Textile Business Plan

Textile Business Plan Production of Gray Cloth, a raw material for textile processing factories in Tz, using local processed cotton yarn in Tanzania. Add to favourite plans Ihembe Textile is considering providing an upscale full-product service to textile companies. The firm is aimed at offering customers a state of art technology in the provision of raw materials. The firms’ core business is to produce textile fabrics in form of Gray fabrics which are raw materials for textile companies. Due to under capacity, the company is underserving its customers who imports raw materials from abroad due to unreliable availability domestically. This proves a tremendous availability of customers for Ihembe Textiles products.

Facts Legal status business Formally registered Year of establishment 2005 Sales (US$) Two years ago:

100,000

Last year:

300,000

This year (forecast):

800,000

Year 2 (forecast):

1,000,000

Year 3 (forecast):

1,200,000

Net profit after tax (US$) Two years ago:

10,000

Last year:

40,000

This year (forecast):

90,000

Year 2 (forecast):

100,000

Year 3 (forecast):

120,000

Total number of Employees Two years ago:

12

Last year:

20

This year (forecast):

30

Year 2 (forecast):

50

Year 3 (forecast):

100

Finance needed Finance needed for fixed assets (buying of machines, buildings, ...)

700,000

Finance needed for working capital (salaries, stock, rental, leasing, transport, ...) Total finance needed (US$)

0

700,000

How do you expect this to be financed?

Please note: the total amount mentioned here

should be equal to the total finance needed at the previous question. Own Contribution in cash

400,000

Loans (debt)

225,000

Shares in your company that you offer to investors (equity) Other sources Total finance needed (US$)

0 75,000 700,000

The Business What is your product/service? The business is currently producing gray cloth which is sold to as a raw materiasl for other textile companies for manufacture of Kitenge, Kanga, bed sheets, Boutique and other garments. Due to under capacity, the company is serving only two customers namely African Pride Textiles (Gray Fabrics) and Adabu Associates Co Ltd ( Kikoy). The former’s requirement is over 250,000 meters per day and the later 5000pcs per week. The market for Ihembe Textile is still virgin as most of these fabrics are imported from China and India. What customer need/problem do your products/services satisfy? The business is currently producing under capacity. Other textile companies like KTM, Urafiki Textiles, Lakhani and Nida Textiles are importing raw materials from abroad due to unreliable availability domestically. This proves a tremendous availability of customers for Ihembe Textiles products. Since most of the gray fabric produced locally does not satisfy the market, textile companies rely on imported yarn. Ihembe is focused to offer yarn at the required quantity to these businesses. How will you make the product/service? Ihembe Textiles depends on raw polyester acrylic and cotton yarn from suppliers. These materials are manufactured to finished products using the weaving machines. The company has a total of 60 weaving machines which will be running on a 12 hour shift basis with a capacity of 450 meters of Gray fabrics per hour. The production process is planned to run for 24 days per month and an operational efficiency of 70% leaving a provision of change and machine service. Explain how you will sell your product/service (marketing strategy) and how you will reach your customers (distribution strategy)? Ihembe has been participating in Trade fairs through Small Industry Development Organisation (SIDO). Together with participation in trade fairs Ihembe will use of personal selling through the network of established small medium enterprises and textile companies domestically. Other marketing strategies will be though the use of Clusters, Tanzania Investment Centres, Tanzania Chamber of Commerce and Industry. Use of calendars printed in

the cotton fabrics will be sent to our potential customers. Other communication strategies will be use of print media, t-shirts and brochures. Ihembe will print banners to use them whenever participates in trade fairs. To whom are you selling, what is your market? The primary target market for Ihembe are clothing manufacturing textiles making gaments. African Pride Textile Mills is the current customer with a total requirement of 250,000 meters per day to process khanga, kitenge, bedsheets and kaniki. The secondary target market for Ihembe is Petty Processors of Boutiques located in Kitumbini area and other cultural and tourist sites in Dar Es Salaam, Arusha, Bagamoyo, Zanzibar and neighbouring countries of Kenya Uganda Rwanda and Burundi. Kikoy is now regarded as a cultural wear for many African cultures. It can be weared in its own or converted into other garments. Describe your competitors? The major internal competitors are all textile companies. Examples like Namera Group, Urafiki Textiles, Millenium Textiles (Morogoro), Mohamed Enterprises and Kiltex (Arusha), AtoZ Textiles (Arusha) and Sunflag (Arusha). Countries along the Pacific rim such as China, Taiwan and South Korea now account for more than 50 % of the world-wide export output of fabrics. Apparel manufacture has also seen a significant move towards those countries with reduced labour costs. Some of them are imported to our country. What makes your business different/better than your competitors (competitive advantage)? The uniqueness of the Ihembe is the strategy to involve other small manufacturers of textiles by installing machines in their own premises or in a jointly built area where they can earn returns in the whole process. This caters for improved reliability of materials. The involvement of the SMEs to manufacture does not need big capital investment. An SMEs will only need 1 set of machined which contain 4 machines worth USD 10,000. The SME can make fabric with supply of yarn from our company. Go four machines 600metres of fabrics is supplied per day and make a net profit of USD 5C to USD 20C per meter. A return of about 80% - 150% per year of total investment. The production area will only cover 50 square meters.

What makes your business, your product or service innovative? engaging small businesses to manufacture textiles How will you ensure the growth of your business? With a commited director, experienced staff and technology, this will ensure growth of the business. Textile is a labour intensive business ranging from lower skilled to experienced and skilled manpower. Ihembe will employ Technicians who have background education and experience in the textile industry.

The Entrepreneur & Management Describe the entrepreneur & management Motivation from this comes from the following: • I own a small industry and I have an order of 250,000 metres per day. Currently I can be able to manufacturer only 7,000 per day. I would like to share the opportunity with other SMEs so as they can manufacture the same and increase the production in my own firm. • The involvement of the SMEs to manufacture it does not need a lot of capital. An SMEs can only need 1 set of machined which contain 4 machines worth 10mil. The SME can make fabric with supply of threads from our company. Gor four machines 600metres of fabrics is supplied per day and make a net profit of Tshs 50 to 200 per meter. A return of about 80% 150% per year of total investment. The production will consist 50 square meters What specifically makes you and (if relevant) your management team most qualified to build this business? Motivation, experience in textile business as well as qualified staff. How much time do/will you expect to spend per week in the business? The director, Edgar Nkunda is a full time director who will spend more than 45 hours per week.

Development How does your business improve the local living standards (social and environmental)?

At the end of year three, the company will be having a total of 54 direct jobs and over 400 indirect jobs. This will assist in improving the standard of living of the community. The company will transfer technology to petty producers through the system of engaging them in production at their small industries to be established on their behalf. Textile mills are known to generate effluent, which pollutes the environment. The nature of the by-products for the business are not harmful to the environment. The challenge for the company is to find ways of reducing noise pollution whereby all manufacturing and processing activities will be done in house to reduce noise. Workers will be supplied with ear plugs and other safety gears to reduce exposure to the noise of machines. Due to its accessibility, the city garbage collectors will be scheduled to collect all litters