Christina has always wanted to open a small neighborhood bakery, Christina’s Confections. She is currently working out of her home, earning income making cakes and baked goods for weddings, parties, and other special occasions. She would like to find a location for her bakery, as she believes there is a market, and she would like to expand her business to a retail operation. She has some money saved and her credit is good, but she is concerned that obtaining a loan will be challenging. Sales have been consistently increasing, and she now has one part-time employee, but she thinks that with a retail location she will need to hire an additional two people on a part-time basis. If she does hire staff, she will need to consider the cost of labor, how many hours she would need each of these staff, and the tasks she would need them to perform at this stage in her business operation. As a result, she will need to consider their wages as a cost of labor on top of all the other supplies, insurance, rent, advertising, point-of-sale equipment, and various other costs she did not have when she was operating out of her home. She needs to figure out how she will make money and how she will finance or pay for her new start-up costs in the retail location.
Christina needs to evaluate all the resources she would need for this enterprise and create a checklist so that she can determine if the time is right for her to take this important step with her bakery. As she progresses through the process, the questions get more specific and the answers become much more detailed.
Review Christina’s resource needs and make a list of them.
Going back to this case question on Christina’s Confections, go over the list of resources that you created. Now that you have additional information, determine if that is a good list; if not, add or delete items that are necessary for her to run her business. What additional resources did you come up with? What can she do to ensure she can cover all her expenses?
The list may include
- Rent (facility) or even home space
- Personal vehicle
- Oven (equipment)
- Bakery utensils (bowls, shakers, sifters, brushes, rolling pin, cake cutters/marker, spoons etc.)
- Professional services (lawyer/accountant)
- Business permit, sales permit, health permit, and fire permit]
Consider Christina’s Confectionaries bakery example and focus on the maturity phase of her business. Describe how Christina can develop her brand to distinguish her from other bakeries and what kind of costs she can expect to incur while doing this.
Answers will vary, but students should focus on ensuring that the logo, trademark, slogan, and communication are cohesive to showcase the bakery. They can also mention the feel these can have: luxurious, healthy, grab and go, etc. They should also include vehicles that can be used to reach their goals, such as having a well-developed e-commerce website, social media, e-mails, TV commercials, radio, and print ads that showcase the bakery. Examples of costs for a small bakery are approximately $5,000 to $20,000, and, for a larger bakery, they are approximately $25,000 to $80,000, but can go even higher if it’s a large chain. This can go into the hundreds of thousands of dollars.