Executive Summary
Natalie’s Bakery offers bakery products for food lovers across Texas. We have been in business for more than 15 years. We are looking for a $500k bank loan in order to expand to Washington and Virginia. The business is registered as an LLC in Texas and the founder(s) are Elma Stevenson and Adam Smith. Our founders possess more than 30 years of experience in the industry.
Target Market: our primary target market involves bagels, buns, rolls, biscuits, and loaf bread customers across Dallas, Houston and San Antonio. In terms of demographics, we are targeting mid-income people.
Industry Overview: the industry is valued at [X] across [Country] and growing at a CAGR of [X%]. The market size of our immediate/ current target market is [X]. Some of the major market players include [major competitors].
Marketing Overview: in terms of promotions, we are using/ planning to use [marketing channels]. The reason involves lower customer acquisition costs across these channels and our in-house expertise across these channels. In addition, we are also planning to allocate a promotional budget for [future promotional channels].
Financial Overview
Financial Highlights
| Liquidity | 2020A | 2021A | 2022F | 2023F | 2024F |
| Current ratio | 6 | 12 | 23 | 32 | 42 |
| Quick ratio | 6 | 11 | 22 | 31 | 40 |
| DSO | 8 | 8 | 8 | 8 | 8 |
| Solvency | |||||
| Interest coverage ratio | 8.2 | 11.1 | 14.2 | ||
| Debt to asset ratio | 0.01 | 0.01 | 0.2 | 0.18 | 0.16 |
| Profitability | |||||
| Gross profit margin | 51% | 51% | 53% | 53% | 53% |
| EBITDA margin | 12% | 14% | 21% | 22% | 22% |
| Return on asset | 5% | 6% | 13% | 14% | 14% |
| Return on equity | 5% | 6% | 16% | 17% | 17% |
Fund Usage
Industry Analysis
Sixty-five percent of bakeries employ less than ten people; 44 percent employ one to four people, and most small businesses have just one location. The baking business employs almost 800,000 people and generates $44 billion in direct compensation. To become a significant commercial bakery, you’ll need a lot of money to buy equipment, and you’ll be up against much competition from established companies. A small retail Bakery takes less capital and is less difficult to establish. Smaller bakeries may build a dedicated following of local consumers by offering specialty items like whole-grain bread.
Large commercial bakeries continue to dominate the competition because the other businesses are tiny, and the industry is severely fragmented. Major commercial bakeries, such as Grupo Bimbo, will continue to expand via the acquisition of other brands and regional bakeries.
Over the five years leading up to 2021, the Bakery Cafes business performed well. Bakery cafés have raced ahead, benefiting from altering customer tastes, with both disposable income and consumer confidence on the upswing for much of the time. People desire the convenience of fast food establishments without sacrificing quality. Industry businesses strive to provide high-quality meals with healthy alternatives while delivering quick service. Consequently, sector revenue is predicted to climb by an average of 1.7 percent to $11.7 billion over five years to 2021, with a 3.6 percent gain in 2021 alone as the economy improves and customers become more comfortable dining out.
From 2019 to 2025, the worldwide bakery product market is expected to grow at a CAGR of 3.2 percent. Over the anticipated years, rising consumption of ready-to-eat meals worldwide is expected to increase product demand. In Europe, the rising demand for bread items has been driven by a growing appetite for ethnic foods and the popularity of Thai and Mexican cuisine in restaurants.
To win more market share, major corporations are expanding their global footprint. The firms’ ability to create joint warehouses in strategic locations remains a significant success element. Due to rising snack consumption, the cakes and pastries market is expected to grow at the quickest rate between 2019 and 2025.
Because of the high presence of important corporations in rising nations like China, India, Singapore, and Japan, Asia Pacific is predicted to grow quickly throughout the projection years. Furthermore, increased per capita income in these nations will aid regional market expansion. Milk, emulsifiers, fat, stabilizers, flavors, sugar, and flour are the most common essential ingredients used in bread items.
The cost of these components and their availability has a significant impact on the price of bakery goods. Like Associated British Foods, Dawn Foods, and Bakels, many organizations have integrated backward to fight supply-demand mismatches and volatility. Because the product must be carried in specifically constructed automobile components with state-of-the-art refrigeration capabilities, the bakery product industry uses a lot of energy. It has a lot of transportation and storage expenses. To some degree, these constraints may limit the market growth.
Flavors and fat content and texture, and sweetness are all variables impacting the industry’s development. The bread and rolls sector is predicted to develop significantly due to increased demand in North America and the Asia Pacific. Because of the introduction of unique tastes and growing consumer disposable income levels, the cakes and pastries category is predicted to develop the quickest during the projection period, accounting for the highest market share. As Asia Pacific’s population grows, long-term prospects for industry players will be created. Because of the introduction of new flavors, forms, and textures to the product, the cookies product sector is expected to develop strongly.
The market is split into hypermarkets and supermarkets, convenience shops, specialty stores, and others based on distribution channels. The worldwide market’s primary distribution channels are specialty shops and convenience stores. Specialty retailers are likely to be the most prominent and fastest-growing category throughout the projected period. By 2025, it is predicted to have a market share of over 33%.
Because of the increasing demand for baked goods, such as gluten-free, high-fiber, and Trans fat products, which staple foods, Europe is predicted to be the dominating and second-fastest-growing regional market. Because of expanding population and per-capita income, developing markets are expected to present growth prospects. Furthermore, the rising demand for breakfast grains and cereals in China and India will fuel the industry. Due to brand loyalty and large capital expenditures, high entry barriers are likely to keep competition fierce. Major corporations strive for maximum commercial expansion using a variety of growth tactics, including joint ventures, mergers and acquisitions, strategic collaborations with regional manufacturers, and distribution channel diversification. Kraft Food Group, Inc., Nestle S.A., Bimbo Bakeries USA, Britannia Industries Ltd., General Mills, Associated British Foods, and Campbell Soup Company are just a few of the major players in the business.
Marketing Plan
Website: A promotional banner will be posted on Prantl’s Bakery website so visitors will know about our new products.
Social Media: Prantl’s Bakery will be posting photos of our new bread and pastries on our Facebook and Instagram pages to reach a broad audience through this platform.
Promotions & Events: Prantl’s Bakery offers weekly classes on cake decorations. Attending events and giving free samples is an excellent opportunity to promote Prantl’s Bakery products.
Catalog/Brochures: Sending Digital Catalog and distributing printed brochures is also a means of promoting Prantl’s Bakery.
Free Samples: We will be sending samples to retail venues like restaurants and cafes to show how delicious our new products are.
Organogram
Financial Plan
Earnings:
Break-Even Analysis:
Income Statement:
| 2020A | 2021A | 2022F | 2023F | 2024F | |
| ANNUAL REVENUE | |||||
| Item 1 | 9,217 | 59,117 | 175,410 | 415,277 | 781,357 |
| Item 2 | 34,701 | 222,558 | 660,368 | 1,563,394 | 2,941,580 |
| Item 3 | 4,067 | 19,561 | 46,432 | 78,519 | 114,905 |
| Total annual revenue | 47,985 | 301,236 | 882,211 | 2,057,189 | 3,837,842 |
| % increase | 528% | 193% | 133% | 87% | |
| COST of REVENUE | |||||
| Item 1 | 360 | 2,259 | 6,617 | 15,429 | 28,784 |
| Item 2 | 480 | 3,012 | 8,822 | 20,572 | 38,378 |
| Item 3 | 52,000 | 65,000 | 78,000 | 91,000 | 104,000 |
| Item 4 | 720 | 3,615 | 8,822 | 16,458 | 23,027 |
| Item 5 | 140,000 | 336,000 | 560,000 | 840,000 | 1,120,000 |
| Item 6 | 60,000 | 144,000 | 240,000 | 360,000 | 480,000 |
| Item 7 | 32,000 | 61,333 | 85,533 | 112,153 | 141,435 |
| Total Cost of Revenue | 285,560 | 615,220 | 987,794 | 1,455,612 | 1,935,625 |
| as % of revenue | 595% | 204% | 112% | 71% | 50% |
| Gross Profit | -237,575 | -313,984 | -105,583 | 601,578 | 1,902,218 |
| SELLING & ADMIN EXPENSES | |||||
| Item 1 | 28,000 | 96,800 | 154,880 | 175,692 | 193,261 |
| Item 2 | 75,000 | 105,000 | 120,000 | 120,000 | 120,000 |
| Item 3 | 36,000 | 96,000 | 108,000 | 120,000 | 120,000 |
| Item 4 | 8,000 | 12,000 | 12,000 | 12,000 | 12,000 |
| Item 5 | 3,839 | 18,074 | 44,111 | 61,716 | 115,135 |
| Item 6 | 3,359 | 12,049 | 26,466 | 41,144 | 76,757 |
| Item 7 | 5,600 | 10,000 | 12,904 | 15,034 | 17,376 |
| Item 8 | 6,667 | 14,000 | 22,067 | 30,940 | 40,701 |
| Total selling & admin expenses | 166,464 | 363,924 | 500,428 | 576,525 | 695,230 |
| as % of revenue | 347% | 121% | 57% | 28% | 18% |
| Net profit | -404,039 | -677,907 | -606,011 | 25,052 | 1,206,987 |
| Accumulated net profit | -404,039 | -1,081,947 | -1,687,957 | -1,662,905 | -455,918 |
Cash Flow Statement:
| 2020A | 2021A | 2022F | 2023F | 2024F | |
| CASH FLOW from OPERATING ACTIVITIES | |||||
| Net profit before tax | -$404,039 | -$677,907 | -$606,011 | $25,052 | $1,206,987 |
| Depreciation | $44,267 | $85,333 | $120,504 | $158,127 | $199,512 |
| Payables | |||||
| Item 1 | $4,333 | $5,417 | $6,500 | $7,583 | $8,667 |
| Item 2 | $11,667 | $28,000 | $46,667 | $70,000 | $93,333 |
| Item 3 | $6,250 | $8,750 | $10,000 | $10,000 | $10,000 |
| Item 4 | $3,000 | $8,000 | $9,000 | $10,000 | $10,000 |
| Item 5 | $667 | $1,000 | $1,000 | $1,000 | $1,000 |
| Total payables | $25,917 | $51,167 | $73,167 | $98,583 | $123,000 |
| change in payables | $25,917 | $25,250 | $22,000 | $25,417 | $24,417 |
| Receivables | |||||
| Item 1 | $320 | $1,506 | $3,676 | $5,143 | $9,595 |
| Item 2 | $360 | $1,807 | $4,411 | $8,229 | $11,514 |
| Total receivables | $680 | $3,314 | $8,087 | $13,372 | $21,108 |
| change in receivables | -$680 | -$2,634 | -$4,773 | -$5,285 | -$7,736 |
| Net cash flow from operating activities | -$334,536 | -$569,958 | -$468,280 | $203,311 | $1,423,180 |
| CASH FLOW from INVESTING ACTIVITIES | |||||
| Item 1 | $16,000 | $13,200 | $14,520 | $15,972 | $17,569 |
| Item 2 | $20,000 | $22,000 | $24,200 | $26,620 | $29,282 |
| Item 3 | $28,000 | $22,000 | $14,520 | $10,648 | $11,713 |
| Item 4 | $96,000 | $88,000 | $72,600 | $79,860 | $87,846 |
| Item 5 | $20,000 | $22,000 | $24,200 | $26,620 | $29,282 |
| Net cash flow/ (outflow) from investing activities | -$180,000 | -$167,200 | -$150,040 | -$159,720 | -$175,692 |
| CASH FLOW from FINANCING ACTIVITIES | |||||
| Equity | $400,000 | $440,000 | $484,000 | $532,400 | $585,640 |
| Net cash flow from financing activities | $400,000 | $440,000 | $484,000 | $532,400 | $585,640 |
| Net (decrease)/ increase in cash/ cash equivalents | -$114,536 | -$297,158 | -$134,320 | $575,991 | $1,833,128 |
| Cash and cash equivalents at the beginning of the year | – | -$114,536 | -$411,693 | -$546,014 | $29,978 |
| Cash & cash equivalents at the end of the year | -$114,536 | -$411,693 | -$546,014 | $29,978 | $1,863,105 |
Balance Sheet:
| 2020A | 2021A | 2022F | 2023F | 2024F | |
| NON-CURRENT ASSETS | |||||
| Item 1 | $16,000 | $29,200 | $43,720 | $59,692 | $77,261 |
| Item 2 | $20,000 | $42,000 | $66,200 | $92,820 | $122,102 |
| Item 3 | $28,000 | $50,000 | $64,520 | $75,168 | $86,881 |
| Item 4 | $96,000 | $184,000 | $256,600 | $336,460 | $424,306 |
| Item 5 | $20,000 | $42,000 | $66,200 | $92,820 | $122,102 |
| Total | $180,000 | $347,200 | $497,240 | $656,960 | $832,652 |
| Accumulated depreciation | $44,267 | $129,600 | $250,104 | $408,231 | $607,743 |
| Net non-current assets | $135,733 | $217,600 | $247,136 | $248,729 | $224,909 |
| CURRENT ASSETS | |||||
| Cash | -$114,536 | -$411,693 | -$546,014 | $29,978 | $1,863,105 |
| Accounts receivables | $680 | $3,314 | $8,087 | $13,372 | $21,108 |
| Total current assets | -$113,856 | -$408,380 | -$537,927 | $43,349 | $1,884,214 |
| Total Assets | $21,878 | -$190,780 | -$290,791 | $292,078 | $2,109,122 |
| LIABILITIES | |||||
| Account payables | $25,917 | $51,167 | $73,167 | $98,583 | $123,000 |
| Total liabilities | $25,917 | $51,167 | $73,167 | $98,583 | $123,000 |
| EQUITIES | |||||
| Owner’s equity | $400,000 | $840,000 | $1,324,000 | $1,856,400 | $2,442,040 |
| Accumulated net profit | -$404,039 | -$1,081,947 | -$1,687,957 | -$1,662,905 | -$455,918 |
| Total equities | -$4,039 | -$241,947 | -$363,957 | $193,495 | $1,986,122 |
| Total liabilities & equities | $21,878 | -$190,780 | -$290,791 | $292,078 | $2,109,122 |