SHIMELIS BAKERY BUSINESS PLAN 2023

1. Executive Summary
Shimelis Bakery is an innovative retail bakery in Selamber town, aiming to offer high quality
bakery products at a competitive price to meet the demand of the middle- to higher-income
households, school, café and restaurant, and others. It will sell freshly baked breads and desserts
made from the highest grade of ingredients, filling the Selamber area’s need for a classic bakery.
Shimelis Bakery will make its business stand out in the baked goods industry is our drive to let
the customers be inspired through their own designed creations. In our store, located
conveniently on the bypass, we will have specified stations with our fun and easy-to-use design
tablets for the customers to fashion their own cakes or cupcakes, which then our bakers will
create for them.
Shimelis Bakery values having great customer service, keeping up-to-date with technology to
remain as competitive and customer friendly as possible, and contributing to the local
community through non-profit organizations, like clinic, education, through donating our two
day-old baked goods among other things.
We believe that we are coming into the retail bakery industry at an optimal time. There are no
bakery shops near the Selamber area, giving us a big break into the industry. The only
competition Shimelis Bakery predicts to have is the bakery sections are LIG and Mulu Desta
Bread, which are on either ends of town. These small two will be our greatest competitors.
Fortunately, the economy has not hurt bakeries.
Our target market will be the higher end of middle class workers and above, however effort will
be made to give lower incomes opportunities to buy our products, such as through our day-old
bread section. Our prices will tend to be higher than those of our local competitors, mainly for
the reason that we strive for higher quality in our products.

Shimelis Bakery will be a limited liability Sole-proprietorship. It will require ______ for start-
up cost, and from which _______ will be placed fully on bank long term loan, but we predict that
the debt will be paid after five years. In the beginning we will only need ______ minimum-wage
workers aside from the all us participating in the business to run the bakery but more may be
added as finances allow it and demand requires it.

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2. Introduction

Shimelis Bakery will be run as a Sole-proprietorship. This Business plan is prepared for the
purpose of providing an understanding of bakery business. A brief analysis on baking is thus
conducted to identify the current market trend and to share the shortage and unsatisfied market in
Selamber Town and nearby small towns. Shimelis Bakery is a start-up bakery producer and
retail establishment located in SNNP region Gamo Zone Selamber town. Shimelis Bakery
expects to catch the interest of a regular loyal customer base with its broad variety of bread
products. The company plans to build a strong market position in the town. Shimelis Bakery
aims to offer its products at a competitive price to meet the demand of the middle-to higher-
income local market and government and private organizations.

2.1 The business

Shimelis Bakery is a limited liability Sole-proprietorship engaged in the bakery business. It is

owned by Shimelis Shaol and overseen by him. The business is controlled and managed by Mr.
_______ has graduated in Industrial Engineering in Bahir Dar University and has extensive
experience in sales, marketing, and management. The owner has the capacity to utilize traditional
and more advanced bakery technologies to produce new breads with locally-adapted
technologies. The Sole-proprietorship intends to hire ____ full-time bread bakers to handle
customer service and day to day operations.

2.2 Products and Services

Shimelis Bakery offers a broad range of bread products, all from high quality wheat floors.
Shimelis Bakery will supply food to all of its customers by providing each customer with bread
products made to suit the customer. The bakery provides freshly prepared bakery products at all
times during business operations. Shimelis Bakery also plans to produce its own floor from
locally and imported wheat in the future.

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2.3 The Market (industry analysis)

Bakery business in Ethiopia recently experienced rapid growth as the living standard and way of
the people is changed. Shimelis Bakery wants to establish a large regular customer base, and
will therefore concentrate its business and marketing on local residents, and others which will be
the dominant target market. This will establish a healthy, consistent revenue base to ensure
stability of the business.

2.4 Economic and Social Benefit

The business has the following socio economic benefits:

 Create job opportunities for the surrounding population

 To introduce modern production methods and deploy highly durable and effective
machineries
 It increases the government revenue in the form of taxes
 To provide a sustainable firm steady income for the business owner

2.5 Financial Considerations

Shimelis Bakery expects to raise Br ______ totally in its own capital, and it anticipates sales of
about Br. _____ in the first year, Br. _____ in the second year, Br. _____ in the third year, Br.
_____ in the fourth, and Br. _____ in the fifth year of the plan. Shimelis Bakery should break
even by the first of its operation as it steadily increases its sales. The businesses profit and loss
statement indicates that the business is profitable throughout its business life. Net-income for
five years period are expected to be approximately Br. _____ in year 1, Br. _____ by year 2, and
Br. _____ by year 3, Br _____ by year 4 and Br. _____ in the fifth year of its operation. The
company does not anticipate any cash flow problems.

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3 BUSSINESS PROFIL

3.1 Objectives

The overall objective of the business is to offer its products at a competitive price to meet the
demand of the middle-to higher-income local market and government and private organizations
and also lower income residents. Specifically;

 Provides quality of product to the customers

 Attract the customer or expand with in short period of time
 Expand to two stores (Daramalo and Kucha Alfa Woreda) by the third year of business.

3.2 Business Mission

Shimelis Bakery aims to offer high quality bakery products at a competitive price to meet the
demand of the lower- to higher-income households, school, café and restaurant.

3. 3 Business vision

In the future, we intend to adapt through marketing and technology to sustain our modern edge to
be as customer-friendly as possible and provide the best products in our field. We also plan to
continue to invest in our community through partnerships with other businesses and non-profit
organizations and after five years we would hope to set up similar operation in another area.

3.4 Core Values:

Serve… Sustain… Contribute…

3.5 Keys to Success

Keys to success for Shimelis Bakery will include:

 Providing the highest quality product with personal customer service.

 Competitive pricing.
 Ongoing employee education and recognition programs.
 Give back to the community.

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3.6 Business History

Shimelis Bakery is a start-up business. Financing will come from the owner and loans. The
following table illustrates Sole-proprietorship projected initial start-up costs.

Our start-up costs come to Br _______ which is mostly equipment, store furnishings and
construction, and starting inventory expenses associated with opening our first store.

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4. SITUATION ANALYSIS

4.1 SWOT Analysis

Strengths

 Bakery would be clean and tidy

 Highly quality food offering
 Choice of different menu items not available anywhere near
 Great retail space that is new clean and located in perfect area
 Passionate owner who believes in giving back to their community/environment
 Sustainable competitive edge of adaptability to all occasions
 Consumer market needs
 Minimal, but experienced staff to start business and save money
 Financial resources will be used to give back to assist in the nation

Weaknesses

 First time business venture

 Lack of brand relation as bakery start up business
 Limited marketing budget available to create awareness
 Lack of experience in the bakery
 Start up costs are only estimates
 Funding a new business could be difficult
 Potentially could be understaffed if our product demand increases drastically
 Experience in marketing our product is minimal

Opportunities

 There are low number competitors at the areas.

 New building complexes are being built nearby so we can increase our operation
 Diversifying our operation by opening other operation area
 Suitability of the areas for trading such materials & grow quickly and expand

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 Join the trend of modern cupcake design

Threats

 Will there be increasing of tax.

 New restaurants are opening up which might out profit margins
 Will there be inflation.
 Competitors from local restaurants may respond by reducing their price to increase sale
 The high increment of rent of house
 Competitors could “steal” our ideas
 Desired capital may not become available
 Financial problems could threaten our first year’s success
 Time management could falter our productivity
 Potential completion from new entrants

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5 Production plan

Shimelis Bakery offers a broad range of bread products, all from high quality wheat floors.
Shimelis Bakery will provide all of its customers by providing each customer with bread
products made to suit the customer. The bakery provides freshly prepared bakery products at all
times during business operations.

5.1 Future Products

In the meantime, the company would like to explore the possibilities of floor production from the
local wheat. The company also believes that if floor production is successful then it could
become the number one endeavour of bakery and flour business.

Currently, there is a low flour production facility with lack of all the necessary capital
equipment. Purchase of this facility would allow the owners to begin production and to capitalize
on this higher margin product.

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6 Market plane and Analysis

Shimelis Bakery is a bakery that sells quality bread and other pastries. We want to target the
higher income of the middle class, maintain the quality of our products but also keep the prices
reasonable. We will strive to make our food something that our customers enjoy, but supply an
even greater experience by incorporating technology.

The government of Ethiopia is now subsidizing bakery business to make competitive in the
market by facilitating credits and by making tax redemption.

Shimelis Bakery‘s focus is on meeting the demand of a regular local resident customer base, as
well as a significant level of government and private organizations that includes school, hotels,
café and restaurants and others.

Target Market: Our target customers mainly consist of the higher income consumers, and the
top of the middle class. Although this is a smaller group of consumers to appeal to, we hope to
position our-self as a business in the downtown area or along the bypass in Shimelis Bakery
where there is easy access to our selected consumers. We expect our customers to be of the
working class, people with steady jobs, and possibly families.

Product: Our product is a high-quality, organic dessert that is extremely adaptable to both
special events, and to the special dietary needs of our customers.

Pricing: Our prices will be slightly higher than those of our local competitors, mainly for the
reason that we strive for quality in our products. This goes hand in hand with the market that we
plan to target that of the upper middle class, and our higher income consumers.

Place (Distribution): Our primary way of distributing our products would be through our store.
Hopefully in the future we will be able to offer catering services, but during start up we will
work out of our own facilities. Customers will be able to walk in and buy our baked goods, as
well as set and/or send orders by telephone, or through a direct in-store appointment.

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Promotion: We hope to contact our customers through advertising in FM, radio and in the
beginning use advertisements in the newspaper to introduce our new business. We hope that our
idea to sell bread for half price will promote our products, although we want to be known as a
bakery that sells our fresh baked bread and pastries. We also expect that our valued community
involvement will also work as a promotion by improving the public view of our business and
advertising to the individuals involved with the organizations we work with.

6.1 Market Segmentation

In this process of analyzing and classifying customers in a given market to create smaller, more
precise target markets, Shimelis Bakery focuses on the middle, upper and lower-income markets.
These market segments consume the majority of bread products. The market would be
segmented based on the quantity purchased both for households and organizations.

Households

Shimelis Bakery wants to establish a large regular customer base. This will establish a healthy,
consistent revenue base to ensure stability of the business. It expects low amount of purchase for
a large amount of households per individual.

Public and private organizations

The company expects high amount of purchase from organizations like café, hotels and
restaurants. It will have its own strategy to satisfy the demand of these large purchasers.

6.2 Target Market Segment Strategy

This involves the identification of target markets and determination of marketing mix choices
that focus on those markets. The dominant target market for Shimelis Bakery is a regular stream
of local residents and public and private organizations. Personal and expedient customer service
at a competitive price is a key to maintaining the local market share of this target market.

6.3 Service Business Analysis

The bakery business in Ethiopia has recently experienced rapid growth. Despite low competition
in the immediate area, Shimelis Bakery will position itself as a bakery where customers can
enjoy breads with best quality and low price with reliable services.

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6.4 Competition and Buying Patterns

Competition in the local area is somewhat sparse and does not provide nearly the level of product
quality and customer service as Shimelis Bakery. But some of the competitors have strength and
weakness.

Strength

LIG and Mulu Bread: They will definitely be two of the major competitors because of its
strong financial position and established marketing and operational practices. However, despite
of their entrenched market position, many customers favour smaller, independent establishments
that offer comfortable atmosphere and good bread at affordable prices.

Weakness

 They bake low quality bread product

 Limited number of customers
 They don’t have good management practice
 They don’t give back to the community
 They don’t keep the personality of the customer as Shimelis Bakery.

6.5 Strategy and Implementation

Shimelis Bakery will succeed by offering consumers high quality bakery products with personal
service at a competitive price. The owner’s strategy is to profitably and efficiently utilize present
and future bakery production technology.

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7 Human Resources Business and its Management Plan

Mr. _________ will be the manager of the Sole-proprietorship being responsible for the
operations and management of the company. Since the business is in the world of limited
resources, decision making on how to use these resources in their best possible way is an
essential matter.

The business will follow efficient management procedures. The business will be run the day to
day operation by consisting of, skilled, semi-skilled and unskilled workers to be employed by the
business with attractive monthly salary.

Therefore, the management of the business will be competent enough. More specifically, the
duties and responsibilities of the bakery manager will be:

 To prepare rules and regulations that are practical for business administration
 To check consistently if staffs are functionally employed
 To prepare the monthly and annual budget, and present to the owner for approval
 To organize strategies and means to promote sales
 To be responsible to purchase and sign check when delegated by owner
 To check the date of sales report
 To check if tax and liabilities are paid on time
 To check if the business is profitable, output quality is maintained and prices are within a
competitive range
 To check bank loans and other payments are effected on time

One aim of a manager should be to ensure that all staff understand the nature of the business and
are active in working towards its success.

If it is accepted that most people wish to have the following aspects in their job, the manager can
arrange work to meet these needs:

 A reasonable wage
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 Security of employment
 Respect for their skills and knowledge
 Good relationships with other staff
 Opportunity to develop new capabilities
 Reasonable working conditions.

The majority of people wish to have their skills and knowledge recognized and to be able to
develop these further in their work.

7.1 Management Team

The owner has extensive experience in sales, marketing, finance, accounting, administration and
management.

7.2 Personnel Plan

As the personnel plan shows, Shimelis Bakery expects to make significant investments in sales,
sales support, and product development personnel.

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8 Financial Analyses

Sales Strategy

Nature and Limitation of Business:

This financial projection is based on sales volume at the levels described in the sales forecast
section and presents, to the best of management’s knowledge, the company’s expected assets,
liabilities, capital, and revenues and expenses. The projection reflects management’s judgment of
the expected conditions and its expected course of action given the hypothetical assumptions. As
the table show, Shimelis Bakery anticipates sales of about Br. _____ in the first year, Br.
505,920 in the second year, Br 526,157 in the third year, Br. 557,726 in the fourth, and Br.
602,344 in the fifth year of the plan.

8.1 Financial Plan

There are different major types of bakeries: in-store supermarket and small retail. With most
revenue coming from in-store bakeries, our business would draw off these sales. We would
specifically target upper middle class to high-class citizens who are willing to pay a little more
for a higher quality product with more specialization and service than that of major
supermarkets. A loan from the bank will be needed to receive capital for start up costs. The
requested long term loan amount is _____ Birr.

8.2 Break-even Analysis

Break even is useful tool in business analysis. The breakeven point occurs when total revenue is
equal to total cost. Shimelis Bakery‘s Break-even Analysis is based on the average of the first-
year figures for total sales by units, and by operating expenses. These are presented as per-unit
revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate
estimate of real risk. Shimelis Bakery should breakeven by the second year of its operation as it
steadily increases its sales.

Breakeven point = total fixed cost divided by weighted average contribution margin.

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Table 1: Fixed investment cost estimation

Unit
S/N Description Unit Quantity Total cost
price in
1 Baking Machine No. 1 120,000 120,000
2 Cash register Machine No. 1 30,000 30,000
3 Flour mixing Machine No. 1 55,000 55,000
4 Breading house No. 1 60,000 60,000
Sub total base cost 265,000 265,000
Contingency (10%) 26500 26,500
Total 291,500 291,500

Table 2: Tools and Equipment

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