Business Plan Of Slice Bakery Management Essay
Introduction
Slice Bakery and Juices is a start up juice and bakery retail establishment located in down town Nairobi. Slice bakers expects to catch the interest of a regular loyal customer base with its wide variety of fresh juices and freshly baked cakes and bread. Slice Bakery and Juices plans to construct a strong market position in the city due to the partners’ industry experience in the area.
The establishment aims to offer its services and products at a reasonably competitive price to meet the demand of the middle and high area residents and tourists.
The Company
Slice Bakery and Juices is incorporated in the city of Nairobi. It is equally owned and managed by its three partners. Mr. David Williams has extensive experience in marketing, sales and management and was the vice chairman of Eveready Batteries and Harper foods. Mr. Arnold Mwangi is experienced in finance and administration and was previously the chief financial officer with both Luigi’s Café and Willy Pastries. Mrs. Felicia Wanjiku is a well respected pastry chef with vast knowledge and experience in the field, she formerly worked at Lagoon beach resort in the Kenyan coast as the head pastry chef.
The organization intends to hire 2 full time pastry cooks and four part time baristas to serve customers and perform the day to day operations.
Products and Services
Slice Bakery and Juices offers a vast range of freshly made fruit and vegetable juice varieties that are brought into the city from various parts of the continent. The company caters to all of its customers by serving each of them a carefully made drink that is specifically tailored to the customers order.
The bakery side of the company provides a wide array of freshly prepared bread and cake varieties at all times during business hours. Ten to twelve moderately sized batches of assorted bread and cakes are prepared during the day to assure the availability of freshly baked products at all times.
The Market
The Fresh juice industry in Nairobi has recently experienced very fast growth. The worm equatorial temperature in Nairobi stimulates the regular consumption of cool drinks.
Slice Bakery and Juices wants to establish a large regular customer base and it will achieve this by concentrating its marketing and business on local residents, which will be the organizations target market. This will create a healthy, stable revenue base that will ensure the stability of Slice Bakery. In addition tourists are expected to comprise aproximately25% of the total revenue collected. Good visibility and competitive products and services are crucial in order to capture this segment of the market.
Financial Considerations
Slice Bakery and Juices is expected to raise $90,000 of its own capital and to borrow $110,000 guaranteed by the National Bank of Kenya s a ten year loan. The company anticipates sales of around $485,000 in the first year, $570,000 in the second year and $660,000 in the third year. The organization should break even by the fourth month of business as it steadily increases its revenue. Profits for this period are anticipated to be approximately $12,000 in year one, $31,000 by year two and $48,000 by year three. Slice bakers does not expect cash flow problems
Mission
Slice Bakery and Juices aims to offer high quality fresh juice and pastry products at a reasonable price to meet the demand of middle and high income area residents and tourists.
Keys to Success
The following are needed to make Slice Bakers and Juices a success:
Provide the highest possible quality product with excellent customer services.
Competitive pricing.
COMPANY SUMMARY
Slice Bakery and Juices is a bakery and juice shop managed by three partners. These partners represent sales management and financeadministration food and beverage. The partners will provide capital from their own savings which will cover up the start up expenses and also provide a safety net for the first few months of business. A ten year small business administration loan will cover the remaining costs. Slice Bakery and Juices plans to build a small market position within the city due to the mild competition in the business area of Nairobi.
Company Ownership
Slice Bakery and Juices is incorporated in the city of Nairobi. It is equally owned by its three partners.
Start Up Summary
Slice Bakery and Juices’ financing will come from the partners’ capital and the ten year loan from the National Bank of Kenya. The following diagram and table below illustrate the organizations projected initial start up costs.
Start-Up Requirements
Start up expenses:
Legal- $2,000
Premise Renovation- $25,000
Expensed equipment- $37,000
Other- $1,000
Total start-up expenses- $65,000
Start-Up Assets
Cash Required- $63,000
Other current assets- $10,000
Long term assets-$65,000
Total assets- $138,000
Total Requirements- $208,000
Funding
Start up expenses- $65,000
Start-Up Assets – $138,000
Total funding needed- $208,000
Assets
Non-cash assets from start-up- $65,000
Cash requirements from start-up- $73,000
Total assets- $138,000
Liabilities and capital liabilities
Current borrowing- $0
Long tem liabilities – $110,000
Accounts payable- $900
Other current liabilities- $0
Total liabilities- $110,900
Capital
Planned investment
Mr. David Williams- 30,300
Mr. Arnold Mwangi- 30,300
Mrs. Felicia Wanjiku- 30,300
Other- $0
Additional required investment- $0
Total Planned investment- $90,900
Loss at start up (start-up expenses) – $65,000
Total capital- $25,900
Total capital and liabilities- $135,900
Total funding- $208,000
PRODUCTS
Slice Bakery and Juices offers a vast range of juices all from a good quality farms in Africa. The organization caters for its customers by providing them with juice made to suite their individual needs. The bakery provides freshly made pastries and baked products at all times during business hours. Ten to twelve moderately sized batches of various breads and cakes are prepared during the day to assure the availability of freshly baked products at all times.
MARKET ANALYSIS SUMMARY
Slice Bakery and Juices’ main focus is on meeting the growing demand of a regular local resident customer demographic, as well as a number of visiting tourists that pass through the area.
Market Segmentation
Slice Bakery and Juices focuses on the upper and middle income markets, this particular market segment consumes the majority of baked and pastry products.
Local Residents
Slice Bakery and Juices wants to establish a large regular customer base. This will establish reliable and consistent revenue to ensure stability of the establishment.
Tourists
Tourists are expected to comprise aproximately25% of the total revenue collected. Good visibility and competitive quality products and services are crucial in order to capture this market segment.
Market Analysis
The previous chart and table outline the total market potential of the above customer segments
Target Market Segment Strategy
The dominant selected market for Slice Bakery and Juices is a regular flow of local residents. Personal and respectful customer service at a competitive price is the key in maintaining the local market share.
Market Needs
Since Nairobi has a worm climate for most of the year, cool drinks are very much in demand. Much of the day’s activity occurs in the morning just before 9:30am with a steady flow for the rest of the day.
Service Business Analysis
The Fresh juice industry in Nairobi has recently experienced very fast growth. The worm equatorial temperature in Nairobi stimulates the regular consumption of cool drinks. Juice Drinkers in the greater Nairobi city area are finicky about the quality of Juice offered at the numerous Fruit stalls across the area. Despite low competition in the current areal, Slice Bakery and Juices will be located at a place where customers can enjoy a glass of freshly made fruit/vegetable juice with freshly baked cakes in a relaxing environment.
Competition and Buying Patterns
Competition in the area is relatively sparse and does not nearly provide the quality of products and customer services as Slice Bakery and Juices. Local area customers are looking for a high quality product in a peaceful atmosphere.
Leading competitors purchase and squeeze an array of fruits from around the world, make fruit and vegetable salads, a variety of pastries in quality packages and a line of premium packed cocktail drinks(both alcoholic and non-alcoholic). In addition to the companies sales through company operated retail shops
Large chain companies vary their product mix depending on the size of each individual store and its location. Larger stores carry a wide selection of fresh juices in various sizes, flavor and types of packaging, as well as an assortment of fruits and fruit blending equipment and accessories. Smaller shops and kiosks generally sell a full line of Juice varieties, a limited selection of alcohol fruit cocktails and a few more accessories.
Technologically conversant competitors make fruit juices and fruit related products conveniently available via the internet or mail order. Websites that allow online stores that allow customers to browse and purchase the company’s vast array of products and service.
STRATERGY AND IMPLIMENTATION SUMMERY
Slice Bakery and Juices will eventually succeed by offering consumers high quality juices, bread and pastries with personal service at a reasonable and competitive price.
Competitive Edge
Slice Bakery and Juices’ is the relatively low level of competition in the city area targeting this particular demographic.
Sales Strategy
As the graphs below show, Slice Bakery and Juices expects sales of about $485,000 in the first year, $570,000 in the second year and $660,000 in the third year.
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Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Juices 135,000 148,500 163,350
Pastry Items 86,000 94,600 104,060
Other 0 0 0
Total Unit Sales 221,000 243,100 267,410
Unit Prices Year 1 Year 2 Year 3
Juices $3.00 $3.15 $3.31
Pastry Items $1.00 $1.05 $1.10
Other $0.00 $0.00 $0.00
Sales
Juices $405,000 $467,775 $540,280
Pastry Items $86,000 $99,330 $114,726
Other $0 $0 $0
Total Sales $491,000 $567,105 $655,006
Direct Unit Costs Year 1 Year 2 Year 3
Juices $0.25 $0.26 $0.28
Pastry Items $0.50 $0.53 $0.55
Other $0.00 $0.00 $0.00
Direct Cost of Sales
Juices $33,750 $38,981 $45,023
Pastry Items $43,000 $49,665 $57,363
Other $0 $0 $0
Subtotal Direct Cost of Sales $76,750 $88,646 $102,386
Management Summary
Mr. David Williams has extensive experience in marketing, sales and management and was the vice chairman of Eveready Batteries and Harper foods. Mr. Arnold Mwangi is experienced in finance and administration and was previously the chief financial officer with both Luigi’s Café and Willy Pastries. Mrs. Felicia Wanjiku is a well respected pastry chef with vast knowledge and experience in the field, she formerly worked at Lagoon beach resort in the Kenyan coast as the head pastry chef.
Personnel Plan
As the personnel plan illustrates, Slice Bakery and Juices expects to make significant investments in sales, sales support, and product development personnel.
Managers $100,000 $105,000 $110,250
Pastry Bakers $40,800 $42,840 $44,982
Baristas $120,000 $126,000 $132,300
Other $0 $0 $0
Total People 10 10 10
Total Payroll $260,800 $273,840 $287,532
Financial Plan
Slice Bakery and Juices expects to raise $90,900 of its own capital, and to borrow $110,000 guaranteed by the National Bank of Kenya as a ten-year loan. This provides the bulk of the current financing required.
Break-even Analysis
Slice Bakery and Juices Break-even Analysis is based on the basic average of the first-year figures for total sales by units, and by operating costs. These are presented as per-unit revenue, per-unit price, and fixed costs. These conservative assumptions make room for a more accurate estimate of real risk. Slice Bakery and Juices should break even by the fourth month of its operation as it slowly increases its sales.
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Break-even Analysis
Monthly Units Break-even
17,255
Monthly Revenue Break-even
$38,336
Assumptions:
Average Per-Unit Revenue
$2.22
Average Per-Unit Variable Cost
$0.35
Estimated Monthly Fixed Cost
$32,343
Projected Profit and Loss
As the Profit and Loss table shows, Slice Bakery and Juices expects to continue its steady rise in profitability over the next three years of business.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $491,000 $567,105 $655,006
Direct Cost of Sales $76,750 $88,646 $102,386
Other $0 $0 $0
Total Cost of Sales $76,750 $88,646 $102,386
Gross Margin $414,250 $478,459 $552,620
Gross Margin % 84.37% 84.37% 84.37%
Expenses
Payroll $260,800 $273,840 $287,532
Sales and Marketing and Other Expenses $27,000 $35,200 $71,460
Depreciation $60,000 $69,000 $79,350
Utilities $1,200 $1,260 $1,323
Payroll Taxes $39,120 $41,076 $43,130
Other $0 $0 $0
Total Operating Expenses $388,120 $420,376 $482,795
Profit Before Interest and Taxes $26,130 $58,083 $69,825
EBITDA $86,130 $127,083 $149,175
Interest Expense $10,000 $9,500 $8,250
Taxes Incurred $3,111 $12,146 $15,650
Net Profit $13,019 $36,437 $45,925
Net Profit/Sales 2.65% 6.43% 7.01%
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