mveledzandivho co-operative business plan final

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-_BvlskdKenUZw


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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


(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)


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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30

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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mveledzandivho co-operative business plan final

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