BUSINESS PLAN FOR Soap Making
February 13, 2023 | Author: Anonymous | Category: N/A
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Description
BUSINESS PLAN ON
LIQUID SOAP MANUFACTURING
Prepared By:
COOPERATIVE MULTIPURPOSE SOCIETY ADDRESS: Telephone: Email:
OCTOBER 2013
1
TABLE OF CONTENT
Chapter
Page
Table of Content
2
Executive Summary
5
1.0
BUSINESS OVERVIEW
7
1.1
Business Idea
1.2
Description of Business
7
Vision and Mission Statement
8
The Objective of the Company
8
1.3
Value Proposition
8
1.4
Current Status of the Business
1.5
Description of the Business Industry
9
1.6
Contribution to Local and National Economy
10
2.0
SALES AND MARKETING PLAN
11
2.1
Market Research
11
2.2
The Opportunity
11
2.3
Target Market
11
2.4
Distribution Strategy
11
2.7
Promotional Strategy
12
2.8
Competition
12
2
3.0
PRODUCTION PLAN
15
3.1
Description of the Location / Factory
15
3.2
Raw Materials Needed
15
3.3
Production Equipment Table
16
3.3.2 Utilities Requirement & Cost
16
Equipment Depreciation (Table 3.1)
17
Documentation
18
Cost Forecast (Table 3.3)
19
3.4
Production Process / Techniques
19
3.5
Production Cost
21
Direct Material Cost Per Product (Table 3.2)
21
Cost Assumptions
22
Stock Control Process
22
Opening Stock (Table 3.4)
22
3.7
Pre-operating Activities and Expenses
23
4.0
ORGANISATIONAL AND MANAGEMENT PLAN
24
4.1
Ownership of the Business
24
4.2
Profile of the Promoter
24
4.3
Key Management of Staff
26
Table 4.1: Salary Schedule
26
FINANCIAL PLAN
27
3.6
5.0
3
5.1
Financial Assumptions
27
5.2
Start up Capital Estimation
27
Table 5.1: Required startup capital estimate
27
Source of Capital
27
Table 5.2: Source of Funds
27
Loan Repayment Plan
28
Table 5.3: Loan Repayment Schedule
28
Financial Projections
28
5.3
5.5
5.6
Table 5.4: Profit and Loss Plan Table 5.5: Cash Flow Plan
6.0
BUSINESS RISKS AND MITIGATING FACTOR
29
6.1
Business Risks
29
4
EXECUTIVE SUMMARY Liquid soap as a washing agent is fast replacing detergents in Nigeria. Since the advent of liquid soap in Nigeria, the detergent producers have not found it easy copping with the competition. This is because of the simple fact that liquid soap is fast gaining grounds for laundry and dish washing. Liquid soap has several advantages over Soaps and detergents hence its preference for laundry and dish washing. Since the advent of liquid soap in Nigeria, several skill acquisition centers have incorporated liquid soap making into their curricula hence the proliferation of several small scale liquid soap production companies.
The Business Description
The entire process of soap making, from start to finish, takes about 2 days which include mixing the raw materials, letting it cool down and molding the mixture to obtain the finished product.
Cooperative Background
We commence operation about a year ago. We intend to start new business by going into soap making production.
Marketing Our cooperative aims at producing a minimum capacity of 3,000 cartons of 75Cl bottles per month. There are a lot of ways to market our liquid soap. We shall package it as a souvenir in weddings and birthday parties. We shall extend our marketing to drop supermarkets and grocery stores, supply it to restaurants and eateries, supply it to bars and cool joint owners, supply it to guest houses and hotels.
Financial Plan Our Cooperative equity contribution
=
Loan required
=
N10,000,000.00 N10,000,000.00
Startup Capital
=
N12,000,000.00
N2,500,000.00
5
Duration
=
24 months
Interest rate
=
20% per annum
Sales and Cost forecasts as well as Profit and Loss statement reveal the following: Gross Profit:
=
N31,484,700.00
Net Profit:
=
N15,490,501.36 N15,490,501.36
Moratorium:
=
2 months
Tenure of loan:
=
24 months
The purpose of the loan is for operational expenses, procurement of water treatment plant and office equipments. The risks The risks identified in this business are fire outbreak, accidental discharge of reagents for laboratory analysis, sustaining injury within the factory, motor accident that may involve the truck drivers and theft. We shall mitigate the risk challenges through insurance policy against fire, installation of fire extinguisher and provision of First Aid Box for staff.
CHAPTER ONE
6
BUSINESS OVERVIEW Liquid soap as a washing agent is fast replacing detergents in Nigeria. Since the advent of liquid soap in Nigeria, the detergent producers have not found it easy copping with the competition. This is because of the simple fact that liquid soap is fast gaining grounds for laundry and dish washing. Liquid soap has several advantages over Soaps and detergents hence its preference for laundry and dish washing. Since the advent of liquid soap in Nigeria, several skill acquisition centers have incorporated liquid soap making into their curricula hence the proliferation of several small scale liquid soap production companies.
1.1
The Business Idea
Making soap is a creative hobby one can turn into a successful business because everyone needs soap. Every bar must eventually dissolve, so every customer can be a steady customer, provided our soap is good. As with anything else, quality will be the determining factor in the success of our business. We hope to make good products in order to capture sufficient public interest which can make our business to thrive.
1.2
Description of the Business
a. Identity of the Business The name of the business enterprises shall be …. Cooperative, a business name registered with state ministry of Commerce and Industry. Industry .
b. Business Location
The business is located at ………………………… …………………………
Mission
Our mission is to create value for customers by continually improving health and reducing preventable illnesses through the use of our soap.
7
Objectives of the Business
The objectives of our cooperative are the following:
Develop a complete product which meets regulatory standards by second month of Year 1.
Become the specialty soap of choice for restaurants and day cares across the community
by the end of Year 2. Achieve sales of of N5 million by the end end of Year2. Year2.
1.3 Keys to Success
A branding branding campaign campaign to build awareness awareness of our products products as the standard standard for ensuring ensuring good good
washing compliance. Consistent education on hand washing and personal hygiene.
1.4
Current Status of the Business
The business is yet to commence operation. It is indeed a start up business.
1.5
Potential Challenges in the Soap Making Industry.
In the recent years, we have seen massive changes in this industry, these changes include:
New technology
National Competitive pressures
Unstable foreign exchange.
Workers bad attitudes
It has been a challenging time for many enterprises producing soaps. Competition has been fierce, market shares have been changing rapidly, and some players have experienced severe financial problems. 1.6
Contribution to Local and National Economy
The following are the benefits and contribution of this business to the economy:
Employment generation for the teaming unemployed youth youth in the state.
The company and staff pay taxes to the government which will increase government revenue.
8
Improved healthy living and promote longevity among the citizens. A healthy workforce is a benefit to the economy.
9
CHAPTER TWO MARKETING PLAN The industry is highly competitive due to the fact that many players are involved. A lot of trainings on soap making are going on every day. New players are entering the market on a regular basis. The major strategy in order to become a force to reckon with is to have a well planned out sales and marketing strategy. Considering the large scope of our potential markets, we feel it is imperative to focus our limited resources on a particular geographic region where we can establish demand for our product. After successful market penetration, we will begin implementation into the restaurant and hospital markets. Target Market Segment Strategy
Our target market includes restaurants, eateries, laundry and dry cleaning companies. These markets consist of medium to large organizations. Organizations such as Mr. Biggs, Tantalizers, Chicken Republic and Captain Cook represent very attractive opportunities for our products.
Organizations of this type are attractive because they are well managed, successful, health conscious and nationwide. Within these organizations we will target decision level managers with the power to implement use of our product in those locations.
2.1
Product Packaging and Delivery
Our Coop will produce a line of institutional liquid soaps with a quality raw materials blended into the mixture, utilizing the brightest colors possible . The liquid product will be packaged in 75cl plastic bottles while the bar soaps will be wrapped in high density nylon.
2.2 The Opportunity
The market survey shows that there is a great demand for soaps for washing and cleansing.
Pricing Strategy
10
The method adopted for setting our prices is prevailing market price method. We intend to have an introductory price that is 10% less than the prevailing market price.
Selling Price: S/N
PRODUCT
1.
Toilet Cleanser (75Cl)
3,600.00
4,080.00
2.
Liquid Soap (75Cl)x12
3,000.00
3,360.00
3.
Bar Soap (180g)x20
800.00
1,000.00
2.4
DEALER’S PRICE (N) (N) MARKET PRICE (N)
Distribution Strategy
We shall canvass to market men and women perceived to be dealers of similar products. Friend, families and associates are not out left. We wish to adopt two approaches, first, direct sales to the customers, and secondly, to supply the dealers in the major markets in Ondo State and the neighbouring states. As we introduce our our business to various various people, we shall ask them for referral referral to potential buy buyers. ers. This shall be handled by our marketing team. We shall also employ the services of sales agents. Our products shall be conveyed to desired destinations through a truck, preferably a 2.5 tons truck.
2.7
Promotional Strategy
Our strategy for penetrating the market is as follows:
a.
Publicity and Advertisement
Publicity and advertisement in this context involve creating public awareness.
b.
Sales Method
We shall give priority to customer care and satisfaction. Good public relations must be established. We shall see our prospective customers to be our real employers. In selling our
11
products, we shall supervise our sales agent in the selling process. Every member of staff is a potential marketer of our products. Appropriate commission shall be giving to members of staff that could open and close a sale. We shall give some determined discount to consistent customers, dealers and agents. As a matter of policy, we shall allow credit facility to only accredited dealers and those who can give us a credible guarantor.
2.8
Competition
In the market we shall be competing with, but not limited, to the following products: 1.
Morning Fresh
2.
Mama Lemon
3.
Harpic
4.
B-29 Bar Soap
5.
Sunlight Soap
6.
Canoe Soap
Sales Assumptions:
1.
The sales are expected to be high during dry season. Obviously, a lot of people get thirsty when the weather gets hot. In addition, during ceremonies like house warming, naming, wedding, burial, Christian and Muslim festivals, there shall be increase in sales.
2.
Sales fall during the raining season.
12
Sales Forecast
Table 2.2: SALES FORECAST (Bi-monthly) P1 P2
50Cl Bottle
P3
P4
P5
P6
P7
P8
P9
P10
Qty Price/ Unit Amt
75Cl Bottle
8,000
10,000
12,000
14,000
12,000
10,000
9,000
9,500
10,000
12,000
14
650
650
650
650
650
650
650
650
650
650
65
5,200,000
6,500,000
7,800,000
9,100,000
7,800,000
6,500,000
5,850,000
6,175,000
6,500,000
7,800,000
9,
10,000
12,000
14,000
15,000
13,000
12,000
11,000
10,000
11,000
12,000
1,
420
420
420
420
420
420
420
420
420
420
42
4,200,000
5,040,000
5,880,000
6,300,000
5,460,000
5,040,000
4,620,000
4,200,000
4,620,000
5,040,000
58
14,000
14,500
15,000
15,800
14,500
14,200
14,000
13,800
14,500
15,500
1
100
100
100
100
100
100
100
100
100
100
10
1,400,000
1,450,000
1,500,000
1,580,000
1,450,000
1,420,000
1,400,000
1,380,000
1,450,000
1,550,000
1,
10,800,00 0
12,990,00 0
15,180,00 0
16,980,00 0
14,710,00 0
12,960,00 0
11,870,00 0
11,755,00 0
12,570,00 0
14,390,00 0
11 0
Qty Price/ Unit Amt
Sachet
Qty Price/ Unit Amt
Total Revenue
13
CHAPTER THREE PRODUCTION PLAN 3.1
Description of the Location / Factory Factory The factory is located within the industrial park. The factory is easily accessible with good facilities, such as water, dedicated power line and hospital facility.
3.2 PRODUCTION EQUIPMENTS AND DEPRECIATION SCHEDULE
Table 3.1 Equipment
Reverse Osmosis
Unit
1
Cost
Value
1250000
Life Span (Months)
60 1,250,000.00
Bottle Packaging Machine PVC Label
1
1450000
20,833.33 60
1,450,000.00 1
250000
24,166.67 60
250,000.00 60 kva generator set
1
750000
4,166.67 120
750,000.00 Distribution Van
1
1500000
6,250.00 60
1,500,000.00 Shrink Wrapper – Full Automatic Composite filters (sand and carbon) Air Ultraviolet Sterilizer (AUV) Water Tanks (2,000L) Pumping machine
1
850000
25,000.00 60
850,000.00 1
1100000
14,166.67 60
1,100,000.00 2
45000
18,333.33 60
90,000.00 3
30000
1,500.00 60
90,000.00 6
15000
1,500.00 60
90,000.00 Ozonator (8g)
1
850000
1,500.00 60
850,000.00 Automated Sachet filling Machine
1
Monthly Depreciation
420000
14,166.67 60
420,000.00
7,000.00 14
1 -
1
8,690,000.00
-
138,583.33
UTILITIES REQUIREMENT / OPERATING COST Table 3.2 S/N
Particulars
Qty Used
Unit Price
Monthly 1.
PHCN
2.
Fuel (Diesel)
3.
Office Stationeries
4.
Laboratory Analysis
1,800
Monthly Cost
12.00
21,600.00
240L
160
38,400.00
1500
2.00
3,000.00
TOTAL
5,000.00 68,000.00
COST ASSUMPTION
1.
It is expected that when sales or demand increases, the cost of production must also increase.
2.
Since season affects our business positively as well as negatively, the cost of production is likely going to fall during the raining season.
15
3.3
Cost Forecast Table 3.3: COST FORECAST (Bi-monthly) Cost P1 P2
50Cl Bottle
P4
P5
P6
P7
P8
P9
P1
Qty Cost/ Unit Amt
75Cl Bottle
P3
8,000
10,000
12,000
14,000
12,000
10,000
9,000
9,500
10,000
12,00
535
535
535
535
535
535
535
535
535
535
4,280,000
5,350,000
6,420,000
7,490,000
6,420,000
5,350,000
4,815,000
5,082,500
5,350,000
6,420
10,000
12,000
14,000
15,000
13,000
12,000
11,000
10,000
11,000
12,00
348
348
348
348
348
348
348
348
348
348
3,480,000
4,176,000
4,872,000
5,220,000
4,524,000
4,176,000
3,828,000
3,480,000
3,828,000
4,176
14,000
14,500
15,000
15,800
14,500
14,200
14,000
13,800
14,500
15,50
67
67
67
67
67
67
67
67
67
67
938,000
971,500
1,005,000
1,058,600
971,500
951,400
938,000
924,600
971,500
1,038
8,698,000
10,497,50 0
12,297,00 0
13,768,60 0
11,915,50 0
10,477,40 0
9,581,000
9,487,100
10,149,50 0
11,63 0
Qty Cost/ Unit Amt
Sachet
Qty Cost/ Unit Amt
Total Cost of Sales
16
3.4
Operating Activities
Table 3.4: Operating Activities and Expenses (Bi-monthly) Expensess Expense P1 P2 P3 P4 P5
Salary Expenses Repair & Maintenance
P6
P7
P8
P9
494,000
494,000
P11
494,000
494,000
P12
494,000
494,000
494,000
494,000
494,000
494,000
494,000
100,000
80,000
110,000
50,000
85,000
60,000
40,000
4,000
5,000
24,000
24,000
24,000
28,000
28,000
30,000
24,000
24,000
26,000
28,000
28,000
30,000
6,000
4,000
4,000
6,000
6,000
6,000
6,000
5,000
5,000
5,000
4,000
6,000
136,000
136,000
136,000
136,000
136,000
136,000
136,000
136,000
136,000
136,000
136,000
136,000
Total Operating Expenses
764,000
743,000
768,000
714,000
749,000
734,000
700,000
659,000
671,000
668,000
662,000
786,000
Initial Operating Expenses
764,000
10,000
494,000
120,000
Advertising Delivery /transport Telephone
8,000
5,000
Utilities
17
3.5
Production Process and Techniques
1. Put all of your oils and beeswax into the pot and place it on the stove element at about level 3 (low). You want to heat the oils very slowly. If you heat the oils too high it will take much longer for it to cool to the temperature to make soap.
While the oils are heating use a bit of vegetable oil to oil the plastic container that you will be using as your your mold. Use the freezer paper (shiny (shiny side towards the soap) to line the bottom of the plastic container, smooth the paper as much as possible. The oil keeps the paper in place and the paper ensures that you can remove your soap from the mold mold without sticking. Tape the edges of the freezer paper to the outer sides of the mold.
the pot and remove the pot from the element.. The temperature 2. Clip your thermometer on the edge of the should be about 150o . If it is higher, don't worry, it will cool down down in time.
18
Mi x in Mix ingg the L ye: Important: Please read the warnings on all of the pages
Gather the following items Lye Distilled Water Stir Stick Rubber Gloves Pyrex Container and Safety Glasses
3. When the oils and lye mixture are at the right temperature you are ready to begin pouring. Remove the Thermometer and rinse and wash thoroughly. Set aside
Slowly mixing the oils pourStir, the lye the pot with the oils. Keep stirring stirring slowly. stir,mixture stir,…. into and stir some more. Some people say that if you stir too quickly you will ruin the soap, others say if you you stir too slowly you you will ruin the soap. There is much discussion about this stirring, I suppose because there is so much of it. I stir so as not to slop any out of the pot, otherwise otherwise I have not had any problems in that regard. You have to stir for about 20- 30 minutes, I usually only onl y can stand to wait 20 minutes. If the mixture starts to thicken, you are just about done, don e, if not proceed to the next step. If you have a stick blender, put it into the pot and turn it on. Make sure you don't mix in any air, always keep the hand blender under the surface of the liquid, you don't don 't want to stir in any air, or splash any of the mixture.
19
Add any herbs or colouring quickly and all at once. Use the stick blender to mix everything everything together. Add your fragrance. Some fragrances are not designed for soapmaking and will seize your soap. Always use fragrances which have been tested in cold process soap or essential oils.
4. Cutting
and
shaping
the
soap
After 24 hours uncover the soap, and measure and score the top of the soap lightly in the shape of the bars you like. Each person is different in the size of bar that they prefer. A small bar of soap sold in the grocery store is 2"X3", but I have found 2 1/2 X 3 1/2 makes a much nicer sized bar.
3.6 PRODUCTION COST
a.
Direct Material Cost for 50CL Bottle
1.
Direct Materials Raw Material
Qty 100,000L
Cost Per Unit (N) 15.00
Amount (N) 1,500,000.00
2.
50cl Bottle
200,000
12.00
2,400,000.00
Cap cover
200,000
1.00
200,000.00
Packaging Cartons Nylon
8,333
2.00 2.0 0
16,666.00
Transportation
8,333
3.00
24,999.00
Label
200,000
1.00
200,000.00
4.
Labor
5
18,000.00
5.
Electricity
1,800Kwh
12.00
3.
Total Cost of Production Total Cost per Crate Total Cost per unit
90,000 21,600.00 4,453,265.00 534.41 22.27
20
Table 3.5: Opening Stock
Stock / Item
50cl Sachet Nylon
Quantity
Unit Cost
150000
Total
1 150,000.00
Packaging Nylon
15000
3 45,000.00
50cl Bottle
80000
12 960,000.00
75cl Bottle
55000
14 770,000.00 -
Bottle caps
135000
1 135,000.00
Labels
135000
1 135,000.00 -
TOTAL 2,195,000.00
3.7
Pre-operating Activities and Expenses
Table 3.6: PRE-OPERATING ACTIVITIES AND EXPENSES Item Description Amount
Rent
Two years
Equipment Renovation/ demarcation
See Table 3.1 for Details For all the painting, refixing
Advertising
To create awareness of the business
Business registration TOTAL
NAFDAC Registration
144,000.00 8,690,000.00 447,000.00
260,000.00 9,541,000.00
21
CHAPTER FOUR 4.0 4.1
ORGANISATIONAL AND MANAGEMENT PLAN Ownership of the Business
The business is owned by Akure Solid Pillar Foundation Cooperative Multipurpose Society, comprising of ten members.
4.2
Key Management Staff
General Manager
Production Manager Marketing Manager
Accountant
ORGANISATION CHART Managing Director
Production Manager (Existing)
Factory Assistant (existing)
Factory Assistant (Proposed)
Sales Officers (Proposed)
Proposed Account Officer
22
Details of Salary Schedule SN
Designation Designatio n
No of staff
Salary
Monthly Salary
Annual Salary
1.
Managing Director
1
N65,000
#65,000
N780,000
2.
Production Manager
1
N300,000
#30,000
N360,000
Marketing Director
1
#30,000
#30,000
3.
Sales/Marketing Sales/Market ing
2
N12,0000
#24,000
N288,000
4.
Factory Workers
4
N12,000
#48,000
N576,000
5.
Cleaner/Office Cleaner/Off ice Assistantt
1
N10,000
#10,000
N120,000
6.
Drivers
2
N20,000
#40,000
N480,000
TOTAL SALARY
12
N247,000
N360,000
N2,964,000
23
CHAPTER FIVE 5.0 5.0 5.1
FINANCIAL PLAN Financial Assumptions
We assume inflation will be relatively stable, while the interest rate is taken to be 20% per annum to illustrate the worse scenario. Other assumptions include: Tax at 5% of net profit, depreciation is considered using straight line method, the insurance at 5% on total capital expense.
5.2
Startup Capital Estimation
Table 5.1: Required Startup Capital Estimate ITEMS
AMOUNT
Pre-operating Expenses
9,541,000.00
Opening Stock
2,195,000.00
Initial Operating Expenses 2months
COMMENT
764,000.00
Total Startup Capital Estimated
12,500,000.00
SOURCES OF FUNDS
AMOUNT
Personal Fund /Equity Bank Loan
2,500,000.00 10,000,000.00
Total Funds Sourced
12,500,000.00
% 20% 80% 100%
Table 5.2: Loan Repayment Schedule Month
0
Principal
Monthly Principal
Monthly Interest
Principal + Interest
Cumulative
10,000,000.00
24
1
10,000,000.00
-
166,666.67
166,666.67
166,666.67
2
10,000,000.00
-
166,666.67
166,666.67
333,333.33
3
10,000,000.00
454,545.45
166,666.67
621,212.12
954,545.45
4
9,545,454.55
454,545.45
166,666.67
621,212.12
1,575,757.58
5
9,090,909.09
454,545.45
166,666.67
621,212.12
2,196,969.70
6
8,636,363.64
454,545.45
166,666.67
621,212.12
2,818,181.82
7
8,181,818.18
454,545.45
166,666.67
621,212.12
3,439,393.94
8
7,727,272.73
454,545.45
166,666.67
621,212.12
4,060,606.06
9
7,272,727.27
454,545.45
166,666.67
621,212.12
4,681,818.18
10
6,818,181.82
454,545.45
166,666.67
621,212.12
5,303,030.30
11
6,363,636.36
454,545.45
166,666.67
621,212.12
5,924,242.42
12
5,909,090.91
454,545.45
166,666.67
621,212.12
6,545,454.55
13
5,454,545.45
454,545.45
90,909.09
545,454.55
7,090,909.09
14
5,000,000.00
454,545.45
90,909.09
545,454.55
7,636,363.64
15
4,545,454.55
454,545.45
90,909.09
545,454.55
8,181,818.18
16
4,090,909.09
454,545.45
90,909.09
545,454.55
8,727,272.73
17
3,636,363.64
454,545.45
90,909.09
545,454.55
9,272,727.27
18
3,181,818.18
454,545.45
90,909.09
545,454.55
9,818,181.82
19
2,727,272.73
454,545.45
90,909.09
545,454.55
10,363,636.36
20
2,272,727.27
454,545.45
90,909.09
545,454.55
10,909,090.91
21
1,818,181.82
454,545.45
90,909.09
545,454.55
11,454,545.45
22
1,363,636.36
454,545.45
90,909.09
545,454.55
12,000,000.00
23
909,090.91
454,545.45
90,909.09
545,454.55
12,545,454.55
24
454,545.45
454,545.45
90,909.09
545,454.55
13,090,909.09
10,000,000.00
3,090,909.09
13,090,909.09
GRAND TOTAL
25
Table 5.3:Bi-Monthly Profit and Loss Sta Statement tement (24 Months) Components 1 2 3
TOTAL SALES TOTAL COST OF SALES GROSS PROFIT
4
5
6
7
8
9
10,800,00 0.00
12,990,000. 00
15,180,000. 00
16,980,000. 00
14,710,000. 00
12,960,000. 00
11,870,00 0.00
11,755,000. 00
12,570,000. 00
1 0
8,698,000 .00
10,497,500. 00
12,297,000. 00
13,768,600. 00
11,915,500. 00
10,477,400. 00
9,581,000. 00
9,487,100.0 0
10,149,500. 00
1 0
2,102,000 .00
2,492,500.0 0
2,883,000.0 0
3,211,400.0 0
2,794,500.0 0
2,482,600.0 0
2,289,000. 00
2,267,900.0 0
2,420,500.0 0
2 0
764,000.0 0
743,000.00
768,000.00
714,000.00
749,000.00
734,000.00
700,000.0 0
659,000.00
671,000.00
6
333,333.3 3
333,333.33
333,333.33
333,333.33
333,333.33
333,333.33
181,818.1 8
181,818.18
181,818.18
1
277,166.67
27 277,166.67 7,166.67
277,166.67
277,166.67
277,166.67
277,166.6 7
277,166.67
277,166.67
2
12,000.00
12,000.00
12,000.00
12,000.00
12,000.00
12,000.00
12,000.00
12,000.00
12,000.00
1
1,386,500 .00
1,365,500.0 0
1,390,500.0 0
1,336,500.0 0
1,371,500.0 0
1,356,500.0 0
1,170,984. 85
1,129,984.8 5
1,141,984.8 5
1 5
715,500.0 0
1,127,000.0 0
1,492,500.0 0
1,874,900.0 0
1,423,000.0 0
1,126,100.0 0
1,118,015. 15
1,137,915.1 5
1,278,515.1 5
1 5
35,775.00
56,350.00
74,625.00
93,745.00
71,150.00
56,305.00
55,900.76
56,895.76
63,925.76
8
679,725.0 0
1,070,650.0 0
1,417,875.0 0
1,781,155.0 0
1,351,850.0 0
1,069,795.0 0
1,062,114. 39
1,081,019.3 9
1,214,589.3 9
1 9
EXPENSES
Operating Expenses Interest
Depreciation
277166.6 667
Rent
TOTAL EXPENSES NET PROFIT BEFORE TAX Income Tax
NET PROFIT AFTER TAX
Table 5.4: Bi-Monthly Cash flow Plan (24 Months) Components Pre 1 Startup CASH INFLOW Cash at Hand (beginning of month) Cash Sales
2
3
4
5
6
7
8
764,000.0 0
1,732,891. 67
2,183,617.4 2
2,981,568. 18
4,142,798.9 4
4,874,72 4.70
5,324,59 5.45
5,766,78 5.61
6,227,8 0.76
10,800,00 0.00
12,990,00 0.00
15,180,000. 00
16,980,00 0.00
14,710,000. 00
12,960,0 00.00
11,870,0 00.00
11,755,0 00.00
12,570 00.00
26
Equity
2,500,00 0.00 Loan Proceed
10,000,0 00.00 Total Cash Inflow CASH OUTFLOW Pre-operating Expenses Opening inventory Total Cost Operating Expenses
12,500,0 00.00
11,564,00 0.00
14,722,89 1.67
17,363,617. 42
19,961,56 8.18
18,852,798. 94
17,834,7 24.70
17,194,5 95.45
17,521,7 85.61
18,797 80.76
8,698,000. 00
10,497,50 0.00
12,297,000. 00
13,768,60 0.00
11,915,500. 00
10,477,4 00.00
9,581,00 0.00
9,487,10 0.00
10,149 00.00
764,000.0 0
743,000.0 0
768,000.00
714,000.0 0
749,000.00
734,000. 00
700,000. 00
659,000. 00
671,00 00
333,333.3 3
333,333.3 3
333,333.33
333,333.3 3
333,333.33
333,333. 33
181,818. 18
181,818. 18
181,81 18
-
909,090.9 1
909,090.91
909,090.9 1
909,090.91
909,090. 91
909,090. 91
909,090. 91
909,09 91
35,775.00
56,350.00
74,625.00
93,745.00
71,150.00
56,305.0 0
55,900.7 6
56,895.7 6
63,925 6
11,736,0 00.00
9,831,108. 33
12,539,27 4.24
14,382,049. 24
15,818,76 9.24
13,978,074. 24
12,510,1 29.24
11,427,8 09.85
11,293,9 04.85
11,975 34.85
764,000. 00
1,732,891. 67
2,183,617. 42
2,981,568.1 8
4,142,798. 94
4,874,724.7 0
5,324,59 5.45
5,766,78 5.61
6,227,88 0.76
6,822,5 5.91
9,541,00 0.00 2,195,00 0.00
Interest
Loan Repayment Income Tax
Total Cash Outflow Cash Balance (end of the month)
SENSITIVITY ANALYSIS 0
1
2
3
4
5
6
7
8
9
12,50 0,000
11,564,0 00
14,722,8 92
17,363,6 17
19,961,5 68
18,852,7 99
17,834,72 5
17,194,5 95
17,521,78 6
18,797,881
21,212
Red Rev 20%
9,251,20 0
11,778,3 13
13,890,8 94
15,969,2 55
15,082,2 39
14,267,78 0
13,755,6 76
14,017,42 8
15,038,305
16,970
Cash Outflow
9,831,10 8
12,539,2 74
14,382,0 49
15,818,7 69
13,978,0 74
12,510,12 9
11,427,8 10
11,293,90 5
11,975,335
13,474
Inc Cost 15%
11,305,7 75
14,420,1 65
16,539,3 57
18,191,5 85
16,074,7 85
14,386,64 9
13,141,9 81
12,987,99 1
13,771,635
15,495
Cash Inflow
10
Presented
(12,50 0,000)
1,732,89 2
2,183,61 7
2,981,56 8
4,142,79 9
4,874,72 5
5,324,595
5,766,78 6
6,227,881
6,822,546
7,738,
Scenerio 1
(12,50 0,000)
(579,908 )
(760,961 )
(491,155 )
150,485
1,104,16 5
1,757,651
2,327,86 7
2,723,524
3,062,970
3,495,
Scenerio 2
(12,50 0,000)
258,225
302,726
824,261
1,769,98 4
2,778,01 4
3,448,076
4,052,61 4
4,533,795
5,026,246
5,717,
Presente d
Scenario 1
Scenario 2
27
NPV
4,808,83 3.47
IRR
(7,623,9 55.15)
28%
(2,231,9 32.97)
6%
16%
CHAPTER SIX 6.0
BUSINESS RISK AND MITIGATION FACTOR
6.1
Identified Risks The water processing factory is associated with some risks which include:
i.
Fire hazard / outbreak
ii.
Machine breakdown
iii.
Employee accident
iv.
Vehicle breakdown
v.
Equipment safety
Mitigation Strategies
i.
Fire Hazard / Outbreak
Fire Hazard or Outbreak refers to a situation when the factory and/or its machinery ignite as a result of error committed by member of staff. In order to prevent such occurrence, the management shall ensure strict compliance to instructions on the usage of the machineries. All electrical appliances must be switched off before the company closes for the day. Industrial fire extinguisher must be installed at strategic point in the factory. ii.
Machine and Vehicle Breakdown
Machine and vehicle breakdown is a situation where these equipments cease to function due to technical fault In order to avoid these situations, control measures must be put in place to provide adequate servicing for all machines. iii.
Employee Accident
To curb this accident, operators must be well trained and vast in the used of the equipment. He/she must be sensitive and conscious to the factory environment. Secondly, men and women of good medical records shall be employed. However, First Aid Boxes shall be made available in the company. iv. iv.
Safety of the Equipment Location
28
The equipments are safe and secure due to the tight security arrangement put in place by the Cooperative Society coupled with the security surveillance of the industry park.
6.2
SWOT ANALYSIS Analysis
i. Strength: We have quality products with attractive Packaging at affordable prices. We have competent, efficient and loyal Staffs that are purpose driven to Succeed. ii. Weakness: W eakness: Presently having low market share, low financial and equipment capacities.
iii. Opportunity: We are close to our target market. Also close close to the source source of of raw Materials. iv. Threat: Power failure. poor water supply and poor maintenance culture by of the facilities being managed Government officials.
Implication on the business
Timely production. Timely delivery of Products. Our products are prepared to meet needs of people, result is good sales
There shall be limitation to the level of our capacity. This limitations may Affect our advertisement, promotional strategy and, production level.
We shall be seen as part of the community that offers the citizens citizens not Only good products but also provide employment for the people. These will affect our production since we largely depend on these for production.
29
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