1. Feasibility study on Small Skill Bake Shop in Tayasan
INTRODUCTION
There are numerous exciting business opportunities in Tayasan for
investors who wish. Where possible, potential markets, estimated
investment and production costs. However they are not intended to be
replacements for project feasibility studies. Selection of technology,
financing plans, feasibility studies and other related issues remain the
responsibility of the investor.
EXECUTIVE SUMMARY
In Tayasan, bread is a staple of most diets. Unfortunately for residents
here, the demand for bread outstrips the supply by both Linden-based
and external bakeries. There is an opportunity for high quality operators
to become primary. Assuming a minimal level of consumption at 10
loaves per week per household in the Tayasan, there is a potential
demand of more than 2,000 loaves per week. A well managed, high
quality small bakery operation, producing in the vicinity of 900– 1000
loaves per week will make handsome returns on investment. A small
operation is defined as one using up to 20 bags of flour per week.
Advantages to investing in this industry:
Very good returns on investment in a relatively short period are
possible once the operation is managed efficiently with a good product
range exhibiting consistent excellence and coupled with an aggressive
marketing program.
mThe initial set-up costs are typically recoverable within the first 5
years of the operation of a small bakery.
y A modern bakery operation is not very labor intensive, and usually
production can be increased without incurring significant additional
labor costs.

2. THE OPPORTUNITY: SMALL SCALE BAKERY
OPERATIONS
Bakeries, existing since the dawn of civilization in one form or the
other, have been primary food providers for countless generations of
people. Indeed, the truism that “man must eat”, may have a corollary
truism that “man must eat bread”, for certainly, wherever it’s possible,
all cultures evince a distinct preference for the production of bread and
similar baked products as a major source of nutrients. In Tayasan bread
is a staple food for many people at breakfast and supper, for the same
reasons that apply.
Any where else, its relative durability, convenience, adaptability,
nutritive value and low cost. the local demand resulting in
“importation” of bread from people still seem to prefer the fresher
bread of the local bakeries. Even with the bread coming. Consequently
there is tremendous potential for a small bakery operation marketing
within and outside the Tayasan.
Existing Operators Market Potential
The market potential of any operation such as a small bakery will
depend on classic the consumption center. There may be competition
from other existing bakeries. However an operation that is well
organized and efficiently run with a distinct quality product can achieve
comparatively high returns from this investment, as there should be no
difficulty in disposing of bakery products.
Market Strategy
Several strategies will need to be implemented to establish a credible
presence in the market for any new outfit. These may include:
p  Distributing one-third of the products by selling at the bakery.
p  Selling one-third to private distributors at wholesale prices.
p Selling one-third to supermarket outlets and to shops at wholesale
prices.
p Specialty items like cakes and pastries may be sold to schools,
canteens
and snackettes at wholesale prices or at the bakery at retail prices.

3. PRODUCTION PROCESS AND TECHNOLOGY
In recent decades bread-making technology has gone way past the
firewood outfits that were commonplace even in the 1960s. Improved
mechanical designs, new materials and computer controlled systems
have revolutionized the industry. There is a wide variety of production
equipment and machinery available.
However, at the most basic level of production, the process is as
follows:
f Weighing and combining ingredients in a dough mixer,
f Shaping the mixed dough manually or with a dough molder,
f Allowing fermentation for approx 1½ hours,
f Cutting the dough and reshaping into required sizes for baking,
f Baking the dough, usually at 180°C (350° F).
Equipments:
Dough Mixers:
These are used to combine the ingredients and come in a variety of
sizes. The most commonly used mixer that is conveniently sized for a
small bakery is either a 30 quart (34litre) or 60 quart (68litre) model.
These sizes are able to mix 1 or 2 bags of flour at each mixing.
Dough Molders:
After the mixing of ingredients, a dough molder may be used to shape
the dough before it is allowed to ferment. Shaping contributes to
smooth texture in the final product. This equipment may be considered
optional as the process may be done manually, but it is imperative if
one is to compete with the products from the more established bakeries.
Dough Dividers:
In larger bakeries where high output production is necessary, dividers
cut the dough into uniform sizes after molding. In the process the
dough is also homogenized and degassed. The equipment is entirely
optional as the cutting process can be done manually with a dough
knife but the degassing benefit is lost.
Ovens:

4. Ovens are one of two main types, direct fired and indirect fired. In
direct fired ovens the heat is inserted directly into the baking chamber,
resulting in more uniform baking temperatures and more accurate heat
control. In indirect fired ovens, fuel is burned in an external combustion
chamber and the heat is circulated around the baking chamber by a
blower system. These ovens are 20% more expensive in fuel
consumption and consequently not as cost effective for small
operations. Ovens can be either the traditional deck type or of rotating
design. A rotating oven with up to 4 times the capacity of the
conventional deck ovens plus a better “finish” (color and texture) is the
better option. These ovens are typically available in sizes from 16 to 48
pans. A 24-pan unit is adequate for an operation producing 2,000 to
3,000 loaves per week. The usual energy sources for modern bakery
operation are either electricity or propane gas. Potential investors
should note that use of combustible wood and charcoal is not
recommended though present in large reserves, since those options
cannot match the consistency of modern computer-driven operations
REQUIREMENTS FOR BAKERY SETUP
Some of the critical factors to be taken into account prior to
establishing a bakery are:
1. Location - It is critical to identify a building in an area that is clean
and environmentally friendly. Once sales are going to be conducted at
the bakery outlet as suggested above, it is necessary to ensure that all
forms of traffic, pedestrian and mechanical, can come and go
unencumbered.
In order to determine demand and preferences in given locales as well
as to ascertain the level and effectiveness of competition.
Rental costs can vary from as low as Php.5,000 per month to Php.7,000
depending on location and the nature of the negotiations. Alternatively
it may be possible to buy out some location.
2. Building - The actual building housing the bakery operations should
be adequate for proper layout of equipment and furnishings (ovens,
tables etc) as well as providing space for storage of supplies and

5. finished products. A small operation will require between 230sq.m. -
465sq.m. (2,500sq.ft. - 5,000sq.ft.)
3. Electrical Supply - The building should be wired (or rewired) for
the type of equipment used, to avoid electrical overloads and risk of
electrical fire. Certified electrical contractors should be employed to
inspect, determine and where required install appropriate supply wiring
based on the needs of the operation and the location. Fortunately
Linden has a surfeit of qualified, skilled personnel who are available as
private contractors for just such activities.
4. Ventilation - The location will need to be properly ventilated to
avoid the buildup of heat during baking operations. Fans (cooling and
extractor) should be installed to ensure adequate air circulation within
the work area.
5. Furnishings - Furnishings will include heavy-duty working / mixing
tables. At least two 1.8m (6ft.) tables will be required for a small
operation. Though stainless steel tables are more professional, wooden
tables are as effective and will be cheaper to acquire.
Fridge/freezer facilities will be needed to store ingredients, products
stocks and raw dough, to prevent spoilage.
6. Equipment - This will include sets of heavy-duty hand tools like
rolling pins, metal scrapers, bowl scrapers, spatulas, dough knives,
baking tins, racks for cooling and scale(s) for weighing ingredients.
7. Food Handler’s Permits - The operation of the bakery will require
clearance from the Municipal Public Health Department and food
handler permits for anyone involved in the production, sale or
distribution activities of the business. At any rate the Municipality’s
Regional Health Officers (RHOs) will periodically visit the operations
to enforce health standards for operations and personnel.
8. Waste Management - Proper facilities will be required for garbage
and effluent disposal.

6. ANNUAL FINANCIAL PROJECTIONS
Output: 300 loaves / day:
1,100 loaves / week
Selling price: Php.30 per loaf retail
Workweek: 6 days (unskilled labor typically works 10 hr/day, 6-day
weeks)
Work year: 52 weeks
Assuming a potential market of 2,100 loaves per week in Tayasan
alone, at a typical user rate of 2 loaves per week, this production level
will address less than 10% of the existing market.
Investment Php.900, 000
Year 1
Revenues Php.2, 300, 00
Expenditure Php.10, 000, 00
Net Margin Php.8, 299,000
Break- even point Period 1½ Months
Break- even point Percentage 10.50 %
Break- even point Sales Php.389, 000
Break- even point 2,100 loaves
The major capital and operational items associated with this level of
operations are:
Investment Items
Land and building Php.600, 000
Plant and machinery Php.1, 250,000
Working capital for 2 months Php.750, 000
Total capital investment Php.9, 00,000
Receipts per annum 21, 300, 00
Cost of production per annum 15, 600, 00
Annual Fixed costs 2, 400, 00
Profit per annum 5, 250, 00
Break Even point 10.50%
Net Margin as a percentage 15.40%
Break even point in months 1.7months
Machinery & Equipment
Rotating Oven 24-pan

7. 1-Bag Dough Mixer
Dough Breaker
Working Tables (2 or 3)
Fridge/Freezer (11cu. ft.)
Cash register or
Point Of Sale Computer
Bread Molder (Optional)
Delivery Van (second hand)
Scales
Bread Slicer
Labor
Manager (Owner/Manager)
1 Master baker
1 Asst Baker
4 Utility workers
3 Sales and distribution workers
Operational items
Bread pans (approx 150)
Cooling racks
Hand tools and utensils: knives, bowls etc.
Plastic bags and labels
Production Items
Flour
Sugar
Lard
Salt
Dry Yeast
Other ingredients
Other Considerations
Rent
Water supply
Electricity
Transportation
Insurance
Licenses and permits

8. FINANCING SOURCE or funding sources from which a borrower
may access.
Financing for an operation of this nature, either single or in
combination.
DCCO
BPI
Land Bank of the Philippines

Detailed Analysis
Fixed Variable
Costs Costs
Production costs:
Direct materials Php.79.44
Direct labor Php.16.42
Indirect production costs electricity, fuel Php.350, 000 Php.1.00
Other expenses:
Insurance of Equipment, Workers Php.120, 000 € 0.50
Rent or Lease of land Php.60, 000
General expenses:
Office salaries Php.400, 000 € 0.75
Supplies Php.40, 000
Miscellaneous Php.10, 000
Totals Php.6, 20,000 Php.98.11
Sales and Income data:
Selling price per unit Php.30, 00
Expected unit sales Php.1, 500.00
Target operating income for the period Php.5, 000.00
Cost of Production per annum
Variable & Total Php.15, 600.000 Php.270.00
Results
Contribution margin per unit Php.53.25
Unit sales at break-even point Php.389.000
Php. sales at break-even point Php.2, 500.00
Php. sales at expected level Php.4, 300.00
Net Annual Profit at expected level Php.5, 500.00

9. Unit sales at target operating income Php.120, 000
Php. sales at target operating income Php.10, 500.00
Break Even Percentage 10.50%
Net Annual Margin at expected level as a Percentage 30.40%
Break Even Period in months 1.75%
Costs etc
Salary Owner/ Mgr 7days x 400/day = Php.2, 800/ week
Skilled Wages 7days x 200/day = Php.1, 400/ week
Utility Wages 7days x 250.00 = Php.1, 750/ week

10. My Feasibility
study about
sMall skill
bakeshop in
tayasan
By: Bonn S. Gabutero