Business Planning

Over the past few years, I have gained an interest in venturing into the catering industry. Therefore, beginning a cake bakery shop remains the most critical business idea that I have. Catering sector has a definite market growth trend, with many investors currently venturing into large restaurant operations. Venturing into small bakery shops has been neglected, and places such as Sanibel Island in Florida lacks many of these facilities. Florida thus forms the best business location for my enterprise. Florida has a competitive advantage over other places in The United States of America, regarding demographics, cost, and accessibility. My business will be a partnership type of business. I prefer a partnership business because of equality in sharing risks, liabilities, profits, responsibilities and operational costs. The projected cost of the project is $44,000. Jane, my business partner, will contribute $10,000, I will provide $14,000, and the remaining $20,000 will be obtained in the form of a bank loan. Before the start of our operations, we will obtain relevant licenses and permits such as food handling license, partnership agreement, dissolution agreement, and the letter of intent.  We will select the name of our business (Yummy Cakes Bakery shop), and design our logo. The title should be compliant with the registrar of partnerships requirements of selecting the names. We will publish our name in legal journals and newspaper, and once we are approved, we will start up the business in Florida. We will purchase an accounting software to help in our accounting processes. As the entity grows, we will hire a human resource manager to assist in recruiting, training and developing employees. To ensure we remain in the market, we will formulate an operating system based on hard and soft systems such as finance, marketing, training and management in the organization. We will develop contingency plans to address failures of our counterparts and possible threats in the entire catering industry.

Cake Bakery Shop

Business Idea

Establishment of bakeries in the United States of America and other countries has remained to be a subject of paramount importance to many young entrepreneurs who want to venture into private business operations. Beginning a cake bakery shop before completing my college studies is one of the fundamental strategic plans that I have to meet my future business demands. Perhaps the entire catering industry is highly fragmented both in the type of products offered in the market and the quality of services that are provided by those entrepreneurs who venture in this business. Many entrepreneurs produce and sell flour-based food products that are baked in an oven such as cookies, bread, cakes, pies, and pastries. My business entity will be based on baking and selling cakes to consumers.

My menu will depend on customer order and urgency. Therefore, I will offer different varieties of cakes including birthday recipes such as the pineapple cake, the eggless truffle cake, Oreo cheesecake, banana cake, etc. The entire catering industry is dynamic, and the current market trends indicate that there will be an increase in customer demand in futures, more specifically in the United States of America. Economic research suggests that people’s life is getting better as time progresses. An increase in the financial status of the people is an added advantage since I will have a ready market for all my cakes and my business will thrive well.

Planning to venture into the bakery industry comes from my more profound conviction of giving back my skills to the community. I want to practice the baking skills that I acquired before joining college and assist in raising our countries’ economy. I want to see quality products having the right quantity and which are safe being sold to the customers. Venturing into this business also will give me a sense of personal importance. I would like to self-employed and a skillful entrepreneur. The only way I can succeed in the dynamic business environment is by starting a business that will manage it myself without any supervision or pressure from my employer. I believe consumers will buy my business ide because my business will be oriented on customer safety, quality of the product and services and also the right quantity of the products.

Step 1: Marketing Research

Bakery products in the current global market are driven by indulgence, convenience needs of the consumer markets and the ever-evolving health issues. High-quality cake variants in the current market drives demand in the global catering industry. There is increased popularity of low carbohydrates in catering products such as cakes and other bakery diets to slow down the volume growth. The current and the future market is shifting towards the premium cakes.

There is an increased health awareness on the need of maintaining a healthy lifestyle and hence driving the future sales of cakes. Indulgence and impulse buying in the current global market drives growth in demand for adorable cakes and other bakery products such as bread. There is increased use of vast ingredients and non-conventional flavors which regularly makes way in baked pies and other bakery goods. Affordability factor in the global market spurs a strong demand for cakes and pastries, especially in the United States of America. There is also a rising incidence of lifestyle diseases such as diabetes which drives rapid growth in demand for Gluten-free cakes and other bakery products. There is increased use of nanotechnology set in delivering unique flavors and nutrients to cakes and other bakery products. Also, there is an increased use of honey which raises the health quotient of many bakery products such as cakes and pastries.

Competition remains a subject of concern when dealing with bakery products in the entire catering industry. The marketplace for bakery products is intensely fragmented and competitive. Catering industry is bestowed on the net worthy of key competitors dealing with bakery products. Manufactures of bakery products fragment their products based on health and quality and thus may be difficult for new entrepreneurs to venture into the market arena. Also, low entry barriers in the catering industry intensify competition in the marketplace. Perhaps there is a need for cultural and regional customization, and thus competitors are struggling to develop international bakery products’ brands, making the industry highly competitive. Competitors are also positioning their products based on co-branding, age-specific branding, packaging, brand localization, brand licensing and distribution landscape. These strategies in positioning products intensify competition, and it may be difficult for a new investor to venture into the catering industry easily.

Step 2: Preparing A Business Plan

Objectives

1. To become an extensive local focal point of interest for cake consumers

2. To ensure the business breaks even by the end of the first year

Mission

Yummy Cakes aspires to offer high quality, quantity and safe baked goods at a competitive price, that will considerably create a loyal customer base. The cake shop hopes to become the cornerstone of our community by creating a neighborhood atmosphere where patrons will feel relaxed and also become instant regulars.

Ideas and Product Brands

            Yummy Cakes will offer a variety of products based on customer demands. Our standard recipe will include birthday cakes such as pineapple cake, the eggless truffle cake, Oreo cheesecake, and banana cake. We will also make Butter cake/Oil cakes, sponge/foam cakes and Low/No flour cakes. Our main ideas in baking these birthday cakes will depend on concepts such as incorporation of Omega 3 in our recipes, use of minimal oils to bake the cake and also use of low carbohydrates as per the changing market demand for bakery products.

Shop Processes

Yummy Cakes shop will perform the following task as far as cake baking, and selling is concerned.

1. Production of all planned types of cakes such as birthday cakes

2. Advertising of the shop’s brand through social media platforms such as Facebook and the shop’s website.

3. Home and business door to door delivery of ordered cakes

4. Facilitation of community growth programs on ways of making cakes through organization conferences and seminars to teach a member of the community ways of baking cakes

Target Audience and Market Segmentation Strategy

The primary target for Yummy Cakes Shop is the returning customer who lives in the neighborhood of the business. The shop will focus to offer personal customer services to enhance our customers’ satisfaction, and we also aim to supply the best cakes on offer at a highly competitive price. Perhaps we believe that the strategy is vital in maintaining the locals market share of our target markets.  Therefore, our sales target the youth, older adults and also children organizing birthdays or other parties.

Competitive Edge

            Yummy Cakes shop’s competitive edge will be our unique flavors of cupcakes and incorporation of Omega 3 to all our cake brands. We will also innovate new recipes and flavors regularly to ensure our products remain interesting for all our customers.

Management Summary

I have attended a junior training course on hospitality and tourism management. I will be the one to manage the business. I will participate in the actual baking of the cakes. However, I will employee one cook to assist me in baking the cakes. I will also employ two marketers and salespersons to assist in advertising our products, supplying the products to our clients and also obtaining orders from potential customers.

Step 3: Planning Finances

Financial Forecast

Source of Funds

The total startup costs for the shop are estimated to be $44,000. Majority of these startup costs are associated with reserve costs to pay labor, inventory, furniture and the purchase of shop’s equipment. I will contribute $14,000 for beginning the business. Jane, my partner in the business, will provide $10,000. The remaining $20,000 will be funded through bank loan which is expected to be a fully amortizing three-year term note.

Step 4: Choosing A Business Structure

The business will be a private partnership type of business owned by two partners, Jane and myself. Partnership type of business is the best for the shop bakery since it is starting and we have less capital to set up a private limited company. Partnership structure breaks the risk since the two partners contribute the money, profits are shared between the partners, and thus also losses are shared between the two partners. Partnership structure breaks through the limitations of experience, and therefore experience and efforts are contributed by two parties. The partnership makes an internal complementarity within the company and hence time is saved in making decisions or resolving conflicts.

Organizational Structure

The business entity being a partnership will employ a matrix method of organization and control the business operations. The matrix structure for Yummy cakes will constitute the setting of a grid/matrix to facilitate reporting relationships in the organization. The employees of the business will have a dual reporting relationship to the partners of the firm. The structure will be as follows;

Step 5: Setting Up a Business Name and Logo

The business’ name will be called ‘Yummy Cakes Shop.’ The name is chosen from our basic principle of providing quality and enjoyable bakery products to all our customers. The name also reflects our vision and mission of being one of the best bakers’ shops in our operational region. The business name is distinguishable from our competitors and in compliance with the requirements of the partnership acts concerning selecting names for the partnership business entity. After choosing the title, we will file the factious registration forms for incorporating names to partnership businesses.

 The design of the shop’s logo will follow immediately after selecting the name for the business. Once the registrar of partnership business approves that our name is not abusive, not copied from other business entities or lacks any record of criminal activities attached to it, we will proceed the process of designing the business logo. In one glance, our business logo should extensively communicate the ‘feeling’ and the identity of our bakery shop. We will choose the best designers from Florida in the United States of America. Thanks to the logo company for today’s infographic that shows the color psychology of business logos. Perhaps the logo is the first impression that sets our business expectations even before reading our business name, and thus should be technologically designed.

            We will spend approximately $2,000 to hire quality graphic designers for the business logo. After selecting the name and designing the business logo, we will conduct another name availability search and registration processes. We will then publish our name or intent to incorporation in newspapers and legal business journals. We will write a copy, locate approved publishers, submit the copy, schedule the text and obtain legal affidavits for all our business records. Once the government approves our records, we will immediately commence our operations.

Step 6: Getting Permits

After selecting the name for our business and designing the business logo, the next step will be to obtain the necessary legal permits and licenses for commencing operations. Before starting a business, figure out what licenses and permits need to be collected and how they can be obtained because they are the most basic requirements. Because of the strict restrictions and regulations from food and drug administrations in the United States of America, any business or food company that creates or sells food products is required to have necessary business permits and licenses which authorizes it as an approved provider and handler of food. We will apply for these licenses and permits our state agency. These business license and permits are required by our states permits, business license, and tax authority, and entirely it is a must for us to be able to bake and sell cakes to our consumers or perform our advertisements on social media. Therefore, these licenses and permits that we require include;

Partnership Agreement

This agreement is a vital document and a necessity for forming and operating a partnership type of business. The agreement sets out what is expected of us as the partners for our business, how we will make critical decisions and also how profits and liabilities will be shared for our firm — the document covers who we are, our rights and responsibilities, what we own, the amount of initial capital we contributed, and what will happen if one partner wants to leave the partnership or if other partners wish to join the business.

Dissolution Deed

The document indicates how assets and liabilities will be disposed of in case of winding up the partnership business.

Confidentiality Agreement

            Sharing of commercially sensitive information may at a time become a necessity for the running of our cake bakery shop. It is prudent for us to preserve confidentiality with legally binding agreements, especially when an aggressive and intellectual property is at stake. The deal is called a Non-Disclosure Agreement (NDA). NDA allows an individual to enter into entrepreneurial relationships without having any risk of information being misused by third parties without the partners’ consent.

Letter of Intent

A memorandum of understanding (a letter of intent) is necessary to help us set the critical terms of our potential agreement. The letter includes details of the proposed deal, fundamental obligations, pre-conditions, intended signing dates and the next business steps. The latter can also be used as a roadmap for further negotiations, and in obtaining a final agreement more easily. The letter is not legally binding for our bakery shop, but it can contain certain legally binding clauses i.e., confidentiality clause.

Employment Contract

            We will need to employ cooks, delivery team, salespersons and the marketing team. Therefore, an employment contract is required for setting out expectations and obligations for both the employee and partnership from the beginning. The agreement should cover areas such as pay benefits, probation period, termination, working hours and annual leaves. The deal will help to minimize disputes in the business, and thus will guarantee the business a happy working environment.

Other vital legal license includes;

1. Food handling license

2. Sale and supply of goods agreement

3. Health compliance permit

4. Website and online advertisement licenses

Therefore, once the state agency through the state inspector approves that all the requirements all achieved and expertly compiled and that the food produced will not harm consumers, an operational license for commencing the business will be provided. Indeed, having a business license for a small business entity shows that the owners are professions, and they will guarantee their clients quality cakes and cookies.

Step 7: Choosing an Accounting System

The success of our business entity is bestowed on our ability to manage our budget both monetary and non-monetary resources. Since the business, if starting up, we do not need to have an accounting department or perhaps employ a trained accountant for the firm. We will instead manager our budget using an accounting software which we will purchase copyright, and licenses and install in our shop to help us track our operations.

The accounting software will make it easier for us to track the shop’s financial health and also monitor how money flows in and out of our accounts. The software can create invoices, generate reports necessary for analyzing our performance at all angles and even track our business expenses. The software has applications that can help us monitor our bills and also manage our projects and inventory.

Perhaps choosing the accounting software for our business entity may be challenging. Each program/application includes a different set of features, and mostly provide multiple pricing plans which vary in some users, functions or other variables. Therefore, based on our capital and business’s net worth, we will select an accounting software taking considerations on the cost of the software, its usability, and the software’s features. On the usability factor, the software is supposed to provide multi-user access so that Jane and I will be able to manage the business accounts effectively from different positions. The software also is required to give multiple-business support, and cloud-based mobile access to help in storing and monitoring accounting information.

Since our business is a small entity, various specific features are required for the accounting software. These features include;

Time-saving Automation

            The accounting software should be able to send past-due notifications and recurring invoices automatically, and thus saving our time with our accounts receivables and invoicing tasks. The software should be able to keep our time that we would rather spend in reconciling our reports through the suggestion of transaction matches.

Tax Preparation

            The software is required to make life easier by automatically calculating taxes, obtaining multiple tax rates and also performing tax reporting.

Add-on Services

The software should entail add-ons such as payroll and payment processing services to ensure there is acceptance of invoice payments and online payment of employees.

Third-party Integrations

            The software should make it easier to run our business by integrating the services and programs we will be using, and automatically sharing different sets of data between all our management systems in real times. We will use the POS (Point of Sale), CRM (Customer Relationships Management), and ERP (Enterprise Resource Planning) integration systems to better our accounting services.

Step 8: Business location

Yummy Cakes Bakery shop will be located in Florida, near Sanibel Island. Florida proves to be the best business location for our bakery shop because of the following environmental dynamics and other business features;

Population Demographics

Florida is highly populated with the highest category of people being the youth aged 18-30 years. Perhaps the majority of human traffic remains critical in analyzing the demographics of our selected business location. These human traffic and population dynamics are based on age, gender, professions and the general household of the citizens in Florida. With a high number of employed people in Florida, our business is guaranteed of potential customers who are willing to buy our products. The high population is an indicator of the readily available market for our bakery products.

Competition

Statistics from our competitor analysis profile for places in Sanibel Island indicates that there is no stiff competition in the region as far catering industry is concerned. Many competitors are currently venturing into competitive restaurant operation, and thus forsaking the establishment and running of small bakery shops in the region. Having a low competition in this location, we are guaranteed of minimal market entry barrier, and thus we will easily venture and succeed in our business idea. The following competitor analysis profile about our purposed business is evident in Sanibel Island in Florida;

Name/Description

Brands

Pricing/Cake

Operating Hours

Other

Yummy Cakes Shop

Variety

$3-$100

0600hrs-2200hrs

Planned to incorporate Omega 3

Competitor A

Only Birthday Cakes

$2-$88

24hrs

Outdated Flavors

Competitor B

Variety

$3-$45

0700hrs-2300hrs

Outdated menu

Competitor C

Wedding Cakes only

$2-$300

0400hrs-2100hrs

Owner about to retire

Amenities

            Accessibility is critical for the location of our business. It is a subject of paramount importance for all our customers to have easy access to our services. Sanibel Island has nearby parking spots gas stations and petrol stations for our clients and our operations. The location has proximity to local police stations, and thus our security and the security of all our customers is guaranteed. Infrastructure and communication networks are enhanced in Florida. Therefore, it will be easy to communicate with customers who want to make orders and also it will be easy to move from one place to another making deliveries of the ordered products. Also, in Florida, there is clean water that will guarantee as for the safety that we need in baking the cakes.

Cost Issues

            Cost of production is critical in determining the location and the general success of a business entity. Baking flour and oil are cheaper in Florida as compared to other places like Los Angeles and California. We need to rent a house for all our baking operational and also a warehouse to store our machines and other miscellaneous business equipment. The price charged as rent in Florida ranges from $3000 per month to $4000 as compared to Los Angeles which the price can go up to $15000 per month. Florida will be the best location for the business considering that our shop is merely a starting entity and our budget is not significant,

Step 9: Grouping A Business Team

After securing a suitable location for our business, we will build a human resource department for the business. We will employ a human resource manager basing on the growth of the business. However, at the beginning of the business operation, Jane and I will entirely deal with recruiting the cooks and the salesperson, but as the business grows, the human resource department will be the one responsible for hiring professionals who are highly experienced in managing our recruitment processes. Having a strong team is one of the grand objectives that we are planning to achieve once the business begins to thrive well.

            We will, therefore, higher a human resource manager who will perform the following duties;

1. Attract talent

2. Hire skilled human resources

3. Perform training of the hired personnel

4. Professionally develop existing employees

5. Perform appraisals of employees

6. Maintain organizational culture

7. Resolve conflicts that may arise in the organization

8. Organize provision of rewards and incentives to performing employees.

Step 10: Operation System

Obtaining necessary licenses and permits and also deciding the suitable location for our business is not enough if we cannot design mechanisms on how we will be operating the business. Therefore, setting an appropriate operating system guarantees us survival even in the next five years of our business operations. Establishing a suitable OS requires the establishment of the services that we will have either on a daily or monthly basis. Our main services include;

1. Actual production services

2. Marketing of the products

3. Mentoring and leadership services

4. Training

5. Sales services

The OS for Yummy Cakes Shop

The comprehensive process of creating our business operating system comprises five significant steps, i.e. methods, systems, roles, skills and the structure of the organization. Underdeveloped work process proves to be the most common risk factor for our growing companies, and thus it will be necessary for us to create severe economic conditions for our success. We will use traditional operational strategies or communications and problem solving to ensure the business remains operational. For the parameters of the system, we will use both hard and soft systems including technology, marketing, operations, people and finance to ensure the business thrives longer. The OS will be bestowed upon recruitment training and development of employees to equip them with relevant skills that provides the effectiveness of the business. The structure of our management being a matrix form is paramount in dictating the process of our operations and the general success of the business.

                           What Could Go Wrong

Yummy Cakes Shop is an ideal business entity, and hence t is subject to various risk factors that have contributed to the failure of other business entities. The success of our business depends on our ability to manage these risk factors. Many bakeries have failed in this catering industry because they are typically unprepared to attend to customers or they are underprepared as per the customers' expectations. Poor quality service that takes much time and the service is costly discourages many customers from returning to the restaurant. The main aim of Yummy Cakes Bakery Shop is to maintain highly esteemed customers for as much long as possible throughout the business existence in Florida. The business plans to adopt the following strategies to mitigate all the risk associated with restaurant operation.

1. We will organize weekly meetings to ensure we are in touch with our employees and also monitor their progress.

2. Yummy Cakes will adopt preparation of cakes based on customer order to avoid preparing unordered cakes that may sum up to total loss if they are not bought

After sales service to maintain customer' loyalty

Have backup kitchen equipment and power systems to avoid delays in case of mechanical breakdowns

We will establish alternative suppliers to supply our brands to our clients if the main suppliers fail

We will establish at least a four month's inventory to deal with frozen products.

We will put in place an internal recruitment system to cater to employee shortage if one of them quits.

Conclusion

Beginning a cake bakery has always remained to be the best business idea that I believe will help me become self-employed, earn extra cash with no supervision. Many investors are currently venturing into management and operation of large restaurants forgetting the operation of small bakery shops.  With an increase in demand for home-based birthday, wedding and general party cakes in Florida, my business will have a readily available market. Also, entering into the market will be easy as there is minimal competition in the catering industry in Sanibel Island regions in Florida. Before the start of my operations, I will have to determine the structure of the business. Partnerships type of structure proves to be the bets as far as sharing of liabilities, profits and responsibilities are concerned. One of my business partners will be Jane who will contribute $10,000 for the start of the business; I will provide $14,000 while $20,000 will be obtained in form of bank loan. Before our operations, we will be required to purchase relevant legislation and permits for our business. We will also determine the most suitable location for the business and decide on our operating system to ensure the business thrives well. We will adopt effective management system as a remedy to conflicts in the business, and also we will design contingency plans to cater for threats in the catering industry.