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The Client

A Red Seal Baker, who had been working in a well-established and successful bakeshop for several years, had an idea for a new kind of bakery business. He wanted to supply wholesale products to hotels, restaurants, and grocery stores. When the owner wasn’t receptive to the business opportunities, this baker looked to other alternatives.

The Business Challenge

This baker thought he had a plan for a business that would work, but wanted a second opinion. When the Red Seal Baker came for an advisory meeting with me, he had a draft business plan and needed some help with the financial and cash flow forecasting. Once that was complete, we tested all of his hypotheses. He was sure he could achieve the sales targets required, so he took the business plan and forecasts to a bank. He was approved for $200,000 to purchase equipment to get started. After a friendly discussion with his employer to give notice, he worked with him for two more months while he secured an appropriate space to lease and install equipment. The business was launched three months after giving notice.

How We Helped

I helped draft the financial and cash flow forecasts, including all tax payments, and documented all the detailed assumptions that were made within those forecasts to be included in the bank financing application and for the owner to compare with actual results. We calculated the break-even revenue target that would cover all debt repayments and operating costs. We also calculated the revenue target that would allow for a market rate, or better, salary for himself and his wife. The revenue target was translated into a target daily number of units to prepare and sell, and his wife became the Marketing Manager of the business. We set up the chart of accounts, the sales order and invoicing system, documented the bookkeeping processes that utilized downloads from the bank and other integrations wherever possible, and taught the couple to do their day-to-day bookkeeping. We entered the monthly budgets so they could run the budget to actual reports in real-time. I visited the couple at their location monthly for the first six months. They missed their targets the first four months, but, with some perseverance on their part and coaching from me, all subsequent months exceeded all expectations. By the second year, they had salaries that exceeded that of their former employment and had grown a community of business supporters. For all subsequent years, we created their 12-month salary, dividend, RRSP, TFSA, and tax payments schedule every January, filed the corporate tax returns, T4s, and T5s, and answered their questions for significant business or investments decisions as they needed. Five years later the business still thrived.