A Project proposal
Prepared by:
DON ENRICO G. CONCEPCION
Introduction
Putting up a Bakery is the most viable enterprise to go into during theses times of crisis. This country is still in recession to my opinion. The business of food, transportation, and telecommunication is very strong to this day because people utilize these services almost always. Especially in the telecommunication sector, where subscription based services is always a big income earner; the income is continuous. These are the telephone companies, cable companies and Internet Service Providers. So as with the transportation business, everyone needs to go around. Gasoline companies are the real winners in this sector. As for food, everyone has to eat! The food business is said to be the most stable even if the prices have gone up fast food chains never lose customers. Even if there are many competitors, the business never fails. Food is a thing no one can live without.
To establish a Bakery is, in a sense a very good idea to some. Most people in this country eat bread, specifically pandesal in the morning compared to westerners who might eat cereals, but of course there are those who prefer to eat rice like sinangag with other viands. Some eat puto in the morning or just plain taho and purchase them from peddlers. The return on investment of a bakery is good according to some bakeries I asked. Minimizing costs in production can increase the profit from sales. The relative shelf life, on the other hand is very long, bread can be stored for a considerable length of time. The biggest input in bread making is the flour, wheat flour used in all bakeshops is imported; wheat cannot be grown here, but there have been attempts by plant breeders to breed suitable varieties in different localities nationwide. Wheat flour costs have decreased since our country joined the GATT. The fact is we are being dumped with cheap flour from the west. With a small amount of flour you can produce a lot of bread, but that's not the only ingredient to it, there is eggs, sugar, baker's yeast, butter. There are differences in making bread, cakes and cookies.
Establishing the Business
According to some I asked no one loses in the food business. And the easiest to establish is a bakery. It will provide bread for breakfast and merienda in the afternoon. Filipinos who are true Filipinos eat a lot, you are not a Filipino if you don't eat four times a day; some even eat midnight snacks. To establish the bakery, I think we would need a very experienced baker or someone who bakes and makes bread and a very sturdy baking oven, a good location away from competitors but close to the community, who will be our customers, and the ingredients, which will be the bulk of the operating expenses. The biggest costly input will be the oven and the structure of the bakery itself. One option I thought of in case we cannot start the bakery from scratch because of some factors like, lack of money, scarcity of a competent baker, labor cost of managing the business, high cost of inputs; is that we can entrepreneur an already existing small scale bakery business. According to me, entrepreneurship is in essence the innovating of an existing enterprise to increase more profits or to make something out of nothing and make a lot of money out of it. We can pool our money together and improve someone's small bakery. That is the key. We would take that small business and pour in capital to increase its marketability, improve its income, diversify its product line and give more value to customers; giving people more goods to choose from.
Things to consider in establishing the bakeshop: Would we be making it a big shop or a small shop? Can we start it from scratch? How much will we spend? Can we raise enough money? Will it be just a bakery or something else? How do we start it off? Do we need to know bread-making skills? Can we find a baker? How many people will we employ? Where and when will we make shop? Would we lease commercial space or make it home grown? Do we have a conceptual model of the business? Will we expand after making it good? To my opinion, we should learn the bread making skills ourselves, that way, we could really know how the business works first hand and to be able to know the possible problems and how to go around them and find ways to improve everything.
The Location
The most suitable location for a bakery must be within the community or where most people would want to eat. It could be near the work place, in the malls, near business establishments, if we are going to be big. For small time, the closeness to the immediate community will suffice. The availability of the ingredients is also a factor to consider. If the materials are readily available, we won't have any problems with that. Starting from scratch would probably be a little difficult. It would require us to lease commercial space in an area with high demand for the product. Scouting for the ideal location would be the first step and then the budget considerations when the suitable location is chosen. For an area near a community, it would be best to establish the bakery along the road near an intersection, but not so close to traffic. Access to the ingredients is the main consideration and access to customers. Most bakeries are homegrown; they start as a family business and are established within the household, catering to the immediate community.
For an area near a commercial area, I suggest similarly the same, near lots of human traffic, where people converge. The mall would be good, but the lease on these areas, are unreachable. Good areas would be near universities, schools, near market places, mainly in metropolitan areas. In the business districts we can cater to the corporate yuppies. To this point we still have not chosen a preferred location.
The Materials and Equipment Needed
The biggest initial input would be the baking oven, specifications of this are still not researched but information can be obtained through other bakeries. The type and cost of an effective oven, where to purchase it, to purchase second hand or brand new, still needs to be found out. Ingredients for making bread, what are they? Where can we get the best buy? The expert baker, where can we get hold of one? Other utensils needed for the bakery, stalls for displaying the goods, trays, refrigerator, and containers for the ingredients. Electricity will be needed if we will be using an electric oven. Other things that may be necessary would include a bathroom with lavatory for other miscellaneous activities, a water connection, a phone line for communication, a vehicle for bringing in supplies, a storage facility at the back of the establishment for the ingredients and other supplies. We would also need a coffee-making machine if we will be making it into a coffee shop as well. If it will be homegrown, part of the house will be used for storage purposes.
Financing
The financing scheme is still a question mark. How will we finance this project? Will we get a loan from a bank or will it all come from our pockets? What would be our collateral if we get a loan? I don't know the terms and conditions in acquiring a loan. If we get a loan, I think it would all lie on the cash flow presentation of the feasibility study the bank may require us to submit. If it comes from our pockets, who will be the contributors, the major players in this game of risk? Do we have to guts to jump into this endeavor and overcome the economic crisis? I suggest if we can't loan from a bank, a local lending investor would do.
Income Potential
Cost and Operating Expenses
The expenses I see would be the rent on the commercial space, taxes and other municipal fees, water and electric bill, and phone line installation if we need it. Other expenses will be salaries for the employees. That is part of the operating expenses. Initial cost if we would start from scratch would be an oven, utensils etc., a good baker and ingredients. But if we will entrepreneur someone's bakery, it would be a partnership business, and we would invest mainly in the location to improve its marketability, and improve or specialize its product line to increase profitability. Diversifying the goods is one of our objectives, transforming it into a coffee shop from a mere bakery is the key. Moving the bakery into a commercial space will increase its marketability and improve its income.
Feasibility Computation
Possible Problems and Recommendations
Marketing Strategy
There are several marketing strategies that we might employ. One that I thought of is specializing in certain products that our competitors don't have like special tarts or other delicious addictive desserts that in the long run we might make to order. We can also add or diversify our goods like adding coffee to the menu. Coffee or so called morning latte is so popular so many people drink it, so often it looks like they are addicted to it. Adding a coffee shop to the bakery would definitely add more variety and choices to the baked goods and it would go perfectly with the bread and cookies. We'll add different flavors of coffee. With this we will need an efficient coffee maker.
Adding snacks other than baked goodies such as pastas and pizza would spice up the customers appetite. We'll make different kinds of tasty pizzas and different pasta dishes. Or we can add flavored French fries and different flavored homemade ice cream. Variety of goods will make more people come into our deli. These recipes are not that hard to find. Adding a salad bar would also be a good idea for those vegetarians or those who want to go on a diet. This will cater to a wide variety of people.
Adding a few computer terminals for Internet access would add more service to our customers and will invite more patrons to our deli. For this we need an Internet subscription and a separate phone line.
We can also invite sponsors to advertise in our shop, that way we would invite more customers at the same time helping each other. Sponsors or advertisers will be our business partners. For example, the makers of scented candles or fresh flowers or hand made beads, would sell their stuff in our deli and pay a small lease. That way, customers interested in buying them would also want to take a drink of our coffee or grab a bite of our baked goodies or pizzas or ice cream or flavored French fries.
Availability of cashless purchases will definitely increase our customer base and convenience to our patrons. This will include credit card purchases. Online purchases will increase our sales, which would subsequently increase our workload. This would entail putting up our own website, which will add more cost. For this, we will need to get a domain name, a server to put our domain, a convenient design for our website, which will need someone to design the site.
Adding an environmental objective as a social and civic contribution to the community is another marketing strategy that will put our business name in everybody's mind. Promoting environmental awareness, like recycling or use of natural products can be done by printing slogans on cups or paper bags that come with the goodies or on napkins.
Cutting down cost is the most important aspect to think of. Reducing cost of production will increase our profits. Huge costs will be a problem. Appropriate pricing with acquiring the raw materials at low costs will make our business stay afloat.
Most of the ingredients to the products I mentioned are of bakery nature. The flour is the main and bulk of the ingredients, innovating that would cut down costs. For the coffee, we should get the beans from a trusted source and at farm gate prices. For the French fries, I guess it would be cheaper to get them fresh and by the volume; we just have to store them and freeze them. Buying the potatoes on a particular season would be wise because prices fluctuate. We can also grow the ingredients we need if situations permit. A proper storage facility of ample size would be needed for this purpose. This includes a dry and cold storage area.
The Future
My vision of the bakery business that we will be creating is quite simple but innovative. The best thing I think would be to entrepreneur an existing bakery and making it into a bakeshop, this would put some facade on the bakery itself, it would put some tint of character and color to the business. A bakery is where you can purchase bread at a counter, whereas a bakeshop, you can dine-in inside the establishment. It would have an ambiance, a ceiling to look at and a wall to admire. We would increase its marketability by adding value to the product. We can also specialize or diversify the product line, by making specialties such as desserts (e.g. tarts), we can make it into a bakeshop-coffee shop; we would also serve coffee. That would mean different ways of serving coffee and many flavors of coffee, but we would stick to locally produced ingredients.
I would see our bakeshop-coffee shop to be air-conditioned situated in the heart of a metropolis where people would come in for coffee and find the delectable variety of our baked goodies to their satisfaction. The space inside would be well lit, spacious, with tables and chairs and a view of the street. There also, would be a bar-counter near a cash register. It could be self-service or a waiter would take their orders. The catch would be: great coffee with great pastries. In expanding, we may add some short orders to the menu, like pizza and pasta dishes and sandwiches and ice cream, we might even offer catering services to the business communities around. We may add a small bookstore inside or offer other products through a small cart that sells beads, scented candles and fresh flowers. It would be a one-stop shop. We can also add an important service, like adding one or two computer terminals for Internet access. We'll also have a community bulletin board and a lost and found counter. In summary, it would be a hang out for people from all around and a meeting place for business people.
I have this marketing plan to this stage of the business, when its already a coffee shop-bakeshop status such as I have described, we'll have our own website for the business. People can browse our site and see what we have to offer; they can look into our menus for the week and the price list. Through the site, our business partners can transact business-to-business transactions. Interested parties can make reservations for our catering services or order our baked goodies online. They can email us, fax us or call us via the phone. This would make our business leap toward e-commerce. We would have an edge against our competitors. Expansion could include offering franchises or opening branches in other commercial areas, such as major cities and inside airports or seaports and industrialized zones such as Clark Economic Zone, Subic Metropolitan Authority, Fort Bonifacio Business Complex to name a few.
A publicity stunt would make it more Internet savvy. I devised an idea that would be very different from the rest. If we would link a few web cams inside the coffee shop-bakeshop to our website to show what's going on inside and who are the lucky customers to be on the net, it would spark a revolutionary step to entrepreneurship and change the whole business model radically. The web cams would focus the view to the bar-counter and cash register, the door, the side window, the kitchen and the entrance. We could invite celebrities to dine, and focus incidentally on them to show the people on the net what the celebrities like to eat in our coffee shop-bakeshop. We might even have names for the baked goodies our celebrities like and call it their specialty. We would have a disclaimer posted before they enter the coffee shop, which they will agree to lose some of their privacies as they enter. The web cams can also show the pretty people who hang out at our shop. This would invite others to join in and get themselves shown on the Internet while enjoying the pastries we have to offer them.
The business-to-business transaction would be on the raw materials such as our special flour, which we could offer wholesale and retail on other items. The business-to-customer transaction would be our goods to the public customers either through our physical store or online store. These would all generate a lot of hits on our website and will prompt our site to be listed on the most visited sites on the web, we would take advantage of this and offer advertisers to advertise on our site, we can earn extra income through this as well as banner exchanges. We would then link our site to major web portals in the country.
One more idea is to have ties with art galleries near by. We can ask some of the artists in advance to display some of their work in the shop as part of advertising them, in return we have a good business sign for everybody to look at.
If situations improve for the whole country, we might introduce cashless purchases at our shop by using the debit card system. We can also cater to credit card purchases. The future is our destiny.
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