Sugar and Spices Bakery; Catering Opportunity

 

 Strathroy-Caradoc Purchase

            Sugar and spice bakery has been doing well in many areas of Canada especially Strathroy. Strathroy is county that is located in the western side of a major city in southwestern. The distance is approximately 40 kilometers in London where there is a population of 367000. Among other communities inside Middlesex County, Strathroy is the biggest town. In the year 2001, Strathroy town and Caradoc formed a union of Strathroy-Caradoc municipality. More than a half of the population of the people in this community used to live in the town. Strathroy has been offering support to the people of the community in various ways like initiating industries and income generating projects. Examples of these businesses include; logistic operations, industries and agri-business. Entrepreneurs have been accessing to international and regional markets by the help of the presence of tracking and rail routes to the southern Ontario. There has been Cuddy Farms which have been working on production and delivery of poults and turkey eggs for commercial purposes. Strathroy has been hosting Turkey Fest event, which has been attracting very many visitors within the county of Middlesex.

            Many people have been aspiring to initiate many businesses among them being that of sugar and bakery business. Even after finishing their professions they have been having the passion of operating with this business. Rosetta Kilbourne is lady who had been having the same passion. Since she was a small girl, she used to prepare her own meals which the family members liked tasting very much. She had been having a passion of operating her own bakery although this dream had been interfered with by the fear of where to get the initial capital and also working as a self-employed person. The lady had been working as an administrative assistant in a security company in Strathroy after graduating. This had been within London but she was laid off in the month spring within the year 2007. As she had been thinking about what other job would suit her well, her mind reminded her about the dream of baking. She then purchased a bakery business that had been operating in the town of Strathroy.

Purchase

Sugar and spice bakery is one among the many businesses that has been doing very well in many areas of Canada, especially in the town of Strathroy. It is a town that has been offering many services like selling sandwiches, soups and classic desserts. The bakery has been operating for nine hours, from 7am to 4 pm during the weekdays. It does not operate in weekends.

Customers

            The bakery has been a well known business for the good services offered making it reliable to the people who reside in Strathroy. Many customers usually prefer getting their breakfast in the bakery where they enjoy taking their meals comfortably. Sometimes they can even stay for a period exceeding an hour without worries. Good relationship with the customers is the one that has mainly enabled them to feel comfortable and attracted to the bakery. Most of the people who buy from the bakery make orders sometime before so that their requests may be prepared and packed. The orders are mainly done through the telephone calls or messages. The customers who purchase their meals and take instantly are less because the majority does prefer buying and taking the meals to their places. These phone orders are mainly from community groups or local businesses.

Competition

            There have been a number of large grocery stores and retailers in Strathroy who provide to the people of the community with all their needs. In addition, they have been offering delivery services hence people have not been wasting time travelling all the way to London in order to meet their requirements. There is a stiff competition in catering because of the presence of coffee chains and restaurants in Strathroy who offer fast-foods. These chains include; Tim Horton’s locations, a coffee culture and a McDonald’s. The stores have been offering very good services to the residents of London and they are usually open in many hours. In addition to this, they are in the position to offer free Wi-Fi services to their customers as well as in-store seating. These services have been very much attractive and have played a big role in motivating majority of the people in the community thereby strengthening the reliability with the stores and the retailers. There would be a probability of the Spice and Sugar bakery being in the position to offer the customers with very nice services of sandwiches and soup for lunch if by any chance it can manage to enter the market of catering. It can as well manage to offer services to the customers on fruits and dessert platters. The closeness of the caterer with the customers is of less importance since there can be always advance preparation. The Sugar and Spice bakery is having the ability to supply its services in Strathroy as well as other communities. Entrepreneurs are having the believe that there would be some orders coming from London even though it still had many companies who are offering catering services.

The catering opportunity

             Profitability can be improved in various ways within business operation. In this case, when an entrepreneur makes a decision of specializing with catering only and do away with bakery, for example, how Rosetta Kilbourne has been deciding to do, there are expectations of increased profit within the business. This is because there can be reduction of the costs since no amount would be used in bakery. There is the feeling that if one manages their catering services without necessarily looking for employees, the profit would be high. There can be no money spent on the payment of the workers. One can be able to manage their own activities like educating the children as well as doing other personal activities which are not part of the job. Success of this job opportunity has the ability to enable one to cater for the education needs of the children when they consider additional annual drawings.

Projections

            There are estimations that if the bakery continues to operate, its revenues would be the same to those of fiscal year, 2015 which were $170,000. The total money incurred for purchasing the goods was 30% of the sales during the fiscal’s year. If the bakery is closed, there are projections in catering about filling annual orders between 84 and 120. There would be a reduction of the money used to pay the workers which amounts to $67200 per year. The customers would pay $750 for each catering service. The cost of goods that are to be sold would reduce by 25% and there would be less waste discovered in catering compared to the present bakery. These correlates with the presence of an exact number of items required for purchase according to the amount of orders given by the customers hence less wastage. There would be a requirement of 50% payment of deposit by the customers when they are making orders. Purchase of a van would assist in carrying out delivery services to the customers, preferably a used car amounting to $7,000. $ 110 would be expected to be incurred for the insurance payments while $225 would be approximately spent on all the fueling services for every month. In case all the monthly projected orders would be met, the cost of fuel would increase with $100. $800 is estimated to be spent during the business advertisement by the use of the van. This would amount to $112,000 per year. In case the entrepreneur has exhausted the external sources of finance, they are expected to use their own credit line at 5.5 % interest rate per year. These payments are supposed to be done at the beginning of the very first day of the monthly usage.

            Catering is much advantageous compared to bakery since the entrepreneur is not expected to purchase a building for spices and sugar storage. This is because there has been buying of spices and sugar in large quantities to cater for the bakery services. The amount of money that had been in use to cater for the rent is $1,350 monthly and an addition of $200 spent on utilities per month. On the other hand, catering would be much cheaper because nothing would be bought for storage as there has been expectations of purchasing only what is in need as per the orders from the customers. This implies that there can be reduction of expenses since the amount of money that has been in use previously to cater for these needs can be spared to favor the catering business. The business would be easily operated at home without necessarily employing workers and renting a building for the operation although there would be more money spent on purchasing a refrigerator which amounts to $1,600. There is a projection still concerning the bill of home utility which would elevate by $25 in a month.    

 

 

 

 

 

 

 

 

Annual Pro-Forma of Income Statement for Bakery

Expenditure                           amount per annum

Rent                                                $16200

Utilities                                           $2400

Purchases                                        $5100

Employment                                   $67200

Totals                                              $90900

Revenue                                     amount per annum

Sales                                                $170000

Totals                                               $170000

Net profit                                           $79100

 

                         

 

 

 

 

 

 

 Annual Pro-Forma of Income Statement for Catering

Expenditure                                                     amount per annum

Purchases                                                               $3825

Van                                                                         $7000

Fuel                                                                        $3900

Insurance costs                                                       $1800

Advertisement                                                        $1200

Refrigerator                                                            $1600

Utility bills                                                             $2700

Totals                                                                     $20425

Revenue                                                              amount per annum

Sales                                                                        $90000

Totals                                                                      $90000

Net profit                                                                $69575

 

 

 

 

 

 

 

 

Bakery is much feasible than sugar and spice catering

            The bakery business is consuming much of entrepreneur’s money and time. There is the payment of employees who are working as full-time and part-time even though the owner still gets tired regardless of having them. Bakery still incurs much expenditure on renting a building for spice and sugar storage. However, shifting to catering alone with the basis of the many orders likely to be received is not profitable as one could think. This is because regardless of the many orders, there is high capital requirement to initiate the business. The entrepreneur will have to spend money on buying a van, fueling it and paying for its insurance services per month. There will also be expenditure on advertising the business since its new in the people have to be notified that it is existing and who is operating it and in what manner. There is the need of purchasing a refrigerator would be operating at home. In addition, there will be increased expenditure on home utilities. Having the view of the financial analysis, the total profit achieved in bakery by the end of the year is higher than that of catering with a difference of $9525 which is a very great difference. High amount of money is required as capital and for maintenance of the business. This shows that it is much cheaper to continue operating on bakery rather than initiating catering business.