Planning a business

You and your friends want to open a bakery. Before you buy a single oven, you need a plan. A business plan is a written document, a blueprint, that sets out the business's goals and the steps to reach them. It is like the drawing of a house before building: mistakes on paper are cheap; mistakes in bricks are costly. It guides you from the first idea to running the business, and helps you stay organised, set priorities and decide well.

Eight questions every plan should answer (Fig. 6.6), with the bakery:

• Needs and idea: what do people want? Fresh bread, cakes, pastries, or healthier whole-wheat goods? Will we offer something new to the area?
• Potential customers: cupcakes for children, savoury snacks for young adults, or everyday bread for families?
• Money and costs: how much to start (an oven, rent, staff pay, flour, nuts, packaging)? Where will the money come from: savings, a bank loan, friends, relatives, investors?
• Location: a busy spot near schools, colleges or markets? Online orders and delivery apps?
• Human resources: how many bakers, helpers, billing and delivery staff, with what skills?
• Pricing and profits: prices that cover costs, leave a profit and stay affordable; maybe cheaper mini cake jars.
• Promotion or marketing: social media, posters, offers, attractive packaging, good service to keep customers.
• Challenges and risks: competition, rising prices of flour, customers' changing tastes, uneven cash flow, food that goes stale (perishable inventory), keeping quality steady.

Inventory means the goods and materials a business keeps for making or selling: for a bakery, flour, sugar and the cakes on the shelf.

A plan is not fixed. A business plan is a living roadmap. When customers ask for something new, costs rise, a competitor opens next door, or a new chance appears, you revise the plan. The Dandekar brothers started with ink and changed course when they spotted the need for art materials.