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Bakery bill format for Supervision

hey this is Kyle at projection hub and today I'm going to show you how to create a business plan for a bakery now what this video is not going to be is I'm not going to write an entire business plan word for word right here in front of you what I am going to do is I'm going to demonstrate I'm going to show you a typical outline of a bakery business plan as well as highlight five key points you need to make sure you include in your business plan to have it in most tip top shape possible you can especially if you're trying to get approved for funding or financing for your business that your lenders are going to be looking out for now who is projection hub projection hub has helped more than 50 000 small businesses and Founders create Financial projections for their business plans their loan applications their you know investment pitch decks and we've helped hundreds of bakeries create their financial projections for those same reasons and who am I as I mentioned my name is Kyle and before helping businesses with projections here at projection hub I actually spent seven years as a small business lender with an SBA or small business administration lender where I reviewed you know hundreds of loan applications including some bakery business plans and their lending package to help them try to get approved for financing now some of those were root and some of those ultimately declined and I'm going to share it in those five key points some of those things that I learned that can really make your business plan shine so if at any point you like this video please give it a thumbs up and if you want to learn and get more regular information about how to grow your business manager business please feel free to subscribe to the channel we would love to have you now going to go ahead and jump in now on the rest of this business plan okay so first things first why is your business plan necessary now I know this you know sounds cliche because maybe it's obvious but the purpose of your business plan is to not explain to the audience or to your lender the industry or you know what a bakery is but instead it's to demonstrate your specific plan your path to be successful because ultimately they're trying to decide if they're making an investment whether that's with a loan or you know an equity investment they want to see that their money is going to be returned to them they want to return on their investment that's going to be the interest you're going to be on your loan so they want to make sure they get their their money back and so purpose of this business plan what you you hand over to them needs to be a solid roadmap a believable roadmap that they would have high degree of confidence in you that that would be successful so you can see here in the table of contents kind of the the outline we're going to talk about but one thing you'll probably notice is that this only goes up to nine pages and you know a very common misconception is that your business plan needs to be really long now if you need a 40 page 50 page business plan for yourself to feel like you covered everything you possibly can and you're very you know prepared to launch this business then definitely do that that's a great exercise for you but what you provide to your lender or whoever's going to be reviewing your business plan does not need to be 40 or 50 pages try to make it in that 5 10 15 pages five is probably on the on the short end but try to make it around that 10 pages 15 pages because you're going to hit the most important points but we don't want to muddy those important points with you know other very technical things that are important to your bakery maybe maybe not to The Lending decision so what I'm going to do is we're going to scroll through this business plan I'm going to cover each of the sections and whenever I get to one of those five key points I'm going to pause for a bit to get into it maybe even provide some examples and then we'll keep going from there so let's get to it okay first off we've got our executive summary I want you to think about your executive summary kind of like a cover letter for a resume you're applying for a job so make sure your executive summary keep it less than a page this is where you're going to say the name where you're located maybe a mission statement do you have a specific Vibe or something about the baker you want to make sure is noted you have some sort of special type of pastry or skill that's you know unique and then maybe you know what are your total startup costs and and how are you sourcing those so if say it's a hundred thousand dollars in startup funds and 70 000 is going to be alone and 30 000 is going to be personal investment you can say that really quickly in the executive summary because that helps you know potential lender or you know whoever's gonna be reviewing that get a quick quick idea of that so that's where you would want to do that company description okay so this is a little bit of an elaboration of what you just did but I would say this is focused more on the ownership and the people involved so we'll make this key Point number one there's another section probably later on the business plan that's kind of a two-parter with this one but in short it is relevant industry experience so a bakery is a really good example of a business that requires some skill some experience I I wouldn't just wake up the next day and decide I can open up a bakery and be successful because I can't be so that does come with some required skill set now there are varying degrees of certification in bakeries you know if you're a Patisserie or whatever it's called you know and you went off to schooling that's going to be a new different tier versus maybe you're an at-home trained Baker and you make great cupcakes so there's the room in the market for both but that's an important designation so what's important here is you need to demonstrate to your lender why do you have or what history or experience do you have or a partner has or a key employee has that's gonna make this possible so if maybe you have some significant amount of baking experience or maybe you've worked at a bakery or managed a bakery before great that is perfect to put in there maybe you haven't maybe you're coming from a day job a corporate day job but you're opening a bakery and you're hiring your best friend you're gonna be partners with your best friend who is uh you know a highly skilled and trained Baker great put that in there so it's not necessarily a requirement I would say but it's going to raise a lot of questions if you don't have some obvious relevant industry experience so we really want to drill that in and Company description is a great place to do that so make sure your lender knows that you guys know what you're doing so yeah that's key Point number one and then we will keep things moving along here down to the market analysis which is where we're going to talk about key Point number two the purpose of your market analysis is you want to demonstrate that there is room in the market for your business to be supported there's going to be enough customers in the market for you if it's a highly competitive or maybe saturated Market that doesn't necessarily mean it's going to be a no to get your funding you gotta have something in here that's going to be you're going to be a disrupter you know you're going to have some sort of momentum or advantage or Secret Sauce that's really going to disrupt things that you're going to be able to get enough of the capture enough of those customers for you so you know what's a good a good way to do this because you know espec if you're mom and pop or maybe you know it's gonna be a small business Bakery you don't have the resources to have an elaborate market research plan done or measure how many cars are driving by or that kind of thing which I totally understand just go and do some good old-fashioned Google researching okay so as an example let's do bakeries near me okay I'm in this Fishers Indiana which is a suburb of Indianapolis and I'm looking at what bakeries exist out there okay so I know Kroger that's a grocery store it's kind of like a Walmart right so I know there's a few of those sprinkled around here but okay so there's a good a good chunk I also know some of these are donut shops which is very different so that's that's a thing like if we were opening a coffee shop one coffee shop to the next isn't as different from each other right there's bottom line they're gonna offer coffee maybe they offer some other things but you can go to one coffee shop in another coffee shop you still can get coffee Bakery is a little different right we already touched on this there's Specialties depending upon your skills or your education or your experience so you might be able to different if you do custom cakes or if you're a cupcake shop or maybe you focus on Donuts or maybe you focus on Bagels that can be very different so when I look at this at first things may be like wow that's a lot of Bakers in one spot on second thought it's like okay maybe I don't know if there's a single bagel place in here let me make bagels okay so this is a very basic example of understand you want to know every single bakery or potential competitor within a 10 mile radius I would say you don't have to list those in your business plan but you want to know them and then note the overlaps or the direct competition so that we can see like does it make sense you know if you're questioned on that include a little bit of that in your business plan another way we go about doing this another Google tool Google ads you can make a free Google AdWords account and use this tool under Tools Keyword Planner this is basically demonstrating is when someone goes to Google and searches something I can see how often people are searching for that thing so I set my location for this example to be Fishers which is around 300 000 people and I want to know how often does it searched out someone says bakeries near me or pastries near me and then the great thing about this is not only is it going to tell us how many times that's being searched it's going to tell us the trend is that growing or shrinking and then also it's going to give me other suggestions right different products like I already mentioned your French bakery vegan bakery cupcakes Cake Shop Mexican bakery right you have all these different examples so it's going to help you identify that so some things to point out you know that's this is solid search fine but what I'm really interested in here is this year-over-year change so we can see up 51 bakeries near me cake shop near me is up cupcakes are down a little bit gluten-free is up Custom Cakes are up French bakery is up so that can help you get a sense of what is the trend on different types of bakeries in that area because if I see growth that might be an indication that it can continue to support more bakeries versus if it was Contracting you might you know have a tough guest it's getting more competitive so that is a quick example of how you can do some market analysis demonstration it's not enough to just say like I live in the area and I know there's some bakeries you got to put in some examples of the research that you're actually doing and you're actually thinking about that and include that here in your market analysis you know are there another thing you might include is are there schools offices like office parks are there churches are there grocery stores these common Cornerstone places that the people that would go would be a typical customer of a bakery so that's something to keep in mind move along that was key Point number two move along your product and service line This is not one of our key points but obviously very important again you want to identify what type of Baker you're going to be what are you going to offer what's your price point going to be how does that price point compare to other competitors in your market so you're going to outline that here which just to say this like your lender is not going to be a bakery expert so they're not going to knock your business plan on your menu they just need to see it there because they need to know you know what you're talking about but that's not going to make their decision you know better or worse for the loan application all right moving along marketing and sales and this is going to bring us to point number three and that's gonna be customer acquisition so in the market analysis section we wanted to demonstrate that there are customers available now in customer acquisition we need to demonstrate how are we actually going to get those customers in the door and once again this can't be build it and they will come you can't just trust that and you can't tell your Lander your lender you're going to build a bakery you're going to have a website and people are just going to show up that may get you an approval but probably won't what they want to see again they know you don't have a crystal ball you can't predict exactly what your customer base is going to be but they want to see that you've got some ideas they want to see that you are testing some of those ideas some examples here might be do some test runs you know whether that's at a local farmers Market a local event a local business or restaurant partner up with some people find a place to bake things and sell them maybe let's say it's going to be a cake shop and you've been making custom cakes at your home and you just are selling them to friends and family or people in your neighborhood that's great include that those details here right say I've baked 27 custom cakes made a x amount of money include some feedback or testimonies from that that's a demonstration you know what you're doing you can let's say you get a pre-signups for a Founders club right you start spreading the word that you're gonna you're thinking about opening up a bakery sign up now and you get a you get a Founder's Club discount for the first year see how many signups you can get start your social media channel start building a local following make delicious looking cakes or whatever that is start getting a founder or a following of those people come up with some unique launch ideas not expensive but a launch idea an event or whatever that you're going to get people in the door any way you can find a way to track or record how many people are getting involved it's something how many times people bought something that is great what we call attraction in your customer acquisition you're demonstrating that you actually have some experience that you're hustling you're prepared to have some momentum when you open the doors versus you're just going to open up the doors and assume people are going to show up so more you can put for that detail in here the better and of course you can include things like website or social media advertising campaign or you're going to mail out flyers or that kind of thing but I'm telling you the thing that's going to make your business plan shine is if you can demonstrate Traction in your customer acquisition so that was key Point number three now we're going to keep moving along here Financial projections now obviously a little bit biased but we are projection hub are obviously going to say that Financial projections are the most important part of your business plan that might sound biased but even when I was a lender the same was true Financial projections are the most important part of this to show you what's included in here is an example of a breakdown of your startup costs here's like a little five-year projection breakdown of some of the key you know Financial line items customers spend percentage of cost we've got our sales growth over the first five years some key ratios and then we're going to have five-year Financial pro forma statements for income statement profit and loss you might be familiar with that your balance sheet in a cash flow statement now full transparency those numbers that I just showed you were made using this financial projection template which we sell it's less than a hundred dollars I'm telling you it's probably the easiest way you're going to generate reliable Financial projections this was built by our very own CPA on our staff show you it really quick everywhere that's blue is the only Places You'll edit things right so you put in the basic information the assets you need to purchase to get launched it's going to help you calculate how much startup Capital you actually need it'll help you calculate some basic ways to acquire your customers you'll put in your menu your categories you'll put in your hourly employees your operating costs like your rent and your insurance and then you'll put in any salaried employees and then the template does the rest it's going to generate all of those charts all of those numbers all the financial statements so you hear you got your income statement annual five-year annual of those Bakery for your balance sheet income statement in cash flow the monthly breakdown of each of those same statements and that's going to be everything you're going to need for your lender that template is linked down in the description and at the end of the video I'll even give you a promo code to get a discount on that even further but if you have any questions about it just reach out to support projection.com but the financial projections are not key Point number four you should have Financial projections regardless that will be a requirement but key Point number four is that your financial projections need to be realistic and they need to fall within industry expectations and industry norms and maybe you wonder well how do I how do I know that how do I know what's what's normal or what's realistic and very easy to do that go back to Google do a very basic search look for things like what's a typical profit margin Google is going to tell me or you can go look at any one of the the results and say four to nine percent typical profit margins okay well how do I know what that's going to be we go to our projections and we see okay first year is always going to be a little bit of an outlier because you just started up it might be a partial year you're probably not going to have as many customers at the beginning so we expect to have a loss in the first year but then as things grow and they stabilize look at that six percent four percent nine percent right within that 49 range so we know that that's realistic you can do that same exercise for Revenue percentage of cost of goods sold typical number of customers any one of those things that would be a part of your projections you can go out and look to see what are industry standards what are industry expectations so that you can know you're within line you do the same thing for startup costs so that is when you go to your talking to your lender they're not going to have a cheat sheet in front of them that says what is normal right well they might but they might have some benchmarks for an industry but if you know that you went out and you're comparing to what are their typical numbers out there you can feel confident that your projections are a combination of one the homework that you've done the menu you've put together the skill that you have and two and it doesn't look abnormal for another Bakery that's been out there that can help you feel confident that they're going to be realistic so now the rest of the business plan the projections are going to pretty much round it out you can elaborate on Staffing down here again that's what I mentioned part two of relevant experience if you need to outline the team that you've got involved to demonstrate you have a team equipped with the right experience you can do that here and then your conclusion to wrap things up but we're missing a fifth key point and the fifth key point is mostly relevant if you're trying to get a loan for opening your business and that is you need to be prepared to demonstrate skin in the game and what does that mean okay think about if you're buying a house and you getting a mortgage for your home the bank is going to expect you to a have a down payment as a percentage probably at least ten percent five percent ten percent and B they're going to have a lien on your house because they're giving you a loan so if you fail if you default on paying back that loan they're going to keep the house and you're going to lose your down payment this is it's a very similar concept let's say it's going to take a hundred thousand dollars to open up your bakery the bank might say we'll give you eighty thousand dollars but you have to put in the other twenty percent you have to put in the other twenty thousand okay so that's gonna be your personal investment that's a demonstration of skin in the game and another portion of that is gonna be collateral now there are some lenders out there that will do unsecured loans expect a higher interest rate if that is the case but especially if you're going to go to the bank expect to have to put up collateral now if you're buying a building that's going to be your collateral if you're renting a building it might look like you have a title on a free and clear car that you can put towards the loan um the equipment in your bakery is going to be you know part of the collateral do you need to put a second mortgage on your house now none of those things sound super fun and I used to hear all the times A lender people say okay before I get started I want to make sure we keep business and personal separate great advice for your accounting your bank account but that's just not going to happen when it comes to get funding I'm going to let you know that right now your bank your lender is going to require you to be adjusted and as invested and committed personally as they are you know the business so that's just to let you know you're going to have to be prepared to have some skin in the game and then another exam I'll put onto that which isn't going to maybe carry as much weight like in an underwriting opinion but your lender is going to like to hear is let's say you have a full-time day job right now and you're opening this Bakery a lot of businesses think that the lender wants to hear like I'm going to quit my job today so I'm invested in the business 100 now that is going to be necessary at some point the bank probably is going to want you to do that at some point but on day one they might actually like it more if you were going to keep working your job to supplement the income and you're going to say my partner and our key employee are going to be the ones running the bakery and I'm going to be there on weekends I'm going to be there at night to clean up and do whatever but I'm going to keep working for six months or 12 months to supplement income okay so that's another demonstration of skin in the game put that in your business plan your lender is going to love to hear that and that'll do it that's five key points of how to make a bakery business plan and get it approved for funding so again this template this business plan template is free I've linked it down in the description you can go ahead and grab it also a link to the financial projection template for the bakery which is not free but let me give you a discount code for that if you use ph20bp that'll give you 20 I've linked the projection template here in the business plan we also have a video that walks how to fill out the whole thing which makes it very easy and you can reach out to us to ask questions and we'll help you fill it out as well so thanks again and good luck with your bakery business plan