Cruffs Creampuffs
Business Plan 2012
Prepared by: Kody Orr
Table of Contents
Executive Summary
1.0Introduction
1.1Mission Statement
1.2Goals and Objectives
1.3Industry Overview
2.0Operations Plan
2.1Organizational Structure
2.2Site and Floor Plan
2.2Daily Operations
Average Business Day
Average Business Week
Average Business Month
Average Business Year
2.3Supply Analysis
2.4Capacity
2.5Cost of Sales
2.6Capital Budget
2.7Operational Budget
3.0Human Resource Plan
3.1Job Descriptions
Manager
Full Time Employee
Part Time Employee
3.2Training
4.0Marketing Plan
4.1The Marketing Mix
Product
Price
Promotion
Place
4.2STP
Segmentation
Target Market
Positioning
4.3Competition
4.4Target Markets
5.0Financial Plan
5.1Financial Description
5.2Require Rate of Return
5.3Critical Success Variables
5.4Best and Worst Case Scenarios
Best
Worst
5.5Sensitivity Analysis
5.6Break Even Analysis
5.7NPV and IRR
5.8Feasibility
5.9Contingency Plan
6.0Conclusion
7.0References
8.0Appendices
1.Capital Budget
2.Revenue Estimates
3.Marketing Expenses
4.Retained Earnings and Dividend Schedule
5.Break Even Analysis
6.Cost of Goods Sold
Executive Summary
Downtown business cores in cities throughout North America have become large hubs for retail businesses as a whole but specifically small coffee shops and bakeries. Small geographic areas polluted with working professionals and shoppers have made a recipe for success to businesses offering food and drinks. Cruffs would like to try and take advantage of this by offering high quality, freshly made coffee and pastries.
Currently Saskatoon does not house a specialty creampuff store. Creampuffs can be purchased from small local bakeries as well as large grocery stores but only as a common product or recipe. Cruffs plans to expose the market and achieve success by offering specialty individual creampuffs as well as cakes for its customers in a friendly and efficient manner. Cruffs plans to target local business professionals, events of all sizes, and common foot traffic in the downtown core.
This business plan has been created to gather financing for the creation of a Cruffs store in downtown Saskatoon. The financing will go towards capital costs, leasehold renovations, and operating costs as well as designing and implementing a marketing campaign.
Critical success factors of Cruffs will include quantity of customers per day, growth of sales immediately after startup, branding in the City of Saskatoon and competitive pricing.
Cruffs Creampuffs will be known as The House of Creampuffs and a local hub to purchase a high quality, specialized product in a timely and cost effective manner.
1.0Introduction
1.1Mission Statement
To offer fresh, specialty creampuffs at a competitive yet affordable price to satisfy the needs of the greater Saskatoon area
1.2Goals and Objectives
- To gain a significant amount of awareness throughout Saskatoon of Cruffs brand and product
- To consistently offer customers a fresh and unique product
- Generate a targeted (20%) return on investment
- Stay environmentally friendly and offer “green” products to our customers
- Continually grow our customer base until we hold a firm share of the market
1.3Industry Overview
I have identified many opportunities within Saskatoon for a business such as Cruffs. In the most recent census from Statistics Canada, Saskatoon’s population is estimated to be 220,035. This is up 9.7% from the previous census. Also according to Statistics Canada, average household income has been on the rise for many consecutive years and is currently pegged at $80,570 in the most recent census. These positive statistics go to show that Saskatoon is growing in size as well as income.
In recent years downtown Saskatoon has underwent many revitalization projects to attract more people; however there is still no other business in the city that offers a product such as specialty creampuffs. Cruffs will position itself not only in the right area of this but also in the right market as factors such as population and income rise.
2.0Operations Plan
2.1Organizational Structure
Cruffs will be solely owned by 1 person who will also manage the store. They will be in charge of the inventory, basic accounting, and HR duties of the business. The manager will be heavily involved with the daily operation of the store and although they are scheduled to certain working hours they will more than likely be putting in many more unscheduled hours to ensure a smoothly run operation. Assisting the manager will be 1 full time employee and 1 part time employee. The full time employee will work Monday-Friday and will be in charge of all duties in the store front and when working on duty with the manager will be given the task of cake decorating in the kitchen. The part time employee will manage the duties involved in the store front on an evenings and weekend basis.
Figure 1: Organizational Chart
2.2Site and Floor Plan
This plan ensures that an adequate space is available to rent which will be located in the heart of downtown Saskatoon at 133 21st Street East. This location is surrounded by the downtown business core which is home to thousands of business professionals as well as the heart of retail shopping in Saskatoon. The store is also located half a block from Saskatoon’s largest shopping center the Midtown Plaza. These factors will ensure that there is an adequate amount of foot traffic travelling past our store every single day of the week. The store itself is quite small but provides customers with a cozy environment and the open floor plan will ensure that customers will have a fast and easy transaction which will provide minimal disturbance in their day.
Cruffs board of directors will include 3 key components. First being an experienced accountant to ensure that our business is efficient and on track to maximizing profits. Second being a local food industry professional and local business owner to provide the manager with valuable insight in managing and operating a small business. Third being a lawyer experienced in business law who will be able to lend their services if any legal situations shall arise.
Figure 2: Site Plan
Figure 3: Building Specifications
Figure 4: Floor Plan
Store Front: Public Side
Back of Store: Kitchen
2.3Daily Operations
Average Business Day
Every day, with the exception of Sunday, will begin with an employee (full time employee during the week and manager on Saturday) arriving at the store at 7AM to begin baking and preparing the creampuffs for the day. The baker will prepare an adequate amount of creampuffs for the day based on common trends seen throughout each day. During the time that the creampuffs are being baked the employee will prepare mix for the next batch of creampuffs, prepare the freshly baked creampuffs in their proper coating and toppings, stock the front display case with fresh creampuffs as well as prepare the filling for the creampuffs and place it in the proper canister at the front of the store.
At 10AM the manager of the store will arrive to open up the store. This will include preparing the till, brewing coffee, and opening the store to customers. Once the manager arrives the baking should be done for the creampuffs which are being sold that day. At this time the full time employee will perform cleaning duties in the kitchen from the baking activities in the morning.
After cleanup is finished in the kitchen the full time employee will then work on any special orders that are needed for the day. This includes Cruffs boxes and cakes. The manager will continue to run the storefront as well as take business calls and continue to brew fresh coffee.
At 12PM the full time employee will receive an hour lunch break. During this time the manager will continue to run the store front and take care of the lunch hour traffic.
At 1PM when the full time employee returns from lunch they will take over the operation of the store front. At this time the manager will take care of other business duties such as stocking inventory, taking care of HR and marketing duties, handle any problems that may have risen throughout the business, and other miscellaneous duties that go along with the store.
When the full time employee has put in their 8 hours for the day which should be at 4PM, they will head home for the day and the manager will once again take over the store front duties. After around 5PM when the foot traffic starts to slow down the Manager will begin to prepare the store for the next day’s duties. This will include basic cleanup of the storefront and kitchen.
When the end of the day arrives at 6PM the manager will close the store to its customers and finish off preparation for the next day’s duties. This will include cleaning out the display case, cleaning the filling canisters and coffee machines, as well as balancing the cash in the till.
Average Business Week
Each week the manager will need to create a chart for special orders for the week. This will mostly include of cakes for events as well as Cruffs boxes for corporate affairs. The manager will also need to create an employee schedule 3 weeks in advance. This will give the employee and employer a fair amount of time to account for situations which may arise that conflict the working schedule. The manager should also view the inventory budget as well as the sales budget each week to make sure that the business is running as efficient as possible.
Average Business Month
Each month the financial records will be sent to the accountant in order for the books to be prepared. Monthly statements will be made in order to keep track of the company’s sales, profits and expenses. It would be ideal to have a meeting each month as well between all employees of the business just to discuss basic daily operations with the business and any suggestions for improvements will be recorded and further investigated.
Average Business Year
Each year the manager will have to print the company’s fiscal year end reports. These will be used for filing income tax. Goals and objectives will also be reviewed each year to assess the progress as well as feasibility of each. Also it would be ideal to perform a store wide review of any upgrades that are needed for all aspects of the business. Also a couple times a year the manager will assess its inventory suppliers to make sure that they are receiving the most cost efficient product available.
2.4Supply Analysis
Cruffs will receive its product from local grocery stores in Saskatoon multiple times weekly. They will not enter any binding agreements or contracts with stores due to the fact that prices can fluctuate and they do not want to get stuck paying more with one provider when they could go elsewhere to receive their product. The manager will perform quarterly competitor checks with grocery stores around Saskatoon in order to maintain low costs of ingredients. Cruffs will try to buy all their equipment locally however if the cost outweighs the benefit they will then purchase their equipment from retailers outside of Saskatoon. Cruffs will buy extended warranty on all of their equipment to ensure that if mishaps do occur they will not have the burden of paying for repair fees.
2.5Capacity
Cruffs owns 2 industrial sized ovens with 3 racks in each oven. Each rack will be able to cook 15 creampuffs which take half an hour to cook. With an employee in the store for 3 hours before opening Cruffs would be able to produce 540 individual creampuffs for daily sales. Since this would be much more than estimated sales, a better indicator of capacity would be how many customers Cruffs could handle. Cruffs is open an average of 8 hours per day and an average transaction is predicted to take 2 minutes. According to that the capacity would be 240 customers per day. If Cruffs was beginning to approach this capacity they would need to open a second cash register to accommodate the higher customer inflow during certain times of the day.
2.6Cost of Sales
Creampuffs are relatively inexpensive to produce. The average creampuff sells for $1.75 but only costs $.23 to produce. This gives us a profit margin of 87%. Wedding cakes vary in profit margin depending on the specifics of the cake but they still stay between 80%-90%. Our coffee we sell costs about $.033 per ounce to make but we sell it for an average of $.1065. This gives us a profit margin of around 69% on coffee.
A detailed review of the Cost of goods sold as well as the Gross Profit Margin can be seen in Appendix 4
2.7Capital Budget
The capital budget consists of two major aspects which are equipment and leasehold improvements.
The equipment budget includes all of the equipment which Cruffs needs to run their business. This includes the baking equipment such as the ovens, refrigerators, dishwasher, cream canisters, and display case. Cruffs will incur the initial cost of these in the first year and will also purchase extended warranty on all possible equipment so that breakdown costs will not need to be worried about.
The leasehold improvements will need to be done before the equipment is purchased and the store is opened. These are vital costs that are needed as they provide the initial impression and the environment that Cruffs offers to their customers. This will include the initial renovations to the building such as plumbing, floors, paint and electrical. The leasehold improvements also include furniture. The building will need to be supplied with a table and chairs for the few customers who choose to sit in store as well as the counter which the orders will be placed at. The IT systems and signs are another important improvement needed as a proper IT system will ensure a smooth and efficient transaction for customers and the business. The new sign which will be placed on the front of the store facing the street is essential for the success of the business as it will create brand awareness to potential new customers.
On a side note we stated that working capital will be stated at $0. The reason for this is we will not be accepting credit from our customers so we will have no accounts receivables. Also we believe that since our inventory turnover will be so quick our accounts payables and inventory will cancel each other out as we will be paying off our current debt at the same time that we are accruing new debt. Cruffs plans to have very little cash on hand. Any cash that builds up we plan to do 1 of 2 things with. First off if cash is building up we plan to reinvest it within the business. Reinvesting is a great way to grow your business and provide the ultimate experience for the customer. The second option we have is to pay out shareholders in dividends. This is also a great option as the sole owner invests a lot of time and money into this business and dividends is payoff when the business starts seeing success.
The total amount of the capital budget in year 1 is estimated to be $92,250
A detailed view of thecapital costs can be seen in Appendix 1
2.8Operational Budget
The operations budget accounts for all of the daily expenses the business should accrue. This includes things such as accounting fees, rent, occupancy costs, inventory, insurance, utilities, wages and benefits as well as phone and internet.
One of the expenses worth noting is the wages. The wages consists of a base $45,000 for the manager. This is paid as a salary due to the inconsistent hours which the manager will work. Following that is the wage paid to the full time employee which is $15/hour as well as the wage paid to a single part time employee which is $10/hour.
Another expense is inventory. This may have to be adjusted up or down due to multiple revised views of the budget and usage. If Cruffs is experiencing a lot of waste at the end of each day then we will produce less and cut inventory costs however if it is noticed that we are selling out of product before the end of the day consistently then we will have to produce more product which will raise the inventory costs.
Maintenance costs may rise as years go by due to the fact that our extended warranty on our equipment may be running out as different equipment will have different lengths of warranty.
The total amount for the operation budget in year 1 is estimated to be $131,66
3.0Human Resource Plan
3.1Job Descriptions
Cruffs will have 3 employees hired at the store who consist of a manager, full time employee as well as a part time employee. Their job duties will consist of the following:
Manager
- Oversee scheduling of employees
- Record daily financials, cash drops, and everyday accounting of the business
- Open and close store on a daily basis
- Bake and prepare creampuffs as well as fillings
- Stock display case with fresh stock
- Brew fresh coffee throughout the day
- Clean and maintain cleanliness through the store
- Operate front counter and take in store inquiries about cakes and Cruffs boxes
- Restock inventory
- Take care of all aspects of the marketing front for Cruffs
- Prepare product and store at the end of each day to be primed for following day
- Balance the cash till at the end of the day
Full Time Employee
- Bake and prepare creampuffs as well as fillings
- Stock the display case with fresh stock
- Brew fresh coffee throughout the day
- Clean and maintain cleanliness through the store
- Create cakes and Cruffs boxes specified as ordered
- Operate front counter and take in store inquiries about cakes and Cruffs boxes
Part Time Employee
- Ability to open and close store if needed
- Stock display case with fresh stock
- Brew fresh coffee throughout the day
- Clean and maintain cleanliness of the store
- Operate front counter and take in inquiries about cakes and Cruffs boxes
- Prepare product and store at the end of each day to be primed for following day
- Ability to balance the cash till at the end of the day if needed
All Cruffs staff will need to hold valid food safety certification. If an employee does not hold this certificate, Cruffs would pay for the course for the employee.