Bobs Bakery Case Study

Learn how Bob was finally able to make a profit by focusing on core business fundamentals while working with a Optimal Profit .

The Problem

Bob was a Baker in a regional town; he longed for his own Business. He was married to Julie and they had two children and a nice house in a nice part of town.

Bob decided to go into Business and found an old petrol station on the main road that was for lease. He took the lease and borrowed money from the bank against his house to get started. The money borrowed was used to buy the bakery equipment and fit out the shop.

Bob’s Bakery was an overnight success and he became a local celebrity (local lad does good etc).

Bob bought two new cars and paid for them with cash – he was the envy of all his friends.

Soon Bob’s Bakery was at capacity and he wanted a second store so he found one in a local shopping mall and he took the lease with a further loan from the bank to buy the equipment. The second store was nowhere as good as the first and he found himself stretched between two stores which caused the performance of the first store to drop.

There were many problems with quality, wastage, employee issues and eventually the cash ran out and Bob was in trouble. Driving his new car made him feel sick, as he owed money to suppliers.

Bob did not have any systems in place and did not produce monthly financial reports to measure the performance of the Business; nor did he have a clear understanding of the correct way to cost products to make a profit.

Bob’s Business turned over almost $2m per year but was on the brink of bankruptcy.

Sales were not the problem; they just couldn’t seem to make money no matter how hard they worked. Bob and his Wife were under huge stress and they did not know what to do. They called Optimal Profit

The Solution

The Optimal Profit suggested that immediate action needed be taken to avoid the loss of the Business and their house. The Consultant proposed that they firstly concentrate on the very urgent financial issues at hand and then look at future planning:

Some of the initiatives were to…

  • Immediately upgrade of the handling and control of cash within the Business.
  • Immediate establishment of the exact financial position the Business was in.
  • Visit to the bank to meet the Manager and outline the Business Success Programme and the plan to improve the Business.
  • Release cash into the Business.
  • Arrange meetings with major creditors to enlist support and to outline future plans for the Business.

Once the Business was for the short term stable; Bob, Julie and their Optimal Profit Consultant commenced work on the long term growth, improvement and stability of the Business.

Together they created a Vision for the future and set to work to achieve it – Bob and Julie never wanted to risk their personal and business future again.

Today they have five profitable stores and a central production facility.