bakery Total Building Costs Equipment: Oven Proofer Showcase Refrigerator Freezer Used Mixers 20qt Shelves/dollies Additional equipment Furniture Total Equip. Costs Total Working Capital Total Capital Required $ $ $ $ $ $ $ $ $ $ 2,400 2,000 560 2,600 750 3,200 525 5,000 640 $ 17,600 1200 $ 85,000 $ 85,000

1000ft2
Humboldt Lumber Mart Ltd

Ace Mart Restaurant Supply Co Ace Mart Restaurant Supply Co Ace Mart Restaurant Supply Co Sears Canada Sears Canada Nicholson Equipment Ltd. Ace Mart Restaurant Supply Co Ace Mart Restaurant Supply Co Monthly requirements for capital*

$ 103,800

Cost of Goods Manufactured

2006

Total Direct Labour

Total Direct Materials Manufacturing Overhead

$30,500
$16,700 $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
Wakaw, Saskatoon, Melfort

Place

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 Farmers 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
Country Crossroads

Prices
Very High

Edge
-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 caf/bakery -located in the city of Melfort

Farmers 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 caf/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 Newspaper Western Producer Other Billboard Bulletins Promotion and Development Business cards Travel expenses Total Marketing Expenses $90 $200 $850 $100 $60 $400 Expenses/year

Financial Plan

Financing
Total Financing Required $104,000

Long Term Bank Debt Owner Equity

$150,000 $30,000

Total Financing

$180,000

Balance Sheet as of December 31, 2006 Assets Current Assets Total Current Assets Long Term Assets Total Long Term Assets Liabilities Current Liabilities 44587 Total Current Liabilities Long Term Liabilities 94431 Total Long Term Liabilities Owner Equity Total Owner Equity Total Liabilities and Owner 139018 Equity 1080 144477 -6538

Total Assets

139018

Ratio Analysis
Ratio 1. Liquidity Ratios Current Ratio 2. Investment Utilization Ratios Inventory Turnover Total Asset Turnover 26 1.44 -6.67 Company Average

Fixed Asset Turnover

3. Solvency Ratios Debt Ratio Debt to Equity Ratio 4. Profitability Ratios Gross Profit Margin Net Profit Margin Return on Assets Return on Equity

2.93
86.4% 6.34 52.9% 9.8% 14% 103%

Risk Analysis
Critical Value
Interest rate on debt Fuel Prices Driver Wage Quantity of Bread (farmers market) Quantity of Buns (farmers market)

IRR=0% IRR = 15%

29% $21,346 $14.66 4,571 15.2% $1,2978 $11.64 7001

Base Case
8% $1,200 8.50 10,608

Allowable % Change (when IRR = 15%)

90 981.5 36.9 55.1

2,485

5,447

8,352

53.3

$ of farmers market bread

$ of farmers market buns

$1.31
$1.43

$1.78
$2.15

$2.50
$3.06

40.4
42.3

Breakeven price of Farmers Market Bread

8.00 6.00 4.00 2.00 0.00 2006 2007 2008 -2.00 -4.00 -6.00 year 2009 2010 2011 2012 2013 2014 2015 Base Case Cash Net Income NPV

price

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?