Asset and Wonderland Cupcakes

1.Executive Summary
Wonderland Cupcakes aims to give cupcakes a whole new dimension. Located in Beirut, it will be a unique bakery for its creative custom-made cupcakes and its relationship with its customers. Whether it’s an extravagant wedding, or a fun birthday cupcake, we like to talk to our customers and get a feel for what they want. Our mission is to create a unique bakery where customers tell their stories and watch their stories turn into cupcakes. We are sensitive to each and every person’s stories, empathize with them and portray that story in a cupcake. Our cupcakes not only change their looks with every customer but also tastes delicious and are inexpensive. We seek fair and responsible profit, enough to keep the company financially healthy. Owner and founder of Wonderland Cupcakes is starting the business with only $20,000 in their pocket.

But the company has a start-up requirement of about $65,000 which will be spent in leasing a store-front, registering the business, acquiring insurance, purchasing equipment for set-up, for e.g., convention oven, microwave oven, fridge, computer etc, which are the long term assets of the company. Other assets include electronics like mixers, blenders etc and utensils like pans, spatula etc, while inventory includes flour, sugar, fondant, gum paste etc. A major portion of the start-up expense also goes into marketing and advertising. In the projections for Wonderland Cupcakes, the company starts off with yearly sales of about $100 thousand in its first year of operation. With the growth in business and expansion into other lines, Wonderland Cupcakes manages to earn revenue of about $400 thousand in the fifth year. The company will have a high gross margin of about 85% almost throughout its five years of projections, which seems to leaves enough room for its fixed expenses and other administrative or operating expenses. In the first year, Wonderland Cupcakes is projected to turn a net profit of almost 10% in the second year, which increases to almost 20% by the end of fifth year.

2. Objectives
I. To establish a strong presence in the market as a unique bakery. II. To specialize in cakes those are different from any other cupcakes available in the market. III. To establish a storefront by the end of summer 2013. 3. Mission

Wonderland Cupcakes aims to be a cornerstone in creating a unique bakery sensitive to each and every customer’s stories, empathize with them and portray that story in a cupcake. Our cupcakes not only change their looks with every customer but also tastes delicious and are inexpensive. We seek fair and responsible profit, enough to keep the company financially healthy.

4. Keys to Success
I. Creativity
II. Low price
III. Relationship with customers
5. Company Summary
Wonderland Cupcakes will be located in the heart of Beirut, delivering cupcakes though out Lebanon area every day of the week. It will be unique for its creative custom-made cakes and its relationship with its customers. Whether it’s an extravagant wedding, or a fun birthday cupcake, we like to talk to our customers and get a feel for what they want. We make sure the cake reflects their personal style, the event and the story behind it. We emphasize on presentation, detail and taste.

6. Start-up Summary
Like any other start-up, Wonderland cupcakes have the usual start-up costs of registering the company, attaining the license, and since it is registered as an LLC, there is also the cost of publishing the legal notice in the newspapers. In addition, a store front along with work space will be leased. The place will be refurbished and equipped with modern convention ovens, microwave ovens, fridge etc. Other initial costs will include electronics like mixers, beaters, along with cake pans, utensils etc. Inventory mainly comprises of flour, baking powder, oil, butter, eggs, sugar, salt, fondant, gum paste and many more.

7. Products
As the name suggests, Wonderland Cupcakes sells cupcakes, but not just any cupcake, it sells cupcakes that are unique and creative in their own ways. The cupcakes are custom-made and are made after listening to the tale of each customer. Whether it’s a wedding, anniversary or a birthday party, every occasion has a theme, and stories behind them. We listen to them, relate to them, forma relationship with them and try to makes the cupcakes from their point of view. We make sure the cupcake reflects their personal style the event and the story behind it. Presentation is the key for us, we pay close attention the details and last but not the least, and we make the cupcakes taste delicious too.

8. Market Analysis Summary
The target market for Wonderland Cupcakes are the middle-class population and high income professionals in Beirut area, who appreciate the finer things, and are willing to pay for them. They value relationships, art, great food and organic fruits and vegetables, delicious desserts made from scratch. The company will not chase the $2,75-cupcake market; the same group that prefers convenience and low prices. But it would be wrong to say that those who buy cupcakes from the grocery store will not order cupcakes to Wonderland Cupcakes. Customers who appreciate a homemade treat made from scratch, using only fresh, high quality ingredients will also fall in the target market. When considering the social ladder, this target market will be members of the middle class and upper middle class group , white collar workers. Price is not an issue for them. They would be willing to pay a decent amount for a unique, creative and impressive as well as delicious homemade cupcake. But, one thing is common in all of them, they always have a story to tell and it is represented in the cupcakes. 9. Competition and Buying Patterns

Porter’s Five Forces analysis is useful when trying to understand the competitive environment facing a given industry. It involves looking at internal competition, barriers to entry, the profit-appropriating power of both buyers and sellers, as well as substitutes to the goods produced. Applied to the bakery industry it shows an average net profit that typically does not cover the cost of capital due to low barriers to entry, ease to production and ease of access to ingredients.

Internal Rivalry: There are many players in the bakery industry. The top four companies are estimated to account for 11.7 percent of the market. The industry is characterized by many small bakeries, but there has been a recent trend towards consolidation and economies of scale. Businesses compete on price, quality, differentiation and relationships with key suppliers..

Barriers to Entry: Barriers to entry in this industry are low. Economies of scale are beneficial, but are not required for industry success. As a result, small businesses can enter the industry with a relatively small amount of capital. The two main determinants of a new company’s success is the leaders’ ability to acquire sufficient distribution channels to cover operating costs and their ability to build up brand recognition and loyalty. Distribution channels typically involve retail outlets, such as supermarkets and grocery stores, and they can be more easily acquired if the bakery has an established I. brand or the marketing resources to create one.

Buyers: Buyers of the bakery industry’s products, such as supermarkets, grocery stores hotel chains and convenience stores, are able to appropriate much of the industry’s profit due to the large number of small bakeries that are all vying to find outlets for their products.

Suppliers: Suppliers do not have much negotiating power in the bakery business due to the well developed markets for their products and the commoditized nature of what they are selling. Bakeries can be affected by price swings of the raw inputs, but the changes are a result of global supply and demand determinants rather than suppliers’ negotiating power. Substitutes: Many substitutes exist for bakery products. All products are viable alternatives and individuals can also make all of the baked goods switching they want at home. Bakeries rely upon price and convenience to keep individuals to a substitute or baking what they need at home.

10. Web Plan Summary
Wonderland Cupcakes have already launched a website at www.wonder_cupcakes.com.lb. this website will play a major rule in the business and will be a dynamic marketing tool for the company sales, catalogues, and expanding to others areas. It will provide sufficient information about the company products, pricing, and other services. The goal will be to implement a functional and professionally designed website that can be adapted to meet the needs.

11. Website Marketing Strategy
A significant amount of marketing budget will be spent on internet marketing, SEOs and other search marketing tools to make sure Wonderland Cupcakes site appears on the Google, Yahoo, or Bing when anyone looking for creative cupcakes in Beirut area.

12. Development Requirements
The website has been created through intuit.com. Any future updates or additions will also be done through them. Intuit also offers marketing tools to help spread the company name faster.

13. Strategy and Implementation Summary
Wonderland Cupcakes will succeed through making high quality, unique, creative custom made cupcakes. It will focus on a niche market and will attempt to achieve the best reputation in that segment.

14. SWOT Analysis
The SWOT analysis for Wonderland Cupcakes provided us with the opportunity to analyze its internal strengths and weaknesses against the external opportunities and threats. It gives the company a chance to build on its strengths and work on its weaknesses by taking advantage of the opportunities and protecting itself from the threats Wonderland Cupcakes unique strengths of creativity and custom made cakes at lower prices than its competitors protects its from its potential threats of new entrants. While targeting its niche market, it also works on its weaknesses by overcoming its dependence on the distribution system.

Strengths
Uniqueness: Wonderland Cupcakes have made cupcakes and will continue to make cupcake that are one of a kind. , because each cake represents a person or a relationship or a celebration by them. So, like each individual or his/her
relationship with others, the cupcakes are unique.

. Creative and custom-made: The cupcakes are creative, and each is a piece of art There maybe thousands of bakeries out there, but there are only a handful of bakeries that make as creative cupcakes likes Wonderland Cupcakes.

Inexpensive: Usually cupcakes that are unique, creative and especially custom-made are not affordable by most people. But, Wonderland Cupcakes make them inexpensive and within the reach of middle class customers.

Weaknesses
Short-staffed: When dealing with art, a single problem lies in every field, there are not many artists available out there. This causes the company to be short-staffed, which eventually limits its growth and potential to higher earnings. Transportation: Wonderland Cupcakes serves an unlimited area. Wonderland Cupcakes have an established distribution system. Opportunities

Changing consumer tastes have given rise to changing consumer tastes have given rise to facilities can capitalize on such home-made high quality products: In the recent years, customers are becoming more and more health conscious and prefer home-made goods made with quality ingredients and customers are also willing to pay a high price for that. Threats

Raw-material and energy costs volatile: The costs of major raw materials, such as wheat, vegetable oils, fuel for delivery fleets, and natural gas for ovens, can change rapidly. The volatility in prices of raw-materials cannot affect the end-product price, thus shrinking the profit.

Competitors: Current and potential competitors are the major threats. The creativity and the uniqueness of its cupcakes cannot be patented and can easily be copied.

15. Competitive Edge
The competitive advantage comes from its uniqueness, differentiation, high quality at lower price, all which are key desires for all consumers of the industry. 16. Marketing strategy
The marketing strategy will include a lot of advertising online and in the targeted print media. We believe in target marketing and it will be aimed at getting the right information at the right place. We will make sure that those who will appreciate the product will know about it.

17. Sales Strategy
Wonderland Cupcakes focuses first on the increased demand of unique and creative cakes for birthdays, anniversaries and weddings. People are so tired of having the store bought square or round cupcakes for these occasions, they want something different and something that represents them, talks about them. It will make the quality cupcakes which are also custom-made but will give a fresh new look to cupcakes. One of a kind designs and mouth-watering cupcakes will be affordable to the middle-class.

18. Financial Plan
We want to finance growth in terms of increased demand through a combination of, short-term debt and cash inflow. Larger purchases of more equipment like oven, fridge computer etc after full depreciation will require approximately eighty percent debt financing (long term debt). Additional investments will be primarily financed with cash flow. Inventory turnover must remain at or above one or we run the risk of backing up orders and jeopardizing our freshness guarantees. We have had no problems with accounts receivable and we expect to maintain our collection days at 3 to 5 with minimal sales on credit. In addition, we must achieve gross margins of eighty-five percent and hold operating costs no more than seventy-five percent of sales. 19. Break-even Analysis

The break-even analysis shows that Wonderland Cupcakes have sufficient sales strength to remain viable. Our break-even point is close to 7525 cakes per month, which amounts to less than $20,000 in revenue per month. Wonderland Cupcakes have high average cost of almost $16,500. Although its average variable cost per unit is very low, the high fixed costs delay its break-even time. 20. Projected Profit and Loss

In the projections for Wonderland Cupcakes, the company starts off with yearly sales of about $100 thousands in its first year of operation. With the growth in business and expansion into other lines, Wonderland Cupcakes manages to earn revenue of about $255 thousand. Wonderland Cupcakes have a high gross margin of about 85% almost throughout its five years of projections, which seems to leave a lot of room for its fixed expenses and other administrative or operating expenses. In the first year, Wonderland Cupcakes is projected to have a loss after paying its operating expenses, taxes and interest payments. But, it is projected to turn a net profit of almost which increases almost 20% by the end of fifth year, 10 %. 21. Projected Cash Flow

Wonderland Cupcakes expects to have all its transactions through online payments, credit cards, checks or cash, none of which have a transaction time more than a couple of days and thus is almost as liquid as cash. Wonderland Cupcakes will borrow $50 thousands in Long Term Loans for purchase of long term assets like convention oven, microwave oven, fridge etc. the company will repay the loan in 5 years with equal amounts of payment each month. 22. Business Ratios

Standard business ratios are included in the following table. The ratios show a solid plan for growth in order to reach maximum production within the first few years. Asset to sales ratio doubles from the time of inception to the end of fifth year. Current debt to total asset ratio is low in the first year, but maintains almost 25% from the next. Last but not the least the Acid Test maintains an average of 2.5 times throughout the 5 year period.

23. Long-Term Plan
The Business Plan covers five years of activities. We consider the financial projections in the Business Plan as conservative. The sales figures are the minimum amount we wish to sell. The company also plans to expand to other locations and open up stores in several other locations in the 6th year, which are not reflected in this business plan. At the end of fifth year, all large equipment like the ovens, fridge etc. will be sold for salvage value and new equipment will be purchased for better efficiency.

Start –up

Requirements
Start-up Expenses
Legal $2,500 Insurance $2,500 Lease $12,500 Computer $1,000 Marketing $7,000 Other $2,500 Total Start-up Expenses $28,000 Start-up Assets

Cash Required $10,000 Start-up Inventory $ 12.500 Other Current Assets $2,500 Long-term Assets $12,500 Total Assets $37,500 Total Requirements $65,500

Market Analysis|
2016| 2015| 2014| 2013| 2012| Growth| Customers|
54,121| 53,060| 52,020| 51,000| 50,000| 2%| Weddings | 28,139| 27,319| 26,523| 25,750| 25,000| 3%| Birthdays | 10,406| 10,303| 10,201| 10,100| 10,000| 1%| Holidays | 20,800| 20,600| 20,400| 20,200| 20,000| 2%| Graduation | 113,466| 111,282| 109,144| 106,300| 105,000| 2%| Total |

Bibliographic References

http://www.ehow.com/about_5234246_bakery-industry-analysis.html#ixzz1ODsazdx1 www.hover.com
http://www.entrepreneur.com/businessplan/index.html