Cake Shop;business Plan
Cake Shop;business plan
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We completed presentation before the essay, so the essay is required to remain the same topic with our presentation, the topic of this business plan is Cake Shop.
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Cake Shop
Business Plan
Table of Contents
Executive summary……………………………………………………………….4
The Business………………………………………………………………………….4
The Market…………………………………………………………………………….4
The Future…………………………………………………………………………….5
Financial Consideration……………………………………………………………5
Introduction…………………………………………………………………………..6
Business Description…………………………………………………………………6
Legal Considerations…………………………………………………………………6
Management and Ownership……………………………………………………..7
Operations…………………………………………………………………………….8
Organization Structure……………………………………………………………….8
Key Personnel………………………………………………………………………….8
Service Process………………………………………………………………………..9
Licences and Permits……………………………………………………………….11
The Market……………………………………………………………………………..13
Products/Services……………………………………………………………………13
Break-Even Analysis………………………………………………………………..14
Market Research……………………………………………………………………..14
Environmental/Industry analysis………………………………………………..15
Customers……………………………………………………………………………..15
S.W.O.T………………………………………………………………………………….16
Advertising and Sales………………………………………………………………..17
Financial Projections……………………………………………………………….18
Assumption………………………………………………………………………………18
Start-up requirements……………………………………………………………..18
Sales Budget………………………………………………………………………….20
Purchase Budget……………………………………………………………………..21
Operating Budget Expenses………………………………………………………22
Budgeted Income Statement…………………………………………………..22
Budgeted Cash Flow Statement……………………………………………..24
The Future………………………………………………………………………….25
Conclusion………………………………………………………………………….26
List of References……………………………………………………………….27
Executive Summary
The Business
Yummy cake shop is cake shop established on 1st Dec 2014. It is located at Lonsdale Street, Melbourne on a street front shop. Registered as a partnership business the business ABN No is 52004005734. The cake shop expects to win regular customers with its broad variety dry cakes and yummy bakers customer favourites. The cake shop is owned by two high school friends John Sut and Saleem Hassan.
The market:
Target Market
Yummy Cake Shop targets on the middle and upper-income brackets consumers. People within these market segments are the main consumers of the majority of the cake industry.
The specific Target Market includes:
The parties Group: These are individuals who want to purchase a cake for celebrations and other forms of parties. These types of consumers pre-order the cakes and will be targeted through extensive advertising and word of mouth.
Individual buyers: To win individual buyers, the business will focus on using window display marketing strategy to attract passersby.
Regular residents: These are individual customers who purchase cakes regularly for consumption. Yummy Cake Shop would want to establish a large regular customer base. This will ensure that the organization will have consistent profits hence business sustainability.
Marketing Strategy
Yummy Cake shop targets the returning customers that reside in the neighbourhood. The organization will focus on offering a personal customer service to make customers satisfied and hence customer loyalty. Yummy Cake shop will also focus on offering high-quality products in a competitive market.
The Future
Vision Statement:
Our vision is to be the best Cake shop offering high-quality cakes at an affordable price. To achieve this vision we intend to bake quality cakes maintain a friendly customer relationship
Objectives:
- To increase the second year sales by 40% and the subsequent year sales by 25%, and
- To expand to two storefronts by the fourth year of business.
Financial Considerations
The start-up capital was contributed by the two partners that amounted to $110,000. The company has applied for a loan of $100,000 to boost their business activities. The loan will be payable in a period of 10 years.
Sales projections
| Year | Sales | Gross Margin | Net Profit |
| 2015 | 491,000 | 478,000 | 13,000 |
| 2016 | 567,000 | 531,000 | 36,000 |
| 2017 | 655,000 | 609,000 | 46,000 |
Introduction
Business Details
Products and Services: Yummy Cake Shop offers a wide variety of dry cakes and flavored cupcakes such as Gingerbread Flavour, Rose petal, gingerbread flavour and raspberry fudge. On the same note, the cake shop offers old time favourites such as vanilla, strawberry and red Velvet.
Registration details
Business Name: Yummy Cake Shop
Trading Name: Yummy Cake Shop
Date Registered: 1st Dec 2014
Location Registered: Melbourne, Australia
ABN: 52004005734
GST: 10%, Registered 1st Dec 2014
Business Structure: Partnership this structure is selected because of less start-up cost, few legal requirements and ability to utilize.
Business Premises
Business Location: Yummy Cake Shop is located at Lonsdale Street, Melbourne on a street front shop. The shop is divided into two rooms. The front shop serves as an outlet for the Yummy Cakes as well as the cashier’s office. The back room serves as the bakery where the chefs prepare the cakes that will are sold at the shop. Lonsdale Street is a busy street because of the surrounding shops and a supermarket. Therefore, these visitors will be attracted to our shop for a quick bite.
The business premises are leased for one year. The contract is renewed each year upon payment of rent.
Legal Considerations: Licences required include Trade licences and Health and safety licences
Management and Ownership
Names of Owners: John Sut and Saleem Hassan. The owners are also the ones running the business. John Sut is the manager and chief executive officer (CEO) of the business because of his previous experience. On the other hand, Saleem Hassan is the chief financial officer (CFO) as well as the cashier.
John Sut is quick in decision making and has a keen eye for quality of production. Therefore, his profile and skills fit the position of a manager.
Skills, Experience, and Qualifications:
John: Management
Has a bachelor’s degree in human resource management and used to work at KFC as human resource manager.
Saleem: He is a certified public accountant. He just completed his undergraduate degree in Finance.
Business Operations
Organisation chart
Required Staff
| Job Title | Name | Expected staff turnover | Skills or strengths |
| Manager | John Sut | Has a bachelor’s degree in human resource management and used to work at KFC as human resource manager.
|
|
| Cashier | Saleem Hassan | He is a certified public accountant. He just completed his undergraduate degree in Finance. | |
| Baker | Evans Brown | Worked as a baker in Kings Bakery | |
| Baker | Fran Reid | Worked at queens garden as a baker and event organizer | |
| Cleaner | Jo Stevens | Underwent basic cleaning and laundry training |
Current Staff
| Job Title | Quantity | Expected staff turnover | Skills necessary | Date required |
| Quality control | [1] | [2-3 years] | Must have two years experience working in catering related fields. | 01/01/2016 |
Recruitment options
Because of the small size of the business, the management will recruit employees through communication with friends and family to find the most appropriate quality manager. This strategy will help the organization to reduce recruitment cost and easily find a good employee.
Training Programs
The existing employees in the organization will be the ones responsible for orientation and training of new employees. A new employee will be assigned a worker to train and supervise him for two weeks before he/she begins working independently.
Skill Retention Strategies
Skill retention is an important part of human resource management. The organization will retain the best workers through motivation and salary increase. By rewarding exceptional performance employees will prefer to work with Yummy Cake Shop rather than to work elsewhere.
Service Process
Yummy Cake Shop will process three types of orders. That is take away orders, dined in orders and special orders.
Take away orders: refers customers request to purchase cakes and take them home. The orders are processed by the sales person on the counter. The cakes will be packed in a special takeaway packaged and given to the customer to take home.
Dined in orders will be offered for the clients to consume within the business premises with a soft drink such soda.
Special orders: refer to those orders for cakes used for special occasions such as weddings, birthdays among others. These orders will require the client to pre-order for the chefs to prepare the orders before it is processed by the sales person.
Suppliers
Yummy Cake Shop will purchase its wheat flour required for baking directly from the millers to reduce the cost of purchasing them. Other baking materials such as cooking oil, salt, and baking powder will be bought from a wholesaler so as to utilize the discount allowed by buying in bulk.
Assets Required
| Equipment | Purchase date | Purchase price | Running cost |
| Ovens | 1st Dec 2014 | $155 | 0 |
| Proof Boxes | 1st Dec 2014 | $102 | 0 |
| Baking Sheets | 4th Dec 2014 | $20 | 0 |
| Work Tables | 4th Dec 2014 | $92 | 0 |
| Planetary dough mixer | 16th Jan 2015 | $26 | 0 |
Inventory
| Inventory item | Unit price | Quantity in stock | Total cost |
| Flour | 25 | 50 | 1,250 |
| Sugar (Granulated, powdered and brown sugar) | 10 | 20 | 200 |
| Baking Soda | 2 | 20 | 40 |
| Baking Powder | 3 | 8 | 24 |
| Butter milk | 2 | 4 Litres | 8 |
| Food Colouring | 1 | 20 | 20 |
| Flavours | 2 | 6 | 12 |
| Eggs | 2 | 250 | 500 |
| Milk | 2 | 50 | 100 |
| Lemon juice | 1 | 2 | 3 |
| Salt | 0.5 | 1 | 0.5 |
| Vegetable oil | 2 | 4 | 8 |
| water | 0.5 | 200 | 100 |
Technology Software:
Yummy Cake Shop uses accounting packages to keep daily records and business transaction records. The business is also planning to open up a website that will be used to advertise the company products and establish an online presence (Razak et al., 2014).
Trading Hours: Our business shop will be open from 8 am to 5:30 pm on weekdays. However on Saturday and Sunday, the shop will operate from 8 am to 11 am.
Communication Channels: the main communication channel will be through telephone calls. The business organization encourages clients to communicate by making a call or writing a message using our office mobile number. However, we also process email orders. On the same note, once a website is a build, we will also process orders via purchase portal in the website.
Payments Accepted: Yummy Cake Shop accepts payment in the form of cash, we also accept credit and debit cards for payments above $25.
Credit Policy: We accept credit for regular customers but the credit must not exceed $200. Invoices will be sent by mail every once a month to request for creditors to pay their dues (Ossolinski et al., 2014).
Warranties & Refunds: we accept back broken cakes if they were transferred using our means. We also offer refunds for merchandise that get spoiled during transportation. However, the customer must produce a valid receipt that was originally used to purchase the product.
Quality Control: The Company is planning to employ a quality control manager that will ensure that the cakes offered for sale are of good quality. The new manager will regularly do quality control checks to ensure that all the company’s products are of high quality.
Licences and permits;
Insurance:
Public Liability: The business has no public liability insurance to cover for any third party from death or injury. Similarly, employees are expected to make arrangements with insurance companies to insure themselves
Business Assets: Business assets are insured against fire, burglary and theft. Some of the assets insured include production facilities, business computers, and the premise television set.
Action Plan
| Sustainability milestone | Target | Target date |
| Reduce the use of burners that use unclean energy | 40% Reduction | Jan/2017 |
The Market
Products/services
| Product/Service | Description | Price |
| Cup Cake | 3.50 | |
| Rainbow Cake | 2.95 | |
| Gingerbread Flavour | 3 | |
| Banana Rum | 2.50 | |
| Rose Petal | 3.45 | |
| Raspberry Fudge | 3 | |
| Red Velvet | 3.50 | |
| Vanilla | 3.50 | |
| Straw berry | 3.50 |
Market Positioning
The location is imperative when it comes to marketing and promotion. Yummy Cake Shop is located in a high-traffic retail area in Lonsdale, Melbourne Australia. The cake shop is located close to other shops such as electronic shops among others. These shops attract high population, and Yummy will be able to pitch some of these regulars. We will focus on providing unique types of cakes as well as superior pastry shops (Harrington et al., 2013). Similarly, the company will advertise using fliers, magazines and promotions to attract more customers.
Pricing Strategy
Price is an important factor when competing with other key players in the industry and sellers of competing products such as Ice creams and coffee shops (Lappo et al., 2013). Our cake shop will offer slightly lower prices as compared to other bakeries and pastries. The company will also offer a 7% discount for a person who purchases more than three cakes in a single day.
Break-even analysis
The breakeven analysis is calculated with assumptions on running costs such as utilities, transport cost among others.
Target Market
Market Segmentation
Our market is divided into four segments. That is
The parties Group: These are individuals who want to purchase a cake for celebrations and other forms of parties. These types of consumers pre-order the cakes and will be targeted through extensive advertising and word of mouth.
The individual buyers: To win individual buyers, the business will focus on using window display marketing strategy to attract passersby.
Regular residents: These are individual customers who purchase cakes regularly for consumption. Yummy Cake Shop would want to establish a large regular customer base. This will ensure that the organization will have consistent profits hence business sustainability.
Market Research
Market Analysis
| Potential Customers | Growth | 2016 | 2017 | 2018 |
| The parties group | 25% | 10,000 | 10500 | 11,050 |
| Individual Buyers | 15% | 5000 | 5,750 | 6,613 |
| Regular Local Residents | 15% | 5000 | 5,750 | 6,613 |
Environmental and Industry Analysis
The banking business in Australia has been there for a very long time. Therefore, there are other well-established business organizations in cake shop niche. Some of the key competitors include;
- Donut and Coffee Shops,
- Restaurants,
- Ice cream shops,
- Free-standing traditional bakeries and,
- Supermarkets.
Customer Demographics
Cakes are universal and, therefore, every body’s favorite. Thus, Yummy Cake Shop will have customers ranging from children, teenager, adults and the elderly (Solomon et al, 2012). The cakes will also be demanded for celebration purposes such as weddings, graduation parties, and birthdays among others.
Key Customers
From the customer demographics discussion, the key customers include regular buyers from within the neighbourhood and buyers for celebration purposes such as weddings, birthdays, graduation ceremonies among others.
Value to Customer:
Our customers will derive value from consumption of our variety of cakes with different flavours. These cakes will satisfy basic human needs of hunger as well as self-actualization needs such as the feeling of achievements during graduation parties.
Customer Management:
The customer is a very valuable asset for any organization. Yummy Cake shop will treat customers in a friendly manner following stringent business ethics.
S.W.O.T Analysis
| Strengths | Weaknesses |
| – Low cost of production due to flat organization structure.
– Lower price than competitors – Strong positioning of the Shop – High quality varieties of cakes
|
– New to the market, not established
– Limited cash flow – Low customer Base – High advertisement cost |
| Opportunities | Threats |
| – New Technology
– New creation of new products – |
– New competitors enter the market
– High expenditure cost – Stiff competition |
| Competitor | Established date | Size | Market share (%) | Value to customers | Strengths | Weaknesses |
| Le Petit Gateu | 30 | Unique creations and irresistible classics such as chocolate gateu | -Located at inner-city
-Good market positioning |
-Small physical space for eating out | ||
| Brunetti cakes | 20 | Variety of celebratory cakes such as vanilla sponge, chocolate chips and Braziliana | -Italian cakes that are entirely sweet
-strong market presence -Strong customer loyalty |
-management problems.
|
||
| Hausfrau | Good desserts, birthday cakes | They do classic European cakes which are unique in the Australian market
-Strong market presence |
Large operations hence diseconomies of scale |
Advertising and Sales
Advertising and promotional Strategy
| Planned promotion /advertising type | Expected business improvement | Cost ($) | Target date |
| News paper and magazines | Increased customers | 20 | February/2016 |
| Mouth to mouth | Increased demand because of creation of good image | Free | April/2016 |
| Social media campaigns | Increased customer loyalty & better image for the company | Free | July/2016 |
Sales Distribution Channels
Due to the small nature of the business, the products will be distributed through the storefront shop. Clients will be expected to make their orders physically and collect their cakes. On the same note, clients can make orders through email and will be delivered by sales agent if the customer is within Melbourne (Arnold, 2014).
Financial Projections
Financial Management goals
- To cut down the cost of production.
- Reduce purchasing expenses through bulk buying
- Strategic partnership to obtain more funds for expansion
BREAK-EVEN ANALYSIS
| Break-even Analysis | |
| Monthly Units Break-even | 17,300 |
| Monthly Break-even | $38,634 |
| Assumptions: | |
| Average per-unit revenue | $2.22 |
| Average Per-unit | $0.35 |
| Estimated Monthly fixed cost | $32,343 |
Finance Required
YUMMY CAKE SHOP START UP REQUIREMENTS
| START-UP REQUIREMENTS | |
| Start-up Expenses: | $3000 |
| Legal | $20000 |
| Premise Renovation | $4000 |
| Expensed Equipment | $4000 |
| Other | $1,000 |
| TOTAL START-UP EXPENSES | $32,000 |
| Start-up Assets | |
| Cash Required | $70,000 |
| Other Current Assets | $12,000 |
| Long-term Assets | $65,000 |
| TOTAL ASSETS | $147,000 |
| Total Requirements | $211,000 |
| STARTUP FUNDING | 358,000 |
| Start-up Expenses to Fund | $64,000 |
| Start-up assets to Fund | $147,000 |
| TOTAL FUNDING REQUIRED | $211,000 |
| Assets | |
| Non-cash Assets from Start-up | $77,000 |
| Cash Requirements from Start-up | $70,000 |
| TOTAL ASSETS | 147,000 |
| Liabilities and Capital | 147,000 |
| Liabilities | 46,000 |
| Current Borrowing | 0 |
| Long-term liabilities | $100,000 |
| Accounts Payables | $1,000 |
| Other Current Liabilities | |
| TOTAL LIABILITIES | 46,000 |
| TOTAL CAPITAL | $147,000 |
| TOTAL CAPITAL AND LIABILITIES | $147,000 |
| Total Funding | $211,000 |
Sales Budget
| Sales Forecast | ||||||||
| Unit Sales | Month 1 | Month
2 |
Month
3 |
Month
4 |
Month
5 |
Month
6 |
Month
7 |
Month
8 |
| Cake Sales | 4,950 | 7,500 | 9,500 | 13,500 | 13,500 | 13,500 | 13,500 | 13,500 |
| Beverage Sales | 2,050 | 2,500 | 3,000 | 4,500 | 4,500 | 4,500 | 4,500 | 4,500 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| TOTAL
UNIT SALES |
7,000 | 10,000 | 15,500 | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 |
| Cakes | $3.50 | $3.50 | $3.50 | $3.50 | $3.50 | $3.50 | $3.50 | $3.50 |
| Beverages | $1 | $1 | $1 | $1 | $1 | $1 | $1 | $1 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Sales | ||||||||
| Cakes ($) | 17,325 | 26,250 | 33,250 | 47,250 | 47,250 | 47,250 | 47,250 | 47,250 |
| Beverages ($) | 2,050 | 2,500 | 3,000 | 4,500 | 4,500 | 4,500 | 4,500 | 4,500 |
| TOTAL SALES ($) | 19,375 | 28,750 | 36,250 | 51,750 | 51,750 | 51,750 | 51,750 | 51,750 |
Purchases Budget
| Unit Costs | Month
1 |
Month
2 |
Month
3 |
Month
4 |
Month
5 |
Month
6 |
Month
7 |
Month
8 |
| Direct Unit Cost | ||||||||
| Purchases of Cake Raw Materials ($) | $0.50
|
$0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 |
| Beverage Purchases | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 |
| Purchase
Expenses |
||||||||
| Purchases of cake Raw Materials | $2,475 | $3,750 | $4,750 | $6,750 | $6,750 | $6,750 | $6,750 | $6,750 |
| Purchase of beverages | $512.5 | $625 | $750 | $1,125 | $1,125 | $1,125 | $1,125 | $1,125 |
| TOTAL PURCHASES OF RAW MATERIALS | $2,987.5 | $4,375 | $5,500 | $7,875 | $7,875 | $7,875 | $7,875 | $7,875 |
Operating Expenses Budget
| OPERATING EXPENSES | Month
1 |
Month
2 |
Month
3 |
Month
4 |
Month
5 |
Month
6 |
Month
7 |
Month
8 |
| Payroll | $0.3 | $0.46 | $0.58 | $0.83 | $0.83 | $0.83 | $0.83 | $0.83 |
| Taxes | $0.21 | $0.14 | $0.11 | $0.08 | $0.08 | $0.08 | $0.08 | $0.08 |
| Marketing | $0.11 | $0.07 | &0.06 | $0.04 | $0.04 | $0.04 | $0.04 | $0.04 |
| Utilities | $0.10 | $0.06 | $0.05 | $0.03 | $0.03 | $0.03 | $0.03 | $0.03 |
| TOTAL OPERATING EXPENSES | $0.72 | $0.73 | $0.8 | $0.23 | $0.23 | $0.23 | $0.23 | $0.23 |
Budgeted Income Statement for Year 1
Yummy Cake Shop
| Revenue | $ | $ |
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