If you plan to seek financing for your bakery, a business plan is absolutely essential. Investors and lenders rely on the key information provided in the business plan to decide whether your bakery is a good financial risk. Even if you will self-finance, a business plan serves as a valuable road map to help you stay on track and control growth in an organized, cohesive way.
What Is a Business Plan?
A business plan combines a snapshot of your bakery as it currently exists with a clearly defined vision of your company’s future over the next three to five years. It lays out your goals, the obstacles that you expect to encounter, and your strategies for overcoming those obstacles and reaching your goals. Your business plan is a living document, and you should revisit it frequently as your bakery evolves.
The executive summary is the introduction to your business plan, although it is often written last. It helps investors and lenders quickly decide whether to read more, so the first page must get right to the point. Include a concise description of your bakery, a short analysis of the market, proof that customers are willing to pay for premium baked goods, and an explanation of the unique qualifications that ensure your bakery will be a success.
This section provides a comprehensive look at the company’s history. Include details on your bakery’s legal structure, founding, location, and current business stage, as well as your past accomplishments and unique qualifications. Clearly explain anything that makes you a strong competitor in this market, such as existing contracts with retailers, a head baker with impressive restaurant credentials, or exclusive access to award-winning recipes.
This section assesses your industry as a whole, and explains how your bakery fits into the existing landscape. Address any challenges that you unearth with a solid strategy for success. Also keep in mind that your market is not the entire baked goods market. Rather, it is your niche of that market. Zero in on the specific products and customers you plan to target, and focus your analysis on those elements.
This section explains your customers and how you will fulfill a need for them. Be as specific as possible. Do you plan to target brides to be? Children’s birthday parties? Upscale families who regularly hold private events for 100 or more guests? Clearly define your target market, and then delineate their demographics. Also discuss how they make their buying decisions. Are they price conscious? Is quality the most important? Do they insist on reliability and premium service? Finally, stress how your bakery will meet their unique needs.
Your direct competitors are those who fulfill the same need for the same target market. Your indirect competitors are those who fulfill a different need for the same target market, or those who fulfill the same need for a different target market. Name and describe your direct competitors individually, and explain what sets your bakery apart from them. Create a more general category for your indirect competitors and discuss them as a whole.
Your marketing plan explains how you will penetrate your target market, based on the four P’s: Product, Price, Place, and Promotion. The Product section explains all of the products and services your bakery will provide. Price refers to the price points at which you will sell each item, along with your reasoning for choosing those prices. Place explains all of your distribution methods, such as your retail stores, your company website, and third-party retailers. Promotion defines the ways you will entice customers to purchase your baked goods, such as free samples and web advertising. Finally, explain how you will retain existing customers through loyalty programs or other methods.
The operations plan explains the processes by which you will turn your vision into a reality. It includes the everyday short-term processes involved in physically baking your products, managing your retail space, packaging your baked goods, conducting sales transactions, and delivering the finished products to your customers. It also includes the long-term processes involved in growing your company, such as introducing new products or retail stores, achieving specific sales milestones, and hitting other important business-oriented goals.
This section provides biographies of the key members of your company’s management team, with an emphasis on strong business skills. Focus on educational background, previous experience with successful start-ups, and other elements that demonstrate the ability to build a company. A strong advisory board can help make up for weaknesses, provided you clearly articulate how your advisors will directly affect the company’s growth.
The financial plan is often the most difficult part of the business plan to write, yet it is the section that potential investors and lenders spend the most time analyzing. Provide a list of all revenue streams, including their relative importance and timeline for implementation, as well as sources of outside funding. Include a summary of past and projected Income Statements, Balance Sheets, and Cash Flow Statements. The assumptions made in these documents must be reasonable and verifiable based on an analysis of similar companies. A solid exit strategy is also important.
The appendix includes the full financial projections, as well as any other documentation that supports the claims made in the business plan. For example, it might include a list of key existing customers or letters from potential partners.
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