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Table of Contents

1.0 Executive Summary.....................................................................................................................1

Chart: Highlights...........................................................................................................................2
1.1 Keys to Success.........................................................................................................................2
1.2 Objectives....................................................................................................................................3
1.3 Mission...........................................................................................................................................3
2.0 Company Summary......................................................................................................................4
2.1 Company Ownership................................................................................................................4
2.2 Company Locations and Facilities.......................................................................................4
2.3 Start-up Summary....................................................................................................................4
Table: Start-up...............................................................................................................................4
Table: Start-up Funding..............................................................................................................5
Chart: Start-up..............................................................................................................................6
3.0 Products............................................................................................................................................6
3.1 Product Description..................................................................................................................6
3.2 Competitive Comparison........................................................................................................7
3.3 Sales Literature..........................................................................................................................7
3.4 Technology...................................................................................................................................7
3.5 Future Products..........................................................................................................................8
4.0 Market Analysis Summary.........................................................................................................8
4.1 Market Segmentation..............................................................................................................8
4.2 Target Market Segment Strategy........................................................................................9
4.2.1 Market Needs......................................................................................................................9
4.2.2 Market Trends.....................................................................................................................9
4.3 Industry Analysis.....................................................................................................................10
4.3.1 Competition and Buying Patterns.............................................................................10
4.3.2 Main Competitors............................................................................................................10
5.0 Strategy and Implementation Summary...........................................................................11
5.1 SWOT Analysis.........................................................................................................................12
5.1.1 Strengths............................................................................................................................12
5.1.2 Weaknesses.......................................................................................................................12
5.1.3 Opportunities....................................................................................................................12
5.1.4 Threats................................................................................................................................12
5.2 Marketing Strategy.................................................................................................................12
5.2.1 Pricing Strategy...............................................................................................................13
5.2.2 Promotion Strategy........................................................................................................13
5.2.3 Distribution Strategy......................................................................................................14
5.2.4 Positioning Statement...................................................................................................14
5.3 Sales Strategy..........................................................................................................................14
5.3.1 Sales Forecast..................................................................................................................15
Chart: Sales Monthly.............................................................................................................15
Table: Sales Forecast.............................................................................................................15
6.0 Management Summary.............................................................................................................16
6.1 Organizational Structure......................................................................................................16
6.2 Management Team.................................................................................................................16
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Table of Contents

6.3 Personnel Plan..........................................................................................................................17

Table: Personnel..........................................................................................................................17
6.4 Training........................................................................................................................................17
6.5 Feedback and Control............................................................................................................18
6.6 Corporate Social Responsibility.........................................................................................18
7.0 Financial Plan................................................................................................................................19
7.1 Important Assumptions........................................................................................................20
Table: General Assumptions...................................................................................................20
7.2 Key Financial Indicators........................................................................................................21
Chart: Benchmarks....................................................................................................................21
7.3 Break-even Analysis...............................................................................................................22
Chart: Break-even Analysis....................................................................................................22
Table: Break-even Analysis.....................................................................................................22
7.4 Revenue Generation...............................................................................................................23
7.5 Expense Forecast....................................................................................................................23
7.6 Projected Profit and Loss.....................................................................................................24
Chart: Profit Monthly.................................................................................................................24
Table: Profit and Loss................................................................................................................25
Chart: Gross Margin Monthly.................................................................................................25
7.7 Projected Cash Flow...............................................................................................................26
Chart: Cash...................................................................................................................................26
Table: Cash Flow.........................................................................................................................27
7.8 Projected Balance Sheet......................................................................................................28
Table: Balance Sheet.................................................................................................................28
7.9 Business Ratios........................................................................................................................28
Table: Ratios.................................................................................................................................29
8.0 Controls...........................................................................................................................................30
8.1 Financial Risks and Contingencies....................................................................................30
8.2 Implementation.......................................................................................................................30
Table: Sales Forecast...........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................6

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Baby Nappies World

1.0 Executive Summary

The disposable nappy, an invention that revolutionized the baby care industry, exists today as a
practical solution to the problem of dirty, smelly, wet baby bottoms throughout the world.
We are on the verge of entering a lucrative market in a growing country. The current population
fertility rate estimated at 4.2 children1, and increased admissions in hospitals and clinics
presents an opportunity for Baby Nappies World to enter and penetrate the baby nappies and
sanitary pads market. Baby Nappies World is poised to take advantage of this growth rate and
minimal local competition, with a dedicated and experienced staff, excellent order procurement,
and effective management and marketing. The initial intention will be to provide nappies and
sanitary pads to institutions and organisations including hospitals and wholesalers throughout
Botswana.
Initial plans are to produce approximately 300 diapers per hour 5 days a week, utilizing an 8
hour working day, enabling us to produce a total of 48,000 diapers per month. As time
progresses and we become more efficient in their production this figure should rise to
approximately 56,000 per month. This would be for the diapers only though we do intend to
also produce sanitary pads, though on an order basis.
We realise the fact that for us to prosper in this relatively untapped market, there is need to be
flexible and responsive, to delight our customers by providing them with what they want, when
they want it and in the exact quantity. Our primary goal will be to establish and strengthen our
existence in the market, which will be bestowed by the business environment in which we
function.
Our marketing strategy will be based mainly on ensuring that customers know about our
existence and the products we produce. Hence our intention is to make the right information
available to the right target customers. This will be done through implementing a market
penetration strategy that will ensure that we are well known and respected in the market. We
will ensure that our products' prices are favorable relative to our South African counterparts'
prices, and that our potential customers appreciate the quality of our products. However, the
prices we charge will also take into consideration the cost of production and distribution so as to
ensure that we remain viable and operational. We appreciate the fact that the majority of
wholesalers and intermediaries that order our products perceive South African products to be of
higher quality and reliability. To counteract this there will be need for us to not only aggressively
market the high quality of our products, but also to go out of our way in serving our customers
and clients so as to establish a good long-term relationship.
Our target markets will primarily constitute institutions, wholesalers and other intermediaries
who often order in bulk for their customers, and concerned individuals. Hence there will be
need to network with the various decision-makers/order-makers to ensure we receive orders for
our products.
We intend to compensate our personnel well, so as to retain their invaluable expertise and to
ensure job satisfaction and enrichment through delegation of authority. We intend to achieve
optimal productivity whilst realizing the full potential of each of our employees through
provision of health care, generous profit sharing, plus a minimum of three weeks vacation.
Awards will be given out to outstanding individuals for hard work and production so as to not
only show our appreciation, but to instill a sense of fun into the work and promote the
maintenance of high standards.

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Baby Nappies World

We project sales to increase from more than P748,800 the first year to more than P1,075,200
the second, and P1,142,400 in the third year.
Ultimately the attractiveness of our venture lies with the fact that customers will choose our
products above those of competitors because of the relatively lower prices as well as their high
quality. Hence Baby Nappies World's ongoing initiatives will be to drive sales, market share and
productivity so as to provide additional impetus towards attainment of the corporate goals and
objectives.
1

Courtesy: Central Statistic Office

NOTE: All currency figures in this plan are in Botswanan Pula (P).

Chart: Highlights

1.1 Keys to Success

1. Timely response to customers' requests: We cannot afford to delay our clients for
whatever reason, as this will have a negative bearing on our image and reputation,as well
as impacting future business. Hence we need to be continually communicating with the
client, so as to ensure that products are delivered on time and according to the customer's
specifications. This will go a long way towards instilling a sense of trust in our ability and
establishing long-term relationships.
2. Excellence in fulfilling the promise: We intend to produce and provide products of
uncompromised quality to our customers, and excellent service. This is so as to meet their
needs and standards. We acknowledge the fact that the company's success will be based on
timeous response to customer orders and hence we intend to set high standards and work

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Baby Nappies World

procedures.
3. Assembly Technology: To ensure quality diapers and sanitary pads it is essential to utilize
the latest and most efficient production machines. We also intend to keep abreast with
technological developments, which will ensure we gain and maintain a competitive
advantage utilizing the latest production techniques.
4. Networking: As the majority of our customers will be wholesalers and intermediaries there
is need to effectively network with the various decision-makers and order-makers to ensure
a ready market.
1.2 Objectives
Our business strategy will revolve around the need to provide quality disposable baby nappies,
geriatric/adult diapers and sanitary pads to the various institutions and wholesalers that need
them, in the process fully satisfying their requirements. This shall be undertaken through
adequate training and recruitment of a professional team dedicated to providing and catering
the customer's needs.
We intend to ensure that our marketing campaign increases the knowledge of our products and
services to the various market segments we shall be targeting. This is particularly so with
organisations increasingly looking at obtaining quality products at the lowest prices as they
strive to increase profitability.
We also intend to have well laid out introductory letters and other promotional material that will
enable clients to have an understanding of the types of products we offer and advantages of
utilizing them. In addition well-done company profiles and business cards often have a
triggering effect on clients contemplating ordering our products. Hence this will undoubtedly
generate increased sales of our products.
In summary we intend to attain the following objectives:

Continuously provide high quality diapers and sanitary pads on time and on budget.
Develop enthusiastically satisfied customers all of the time.
Ensure economical use of resources from capacity utilization, minimising inventory/stock
and low cost, and high quality materials.
Contribute positively to our communities and our environment.
Establish a market presence that assures short-term and long-term profitability, growth and
market share, which will ultimately convert to business success.

1.3 Mission
We are fully committed towards the production and delivery of high quality disposable baby
nappies, geriatric/adult diapers and sanitary pads to the respective communities. Internally we
intend to create and nurture a healthy, productive, satisfying and enjoyable environment, in
which our employees are fairly compensated and encouraged to respect the customers'
requests and the quality of the products we intend to produce. We seek fair and responsible
profit, enough to keep the company financially healthy for the short and long term, and to fairly
remunerate employees for the work and effort.

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Baby Nappies World

2.0 Company Summary

The primary nature of the business is to manufacture and sell disposable baby nappies,
geriatric/adult diapers and sanitary pads. Our intention is to produce disposable nappies that
will meet all the requirements of a quality standard, particularly considering that the majority of
those currently on the market are imported from South Africa.
2.1 Company Ownership
Baby Nappies World is a company incorporated at the Registrar of Companies through the
foresight and vision of Mrs. X and Mr. X. Though relatively new, the directors realize their
Company's vast potential market and opportunity for growth given implementation of the
appropriate strategies, aided by the necessary finances.
2.2 Company Locations and Facilities
At present the business is located at Plot Number 5767, Partial, Gaborone. However, as time
progresses and the business expands, the intention will be to move into a more accessible and
attractive commercial area. This regardless of the fact that our type of business is not too
dependent on office location and size, with the quality of our products being the primary
concern.
2.3 Start-up Summary
Total start-up expenses covered (including legal costs, business plan compilation, stationery and
related expenses) came to approximately P5,000. Start-up assets in the company's possession
include a vehicle, computer, printer and fax, the last of which is relatively new.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance
Rent
Research and development
Expensed equipment
Other
Total Start-up Expenses

P1,000
P100
P900
P0
P1,000
P1,000
P0
P1,000
P0
P5,000

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

P37,043
P3,680
P0
P54,277
P95,000

Total Requirements

P100,000

Page 4

Baby Nappies World

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

P5,000
P95,000
P100,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

P57,957
P37,043
P0
P37,043
P95,000

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

P0
P0
P0
P0
P0

Capital
Planned Investment
Investor 1
Investor 2
Other
Additional Investment Requirement
Total Planned Investment

P100,000
P0
P0
P0
P100,000

Loss at Start-up (Start-up Expenses)

Total Capital

(P5,000)
P95,000

Total Capital and Liabilities

P95,000

Total Funding

P100,000

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Baby Nappies World

Chart: Start-up

3.0 Products
Baby Nappies World intends to manufacture and sell disposable baby nappies, geriatric/adult
diapers and sanitary pads. These products shall be of high quality standard so as to ensure
customer satisfaction and meet all the customers' requirements.
3.1 Product Description
Baby Nappies World initially intends to focus on the production of the following products:
1. Baby Nappies
The disposable nappy may be described as an invention that revolutionized the baby care
industry. It exists today as a practical solution to the problem of dirty, smelly, wet baby
bottoms throughout the world. The vast amount of births here in Botswana dictates that the
baby nappy is very much in demand, and that demand continuously increasing. With this in
mind we intend to produce a quality nappy. Our diaper will have (discussion omitted).
2. Geriatric/Adult & Sanitary Pads
These are mainly used in medical institutions such as hospitals and clinics where patients
often require disposable pads to overcome the problem of dirty, smelly and wet bottoms.
This is particularly so as these adult patients are incontinent and often do not have the
ability to control their bladder. The (discussion omitted).

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Baby Nappies World

3.2 Competitive Comparison

There is very little competition from local companies manufacturing products similar to our
main products. However considering the pace of change and current growth rate of the
economy luring companies into the market, this may be short-lived. Hence there will be a need
to not only firmly establish ourselves in the market, but also strongly differentiate ourselves
from these other businesses. However on a broader scale our competition comes in several
forms:
1. The most significant competition are South African manufacturers of diapers and sanitary
pads including reputable brands such as X and Y, which have a well established distribution
network in place. This network ensures that their products are widely available on the
market. Our key advantages over these producers will be our order response time as well as
lower costs, which will be attractive to many of our prospective clients.
2. Existing local manufacturers of diapers and sanitary pads are few with research indicating
that there are currently two in Gaborone and one in Francistown, though additional
information regarding their products and operations were still being collected during
compilation of this plan.
3. An existing textile company is also contemplating entering the baby nappies market.
An analysis of competition is provided in the competition section of this plan.
3.3 Sales Literature
The business will begin by formulating letters of introduction establishing its position on the
market, as well as the products it manufacturers. These letters will be developed as part of the
start-up expenses together with the business cards and the Company Profile, mainly for the
large organisations and institutions. Complementary coupons are also intended so as to raise
awareness of the company and its products.
Hence literature and mailings for the initial market forums will be very important.
3.4 Technology
The machine responsible for the manufacturing process is a new and unique concept. It is
capable of producing different sized nappies, that is, small, medium and large geriatric/adult
and sanitary pads. It is capable of producing 350+/- diapers per hour, which converts to
2,500+/- per day, or 8,000+/- sanitary pads per day.
The one certainty in our industry is that technology will continue to evolve and develop,
changing the quantity that can be produced at any one time, as well as its quality. Our aim will
be to be aware of the implications of this new technology and utilize it in our existing
framework where possible. However our initial aim will be to pay back the initial cost of the
machine.

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Baby Nappies World

3.5 Future Products

In putting the company together we have attempted to offer enough products to allow us to
always be in demand by our customers and clients. The most important factor in developing
future products is market need. As time progresses we intend to produce towels, t-shirts and
sportswear. However, we should stress that in doing so, we will strive to ensure that it is
compatible with the existing products and company personnel.
4.0 Market Analysis Summary
The current drive and emphasis by the government on diversification of the industrial base
away from the minerals sector presents an opportunity for Baby Nappies World to make a
valuable contribution towards achieving this goal. Having undertaken a thorough and
comprehensive research of the market we realized that there was a vast opportunity for a local
manufacturer of diapers and pads, with less than a handful currently on the market.
Aware of the fact that operating in such a market is largely dependent on good networking, we
intend to establish networks and strategic relationships with various wholesalers, clinics and
hospitals to ensure a steady stream of orders. In so doing we intend to ensure that the
products we produce are of extremely high quality and fully serve their purpose. Our initial
overall target market share shall be 10% of the market, mainly focusing on the wholesalers and
organisations in Botswana.
We appreciate that entering such a market is not a 'bed of roses' and will require us
establishing strong networks and links with several organisations and institutions as outlined
previously. Hence we intend to implement an aggressive marketing strategy, well supported by
the other business functions. The above prognosis influenced our decision to enter the diaper
and sanitary pad manufacturing industry.
4.1 Market Segmentation
We will be focusing on wholesalers, academic institutions, hospitals and clinics that either sell or
utilize our intended products. We also intend to focus on government tenders for our diapers
and sanitary pads.
Our main target market is large enough to order from us and ensure that we are kept busy
meeting their orders. Though we do not intend to fully depend on them, they shall constitute
our 'core' market. One of our intentions will be to offer organisations an attractive alternative to
South African companies mainly marketing our lower costs and shorter order fulfillment time.

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Baby Nappies World

4.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making our products available to the right
target customer. We will ensure that our products' prices take into consideration organisations
order-makers' budgets, and that these people appreciate the quality of our products, are aware
our products exist,, and know where to order them. Our low production costs, which will
naturally be reflected in lower prices for our products, will ensure that we have very good
opportunities to win hospital, clinic, and institution tenders for our products, besides obtaining
orders from all the other markets including wholesalers, chemists, informal traders and
supermarkets we shall be targeting.
We realize the need to focus our marketing message and our product offerings. We need to
develop our message, communicate it, and make good on it. This shall be undertaken in order
to establish ourselves on the market and long-term relationships.
4.2.1 Market Needs
Baby Nappies World will set out to provide high quality disposable baby nappies, geriatric/adult
diapers and sanitary pads that will facilitate the hygienic and easier changing of individuals,
both adult and children. The quality of raw materials and assembly technology we shall utilize
will be evident in our products, serving to enhance the appearance of our customers, in turn
adding to their comfort. The large market is due to the fact that admissions are increasing at an
enormous rate in hospitals and clinics resulting from increased diseases and infections, as well
as the increase in the population growth rate.
We understand that our target markets need more than just something that absorbs. Our target
customer wants something that absorbs as well as being hygienic, comfortable, easy to use and
of good quality. Price also plays an important part in the purchase decision.
4.2.2 Market Trends
Botswana currently has one of the fastest population growth rates in the world, resulting in a
population of over 1.6 million now compared to just 600,000 in 19711. By 2021 the workforce
between 25-59 years old is expected to increase from around 500,000 to over 1 million.
However, a drop in the fertility rate is anticipated because of increased opportunities and better
education. In 1981 Botswana women had an average of 7.1 children, in 1991 they had 4.2
children and this is forecast to fall below there in the next 10 years. This is causing a shift in the
demographic structure of the population, from a situation where over 50% of the population are
under 19 years old, to one where more of the population is of working age. As a result the
dependency ratio is likely to fall, resulting in increased household savings. The current
population growth rate shows that there is a demand for diapers and nappies in households,
particularly considering the increase in the workforce prompting mothers to stock diapers,
especially disposables, as they are easier and faster to handle.
1

Source: Central Statistics Office

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Baby Nappies World

4.3 Industry Analysis

Industry competition information appears in the following subtopics.
4.3.1 Competition and Buying Patterns
The key element in service utilization decisions made at the company's client level is trust in the
reputation and reliability of the firm. The most important factor in this market will be the quality
of the product. Unlike our competitor's nappies and pads, ours are going to have double the
absorbent super gel making our absorbency superior to most top brands. This converts
into fewer diapers and pads being used per day, encouraging customers to order our products.
4.3.2 Main Competitors
There are currently few local companies competing in our market niche. However upon closer
research it was identified that South African products constitute approximately 70% of the
market, dominating the market. Hence we intend to market ourselves as a local quality
manufacturer of diapers and pads in such a way that with time customers will choose our
products over competitors' on the basis of our lower costs, faster order fulfillment times and
high quality. The following were identified as our main local competitors:
1. X
Located in Francistown, X, also known as N, specializes in the manufacture of baby napkins,
bath and hand towels, face and wash cloths, beach towels, bath sheets and waffle gowns. With
a large share of the northern market, mainly due to the large distance between Francistown
and South Africa, N is an established player on the market and was rated as the best performer
in the textile sector in 1999. It has had tremendous growth in a short time, with state of the art
machinery currently in place.
During 1999 the company pursued the European markets with employment rising to 340
people. It has a well-coordinated sales office, which ensures orders are met and delivered on
time, as well as a professional sales staff that ensures customer inquiries are well handled. Its
customer base is largely from South Africa with few local customers. Prices are extremely
competitive with a pack of four black diamond napkins (70x70cm) selling for P27.08. Though
the local orders are few they tend to be of large amounts. It obtains most of its raw materials,
including yarn from Zimbabwe, with the actual weaving being done in the factory. Transport is
normally provided for bulk orders of above P2,500.00 throughout Botswana taking four weeks
at maximum to deliver the order. The actual delivery time often depends on whether the stock
is available in-house. The company is an investment product of B, with a considerable degree of
financial and technical backing.
2. Y
Located in Gaborone West, Y specializes in the manufacture of baby napkins, towels, face
cloths, tea towels and dish cloths. It has a large warehouse whose logistics/operations are well
organised, coordinated and closely supervised. Prices are extremely competitive due to the
above-mentioned factors with baby napkins selling at approximately P4.00 (70x70cm); Infant
napkin approximately P3.00 (60x60cm) and a printed baby napkin selling at P6.00 (70x70cm).
It targets both retailers and consumers ensuring a large customer base.

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Baby Nappies World

3. Z
Located in Tlokweng Industrial, Z specializes in the manufacture of baby napkins, towels, face
cloths, dishcloths, swabs and other textiles.
4. K
Located in Tlokweng, K intends to go into manufacturing of baby napkins in bulk in the near
future. It currently has the capacity to do so and manufactures face cloths and dish towels, all
for the South African market. It employs 145 people and is also an investment product of B.
5.0 Strategy and Implementation Summary
Baby Nappies World intends to win and maintain customers by providing products that add
value in terms of price, quality, safety, availability and functionability, and are supported by a
dedicated, well-trained team. This shall be important to the successful implementation of our
overall strategy and hence the need to ensure we are focused and working harmoniously
towards attainment of the goals and objectives. We initially intend to be focusing on satisfying
the local market.
Our marketing strategy emphasises focus. We are a new company and hence must focus our
efforts towards informing customers of our existence and the products we are able to supply.
Initially Baby World Nappies will focus on the local market before contemplating entering the
regional market. This is mainly due to our limited resources and the need to instill confidence in
our products as well as business operations. The target customers will include key decisionmakers and order-makers in hospitals, clinics, wholesalers and informal traders, who often
order or recommend on behalf of the whole organisation, the aim being to obtain an initial
order and fully satisfy the customer from then on. Hence:

We intend to focus on delivering quality products at affordable prices that in turn will
produce good referrals, which can then generate revenue.
We intend to build image and awareness through consistency and distinctiveness in our
order fulfillment.

Our strategy is to grow the business by nurturing clients and establishing good one to one
relationships with them. All criteria from customer satisfaction, order fulfillment, price
competitiveness to staff attitudes are to be looked at thoroughly in the initial stages so as to
identify areas of improvement. To attain low lead times (the time it takes to meet orders) we
need to ensure that all functions are communicating properly and formally, using valid and
accurate data to derive achievable plans and schedules for all stages of procurement,
manufacturing and delivery.
Baby Nappies World will develop new channels of distribution as the company grows. Its plan to
become a nationally known brand may be pushed forward by entering into contracts with the
numerous clinics and hospitals throughout the country, such that it gives Baby Nappies World
exclusive access to the relatively remote areas in the country.

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Baby Nappies World

5.1 SWOT Analysis

We shall be in a highly lucrative market in a growing economy. We foresee our strengths as the
ability to respond timeously to customer's orders and provide them with the correct quantity.
Our key personnel will be well trained in the actual production of our products so as to ensure
on time deliveries to the client. This will go a long way towards penetrating the market. Below
are the summarized strengths, weaknesses, opportunities and threats.
5.1.1 Strengths

Relationship selling: We intend to get to know our customers, one on one. Our direct
sales efforts will seek to maintain a relationship with our customers.
Diversified customer base: We intend to obtain orders for our products from a wide
customer base. This will ensure lack of dependency on one customer.
Low production costs: The costs of our products will be approximately a third less than
the famous brand names and end user prices.

5.1.2 Weaknesses

A limited financial base compared to our South African counterparts.

The introduction of new organisational practices and personnel who have not previously
worked together presents a challenge to the organisation.
Our infancy dictates that wholesalers and other intermediaries might be skeptical about our
products.

5.1.3 Opportunities

Service. As our intended target markets are in relatively accessible areas we intend to be
able to meet their requirements in the shortest possible time.
Current drive by government towards encouraging the participation of indigenous
entrepreneurs and diversification of the economy presents an opportunity that we may fully
utilize.
Presently there is no reliable local manufacturer of diapers and sanitary pads, with less than
a handful currently on the market.

5.1.4 Threats

The "Foreign is good, local is poor" belief may present a difficult hurdle to be overcome.
Existing competition, both local and foreign. Wholesalers and institutions may express
satisfaction with their current diapers and sanitary pads.
The possibility of other start up diaper/sanitary pad manufacturing companies generated by
healthy economic growth, establishing in the market.

5.2 Marketing Strategy

We intend to implement a progressive marketing strategy. In terms of marketing we intend that
our name and products are marketed on an extensive basis to ensure that customers are aware
of our existence. In price, we intend to offer reasonable and competitive prices in comparison to
South African competitors and we need to be able to sustain that. Our marketing will strive to
ensure that we establish long relationships with clients.

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Baby Nappies World

5.2.1 Pricing Strategy

Baby Nappies World's products will be competitively priced in relation to its South African
competitor's products. Due to the introductory nature of our products we intend to implement a
penetration pricing strategy which will ensure that potential customers are attracted by our
lower prices, up until our products are fully appreciated on the market, especially in terms of
their quality. We will initially charge PX per nappy. However this will dictate that our costs are
prudently kept so as to ensure our financial goals come to fruition.
5.2.2 Promotion Strategy
The promotion strategy shall initially revolve around informing customers of our existence, the
products we produce, and how to order them. The intention will be to highlight the following
key benefits of ordering our products instead of competitors, including:

Our lower production costs which will convert to lower order prices.
Quality products able to compete with the top brands.
Faster order fulfillment times.

We intend to be well known by all our stakeholders in particular wholesalers, hospitals and
other such institutions that may utilize our products, as well as informal traders. Hence we shall
leverage our presence using introductory letters, brochures and other sales literature. We
intend to spread the word about our business through the following:
1. Personal Selling. Undoubtedly customer solicitation face-to-face will be our most powerful
form of promotion mainly due to the fact that our products are mainly ordered by
individuals in organisations and institutions. Its flexibility will enable us to give our
customers concise details of what we have to offer and the benefits of using our products.
Another important determinant in utilizing personal selling is the fact that we are relatively
new on the market. As such potential customers/clients will to a certain degree be skeptical
towards our products and their efficacy.
2. Advertising. In view of the fact that we are new on the market we intend to undertake
adequate advertising of our name and products we offer. This is to instill awareness and
knowledge of our existence in the market place, which hopefully shall convert into market
share. A constant look out will be made of any special editions in the local newspapers,
which may provide an opportunity for us to advertise our products and business name.
3. Direct Marketing. This will be used to a limited extent in the form of telemarketing and
informing potential customers and obtaining referrals where possible. In the case of
telemarketing it will involve our targeting potential customers of our products and informing
them of our existence. We may then arrange for an appointment with the respective
decision-maker/order-maker, with the intention being to encourage them to order our
products.
4. Events. We intend to attend trade shows and exhibitions to increase awareness of our
products and services. These events will also enable us to interact with potential clients who
may decide to order our products. Trade shows that instantly come to mind include
Botswana International Trade Fair (BITF) and BITEC, though the latter might not be as
important as the former.

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Baby Nappies World

5.2.3 Distribution Strategy

Our products shall initially be mainly sold through personal selling and referral business, with
relationships and customer experience being, by far, the most important factor. Relationships in
this regard means establishment of links with the various wholesalers, hospitals and clinics
which often order or require our products for their customers. Invariably the experience a
customer has with our products will go a long way toward influencing the intermediary to
continue to order our products, and whether they should refer their friends to order our
products. To this end we intend to ensure we provide a quality product with superior
absorbency and comfort. Hence we initially intend to use the following channels: (discussion
omitted).
5.2.4 Positioning Statement
We intend to position ourselves as a desirable alternative source of high quality disposable baby
nappies, geriatric/adult diapers and sanitary pads. This shall be undertaken through use of high
quality raw materials and production processes so as to ensure the efficient delivery of quality
products. The product strategy will also be based on quality, combined with making the product
easily available to the customers. An important competitive edge will be our assembly strategy,
which will be based on good quality, such that production and delivery are not only a pleasure,
but also a feature that enhances the sense of quality and perception by clients. Our faster
delivery, relative to our South African counterparts, will also serve as an important competitive
advantage on the market.
Through our lower prices, made possible by reduced local delivery charges, we intend to attract
a large portion of the market, both directly and indirectly through referrals.
5.3 Sales Strategy
For the short term at least, the selling process will depend on personal selling/networking and
advertising to inform potential customers about the products we offer and the benefits of
utilizing our products. Our marketing does not intend to affect the perception of need as much
as knowledge and awareness of the product category.

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Baby Nappies World

5.3.1 Sales Forecast

Sales forecast information is presented in the chart and table below.

Chart: Sales Monthly

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Nappies, diaper, pads

Other
Total Sales

P748,800
P0
P748,800

P1,075,200
P0
P1,075,200

P1,142,400
P0
P1,142,400

Direct Cost of Sales

Nappies, diaper, pads
Other
Subtotal Direct Cost of Sales

Year 1
P361,920
P0
P361,920

Year 2
P389,760
P0
P389,760

Year 3
P389,760
P0
P389,760

Sales

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Baby Nappies World

6.0 Management Summary

Our human resources strategy shall constitute an important element in realizing our business
objectives and goals. By having enthusiastic, capable and motivated staff we intend to meet
customers' order fulfillment times and ensure their satisfaction with our products and service.
This will also ensure that we build the competitive advantage of being able to comprehensively
meet our customers' needs. There will be need to evaluate jobs and remuneration packages
against market benchmarks to employees for their agreed and set out tasks so as for ensure
they are competitive.
6.1 Organizational Structure
Baby Nappies World shall be managed primarily by the directors/owners. The company will
engage a non-formal functional organisation structure whereby people shall be focusing on their
prime area of expertise. A non-formal structure is flexible and responsive to the market
dictates, enabling the company to delight customers by providing them with what they want,
when they want it and faster than the competition. In engaging this organisation structure we
intend that there is open communication between all personnel at all levels.
As the company grows there will be more structure to the organisation, with new employees
being assigned a supervisor or subordinate. When the company is at its full staff potential, it
will operate as any closely held organisation, but maintain the personal interest in each
employee's personal and family welfare and their contributions to the business.
6.2 Management Team
The founders of Baby Nappies World are passionate about the activities it will promote and offer
on the market. Management style will reflect the participation of the directors/shareholders. As
outlined previously we do not intend to be very hierarchical especially considering our size and
need to respond timeously to customers' orders. Management's ongoing initiatives will include
driving sales, market share and productivity. Please find below a brief outline of the directors'
work experience and qualifications. (discussion omitted)

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Baby Nappies World

6.3 Personnel Plan

We believe this plan meets the commitments of our mission and business objectives. We intend
to grow into a large organisation, though in doing so ensure that we wish to stay responsive to
customers orders and requests. We want the company to stay lean and flexible so that we can
respond to our markets' needs quickly. As we expand and increase in size we do expect to
increase our personnel.
Baby Nappies World recognises that our employees contribute fundamentally to the Company's
long-term prosperity, acknowledging our obligation to remunerate them competitively. We
intend to compensate our personnel well, so as to retain their invaluable expertise and to
ensure job satisfaction and enrichment through delegation of authority. Our compensation will
include a competitive salary, generous profit sharing, plus a minimum of three weeks vacation.
As time progresses we intend to enhance our capacity to attract and retain people of quality,
inter alia, through benefits such as housing and family education grants.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

All departments
Other
Total People

P43,824
P0
7

P76,174
P0
10

P104,661
P0
12

Total Payroll

P43,824

P76,174

P104,661

6.4 Training
At the onset training shall be obtained from Q, the suppliers of the manufacturing equipment, in
the actual operations of the machines. Thereafter in-house training shall be undertaken. This
training will not only include product and technical aspects, but also expand to give much
greater knowledge of customers, market trends, products, new technology aids, and time
management amongst other such variables. This is to ensure that we are continuously able to
anticipate our markets needs-a proactive approach, which is so essential if we are to gain and
maintain a competitive advantage on the market.
External training will be conducted, mainly in South Africa with reputable organisations to stay
aware of the latest products and services on the market, and how to install or maintain them.
This will also ensure that our personnel are able to meet the high standards, of these
organisations.

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Baby Nappies World

6.5 Feedback and Control

1. Important notices and developments will be continuously communicated to employees to
keep them abreast of developments and promoting a sense of belonging and oneness in the
organisation.
2. We will encourage our employees to put forward any suggestions they might have
regarding the improvement of any of the company's functions-an open door philosophy.
Such a culture will enhance innovativeness and creativity, in turn leading to job satisfaction
and enrichment.
3. We intend to make sure that our employees understand the goals of the firm, are customer
focused, proud of their work and work as a team. This will encourage employees to become
entrepreneurial and customer responsible, in addition to unifying staff in customer focus and
values.
6.6 Corporate Social Responsibility
We recognise the fact that the broader community in which we operate affords us our 'license to
trade'. We intend to establish relationships based on trust and mutual advantage through
engaging in a wide range of active social responsibility programs. Our efforts on community
service will show that the company has its own community at heart, contributing towards the
establishment of a good and reputable image. We intend to be a responsible corporate citizen
fully contributing positively towards the environment in which we shall operate. Furthermore,
(discussion omitted).

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Baby Nappies World

7.0 Financial Plan

The financial plan shall be essential if we are to meet our objectives. The intention is to finance
growth through cash flow.
One of the most important factors will be the payment terms as agreed between the client or
customer. We can't push our customers hard on collection days, because they are extremely
sensitive and will normally judge us on our terms. However there are certain instances where
we will have the bargaining power instead of the customer. Examples include informal traders
and actual consumers of our products. Therefore there is need to develop a permanent system
of receivables financing mutually agreed between both parties. Hence in the financial plan we
intend to have the following:
1. A fundamental respect for giving our customers value, and for maintaining a healthy and
congenial workplace.
2. Cash flow as first priority, growth second, profits third.
3. Respect for realistic forecasts, and conservative cash flow and financial management.
Of these only (1) and (3) are flexible.

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Baby Nappies World

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are included in the
financial plan as annual assumptions. The monthly assumptions are included in the appendix.
From the beginning, we recognize that collection days are critical, but not a factor we can
influence easily. At least we are planning on the problem, and dealing with it. Interest rates, tax
rates, and personnel burden are based on conservative assumptions.
Some of the more important underlying assumptions are:

We assume a strong economy, without major recession.

We assume, of course, that there are no unforeseen changes in economic policy to make
our products and service immediately obsolete.

Other key financial assumptions, including 30-day average collection days, sales entirely on
invoice basis including a favorable deposit policy, expenses mainly on a net 30 day basis, 30
days on average for payment of invoices, and present-day interest rates.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
18.08%
0

2
10.00%
10.00%
17.00%
0

3
10.00%
10.00%
18.08%
0

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Baby Nappies World

7.2 Key Financial Indicators

We foresee growth in sales at a faster rate than operating expenses, and a bump in our
collection days as we seek to spread the business during start-up.
Collection days are very important. We do not want to let our average collection days get above
30 under any circumstances. This could cause a serious problem with cash flow, because our
working capital situation is chronically tight. However, we recognize that we cannot control this
factor easily, because of the relationship with our clients.

Chart: Benchmarks

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Baby Nappies World

7.3 Break-even Analysis

Our break-even analysis will be based on running costs, that is costs we shall incur in keeping
the business running, including salaries and wages, rent, machine maintenance costs, water
and electricity, insurance amongst others. We estimate the company will comfortably exceed
the break-even sales volume.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

P16,967

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

48%
P8,766

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Baby Nappies World

7.4 Revenue Generation

Baby Nappies World will receive its revenue streams from sales of its diapers and sanitary pads.
However we will also look into whether we are able to generate revenue from by-products
obtained from manufacturing our main products. Additional research into the above shall be
undertaken.
7.5 Expense Forecast
Initial expenses shall not be extremely high considering the fact that the manufacture of our
products does not require much electricity (220v) or water. Expenses will be brought about by
transport charges incurred in delivering our products to customers, as well as going out on
sales calls procuring orders. However the strategy will involve including these charges in the
prices of our products. As time progresses we intend to undertake marketing programs to
ensure awareness of our existence on the market. Invariably this will result in marketing
expenses being incurred.

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Baby Nappies World

7.6 Projected Profit and Loss

Our projected profit and loss is shown in the appendix, with sales increasing from more than
P748,800 the first year to more than P1,075,200 the second, and P1,142,400 in the third
year. We do expect to more than break-even in the first year of operation. As with the breakeven, we are projecting very conservatively regarding cost of sales and gross margin. Our cost
of sales should be much lower, and gross margin higher, than in this projection.

Chart: Profit Monthly

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Baby Nappies World

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other
Total Cost of Sales

P748,800
P361,920
P0
P361,920

P1,075,200
P389,760
P0
P389,760

P1,142,400
P389,760
P0
P389,760

Gross Margin
Gross Margin %

P386,880
51.67%

P685,440
63.75%

P752,640
65.88%

P43,824
P16,200
P10,800
P800
P2,400
P600
P12,000
P12,000
P6,574
P0

P76,174
P20,400
P10,800
P1,000
P3,000
P0
P12,000
P13,200
P11,426
P0

P104,661
P20,400
P10,800
P800
P4,200
P0
P14,400
P14,520
P15,699
P0

Total Operating Expenses

P105,198

P148,000

P185,480

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

P281,682
P292,482
P0
P50,552

P537,440
P548,240
P0
P91,365

P567,160
P577,960
P0
P102,561

Net Profit
Net Profit/Sales

P231,130
30.87%

P446,075
41.49%

P464,598
40.67%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Maintenance
Utilities
Installation Costs
Insurance
Rent
Payroll Taxes
Other

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Baby Nappies World

Chart: Gross Margin Monthly

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Baby Nappies World

7.7 Projected Cash Flow

Our cash flow is shown in the following chart and table.

Chart: Cash

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Baby Nappies World

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

P187,200
P462,480
P649,680

P268,800
P763,194
P1,031,994

P285,600
P847,905
P1,133,505

P0
P0
P0
P0
P0
P0
P9,000
P658,680

P0
P0
P0
P0
P0
P0
P0
P1,031,994

P0
P0
P0
P0
P0
P0
P0
P1,133,505

Year 1

Year 2

Year 3

P43,824
P455,291
P499,115

P76,174
P539,916
P616,090

P104,661
P558,385
P663,046

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

P0
P0
P0
P0
P0
P0
P0
P499,115

P0
P0
P0
P0
P0
P0
P0
P616,090

P0
P0
P0
P0
P0
P0
P0
P663,046

Net Cash Flow

Cash Balance

P159,565
P196,608

P415,904
P612,512

P470,459
P1,082,971

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

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Baby Nappies World

7.8 Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position. The threeyear estimates are included in the appendix.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

P196,608
P99,120
P35,728
P0
P331,456

P612,512
P142,326
P38,476
P0
P793,314

P1,082,971
P151,222
P35,728
P0
P1,269,921

P54,277
P10,800
P43,477
P374,933

P54,277
P21,600
P32,677
P825,991

P54,277
P32,400
P21,877
P1,291,798

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

P39,803
P0
P0
P39,803

P44,786
P0
P0
P44,786

P45,994
P0
P0
P45,994

Long-term Liabilities
Total Liabilities

P0
P39,803

P0
P44,786

P0
P45,994

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

P109,000
(P5,000)
P231,130
P335,130
P374,933

P109,000
P226,130
P446,075
P781,205
P825,991

P109,000
P672,205
P464,598
P1,245,804
P1,291,798

Net Worth

P335,130

P781,205

P1,245,804

Assets
Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

7.9 Business Ratios

Standard business ratios are shown in the following table. The Industry Profile column shows
ratios for Standard Industry Code (SIC) 2676, Sanitary Paper Products.

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Baby Nappies World

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

43.59%

6.25%

0.00%

Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

26.44%
9.53%
0.00%
88.40%
11.60%
100.00%

17.23%
4.66%
0.00%
96.04%
3.96%
100.00%

11.71%
2.77%
0.00%
98.31%
1.69%
100.00%

27.60%
11.20%
27.70%
66.50%
33.50%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

10.62%
0.00%
10.62%
89.38%

5.42%
0.00%
5.42%
94.58%

3.56%
0.00%
3.56%
96.44%

33.80%
20.00%
53.80%
46.20%

100.00%
51.67%
20.44%
0.96%
37.62%

100.00%
63.75%
22.26%
0.89%
49.99%

100.00%
65.88%
24.68%
0.84%
49.65%

100.00%
33.60%
21.20%
0.40%
2.90%

8.33
7.43
10.62%
84.05%
75.13%

17.71
16.85
5.42%
68.80%
65.07%

27.61
26.83
3.56%
45.53%
43.90%

1.77
1.24
53.80%
6.20%
13.50%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

30.87%
68.97%

41.49%
57.10%

40.67%
37.29%

n.a
n.a

5.67
57
10.91
12.44
27
2.00

5.67
55
10.51
12.17
28
1.30

5.67
63
10.51
12.17
30
0.88

n.a
n.a
n.a
n.a
n.a
n.a

0.12
1.00

0.06
1.00

0.04
1.00

n.a
n.a

P291,653
0.00

P748,528
0.00

P1,223,927
0.00

n.a
n.a

0.50
11%
4.94
2.23
0.00

0.77
5%
13.68
1.38
0.00

1.13
4%
23.55
0.92
0.00

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

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Baby Nappies World

8.0 Controls
The diapers and sanitary pads market has not been fully explored. With this in mind we intend
to aggressively market our existence. The introduction of quality sales and marketing literature
will enable the company to effectively market to potential customers with a positive image and
impression. This will be supported by the relationships we would have established with several
of our customers and clients.
Throughout the year the intention will be to undertake regular evaluations of our products and
marketing programs so as to ensure that we are in line with our intended objectives. In
summary we intend to undertake the following:
1. Tracking and follow-up: We intend to have the discipline, as an organisation, to track results
of the business plan and make sure that we implement.
2. Market segment focus: We intend to have the discipline to maintain the market segment
focus.
3. Saying no: Though difficult initially we intend to be able to say no to special deals that take
us away from the target focus but in particular those that are unprofitable.
8.1 Financial Risks and Contingencies
1. We intend to watch our results very carefully. We may need to drop a certain product
type(s), if we cannot get the margin up or it seems to be unviable. We might be able to
avoid the straight competition with the major companies by focusing more on the target
market mentioned previously.
2. Another possibility is the introduction of a new company(s) in our niche. Hence the need to
undertake aggressive marketing and networking.
8.2 Implementation
Baby Nappies World will start by obtaining trial orders from several wholesalers and institutions
with the objective being to impress them regarding our products' quality. This will see us
obtaining long-term contracts that will ensure we grow in the right direction. We will prepare
our sales literature, including business cards mainly through engaging a reputable printing
organisation. In undertaking the above we intend to ensure that the goals of the organisation
are achieved as well as delegation of responsibility for maximum effectiveness.

Page 31

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

P57,600
P0
P57,600

P57,600
P0
P57,600

P57,600
P0
P57,600

P57,600
P0
P57,600

P57,600
P0
P57,600

P57,600
P0
P57,600

P67,200
P0
P67,200

P67,200
P0
P67,200

P67,200
P0
P67,200

P67,200
P0
P67,200

P67,200
P0
P67,200

P67,200
P0
P67,200

Sales
Nappies, diaper, pads
Other
Total Sales
Direct Cost of Sales
Nappies, diaper, pads
Other
Subtotal Direct Cost of Sales

0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

P27,840

P27,840

P27,840

P27,840

P27,840

P27,840

P32,480

P32,480

P32,480

P32,480

P32,480

P32,480

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P27,840

P27,840

P27,840

P27,840

P27,840

P27,840

P32,480

P32,480

P32,480

P32,480

P32,480

P32,480

Page 1

Appendix
Table: Personnel

Personnel Plan
All departments
Other
Total People
Total Payroll

0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652
P0
7

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

Page 2

Appendix
Table: General Assumptions

General Assumptions
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Tax Rate

30.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

Plan Month

Other

Month 12

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

P57,600

P57,600

P57,600

P57,600

P57,600

P57,600

P67,200

P67,200

P67,200

P67,200

P67,200

P67,200

Direct Cost of Sales

P27,840

P27,840

P27,840

P27,840

P27,840

P27,840

P32,480

P32,480

P32,480

P32,480

P32,480

P32,480

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Total Cost of Sales

P27,840

P27,840

P27,840

P27,840

P27,840

P27,840

P32,480

P32,480

P32,480

P32,480

P32,480

P32,480

Gross Margin

P29,760

P29,760

P29,760

P29,760

P29,760

P29,760

P34,720

P34,720

P34,720

P34,720

P34,720

P34,720

Gross Margin %

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

51.67%

Payroll

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

Sales and Marketing and Other

Expenses
Depreciation

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P900

P900

P900

P900

P900

P900

P900

P900

P900

P900

P900

P900

P0

P0

P200

P0

P0

P200

P0

P0

P200

P0

P0

P200

Utilities

P200

P200

P200

P200

P200

P200

P200

P200

P200

P200

P200

P200

Installation Costs

P600

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P548
P0

P9,250

P8,650

P8,850

P8,650

P8,650

P8,850

P8,650

P8,650

P8,850

P8,650

P8,650

P8,850

Other

Expenses

Maintenance

Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

15%

Profit Before Interest and Taxes

P20,510

P21,110

P20,910

P21,110

P21,110

P20,910

P26,070

P26,070

P25,870

P26,070

P26,070

P25,870

EBITDA

P21,410

P22,010

P21,810

P22,010

P22,010

P21,810

P26,970

P26,970

P26,770

P26,970

P26,970

P26,770

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P6,153

P3,589

P3,555

P3,589

P3,589

P3,555

P4,432

P4,432

P4,398

P4,432

P4,432

P4,398

Net Profit

P14,357

P17,521

P17,355

P17,521

P17,521

P17,355

P21,638

P21,638

P21,472

P21,638

P21,638

P21,472

Net Profit/Sales

24.93%

30.42%

30.13%

30.42%

30.42%

30.13%

32.20%

32.20%

31.95%

32.20%

32.20%

31.95%

Interest Expense
Taxes Incurred

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

P14,400

P14,400

P14,400

P14,400

P14,400

P14,400

P16,800

P16,800

P16,800

P16,800

P16,800

P16,800

P0

P1,440

P43,200

P43,200

P43,200

P43,200

P43,200

P43,440

P50,400

P50,400

P50,400

P50,400

P14,400

P15,840

P57,600

P57,600

P57,600

P57,600

P60,000

P60,240

P67,200

P67,200

P67,200

P67,200

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

P0
P0

New Other Liabilities (interest-free)

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

New Long-term Liabilities

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Sales of Other Current Assets

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Sales of Long-term Assets

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

New Investment Received

P0

P9,000

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P14,400

P24,840

P57,600

P57,600

P57,600

P57,600

P60,000

P60,240

P67,200

P67,200

P67,200

P67,200

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing

Subtotal Cash Received

Expenditures

0.00%

Expenditures from Operations

Cash Spending

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

Bill Payments

P2,188

P64,631

P35,532

P35,687

P35,527

P35,532

P36,040

P45,944

P41,015

P41,170

P41,010

P41,015

Subtotal Spent on Operations

P5,840

P68,283

P39,184

P39,339

P39,179

P39,184

P39,692

P49,596

P44,667

P44,822

P44,662

P44,667

Sales Tax, VAT, HST/GST Paid Out

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Principal Repayment of Current Borrowing

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Other Liabilities Principal Repayment

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Long-term Liabilities Principal Repayment

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Purchase Other Current Assets

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Purchase Long-term Assets

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Dividends

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Subtotal Cash Spent

P5,840

P68,283

P39,184

P39,339

P39,179

P39,184

P39,692

P49,596

P44,667

P44,822

P44,662

P44,667

Net Cash Flow

P8,560

(P43,443)

P18,416

P18,261

P18,421

P18,416

P20,308

P10,644

P22,533

P22,378

P22,538

P22,533

Additional Cash Spent

Page 5

Appendix
Cash Balance

P45,603

P2,160

P20,576

P38,837

P57,258

P75,674

P95,982

P106,627

P129,159

P151,537

P174,076

P196,608

Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

P37,043
P0
P3,680
P0
P40,723

P45,603
P43,200
P30,624
P0
P119,427

P2,160
P84,960
P30,624
P0
P117,744

P20,576
P84,960
P30,624
P0
P136,160

P38,837
P84,960
P30,624
P0
P154,421

P57,258
P84,960
P30,624
P0
P172,842

P75,674
P84,960
P30,624
P0
P191,258

P95,982
P92,160
P35,728
P0
P223,870

P106,627
P99,120
P35,728
P0
P241,475

P129,159
P99,120
P35,728
P0
P264,007

P151,537
P99,120
P35,728
P0
P286,385

P174,076
P99,120
P35,728
P0
P308,924

P196,608
P99,120
P35,728
P0
P331,456

P54,277
P0
P54,277
P95,000

P54,277
P900
P53,377
P172,804

P54,277
P1,800
P52,477
P170,221

P54,277
P2,700
P51,577
P187,737

P54,277
P3,600
P50,677
P205,098

P54,277
P4,500
P49,777
P222,619

P54,277
P5,400
P48,877
P240,135

P54,277
P6,300
P47,977
P271,847

P54,277
P7,200
P47,077
P288,552

P54,277
P8,100
P46,177
P310,184

P54,277
P9,000
P45,277
P331,662

P54,277
P9,900
P44,377
P353,301

P54,277
P10,800
P43,477
P374,933

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

P0
P0
P0
P0

P63,447
P0
P0
P63,447

P34,342
P0
P0
P34,342

P34,503
P0
P0
P34,503

P34,342
P0
P0
P34,342

P34,342
P0
P0
P34,342

P34,503
P0
P0
P34,503

P44,577
P0
P0
P44,577

P39,643
P0
P0
P39,643

P39,803
P0
P0
P39,803

P39,643
P0
P0
P39,643

P39,643
P0
P0
P39,643

P39,803
P0
P0
P39,803

Long-term Liabilities
Total Liabilities

P0
P0

P0
P63,447

P0
P34,342

P0
P34,503

P0
P34,342

P0
P34,342

P0
P34,503

P0
P44,577

P0
P39,643

P0
P39,803

P0
P39,643

P0
P39,643

P0
P39,803

P100,000
(P5,000)
P0
P95,000
P95,000

P100,000
(P5,000)
P14,357
P109,357
P172,804

P109,000
(P5,000)
P31,879
P135,879
P170,221

P109,000
(P5,000)
P49,234
P153,234
P187,737

P109,000
(P5,000)
P66,756
P170,756
P205,098

P109,000
(P5,000)
P84,277
P188,277
P222,619

P109,000
(P5,000)
P101,632
P205,632
P240,135

P109,000
(P5,000)
P123,271
P227,271
P271,847

P109,000
(P5,000)
P144,909
P248,909
P288,552

P109,000
(P5,000)
P166,381
P270,381
P310,184

P109,000
(P5,000)
P188,020
P292,020
P331,662

P109,000
(P5,000)
P209,658
P313,658
P353,301

P109,000
(P5,000)
P231,130
P335,130
P374,933

P95,000

P109,357

P135,879

P153,234

P170,756

P188,277

P205,632

P227,271

P248,909

P270,381

P292,020

P313,658

P335,130

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 6