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
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 Budget
Description Estimated Source of Estimates
Cost ($) Obtained
Buildings: 1000ft
2

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
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 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 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 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 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 139018
Total Liabilities and Owner
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
Case
Allowable % Change
(when IRR = 15%)
Interest rate on
debt
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
-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
p
r
i
c
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?