My business opportunity


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My business opportunity

  1. 1. Feasibility study on Small Skill Bake Shop in TayasanINTRODUCTIONThere are numerous exciting business opportunities in Tayasan forinvestors who wish. Where possible, potential markets, estimatedinvestment and production costs. However they are not intended to bereplacements for project feasibility studies. Selection of technology,financing plans, feasibility studies and other related issues remain theresponsibility of the investor.EXECUTIVE SUMMARYIn Tayasan, bread is a staple of most diets. Unfortunately for residentshere, the demand for bread outstrips the supply by both Linden-basedand external bakeries. There is an opportunity for high quality operatorsto become primary. Assuming a minimal level of consumption at 10loaves per week per household in the Tayasan, there is a potentialdemand of more than 2,000 loaves per week. A well managed, highquality small bakery operation, producing in the vicinity of 900– 1000loaves per week will make handsome returns on investment. A smalloperation is defined as one using up to 20 bags of flour per week. Advantages to investing in this industry: Very good returns on investment in a relatively short period arepossible once the operation is managed efficiently with a good productrange exhibiting consistent excellence and coupled with an aggressivemarketing program.mThe initial set-up costs are typically recoverable within the first 5years of the operation of a small bakery.y A modern bakery operation is not very labor intensive, and usuallyproduction can be increased without incurring significant additionallabor costs.
  2. 2. THE OPPORTUNITY: SMALL SCALE BAKERYOPERATIONSBakeries, existing since the dawn of civilization in one form or theother, have been primary food providers for countless generations ofpeople. Indeed, the truism that “man must eat”, may have a corollarytruism that “man must eat bread”, for certainly, wherever it’s possible,all cultures evince a distinct preference for the production of bread andsimilar baked products as a major source of nutrients. In Tayasan breadis a staple food for many people at breakfast and supper, for the samereasons that apply.Any where else, its relative durability, convenience, adaptability,nutritive value and low cost. the local demand resulting in“importation” of bread from people still seem to prefer the fresherbread of the local bakeries. Even with the bread coming. Consequentlythere is tremendous potential for a small bakery operation marketingwithin and outside the Tayasan. Existing Operators Market PotentialThe market potential of any operation such as a small bakery willdepend on classic the consumption center. There may be competitionfrom other existing bakeries. However an operation that is wellorganized and efficiently run with a distinct quality product can achievecomparatively high returns from this investment, as there should be nodifficulty in disposing of bakery products.Market StrategySeveral strategies will need to be implemented to establish a crediblepresence in the market for any new outfit. These may include:p  Distributing one-third of the products by selling at the bakery.p  Selling one-third to private distributors at wholesale prices.p Selling one-third to supermarket outlets and to shops at wholesaleprices.p Specialty items like cakes and pastries may be sold to schools,canteensand snackettes at wholesale prices or at the bakery at retail prices.
  3. 3. PRODUCTION PROCESS AND TECHNOLOGYIn recent decades bread-making technology has gone way past thefirewood outfits that were commonplace even in the 1960s. Improvedmechanical designs, new materials and computer controlled systemshave revolutionized the industry. There is a wide variety of productionequipment and machinery available.However, at the most basic level of production, the process is asfollows:f Weighing and combining ingredients in a dough mixer,f Shaping the mixed dough manually or with a dough molder,f Allowing fermentation for approx 1½ hours,f Cutting the dough and reshaping into required sizes for baking,f Baking the dough, usually at 180°C (350° F).Equipments:Dough Mixers:These are used to combine the ingredients and come in a variety ofsizes. The most commonly used mixer that is conveniently sized for asmall bakery is either a 30 quart (34litre) or 60 quart (68litre) model.These sizes are able to mix 1 or 2 bags of flour at each mixing.Dough Molders:After the mixing of ingredients, a dough molder may be used to shapethe dough before it is allowed to ferment. Shaping contributes tosmooth texture in the final product. This equipment may be consideredoptional as the process may be done manually, but it is imperative ifone is to compete with the products from the more established bakeries.Dough Dividers:In larger bakeries where high output production is necessary, dividerscut the dough into uniform sizes after molding. In the process thedough is also homogenized and degassed. The equipment is entirelyoptional as the cutting process can be done manually with a doughknife but the degassing benefit is lost.Ovens:
  4. 4. Ovens are one of two main types, direct fired and indirect fired. Indirect fired ovens the heat is inserted directly into the baking chamber,resulting in more uniform baking temperatures and more accurate heatcontrol. In indirect fired ovens, fuel is burned in an external combustionchamber and the heat is circulated around the baking chamber by ablower system. These ovens are 20% more expensive in fuelconsumption and consequently not as cost effective for smalloperations. Ovens can be either the traditional deck type or of rotatingdesign. A rotating oven with up to 4 times the capacity of theconventional deck ovens plus a better “finish” (color and texture) is thebetter option. These ovens are typically available in sizes from 16 to 48pans. A 24-pan unit is adequate for an operation producing 2,000 to3,000 loaves per week. The usual energy sources for modern bakeryoperation are either electricity or propane gas. Potential investorsshould note that use of combustible wood and charcoal is notrecommended though present in large reserves, since those optionscannot match the consistency of modern computer-driven operationsREQUIREMENTS FOR BAKERY SETUPSome of the critical factors to be taken into account prior toestablishing a bakery are:1. Location - It is critical to identify a building in an area that is cleanand environmentally friendly. Once sales are going to be conducted atthe bakery outlet as suggested above, it is necessary to ensure that allforms of traffic, pedestrian and mechanical, can come and gounencumbered.In order to determine demand and preferences in given locales as wellas to ascertain the level and effectiveness of competition.Rental costs can vary from as low as Php.5,000 per month to Php.7,000depending on location and the nature of the negotiations. Alternativelyit may be possible to buy out some location.2. Building - The actual building housing the bakery operations shouldbe adequate for proper layout of equipment and furnishings (ovens,tables etc) as well as providing space for storage of supplies and
  5. 5. finished products. A small operation will require between 230sq.m. -465sq.m. (2,500sq.ft. - 5,000sq.ft.)3. Electrical Supply - The building should be wired (or rewired) forthe type of equipment used, to avoid electrical overloads and risk ofelectrical fire. Certified electrical contractors should be employed toinspect, determine and where required install appropriate supply wiringbased on the needs of the operation and the location. FortunatelyLinden has a surfeit of qualified, skilled personnel who are available asprivate contractors for just such activities.4. Ventilation - The location will need to be properly ventilated toavoid the buildup of heat during baking operations. Fans (cooling andextractor) should be installed to ensure adequate air circulation withinthe work area.5. Furnishings - Furnishings will include heavy-duty working / mixingtables. At least two 1.8m (6ft.) tables will be required for a smalloperation. Though stainless steel tables are more professional, woodentables are as effective and will be cheaper to acquire.Fridge/freezer facilities will be needed to store ingredients, productsstocks and raw dough, to prevent spoilage.6. Equipment - This will include sets of heavy-duty hand tools likerolling pins, metal scrapers, bowl scrapers, spatulas, dough knives,baking tins, racks for cooling and scale(s) for weighing ingredients.7. Food Handler’s Permits - The operation of the bakery will requireclearance from the Municipal Public Health Department and foodhandler permits for anyone involved in the production, sale ordistribution activities of the business. At any rate the Municipality’sRegional Health Officers (RHOs) will periodically visit the operationsto enforce health standards for operations and personnel.8. Waste Management - Proper facilities will be required for garbageand effluent disposal.
  6. 6. ANNUAL FINANCIAL PROJECTIONSOutput: 300 loaves / day:1,100 loaves / weekSelling price: Php.30 per loaf retailWorkweek: 6 days (unskilled labor typically works 10 hr/day, 6-dayweeks)Work year: 52 weeksAssuming a potential market of 2,100 loaves per week in Tayasanalone, at a typical user rate of 2 loaves per week, this production levelwill address less than 10% of the existing market.Investment Php.900, 000Year 1Revenues Php.2, 300, 00Expenditure Php.10, 000, 00Net Margin Php.8, 299,000Break- even point Period 1½ MonthsBreak- even point Percentage 10.50 %Break- even point Sales Php.389, 000Break- even point 2,100 loavesThe major capital and operational items associated with this level ofoperations are:Investment ItemsLand and building Php.600, 000Plant and machinery Php.1, 250,000Working capital for 2 months Php.750, 000Total capital investment Php.9, 00,000Receipts per annum 21, 300, 00Cost of production per annum 15, 600, 00Annual Fixed costs 2, 400, 00Profit per annum 5, 250, 00Break Even point 10.50%Net Margin as a percentage 15.40%Break even point in months 1.7monthsMachinery & EquipmentRotating Oven 24-pan
  7. 7. 1-Bag Dough MixerDough BreakerWorking Tables (2 or 3)Fridge/Freezer (11cu. ft.)Cash register orPoint Of Sale ComputerBread Molder (Optional)Delivery Van (second hand)ScalesBread SlicerLaborManager (Owner/Manager)1 Master baker1 Asst Baker4 Utility workers3 Sales and distribution workersOperational itemsBread pans (approx 150)Cooling racksHand tools and utensils: knives, bowls etc.Plastic bags and labelsProduction ItemsFlourSugarLardSaltDry YeastOther ingredientsOther ConsiderationsRentWater supplyElectricityTransportationInsuranceLicenses and permits
  8. 8. FINANCING SOURCE or funding sources from which a borrowermay access.Financing for an operation of this nature, either single or incombination. DCCO BPI Land Bank of the Philippines  Detailed Analysis Fixed Variable Costs CostsProduction costs:Direct materials Php.79.44Direct labor Php.16.42Indirect production costs electricity, fuel Php.350, 000 Php.1.00Other expenses:Insurance of Equipment, Workers Php.120, 000 € 0.50Rent or Lease of land Php.60, 000General expenses:Office salaries Php.400, 000 € 0.75Supplies Php.40, 000Miscellaneous Php.10, 000Totals Php.6, 20,000 Php.98.11Sales and Income data:Selling price per unit Php.30, 00Expected unit sales Php.1, 500.00Target operating income for the period Php.5, 000.00Cost of Production per annumVariable & Total Php.15, 600.000 Php.270.00 ResultsContribution margin per unit Php.53.25Unit sales at break-even point Php.389.000Php. sales at break-even point Php.2, 500.00Php. sales at expected level Php.4, 300.00Net Annual Profit at expected level Php.5, 500.00
  9. 9. Unit sales at target operating income Php.120, 000Php. sales at target operating income Php.10, 500.00Break Even Percentage 10.50%Net Annual Margin at expected level as a Percentage 30.40%Break Even Period in months 1.75%Costs etcSalary Owner/ Mgr 7days x 400/day = Php.2, 800/ weekSkilled Wages 7days x 200/day = Php.1, 400/ weekUtility Wages 7days x 250.00 = Php.1, 750/ week
  10. 10. My Feasibility study about sMall skill bakeshop in tayasan By: Bonn S. Gabutero