Ultimate Guide To Writing A Bakery Business Plan in 2021September 16, 2021 2021-09-16 16:14
Ultimate Guide To Writing A Bakery Business Plan in 2021
Ultimate Guide To Writing A Bakery Business Plan in 2021
Starting a new business in Nigeria is like going into the forests in search of treasures. There is gratification at the end, either through acquired riches or in a personal sense of achievement, however, there are dangers lurking and you can easily lose your way.
A solid start to beginning your bakery business is by creating a business plan after you secure your business name registration with CAC. A business plan will help you to decide if your idea makes sense and whether it’s a business worth starting. It’ll give you a snapshot of your finances, the market, and will force you to think about your competitors.
You shouldn’t lose sleep overwriting a business plan for your bakery business, in this article I will show you how to easily write a business plan that achieves results without stress. You don’t need a business degree to get it done. It will show you how to get your plan done step-by-step without any of the complexity or frustration.
Table of Content
- 1. What Is A Bakery Business Plan
- 2. Why Writing a Bakery Business Plan?
- Benefits of Writing Your Business Plan
- Business Plan Writing Guides
- Types of Financial Documents
- Financial Analysis Documents:
- Bakery Business Plan Tips
1. What Is A Bakery Business Plan
A bakery business plan is a written document that describes in detail how a bakery business defines its objectives and what it has to do to achieve its goals. A bakery business plan lays out a written roadmap for the business from marketing, financial, and operational standpoints.
2. Why Writing a Bakery Business Plan?
A business plan for your bakery is an important document you should put in place prior to beginning operations. A well-written business plan is important if you want to attract investors to your business, it will signal to intend investors that you are serious.
If you want to build a lasting business, writing out your business plan is essential, few companies last beyond 5 years without a business plan. If you are already running your business without one, now is a good time to create it.
Benefits of Writing Your Business Plan
1. To Create a Roadmap for Your Business
The business plan is a blueprint of the business that you will follow during the lifetime of your business. It helps you develop a guide for analyzing your business and making changes that will improve your profitability.
The business plan provides a detailed description of your business, it helps you to organize your thoughts and goals in a logical manner. It provides a detailed outline of your company’s past performance, current financial status, and projected growth.
For new business owners without business history, the information in their plans will be based on projections created through current industry research. It also helps you stay focused on your key objectives.
2. To Serve as Documentation for Financing
If you plan to apply for a loan or seek financing from an investor, you will be required to submit a business plan. The business plan shows explicitly how the investment or loan will help the company achieve its goals and increase profitability.
The loaner wants to know one thing- how will you maintain your cash flow and repay the loan with interest without stress. While the investor is interested in knowing how his financial investment will increase the valuation of your company and help him/her regain his investment with profit.
You will have to demonstrate what you would do with the money and justify how it will generate better returns than other options.
The process of creating a business plan will yield you much more than just a piece of writing. It will help you clarify your business idea, test its viability, and demonstrate it to others.
Business Plan Writing Guides
An executive summary is a short (2-4 page) document that covers the main points of a longer (10-20 page) business plan. It’s usually written before the rest of the business plan and briefly pitches the idea to investors. Your summary should include information about the bakery, its mission statement, management, employees, operations, and location. If you are pitching to investors, you should pay attention to this section because it helps readers decide if they want to read the whole plan or not, based on what you do not put in the summary.
While the executive summary appears at the beginning of your business plan, it is advisable you write it after completing the rest of the business plan because, earlier in the process, you’ll have a lot more uncertainty about your business plan. At that point in time, all relevant concepts will be well materialized and other relevant information like financial documents, cash flow forecast, etc will be compiled and available.
If you’re writing your business plan to guide your firm, and not writing one to get financing, writing an executive summary will help you formulate a good overall picture of your business plans. If you are seeking financing, the executive summary is the first introduction to your business and it should provide vital information about your company and its potential for growth and profitability.
Keep in mind to revise your executive summary as soon as you change other sections of your business plan, which you might do constantly.
Products and Services
Here, you list all the products and services you offer, their prices, the lifecycle of your products, and the unique benefit it adds to the lives of your customers. If your bakery has a better way of doing something—a new product, a new technology, or a new way of organizing yourself, you crystallize it here.
As a bread manufacturer, here you itemize your different ranges of products and describe the developmental process of creating a loaf of bread from raw material to the final product. This will help you identify where your raw materials should be sourced, how long it will take to produce a line of bread, how long will the storage and shipping to retailers take.
From a retail point of view, you itemize all the business owners you will supply to. You will also identify how you will be managing inventories to ensure you have enough inventory that you sell it all without running out.
This is where you outline your qualitative and quantitative assessment of the market you plan to enter. You analyze the size of your market, the strengths and weaknesses of competitors, different customer segments you will cater to, how they buy, and the environment you will be playing in.
A useful tool you can use to analyze the market is the SWOT analysis framework. SWOT stands for Strength, Weakness, Opportunities, and Threats. It is used for strategy development and evaluating internal (strengths, weaknesses) and external factors (opportunities, and threats) affecting a business.
The tool asks you to consider what you wish to achieve and then asks how well placed you are to use your particular strengths and exploit your opportunities. It also asks how the environment poses threats and what vulnerabilities exist to your business.
Although your product might be the best thing since the invention of sliced bread, you will enter oblivion if there is no demand for your product and services or you lack the skillset to position your product in front of your target audience.
One of the most fundamental rules of business is that you succeed by focusing on the right markets with the right product. Most products fail because there is no market for them. Or, even if there is a market because the product itself makes it hard to meet customer’s needs.
Your marketing strategy is the comprehensive approach your business will take to achieve your business objectives. In this section, you describe your company’s activities to make potential customers want to buy your products and services. You spell out your distribution channels, sales, advertising, public relations campaigns, and the communication channels you will be using to get your message out.
When all the components of your marketing are synchronized, it reinforces your positioning and gives you a distinct image that resonates with existing and potential customers.
Financial Planning and Targets
Having defined what you are selling and how to sell it, you are now set to develop your financials. The financial documents section outlines the financial information that supports the overall objectives of your business plan. In your financials, you are to show three aspects of your finances- the past, current and projected finances.
If your business is running already, you may include financial statements, balance sheets, cash flow forecasts, income statements, etc. For a new business owner, the thought of creating a financial plan might be intimidating, but note that investors and banks will require one when you seek out a loan. You are required to include your turnover forecast for the first few years and your profit forecast for the first few years.
Types of Financial Documents
- Statements of Sources and Uses of Funds from a Lender or Investor: You include this in your business plan only if you are seeking a loan or funds from an investor.
- Pro Forma Statements: Pro Forma Statements (Pro is a technical term for projected) are financial documents used to predict how profitable a business will become.
- Actual Performance Statements: These are financial statements that show the history of your business’s performance.
Financial Analysis Documents:
- Summary of Financial Needs
- Dispersal of Loan Funds Statement
- Cash Flow Statement (Budget)
- Three-Year Income Projection
- Break-Even Analysis
- Balance Sheet
- Profit & Loss Statement
- Loan Application/Financial History
- Financial Statement Analysis
The documents you will include in your business plan is dependent on your business status (new or old) and investment status (seeking or not seeking).
Supporting Documents: The supporting document section is a must by any means, however, if you have critical records that relate to your business, you can include it here. Some supporting documents you can include in your business plan include
- Personal Résumés
- Owner’s Financial Statement
- Credit Reports
- Copies of Leases
- Letters of Reference
- Legal Documents
- Location Studies, Demographics, etc.
Bakery Business Plan Tips
Clarity: When writing your business plan, bear in mind that you might have to share it with other people, investors, employees, etc. which is why you must ensure your document is written clearly. Clarity is important in business communication because if people don’t understand what you’re saying, they can misinterpret it. A misinterpretation means that they act on faulty assumptions, which means that the wrong decisions are made, which means that businesses fail.
Keep the following in mind when writing your business plan
- Use the KISS template: Keep it short and simple
- Break your paragraphs: If your paragraph is more than 5 sentences break it
- Link your sentences paragraphs: Use linking words to create a connection between sentences and paragraphs
- Use adjectives sparingly
- Use tables to represent information where necessary
Brevity: Communicate your messages as quickly as possible. Ensure that your business plan includes only the information that is necessary, if you are sending it to lenders or investors, you don’t want to bore them with jargon.
Logic: If you present facts and ideas in a logical order, you can help readers follow your line of reasoning more easily. Avoid a series of paragraphs that don’t convey any real information or that state the obvious. Also, ensure that there is consistency across your business plan.
Figures: If you are presenting your business plan to a lender or an investor, note that they think in figures. Unless you give specific, precise information, the banker will make assumptions about your financial situation. In other words, ensure you quantify as much as you can.
After writing your business plan for your bakery venture, note that the document is not static. It’s important to keep up to date with new developments in your industry and be sure that your business plan reflects them.
By following the methods above, you should be ready to present your bakery business plan to your employees, lenders, investors, etc. When they read it, it will be evident that it was done by someone who has a solid understanding of the business.