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8/10/2019 Mveledzandivho Co-operative Business Plan Final
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BUSINESS PLAN
MVELEDZANDIVHO MULTI-PURPOSECO-OPERATIVE LIMITED
Supported by : Small Enterprise Development A gency
http://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZwhttp://www.google.co.za/url?url=http://www.southafricaweb.co.za/page/crafts-south-africa&rct=j&frm=1&q=&esrc=s&sa=U&ei=If7VU56NN62A7Qatj4G4Bg&ved=0CDsQ9QEwEzhQ&usg=AFQjCNFa2RNG-3C0tCJW-_BvlskdKenUZw8/10/2019 Mveledzandivho Co-operative Business Plan Final
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MVELEDZANDIVHO MULTI-PURPOSE CO-OPERATIVE LIMITED
BUSINESS PLAN
Company Inform at ion
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: 082 967 0652
POSTAL ADDRESS:
P.O Box 1
Mukula
0978
BANK DETAILS:
Name of Bank:
Account Number:
Account Type: Cheque Account
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Why was this Bus iness Plan Written?
Confidential Agreement
The information contained in this business plan is confidential and proprietary toMveledzandivho 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.
Mveledzandivho Multi-Purpose Co-Operative Limited
Mveledzandivho Multi-
Purpose Co-Operative Limited
Mveledzandivho Multi-Purpose Co-
Operative Limited
_________________________ ______________________________
Signature Name:
____________________
Date
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1. To obtain the grant financing of an amount of R349 532 from any
financial institutions.
2. To give the owner who wants to start the clothing production busi-
ness a much better idea of whether the owner should really get in-
volved in this type of business at all, through determining the com-
mercial, technical and financial viability.
3. To serve as a useful guide for the business to check continuously how
the business is getting-on in achieving its goals
4. To serve as an operational plan document for Mveledzandivho Mul-
ti-Purpose Co-Operative Limited.
5. To serve as a very good document for outsiders, like banks or sup-pliers of credit, to see whether they are interested in getting involved
in the affairs ofthe 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 check if
the team is on the right road.
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1.14 Marketing Budget..16
Section 2
MANUFACTURING PLAN
2.1 Fixed Required Capital 17
2.3 Life of Fixed Capital..17
2.4 Cost of Stock and Raw Materials ..18
2.5 Labour....18
2.6 Overhead Expenses....18
Section 3
ORGANISATION & MANAGEMENT PLAN
3.1 Form of Business.19
3.2 Organisational Structure.21
3.3 Pre-Operating Activities and Gantt chart..21
3.5 Pre-Operating Expenses.....24
3.6 Administrative Expenses.24
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Section 4
FINANCIAL PLAN
4.1 Capital Required....25
4.2 Financing Plan and Grant Requirement.....25
4.3 Profit and Loss Statement............26
4.4 Cash Flow Statement....28
4.5 Balance Sheet....30
4.6 Break-even Point (BEP) ...31
4.8 Return on Investment (ROI).32
4.9 Exit Plan...32
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EXECUTIVE
SUMMARY
1. Brief Description of the Business
Mveledzandivho Multi-Purpose Co-Operative Limited is an existing traditional clothing
manufacturing business. The business was established in 2009. It was started as a
community project. Its objective was to combine forces and individual sewing skills
around the village to come up with a commercially viable business. Its main purpose
was for job creation in Mukula village.
This business started with 35 people. Due to lack of infrastructure, equipment and
materials to produce stock, other people decided to leave. The business has now been
left with 9 dedicated individuals. They are currently operating in one mud hut made of
soil and grass. This building is in bad condition and is too small and as such it cannot
accommodate all staff. In 2012 the members decided legalise this business and
register it as a co-operative.
The main objective of this business plan is to obtain funding that will be used to
improve the business so that it can produce more products and make more profit. The
directors intend to increase products range by focusing on different products range thanonly on the traditional attire and beads. The new products range will be school
uniforms, 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.
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With this new products the business has targeted the following, schools, cleaning
companies, 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.
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 been working in this type of business for more than ten
years.
The market survey conducted has indicated that there are few companies that
manufacture these types of products around Thulamela municipality. The products
such as protective clothing, school uniforms and hospital gowns are essential to most
institution and this products are used daily. This means that they need to be replaced
every time. As essential products the demand of these products will never stop. This
cooperative is therefore positioning itself well in order to capitalise on the available
opportunities.
Another opportunity in this business is that the government strategy or BEE act
emphasise that the local black manufacturing companies be given preferences by all
government institutions.
2. Keys to success
Providing products which are on demand.
Keeping cost lower than all local suppliers by producing in higher volumes
Usingevery means available to satisfy customers.
Personal visit to all school in the targeted market area.
Setting prices slightly below the competitors.
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3. Financial Summary
The table below is a brief summary of the profit and Loss statement.
4. Business's Contributions to the Local Economy
Mveledzandivho Multi-Purpose Co-Operative Limited will contribute to local economy
through providing source of income to nine individuals and their families. It will also
result in healthy competition by forcing existing small individuals to 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 361,082 is needed. The owners have
proposed to finance this capital requirement by a grant of R 349,532 or 97% and the
balance R 11550 or 3% will be financed by owners. This grant amount will be used as
follow:
1 2 3
Sales 434 400 477 840 525 624
Net profit 20 548 24 230 28 280
Net Cash flow 105 791 146 289 190 836
Break-even Point % 92.5%
Particulars
Year
**Rate of Return in total investment is 9 years *
Particulars
Amoutnt
(Rand)
Building and Fencing 113 000
Furniture and Equipment 167 175
Electricity Installation 21 800
Materials for 2 Month 26 064
One Month operating expenses 21 493
Total amount needed from outside source 349 532
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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: traditional attire and beads, school uniforms, protective clothing, services
workers clothing, doctors and nursesgowns, work-suit for cleaners, contractors and
general workers. Below are the pictures showing some of the type of products to be
produced.
1.2 Reasons for choosing these products
These products are selected because they meet the requirements for the majority of
institutions and are used daily. Most of the companies or institutions purchase these
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products in bulk. These products are made from a high quality materials. The
advantage is that the cooperative will also be doing embroidery in house.
1.3 Competitors
Mveledzandivho Multi-Purpose Co-Operative Limited is facing competition from one
competitor, Chrystal Garments. Its factory location is in Shayandima Industrial Site and
it has two retail stores in Thohoyandou town. The company produces school uniforms,
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.
On traditional attires the cooperative is competing with a number of small scale
producers. These are found in areas such as Thohoyandou, Sibasa, Khubvi and
Tshilamba. There are also a number of people who are sewing at home. Majority of
these are sewing minwenda, mikhasi, traditional shirts and other forms of traditional
clothes.
1.4 Competitive Advantage
Mveledzandivho Multi-Purpose Co-Operative Limited will distinguishe itself from its
competitors through providing high quality products at reasonable prices. The ad-
vantage is that Mveledzandivho Multi-purpose cooperative is black owned. The new
BEE act requirements give preferences to local black own companies. Competitors do
not provide safety clothing whereas this cooperative will provide safety clothing.
Members of the cooperative will do personal visit to all institutions and companies. It will
build relationships and find out what customers need. Because of few competitors the
current suppliers put their prices very high. This cooperative will mark its prices slightly
below the competitorsprice. It will also offer bulk discount. By keeping the overhead
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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 for selling traditional garments.
1.5 Location
The business will is located at Mukula Village within Thulamela Municipality, Vhembe
District, Limpopo Province, South Africa. This location has been selected because of
the following reasons:
It is far from its competitors
It is closer to its targeted customers
It is also near to the owners homes.
1.6 Market Area
Although the factory is located at Mukula village, the business will distribute its products
to Vhembe district as a whole. e.g Hospital, universities, colleges, municipalities
Members will visit all hospital procurement to be listed in a database in the whole area.
The cooperative has targeted area such as Mukula and surrounding villages.
Mveledzandivho Multi-Purpose Co-Operative Limited plans to initially supply its
products in Vhembe District. Our future plan is to supply the whole country and other
African countries.
1.7 Targeted Customers
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The business main targeted customers are schools and Venda women who like
wearing traditional clothes. It will supply school uniforms and embroidery of name and
logos on the garments. 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 this products almost every day as uniform
for their general workers.
The other Customer group are current customers who are currently purchasing
traditional clothing and beads from the cooperative. These people purchase products
when they attend traditional wedding ceremony and others during their social clubs
such as Tshisevhesevhe. They like wearing traditional clothes when dancing to
traditional songs and sounds.
1.8 The Industry Overview
The market outlook for the selected products in Limpopo Province and elsewhere is
positive. This type of products are used almost every day. Protective and safety
clothing is mandatory in majority of work such as mining, electrical, construction and
cleaning. School uniforms are 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. These days people prefer to be identified through their
traditional clothes. This create a huge demand for both the traditional clothes and
beads.
1.9 Total Demand
The market survey indicated that the demand for traditional clothes is higher than sup-
ply. Some competitors indicated that they sometimes reject orders of people due to the
high load of work. The survey also indicates that half of our targeted market prefers
company name or logo engraved into their garments. The problem is that they are fail-
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ing to get them because of shortage of companies with the right equipment and ma-
chinery.
1.10 Market Share
There is a strong belief in occupying a greater market share because of the following
factors:
The demand is higher than supply,
Competitors are few
Current manufacturing can only cover less than 15 percentage of potential
customers
Competitors do no specialise with products made from specialised materials
Our production is as follows:
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.
Quantity
per Week
Quantity
per Month
Particulars
Venda Traditional Attire 4 16
Venda tradional beads 6 24
Protective Clothing and other related products 10 40
School Uniform 15 60
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1.11 Selling Price
The prices of the products are based on the cost plus margin and combining with what
the customers are willing to pay method. These costs take into consideration all
material, overheads costs, direct labour costs and other production costs. The
production cost increase per size and type of products but it is still very low.
1.12 Sales Forecast
The sales forecast is calculated by multiplying market share per prices and is indicated
this the table below:
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
satisfied customers who would have received high quality products at affordable prices.
Average
Particu lars Pr ice/item
Venda Traditional Attire 400R
Venda trational beads 150RProtective Clothing and other related products R 280
School Uniform 250R
Monthly
Sales 1 2 3
Venda Traditional Attire 6 400 76 800 84 480 92 928
Venda trational beads 3 600 43 200 47 520 52 272
Protective Clothing 11 200 134 400 147 840 162 624
School Uniform 15 000 180 000 198 000 217 800
Total 36 200 434 400 477 840 525 624
ParticularsYear
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Catalogue Sales.
The business will keep a catalogue with photos of all the products that are available. In
the catalogues there will be descriptions of all products and their features.
Personal Visits to customers
Members of the cooperative will visit all targeted business and institution in theirpremises and drop the brochures. The cooperative will also register with procurement
database for all government department and municipalities within the district.
1.14 Marketing Budget
The marketing budget will consist of travelling cost, roadshows, which can be done
three times every year. The monthly budget will be budgeted for the travelling cost to
market new customers.
1 2 3
Traveling to customers 300 3 600 3 960 4 356
Total 300 3 600 3 960 4 356
Particulars Month
YEAR
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Section 2
MANUFACTURING PLAN
2.1 Fixed Assets Required
2.3 Life of Fixed Capital and Depreciation
Particulars
Land and bu ildings Rental
Land - Available
Buildings 98 000
Fencing 15 000Total Land and Bu ildings 113 000 113 000
Furn iture and Equipment
5* Industrial Sewing Machines 39 000
2* Over-locker 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
167 175 167 175
Total Fixed Assets 280 175
Total Furniture and Equipment
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The lifespan of the fixed assets are as follows; this is based on supplier information.
Our depreciation will be on a straight line method.
The annual depreciation cost, assuming no scrap value, will therefore be:
2.4 Cost of Stock and Raw Materials (Rand Value)
The increase is estimated at 10% in all products and Services for the entire years .
2.5 Labour
Direct Labour
2.6 Overhead Expenses
Fixed Assets Lifespan (years)Annual
Depreciation
Furniture and Equipment 10 10%
Vehicles 5 20%
Depreciation Cost ccumulated Book Value
10% Furniture & Equipment 167175.2 16717.52 150 458
Annual Depreciation 16 718Monthly Deprecation 1 393
Monthly
Cost 1 2 3
Materials 13 032 156 384 172 022 189 225
Total 13 032 156 384 172 022 189 225
ParticularsYear
Particulars Amount R's
Labour 9 x 1 800R = 16 200R 16 200R
Total for Direct Labou r 9 16 200R 16 200R
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Overhead costs are monthly indirect cost of the business. The table below shows the
breakdown of categories of expenses.
Section 2
MANAGEMENT PLAN
3.1 Form of Business
The business has been established and registered as a co-operative. The following
are members of the cooperative: Mashudu Khangale Lorraine, Ndidzulafhi Eunice
Mudau, Tondani Mavis Tshinyani, Virginia Netshivhera and Takalani Florance Mu-
laudzi. The Legal name of the business is Mveledzandivho Multi-Purpose Coopera-tive Limited. The Management team is highly motivated, experienced and well quali-
fied.
3.2 Organisational Structure
Mashudu Lorraine Khangale will serve as the General Manager (Chairperson) and willbe responsible for the day-to-day running of the business.
Ndidzulafhi Eunice Mudau as the Finance Manager will be responsible for the
following:
1 2 3Electricity 1 200 14 400 15 840 17 424
Transport 1 800 21 600 23 760 26 136
Depreciation for Fixed assets 1 393 16 718 18 389 20 228
Total 4 393 52 718 57 989 63 788
MonthParticulars
YEAR
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evaluation of data pertaining to costs in order to plan budgets
evaluate financial reporting systems,
accounting,
collection procedures,
Investment activities,
Making recommendations for changes to procedures,
Operating systems,
Budgets,
Other financial control functions
Prepare operational and risk reports for management analysis.
Virginia Netshivhera as the Manufacturing/ Production Manager 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 companys policies and goals
Ndidzulafhi Eunice Mudau as the Marketing Manager and will be responsible for:
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studying competitors' products and services,
exploring ways of improving existing products and services,
increasing profitability,
identifying target markets and developing strategies to communicate with them.
Table 3.2 Organisation Chart
General Manager
(Mashudu LorraineKhangale)
Financial Manager
(Ndidzulafhi EuniceMudau)
ProductionManager
(Virginia Netshifhera
Shonisani)
Marketing Manager
(Ndidzulafhi EuniceMudau)
Bookkeeper /
secretary
(Outsourced)
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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. Construction the Factory - 6 weeks
5. Hiring labour - 1 days
5. Installing the equipment - 1 days
6. Purchasing raw materials - 1 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.
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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. Constructing the Factory
5. Hiring Labour
6. Installing the Equipment
7. Purchasing Raw Material
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3.4 Pre-Operating Expenses
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 incurred is the cost of communicating with supplier during
ordering stock or raw materials and during the need of repair.
The increase is estimated at 10% in all products and services for the entire years.
Market research 4 000
Supplier and Communication 750
Business Plan Preparation 6 800
Electricity Installation 21 800
Total 33 350
Particulars Amount
1 2 3
Telephone 100 1 200 1 320 1 452
Accounting/Bookkeeping Fees 400 4 800 5 280 5 808
Stationery 100 1 200 1 320 1 452
Total 600 7 200 7 920 8 712
Particulars MonthYEAR
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Section 4
FINANCIAL PLAN
4.1 Capital Requirement (Business Cost)
4.2 Financing Plan and Grant Requirement
Particulars Amount R's
(R )
Fixed Assets (step 2.1)
Land and Buildings 113 000Furniture and Equipment 167 175
Total Fixed Assets 280 175 280 175
Pre-Operating Expenses (step 3.4) 33 350
Working Capital
Value of 2 month of raw material (RM) & stocks (step 2.4) 26 064
Value of cash needed for operation. This will be the cost of 2
month of labour (step 2.5), overheads (step 2.6), marketing
budget (step 1.14) and administrative expenses (Step 3.5).
Less: Depreciation
21 493
Total Working Capital 47 557 47 557
Total Capital Requirement 361 082
Owners
Equity
Fixed Capital (in R )
Land and Buildings 113 000 113 000
Furniture and Equipment 167 175 167 175
Pre-Operating Expenses 11 550 21 800 33 350
Working Capital 47 557 47 557
Total 11 550 349 532 361 082
Percent 3% 97% 100%
Particulars Grant Total
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4.3 Profit and Loss Statement (one year)
Particulars Amount R's
Sales: x 12 Month (Step. 1.2) 434 400
Less: Operational Cost 403 502
Raw Materials: x 12 Month (Step. 2.4) 156 384
Labour : x 12 (Step. 2.5) 194 400
Overhead : x 12 (Step.2.6) 52 718
Gross Profit 30 898
Less: Operating Expenses 10 800
Marketing x 12 Month (Step 1.14) 3 600
Administrative Cost X 12 Month (Step 3.5) 7 200
Operating Profit 20 098
Less: Interest on Loan
Profit before Tax 20 098
Less: Tax of @
Net Profit After Tax 20 098
13 032
16 200
300
36 200
600
28%20 098
Month
4 393 Month
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3 YEARS PROJECTED INCOME STATEMENTS
1 2 3
SALES 434 400 477 840 525 624
Less: PRODUCTION 403 502 442 180 484 726
Raw materials 156 384 172 022 189 225
Labour 194 400 213 840 235 224
Overheads 52 718 56 318 60 278
GROSS PROFIT 30 898 35 660 40 898
Less: Operating Expenses 10 800 11 880 13 068
Marketing 3 600 3 960 4 356
Administrative Cost 7 200 7 920 8 712
OPERATING PROFIT 20 098 23 780 27 830
Less: Interest
NET PROFIT BEFORE TAX 20 098 23 780 27 830Tax@28%
NET PROFIT AFTER TAX 20 098 23 780 27 830
Accumulated Profit 20 098 43 879 71 708
ParticularsYears
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4.4 PROJECTED CASH FLOW STATEMENT FOR 3 YAERS (Rand)
Particulars
Period 1 2 3
CASH INFLOW
Equity 11 550 - - -
Borrowings 349 532 - - -
Cash Sales - 434 400 477 840 525 624
Other Income - - - -
Total Cash Inflow 361 082 434 400 477 840 525 624
CASH OUTFLOW
Pre-operating expenses 33 350
Purchase of fixed assets 280 175
Direct materials 156 384 172 022 189 225
Direct Labour 194 400 213 840 235 224
Factory/operational overheads** 36 000 39 600 43 560
Marketing 3 600 3 960 4 356
Administrative Cost 7 200 7 920 8 712
Interest expenses - 0Tax paid 0 0 0
Loan amortisation - 0 0 0
Total Cash Outflow 313 525 397 584 437 342 481 077
NET CASH INFLOW (OUTFLOW) 47 557 36 816 40 498 44 547
CASH BALANCE BEGINNING 47 557 84 373 124 871
CASH BALANCE ENDING 47 557 84 373 124 871 169 418
Pre-
Operatin
YEAR
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PROJECTED MONTHLY CASH FLOW STATEMENT (RAND)
Excludes depreciation expenses and amortisation of pre-operating expenses which are non-cash items.* Not equal to due to rounding.
Particulars
Period 1 2 3 4 5 6 7 8 9 10 11 12
CASH INFLOW
Equity (step 4.2) 11 550 - - - - - - - - - - - -
Borrowings (step 4.2) 349 532 - - - - - - - - - - - -Cash Sales (step 1.10) - 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200
Other Income - - - - - - - - - - - - -
Total Cash Inflow 361 082 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200 36 200
CASH OUTFLOW
Pre-operating expenses 33 350 - - - - - - - - - - -
Purchase of fixed assets 280 175 - - - - - - - - - - - -
Direct materials - 13 032 13 032 13 032 13 032 13 032 13 032 13 032 13 032 13 032 13 032 13 032 13 032
Direct Labour - 16 200 16 200 16 200 16 200 16 200 16 200 16 200 16 200 16 200 16 200 16 200 16 200
Factory/operational
overheads*
- 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000
Marketing - 300 300 300 300 300 300 300 300 300 300 300 300
Administrative Cost - 600 600 600 600 600 600 600 600 600 600 600 600
Interest expenses - - - - - - - - - - - - -
Tax paid - - - - - - - - - - - - -
Loan amortisation - - - - - - - - - - - - -
Total Cash Outflow 313 525 33 132 33 132 33 132 33 132 33 132 33 132 33 132 33 132 33 132 33 132 33 132 33 132
NET CASH INFLOW (-) 47 557 3 068 3 068 3 068 3 068 3 068 3 068 3 068 3 068 3 068 3 068 3 068 3 068
CASH BALANCE
BEGINNING
47 557 50 625 53 693 56 761 59 829 62 897 65 965 69 033 72 101 75 169 78 237 81 305
CLOSING BALANCE 47 557 50 625 53 693 56 761 59 829 62 897 65 965 69 033 72 101 75 169 78 237 81 305 84 373
Pre-
O eratin
MONTH
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4.6 3 YEARS PROJECTED BALANCE SHEET
Particulars
Period 1 2 3
ASSETS
Current Assets
Cash 47 557 84 373 124 871 169 418
Raw Materials Inventory - - -
Accounts Receivable -
To tal Curren t A ssets 47 557 84 373 124 871 169 418
Fixed Assets
Land and Buildings 113 000 113 000 113 000 113 000
Furniture and Equipment 167 175 167 175 167 175 167 175
Less: Accumulated -16 718 -33 435 -50 153
To tal Fixed A ssets 280 175 263 458 246 740 230 023
Other Assets
Pre-operating expenses 33 350 33 350 33 350 33 350
Goodwill
Patents
TOTAL ASSETS 361 082 381 181 404 961 432 791
Liabilities
Current Liabilities
Accounts Payable
Loans Payable
Total Current Liabilities
Long Term Liabilities
Loans Payable - - - -
Total Long Term Liabilities - - - -
OWNERS EQUITY
Capital Beginning 11 550 11 550 11 550 11 550
Grant Fund 349 532 349 532 349 532 349 532
Accumulated Capital 20 098 43 879
Add: Net Profit after Tax 20 098 23 780 27 830
Less: Withdrawal/Dividends
Total Owners Equity & Fund 361 082 381 181 404 961 432 791
TOTAL LIABILITIES AND 361 082 381 181 404 961 432 791
Pre-
Operatin
Year
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4.7 Break-even Point (BEP)
The break-even point can be calculated as follows
Particulars Amount (R's)
Annual Sales (step 4.4) 434 400
Annual Fixed Costs:
Factory Overheads Cost 52 718
Labour 194 400
Administrative Cost 7 200
Annual Interest
254 318 254 318
Annual Variable Costs:
Raw materials 156 384
Marketing 3 600
159 984 159 984
BEP (Annual Sales) = Annual Sales (step 4.4) X Annual Fixed Costs:
Annual Sales (step 4.4) - Annual Variable Costs:
= X
-
=
434 400R 254 318R
434 400R 159 984R
402 584R
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4.8 What is the return on investment (ROI)?
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.
BEP (Percentage) = Annual Fixed Costs: x
Annual Sales (step 4.4) - Annual Variable Costs:
= x
-
254 318R 100
93%
434 400R 159 984.00R
100
The ROI for this business =
= X (Step 4.4)
(Step 4.1)
6%
100
Annul Net profit
Total Capital Requirement
20 098R
R 361 082
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