1.

0 NATURE OF BREAD AND BAKERY FIRM

Bakery business involves the production and selling of baked goods such as bread,
pastries, cakes, cookies, and other sweet treats. The nature of a bakery business is
centered around creating delicious and high-quality baked goods for customers to
enjoy. This includes using high-quality ingredients, careful attention to detail in the
baking process, and providing excellent customer service.

In terms of proposition, the bakery business will offers a wide variety of baked goods
to cater to a diverse customer base. This may include traditional breads and pastries,
as well as specialty items such as gluten-free, vegan, or organic options.

Additionally, the method on take-out and delivery options, will be employed for those
Who are Buying in bulk and some mega Retailer.

Overall, the proposition of a bakery business is to provide customers with delicious

and freshly baked goods that satisfy their cravings and bring joy to their taste buds.
By focusing on quality, variety, and excellent customer service, a bakery business can
build a loyal customer base and establish a strong presence in the community.

2.0 MARKET SIZE AND MARKETING STRATEGY

Market Size Analysis:

Kano and its surrounding areas have a population of approximately 13.4 million

Around 90% of the local population regularly consumes bakery products, indicating a
substantial market.

A marketing plan and strategy for a bread and bakery firm include:

 Marketing Goals:

- Increase brand awareness in the local community by 20% within the first quarter.

- Achieve a 15% growth in sales within the next six months.

- Establish a loyal customer base through a customer retention program, aiming for a
10% increase in repeat business.

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 Target Market:

- Local residents and families in the Kano area.

- Office workers and professionals looking for convenient and quality bakery
products.

- Collaborate with local businesses for bulk orders and catering opportunities.

 Marketing Strategy:

- Digital Presence:

- Create an engaging website with an online ordering system.

- Leverage social media platforms for regular updates, promotions, and customer
engagement.

- Local Partnerships:

- Collaborate with local cafes, schools, and events for cross-promotions.

- Establish partnerships with local suppliers for fresh and quality ingredients.

- In-store Promotions:

- Introduce loyalty programs, discounts for bulk purchases, and special promotions.

- Conduct tasting events to attract new customers and gather feedback.

3.0 TARGET CUSTOMERS FOR BREAD AND BAKERY BUSINESS

 Individual Consumers: Targeting individual consumers of all age groups who

regularly consume bread and bakery products for their daily meals or as snacks.
This includes households, working professionals, students, and others who prefer
freshly baked goods.
 Cafes and Restaurants: Establishing partnerships with local cafes and
restaurants that require a regular supply of high-quality bread and bakery
products for their menu. This includes sandwich shops, bakeries, breakfast
establishments, and other foodservice businesses.

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 Hotels and Catering Services: Targeting hotels and catering businesses that
require bulk orders of bread and bakery products for their breakfast buffets,
banquets, conferences, and other events.
 Retailers and Supermarkets: Supplying bread and bakery products to local
retailers and supermarkets who cater to a wide range of customers looking for
convenient and fresh options.
 Office Buildings and Corporate Cafeterias: Offering delivery services to
corporate offices and their cafeterias, providing them with a variety of bread and
bakery products for breakfast and snack options.
 Schools and Educational Institutions: Partnering with schools, colleges, and
universities to provide freshly baked bread and bakery items for their cafeteria or
as part of their meal plans.
 Health-conscious Consumers: Developing a range of healthy and gluten-free
bread and bakery products to cater to customers who have dietary restrictions or
preferences.
 Specialized Markets: Targeting niche markets such as artisanal bread lovers,
organic food enthusiasts, or those seeking unique and exotic bakery items.
 Online Customers: Leveraging an online presence to reach customers who
prefer the convenience of ordering bread and bakery products online, offering
delivery or pickup options.
 Special Occasion Customers: Tapping into the market for special occasions like
birthdays, anniversaries, weddings, and festivals by offering customized and
themed bakery products.
 Fitness Enthusiasts: Offering a range of protein-packed and low-carb bread and
bakery products targeted towards customers who are health-conscious and
looking for nutritious options to support their fitness goals.
 Elderly Care Facilities: Partnering with nursing homes, assisted living facilities,
and senior centers to provide soft and easy-to-digest bread and bakery items for
elderly residents with dietary restrictions or special needs.

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 Farmers' Markets and Local Events: Participating in local farmers' markets,
food festivals, and community events to showcase your artisanal and handcrafted
bread and bakery products to a diverse audience of food enthusiasts.
 Expat Communities: Targeting expatriate communities or cultural groups who
have a preference for authentic and traditional bread and bakery items from their
home countries, catering to their specific tastes and preferences.
 Workplace Wellness Programs: Collaborating with companies that promote
employee wellness and offer healthy eating initiatives to supply them with fresh
and nutritious bread and bakery products for their workplace programs.
 Tourist Hotspots: Establishing a presence in popular tourist destinations or areas
with high foot traffic to attract tourists seeking a taste of local or artisanal bakery
offerings to take back as souvenirs or gifts.

4.0 BUSINESS COMPETITORS AND STRATEGIES TO WIN COMPETITORS

4.1 Bread and bakery firm competitors

Bakery business competitors are other businesses who can after the same or similar
goods and services to your customers. Bakery business competitors include direct and
indirect competitors. Direct competitors include nearby bakeries known for their
bread and snacks as well as grocery stores. Indirect competitors such as cafes or
dessert shops and online vendors that offer a range of baked bread or snacks.

4.2 Strategies to win competitors

To gain a competitive edge in the bread and bakery business, consider implementing
these strategies:

 Unique Products:Offer distinctive and high-quality baked goods that set the
bakery apart. Experiment with unique flavors,ingredients,or presentation.
 Exceptional Customer Service: Provide excellent customer service to build
loyalty and positive word-of-mouth.A positive customer experience can
differentiate the bakery from competitors.

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 Online Presence: Establish a strong online presence through a user-friendly
website and active social media channels. Show case your products, engage with
customers, and offer online ordering options.
 Loyalty Programs: Implement loyalty programs to encourage repeat business.
Rewards, discounts, or special promotions for loyal customers can foster
customer retention.
 Community Engagement: Get involved in the local community by sponsoring
events, supporting charities, or participating in local initiatives. This can enhance
your bakery's image and attract community support.
 Customization Options: Allow customers to personalize their orders or request
custom items. This flexibility can cater to diverse preferences and attract a wider
customer base.
 QualityIngredients:Emphasize the use of high-quality, fresh ingredients to
enhance the taste and appeal of your baked goods. Communicate the value of
your ingredients to customers.
 Efficient Operations: Optimize the bakery's operations for efficiency.
Streamlining processes can lead to cost savings, allowing you to offer
competitive pricing or investing product quality.
 Feed back and Improvement: Actively seek customer feedback and continuously
improve the offerings based on suggestions. This demonstrates a commitment to
meeting customer needs and staying ahead of the competition. Combining several
of these strategies tailored to the bakery's strengths can contribute to winning
over competitors and building a loyal customer base.

5.0 Business growth potential

The business growth potential for bakery business is promising. Bakery Market" is
expected to witness significant growth in the coming years, primarily driven by the
growing demand for (Hyper Markets, Super Markets, Convenience Stores,
Departmental Stores, Specialty Stores, Online Purchase), Based on the type, the
market can be segmented into (Bread and Rolls, Cakes and Pastries.This growth is

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driven by factors such as increasing disposable income in emerging nations, evolving
lifestyles and a rising demand for bakery produce.

6.0 Key resources resources required and their cost

Starting a bread business requires several key elements, including:
 Bakery Equipment: This includes ovens, mixers, dough dividers, proofing
cabinets, and other essential tools. The cost can vary widely depending on the
scale of the operation and whether new or used equipment is preferred.
 Ingredients: Flour, yeast, sugar, salt, and other ingredients are necessary for
making bread. The cost will depend on the type and quantity of bread planned to
produce.
 Packaging: There will be need for packaging materials like bags, boxes, or
wrapping paper for the bread. The cost will depend on the type and quantity of
packaging that is chosen.
 Permits and Licenses: There’s need to obtain the necessary permits and licenses
to operate a food business in an area. Costs can vary depending on the location
and the type of permits required.
 Marketing and Branding: This includes creating a logo, website, and other
marketing materials to promote the business. Costs can vary depending on the
complexity of the branding strategy.
 Labor: Since there’s a need to hire employees, there will be need to budget for
their salaries and benefits.
 Utilities: There is need to budget for utilities like electricity, water, and gas for the
bakery.
 Rent or Mortgage: If there is no operation from home, there will be a need to
budget for rent or a mortgage for the bakery space.
 Insurance: There is a need for insurance to protect the business from liability and
other risks.
 Transportation: If there is plan to deliver the bread to customers, there will be a
need to budget for transportation costs.

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 Miscellaneous Expenses: This includes any other expenses that may arise, such
as repairs or unexpected costs.
Note: The cost of starting a bread business can vary widely depending on factors like location,
scale, and business model. It's important to do thorough research and create a detailed business

plan to understand the costs involved and ensure there’s enough capital to start and sustain the

business.

7.0 OPERATIONAL ACTIVITIES FOR A BAKERY BUSINESS

FROM BUSINESS INPUT TO FINAL PRODUCT/SERVICE PROVIDED

The operational activities for a bakery business from business input to final product
can be organized into the following:

 Identify Bakery Needs: Assess the scale, layout, and target market to determine
operational requirements
 Market Analysis: Conduct a thorough analysis of the bakery industry,
competitors, and target market
 Supplier Relationships: Establish strong relationships with suppliers to ensure a
steady supply of raw material
 Labor Management: Determine the number of staff needed and their
job description.
 Process Flow: Develop a process flow to prevent bottlenecks and
improve efficiency.
 Training and Staffing: Ensure that staff are competent and up-to-date with
industry trends and standards.
 Equipment and Technology: Identify necessary equipment and incorporate
technology to increase productivity and quality.
 Legal Compliance: Ensure that the bakery adheres to all local, regional, and
national regulations.
 Quality Control and Compliance: Establish control measures to ensure the quality
of products and compliance with health and safety regulations.

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 Creating and Baking Delicious Treats: Develop and create tried-and-true recipes,
as well as exciting seasonal and special-occasion treats.
 Designing Creative Packaging: Create attractive and memorable designs for
packaging baked goods.
 Offering Exceptional Customer Service: Provide exceptional customer service to
build a loyal customer base.
 Building a Loyal Customer Base: Factor customer feedback and opinions into
product decisions and engage customers in exciting and educational events
and activities.
 Utilizing Various Sales Channels: Utilize various sales channels, such as direct
sales, online sales, vendor facilitated sales, and sales through local restaurants and
eateries.
 Inventory Management: Track inventory and manage perishable items to ensure
better shelf-life management and customer experience .
 Customer Relationship Management (CRM): Craft a good relationship with
customers to increase loyalty.
 Continuous Improvement: Practice continuous improvement to maintain a
competitive advantages

8.0 LOCATION CHOSEN FOR THE BREAD AND BAKERY FIRM

Kano.
9.0 Reasons for the choice of location
 Area accessibility
 Low crime rate
 Competition
 Foot traffic

 Employable labor

 Potential for growth

 Business rate

 Parking Access

 Style of operation

 Demographic reason

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 10.0 BUSINESS OWNERSHIP STRUCTURE

The ownership structure of a bread and bakery production business can vary
depending on factors such as the size of the operation, the goals of the owners, and the
legal and regulatory environment. Sole proprietorship is preferred.

 Sole Proprietorship: One individual owns and operates the bakery. This structure
offers simplicity but also means that the owner is personally liable for any debts
or obligations of the business.

In a sole proprietorship ownership structure for a bread and bakery production

business:

1. Ownership: The bakery is owned and operated by a single individual. This person
has full control over all aspects of the business, including decision-making, finances,
and operations.

2. Liability: The owner is personally liable for all debts, obligations, and legal
liabilities of the business. This means that personal assets could be at risk to satisfy
business debts or legal claims.

3. Taxation: Business income and expenses are typically reported on the owner's
personal tax return. The bakery's profits are taxed at the owner's individual tax rate.

4. Flexibility: Sole proprietorships offer a high degree of flexibility and simplicity in

terms of management and decision-making. Others are Ease of formation, control, and
limited resources etc.

11.0 ORGANIZATIONAL STRUCTURE

The organizational structure of a bread and bakery business can vary based on its size
and complexity. Here's a common organizational structure for a medium-sized
bakery:

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 Owner/Founder: The owner or founder is typically responsible for the overall
direction and strategy of the business.
 Management Team: The management team consists of key individuals
responsible for different aspects of the business, such as operations, finance,
marketing, and human resources.
 Production Team: This team is responsible for baking and producing the bread
and bakery products. It includes bakers, pastry chefs, and production staff.
 Sales and Marketing Team: Responsible for promoting the bakery, attracting
customers, and managing sales channels, including retail and wholesale.
 Administrative Staff: This includes roles such as accountants, receptionists, and
other administrative personnel who support the day-to-day operations of the
bakery.
 Retail Staff: Employees who work in the bakery's retail outlets, serving
customers, taking orders, and handling transactions.
 Distribution Team: Responsible for delivering products to wholesale customers,
managing inventory, and logistics.
 Quality Control Team: Ensures that products meet quality standards and are safe
for consumption.
 Customer Service: Handles inquiries, feedback, and complaints from customers.
 Support Staff: This includes roles such as cleaners, maintenance workers, and
security personnel who support the overall operations of the bakery.
 This structure can be adjusted based on the specific needs and size of the bakery
business.

12.0 SOURCES OF FUNDING FOR BREAD AND BAKERY

The main source of funding in any business are

 retained earnings
 debt capital
 equity capital

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In bread and bakery business some source of finance are to be considered which are

 Loan generally have higher interest rates and are less flexible, as payment must
be made for a pre-agreed amount and a pre-agreed time
 business angels
 Loan capital debentures
 Retained profit
 Issuing shares.
 Crowdfunding: This has become very trendy in the startup world. This
business financing options allows new business owners to collect investment
from individual in exchange for a benefits. Aspiring bakery owners could offer a
free pastry, an invite to the soft opening or free coffee for a designated period of
time.

13.0 Risks and Challenges in Bakery and Bread Business

 Insufficient Liquidity: Insufficient liquidity is a common issue encountered by
many newly established bakeries. Despite having substantial investments, loans,
and donations, the absence of adequate cash flow can hinder the success of your
business.
 Efficient Product Marketing: We understand the difficulties that come with
efficiently promoting your newest products. You started your business out of a
passion for baking, not for marketing. In the past, bakeries would often hold
small events or provide complimentary samples to customers .
 Competition in the Bakery Industry: In the realm of bakery businesses, avenues
for expansion often arise through the acquisition of competitors or capturing their
market share for a particular product. To foster the growth of your bakery
enterprise, a viable approach entails crafting artisanal baked goods that are
distinct and not readily available elsewhere, while also offering a menu that caters
to the dietary needs of your customers. Given the increasing prevalence of health-

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 consciousness across the nation, there is a rising demand for bakeries that
produce gluten-free breads to accommodate individuals following such diets.

 Health and Safety Regulations: While it may initially appear advantageous for a
small bakery to be exempt from certain health and safety regulations that larger
bakeries must adhere to, it is crucial to consider the inherent risks associated with
this exemption.

 Government Policies: The bread industry is facing a significant hurdle as

government policies regulating the importation of essential materials for bread
production do not align with the challenges faced by major stakeholders, such as
bakers. A prime example of this is the imposition of an additional 15 percent duty
on wheat imports into Nigeria.

 Inflation: Inflation such as continuous rise in the price of wheat has a significant
impact on bakery and bread business, causing many bakeries to shut down due to
the additional N500 on each raw material cost, resulting in higher production
costs and ultimately leading to business failure.

14.0 MITIGATING METHOD OF BUSINESS RISKS AND CHALLENGES

As a business, baking requires a notably high skill level precision is needed both in
the kitchen and the shopfront. It's been said that cooking is an art, but baking is a
science. Each cake or loaf of bread needs a precise blend of just the right ingredients
in just the right proportions, baked at a specific temperature for a specific amount of
time. Once the good are ready to be sold, an equal amount of precision goes into
managing the stock for factors such as freshness, hygiene, and overall customer
satisfaction.
Maintaining a successful bakery business, therefore, involves a number challenges
such as;
 Shelf Life Management: Freshness is perhaps important variable in a the most

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 successful bakery business. It is vital to ensure that every customer has an
enjoyable experience with every cookie, loaf, muffin, or cake sold. Bakeries need
to make sure that only the freshest and most appetizing goods are sold. Ensuring
freshness can be a difficult task at times, especially since most baked goods have
a very short shelf life. Recording and tracking expiration dates by hand or using a
simple spreadsheet is too time-consuming. Plus, these methods are not guaranteed
to be accurate, and mistakes can extremely costly to the business.The solution is
effective electronic expiration date management . Tedious, inaccurate, manual
processes (such as tracking your inventory and its shelf-life) can be minimized, so
time and money can be saved and ensure that freshness is prioritized in the
products being sold.
 Supply Chain Disruptions: Broken supply chains are something that food and
beverage businesses often have to deal with. The emphasis on freshness, as well
as the fact that certain products simply cannot be produced without key
ingredients, mean that supply chain problems serious issue for bakeries. Bakery
systems overcome this problem with enhanced planning and distribution
functions. These systems help bakers to keep the right balance of inputs and
materials by making sales order lines visible to managers.
 Property Risks that could arise from ownership or renting: Normally all
entrepreneurs suffer three kinds of losses: the property loss which could be direct
or indirect, the liability loss and income loss concerned with employee's
unforeseen predicaments. Direct property loss may occur due to calamities like
fire, thunderstorm, theft etc. In bakeries equipment and surroundings is often at
risk of catching fire. In case of catastrophe, specialized waste management firms
might be contacted to clear the debris and the firm would have to continue daily
activities in a temporary accommodation. Company's statistical records would be
saved elsewhere to avoid major losses.
 Liability Risks: Liability insurance is one of the most important steps while
launching a business that is often overlooked. "Product liability occurs when a

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 firm's products allegedly injure the public.Environmental impairment liability
arises from violating federal or state statutes designed to protect the environment,
or from lawsuits from parties claiming injury caused by a firm's improper
handling of toxic substances. The business should include employer's liability,
public liability, stock, building, vans and money insurance. Product liability and
other quality related issues will require the services of an attorney to make sure
that the procedures are standardized, this will surely put up extra cost but it is
worth all the effort as a little mistake is like to destabilize the business.

15. Projection of six months cash flow

To project the cash flow for a bread and bakery business over six months, there is a
need to estimate the cash coming in (inflows) and the cash going out (outflows).
Here's a basic outline of the process:

 Estimate Sales Revenue: Based on the historical sales data and any expected
changes (seasonality, promotions, etc.), estimate the monthly sales revenue.

 Cost of Goods Sold (COGS): Determine the cost of ingredients, packaging, and
other direct costs associated with producing the products. This will give the
COGS.

 Gross Profit: Calculate the gross profit by subtracting COGS from the sales
revenue.

 Operating Expenses: Estimate the monthly operating expenses, including rent,

utilities, salaries, marketing, and other overhead costs.

 Net Income Before Taxes: Subtract the operating expenses from the gross profit
to get the net income before taxes.

 Taxes: Estimate the tax liability based on the net income and applicable tax rates.

 Net Income After Taxes: Subtract the taxes from the net income before taxes to
get the net income after taxes.

 Cash Flow from Operations: Adjust the net income for changes in working capital
(like accounts receivable and accounts payable) to determine the cash flow from
operations.

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 Capital Expenditures: Consider any planned purchases of equipment or other
assets that will require cash outflows.

 Financing Activities: If there is a plan to take out loans or repay existing debt,
include those cash flows in the projection.

 Other Cash Flows: Include any other significant cash inflows or outflows that are
not accounted for in the above steps.

 Closing Cash Balance: Summarize the projected cash inflows and outflows for
each month to determine the closing cash balance at the end of each month.
Note: These are estimates, and actual results may vary. It's important to review and
adjust the projections regularly based on actual performance to stay on top of the cash
flow.

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