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TRANSCRIPT
The Kupcake Kitchen
Cupcake Bakery
Brittany Snyder May 31, 2013
Table of Contents
Introduction
Executive Summary .....................................................................................1
Self-Analysis ................................................................................................2
Analysis of the Business Situation
Trade Area Analysis
Geographical Analysis .................................................................................3
Competitive Data .........................................................................................4
Market Segment Analysis
Market Segment Analysis ............................................................................5
Analysis of Location
Location .......................................................................................................8
Floor Plan ...................................................................................................10
Planned Operation of Proposed Business
Proposed Organization
Type of Ownership ....................................................................................10
Management ...............................................................................................11
Proposed Product or Service
Proposed Product .......................................................................................12
Suppliers ....................................................................................................13
Equipment ..................................................................................................14
Proposed Marketing Strategies
Pricing Policies ..........................................................................................14
Promotional Strategies ...............................................................................15
Financing
Projected Income and Expenses
Start Up Costs ............................................................................................16
Sales Forecast.............................................................................................16
Building Costs ............................................................................................17
Proposed Plan to Meet Capital Needs
Financing....................................................................................................17
Conclusion
Conclusion .................................................................................................18
Works Cited
Works Cited Reference Guide ...................................................................18
Appendix
Selection Letter ..........................................................................................19
Print Ad ......................................................................................................21
Business Card.............................................................................................22
Introduction
Executive Summary
Since I was a child, I have loved baking. My idea for a business sparked from my fond
memories of baking and my sweet tooth for pastries. My business proposition is of a unique
cupcake shop that will be located in Ashland, Oregon. My business, The Kupcake Kitchen, is an
asset to Rogue Valley area.
The Kupcake Kitchen offers cupcakes with traditional and non- traditional toppings. By
non-traditional toppings, I mean that the cupcakes will have frosting and then a variety of fruit,
candy, or whatever else the customers’ desire. Different flavors of the cupcakes will be available
upon request. My product will be available to be bought as single cupcakes, in a half-dozen, and
in a dozen. A customer has the option to purchase cupcake in large quantities than a dozen upon
request.
My business is new and it has not developed a reputation yet but with promotions and
word of mouth that will change. My business does not offer a service, but it offers quality
products that people of all ages can enjoy. Promotion that leads to the increase of sales and my
customer base will make it possible to expand the size of my bakery one. In the future permitting
the success of my business I would like to hire more bakers and build more onto my building.
The Kupcake Kitchen will be a profitable business because my direct competition is
located about 20 minutes away in Medford, Oregon. With my direct competitors being located a
distance away from my business I will be able to attract the target located close to me. My
business is based in a tourist town and with that advantage I should have an increased revenue
that puts me at an advantage over my competitors.
My business is different from other bakeries because we offer unique, high quality
products at the going price. I will be paying for the equipment, working capital, and real estate of
the Kupcake Kitchen by taking out an SBA loan for a total of $664,248.00. The loan will cover
purchasing ingredients, supplies, general operating expenses, maintaining a cash reserve,
purchasing the kitchen appliances, furniture, tools to maintain the equipment, and for the
modifications of the building that I will be renting. I plan to repay these loans during the period
that I have them, and each month I will pay more than my payment so it will go towards the
interest.
I am dedicated, determined, and passionate about The Kupcake Kitchen. With my
determination and dedication to my business I believe that it will succeed. My love my baking
will drive me to make my business the best it can be.
Self-Analysis
“We all have dreams. But in order to make dreams come into reality, it takes an awful lot of
determination, dedication, self-discipline, and effort.” (Owens). Dedication to a business is
important because it drives you to work hard and be successful. Being equipped with the
appropriate skills is important for running a business smoothly. Without the appropriate skills
and dedication a business would be unorganized and bound to fail. My qualifications that
demonstrate why I will succeed include my education in CSB and previously working at other
businesses. My personality characteristics that demonstrate why I will succeed include
organization, dedication, and drive to be successful.
Experience, training, and education are the foundation of running a successful business.
Through my education in BIS and CSB I have learned valuable skills that are beneficial to
running a business. In CSB the education that I have received that will aid me in running a
business are financing, career explorations, Adobe CS5 skills, and Microsoft Office skills. My
previous working experience at Sun Scape Window Tint, Siskiyou Gifts, and Jackson County
Fairgrounds has provided me with the knowledge of how companies run and has given me
expectations of the business environment.
The various characteristics that describe me are strengths that will aid me as a successful
business owner. I am organized, dedicated, and driven by success, along with many others
characteristics. For a business to succeed to you need dedication and the dedication I have
towards baking will ensure that I will be successful. A person can have an immense amount of
dedication but if they are not organized they may run into problem. I am an organized person and
I like things to be planned out and set in an efficient way. Organization in business is important
to the operations running smoothly. I do not accept failure, and I will not settle for anything but
the best effort. I am driven by success and in the business world that can be very beneficial
because I will be determined to succeed and provide the best quality of products along with
customer service.
If a random person walked up to you on a street one day and proposed to you an
opportunity that could make you a millionaire, would you take the opportunity or turn it down?
A willingness to take risks provides opportunities to grow and become successful. During a
lifetime a person could play it safe and be happy without taking any risks. I however grasp at the
opportunity that a risk can provide. Opening a business is a risk, but with the right skills and
determination the risk will not seem so daunting. A business can be either prosperous or
unsuccessful, but in order to find that out you have to take risks.
Through experience I will learn new skills that will help me run my business and aid my
personal development. When you are in elementary school are you are learning how to write you
do not have that much experience and skill so your writing isn’t the best. With practice and
determination comes experience that improves skills and personal development. At first when I
open my business I may not have experience in every aspect of running a business but overtime
my skills will improve. At first running a business may be challenging but when I am presented
with the opportunity to earn more experience the operations will run smoother. Like a child
without experience in writing a business owner without experience may struggle, but through
experience skills and personal development improve.
Dedication drives people to work hard and become successful. Along with dedication,
having the appropriate skills is important for a business to run smoothly. The qualifications that I
have that demonstrate why I will succeed include my education in CSB and work experience.
My personality characteristics that demonstrate why I will succeed include my organization,
dedication, and drive to be successful.
Analysis of the Business Situation
Trade Area Analysis
Geographical Analysis
The Rogue Valley is acclaimed to be a beautiful part of Southern Oregon, and with the
beauty is the variety of recreational activities that draws tourists. The Rogue Valley is a great
place to locate a business. The location, climate, and topography are some of the many reasons
why the Rogue Valley is a desired spot to locate.
The Rogue Valley is located in Southern Oregon. The cities Grants Pass, Ashland,
Medford, Central Point, Jacksonville, Eagle Point, White City, Phoenix, Talent, Gold Hill,
Rogue River, and Shady Cove are a part of the Rouge Valley. Southern Oregon is located
midway between Portland and San Francisco. The I-5 corridor that connects Washington,
Oregon, and California together runs right through the Rogue Valley. Southern Oregon also has
highways 199, 62, and 140 that connect to the Oregon Coast or Eastern Oregon. Along with the
interstate, airfreight and rail shipping is available in the Rouge Valley. Shipping benefits of the
Rogue Valley are the accessibility to the interstate and the other transportation options available.
Throughout a year, the Rogue Valley experienced four distinct seasons. The summer
season temperature’s average around 90 degrees F and Southern Oregon sees about 200 days of
sun each year. The growing season is from late April through mid- October and lasts for an
average of 170 days. The cooler temperatures at the end of October generally mark the start of
the rainy season. The Jackson County receives an average annual rainfall of 18-20 inches and
Josephine County receives an annual average rainfall of 30-32 inches. The winters in the Rogue
Valley and Southern Oregon area can be issue for the shipment of products due to the snow and
freezing weather in the passes. An average day/night temperature for a day in January is 46/32
and average day/night temperature for a day in July is 90/54.
The Rogue Valley sits at the base of the surrounding mountains. The topography of the
Rogue Valley is both beneficial and a problem. The winters in Southern Oregon bring rain,
snow, and freezing temperatures that occasionally shut down the interstate that passes through
the mountains. The problem with the interstate shutting down is that the shipment of products
can be delayed. The beneficial side of the mountains is that it provides recreation opportunities
and a connection to other cities by the interstate. The recreation industries are enhanced by the
mountains near the Rogue Valley because they provide different activities throughout the year,
like sledding, skiing, snowboarding and snowshoeing, hiking, and mountain biking. The lakes
and the rivers near the Rogue Valley benefit from the snow on the mountains, and that provides
opportunities for activities like fishing and boating. The Rogue Valley is a beautiful place to live. Many aspects about the valley prove to be a
great spot for businesses. The climate, location, and recreational activities draw people to come
visit the cities in Southern Oregon.
The Rogue Valley offers many benefits to my business:
The I-5 corridor that connects Washington, Oregon, and California runs through the
Rogue Valley and is a source of tourist traffic.
The I-5 corridor is a major highway that provides transportation for the import of
supplies.
The four-season climate of the Rogue Valley is has no effect on the sales of my product.
The winter season brings snow and that is a problem to the transportation of supplies.
The celebration of holidays during the seasons provides seasonal promotion for sales.
Competitive Data
Cupcake Creations
Products Cupcakes with non-dairy toppings, specialty
cakes, wedding, birthday, and special occasion.
Rainbow
Cookies and Cream
Chocolate Peanut Butter Cup
Price Depends – single cupcake $(0-10)
Location 1739 E McAndrews
Medford, OR 97504
Promotion Mondays- $1 Cupcake day, ½ dozen
for $6.00, and full dozen for $12.00
Tuesday- $1 cupcake with presentation
of membership card
Internet- Facebook and website
The Cupcake Company
Products Specially designed cakes, ordered for any
event or occasion.
Snowball
Blackberry Pie
Coffee Cake
Price Depends – single cupcake $(0-10)
Location 950 N. Phoenix Rd.
Suite #105
Medford, OR 97504
Promotion Internet- Facebook, website, and
Google plus
Albertsons Bakery
Products Cookies, Cupcake cakes, cakes, wedding
cakes, special order cakes, quinceanera cakes,
cinnamon rolls, bread, and rolls.
Price Depends – $5 and up
Location 2301 Ashland St
Ashland, OR 97520
Promotion Internet- website
TV
Promo Ads
Market Segment Analysis
Market Segment Analysis
The basic color wheel, numbers, and the alphabet are all similar. At first it may not seem
like the tools for counting, writing, and coloring can be similar but they are because each of them
are a categorized group. A categorized group is essentially market segmentation and in business
a market segmentation is very important. A correctly identified market segmentation or target
market determines the rest of the decisions made in the areas of the promotional mix. A target
market that is identified correctly can save a business money over time. A target market is
correctly identified by analyzing the aspects of demographics and psychographics of a
population.
The demographics of my target market include the female population of the Jackson
County, female population by age, income, education level, and marital status. I chose these
measurable descriptors because I believe that they will correctly identify the most beneficial
target market for my business. I chose the female population and the age of the female
population because the sale of my product is directed more towards women who are mid-
twenties to mid-forties. As a bakery, men will come into the shop but women will be the main
gender coming into my business. The education level and income of women in the Jackson go
together because they are both are semi to non-important. The products in a bakery generally sell
for $20 or less and so the income level of the customer does not need to be on the higher end of
the spectrum. Since the customer’s income does not need to be large, a general high school
education or higher is all a customer would need to have an occupation that provides an income
to purchase my products. The knowledge of the marital status of my customers is split in half
between single and married, and that is beneficial to know because the families can be targeted
with certain deals and the single woman can be marketed with the opposite deals. Refer to the
chart below for numerical values.
The Kupcake Kitchen
Demographics Psychographics (VALS)
Age: 25-45 Like Thinkers, Believers are motivated by
ideals. They are conservative, conventional
people with concrete beliefs based on
traditional, established codes: family, religion,
community, and the nation. Many Believers
express moral codes that have deep roots and
literal interpretation. They follow established
routines, organized in large part around home,
family, community, and social or religious
organizations to which they belong.
As consumers, Believers are predictable; they
choose familiar products and established
brands. They favor U.S. products and are
generally loyal customers.
Sex: Female
Income Level: $15,000 - $75,000
Education: Minimum of High School
Marital Status: Single/Married
Cupcake Creations
Demographics Psychographics (VALS)
Age: 25-45 Like Thinkers, Believers are motivated by
ideals. They are conservative, conventional
people with concrete beliefs based on
traditional, established codes: family, religion,
community, and the nation. Many Believers
express moral codes that have deep roots and
literal interpretation. They follow established
routines, organized in large part around home,
family, community, and social or religious
organizations to which they belong.
As consumers, Believers are predictable; they
choose familiar products and established
brands. They favor U.S. products and are
Sex: Female
Income Level: $15,000 - $75,000
Education: Minimum of High School
Marital Status: Single/Married
generally loyal customers.
Albertson’s Bakery
Demographics Psychographics (VALS)
Age: 20-60 Like Experiencers, Makers are motivated by
self-expression. They express themselves and
experience the world by working on it—
building a house, raising children, fixing a car,
or canning vegetables—and have enough skill
and energy to carry out their projects
successfully. Makers are practical people who
have constructive skills and value self-
sufficiency. They live within a traditional
context of family, practical work, and physical
recreation and have little interest in what lies
outside that context.
Makers are suspicious of new ideas and large
institutions such as big business. They are
respectful of government authority and
organized labor but resentful of government
intrusion on individual rights. They are
unimpressed by material possessions other than
those with a practical or functional purpose.
Because they prefer value to luxury, they buy
basic products.
The demographics of my target market fit about 40,460 people or 50.0% of the
population in Ashland. My target market is small but that is beneficial information to know so I
can market my product to the correct portion of the population. Ashland’s population is 54%
females and 10.0 % of the population is females from the ages 25- 45. The females in my target
market earn incomes from $15,000- $74,999. My target market has education levels varying
from a high school education to a bachelor’s degree or higher. The females of my target market
are 64% single and 36% married. Refer to the chart below for the numerical values.
Target Market Demographic Estimate
Demographic Measurement Total Percentage
Female Population 10,822 54%
Female Population by Age 2,094 10.00%
Income 5,095 54.60%
Education Level 12,907 97%
Marital Status 9,542 100%
Average of Demographic Measurements
(ETM)
40,460.00 50.00%
Aspects of different psychographics fit my target market. The psychographics thinkers,
believers, and achievers fit my target market. Thinkers are a part of my target market because
they value the products they buy and when my customers purchase my products I want them to
have confidence that are buying desserts of the best quality. Believers are loyal customers and
they choose familiar products. As my business becomes more established believers will be a part
of my target market. Achievers are a part of my target because the ability to call ahead and place
an order and the option to walk into my bakery and select from a variety of freshly baked
desserts is a timesaving method that achievers like. Other values that the people in my target
market will have include close families and a sense of community.
The colors, numbers, and alphabet are all different groups but they are similar because
they are categorized groups. A categorized group is market segmentation, or a target market.
Target markets are determined by demographics and psychographics of a population. A correctly
identified target market is important to the success of a business. A target market helps determine
how the rest of the marketing decisions will be made and a correctly identified target market can
save a company money in the long run.
Analysis of Location
Location
The location of a business is one of the most aspects to it becoming a success. In the
following details, I will describe the location I plan to locate The Kupcake Kitchen. The business
location, the competition, and the traffic are important aspects to the success of my business.
The Kupcake Kitchen will be located in Ashland. I plan to locate by business at the
address 38 East Main Street Ashland, OR 97520, near the intersection of E Pioneer St and East
Main Street. The address 38 East Main Street Ashland, OR 97520 is located in the zoning
location C-1-D. This location is a good fit for my business because it is in the downtown district
and there is a wide variety of compatible businesses located nearby. The Kupcake Kitchen will
be located in the plaza and the restaurants will be the main compatible businesses.
The Kupcake Kitchen’s competition is located in Medford and Ashland. The main
competition of my business is Cupcake Creations, The Cupcake Company, and Ashland
Albertsons. Taking the I-5 N route, Cupcake Creations is located about 15.6 miles, 26 minutes
away. Driving the I-5 N route, The Cupcake Company is located about 11.0 miles, 20 minutes
away. Ashland Albertsons is about 2.5 miles, 6 minutes away when driving the Siskiyou Blvd
and Ashland St route. Cupcakes Creations is located in East Medford, the Cupcake Company is
located in South- East Medford, and the Ashland Albertsons is located in South Ashland.
Traffic is an important aspect of the success of The Kupcake Kitchen. A steady flow of
traffic is necessary for my business to succeed. The types of traffic that are necessary for my
business are car, foot, and heavy. The traffic passing my business is driving through downtown
Ashland heading home, to work, or a social gathering. The Jackson county traffic volume for E
Main St as of 2012 is 2,596.
The success of a business depends largely on the location. The details of the aspects of
location describe the location of my business The Kupcake Kitchen. The business location, the
competition, and the traffic are important aspects to the success of my business.
Floor Plan
The layout of the Kupcake Kitchen is a simple design. There will be one bathroom
available for the employees and customer that has a square footage of 42 sq. feet. The kitchen of
the bakery is located in the back and is 252 sq. feet. One merchandise room that is for baking
ingredients is located off the kitchen and is 60 sq. feet. The main are of the bakery is for the
display and checkout counter along with five tables for seating. The main are is 2655 sq. feet.
The total square footage of the Kupcake Kitchen is 3009 sq. feet. The bakery is large enough for
growth and expansion in the future.
Planned Operation of Proposed Business
Proposed Organization
Type of Ownership
My business The Kupcake Kitchen will have the ownership sole proprietorship. Sole
proprietor ship is the best type of ownership for my business because I do not have any partners
and I will be able to make all the decisions by myself. One of the main reasons why I chose sole
proprietorship is because they are easy to get started and I will get to keep all the money that is
made from the business. I will take the money I make from the business and reinvest it into my
shop. In addition, if I ever chose to close my business sole proprietorship allows me to at will.
Management
A strong, effective management system is important for a business to have to become
successful. An effective management system that is organized and efficient can lead a business
to success. Management style, organization, and salary structure are aspects of an effective
management system.
The management style that suits me is teamwork. Teamwork is an effective management
style for my business because the pastry chef, bakers, and myself will be working together to
make high quality cupcakes. An example of the teamwork style in my business is the pastry chef
and one other baker will baking the cupcakes and then from there the rest of the bakers will add
the topping to the treat, and I will be doing whatever else is necessary. If a problematic situation
arises, I will adjust my management style by identifying the problem, discussing ways to solve
the issue with my team, and then implementing whatever changes are necessary.
My employees and I will each have different responsibilities. As the owner of The
Kupcake Kitchen I will oversee all the operations and ensure the business is running smoothly, I
will bake/decorate cupcakes, and I will work by the cashier to assist my customers. The pastry
chef will be in charge of all the baking and decorating, and when I am not there they will act as
the assistant manager. The three bakers under the pastry chef will be the employees who do
mainly all of the baking and decorating. I will have one cashier who will assist customers and
tend the counter.
The salary and wages of my employees vary by their job duties. The culinary profession
does not generally pay high, so my employees will be making under $50,000 a year. As the
bakery owner and manager, I will receive about $17.00 an hour and earn a salary of about
Owner (Bakery Manager)
Pastry Chef
Baker
Baker Cashier
Baker
$34,917. The pastry chef will make about $11.17 per hour and receive a salary around $30,005.
The three bakers will have an hourly wage of $10.32 and earn a salary of about $23,065. The
cashier will earn minimum wage and receive a salary of about $18,616.00.
Position Labor Costs Salary
Owner (Bakery Manager) $17/per hour $34,917
Pastry Chef $11.17/per hour $30,005
Baker (x3) $10.32/per hour $23,065
Cashier $8.95/per hour $18,616.00
For a business to become successful, it is important to have a strong, effective
management system. An effective management system that is organized and efficient can lead a
business to success. The aspects of an effective management system are management style,
organization, and salary structure.
Proposed Product
Proposed Product
The cupcakes I sell in my bakery are a unique product to the Rogue Valley because there
are no other shops around that sell unusual, unique cupcakes. The following sections:
promotional mix, potential suppliers, and inventory policies will illustrate the details of the
cupcakes I intend to offer at The Kupcake Kitchen.
The cupcakes that I intend to sell are a unique product that the Rogue Valley does not
have. The product that I will be selling is cupcakes that have unusual or unique toppings. The
cupcakes are considered shopping or impulse goods. Generally, cupcakes are purchased for an
occasion so they are considered shopping goods. A shopping good is a product that a customer
shops around for before they purchase it. Cupcakes are also considered impulse goods because a
customer may not have the intention to buy a dessert when they first go shopping.
The cupcakes that I will be selling are shopping and impulse goods that are a described
product mix. The products from my business will be a product line and have product width. In
my shop, my product line will be defined by a type of cupcakes. The product width will be
defined by multiple different product lines.
My cupcake shop will have three main suppliers.
Company
Name
Address Phone
Number
Web Address Rating
Bakery
Equipment
Main
Warehouse:
409 W.
Cooper
360-255-
7467
Or
http://www.bakeryequipment.com/bakery-
equipment/bakeryequipment.asp
4
Street, Tipton
MO 65081
Corporate
Headquarters:
5500
Olympic
Drive
STE H105 -
PMB 117
Gig Harbor,
WA 98335
888-869-
5737
Product
Offerings
Bakery equipment has all sort of appliances and accessories used for baking and
cooking. The products can be purchased or leased and you can sell any equipment
that you already own.
Company
Name
Address Phone
Number
Web Address Rating
Cleaning
Solutions
Equipment
& Supply,
LLC
541
Parsons Dr.
Medford,
Oregon
97501
541-779-
2014
http://www.cleaningsolutionssupply.com/ 5
Product
Offerings
Cleaning Solutions Equipment & Supply, LLC sells equipment and supplies. The
products sold include chemical, carpet cleaning, commercial pressure washer,
equipment, and janitorial.
Company
Name
Address Phone
Number
Web Address Rating
Costco
Wholesale
3639 Crater
Lake Hwy,
Medford, OR
97504
(541) 734-4227 http://www.costco.com/ 4
Product
Offerings
Costco Wholesale sells a variety of products. The product offering that I am
interested in from Costco is there supply of ingredients for baking.
My main suppliers will be Costco Wholesale, Cleaning Solutions Equipment & Supply,
LLC, and Bakery Equipment. Costco Wholesale will be my main supplier for the ingredients
used in baking my cupcakes. Cleaning Solutions Equipment & Supply, LLC will be my main
supplier for cleaning supplies. My supplier of baking appliances will be the company Bakery
Equipment.
My business will use a planned inventory method to keep my company running
efficiently. I will use the inventory method FIFO. The FIFO method will be used in my cupcake
shop because the fresh products will sell quicker than the batches made earlier in the day. The
first in first out method is a beneficial inventory method in business because of higher net
incomes report and the current cost for Ending Inventory is always reported.
The cupcakes I sell in my bakery are a unique product to the Rogue Valley because there
are no other shops around that sell unusual, unique cupcakes. The strength of my promotional
mix, potential suppliers, and inventory policies illustrate the details of the cupcakes I intend to
sell.
Suppliers
Company
Name
Address Phone
Number
Web Address Rating
Bakery
Equipment
Main
Warehouse:
409 W.
Cooper
Street, Tipton
MO 65081
Corporate
Headquarters:
5500
Olympic
Drive
STE H105 -
PMB 117
Gig Harbor,
WA 98335
360-255-
7467
Or
888-869-
5737
http://www.bakeryequipment.com/bakery-
equipment/bakeryequipment.asp
4
Product
Offerings
Bakery equipment has all sort of appliances and accessories used for baking and
cooking. The products can be purchased or leased and you can also sell any
equipment that you already own.
Company
Name
Address Phone
Number
Web Address Rating
Cleaning
Solutions
Equipment
& Supply,
LLC
541
Parsons Dr.
Medford,
Oregon
97501
541-779-
2014
http://www.cleaningsolutionssupply.com/ 5
Product
Offerings
Cleaning Solutions Equipment & Supply, LLC sells equipment and supplies. The
products sold include chemical, carpet cleaning, commercial pressure washer,
equipment, and janitorial.
Company
Name
Address Phone
Number
Web Address Rating
Costco
Wholesale
3639 Crater
Lake Hwy,
Medford, OR
97504
(541) 734-4227 http://www.costco.com/ 4
Product
Offerings
Costco Wholesale sells a variety of products. The product offering that I am
interested in from Costco is there supply of ingredients for baking.
Equipment
Product Quantity Price
Double Rack Oven 1 $24,316.00
One Door Reach-In Fridge 1 $4,743.63
20 Qt Planetary Mixer 1 $2,563.00
Cupcake Pans (4 rows of 6) 10 $3,090.00
Decorating Bags (100pcs) 500 $25.00
Decorating Tips (24pcs) 2 $17.08
Spatulas (Different Sizes) 15 $45.00
Mixing Bowls (Different Sizes 6 pcs) 5 $274.95
Display Case (51") 1 $4,521.16
Cupcake Stands (4 tier) 1 $22.99
Counters 10 $2,590.00
Cash Register 2 $410.76
Sinks 2 $400
Toilet 1 $316.32
Dining Set (2 chair & 1 table) 5 $904.95
Ingredient Bins (3 bin) 5 $1,874.95
Pan Racks (10 pan) 1 $194.99
Proposed Marketing Strategies
Pricing Policy
The pricing of a company’s product is important because it is related to profits a company
makes. Pricing is one of the four elements of the marketing mix and it affects all the other
features. A company correctly prices their products by using a pricing policy, a pricing
technique, and strategies for introducing new products.
In my business, I will be using competition oriented pricing. Going rate pricing or
competition oriented pricing is the best choice for my business because marking up and cost plus
pricing would make the cupcakes cost more than people would be willing to pay. Competition
oriented pricing will be sufficient for my business to prosper and be successful.
The pricing technique that I will be using in my business is price lining. I will use price
lining because I will set different types of cupcakes and each type will be marked a different rate
that corresponds with my going rate pricing policy. The other pricing techniques are not sensible
for my business because cupcakes are inexpensive and pricing them higher would turn my
market away.
The Kupcake Kitchen will use penetration pricing for the introduction of new products.
The idea of using this strategy is that by pricing my new cupcake flavors lower than the
competitions I will increase my market, and once I have increased my market the cost will go
back up to the going rate. This strategy will be effective because I will introduce my new
products at a low price and I will increase my customer base.
The pricing of the products that a company sells is important because it can determine
how successful a business will be. Pricing is one of the four elements of the marketing mix and it
affects all the other features. A company correctly prices their products by using a pricing policy,
a pricing technique, and strategies for introducing new products.
Promotional Strategies
An efficient, great quality and cost-effective product may be the best product in the world
but without promotion or the public’s knowledge, the item will not sell. The following section
will describe the promotional mix of The Kupcake Kitchen. The promotional activities that will
be used in the promotional mix include advertising, publicity, and sales promotions.
Different sources of advertising will be used in the promotional mix. Advertising is
promotion that is paid for, it uses a set format to carry the message, and it identifies the sponsor
of the message. The main source of advertising that will be focused on is the use of the internet.
A website, twitter, instagram, and Facebook will be created for promotion. These sources were
chosen because of the experience I have with using the programs and because of the advantages
of using the internet.
Publicity is another form of promotion that will be used in the promotional mix. Publicity
is free promotion that builds an image/impression, and creates demand by placing news in the
various media. In my promotional mix, I will be using press release. The press release adds that I
will create will be placed in magazines. Press releases are effective aspects of promotion because
they create brand awareness, develop contacts, there is no need to invest in a lot of technology,
and sales increase.
The last form of promotion that I will be used in my promotional mix is sales promotion.
Sales promotions are displays, premiums, contests, and product samples. At The Kupcake
Kitchen, displays and premiums in the forms of coupons/frequent shopper cards will be used.
Each month different coupons will be available via the internet and mail. Frequent shopper cards
will also be used as sales promotions. The frequent shopper cards will work in a way that when
customers purchase 12 cupcakes, they will receive the 13th
one free.
An efficient, great quality and cost-effective product may be the best product in the world
but without promotion or the public’s knowledge, the item will not sell. The following sections
described the use of promotional mixes. The promotional activities that will be used in the
promotional mix include advertising, publicity, and sales promotions.
Financing
Projected Income and Expenses
Start Up Costs
The start-up costs derived for The Kupcake Kitchen are based on start-up costs for retail
businesses. To start my business I need $210,000. A majority of the money necessary is for the
equipment and working capital. The equipment necessary to start the business is industrial type
baking equipment that costs around $47,000. The working capital necessary for my business is
based off paying my employees and funds for the miscellaneous needs of starting up a business,
the amount for working capital sums up to about $83,000. I will spend $10, 000 on my
advertising so I can introduce my business to Jackson County. My deposits will cost around
$9,000. The aspects of my start- up cost that are not as expensive are transportation equipment
and professional fees; these are lower because I will not be using them that much.
Deposits $9,000
Furniture and
Equipment
$15,000
Machinery
Equipment
$32,000
Transportation
Equipment
$4,000
Building
Improvements
$15,000
Professional Fees $2,000
Advertising $10,000
Working Capital $83,000
Inventory $40,000
Totals $210,000
Sales Forecast
The sales forecast for my business, The Kupcake Kitchen, was derived by calculating the
amount of money my target market will spend at my business. To find the values a market share
percentage was assigned to my competitors businesses and mine. The percent estimated was then
divided by the total population of my target market. Ten percent was taken of the percent of
market. The monthly amount customers spend at my shop was then multiplied by the percent of
market. The estimated earnings were determined by dividing the estimated sales by two. The
percent of market share that my business will have is 24%, 9710 is the percent of the market, and
10% of the market is 971. My estimated sales are $116,520.00 and my estimated earnings are
$58,260.00.
Company % of Market % of 10% Estimated Estimated
Share Target
Market
Sales Earnings
The Cupcake
Company
24.00% 9710 971 $116,520.00 $58,260.00
Cupcakes Creation 23.00% 9306 931 $111,672.00 $55,836.00
Albertson's Bakery 15.00% 6069 607 $72,828.00 $36,414.00
Mix 9.00% 3641 364 $43,692.00 $21,846.00
Deux Chats Bakery 5.00% 2023 202 $24,276.00 $12,138.00
The Kupcake
Kitchen
24.00% 9710 971 $116,520.00 $58,260.00
Building Costs
Building Costs
Fill in your building data to determine how much your building will cost based on the cost/square foot. You should use spreadsheet formulas that refer to the data below and automatically
calculate your costs so that you can change figures easily in case you need to make
adjustments. After you find out how much the building will cost, estimate the monthly
payments on a 30 year loan with 20% down and 5.75% interest using the chart below.
Sq. Feet Cost Facilities 354 ft $121.00 Kitchen and Bath 2655 ft $250.00 Total 3009 ft $706,584.00 Cash for Down Payment $141,316.80 Term of Loan (Years) 30 Annual Interest Rate % - 3.864 5.75% Loan Amount $565,267.20 Monthly Payment $3,298.75 Figures for Building Costs
Cost per square foot
Financing Rates
Regular Retail $121.00
30 year fixed 3.864
Regular Residential $125.00
20 year fixed 3.652
Kitchen & Bath $250.00 15 year fixed 3.062
Proposed Plan to Meet Capital Needs
To open my business I need to borrow money. I plan to repay my loans over the course that I
have the loans. I will be taking out three different loans for working capital, equipment, and real
estate.
The three loans I am taking out are for working capital, equipment, and real estate. The
working capital loan is for purchasing ingredients, supplies, general operating expenses, and
maintaining a cash reserve. The equipment loan is for purchasing the kitchen appliances,
furniture, and tools to maintain the equipment. The last loan I will be taking out is for the real
estate. I will be renting a building but a few modifications will be done so that the layout will be
fitting for a bakery.
I used one SBA loan. The SBA loan that I used was the SBA's 7(a) Loan Program. I
chose this loan because it covers every aspect I need from real estate to equipment, and working
capital.
The repayment plans for the loans are different for each one. The working capital loan is
for 6 years, I will be paying $805.17 monthly, and I plan to have it repaid in 6 years. The
equipment loan is for 8 eight years, I will be paying $330.49 each month and I plan to have the
loan paid back within 8 years. The real estate loan is for 25 years, I will be paying $1,052.33
each month, and I plan to have the loan paid back within the 25 years.
I plan to take out three loans for equipment, working capital, and real estate. The loans
will be SBA and I plan to repay them within the period that I have them.
Conclusion
Ever since I was a little girl I have loved baking, and I have wanted to open a bakery. My passion
for baking shows that I am dedicated to this business and I will do my very best to make sure that
it succeeds. My business is a unique cupcake shop in a thriving tourist town that is bound to
succeed. I believe my business will succeed because I have thought out and researched every
aspect to make sure that I know what I am doing. I sincerely hope that you will invest in my
business and help make my lifelong dream come true.
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Appendix
Selection Letter
Brittany Snyder
655 North Third Street
Central Point, OR 97502
541.494.6300
April 4, 2013
Mr. Frances Hedge
SBA Loan Officer
Bank of America
845 N. Highland Street
Medford, OR 97501
Dear Mr. Hedge:
I am proposing to open a cupcake shop in downtown Ashland.
A bakery is a practical business plan for the Southern Oregon area because many people visit this
area throughout the year. With the constant flow of visitors, the bakery would always have
customers who want to try a unique or classic cupcake. The cupcake shop would be competitive
with other businesses in Ashland and surrounding areas. At the cupcake shop only the best
quality cupcakes would be displayed for selling. I have had a lifelong dream to open a bakery
and I am dedicated to this business growing and becoming successful. I know that I will be able
to make this business prosperous because I have researched and I know what I need to do.
I am eager to continue working on this plan because I know the bakery will succeed in the
Ashland area. I look forward to further discussing my ideas with you, and would like to schedule
a time to meet with you. You can contact me at my email [email protected] or by my
cell (541)778-6339.
Sincerely,
Brittany Snyder
Print Ad
Business Card
The Kupcake Kitchen
Brittany Snyder Owner
541-354-7415 38 E Main St Ashland, OR 97520 www.thekupcakekitchen.com [email protected]