Executive summary
The Sweet Desserts Bakery is an upcoming business that will be dedicated to offering baked products at affordable and reasonable prices. At the start, Sweet Bakery will conduct its business from a single store with an option of incorporating an online ordering and delivery to maximize sales. While The Sweet Bakery acknowledges competition, it is also hopeful that its differentiation strategies and the ever-growing demand for baked products will favor its business operations. Baked products are one of the widely-sought food products -especially during parties and special occasions, and their appetite is insatiable. Because the business will be operated as a partnership, it will be easier to manage the store and the online ordering and delivery services. The online ordering and delivery will allow the bakery to capitalize on the online marketplace by the use of modern technology, best practices as well as sales and marketing campaign aimed at introducing the business into the market and facilitating its growth.
Industry and Market Feasibility
The baking industry is vast and well-established. According to the American Bakers Association, the sector contributes up to 2.1 percent of the GDP of the United States. This is a clear indication that the baking industry is a promising one. However, it also suggests that the industry is a competitive one something new business starters need to be wary of. At the same time, the industry provides an opportunity for starters provided that the business is strategically located, engages in production best practices, ensures customer satisfaction, integrates modern technology and products produced meet the industry standards,
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The market for baked products in the United States has been performing well and is ever-growing. It is due to this ready market that the baking industry in the United States is doing well. As of 2013, the market is shared among 6,000 retail bakeries, and 3,000 commercial bakeries, and the sector produces revenue of over $30 billion each year ( Wyatt, 2014 ). Of these 6,000 retail bakeries and 3,000 commercial bakeries, The Sweet Desserts Bakery expects competition from Panera Holdings, Dunkin's Brands Group, Krispy Kreme Doughnut, Campagna-Turano Bakery, Bakers Union Local, Sprinkles Cupcakes, Minnesota Best Maid Cookie, Donut Holdings, and Tiff's Treats Holdings. One of the strategies that The Sweet Desserts Bakery will use is specializing in given products and gain loyal customers who can then refer to others ( Lau, Dimitrova, Shaffer, Davidkov & Yordanova, 2012 ). Once the bakery achieves this goal, it can then add more products to its production list.
Service Feasibility
The baking industry produces a wide variety of baking products which are sold in a readily available market. Some of the products produced in the baking industry include bread, rolls, cakes, soft cakes, pies, and other products from a retail bakery. Bread has the largest market, and this makes bread production the leading in the bakery industry ( Martínez-Monzó, García-Segovia & Albors-Garrigos, 2013 ). Bread used both in commercial and domestic places in different ways such as an ingredient in other culinary preparations. Cakes are mainly used in parties and ceremonies or on special occasions such as birthday parties. A typical market trend that is coming up and needs to be considered is the changing market as a result of demanding health products such as gluten-free, whole grain and low carbohydrate as consumers become health conscious (Wyatt, 2014). This is one area that the bakery will capitalize on maximizing its sales.
Financial Feasibility
The financial projections for setting up the bakery and the online ordering services and operations are projected based on the assumptions below:
All sales projections remain unchanged
The business plan is performed and executed according to the schedule
All other factors remain constant for the next five years
The table below summarizes the financial projections for starting and operating a bakery as well as incorporating an online sales platform are outlined in the table that follows. They include store sales projection, store staffing costs, store operational and maintenance costs, store additional costs, online sales projections, online platform staffing costs, web server, and maintenance costs, sales and marketing costs, designing, building and implementing online platform and materials, shipping costs and insurance costs. All figures are in $
| Description | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Setting up and running the bakery | |||||
| Store sales projections |
276,000 |
326,000 |
375,000 |
451,000 |
526,000 |
| Store staffing costs |
108,000 |
118,000 |
133,000 |
153,000 |
178,000 |
| Operational and maintenance costs |
108,000 |
118,000 |
133,000 |
153,000 |
178,000 |
| Start-up costs |
50,000 |
0 |
0 |
0 |
0 |
| Additional charges |
5,000 |
0 |
0 |
0 |
0 |
| Cash flow |
5,000 |
90,000 |
109,000 |
145,000 |
170,000 |
| Setting up and maintaining an online platform | |||||
| Online sales projections |
225,000 |
250,000 |
300,000 |
375,000 |
450,000 |
| Staffing costs |
150,000 |
160,000 |
175,000 |
200,000 |
230,000 |
| Web server and maintenance costs |
20,000 |
22,000 |
25,000 |
28,000 |
32,000 |
| Sales and marketing costs |
20,000 |
24,000 |
28,000 |
30,000 |
34,000 |
| Designing, building and implementing the platform |
50,000 |
0 |
0 |
0 |
0 |
| Materials, shipping and maintenance costs |
20,000 |
22,000 |
24,000 |
26,000 |
28,000 |
| Cash flow |
-35,000 |
22,000 |
48,000 |
91,000 |
126,000 |
| Total cash flow |
-30,000 |
112,000 |
157,000 |
236,000 |
296,000 |
Entrepreneurial Readiness
Entrepreneur readiness feasibility is a way of finding out whether the entrepreneur is committed to undertaking a given project. Entrepreneurial readiness will be assessed through the entrepreneur's motivation, opportunity identification, resources, and abilities. Also, entrepreneurial readiness assessment tool by the Small Business Administration will be used. The entrepreneur, readiness assessment tool, is designed to help a starter-up entrepreneur understand their readiness for starting a business venture and not as a guarantee that the business will be a success (). The tool provides several yes/no questions and a 1 point for each 'yes' response.
A score of 20-25 points suggests that one is ready to start up the new business venture. A score of 15-19 points indicates that there is room for improvement and should consider taking time for adequate planning as well as gaining new experiences and skills. A score of 10-14 points suggests that there is a need for additional research and considerations. Planning and getting expert advice will help in gaining more experience and new skills. Lastly, a score of 0-9 points suggests that a person is not ready to start a new business venture. This score indicates there is a need to invest more time to develop essential business skills necessary for starting a business.
Based on market analysis, there is a motivation to set up the bakery because there are a ready market and demand for bakery products. As an entrepreneur, I also possess financial skills, business planning, management, and administrative skills ( Schillo, Persaud, & Jin, 2016 ). Even, upon taking the 25 question test, my score rages between 20-25 points in the SBA assessment tool. The score suggests that I am ready to venture into business.
Recommendation and Conclusion
Based on the information above for this feasibility study, it is recommended that the business venture be carried out if a reliable partner is found. If there is enough financial back-up, both the bakery and online platform can be initiated at the same time, or the platform can be initiated a year, or two years later.
References
Lau, V. P., Dimitrova, M. N., Shaffer, M. A., Davidkov, T., & Yordanova, D. I. (2012). Entrepreneurial readiness and firm growth: an integrated etic and emic approach. Journal of International Management , 18 (2), 147-159.
Martínez-Monzó, J., García-Segovia, P., & Albors-Garrigos, J. (2013). Trends and innovations in bread, bakery, and pastry. Journal of culinary science & technology , 11 (1), 56-65.
Schillo, R. S., Persaud, A., & Jin, M. (2016). Entrepreneurial readiness in the context of national systems of entrepreneurship. Small Business Economics , 46 (4), 619-637.
Wyatt, S. L. (2014). The state of the snack food industry. In SNAXPO Snack Food Association Annual Meeting, Texas, USA. Available at: http://tinyurl. com/y8a7z5o7 .
