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The No. 1 Tool to Transform your Bakery Business

Could a SWOT analysis transform your business?

In an ever-changing landscape have you ever wondered the best way to identify what part of your bakery business is not working so well?  Wanting to be in a better position to spot any challenges coming up over the horizon?  Or find out ways that your bakery can work better and as a result, be more profitable?  If so this article is for you …

We will demystify a SWOT analysis and we will help you understand the implications of undertaking a SWOT analysis, key areas we will discuss are the:

  • Internal and external factors that are currently impacting the bakery business in New Zealand and
  • The advantages and disadvantages of a SWOT analysis

Not only that, we will also provide you with a free ready to use SWOT analysis template.

What is a SWOT analysis?

First things first, a SWOT analysis is a fact-based assessment tool used by businesses to dissect their Strengths, Weaknesses, Opportunities and Threats… SWOT.  Big and small businesses alike use them all the time, often more than once a year, to identify where things aren’t working so well and spot any challenges coming up over the horizon, to find out ways they can work better and, as a result, be more profitable, and much more.

A SWOT can be used to assess the current and future situation of a product, brand, business, proposal, or decision. SWOT analysis considers both internal factors (strengths and weaknesses) and external factors (opportunities and threats) that are relevant to the issue or problem under investigation.

In this article we will discuss:

  • Internal and external factors that are currently impacting the bakery business in New Zealand.
  • The advantages and disadvantages of a SWOT analysis

We will also provide you with a ready to use SWOT analysis template.

So, what does SWOT look like for your business? If you can identify any of the issues below, then it’s time to make a difference to your business through a SWOT analysis.

Bakery Strengths

Are internal factors favourable compared with your competitors? Do you have strong brand loyalty, a good image, or highly skilled workers? Strengths help the business to better achieve its objectives.

Your strengths need to be developed and protected.

Strengths of a Bakery

  1. Qualified and Experienced Staff

Whether you’re new to the bakery market or an experienced baker, we all know the importance of retaining staff – especially in a tight job market. Having well-experienced and qualified staff plays a pivotal role in the success of your business.  Why? Because they produce the high quality and delicious products that you sell, which then attracts customers to your bakery shop.

  1. Offer Big Orders

Being able to deliver big orders for parties and events at short notice is the key strength of any bakery. You may be asking yourself, ‘how can I do this?’ The only way to deliver big orders is when you have an efficient supply chain management system, a quick workforce, efficient equipment, and access to the raw material.

  1. Latest Equipment

Some of the main tools for bakeries are measuring cups, spoons, wooden spoons, rubber spatulas, metal turners, pastry brushes, whisks, kitchen scissors, rolling pins, fine-mesh sieve, a chef knife, a paring knife, rectangular/square baking pans, pie plates, wire racks, muffin pans, baking sheets, hand mixers and many other tools. As well as having the right packaging for your products, an experienced professional needs the right tools. That’s why it’s imperative that your bakery should have all the tools and latest equipment.

  1. Design

There are so many variables with regards to uniqueness and artistic design (perhaps you have your own signature speciality) with regards to cookies, pastries and cakes, which all provide that extra added value to your products. The food and its taste remain the same. However, the artistic presentation and creative design is what makes the difference and getting this right gives you an edge over your competitors.

Bakery Weaknesses

Are internal factors unfavourable compared to your rivals? Do they create competitive disadvantages? Weaknesses are likely to prevent or delay the business from achieving its goals. 

To remain competitive, your business needs to reduce or remove its weaknesses.

Weaknesses of a Bakery

  1. High Prices

We can all agree that currently in New Zealand the pandemic, lockdowns, increasing fuel prices and shortage of supplies have increased the price of basic ingredients. This has resulted in bakery owners having little choice but to increase the retail prices of their ranges. However, inflated high prices are not a competitive edge.

  1. New in the Market

It takes a lot of time, energy, and marketing to build a database of loyal customers and win their trust and confidence. Being committed to marketing and promotion through various channels and mediums is a must.  A good rule of thumb is that marketing should account for 4-6% of net income.

  1. Out of City/Town Location

As the saying goes, ‘location is king’. If you have opened your bakery and people can’t easily access you then that is time to level the playing field. Can a delivery service become an option? Can you boost your online presence to reduce the shortfall.

Bakery Opportunities

Opportunities are the external possibility (prospects) for future development – changes in the external environment that create favourable conditions for a business.

All successful businesses are constantly looking out for opportunities.

Opportunities for a Bakery

  1. Bakery Training

If your bakery has the space and enough equipment, can you convert your bakery into a training centre?  There are many benefits to this including training local people and helping the local economy and boosting staff retention and loyalty.

  1. Healthy Eating

Ok, let’s be honest, usually bakery food items are sugary and oily! Both ingredients are the main cause of raised blood pressure, high cholesterol, obesity, and other disease. But it isn’t all bad news, as this presents an amazing opportunity for your bakery to offer lower sugar and less oil-baked food items to customers –

especially to the younger diet-conscious customer market segment.

  1. Product Portfolio

Expanding your offerings helps you differentiate yourself in the market and, importantly, win market share. Undertake some market research to find the gaps

Bakery Threats

Threats are external factors that hinder the prospects for a company – they cause problems for the business. Examples including technological breakdowns, product recalls, changes in tastes, recession, natural disasters and most current of all, infectious diseases.

Businesses need to pre-prepare against potential threats by identifying them before they happen.

Threats for a Bakery

  1. Economic Recession

With raising food costs, house prices and petrol costs there’s a huge knock-on effect to the average family’s disposable income. Put simply, spending is decreased when consumers have limited money.

  1. Competitors

With the increase in chain brands expanding their franchises, the bakery sector has become more competitive. If you have a strong, established competitor in your area with loyal customers, how will you grow your market share?

What are the advantages and disadvantages of a SWOT analysis?

The table below provides the key advantages and disadvantages that you can review for your bakery business.

Advantages

Disadvantages
  • Completing a SWOT analysis can be quite simple, free, and quick
  • It has a wide range of applications, e.g., reacting to the threat of rivals entering the market
  • It encourages foresight and proactive thinking in the decision-making process
  • It can help reduce the risk of decision-making, by demanding objective and logical thought processes
  • SWOT analysis helps to determine the company’s position in the market and therefore aids the formulation of business strategy for its long-term survival
  • It can be simplistic and does not demand detailed analysis
  • The model is static whereas the business environment is always changing, so SWOTs need to be undertaken regularly
  • The analysis is only useful if decision-makers are open to the weaknesses and willing to act upon them by devoting time, people, and money to tackling the weaknesses and threats
  • SWOT analysis is not typically used in isolation. Better decisions are made if more information is available, so other strategic tools are also used

SWOT Analysis Template

Remember that what might be the strength of a competitor, such as its brand reputation and human capital, might be a weakness in your business. Similarly, your assets might crossover into contrasting categories. Key person syndrome is a threat if you lose them, but that key person in your business might be a hugely talented or highly-specialised baker – a strength. Equally, some threats, such as a change in weather, might also be considered as opportunities for other businesses. An effective SWOT analysis should always be about your business, and your business only.

Below is a SWOT template that your bakery business can use.

Strengths

Weaknesses
  • Value for money (price in relation to quality)
  • Geographical location
  • Core competencies, e.g., product quality
  • Accreditation, endorsement, or official support
  • Image and reputation
  • Market share/market dominance
  • Experience, knowledge & skills
  • Brand awareness and brand loyalty
  • Unique selling point
  • Poor location
  • Limited sources of revenue
  • Escalating costs of production
  • Poor cash flow/liquidity problems
  • Higher prices than competitors
  • Demotivated and/or unproductive workforce
  • Limited sources of finance
  • Lack of spare capacity
  • Restricted product range
Opportunities Threats
  • Economic growth
  • Weakening exchange rate
  • Technological developments/innovations
  • Market growth
  • New markets & locations
  • Demographic and social lifestyle changes
  • New entrants in the marketplace
  • Economic downturn
  • New entrants in the marketplace
  • Inflation (causing higher production costs)
  • Social/environmental/legal constraints
  • Negative media coverage and publicity
  • Unfavourable changes in seasons and weather
  • Adverse changes in tastes
  • Outbreak of infectious diseases

Conclusion

A SWOT analysis is a valuable platform for bakery owners to create an accurate an authentic investigation of how the business is performing. It can also provide useful indicators on where the bakery business is doing well – not just where it can perform better, keeping bakeries agile in an ever-changing business landscape and shifting economy.

By taking a holistic and ‘outside-in’ approach to the business, the results present owners and their teams with a solid strategy for prioritising what needs to be done in the organisation to establish more effective pathways to growth.

Have you checked out our Knowledge Base for other bakery resources?

If you read this and think we might be a good fit for you, please call us to discuss your business and your challenges or shop now.

berica.co.nz | 0800 237 422 | sales@berica.co.nz

About the author

Veronica Aris

Veronica Aris

Veronica has more than 20 years in senior management roles, leading marketing and sales strategies that include primary care consumables, pharmaceuticals, natural health care supplements, consumer and safety products within B2B and B2C.

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