Business Plan Of Slice Bakery Management Essay

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 Luigis Cafà © 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 days 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 companys 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. C:Documents and SettingsChifMy DocumentswORK_ONLINE2a22e7554c0a4224b23f7935f16cfd66.png C:Documents and SettingsChifMy DocumentswORK_ONLINEgraph.png 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 Luigis Cafà © 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. http://www.bplans.com/bakery_business_plan/images/73ebe304715e411d80d3e39ff995c767.png 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%