Finance and Pricing

9.3 How to Manage Expenses During Challenging Times
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Module Overview

00:00:00 / 02:32:57



M0 Baking Fundamentals
3 mins
M1 Ingredients: Basics for Breads, Pastries and Cakes
25 mins
M2 Equipment: Breads, Pastries, Cakes
13 mins
M3 Food Hygiene and Safety: Food Preparation and Storage
13 mins
M4 Packaging: Function and Purpose
4 mins
M5 Menu Planning
9 mins
M6 Product Planning: Healthy Alternatives
4 mins
M7 Business Plan: Scalability and Expansion
23 mins
M8 Business Plan: Entrepreneurship
17 mins
M9 Finance and Pricing
20 mins
M10 Legal: 4 Things To Do Before Opening For Business
6 mins
M11 Marketing Strategy: Digital and Social Marketing
15 mins

About this module

Money talks, and in the world of business, it’s important to manage your finances throughout every step of your business! Learn about the many key sectors and hidden costs that go into running a baking business, from crowdfunding, production, operations and more. Find out which parts you shouldn’t overlook, and how you can budget your money smartly to steer your business forward!


For us, Facebook marketing is very important. Reason being pre-Covid, 90% of our business was supplying to cafes and restaurants. When the pandemic hit for two weeks, I got no business and we’re left with 10% B2C which is not enough to sustain our team. It was quite a tough time for me. From there, I start to teach myself a lot and ask friends who are good in marketing.

So, I am proud to say now after one and a half years later, mainly we are 80% B2C. That’s how we sustained.

Speaking with friends I have met from around the world, I have been asked about the economic downturn that is happening throughout the world, and specifically in our country, Malaysia.

For entrepreneurs out there, this is a question that is important to address as we work through these challenges. As it goes, economic downturns have taken place around every 10 years for the past few decades.

So what do we do? This is a great concern whether you are in the field of education, food, healthcare or the tourism industry. Principles Don’t Change.

We share with you a tool that would help you to navigate from Survival stage to the Growth stage.

Funding is the biggest issue for any entrepreneur at this point. You need to make sure that you have sufficient funds to help you in your cash flow for the next 12 to 18 months to buffer your business.

It is true that Small is Beautiful; because small businesses are the ones who will actually be able to ride through this period. However, small businesses do not have large reserves to cover for losses in sales over a long period of time. The key is in managing your expenses.

We will show you how you can prepare for these inevitable situations.

As advice to home bakers, there are Four Quadrants that you have to look into, whether you are starting a business, or if you want to make sure that you have sufficient cash flow to get through a survival period of at least 12 to 18 months.

The First Quadrant refers to all the payments that you have to make, which your business is committed to.

These are your Fixed Costs. For example, the rented premise, employee salaries and some borrowings from financial institutions that incur monthly interest.

Then, you also have a monthly marketing budget for your social media strategy, flyers, video advertisements, etc.

Remember to keep your fixed costs to the most essential items.

Next are your Variables.

This is related to day-to-day operations and the things that you have to buy. Especially if you are in the food business, you are likely to be purchasing time sensitive ingredients, such as dairy products and fresh produce.

Then, you also need packaging and labelling supplies for your products, as well as your utility bill to keep your business going.

Current needs refer to requests that will pop up to you suddenly or gradually as your business grows. Needs such as additional equipment or machinery, packaging, extra staff to meet more orders are some of these.

Therefore, based on your orders, you have to have funds ready for these current needs.

Finally, the Fourth Quadrant refers to emergencies that may occur. For example, if there is a major lockdown and your sales have gone down. You would need to take out money from your reserves or emergency funds, to get through this difficult period.

This is crucial for anyone in business and you should plan for this.

Now, how do I ensure that these Four Quadrants are taken care of?

Plan early and plan when your first sales starts flowing in. Use these Four Quadrants to guide your record keeping and movement of funds.

Budget your expenses into Fixed and Variable costs by qualifying “Do I need this now?”.

Failing to take proper care of these four quadrants may leave you in a difficult situation as you maneuver the ‘Survival’ stage.

From this Survival stage, which could take place around 12 to 18 months, you will then enter the Growth stage.

To all the entrepreneurs out there, You Know your business, you Love what you are doing and you Serve your customers everyday.

But to do that properly, your management of cash flow in these Four Quadrants, play a crucial part in your day to day operations for the first 12 to 18 months. Best of luck to you!

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