Professional Documents
Culture Documents
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 decisionmakers/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.
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).
1.
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 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.
Read
more: http://www.bplans.com/diaper_manufacturer_business_plan/executive_summary_fc.php#ixzz2OX56dREo
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.
Start-up Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
P1,000
P100
P900
P0
Insurance
Rent
P1,000
P1,000
P0
P1,000
Other
Total Start-up Expenses
P0
P5,000
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
Total Requirements
P37,043
P3,680
P0
P54,277
P95,000
P100,000
Start-up Funding
Start-up Expenses to Fund
P5,000
P95,000
P100,000
Assets
Non-cash Assets from Start-up
P57,957
P37,043
P0
P37,043
P95,000
P0
P0
P0
P0
Total Liabilities
Capital
P0
Planned Investment
Investor 1
Investor 2
Other
P100,000
P0
P0
P0
P100,000
(P5,000)
P95,000
1.
2.
1.
P95,000
P100,000
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:
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.
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.
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.
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.
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
4.3 Industry Analysis
Industry competition information appears in the following subtopics.
4.3.1 Competition and Buying Patterns
1.
2.
3.
4.
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:
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 wellcoordinated 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.
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.
Z
Located in Tlokweng Industrial, Z specializes in the manufacture of baby napkins, towels, face cloths, dishcloths,
swabs and other textiles.
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.
1.
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.
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.
5.3.1 Sales Forecast
Sales forecast information is presented in the chart and table below.
Sales Forecast
Year 1
Year 2
Year 3
Sales
Nappies, diaper, pads
P748,800
P1,075,200
P1,142,400
Other
Total Sales
P0
P748,800
P0
P1,075,200
P0
P1,142,400
Year 1
P361,920
Year 2
P389,760
Year 3
P389,760
Other
Subtotal Direct Cost of Sales
P0
P361,920
P0
P389,760
P0
P389,760
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)
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.
Personnel Plan
1.
Year 1
Year 2
Year 3
All departments
Other
P43,824
P0
P76,174
P0
P104,661
P0
Total People
Total Payroll
7
P43,824
10
P76,174
12
P104,661
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).
1.
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:
A fundamental respect for giving our customers value, and for maintaining a healthy and congenial
workplace.
2.
3.
Respect for realistic forecasts, and conservative cash flow and financial management.
Of these only (1) and (3) are flexible.
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.
General Assumptions
Year 1
1
Year 2
2
Year 3
3
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
Tax Rate
Other
18.08%
0
17.00%
0
18.08%
0
Plan Month
Break-even Analysis
Monthly Revenue Break-even
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
P16,967
48%
P8,766
Year 1
P748,800
Year 2
P1,075,200
Year 3
P1,142,400
P361,920
P0
P389,760
P0
P389,760
P0
P361,920
P386,880
P389,760
P685,440
P389,760
P752,640
Gross Margin %
51.67%
63.75%
65.88%
Expenses
Payroll
P43,824
P76,174
P104,661
P16,200
P10,800
P20,400
P10,800
P20,400
P10,800
P800
P2,400
P1,000
P3,000
P800
P4,200
Installation Costs
Insurance
P600
P12,000
P0
P12,000
P0
P14,400
Rent
Payroll Taxes
P12,000
P6,574
P13,200
P11,426
P14,520
P15,699
Other
Total Operating Expenses
P0
P105,198
P0
P148,000
P0
P185,480
P281,682
P292,482
P537,440
P548,240
P567,160
P577,960
Interest Expense
Taxes Incurred
P0
P50,552
P0
P91,365
P0
P102,561
Net Profit
Net Profit/Sales
P231,130
30.87%
P446,075
41.49%
P464,598
40.67%
Maintenance
Utilities
Year 2
Year 3
P187,200
P268,800
P285,600
P462,480
P649,680
P763,194
P1,031,994
P847,905
P1,133,505
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P9,000
P658,680
P0
P1,031,994
P0
P1,133,505
Year 1
Year 2
Year 3
Cash Received
P43,824
P76,174
P104,661
Bill Payments
Subtotal Spent on Operations
P455,291
P499,115
P539,916
P616,090
P560,907
P665,568
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
Dividends
Subtotal Cash Spent
P0
P499,115
P0
P616,090
P0
P665,568
P159,565
P196,608
P415,904
P612,512
P467,937
P1,080,449
Year 2
Year 3
Cash
Accounts Receivable
P196,608
P99,120
P612,512
P142,326
P1,080,449
P151,222
Inventory
Other Current Assets
P35,728
P0
P38,476
P0
P38,476
P0
P331,456
P793,314
P1,270,146
Long-term Assets
Long-term Assets
P54,277
P54,277
P54,277
Accumulated Depreciation
Total Long-term Assets
P10,800
P43,477
P21,600
P32,677
P32,400
P21,877
P374,933
Year 1
P825,991
Year 2
P1,292,023
Year 3
Accounts Payable
Current Borrowing
P39,803
P0
P44,786
P0
P46,220
P0
P0
P39,803
P0
P44,786
P0
P46,220
Long-term Liabilities
Total Liabilities
P0
P39,803
P0
P44,786
P0
P46,220
Paid-in Capital
Retained Earnings
P109,000
(P5,000)
P109,000
P226,130
P109,000
P672,205
Earnings
Total Capital
P231,130
P335,130
P446,075
P781,205
P464,598
P1,245,804
P374,933
P335,130
P825,991
P781,205
P1,292,023
P1,245,804
Assets
Current Assets
Total Assets
Liabilities and Capital
Current Liabilities
Ratio Analysis
Sales Growth
Year 1
0.00%
Year 2
43.59%
Year 3
6.25%
Industry Profile
0.00%
26.44%
9.53%
17.23%
4.66%
11.70%
2.98%
27.60%
11.20%
0.00%
88.40%
0.00%
96.04%
0.00%
98.31%
27.70%
66.50%
11.60%
100.00%
3.96%
100.00%
1.69%
100.00%
33.50%
100.00%
Current Liabilities
Long-term Liabilities
10.62%
0.00%
5.42%
0.00%
3.58%
0.00%
33.80%
20.00%
Total Liabilities
Net Worth
10.62%
89.38%
5.42%
94.58%
3.58%
96.42%
53.80%
46.20%
100.00%
51.67%
100.00%
63.75%
100.00%
65.88%
100.00%
33.60%
20.44%
0.96%
22.26%
0.89%
24.68%
0.84%
21.20%
0.40%
37.62%
49.99%
49.65%
2.90%
Long-term Assets
Total Assets
Percent of Sales
Sales
Gross Margin
Main Ratios
Current
8.33
17.71
27.48
1.77
Quick
Total Debt to Total Assets
7.43
10.62%
16.85
5.42%
26.65
3.58%
1.24
53.80%
84.05%
75.13%
68.80%
65.07%
45.53%
43.90%
6.20%
13.50%
Additional Ratios
Net Profit Margin
Year 1
30.87%
Year 2
41.49%
Year 3
40.67%
n.a
Return on Equity
68.97%
57.10%
37.29%
n.a
Activity Ratios
Accounts Receivable Turnover
5.67
5.67
5.67
n.a
Collection Days
Inventory Turnover
57
10.91
55
10.51
63
10.13
n.a
n.a
12.44
27
12.17
28
12.17
30
n.a
n.a
2.00
1.30
0.88
n.a
Debt Ratios
Debt to Net Worth
0.12
0.06
0.04
n.a
1.00
1.00
1.00
n.a
P291,653
P748,528
P1,223,927
n.a
Interest Coverage
0.00
0.00
0.00
n.a
Additional Ratios
Assets to Sales
0.50
0.77
1.13
n.a
11%
4.94
5%
13.68
4%
23.38
n.a
n.a
Sales/Net Worth
Dividend Payout
2.23
0.00
1.38
0.00
0.92
0.00
n.a
n.a
Liquidity Ratios
Net Working Capital
1.
2.
3.
1.
2.
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:
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.
Market segment focus: We intend to have the discipline to maintain the market segment focus.
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
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.
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.
Appendix
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
0% P57,600 P57,600 P57,600 P57,600 P57,600 P57,600 P67,200 P67,200 P67,200 P67,200 P67,200
P67,200
Other
0%
Sales
Total Sales
Direct Cost of Sales
Nappies, diaper, pads
P0
P0
P0
P0
P0
P57,600
P57,60
0
P57,60
0
P57,60
0
Month
1
Month
2
Month
3
Month
4
P0
P0
P0
P0
P57,60
0
P57,60
0 P67,200 P67,200 P67,200 P67,200 P67,200
P67,200
Month
5
Month
6
Month 12
P32,480
P0
P0
P0
P0
P27,840
P27,84
0
P27,84
0
P27,84
0
P27,84
0
P0
Month
8
P0
P0
Month
9
P0
P27,840 P27,840 P27,840 P27,840 P27,840 P27,840 P32,480 P32,480 P32,480 P32,480 P32,480
P0
Month
7
P0
Month
11
Other
Subtotal Direct Cost of
Sales
P0
P0
Month
10
P0
P0
P0
P27,84
0 P32,480 P32,480 P32,480 P32,480 P32,480
P32,480
Month 12
All departments
0% P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652
P3,652
Other
0%
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652
P3,652
Total People
Total Payroll
P0
General Assumptions
Month
1
Month
2
Month
3
Month
4
Month
5
Month
6
Month
7
Month
8
Month
9
Month
10
Month
11
Month 12
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
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
P27,840 P27,840 P27,840 P27,840 P27,840 P27,840 P32,480 P32,480 P32,480 P32,480 P32,480
P32,480
Other
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
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
Expenses
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
P1,350
Depreciation
P900
P900
P900
P900
P900
P900
P900
P900
P900
P900
P900
P900
Maintenance
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
P548
P548
P548
P548
P548
P548
P548
P548
P548
P548
P548
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P9,250
P8,650
P8,850
P8,650
P8,650
P8,850
P8,650
P8,650
P8,850
P8,650
Insurance
Rent
Payroll Taxes
Other
Total Operating
Expenses
15%
P8,650
P8,850
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
Interest Expense
Taxes Incurred
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%
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
P14,400
P16,800
P16,800
P16,800
P16,800
P16,800
P0
P43,440
P50,400
P50,400
P50,400
P50,400
P60,240
P67,200
P67,200
P67,200
P67,200
P14,40
0
P15,840
P57,60
0
P57,60
0
P57,60
0
P57,60
0 P60,000
Additional Cash
Received
Sales Tax, VAT,
HST/GST Received
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
New Current
Borrowing
0.00%
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 Long-term
Liabilities
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
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
P0
P9,000
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P57,60
0
P57,60
0
P57,60
0 P60,000
P60,240
New Investment
Received
Subtotal Cash
Received
P14,40
0
P24,840
P57,60
0
P67,200
P67,200
P67,200
P67,200
Expenditures
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 Spending
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
P45,944
P41,015
P41,170
P41,010
P41,015
Subtotal Spent on
Operations
P5,840
P68,283
P39,18
4
P39,33
9
P39,17
9
P49,596
P44,667
P44,822
P44,662
P44,667
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
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
P68,283
P39,18
4
P39,33
9
P39,17
9
P39,18
4 P39,692
P49,596
P44,667
P44,822
P44,662
P44,667
P8,560 (P43,443)
P18,41
6
P18,26
1
P18,42
1
P18,41
6 P20,308
P10,644
P22,533
P22,378
P22,538
P22,533
Cash Balance
P45,60
3
P20,57
6
P38,83
7
P57,25
8
P75,67
4 P95,982
P106,62
7
P129,15
9
P151,53
7 P174,076
P196,608
Expenditures from
Operations
P3,652
P39,18
4 P39,692
P5,840
P2,160
Month
10
Month
11
Month 12
P196,608
Starting
Balances
Current Assets
Cash
Accounts
Receivable
Inventory
Other Current
P37,043
P45,603
P2,160
P20,576
P38,837
P57,258
P75,674
P0
P43,200
P84,960
P84,960
P84,960
P84,960
P84,960
P92,160
P99,120
P99,120
P99,120
P99,120
P99,120
P3,680
P30,624
P30,624
P30,624
P30,624
P30,624
P30,624
P35,728
P35,728
P35,728
P35,728
P35,728
P35,728
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
Assets
Total Current
Assets
P136,16
0
P154,42
1 P172,842
P191,25
8
P223,87
0
P241,47
5 P264,007
P286,38
5
P308,92
4
P331,456
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P54,277
P0
P900
P1,800
P2,700
P3,600
P4,500
P5,400
P6,300
P7,200
P8,100
P9,000
P9,900
P10,800
P54,277
P53,377
P52,477
P51,577
P50,677
P49,777
P48,877
P47,977
P47,077
P46,177
P45,277
P44,377
P43,477
P95,000 P172,804
P170,22
1
P187,73
7
P205,09
8 P222,619
P240,13
5
P271,84
7
P288,55
2 P310,184
P331,66
2
P353,30
1
P374,933
Month
10
Month
11
Month 12
Long-term
Assets
Long-term
Assets
Accumulated
Depreciation
Total Longterm Assets
Total Assets
Liabilities
and Capital
Current
Liabilities
Accounts
Payable
P0
P63,447
P34,342
P34,503
P34,342
P34,342
P34,503
P44,577
P39,643
P39,803
P39,643
P39,643
P39,803
Current
Borrowing
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
Other Current
Liabilities
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
Subtotal
Current
Liabilities
P0
P63,447
P34,342
P34,503
P34,342
P34,342
P34,503
P44,577
P39,643
P39,803
P39,643
P39,643
P39,803
Long-term
Liabilities
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
P0
Total
Liabilities
P0
P63,447
P34,342
P34,503
P34,342
P34,342
P34,503
P44,577
P39,643
P39,803
P39,643
P39,643
P39,803
P100,000 P100,000 P109,000 P109,000 P109,000 P109,000 P109,000 P109,000 P109,000 P109,000 P109,000 P109,000
P109,000
Paid-in
Capital
Retained
Earnings
Earnings
(P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000)
P84,277 P101,632 P123,271 P144,909 P166,381 P188,020 P209,658
(P5,000)
P14,357
P31,879
P49,234
P66,756
Total Capital
P95,000 P109,357
P135,87
9
P153,23
4
P170,75
6 P188,277
P205,63
2
P227,27
1
P248,90
9 P270,381
P292,02
0
P313,65
8
P335,130
Total
Liabilities
and Capital
P95,000 P172,804
P170,22
1
P187,73
7
P205,09
8 P222,619
P240,13
5
P271,84
7
P288,55
2 P310,184
P331,66
2
P353,30
1
P374,933
P95,000 P109,357
P135,87
9
P153,23
4
P170,75
6 P188,277
P205,63
2
P227,27
1
P248,90
9 P270,381
P292,02
0
P313,65
8
P335,130
Net Worth
P0
P231,130