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Establishing a Business: Joy of Cakes

Description of the Business

Type and Nature of the Business

Joy of Cakes would be a confectionery company located in Butte, Montana producing high-end baked goods to wholesale and retail customers. Retail trade would include serving individual customers during the day by offering products such as cupcakes, lude cakes, cookies, beverages and pies, either pre-made or made on the customer’s order. Wholesale customers consist of coffee shops, cafes, hotels restaurant and Front Street Market. Seasonally, the business would also cater for wedding planners, country clubs, caterers and many other channels. The uniqueness of the company’s products is that they are made from purely organic ingredients with the aim of promoting healthy eating. Joy of Cakes is a Limited Liability Company meant to combine all the characteristics of sole proprietorship and corporation.

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Objectives/Mission Statement

The core objective of the business is to provide unique products to Butte community in wholesaling and retailing as well as promote healthy eating in the environment. The confectionary company is aimed to offer high quality desserts to diverse groups of customers and for different purposes. The business has a mission to influence eating habits of the surrounding community through provision of healthy food products and gain financial benefits at the same time. A part of the company’s mission is offering high priced products with an exceptional flavor.

Justification of Location

In the Butt region, there are no high-end bakeries offering a wide range of products made using organic ingredients to promote healthy eating. For instance, diabetic patients are required to reduce sugar intake. Joy of Cake confectionary can bake a cake with no sugar for diabetics. Thus, a person make a special request in the order, and a cake or pie will be prepared for him/her according to it. The region has 33,000 potential customers and the wholesale market of fifteen cafes and restaurants (Janet, 2012). Therefore, the region is a suitable location for the business. It will fill the existing business gap and positively influence the community with poor eating habits.

Selection of Appropriate Labor

There are two positions required to run the business. Thus, Joy of Cakes would employ two casual laborers and a messenger. The former would be involved in baking and preparation of cakes on a daily basis according to specific orders made by customers and in quantity required by restaurants and cafes. They would also clean the working area and package cakes. The messenger would be in charge of taking and giving orders to the clients within as specified time and also help in any other activity that promotes smooth running of the business. This type of labor is significant for ensuring efficiency and speed in production, especially when many clients are involved. Consequently, it facilitates the work of the owner, who can thus focus on the related managerial responsibilities.

Sources of Fixed and Working Capital

  • Fixed Capital

Acquisition of fixed assets is achieved through purchases, lease, hire and rent in case it is more convenient or cheaper as well as in situations when it is impossible to purchase such assets due to technical and legal reasons (Halloran, 2014). Fixed capital required to start the business would come from donations from friends, family and colleagues as well as investment from a venture capitalist, who would be given some stake in the company.

  • Working Capital

Working capital for Joy of Cakes is the financial metric representing operating liquidity for day to day operations. It is a part of operating capital along with the housing and equipment, which are fixed assets (Halloran, 2014). They include accounts receivable, inventory and accounts payable. Accounts receivable is the financial incentive coming into the business, such as profits, donations and investments. Inventory refers to the goods/ raw materials used in production, such as baking ingredients. Accounts payable are expenses incurred by the business, such as wages and salaries.

Role of the Entrepreneur

The entrepreneur plays a critical role in this business. He would have to look for business opportunities and new markets for the products. An entrepreneur is a manager. Thus, he has to oversee the daily flow of activities and make critical decisions for the business, such as those relating to expansion and recruitment (Shane, 2013).

Three Functions of Entrepreneur

Primarily, the entrepreneur is tasked with outsourcing with the aim of gaining financial benefit. A financial incentive is required to run the business effectively. Therefore, the entrepreneur is responsible for ensuring availability of the working capital to run and expand the business through loans and other available ways (Shane, 2013). Secondly, the entrepreneur is tasked with aligning the operations of the company with its vision and mission (Shane, 2013). He/she would have to ensure that the operations do not deviate from the company’s mission. Thirdly, the entrepreneur would also perform a commercial function by dealing with accounting. Accounting refers to the art of recordkeeping, classification and summarization of transactions and events in terms of money (Halloran, 2014). This would help determine profitability of the business.

Type of Production

Job Production

In this type of business, production depends on the orders made by the customers. Production is also dependent on specific types of cakes, such as black forest, chocolate cake, cinnamon cake, salt free cakes and pies ordered by a restaurant and cafes. The equipment is adjusted in a way that suits various specifications. The products are non-standardized, and quantity produced per day depends on the number of orders.

Levels of Production

Domestic Production

This level of production exceeds the basic level because it is meant to fulfill the needs of a large community. Joy of Cakes is a company with the goal of supplying cakes to the entire Butt region of Montana. The target population equals about 33, 000.

Quality Control Measures

Quality is one of the key priorities of the company. In this regard, checks and balances would be created to ensure that only quality cakes are released into the market. Therefore, numerous tests would be carried before packaging to determine the degree of excellence in each type of cake. The parameters for analysis would include color, smell, taste, texture, consistency, nutrient content and appearance. After assessing the quality of products, they would be marked and supplied to the customers. Another control measure would be a weekly routine inspection from an independent party. The inspector would write a report or give feedback to the company.

Use of Technology

The company would use social media and heavy-duty machinery as two important technologies in managing the business. To enhance business efficiency, social media websites such as Facebook, Twitter, and Instagram would be utilized. These platforms would help the company create awareness of its products in the market. Such actions as sending pictures and videos of cakes on Instagram would arouse customer’s desire to purchase the company’s products and also enable receiving real time views from customers. On the other hand, the heavy-duty machinery would increase the speed of production, thus making it possible to meet customer demand and avoid unnecessary inconveniences.

Linkages

The main linkage that can be derived from the business is Corporate Social Responsibility in the form of promotion of healthy eating habits in the community. Eating of cakes on a daily basis can be unhealthy unless they are made from organic ingredients, such as the ones produced by the Joy of Cakes Company.

Potential for Growth

The company has a huge potential for internal growth. After expansion to other areas around Montana, the sales volumes will increase, thus promoting internal growth could occur. For example, profit margins would widen due to the likely increase in demand for cakes; therefore, the company would gain a competitive advantage. With increased demand, the company would have to hire more employees and promote its incentives. Externally, the company would extend its operations to other states, especially due to the use of social media for making orders.

Government Regulations

Taxation is the main government regulation that would indirectly affect the business. Amount of tax levied on the business would influence prices for the products, thus impacting profitability of the business. A direct tax paid per month to the state affects the discount the company can give to its customers and continue producing the expected amount of profit in the long run. An increased tax would cut the profit margins of the business.

Ethical Issues

Production of food products raises numerous ethical issues that influence business operations. In this business, the main ethical consideration is honesty in choosing ingredients, especially when baking a cake for a sick customer. Excessive use of a particular ingredient such as oils and salt in baking can affect the health of a patient. The key ethical code in this company is the use of organic ingredients such as cinnamon in making cakes to boost the level of iron in the body. The company is ethically bound to ensure honesty in dealing with health-conscious clients who need cakes. In a situation where the company falsifies the use of an ingredient, it is likely face a serious lawsuit that would tarnish its reputation in the market. Therefore, the company is bound to ensure that its products meet the expectations of the consumers.

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