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7-CRITICAL RISK ASSESSMENT

7-1 PROBLEMS & POTENTIAL PROBLEMS


There is no cafe, bakery or a restaurant owner that does not face any issues regarding business.
There are different problems linked to a different business that has to be managed properly.
Otherwise, they can ruin the business. The cafe, bakery and restaurant businesses are the ones that
do have some common problems. The owners need to come over these problems in a particular
way to stand out from the rest. A person aiming at starting of small bakery business units has to
consider few related problems and issues. In this section, various aspects such as competition
element, employer-employee relations, role of bakery manufacturers association, credit facility
and recovery problems etc. are discussed.

There are countless problems that every owner of bakery owner faces

1. Lack of finances
There are many business owners that have to face the lack of finances. The majority of businesses
do need investment to get the proper resources. In the age of technology, individuals have to focus
on the investors. On the other hand, the investors are not just the single option. There are many
other alternatives present. Individuals can try to get the donations through a range of fundraisers
or even get loans.

2. Incapability to market the business proficiently

The next common problem is that the business owners are incapable to market their business
proficiently. When you can promote your business properly, then you can earn a better reputation
in the market and get maximum customers. Every business whether it is a bakery, cafe or
restaurant business, it needs a specific marketing plan. This plan depends on the business and its
target audience. When the business owners are clear about the target audience, then they need to
make marketing strategy. In the plan, the Social Media and Blogging categories must be
incorporated.
3. Don’t know how to manage and plan the business

Business owners who do not know how to manage and plan the business. Well, they only need to
get assistance. If they don’t have any assistance, then they can understand the target audience
first. Secondly, they have to write down what things are required in business and how things will
work in place to run the business properly. In short, an effective-enough strategy is required.

4. Workers in bakery business

Every businessman takes efforts in obtaining and maintaining the satisfactory and satisfied work
force in his organization. This is equally essential in case of bakery business activity. Labor
absenteeism is another problem, faced by these businessmen, To add further, the cases are also
not rare, when the skilled persons from the established bakeries are captured by others, and are
offered a higher salary to join their organization. Bad habits of workers like smoking, chewing
tobacco and spitting, certainly affects the atmosphere of bakery unit the quality of the bakery
products. Negligence, carelessness, theft, spoilage etc. are the possible evils associated with the
workers.

5. Credit facility and liquidity position

It was observed that purchasing of basic raw materials like wheat flour, sugar, 'ghee', etc. is done
on credit basis. The credit facility is usually offered for 15 days, without any hesitation, to the
established and big bakery businessmen. However, for a newly establishing small-scale bakery
businessman, obtaining the credit facility even for 7 days, becomes a difficult task

6. Establishment of new competitors

New entrants can also cause problems to our business they could have capture our market share
and became the reason for our low revenue or low profit. So we have to prepare ourselves for
this type of potential problems and to build some contingency plan for it

To conclude, the person starting a bakery business unit as a source of self-employment, has to be
cautious about the above-mentioned relevant issues and problems
7-2RISK & OBSTACLES

1. Price Changes

Some of the raw materials used by bakeries are increased on the yearly basis which cause
increase in cost on a yearly basis, the price of wheat, price of vegetable oil, price of natural gas,
price of electricity etc change by up to some extent. These changes can severely affect the
bakery's profit margin unless the cost is passed on to consumers. One way to minimize this risk
is to negotiate a contract for a fixed price on raw materials.

2. Limited Growth

The market for baked goods is already served by a large number of bakeries both large and
small. The willingness of consumers to pay more for specialty breads and pastries depends on the
health of the overall economy and growth in this industry is depend on population growth. Most
bakery businesses only grow by buying out their competitors or taking a portion of their
business. One way to improve growth is by unique offering, which is rarely found anywhere else
and catering to specialty diets such as the gluten-free diet. Small bakeries often have an
advantage in this situation, because they can more easily adjust to local tastes.

3. Health and Safety

Some of the health and safety regulations larger bakeries must follow do not apply to smaller
operations. This might seem like an advantage, but it also carries substantial risk. Bakers used to
believe that the high temperatures used in baking would kill any pathogens, but this is now
known to not be the case in all situations.. A product recall or a case of illness caused by a
bakery product could cause a sharp drop in business. To reduce this risk, follow the strictest
procedures and policies for food safety.
4. Liability Risk
Liability insurance is one of the most important steps while launching a business that is often
overlooked. “Product liability occurs when a firm’s products allegedly injure the public. Proper
insurance of the bakery business is essential. To get my bakery franchise legalized, I’ll have to
abide by government regulations like obtaining a bakery license regulated by the state. Another
essential step is the hygiene factor. From raw material till the transportation of bakery items
special care is needed

5. Employer/Employee Issue
Keeping in mind the importance of human capital, our business will involve a well-organized
workforce. Suggestions would be accepted from the workers regarding quality improvement and
managing teamwork. Our goal is to make our workforce source of competitive advantage. All
employees must be trained time to time to keep the bakery updated with the latest technology for
baking. Our business firm will gather in advance as much information about the applicants as
possible in order to reduce the risk of negligent hiring. Federal and state anti-discrimination laws
will be kept in mind during the hiring process. After selecting an employee he would be assigned
work tasks
7-3 ALTERNATIVE COURSES OF ACTION
The best medium of marketing is the social media sites like Twitter, Facebook, and Instagram.
You can make accounts on these sites and then start marketing your business. Let the people
know what you are selling and how you are selling. Due to the recent technological innovations,
the business planning didn’t have much attention. The key to business planning is to identify the
challenges of the business and the solutions to overcome them

When the business owners are clear about the target audience, then they need to make marketing
strategy. In the plan, the Social Media and Blogging categories must be incorporated. Taking care
of workforce is vital for any business success, every business should take care their employees in
order to be successful. We also need to think about the potential problems and to build some kind
of contingency plans for the future problem like opening of another bakery near our shop or in
other words establishment of new competitors.

We buy most of our materials on the credit basis, we need to look closely our transaction and the
amount of liability we have to pay before taking any major decision like opening a new branch or
expanding. Concentrate on the quality and hygiene of the product because unhygienic food and
lack of quality affects the organization most brutally. It is not possible for the new established
bakery to provide the best at the minimal price but we should not compromise on the quality
because we are in a business in which if a customer disappoints with the offering he hardly try the
product next time due to so many substitute options.

A good manager manage employee conflicts and costumer anger with patience rather than to
make it the big problem for the business, in a business one have to face new challenges on a daily
base, so the owner or manager must remain ready for any upcoming challenge and once it stands
in front of you then the manager have to use all of his/her skills in order to get rid of it