Bakery Business Plan

This assignment delves into the UK bakery market, analyzing its trends, growth potential, and key players. It requires a SWOT analysis to identify internal strengths and weaknesses and external opportunities and threats facing a new bakery business in the UK. The assignment further guides you through developing a comprehensive business plan encompassing essential elements such as market research, financial projections, operational strategy, marketing plan, and risk assessment. Finally, it encourages the exploration of innovative marketing strategies to ensure the success of a new bakery venture within this competitive landscape.

BUSINESS PROPOSAL

TABLE OF CONTENTS
ELEMENT A: BUSINESS PLAN..................................................................................................1
Business..................................................................................................................................1
The opportunity......................................................................................................................1
Description of the product or service.....................................................................................1
Business description...............................................................................................................3
Competitive advantage...........................................................................................................3
Business model.......................................................................................................................4
Industry analysis.....................................................................................................................6
Competitor analysis................................................................................................................9
Market analysis.....................................................................................................................10
Segmentation, targeting and positioning..............................................................................10
Estimate of market size and predicted sales with key assumptions.....................................13
Marketing plan......................................................................................................................13
Operational plan...................................................................................................................16
Canvas business model of ABC Bakers...............................................................................17
FINANCIAL PROJECTION.........................................................................................................19
Capital requirement..............................................................................................................19
Sales and cost projection......................................................................................................19
Critical success factors (CSF)..............................................................................................25
ELEMENT 2: INDIVIDUAL POSTER PRESENTATION.........................................................26
REFLECTIVE STATEMENT.......................................................................................................27
Learning experience.............................................................................................................27
Barriers to learning...............................................................................................................27
Professional & employability development skills................................................................28
Personal objectives...............................................................................................................29
REFERENCES..............................................................................................................................30

Index of Tables
Table 1 Sales and cost projection of ABC Bakers.........................................................................18
Table 2 Projected profit and loss statement of ABC Bakers.........................................................20
Table 3 Calculation of estimated personnel cost of ABC Bakers.................................................21
Table 4 Loan amortization schedule..............................................................................................22
Table 5 Profitability analysis.........................................................................................................23
Table 6 Projected cash flow statement of ABC Bakers.................................................................24
Index of Figures
Figure 1 Sales and cost projected figures......................................................................................20
Figure 2 Expected gross profit, operating profit and net profit.....................................................23

ELEMENT A: BUSINESS PLAN
Business
The main key towards the business of bakery is towards making determination of suitable
balance among the product quality as well as reasonable price. Due to the presence of immense
competition in the food sector market there is requirement that Bakery firm possess unique
things that make it different from the one who are present already within the market. Today most
the people prefer backed products. There is importance towards considering the altered demand
of the customers. The customers have gained the significance regarding the empowerment within
the food products (Dollinger, 2008). Flexibility needs to be present in the who procedure of
buying. Such is considered as the success of every business which is comprised of Bakery as
well. The Business of bakery is striving to meet the need of the target market. Today the
customers are preferring food options that are much healthier and that are being developed by the
bakeries. Whole grain selection us important for the sake of catering to the requirement of target
market. In order to attract the target market gluten free as well as items that possess lower
sodium are being chosen.
When catering towards the customers health requirement there is requirement to consider
that taste would not be sacrificed at all. At the similar point of time there is sensitivity in relation
with the price.
The opportunity
At present the customers thinking is changing to a greater extent. The desire of the
customers is towards making purchase of the customized products they possess the ability to
comply with the demand. People are fond of wearing the clothes and accessories that are
designer and desired by them. In similar manner innovations are also preferred by the people
when it comes to bakery items (Ward, 2016). The customers want to develop the cake in
accordance with their need. The present business proposal demonstrates the opportunity towards
development of bakery that would be opened in London. This would effectively enable the target
market in gaining designer cakes to a greater extent.
Description of the product or service
The bakery referred to as ABC would be counter service bakery within London. There is
existence of provision related with counter in which details are being offered by the target
market in relation with the cake which they desire to order. The order needs to be accepted in
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case of other baked food items. A greater range of the desserts are being provided by the Bakery.
The main product associated with the bakery would involve cakes that are being developed in
accordance with design that customer offers. The present era has faced greater shift within the
bakery sector. Within the market of baked food business can attain success but there is greater
need that desire of the customers is known to a greater extent. It is important that balance is
being kept with the latest trends that are existing within the market. The firm would make
development of the cakes in suitable way. There is uniqueness within the product as the customer
is designing as per the pattern and colour that are being selected by them. The decision related
with the cake ingredient would be offered by the customers only. In such manner the product that
is customized cake will be developed. This would be comprised of flavours which customers
desire. Further the cake would be customized in terms that ingredients that are not preferred
would not be put within the recipe of developing the cake. Also the customers can provide
information regarding the ingredients with which they possess allergy. Such is being done as per
the determination provided by the target market. Such would offer way to delicious cakes that
would be developed in accordance with the customer preferences. Fresh as well as natural
ingredients would be used while making preparation of the product. The innovative design that
the customers offer is the foundation associated with the cakes. The organization would come up
with the product that possesses ability to create greater impression at reasonable prices.
The value added service that is being offered by ABC will be offering customized
services to the target market. In order to prepare customized cakes the customer would place an
order with the firm. Along with this the customer would give an approval to the design and
sketch of the cake that is required to be devised. By the means of carrying out investigation in
the market information has been gained regarded the needs of the customers that have remained
unfulfilled. The customer's expectations from the local bakeries in London have also been known
by the means of research. On the basis of investigation ABC bakery will come up with the
packages associated with the services which cover the aspects attached with customized cakes.
The ideas associated with the design would be discussed so that decision can be developed
regarding whether to make utilization of the services of the particular bakery or not. Suitable
services in relation with the bakery would involve working effectively with the customers
towards the planning as well as development of the special cake. Thus suitable attention will be
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the focus that would be provided by ABC bakery. In certain areas home delivery services would
also be offered in the particular region.
Business description
The present business development proposal is putting forward the concept that is attached
with opening up bakery in London. The aim of the bakery is towards offering the customers with
the opportunity to develop the cake in accordance with the imagination which is possessed by
them. Further their choice can be on the basis of particular occasion that is comprised of
wedding, birthdays etc. By the means of bakery business the customers would be empowered get
the cakes developed by the ingredients, colour and the design which is design by them. The
Bakery is making presence within the market in order to serve larger base of customers. The
organization is dedicated towards offering new range of the products as well as services where
greater need is. The new venture wishes at making development of the suitable association with
the customers, suppliers as well as employees who are offering value to the firm. This results in
making a greater difference.
Competitive advantage
The following are regarded as the key sources associated with competitive advantage in
relation with the new bakery business. The major source attached with the competitive advantage
is reasonable price at which the firm is offering customized cakes. There is presence of greater
number of bakeries that offer the services related with custom ordered cakes at higher prices
which is making it unaffordable. The availability of the cakes would be different range of prices
so that customer is ordering cake within appropriate range of prices. Another source that is
attached with competitive advantage is potential of the bakery to make outer decoration that is
being stated by the customer. There is greater difficulty for the present bakeries to develop inner
and outer details of cake as this is being stated by the target market. But the particular bakery
would not let the customer design but also allows them to make the decoration. The bakery
possesses the chef who possesses the ability towards making traditional taste in the modern twist
that is customer demand. Suitable ingredients would be sourced and utilized in order to develop
the cakes. Such will offer authentic flavour related with the cakes. The organization would make
payment of special attention in relation with the cake quality as well as other bakery items. The
term quality is considered as the main concern for the customers in present era. On the other
hand for the purpose of serving greater number of customer large number of bakeries is making
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ignorance of such aspect. Through maintenance of the cake quality as well as other products
ABC will gain edge over competitors. Customers have focus towards influence of the business
actions over the environment. In this relation packaging that is friendly is considered as another
factors that assist in gaining advantage over competitors. This will act as an aid for the new firm
in developing unique image in the customers mind.
Business model
SWOT analysis
It acts as an aid in making determination of the strength, weakness, threat and
opportunities of the ABC bakery. The firm is making new entry within the market. Thus by the
means of SWOT analysis assistance would be offered to the firm in development of strategies
that can be used towards bringing enhancement in the weakness. Strengths: The major strength is towards catering to the customer’s specifications. Along
with this offering cake possessing decoration which the customers specify is the main
strength. Along with this strength is towards providing cakes at economical prices.
Further the business has the ability to develop the cakes with traditional flavours as well.
This has been determined that organization possesses the potential to blend the traditional
flavours with the taste that is modern one. Weaknesses: The weaknesses attached with this are the absence of excellence in
development of other products related with bakery. Further another drawback is offering
services related with home delivery in the various regions. On the other hand absence of
innovation in other items of bakery is another weakness of firm. Opportunities: The business has the opportunity regarding making introduction of the
flavours that are considered innovative. The exploration of the market would be done in
the cities that are nearby.
 Threats: The supermarkets as well as in-store retail bakeries can offer same services.
Other bakeries offering home delivery cakes in same region. The bakery that is offering
services related with taking online orders.
PESTLE analysis
For the sake of ascertaining the external environment of the organization there is
importance at carrying out the Pestle analysis in order to know the factors that influence the
business operations. This technique takes into account essential factors such as political, social,
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economical, technological and legal. Pestle analysis of ABC bakery has been presented in the
manner as under: Political: This factor is associated with legal laws as well as regulations which is required
to be followed while the business is carrying out performance of operations in the market.
Apart from this laws related with employment has to be followed then there is
significance for the firm to provide suitable environment to the employees. The
regulation attached with quality of services needs to be followed with respect to ABC
bakery. In this the firm is required to maintain appropriate quality that is being offered to
the target market. At some point of time the political laws are regarded as the barriers and
due to this they are required to be complied with in an appropriate way (Metzger, 2014). Economical: In case of London the economy is developed one. Further considering the
economic situation there is greater advantage for ABC to perform the operations in the
market. As a reason of growth in rate of GDP there is greater willingness in the firm to
spend on the services that are provided by restaurant. This suitable for business in the
market. Apart from this inflation rate is less due to which purchasing power also becomes
higher. Further economic scenario of London is stronger as well as people's income level
within the city is higher that is considered as advantageous in development of the pricing
strategies in an effective manner (Fozer and et.al., 2017). Social: This is attached with the alterations in the needs of the target market on the basis
of services that needs to be offered by the target customers. Further it is important for the
firm to make development understanding with respect target market for the sake of
offering quality services within the town. The retention of the customers is considered as
the key. Thus such is in case of ABC bakery as well. Legal: Such factor is attached with the rules as well as regulation that new firm is
required to follow. It is essential that business complies with the legal restrictions that are
associated with paying off the duties and taxes. Further other laws involves generation of
the employment (Bruns, 2015). Technological: The market wherein the ABC bakery can perform the function in
advanced manner. It is the tourist destination and due to this there is greater significance
for the business to make use of the place (McKeever, 2016). There is no doubt in relation
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to whether the cost is engaged in adopting the new technology. However the end
outcomes are considered favourable for firm through application of such strategies.
 Environmental: The entire business operations which are being carried out negatively
affect the surroundings. Due to this reason the regulatory authority has made
development of some guidelines for the sake of preventing the environment through such
practices. Therefore bakery needs to make sure that operations must not affect the
environment is negative terms. The tool of recycling must be used by the organization for
the sake of protecting the environment (Simón-Moya and Revuelto-Taboada, 2016).
There is existence of certain key factors that affects the organizational productivity to
some extent and thus business is required to take suitable actions in order to enhance the
performance operations of firm.
Industry analysis
In Europe, the bakery industry is considered as a large supplier of revenues & jobs to the
economy. Despite the growth of the UK bakery sector at sluggish pace, the sector is still
continues to offering various growth opportunities to the producers and catering indulgence
consumer trend contributes towards exceeding the industrial growth. Currently, in UK, although
consumers buy desired baked foods from the independent stores, still the sales volume shows a
declined trend mainly because of increase in-store bakery services offered by retailers. Now-a-
days, in- store-
bakeries are
gaining
importance among buyers due to convenience and availability of products at affordable prices.
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(Source: British Bakery Market, 2016)
Evidencing UK bakery sector, the market is valued at £3.6 billion which clearly indicates
that food and bakery sector of UK is one of the largest market and contributing to the economic
growth.
% sales by volume % of sales by value
Large-plant bakeries 75% 85%
In-store bakeries 20% 12%
Craft bakers 5% 3%
Currently, total sales volume of the industry is reported to 4 billion units. There are three
sectors in the UK baking sector that are large plant bakeries, in-store-bakers and craft bakers.
Looking to the statistical information, it becomes clear that large-plant-bakeries sold largest
quantum of goods and sales to 75% and 85% (UK Bakery Market, 2016).
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Figure 1 Turnover of different bakery products in UK
(Source: Euro-Global Summit on Food and Beverages, 2016)
From the above illustration, it can be seen that in the sector, meat productions contributed
highest to 15% and thereafter, various food products and drinks contribution has been reported to
16% and 15%. However, looking to the bakery sector, out of total turnover, bakery &
farinaceous products owns 15% sales revenue (UK Bakery Market, 2016). It clearly indicates
that entrepreneurs have opportunities to establish their own bakeries and serve the target
consumers as per their expectations. In UK, in the current era, industry, most importantly, large-
plant bakers who specialize in the production bread loaves are facing issues due to decline in the
demand of traditional loaves of bread. However, on the other side, small size bakers proliferated
and gaining popularity among audiences due to economic prices. Immense competitive pressure
and change in consumer preferences forced large-scale producers to drop down their prices so as
to squeeze larger profit margin. In the industry, there are no entry barriers for the prospective
ventures that are looking towards entering into the sector. New entrepreneur can set up a new
bakery just by complying with several legislative requirements such as health & safety
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guidelines for the ingredients used in baked food production and other regulatory policies (UK
Bakery Market, 2016). Suitable price policy, excellent quality control mechanism and
introducing new tastier and healthier customized food items are the key preferences among
buyers.
Competitor analysis
Before entering into the sector, it is essential for the venture to examine the
competitiveness in the bakery sector. Porter’s 5 forces model is a great competitive analytical
tool that helps entrepreneurs to evaluate competitive challenges prevailing in the industry. It is
conducted here as follows:
Internal rivalry: UK bakery sector is very fragmented sector because there are number of
well-established organizations who are serving great quality of taste and good value for money to
the buyers. Premier Foods Plc is leading the baked food industry by serving larger market share.
Besides this, there are some well-established brands that are Hovis, Associated British Foods Plc,
Lyons Cakes, Mothers Pride and Mr Kipling holding strong position in the food and beverage
sector. It gives tough competition to the prospective entrant, ABC as well as existing bakery item
producers to run their operations in a successful manner. In order to respond pricing pressure,
competitors are looking for discounting their prices so as to provide cheaper services and thereby
promote brand image.
Entry barriers: In UK, the industry is not highly regulated by the restrictive
governmental legislations and regulative framework. New entrepreneurs who are looking for
opening their own bakery shop do not face any entry barriers. They just need to comply with the
standard quality & safety standards without any legal requirements of obtaining license and
permits.
Buyers bargaining power: As there are numbers of brands serving cakes, pastries, bread
and other bakery items with limited product differentiation. Thus, by this way, consumers have
high bargaining power because they are able to switch consumption of items from one brand to
another one. High prices are the main reason behind fall in sales of large-plant bakeries in UK.
Thus, in order to respond such issues manufacturers have to cut-down their prices. Besides this,
they need to develop loyalty by serving great quality offerings, more added-value bakery
services, proper hygiene maintenance and others (Zhao and et.al., 2016). During the period of
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crisis, in UK, many bakers had discounted their prices due to extreme price sensitivity among
buyers.
Suppliers bargaining power: Suppliers who are delivering ingredients, supplies and other
required services to the bakers are not limited therefore they do not have high power to negotiate.
Although the bakery producers can be affected by the price swing, still, changes are the results of
change in global supply & demand only instead of suppliers bargaining power. Moreover,
commoditized nature and as manufacturers have various choices therefore, suppliers have very
low negotiating power.
Threats of substitute products: Almost all of the brands, Hovis, Premier Food, Lyons
cakes, Cadbury, Kingsmill, ABF Food Plc, Warburtons and others are delivering similar goods.
There are no substitutes available in the market which can encourage buyers to switch off the use
of one item for the other which is available at economical cost (Marshall, 2013).
Market analysis
In the industry, consumers are highly concern towards healthy eating, convenient
availability and variety of ranges for every category i.e. cakes, breads, pastries and all. In
response to this, bakers introduced food products in different varieties so as to grab attention of
the buyers and satisfy them by delivering tastier and healthier items. Bread, cakes and pastires
markets show a mature growth in the sector; still, it has been expected to face tough challenges
in future years. Customer’s preferences over healthy choices, stiff competitive pressure from the
industry players and challenges due to price cutting down by the retailers to maximize sales are
the main issues faced by the manufacturers in the food sector. Health priority gains considerable
importance among buyers with regards to cakes and pastries & sweet goods as these are viewed
as an indulgence (Phan, 2016). Referring especially the cake products, freshness and use of
natural & fresh ingredients are the key requisite for the producers to attract major audience base
by encouraging healthy consumption & mitigate concerns over using long-life products.
Segmentation, targeting and positioning
STP is the best approach used by the marketers to group market into several elements and
determines the target market for which the items will be produced considering their demand,
need and expectations. In context to the current business plan, the target consumer group will be
as follows:
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Figure 2 Segmentation, targeting and positioning
(Source: Patil and Bach, 2017)
Figure 3 Market segmentation criteria
(Source: Datta, Ailawadi and van Heerde, 2017)
Segmentations: It is the process of segregating market into several parts in which similar
type of members are grouped together. There are different base through which market can be
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segmented into different base i.e. geographical, demographic, psycographic, behavioural
explained underneath:
Geographic: In this, consumers can be grouped together considering different base such
as countries, nation, region, state, cities and others. Considering the current plan, the counter
bakery shop will be established at the centrally located area of London city that is Bloomsbury.
Thus, it will serve people of these areas and people residing in its nearby locations.
Demographics: In this, age, gender, family, education and income may be several factors
upon which people can be segregated into different groups. For the planned business, the
population will be divided into various sub-parts considering the age of the people i.e. children,
younger age and elderly age people (Patil and Bach, 2017).
Psycographic: Under this, life style, social class, personality is the base for grouping the
entire population into different markets. Individual choices, attitude, motivation are the factors
upon which market can be divided into various groups.
Behavioural: Occasions, consumer loyalty, user status, consumer’s purchasing power and
status are the basis. Out of these, for the planned business, it has been decided to segment market
considering the buying power of the buyers. On the basis of this, market will be separated into
three different segments that are low-level income, middle-level income and higher-level
income.
Targeting: According to the selected criteria of market segmentation under geographic
base, ABC Bakers will target local residents of Bloomsbury and its near locations as well.
However, under the demographic base, it will specially target children and younger age people
and produce cakes, pastries and other items focusing their choices and preferences. Company
will target all the users whether they belongs to lower level income, middle-level income and
higher-level income. Currently, in London, children and younger age people are increasingly
demanding cakes, pastries and other baked items in various parties and festive events like
birthdays, anniversaries and others. Thus, targeting these market segments will enable ABC
bakers to grab larger market share in the industry.
Positioning: There are various strategies through which ABC Bakers can establish their
position in the market and develop strong brand image among buyers. For instance, quality
positioning focuses on delivering superior quality offerings to the consumers whereas cost
positioning tactics focuses on maintaining availability of goods at affordable charges for the
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buyers (Datta, Ailawadi and van Heerde, 2017). Although both of these are independent from
each other but none of the marketers can choose only one because rendering customized cakes,
pastries and other baked items at cheaper prices without considering the taste and healthiness of
food will negatively impacts the business. Similarly, great quality offers at high prices is also an
issue facing by the current establishments in the UK bakery sector.
Therefore, considering both of these aspects, it is decided to incorporate both the
positioning strategies for the prospective business venture, ABC Bakers to establish their strong
presence in the market. Applying the combination of both the strategies so as to offer great taste
of cakes in different varieties and flavours at economical rates will motivates potential
consumers to either visit at the stores and order goods via telephonic call or online ordering.
Cheaper availability of cakes, pastries, bread and other items enable lower and middle income
generating people to consume it and satisfy their own expectations.
Estimate of market size and predicted sales with key assumptions
In Europe, bakery sector is not homogeneous in terms of variations in enterprises, cost
structures & their operations. Such disparities can also be seen in the London in terms of market
size and dynamics of operations. People celebrate various occasions such as Birthdays,
anniversaries, valentines and other parties and events with their friends and families. On such
occasions, they order cakes as per their taste choices and preferences in terms of colours,
flavours, designs and others. Thus, it will offer great opportunity to the ABC Bakers to offer
different varieties of customized cakes to the customers and satisfy their expectations perfectly.
Marketing plan
In today’s corporate environment, marketing becomes a key importance among the
buyers because without effectively promoting their brand, none of the business will be able to
compete successfully with the top industry players. Marketing is regarded as a procedure of
incorporating various tactics to advertise or promote their offerings among buyers and encourage
them to use the same to satisfy their need.
Marketing mix decisions: It is a tool that marketers use to promote their brand offerings
among target user base. Here, 7Ps of marketing mix for the proposed venture, ABC has been
decided here as follows:
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Figure 4 4Ps of marketing mix
(Source: Hamzah and Sutanto, 2016)
Product: The planned venture, ABC ‘s product portfolio will cover various ranges such
as cakes, desserts and other items, still, it will specialize in the manufacturing of customized
cakes. It is because, cakes add to the user excitement in parties, events and other functions. Now-
a-days, customization of cakes becomes a huge hit and adds meaning to different occasion i.e.
wedding, birthday parties and others festives that is being celebrated (Hisrich and Ramadani,
2017). The concept of customized cakes is developed so that cakes will be made addressing
user’s actual requirement in terms of ingredients, design, colour, flavour and size. In order to
accomplish success in the industry, it has been decided to produce standard quality of baked
foods using natural and freshest ingredients considering consumer specific requirements i.e.
health concerns and taste choices so as to deliver them better value for money.
Price: Price is another element of marketing mix which is regarded as charges set by the
company for getting something in return for the products and services delivered. With context to
the prospective business, it has been decided to use cost-plus-mark-up pricing mechanism for
setting the product prices (Hamzah and Sutanto, 2016). In the application of such method, an
affordable mark-up will be add to the baked food like cakes, pastries, desserts and others so as to
set economical or affordable charges for the final users. At the same time, competitor’s prices
also will be considered in setting out the most appropriate prices at reasonable return to the
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business. As already discussed, that currently, marketers are facing pricing pressure to discount
their prices, thus, reasonable price mechanism will assists ABC in attracting major audiences
with the best quality items.
Place: In the marketing mix, place also gains considerable significance, more
importantly, within bakery sector, consumers give due importance to the convenience of food
availability. It is the only reason why currently, in-store-bakeries are gaining importance among
buyers due to greater convenience as all services are available under a single roof (Hollensen,
2015). Referring the planned ABC Bakers, it has been decided to deliver goods from their own
independent shop as counter services. Besides this, in order to improve convenient deliveries,
services will be delivered on telephonic calls and online where customers just have to click on
the place order option at our site and mobile apps and deliveries can be taken at home.
Promotion: Integrated Promotional Mix (IMC) or Marketing Communication (MarCom)
is a process of incorporating different promotional tools to effectively advertise the item &
services that are going to be offered by the ABC Bakers. Under the promotional mix, company
will use TV ad, Attractive Menu card printing, banners, Social-media sites, website and a mobile
app will be launched for online ordering. Besides this, word of mouth publicity & print media
will enable cake producer to attract greater number of audiences from different places and
serving them tasty quality of baked food.
People: In Food & Beverage sector, staff plays a great role and considered as a key
pillars of success. It is because; the key requisite for the success of the bakers is great quality
taste which is made by chefs. Moreover, services are delivered to the customer at counter by
sales staff and in addition, delivery members will be responsible to ensure on-time home
delivery. Furthermore, marketing staff held accountable for effectively promote business
offerings. Thus, in order to match all these necessities, skilled, talented & competent sales staff
will be hired with a minimum experience requirement of 1-2 years. Apart from this, an initial
training of a short period of 15 days will be organized to train people so that they can serve
consumers in the best way.
Process: The cyclical procedures used to purchase ingredients from the suppliers,
manufacture cakes, pastries, breads and other baked items and ensuring its delivering to the
consumer either at the counter or home delivery at some monetary payment is linked to each
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other. Therefore, it is essential to manage it properly for running the business functions in a
smooth manner.
Physical evidence: All the ingredients will be keep safe considering the hygiene
requirement of the clients and health and safety requirements. In addition to this, services can be
sold either as fresh and pre-packed means long-life products. Referring the planned business, all
the items will be arranged in a counter in safe way. Moreover, as the business will also deliver
home deliveries, therefore, in order to promote safety, it will be packed in a closed container.
Besides this, equipments like refrigerator and others will be used for the physical evidences.
Operational plan
The proposed bakery business, ABC Bakers will carry out various functions in the market
such as purchase of fresh ingredients that will be used in the production, manufacturing process
to produce cakes as per the taste and needs of the buyers, counter and home delivering,
marketing and many others. Entrepreneurs must devise a perfect plan for managing its
operational activities in a successful way so that it can beat rivals and achieve long-run success
in the market.
Nature of business:
The planned bakery business will be established as a sole proprietorship, in which, there
will be a single entity that will be solely responsible to invest required capital, handle regular
operations and dealing with various operational difficulties by designing strategies, management
policies and putting control over daily functions. Being a single entrepreneur, entity owes
unlimited liability and all the profits as well as losses that are the results of bakery operations
will be available to himself / herself. Although, entity might face difficulties in gather sufficient
funds still it involves less regulatory requirement to establish new ventures hence, takes less
time. Moreover, entity can enjoy all the profits gained through operations. In addition to this,
flexibility of management and full control over regular functionalities are the benefits of
establishing proposed venture as a nature of sole proprietorship.
Business location:
ABC Bakers will set up its own physical and independent bakery shop at the central
location of London, Bloomsbury. The reasons behind selecting this particular location is that it s
the central location of London and also people are highly demanding various baked food items to
satisfy their own expectations. Currently, there are number of bakeries running in the
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Bloomsbury i.e. Patisseries Deux Amis, Fork Deli Patisserie, Patisserie Valerie Brunswick
Centre, Upper Fleet Bakery, Patisseie Valerie, Artisan Bakery and others who are rendering
wonderful taste of cake, pastries, breads, teas, coffees and other baked food items in varieties of
ranges to the customers and exceeding their expectations. Quality, Convenience, authentic
environment, well-furnishing is the factors which attract audiences to come and enjoy the
delicious taste of food offerings (Eagle, 2015). Thus, it becomes clear that by opening bakery
shop at such location will be definitely a perfect place to attract the attention of major population
and enable he venture to succeed in the market.
Operational & service management issues:
Establishing a new venture definitely brought a number of risks in the front of
entrepreneurs. Referring the proposed business plan, there are various constraints or issues which
entrepreneur can face in the process of setting-up a new bakery shop. For instance, inability to
find a perfect or stunning location for opening the shop may create hurdles in the front of
business entity and delay the initiation of operations. Besides this, as entity will require various
resources i.e. human capital, funds, equipments and others, therefore, resource constraints such
as limited access to fund, lack of availability of talented workforce at affordable wages rate
might be several issues in the front of proposed business. Funding issues will be overcome
through accessing funds not only from the personal savings but also from the external markets
such as bank borrowings. Furthermore, capacity constraints means ability of the entity to serve
number of audiences at a given time may be a risk for the potential venture (Leary, Bell and
Thomson, 2017). It will be combat through offering services through telephonic calls and orders
at websites and mobile app. In addition to this, conflicts may be incur among workforce which
will be tailored by the HR professionals and mitigate through mutual discussion among team-
members and through developing familiar & healthier relationship among all the staff members.
Canvas business model of ABC Bakers
The business model, Canvas for the proposed bakery shop comprises key operational
areas, partners, resource requirement, distribution channels, key activities, consumer segments
and other important information (Aithal, 2016). It is prepared here as follows:
17

Key Partners
 Equipment vendors
 Suppliers of furniture
 Ingredients suppliers
Key Resources
 Sufficient fund
 Skilled workforce team
 Store for the bakery shop
 Furniture
 Kitchen equipments
Key Activities
 24 Hour online home
delivery
 Best quality cakes,
pastries and other baked
food item deliveries
 Promotional mix
 On-time deliveries
Customer Segments
 Lower-level income
 Middle-level income
 Higher-level income
Channels
 Web or mobile apps ordering
 Telephonic booking
 Counter deliveries at our
shops
Cost Structure
 Production costs i.e.
ingredients, human force and
others
 Administrative cost
 Marketing expenditures
 Operational payments i.e.
utility and other
 Capital expenditures
(CAPEX) i.e. equipment and
counter purchase
Customer Relationships
 Superior quality offerings
as per user taste
 Affordable pricing
mechanism
 Handling consumer
complaints Timely payments to the
suppliers Customer Relationship
Management
Value Proposition
 Customized cakes and food
items in different varieties
and flavours with attractive
designs
 Instant home-delivery
 Clean, friendly and attractive
environment of our location
 Economical prices
Revenue Streams
 Price of goods delivery
 Home-delivery charges
18

FINANCIAL PROJECTION
Capital requirement
The initial capital for the new bakery start-up has been projected to £200,000, out of
which, entrepreneur will invest £80,000 and external loan from Lioyds Bank will be taken @ 4%
interest rate per annum will be paid annually within the maturity period of 5 years.
Sales and cost projection
Table 1 Sales and cost projection of ABC Bakers
Unit sales year 1 Year 2 Year 3 Total
Customized cakes 18000 20700 23805 62505
Drinks 9000 9000 9000 27000
Desserts 7500 7500 7500 22500
Pastries 13500 14850 16335 44685
Total 48000 52050 56640 156690
Average Unit prices
Customized cakes 250 263 276
Drinks 5 5 6
Desserts 15 16 17
Pastries 2 2 2
Total sales
Customized cakes 4500000 5433750 6561253 16495003
Drinks 45000 47250 49613 141863
Desserts 112500 118125 124031 354656
Pastries 27000 31185 36019 94204
Total sales 4684500 5630310 6770916 17085726
Direct cost/unit
Customized cakes 150 158 165
Drinks 3 3 3
Desserts 9 9 10
19

Pastries 1 1 1
Direct cost of sales
Customized cakes 2700000 3260250 3936752 9897002
Drinks 27000 28350 29768 85118
Desserts 67500 70875 74419 212794
Pastries 16200 18711 21611 56522
Total direct cost of sale 2810700 3378186 4062549 10251435
Key assumptions:
 It has been expected to have a market demand of 60 cakes per day covering both counter
sales and online deliveries. Moreover, analysing the growth in consumer demand, it is
also assumed that demand of cakes will be increase at 15% per annum.
 All the forecasting has been made taking into account 25 working days in a month.
 Sales unit for drinks, desserts and pastries have been expected to 30, 25 and 45 units per
day and expected to remain constant over the projected period.
 Selling price has been decided taking into considerable average prices of the current
suppliers in the industry. As per this, 40% mark-up on sales has been decided to set
competitive prices for the consumers. Moreover, in order to make necessary adjustments
regarding inflation, it has been decided to increase the offering prices by 5% on year on
year basis.
 Cost of sales are supposed to be equal to 60% of selling prices to £150, £3, £ 9 and £ 1
for all the offerings such as customized cakes, drinks, desserts and pastries.
year 1 Year 2 Year 3
Total sales 4684500 5630310 6770916
Cost of sale 2810700 3378186 4062549
YOY % growth in sales - 20.19% 20.26%
YOY % growth in costs - 20.19% 20.26%
20

year 1 Year 2 Year 3
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Sales and cost projections
Figure 5 Sales and cost projected figures
Looking to the above graph, it is visualized that sales with the increase in market
demand, sales also shows a rising trend. In the similar way, cost also reported growing trend at
YOY % growth of 20.19% and 20.26% in 2nd and 3rd year.
Table 2 Projected profit and loss statement of ABC Bakers
Particulars Year 1 Year 2 year 3
Sales 4684500 5630310 6770916
Less: Direct cost of sales 2810700 3378186 4062549
Gross margin 1873800 2252124 2708366
Gross margin % 40.00% 40.00% 40.00%
Less: Operational expenditures
Payroll 257800 270690 284225
Administrative expenditures 702675 737809 774699
Sales, marketing and other expenditure 468450 563031 677092
Depreciation on-
Furniture and fittings 13500 11475 11254
Equipments 6750 5738 5627
Utilities 351338 422273 507819
Total operating expenditures 1800513 2011016 2260715
21

Earnings before interest and tax 73288 241109 447652
Operating profit margin/sales 1.56% 4.28% 6.61%
Less: Interest 4800 3914 2992
Profit before tax 68487.5 237195 444660
Less; Tax @ 20% 13697.5 47439 88932
Net profit 54790 189756 355728
Net profit %/sales 1.17% 3.37% 5.25%
Key assumptions:
1. Payroll cost has been assumed taking into consideration average salary in the UK and has been
increased at the growth of 5% on an annual basis, mentioned here as follows:
Number of
employees Average annual salary Total
Manager 2 60000 120000
Bakers 3 20000 60000
Baristas 2 16400 32800
Delivery staff 3 15000 45000
10 257800
Table 3 Calculation of estimated personnel cost of ABC Bakers
Personnel Plan
Year 1 Year 2 Year 3
Manager 120000 126000 132300
Bakers 60000 63000 66150
Baristas 32800 34440 36162
Delivery staff 45000 47250 49613
Total payroll 257800 270690 284225
2. It is estimated that baker will incur 15% of sales as an administrative expenditure which will
increase over the period @ 5%.
3. It has been expected that company will allocate 10% of sales over sales, marketing and other
expenditure which will remain fixed over the budgeted period.
22

4. Depreciation on furniture and fittings and equipments has been charged at 15% p.a. applying
reducing balance method.
5. Loan amortization schedule for the interest calculation is presented below:
Table 4 Loan amortization schedule
Pmt
No.
Pay
ment
Date
Beginnin
g
Balance
Schedul
ed
Paymen
t
Extra
Paym
ent
Total
Payment
Principa
l Interest
Ending
Balance
Cumula
tive
Interest
1
1/6/2
018
£
120,000.0
0
£
26,955.2
5
£
-
£
26,955.2
5
£
22,155.2
5
£
4,800.00
£
97,844.7
5
£
4,800.0
0
2
1/6/2
019 97,844.75
26,955.2
5 -
26,955.2
5
23,041.4
6 3,913.79
74,803.2
8
8,713.7
9
3
1/6/2
020 74,803.28
26,955.2
5 -
26,955.2
5
23,963.1
2 2,992.13
50,840.1
6
11,705.
92
4
1/6/2
021 50,840.16
26,955.2
5 -
26,955.2
5
24,921.6
5 2,033.61
25,918.5
1
13,739.
53
5
1/6/2
022 25,918.51
26,955.2
5 -
25,918.5
1
24,881.7
7 1,036.74 0.00
14,776.
27
Table 5 Profitability analysis
Profitability figures Year 1 Year 2 Year 3
Gross profit 1873800 2252124 2708366
Operating profit 1800513 2011016 2260715
Net profit 54790 189756 355728
Profitability ratios
Gross margin % 40.00% 40.00% 40.00%
Operating profit margin/sales 1.56% 4.28% 6.61%
Net profit %/sales 1.17% 3.37% 5.25%
YOY % growth
23

Gross profit - 20.19% 20.26%
Operating profit - 11.69% 12.42%
Net profit - 246.33% 87.47%
Year 1 Year 2 Year 3
0
500000
1000000
1500000
2000000
2500000
3000000
Expected profitability result
Amount ( In GBP)
Figure 6 Expected gross profit, operating profit and net profit
Looking to the results, it becomes clear that gross margin will remain constant over the
period @ 40%, still, the gross profit grows a rising trend @ YOY growth of 20.19% and 20.26%
respectively. However, operating margin will grow up from 1.56% to 4.28% and 6.61% at YOY
growth of 11.69% and 12.42%. Lastly, net earnings of the firm will be increase due to more
sales. As per the illustration, it can be seen that NM will be increase from 1.17% to 3.37% and
5.25% whereas YOY increase is determined to 246.33% and 87.47% respectively. It clearly
indicates that ABC Bakers will improve better over the period.
Table 6 Projected cash flow statement of ABC Bakers
Particulars Year 1 Year 2 Year 3
(A) Cash inflow from operating activities
Sales 4684500 5630310 6770916
Less: cash paid for
Cost of goods sold 2810700 3378186 4062549
Payroll 257800 270690 284225
24

Administrative expenditures 702675 737809 774699
Sales, marketing and other expenditure 468450 563031 677092
Utilities 351338 422273 507819
Interest 4800 3914 2992
Corporate tax 13698 47439 88932
Net cash flow from operating activities 75040 206968 372608
(B) Cash inflow from investing activity
Purchase of furniture & fittings 90000 0 10000
Purchase of equipments 45000 0 5000
Sale of furniture, fittings & equipment 0 0 0
Cash outflow from investing activity -135000 0 -15000
(C) Cash inflows from financing activities
Procurement of fund through bank loan 120000
Procurement of funds through owner's investment 80000
Repayment of loan -22155 -23041 -23963
Net cash flow from financing activities 177845 -23041 -23963
Net cash flow (A + B + C) 117885 183927 333645
Initial balance 0 117885 183927
Closing cash balance 117885 301812 517572
Key assumption:
Initial investment worth £200,000 will be collected through owner’s capital and
borrowings worth £80,000 and £120,000. Out of these, furniture and fitting (F&F) will be
purchased at £90,000 and equipments will be purchase worth £45,000 and rest will be used as
working capital. In 3rd year, additional purchase will be made for F&F and equipments at
£10,000 and 5000 respectively.
Critical success factors (CSF)
The main key successive factors for the ABC Bakers are mentioned below:
 High quality customized cakes and other products and services
 Competitive prices
 Instant home delivery
25

Entity will carry out its regular business activities in an ethical manner and complying
with the health and safety laws and other regulations as well to mitigate possible issues.
ELEMENT 2: INDIVIDUAL POSTER PRESENTATION
26

REFLECTIVE STATEMENT
Learning experience
The study significantly contributed towards strengthening my learning experience as with
thorough and in-depth investigation to create a feasible business plan, I used multiple of models
and tools like PESTLE for examining the current market environment and its possible impact on
the organization. Besides this, SWOT, business model CANVAS, competitor analysis through
Porter’s 5 forces model, marketing decisions through 7Ps and others improve analytical skills,
decision-making skills and research skills as well. Furthermore, after analysing the current
market growth, I became able to make necessary assumption with proper justifications to make
financial project regarding sales, profitability and cash flows for the proposed business, ABC
Bakers. Brainstorming sessions with my friends also helped me to critically analyze various
issues and find a right solution for the same and improved my critical thinking skills for the
professional advancements. Although I faced hurdles but tutor’s due assistance, guidance and
friends and family members support make me confident & improved my skills for the
professional growth. Overall, it becomes clear that study significantly contributed towards
strengthening my learning skills.
Barriers to learning
Throughout the entire journey, I faced different learning barriers and difficulties which
make it really tough for me to prepare the feasible business plan. It was the first time, when I
have designed a business plan so initially, it was a challenging task for me that how to make
business plan as I have not even a basic idea about it. At that time, the first question was that
which business I must start because there are various categories of businesses thus; it confused
me for selecting the one among all. I overcome such problem through carrying out an in-depth
web investigation. By conducting it, I came to know that in UK; currently people are demanding
varieties of cakes on different occasions but at competitive charges while currently established
large-plant bakers prices are too high. Therefore, it is a gap between industry supplies and
consumer requirement that provides an opportunity to start own bakers where quality customized
cakes are being available to the users but at reasonable prices. Hence, I decided to start a bakery
shop and titled it as “ABC Bakers”.
27

Besides this, although in my educational course, I have read many concepts and
marketing models like PESTLE, SWOT, 7Ps of marketing mix, Porter’s 5 forces model for the
competitive analysis, STP approach and CANVAS business model, still, I just have theoretical
knowledge and not applied any of these models practically. Thus, it was a major barrier in front
of me, still, my supervisor’s considerable support, due guidance and adequate assistance helped
me in applying the models actually to design a new feasible & viable bakery business plan. In
addition to this, financial projection with justifiable assumptions was extremely hard for me, still,
my friends due guidance and supports and web research to analyze the current market prices,
cost structure and others enable me to create a perfect financial projection to examine the
commercial viability of the plan.
Professional & employability development skills
The study greatly contributes towards strengthening my professional & employability
development skills. As in the research, I investigated different areas through conducting web
research which helped me to improve my research skills. In such regards, the viability of the
designed plan, current market growth, market size, prevailing trends in the industry, change in
consumer demand and desire etc. have searched which enhanced my learning and knowledge and
significantly contributed in my employability development skills. It strengthened my particular
industrial based knowledge as I became familiar with the current prevailing market trends,
market growth, possible future movements, cost structure, consumer taste and preferences and
all. Moreover, practical knowledge regarding the application of various marketing models i.e.
7Ps of marketing mix, SWOT, PESTLE, porter’s 5 forces model, CANVAS and others improved
my skills and knowledge to a great extent. In such respect, I made number of decisions like
pricing decision, creation of promotional mix, distribution channel and other areas of proposed
business strengthen my decision-making decision to a great extent and contributed towards
professional growth.
Now-a-days, creativity is also a growing demand in the corporate sector and the study
significantly contributed towards maximizing creativity and innovative skills through an
attractive and unique poster presentation. Moreover, graphical presentation of sales projection,
expected profitability and others strengthen innovativeness. Apart from this, as I used
spreadsheet for the creating cash flow statement, profit and loss account and sales projection
contributed towards maximizing technical skills. It is because, although I have knowledge of
28

excel but never actually used it. However, in designing the business plan, I gained knowledge of
different formulas and functions through the use of spreadsheet which improved my technical
skills. At the starting stage, I was quite feared due to lacks confidence but with the completion of
the business plan, I felt really confident. It build learning attitude and challenge accepting
behaviour in myself and I noticed that dedication, hard-work and genuine efforts makes
everything possible.
Personal objectives
My core aim is to become an entrepreneur in future period which required number of
skills and competencies to set up a successful business in the competitive edge. The designed
business plan really provided help to me to fulfil my personal objective as I gained knowledge of
different aspects such as marketing, finance, competition, external market challenges and others.
This analysis enables me to make right decisions at right time considering consumer expectations
and competitive strategies as well. Moreover, every entrepreneur needs creativity and innovative
skills and must be able to think critically upon various issues to make sound decisions. Through
the current business plan, I used MS spreadsheet for the projection and also design different
graphs which helped me to improve presentation skills and gain strong financial knowledge. In
order to strengthen the knowledge base, I decided to use various updated software like SQL,
SPSS, R software and others to enhance data analytical skills for the purpose of financial
modelling and learning of programming language to become an entrepreneur.
29

30

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