BUSINESS PLAN

Supported by: Small Enterprise Development Agency

MVELEDZANDIVHO MULTI-PURPOSE CO-OPERATIVE LIMITED

MVELEDZANDIVHO MULTI-PURPOSE CO-OPERATIVE LIMITED

BUSINESS PLAN

Company Information Issued Date:..........................

Legal Name: Mveledzandivho Multi-Purpose Co-Operative Limited

Trading Name: Mveledzandivho Multi-Purpose Co-Operative Limited

CK Number: 2012/017322/24

CONTACT PERSON:

Mrs Lorraine Mashudu Khangale

Cell:

POSTAL ADDRESS:

P.O Box 1

Mukula

0978

BANK DETAILS:

Name of Bank:

Account Number:

Account Type: Cheque Account

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Confidential Agreement

The information contained in this business plan is confidential and proprietary to

Mveledzandivho Multi-Purpose Co-Operative Limited and is intended only for the

persons to whom it is transmitted by the Company or its representatives. Any

reproduction of this document, in whole or in part, or the divulgence of any of its

contents without the prior written consent of the Company, is prohibited.

Business Plan Copy No: _____________

The undersigned reader acknowledges that the information provided by member of

Mveledzandivho Multi-Purpose Co-Operative Limited in this business plan is

confidential; therefore, reader agrees not to disclose it without the express written

permission of the Lorraine Khangale Mashudu a member of Mveledzandivho Multi-

Purpose Co-Operative Limited.

It is acknowledged by reader that information to be furnished in this business plan

is in all respects confidential in nature, other than information which is in the public

domain through other means and that any disclosure or use of same by reader

may cause serious harm or damage to Mveledzandivho Multi-Purpose Co-

Operative Limited.

_________________________ ______________________________

Signature Name:

____________________

2

Why was this Business Plan Written?

1. To obtain the grant financing of an amount of R350, 000 from

any financial institutions.

2. To give the owner who wants to start the clothing produc-

tion business a much better idea of whether the owner

should really get involved in this type of business at all,

through determining the commercial, technical and finan-

cial viability.

3. To serve as a useful guide for the business to check con-

tinuously how the business is getting-on in achieving its

goals

4. To serve as an operational plan document for Mveledzandi-

vho Multi-Purpose Co-Operative Limited.

5. To serve as a very good document for outsiders, like banks

or suppliers of credit, to see whether they are interested in

getting involved in the affairs of the business or not.

In a nutshell “This business plan is a road map that tells

business owner where to go, and allows the owner to

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MVELEDZANDIVHO MULTI-PURPOSE CO-OPERATIVE LIMITED

Table of Contents

EXECUTIVE SUMMARY

1. Brief Description of the Business…………………………………………………….7

2. Keys to success………………….……….……………………………………………9

3. Financial Summary………………....…….……………………………………………9

4. Business's Contributions to the Economy…………………………………….…….9

5. Purpose of Required Fund ……………………………………………………..…….9

Section 1

MARKETING PLAN

1.1 Description of the Product and services…………………………………………….10

1.2 Reasons for choosing this Traditional Clothing as product ………...…………..…..10

1.3 Competition…………………………………………………………………………….10

1.4 Competitive Advantage ...……………………………………………………………10

1.5 Location………………………………………………………………………………..11

1.6 Market Area……………………………………………………………………………11

1.7 Targeted Customers….………………………………………………………………12

1.8 The Industry Overview...………………………………………………………………12

1.9 Total Demand………………………………………………………………………….12

1.10 Market Share..………………………………………………………………………….12

1.11 Selling Price……………………………………………………………………………12

1.12 Sales Forecast………………………………………………………………………...12

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1.13 Marketing Strategy……………………………………………………………………14

1.14 Marketing Budget……………………………………………………………………..14

Section 2

MANUFACTURING PLAN

2.1 Fixed Required Capital…………………………………………………………… …15

2.3 Life of Fixed Capital…………………………………………………………………..16

2.4 Cost of Stock and Raw Materials …………………………………………………..16

2.5 Labour……...…………………………………………………………………………..17

2.6 Overhead Expenses…………...…………………………………………………….17

Section 3

ORGANISATION & MANAGEMENT PLAN

3.1 Form of Business…………………………………………………………………….18

3.2 Organisational Structure…………………………………………………………….18

3.3 Pre-Operating Activities and Gantt chart…………………………………………..19

3.5 Pre-Operating Expenses………………………………………………………….....21

3.6 Administrative Expenses……………………………………………………………21

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Section 4

FINANCIAL PLAN

4.1 Capital Required..…………………………………………………..………………22

4.2 Financing Plan and Grant Requirement…….……..……………..………………23

4.3 Security for Grant……… …………………………………………….……………23

4.4 Profit and Loss Statement……….......…………………………..……….………..24

4.5 Cash Flow Statement………………………………………….…….……………..25

4.6 Balance Sheet……………………………..……………………….……………….28

4.7 Break-even Point (BEP) ……………………………………………….…………..29

4.8 Return on Investment (ROI)…………………………………………….…………30

4.9 Exit Plan…………………….…………………………………………….……….…30

EXECUTIVE

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SUMMARY

1. Brief Description of the Business

Mveledzandivho Multi-Purpose Co-Operative Limited is an independent existing traditional clothing manufacturing. The business were started in 2007,I t was started as a community project for combining individual sewing around the village. Its purpose was for job creation in Mukula village a poverty stricken area. It were started with abou 23 people, but due lack infrastructure, equipment, materials to produce stock other people have left during the period. Nine dedicated people remaing in the business since started. They are currently operating in one small African house made of soil and grass, but they still have hope that one day they will get help and grow their business. In 2012 the members decided legalise their business and register it as co-operative.

The main objective of the business plan is to obtain fund to improve the business so that it can make profit and reduce poverty. When fund is obtained the directors plan increase its products line range by focusing on different products range than only on the traditional. The new products range will be School Uniform, hospital uniform, cleaners uniforms or gowns, services workers work-suite, safety and protective clothing including embroidery services. With this products range management believe that this business will make a good profit.

With this new products the business has targeted the following, schools, electrical, cleaning, construction companies, hospitals, university, and security companies with uniform and protective clothing. The business has targeted this type of customers because they purchase their products in bulk and also as it was mention in the president state address speech that government must purchase their products from local business. This is one of the opportunity.

Mveledzandivho Multi-Purpose Co-Operative Limited is managed by highly motivated, well qualified and experienced managers. The management team has experience in clothing manufacturing having working in this type of business for more than 10 years.

The survey has indicated that there are few companies that manufacture the type of products we want to manufacture around Thulamela municipality. The products such as protective clothing, school uniform and hospital gown are essential to most institution and this products is used 5 days in a week, this means that it need to be replaced every time. As an essential products means that the demand of this products will never stops. We are positioning our company to capitalise in this opportunity

2. Keys to success

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Providing products which are on demand. To keep our cost lower than all local suppliers by producing in high volume and

make use of members of co-operatives. To use every means available to satisfy our customers.

Personal visit to all school in our targeted market area.

3. Financial Summary

The table below is a brief summary of the profit and Loss statement.

1 2 3Sales 1 708 800 1 879 680 2 067 648Net profit 424 454 468 316 516 564Net Cash flow 565 169 1 053 157 1 589 393Break-even Point % 33.7%

ParticularsYear

**Rate of Return in total investment is 1 years *

4. Business's Contributions to the Local Economy

Mveledzandivho Multi-Purpose Co-Operative Limited will contribute to local economy through providing source of income of 9 individuals or families. It will also result in healthy competition by forcing existing small individual to also join forces and to improve their product and services quality. This will empower woman and encourage other women to start their business.

5. Purpose of Required Fund

To improve this business a total amount of R 415,816 is needed and the owners have proposed to finance this capital requirement by a grant of R349,879 or 84% and the balance R 65,937 or 16% will be financed by owners. This grant amount will be used as follow:

ParticularsAmoutnt (Rand)

Building and Fencing 105 000Furniture and Equipment 159 675Electricity Installation 18 5001 Month Materials 65 5041 Month Electricity 1 200 Total amount needed from outside source 349 879

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Section 1

MARKETING PLAN

1.1 Description of Products and Services

Mveledzandivho Multi-Purpose Co-Operative Limited will produce the following products school uniform, protective clothing, services workers clothing , doctors and nurses gowns, work-suit for cleaners, contractors and general workers. Below is the type of picture showing

Our products are quality made from a high quality materials, our advantage is that we also going to do embroidery of company name on the garment. This products are chosen because they are in demand or requirement, are weared 5 days a work. This products is purchased most by companies or institution which purchased in bulk. The advantage is that price can be higher rather than selling to individuals.

1.2 Competitors

Mveledzandivho Multi-Purpose Co-Operative Limited is facing competition from, Chrystal Garments, its factory location is in Shandima industrial and it has two retail store in Thohoyandou town. The company produce school uniform, t-shirts and general workers work-suits. The company is own by Philippians.

The indirect competitors is clothing shop around Thohoyandou town who buys and sell uniform and general workers suite and gowns to customers who come and buy in the store.

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1.4 Competitive Advantage

Mveledzandivho Multi-Purpose Co-Operative Limited will distinguishes itself from its competitorOur advantage is that we are bluck – new BEE act requirement give preferences to bluck own companies.

Competitors does not provide safety clothing we provide and safety is one mandatory according the labour act in most job.

Our marketing strategy is that we will do personal visit to all started institutions and companies.

Because of few competitors their prices are high we will price our price slightly below the competitors’s price.

Offer a bulk discount

By keeping the overhead low, the business will be able to channel the profits back into operations thus avoiding high debt ratios or lost sales opportunities.

Consideration will also be given to attending trade shows around the country.

1.5 Location

The business will is located at Mukula Village found in Thulamela Municipality, Vhembe District, and Limpopo Province, South Africa. This location has been selected because of the following reasons: it is far from its competitors and closer to its targeted customers and also near to the owners homes.

1.6 Market Area

Mveledzandivho Multi-Purpose Co-Operative Limited plans to initially supply its products in Vhembe District and with future plans to supply the whole country and other country during the road shows. This area has been chosen because is highly populated with about 40 traditional weeding and parties during weekend and is under-served with African traditional clothing with only two known manufacture. This area has been selected because of few competitors. This is a well developing area with a high population growth about 17% growth every year

Although the factory has located in Mukula village it will the who Vhembe district. E.g Hospital, universities, colleges, municipalities – we will visit all hospital procurement to be listed in a database in the whole area. Targeted customers such as school we have targeted area such as : Mukula and surrounding villages schools.

1.7 Targeted Customers

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The business main targeted customers is schools by supplying uniform and embroidery of emblem on the uniform. Other majority of school in our area they need such embroidery. As we will be local and cheaper than their supplier at same time providing high quality I believe that they prefer us.

The other customers will be cleaning companies, constructions, electrical companies, municipality, university and mining companies who need work-suit with their emblem. This people they use work-suit as uniform for all their general workers.

The other Customer group are our current customers who are currently purchasing a traditional clothing “Minwena” from us. This people purchase when they are attending traditional wedding ceremony and other during thier clud called “Tshisevhesevhe” were they will be dancing traditional songs wearing traditional clothing.

1.8 The Industry Overview

The market outlook for our products in Limpopo Province and elsewhere is positive. This type of product is used almost every day from Monday to Friday. Protective and safety clothing is mandatory in majority of work such as mining, electrical, construction and cleaning. School uniform is also mandatory in all South African public schools. With this reason this industries will remain strong forever. The demand will always increase due to the population growth

1.9 Total Demand

The market survey indicated that they are the demand of school uniform. Competitors visited said that they sometime reject orders of people due to the high load of work. The survey also indicates that half of our targeted market prefers traditional clothing and they are failing to get them because of shortage of manufacturing companies.

1.10 Market Share

Because the demand for African and traditional clothing is higher than supply , and competitors are few, and current manufacturing can only cover less than 15 percentage of potential customers and our competitors does no specialise with products made from specialise materials, and our products are surveyed to be a customer’s preference. As the demand for African and traditional clothing are far above the ground we believe that every single one of our product produced will be purchased in full and our capacity is 12 items per day.

The research indicates that there is high a necessity for extra, African and traditional clothing production companies in Vhembe District area and South Africa as a whole.

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1.11 Selling Price

Our prices are based on the cost plus margin and combining with what the customers are willing to pay method. This cost take inconsideration all material, overheads cost, direct labour cost and other production cost. Our production cost increase per size and type of products but it is still very low. Our average price considering both strategies is R520 per items. This is a price the customers’ survey indicated that is still very cheap and they are willing to pay this price.

1.12 Sales Forecast

If the production capacity is 12 items per day and the price is R520 per item then, the daily sales will be R 6,240 per day R149,760 (R6,240x24days) per month.

MonthlySales 1 2 3

Traditional Attire 26 400 316 800 348 480 383 328

Protective Clothing 42 000 504 000 554 400 609 840

School Uniform 74 000 888 000 976 800 1 074 480

Total 142 400 1 708 800 1 879 680 2 067 648

ParticularsYear

1.13 Marketing Strategy

Mveledzandivho Multi-Purpose Co-Operative Limited will have very modest cost to promote and advertise its product it will rely mostly on word of mouth promotion by satisfying customer and street display and promotions such as:

Catalogue Sales. List your products with an existing catalog sales firm. We will describe our product in full the features and its quality.

Fair sales. Arrange for a compartment at trade shows, large flea markets and community fairs. We will take a good selection of our merchandise, business cards, brochures, and order forms and set up an attractive display. Although the objective will vary with the type of activity. The general idea is to retail, make contacts, gain recognition, and to take wholesale orders.

1.14 Marketing Budget

Our marketing budget will be consist of travelling cost, to business customers, stores roads show sales, which can be done three times every year. The monthly budget will be budgeted for the catalogue, brochure and business cards which we have arranged with SEDA to assist us with promotional materials.

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1 2 3

Business Cards 100 1 200 1 320 1 452 Traveling to customers 2 500 30 000 33 000 36 300 Communication With customer (telephone) 180 2 160 2 376 2 614 Total 2 780 33 360 36 696 40 366

Particulars MonthYEAR

Section 2

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MANUFACTURING PLAN

2.1 Fixed Assets Required

Paarticulars

Land and buildings Rental

Land - AvailableBuildings 90 000 Fencing 15 000 Total Land and Buildings 105 000 105 000

Furniture and Equipment5* Sewing Machines 31 500 2* Overlocker 3 800 1* ZicZac Machine 7 000 5* Cutting Table 5 000 1* One Head Embroidery M/C with Trimmer 101 078

1* Button Hole Cutting Machine 7 900 1* Steam Press 3 397 1* Round Cutting Machine 2 700

15* Chairs 6 000 159 675 159 675

Total Fixed Assets 264 675

Total Furniture and Equipment

2.3 Life of Fixed Capital and Depreciation

The lifespan of the fixed assets are as follows; this is based on supplier information. Our depreciation will be on a straight line method.

Fixed AssetsLifespan (years)

Annual Depreciation

Furniture and Equipment’s 8 12.50%Vehicles 5 20%

Depreciation Cost Accumulated Book Value13% Furniture & Equipment 159 675 19 959 139 716 20% Vehicles - - -

Annual Depreciation 19 959 Monthly Deprecation 1 663

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The annual depreciation cost, assuming no scrap value, will therefore be:

2.4 Cost of Stock and Raw Materials (Rand Value)

MonthlyCost 1 2 3

Materials 65 504 786 048 864 653 951 118

Total 65 504 786 048 864 653 951 118

ParticularsYear

The increase is estimated at 10% in all products and Services for the entire years.

2.5 Labour

Direct Labour

Particulars Amount R's Labour 9 x 2 000R = 18 000R 18 000R

Total for Direct Labour 9 18 000R 18 000R

2.6 Overhead Expenses

Overhead costs are monthly indirect cost of the business. The table below shows the breakdown of categories of expenses.

1 2 3Electricity 1 200 14 400 15 840 17 424 Transport 2 300 27 600 30 360 33 396 Depreciation for Fixed assets 1 663 19 959 21 955 24 151 Repairs and Maintenance 800 9 600 10 560 11 616 Total 5 963 71 559 78 715 86 587

MonthParticulars YEAR

Section 2

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MANAGEMENT PLAN

3.1 Form of Business

The business has been formed and registered as co-operative; the following repres-ent the director Mashudu Khangale Lorraine, Ndidzulafhi Eunice Mudau, Tondani Mavis Tshinyani, Virginia Netshivhera and Takalani Florance Mulaudzi. The Legal name of the business is Mveledzandivho Multi-Purpose Co-Operative Limited and the business will the same name. The Management team is highly motivated, experi-enced and well qualified. The team is strongly positioned to take advantage of this op-portunity.

3.2 Organisational Structure

Mashudu Lorraine Khangale will serve as the General Manager (Chair Person) and

will be responsible for the day-to-day running of the business.

Ndidzulafhi Eunice Mudau as the Finance Manager and be responsible for the

evaluation of data pertaining to costs in order to plan budgets, evaluate financial

reporting systems, accounting and collection procedures, and investment activities, and

make recommendations for changes to procedures, operating systems, budgets, and

other financial control functions, and also to prepare operational and risk reports for

management analysis.

Virginia Netshifhera as the Manufacturing/ Production Manager who will be

responsible for overseeing the manufacturing process, drawing up a manufacturing

schedule, ensuring that the manufacturing is cost effective, coordinate, set up and

implement standard operating procedure for all manufacturing operations, drafting a

timescale for the job, reviewing the performance of subordinates, working with

managers to implement the company’s policies and goals and

Ndidzulafhi Eunice Mudau as the Marketing Manager and will be responsible of

studying competitors' products and services, exploring ways of improving existing

products and services, and increasing profitability, and identifying target markets and

developing strategies to communicate with them. Two of the experienced firm workers

will be sewers assistant.

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Table 3.2 Organisation Chart

3.3 Pre-Operating Activities

Owners have listed down the following activities to be undertaken before they can operate the business:

1. Preparing the business plan - 4 weeks

2. Applying for a grant and approval - 8 weeks

3. Contacting equipment suppliers - 1 week

4. Hiring labour - 2 days

5. Installing the equipment - 2 days

6. Purchasing raw materials - 2 days

The owner aims to implement her operation approximately two months after the grant application, or six weeks after release of his grant.

These pre-operating activities with their corresponding timetable appear in Table 3.4 in a Gantt chart.

General Manager

(Mashudu Lorraine Khangale)

)

Financial Manager

(Ndidzulafhi Eunice Mudau)

Production Manager

(Virginia Netshifhera Shonisani)

Marketing Manager

(Ndidzulafhi Eunice Mudau)

Bookkeeper / secretary

(Outsourced)

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Table 3.4 Gantt chart

MVELEDZANDIVHO MULTI-PURPOSE CO-OPERATIVE LIMITED

Pre-Operating Activities

Timetable (in weeks)

Activities 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1. Preparing the Business Plan

2. Applying/Approval of Grant

3. Contacting Equipment Suppliers

4. Hiring Labour

5. Installing the Equipment

6. Purchasing Raw Material

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3.4 Pre-Operating Expenses

These costs are as follows:

Market research 4 000 Supplier and Communication 750 Business Plan Preparation 6 800 Electricity Installation 18 500 Total 30 050

Particulars Amount

3.5 Administrative Expenses

The owner wants to keep their cost as low as possible in order to be competitive. The only cost they will incurre is the cost of communicating with supplier during ordering stock or raw materials and during the need of repair.

1 2 3Suppliers and Communication 150 1 800 1 980 2 178 Accounting/Bookkeeping Fees 600 7 200 7 920 8 712 Stationery 300 3 600 3 960 4 356

Total 1 050 12 600 13 860 15 246

Particulars MonthYEAR

The increase is estimated at 10% in all products and services for the entire years.

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Section 4

FINANCIAL PLAN

4.1 Capital Requirement (Business Cost)

Particulars Amount R's(R)

Fixed Assets (step 2.1)

Land and Buildings 105 000 Furniture and Equipment 159 675

Total Fixed Assets 264 675 264 675

Pre-Operating Expenses (step 3.4) 30 050

Working CapitalValue of 1 month of raw material (RM) & stocks (step 2.4) 65 504

Value of cash needed for operation. This will be the cost of 2month of labour (step 2.5), overheads (step 2.6), marketingbudget (step 1.14) and administrative expenses (Step 3.5).Less: Depreciation

55 587

Total Working Capital 121 091 121 091 Total Capital Requirement 415 816

4.2Financing Plan and Grant Requirement

Owner’sEquity

Fixed Capital (in R)Land and Buildings 105 000 105 000 Furniture and Equipment 159 675 159 675 Pre-Operating Expenses 11 550 18 500 30 050 Working Capital 54 387 66 704 121 091 Total 65 937 349 879 415 816 Percent 16% 84% 100%

Particulars Grant Total

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4.4 Profit and Loss Statement (one year)

Particulars Amount R's

Sales: x 12 Month (Step. 1.10) 1 708 800

Less: Operational Cost 1 073 607

Raw Materials: x 12 Month (Step. 2.11) 786 048 Labour : x 12 (Step. 2.14) 216 000

Overhead : x 12 (Step.2.17) 71 559

Gross Profit 635 193

Less: Operating Expenses 45 960 Marketing x 12 Month (Step 1.12) 33 360 Administrative Cost X 12 Month (Step 3.7) 12 600

Operating Profit 589 233

Less: Interest on LoanProfit before Tax 589 233 Less: Tax of @ 164 985 Net Profit After Tax 424 247

1050

28%589 233

Month

5 963 Month

65 504 18 000

2 780

142 400

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3 YEARS PROJECTED INCOME STATEMENTS

1 2 3

SALES 1 708 800 1 879 680 2 067 648

Less: PRODUCTION 1 073 607 1 178 972 1 294 873

Raw materials 786 048 864 653 951 118Labour 216 000 237 600 261 360Overheads 71 559 76 719 82 395

GROSS PROFIT 635 193 700 708 772 775

Less: Operating Expenses 45 960 50 556 55 612Marketing 33 360 36 696 40 366Administrative Cost 12 600 13 860 15 246

OPERATING PROFIT 589 233 650 152 717 163Less: Interest

NET PROFIT BEFORE TAX 589 233 650 152 717 163Tax@28% 164 985 182 043 200 806NET PROFIT AFTER TAX 424 247 468 109 516 357Accumulated Profit 424 247 892 357 1 408 714

Particulars

Years

22

4.5PROJECTED CASH FLOW STATEMENT FOR 3 YAERS (Rand)

ParticularsPeriod 1 2 3

CASH INFLOWEquity 65 937 - - -Borrowings 349 879 - - -Cash Sales - 1 708 800 1 879 680 2 067 648Other Income - - - -

Total Cash Inflow 415 816 1 708 800 1 879 680 2 067 648CASH OUTFLOW

Pre-operating expenses 30 050Purchase of fixed assets 264 675Direct materials 786 048 864 653 951 118Direct Labour 216 000 237 600 261 360Factory/operational overheads**

51 600 56 760 62 436

Marketing 33 360 36 696 40 366Administrative Cost 12 600 13 860 15 246Interest expenses - 0Tax paid 164 985 182 043 200 806Loan amortisation - 0 0 0

Total Cash Outflow 294 725 1 264 593 1 391 611 1 531 331NET CASH INFLOW (OUTFLOW)

121 091 444 207 488 069 536 317

CASH BALANCE BEGINNING 121 091 565 297 1 053 366CASH BALANCE ENDING 121 091 565 297 1 053 366 1 589 683

Pre-Operatin

YEAR

23

PROJECTED MONTHLY CASH FLOW STATEMENT (RAND)

ParticularsPeriod 1 2 3 4 5 6 7 8 9 10 11 12

CASH INFLOWEquity (step 4.2) 65 937 - - - - - - - - - - - -Borrowings (step 4.2) 349 879 - - - - - - - - - - - -Cash Sales (step 1.10) - 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400Other Income - - - - - - - - - - - - -Total Cash Inflow 415 816 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400 142 400

CASH OUTFLOWPre-operating expenses 30 050 - - - - - - - - - - -Purchase of fixed assets 264 675 - - - - - - - - - - - -

Direct materials - 65 504 65 504 65 504 65 504 65 504 65 504 65 504 65 504 65 504 65 504 65 504 65 504Direct Labour - 18 000 18 000 18 000 18 000 18 000 18 000 18 000 18 000 18 000 18 000 18 000 18 000Factory/operational overheads*

- 4 300 4 300 4 300 4 300 4 300 4 300 4 300 4 300 4 300 4 300 4 300 4 300

Marketing - 2 780 2 780 2 780 2 780 2 780 2 780 2 780 2 780 2 780 2 780 2 780 2 780Administrative Cost - 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050

Interest expenses - - - - - - - - - - - - - Tax paid - - - - - - - - - - - - - Loan amortisation - - - - - - - - - - - - - Total Cash Outflow 294 725 91 634 91 634 91 634 91 634 91 634 91 634 91 634 91 634 91 634 91 634 91 634 91 634NET CASH INFLOW (-) 121 091 50 766 50 766 50 766 50 766 50 766 50 766 50 766 50 766 50 766 50 766 50 766 50 766CASH BALANCE BEGINNING

121 091 171 857 222 623 273 389 324 155 374 921 425 687 476 453 527 219 577 985 628 751 679 517

CLOSING BALANCE 121 091 171 857 222 623 273 389 324 155 374 921 425 687 476 453 527 219 577 985 628 751 679 517 730 283

Pre-Operating

MONTH

Excludes depreciation expenses and amortisation of pre-operating expenses which are non-cash items.* Not equal to due to rounding.

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4.6 3 YEARS PROJECTED BALANCE SHEET

ParticularsPeriod 1 2 3

ASSETSCurrent Assets

Cash 121 091 565 297 1 053 366 1 589 683Raw Materials Inventory - - - Accounts Receivable -Total Current Assets 121 091 565 297 1 053 366 1 589 683

Fixed AssetsLand and Buildings 105 000 105 000 105 000 105 000Furniture and Equipment 159 675 159 675 159 675 159 675Less: Accumulated Depreciation -19 959 -39 919 -59 878 Total Fixed Assets 264 675 244 716 224 756 204 797Other AssetsPre-operating expenses 30 050 30 050 30 050 30 050

GoodwillPatentsTOTAL ASSETS 415 816 840 063 1 308 173 1 824 530LiabilitiesCurrent LiabilitiesAccounts PayableLoans Payable

Total Current LiabilitiesLong Term LiabilitiesLoans Payable - - - - Total Long Term Liabilities - - - - OWNER’S EQUITYCapital Beginning 65 937 65 937 65 937 65 937Grant Fund 349 879 349 879 349 879 349 879Accumulated Capital 424 247 892 357Add: Net Profit after Tax 424 247 468 109 516 357Less: Withdrawal/DividendsTotal Owner’s Equity & Fund 415 816 840 063 1 308 173 1 824 530TOTAL LIABILITIES AND EQUITY 415 816 840 063 1 308 173 1 824 530

Pre-Operating

Year

25

4.7 Break-even Point (BEP)

The break-even point can be calculated as follows

Particulars Amount (R's)

Annual Sales (step 4.4) 1 708 800

Annual Fixed Costs:Factory Overheads Cost 71 559

Labour 216 000Administrative Cost 12 600Annual Interest

300 159 300 159

  Annual Variable Costs:Raw materials 786 048Marketing 33 360

819 408 819 408

BEP (Annual Sales) = Annual Sales (step 4.4) X Annual Fixed Costs:

Annual Sales (step 4.4) -   Annual Variable Costs:

= X

-

=

1 708 800R 300 159R

1 708 800R 819 408R

576 700R

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BEP (Percentage) = Annual Fixed Costs: xAnnual Sales (step 4.4) -   Annual Variable Costs:

= x-

100

300 159R 100

34%

1 708 800R 819 408.00R

4.8 What is the return on investment (ROI)?

The ROI for this business =

= X (Step 4.4)

(Step 4.1)

102%

100

Annul Net profit Total Capital Requirement

424 247R R 415 816

4.9 Exit Strategy

In business planning, much is based on anticipation the business exit strategy has been decided after careful considerations just like any other aspect of the business. Should the partners wish to sell their equity; the growth of the business will make the following exit strategy possible:

Return capital to financers / investors through dividend or borrowed funds for a management buyout or seek financial partners for the exchange of shares (investor companies, private investors). It is asked that the shareholders retain their capital investment for a minimum period of 3 years after the business launch

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Business Plan

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