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1 Product Profile

Tropical Pharmaceuticals products are topical medicines mainly ointments and


liniments containing all-natural components that threats skin illnesses and relieves the
body from pains and aches. These products are basically for external use only.
1.1

TropiAid Products
1.1.1

Liniment
The physical appearance of liniment is a transparent and liquid-like.
It contains contains camphor, banana oil, menthol, peppermint, borneol
and eucalyptus oil. This formulation is applicable to the two variants of
Liniment, regular and massage. These are to 50ml and 100ml containing
each variant and an inhaler which contains 2ml massage formulations. The
banana oil has a higher percentage to suggest quick relief. The massage
liniment variety, however, contains higher composition of camphor and
menthol content compared to regular emphasize the distinction between
the regular and massage.
The inhaler also contains similar content with massage yet, packed
into 2ml packaging compared to massage.

1.1.2

Ointment
The ointment product appears to be a topical cream type medicine.
It is composed of banana oil, beeswax, citronella oil and Olive oil. Ointment
is further divided into three variants, the antifungal, antipruritic, and
corticosteroid. The three variants vary on the percent content of banana oil
for each variant. Antifungal heals skin irritations like an-an, bun-I, and
athlete's foot and prevents further infection caused by bacteria and fungi.
Antipruritic soothes itchiness and heals skin damaged caused by scratches
due to bug bites and the like. The Corticosteroids is specially formulated to
cure skin diseases like Psoriasis and Eczema. It also contains the highest
banana oil content among the three variants, to improve effectiveness.

A Business Plan of TropiAid


Nevertheless, these ointment formulations are not just derived for
its specific purposes but also integrated with all-natural insect repellant
solutions to protect the users from mosquito bites and helps skin heal and
return to its original state.

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A Business Plan of TropiAid

2 Marketing Plan
2.1

Potential Market
Primarily, the potential market includes the all households in the Philippine

population. Also, the market should belong to an ABC income level living in urbanized
areas. (See Appendix D-1: Forecasted Potential Market (2014-2018) Philippines)
2.2

Target Market
Currently, the ointments and liniments industry are composed of highly established

brands of highly competitive companies. In this light, the proponents decided enter the
industry as a market niche.
Generally, the target market focuses only in Mindanao and Cebu. Bringing the
name of its being natural, it could grab the opportunity to attract those who are interested
and preferred to buy natural made remedies. The following are the specifications of the
target market:

Households

ABC Income Level

Urbanized Mindanao and Cebu Areas

On the long run, the proponents may extend the market to doctors, specifically
dermatologists and general doctors, who are experts on skin treatments and body pain
remedies.
2.3

Projected Demand and Market Share


2.3.1

Total Projected Demand


The population of the potential market in the Philippines in the current year

(2012) is 915,296. Having an average population growth rate of 1.83 percent per
year from 2014 to 2018, from the current, it will increase to 949,381 in 2014 and
further increase to 1,020,206 in 2018. (See Appendix D-2 and D-3: Forecasted
Potential Market (2014-2018) Mindanao and Cebu)

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A Business Plan of TropiAid

Table 6.1. Potential and Targeted Market

Total Potential Market


Potential (Mindanao and Cebu)

Target Market

Davao Region

Target Market
2014
2015
949,848
967,610
249,345
254,008

2016
985,704
258,758

2017
1,004,137
263,597

2018
1,022,914
268,526

22,749

23,175

23,608

24,050

24,499

8,159

8,312

8,467

8,626

5,719

5,826

5,935

6,046

6,159

Zamboanga Peninsula

10,058

10,246

10,437

10,632

Caraga

10,934

11,138

11,346

11,558

28,468
3.00%
4.70%

58,151
6.01%
5.64%

19,498
78,736
7.99%
6.77%

19,863
80,209
7.99%
8.12%

20,234
81,709
7.99%
9.75%

Northern Mindanao
SOCSKSARGEN

Cebu
Total Captured Market
Percentage Captured
Market Share

The proceeding tables show the demand in unit volume of the liniments
and ointments. An assumption volume of variant was made during calculating
process. For liniment products, it is assumed to have the following percentage:
inhalers have only one variant, the massage, while the other two sizes have both
with 60% of the volume goes to regular while the other 40% are for the massage
variants. For the ointment products, it is assumed to have the following percentage:
35%, 35%, and 30% for the antifungal cream, antipruritic, and corticosteroids
respectively. The percent of the total projected market in terms of unit volume are
0.10%, 0.12%, 0.14%, 0.17%, and 0.21% for years 2014, 2015, 2016, 2017, and
2018 respectively.
For the liniment category, a 10% volume is allotted for the inhalers with an
annual increase of 10% to intensify its sales. The rest of the 90% is divided among
the other two sizes, 47% for the 50ml and 43% for the regular one. This percentage
is used in allocating the demand ratio for the inhaler and 50 and 100ml bottles.
The unit demand of each month of the year differs due to the following
certain events. For the liniments, the peak periods are during months of January,
June, July, and December with 10% of the annual demand is shown per month.
The factor behind this is that June and July are rainy seasons, thus an expected
demand for these types of medicines. Also, since January and December are cold
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A Business Plan of TropiAid


months, such increase in demand may also be expected. For the rest of the months,
9% is allotted for March and October, 8% for February and September, 7% for the
summer months, and 6% for August and November, the off-peak months.
For the ointments, the peak periods are during the months of April, May,
June, July, and August, thus 10% is given to each. April and May are summer
month, thus high exposure to outdoor adventures. June and July are rainy months.
June and August are Dengue and Psoriasis Awareness Months thus more
ointments should be produced. The rest of the months are given 7% each except
December with 8%.
Table 6.2. 2ml Liniments Demand in Unit Volume (Inhalers)
Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

2014
2015
2016
2017
2018
Massage Massage Massage Massage Massage
608
774
1,266
1,563
1,910
486
619
1,013
1,250
1,528
547
697
1,139
1,407
1,719
431
544
886
1,094
1,337
431
544
886
1,094
1,337
615
777
1,266
1,563
1,910
620
787
1,270
1,563
1,910
372
472
762
938
1,146
496
630
1,016
1,250
1,528
564
708
1,151
1,407
1,719
376
472
767
938
1,146
627
787
1,279
1,563
1,910
6,173
7,811
12,701
15,630
19,100

Table 6.3. 50ml Liniments Demand in Unit Volume (Regular)


Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

2014
2015
2016
2017
2018
Regular Massage Regular Massage Regular Massage Regular Massage Regular Massage
764
509
972
648
1,590
1,060
1,963
1,308
2,398
1,599
611
407
778
518
1,272
848
1,570
1,047
1,919
1,279
687
458
875
583
1,431
954
1,766
1,178
2,159
1,439
541
361
683
455
1,113
742
1,374
916
1,679
1,119
541
361
683
455
1,113
742
1,374
916
1,679
1,119
773
515
976
651
1,590
1,060
1,963
1,308
2,398
1,599
779
519
988
659
1,595
1,063
1,963
1,308
2,398
1,599
467
312
593
395
957
638
1,178
785
1,439
959
623
415
791
527
1,276
851
1,570
1,047
1,919
1,279
709
472
890
593
1,445
964
1,766
1,178
2,159
1,439
472
315
593
395
964
642
1,178
785
1,439
959
787
525
988
659
1,606
1,071
1,963
1,308
2,398
1,599
7,754
5,169
9,810
6,538
15,952
10,635
19,628
13,084
23,984
15,988

Table 6.4. 100ml Liniments Demand in Unit Volume (Large)

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A Business Plan of TropiAid


Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

2014
2015
2016
2017
2018
Regular Massage Regular Massage Regular Massage Regular Massage Regular Massage
696
464
886
591
1,448
966
1,788
1,192
2,185
1,457
557
371
709
472
1,159
772
1,431
954
1,748
1,166
626
417
797
531
1,304
869
1,609
1,073
1,967
1,311
493
329
622
415
1,014
676
1,252
835
1,530
1,020
493
329
622
415
1,014
676
1,252
835
1,530
1,020
704
469
889
593
1,448
966
1,788
1,192
2,185
1,457
710
473
901
600
1,453
969
1,788
1,192
2,185
1,457
426
284
540
360
872
581
1,073
715
1,311
874
568
378
721
480
1,162
775
1,431
954
1,748
1,166
646
430
811
540
1,317
878
1,609
1,073
1,967
1,311
430
287
540
360
878
585
1,073
715
1,311
874
717
478
901
600
1,463
976
1,788
1,192
2,185
1,457
7,066
4,709
8,939
5,957
14,532
9,689
17,882
11,922
21,852
14,570

Table 6.5. 10g Ointments Demand in Unit Volume


Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

2014

2015

2016

A nti-Fungal A ntipruritic Co rtico stero idA nti-Fungal A ntipruritic Co rtico stero idA nti-Fungal A ntipruritic Co rtico stero id

745
745
745
1,077
1,077
1,077
1,085
1,085
760
768
768
878
10,810

Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

745
745
745
1,077
1,077
1,077
1,085
1,085
760
768
768
878
10,810

638
638
638
923
923
923
930
930
651
658
658
752
9,266

948
948
948
1,360
1,360
1,360
1,377
1,377
964
964
964
1,102
13,675

948
948
948
1,360
1,360
1,360
1,377
1,377
964
964
964
1,102
13,675

813
813
813
1,166
1,166
1,166
1,181
1,181
826
826
826
945
11,721

2017

1,551
1,551
1,551
2,215
2,215
2,215
2,222
2,222
1,556
1,567
1,567
1,791
22,222

1,551
1,551
1,551
2,215
2,215
2,215
2,222
2,222
1,556
1,567
1,567
1,791
22,222

1,329
1,329
1,329
1,899
1,899
1,899
1,905
1,905
1,333
1,343
1,343
1,535
19,048

2018

A nti-Fungal A ntipruritic Co rtico stero idA nti-Fungal A ntipruritic Co rtico stero id

1,915
1,915
1,915
2,735
2,735
2,735
2,735
2,735
1,915
1,915
1,915
2,188
27,351

1,915
1,915
1,915
2,735
2,735
2,735
2,735
2,735
1,915
1,915
1,915
2,188
27,351

1,641
1,641
1,641
2,344
2,344
2,344
2,344
2,344
1,641
1,641
1,641
1,875
23,443

2,340
2,340
2,340
3,342
3,342
3,342
3,342
3,342
2,340
2,340
2,340
2,674
33,424

2,340
2,340
2,340
3,342
3,342
3,342
3,342
3,342
2,340
2,340
2,340
2,674
33,424

2,005
2,005
2,005
2,865
2,865
2,865
2,865
2,865
2,005
2,005
2,005
2,292
28,649

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A Business Plan of TropiAid


2.4

Marketing Strategy
2.4.1

Marketing Objectives
Tropical Pharmaceutical Inc. has the following list of objectives for TropiAid

liniment and ointment products:

To capture 2.67 percent of the consumers based from the targeted


market in the Mindanao and Cebu in the first year and a 7.30
percent in year 5

To gain 9.75 percent market share in year 5 from 4.70 percent in


year 1 with an annual growth of 20 percent

To produce and distribute 6,173 TropiAid Inhalers, 12,923 50ml


liniments, 11,775 100ml liniments, and 30,885 ointments in the first
year with an average annual growth of 3,232, 6,762, 6,162 and
16,153 units respectively.

2.4.2

Positioning Strategies
2.4.2.1 Objective

To become a leading natural ointment and liniment brand the in the


industry which integrates banana fruit extract as its main ingredient

To become a leading natural with fast effect action medicine due to


its high potassium content

To be the most preferred premium brand of topical solutions among


Filipino households

To be a high-quality Filipino product made to provide natural skin


treatments and pain remedies

2.4.2.2 Positioning Statement


Among health conscious and environment concerned Filipino
households, Tropiaid is the Filipino premium brand of topical solutions that
relieve body, muscle, and joint pains, skin itch, fungi, and inflammations
integrated with natural mosquito repellant solutions. Furthermore, TropiAid
is the brand which is safe to the skin because of its all-natural content

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A Business Plan of TropiAid


integrating banana fruit extract, a high-potassium substance, as its main
ingredient. Thus, it ensures no side effects.

2.4.3

Product Strategies
2.4.3.1 Objective

To be a relief for muscle and body pains which has a relaxing


scent

To be an all-natural product, which integrates banana fruit


extract, a high-potassium substance, as its main ingredient,
thus, ensures fast action

To provides remedies for skin itch, skin fungi, and skin


inflammatory, with no side effects

To provide a skin treatment product which cures external


wounds and protects you from further infections

To provide natural protection from pesky mosquitoes

2.4.3.2 Features and Benefits

Core Product
Tropiaid is a product which relieves skin diseases and body

pains which is made out of natural banana fruit extract. The extract
is clinically proven to have therapeutic effects on the skin due to its
high amount of potassium. Such component does several medicinal
benefits which include relief from pain, swelling, itching, bruising,
wrinkles, and sunburn. (Edwards, 2000) In addition, banana fruits
contain natural anti-inflammatory antiseptic, cooling properties that
can help alleviate or reduce the severity of the eczema and
psoriasis symptoms. (Jewell, 2011)

Product Mix

Liniments

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A Business Plan of TropiAid


The liniment product line is further divided into two variants,
the regular and the massage. The uses of such variants are the
following:
1. Regular
A liniment preparation integrated with natural essential
extracts especially formulated for fast and effective relief of back
and muscle pains, headache, minor sprains and strains
The regular liniments contain camphor, banana fruit extract,
menthol, and eucalyptus oil. In this formulation, the banana fruit
extract has a higher percentage to suggest quick relief on the
indications state above.
2. Massage
A minty liniment formulation that is created to give you a cool
and relaxing feeling; further helps you gain that great and relaxing
rest after a stressful day
The massage liniment variety still contains camphor,
banana fruit extract, menthol, and eucalyptus oil. In this formulation,
the camphor and menthol content has a higher composition to
suggest a high amount of aroma for that relaxing feel.
o

Ointments
The ointment product line is further divided into three

variants, the antifungal, antipruritic, and corticosteroid. The uses of


such variants are the following:
1. Antifungal
A topical cream which helps you get rid of bacteria and fungi
that causes several skin irritations like an-an, bun-i, and athlete's
foot

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A Business Plan of TropiAid


2. Antipruritic
A skin cream integrated with natural extracts that soothes
itchiness due to bug bites and the like
3. Corticosteroids
A safe and effective specialized skin remedy that helps cure
skin diseases like Psoriasis and Eczema
These ointment formulations are integrated with natural
insect repellant solutions, thus protects the users from mosquito
bites, leaving its natural feel since the formulation is derived from a
natural source, the banana fruit and citronella oils.
2.4.3.3 Branding
Image 6.1: Product Logo

Generally, TropiAid is a pharmaceutical product. The overall


concept of TropiAids logo, which has a green color and natural feel,
illustrates the brand as a natural and environment-friendly product. The
color also implies that the product is safe to use because of its natural
content.
The logo illustrates the soft yet fast-written cursive text that
symbolizes the soft care touch of the product to the skin yet fast in action.
The silver line represents the premium image of TropiAid.

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In addition, the tagline of the company will be Think Natural, Think
Tropical. This tagline will surely have an impact in the minds of the
consumers. Since the company is having a natural and tropical nature,
the consumers will immediately remember and think of the company and
its products whenever they hear such line.
2.4.3.4 Packaging

Sizes
The liniment core product has three volumes, inhaler (2ml),

50 ml and 100 ml. For the ointment products, all varieties are
available in 10g packs only. (See Appendixes D and E: Liniment
and Ointment Category Matrices)
A new size is introduced by the proponents, an inhaler which
contains 2ml liniment solution. This innovation answers the demand
for convenience. Also, this packaging integrates an inhaler to
further extend the efficiency in acquiring the products benefits in
curing headaches, which could also be used as a relief in clogged
nose. Now, the solution is one sniff away.

Container

Primary
Generally, the packaging of all the variants shows an

elegant and attractive image that depicts its being premium yet still
considering its natural image. The silver strip incorporated with all
the caps of the products serves as an indication of the product being
premium. The overall impact of integrating the green color serves
as the indication of the product being natural.
With the use of recycled packaging, the company taps Metro
Ace Innovplas Corporation, a plant that manufactures plastic
containers for food, chemicals, and cosmetics for pharmaceutical
companies, various items for agricultural industries, and house
ware items, use of recycled plastics as their main material. With the
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A Business Plan of TropiAid


raw material used, the packaging is expected to have a low cost
implication. Furthermore, with the use of recycled packaging, the
company becomes parallel to its image as eco-friendly.
Inhaler
The inhaler product will be packed in a cylindrical shaped
container, containing two bodies and an in between division. (See
Image, Inhaler (2ml) Segmented for a clearer view). The upper
body is an inhaler. It holds a small soft sponge/filter that regulates
the inhalation of camphor and menthol contents of the product.
Below the upper body, there is a colored plastic that separates and
serves as a lock of the two separate bodies of the product. The
lower body is a transparent container which contains the liquid
liniment. The liquid can be directly applied on several body pains
like headaches. Furthermore, the small container can be refilled for
continuous usage.
Below are the images of the said inhaler packaging
innovation:
Image 6.2. Inhaler (2ml) - Front and Back

Image 6.3. Inhaler (2ml) - Segmented

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Liniment
The liniment products will be packed in a recyclable plastic
container. It contains a flip top cap, which serves as sealer of the
product; and a body, which is a usual plastic bottle shape that
serves as the container of the liquid formulation.
Below are the images of both front and back parts of the
said container:
Image 6.4. Liniment (50ml and 100ml) - Front

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Image 6.5. Liniment (50ml and 100ml) - Back

Ointment
The ointment product will be packed in a cylindrical shaped
container made out of recycled plastic. It consists of a removable
screw-type cap and a body. The body serves as the container of
the meat of the product.
Below are the packaging concepts of the ointment variants:
Image 6.6. Ointment (10g) - Front

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Image 6.7. Ointment (10g) Back

Secondary
Each product of TropiAid will be placed in a box that serves

as the secondary packaging. The main purpose of this is to further


protect the primary packaging of the product. The secondary
packaging is part of showing the product in presentable and elegant
way, even during display and in actual buying of product. The
secondary packaging makes people think how secure and quality
controlled the product is. By this, it shows its classic way selling and
presenting of the product. The packaging of the product
incorporates the premium and natural image.
The sizes of the boxes will be 1x1x3 inches for 2ml products,
1.5x1.5x4 inches for 50ml products, 2x2x5 inches for 100ml
products and 2.5x2.5x1.5 inches for the ointment products.

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Image 6.8. Secondary Packaging

Tertiary

Image 6.9. Tertiary Packaging

Each product sizes of TropiAid product have its own proposed sizes of tertiary
packaging. The tertiary products have the same label that includes the brand name,
product information, safety symbols, and box level capacity.

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Tertiary packaging has proposed to be 10x10x6 inches for
the 2ml products, 10.5x10.5x8 inches for the 50ml, 10x10x10
inches for 100ml, and 10x10x10 for the ointment products.

Label
The label holds the product name and the distinctions

among variants. It also incorporates its image as natural and


premium class. The pictures of the leaves and its general green
color represent the being natural of the product. The silver line
below the brand name and along the rim of the caps serves as in
indication for its being premium.
Front
For the liniment product line, colors of the containers help
customers differentiate the product varieties. As seen above, the
light green embellished bottle container holds the massage variant
of the liniment product line while the yellow ones contain the regular
liniments. (See Image 6.4: Liniment (50ml and 100ml) Front)
For ointments, the labels below the brand and, also, the
distinction between colors serve as the differentiation of the variants.
As seen above, the light green embellished cylindrical container
holds the antifungal variant, the yellow one contains the antipruritic,
while the purple one contain the corticosteroid. (See Image 6.6:
Ointment (10g) Front)
Back
At the back portion of the containers, it highlights a quick
description of the product. Furthermore, directions for use, the
manufacturers, and some other information like approval seals are
also printed on the rear part of the containers. The seals printed are
the following: Halal certified, recyclable, Proud to be Pinoy and
BFAD approved. Customer service contact information of the
company is also presented to help in building customer relationship.
(See Image 6.5 and 6.7: Liniment (50ml and 100ml( and Ointment
10g) Back)
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2.4.4

Promotion Strategies
2.4.4.1 Objectives
Tropical Pharmaceuticals has set the following objectives for its
advertising campaign strategies:

To create awareness among the target markets as a


pharmaceutical brand

To promote TropiAid as an all-natural ointment and liniment


product which contains banana fruit extract, a high-potassium
substance, thus, the product ensures fast action and has no
side effects

To emphasize the effects of the brand on several bodily


problems; giving the consumers direct cure and protection from
further infections

2.4.4.2 Advertising
Tropical Pharmaceuticals aims to create awareness among its
targeted market. During the introductory years, intensive advertising and
promotions will be done to make the market aware of the product lines that
the company has to offer. Furthermore, essential benefits will also be
printed as well.

Brochures, Flyers, and Posters


Brochures,

flyers

and

posters

are

forms

of

print

advertisements that serve as a medium for disseminating


information. This information includes the endorsement of the
product about its benefits, effectiveness, and capacity as a natural
product and even the characteristics that differentiate the product
to other brands. This emphasizes how natural and how effective the
product is. It highlights the products high potassium content which
is good for skin remedies. This type of advertisement also
incorporates all the distribution outlets so that customers were able

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A Business Plan of TropiAid


to easily access the product. This advertisement also includes all
the promotional information with regards of buying products.
Image 6.10. Sample Brochure

Social networking Sites and Official Product Website


Currently, young ones, teens, young professionals, adults,

and even some of the older ones, engage with social networking
sites, making online networking advertisements somehow effective.
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With this given generation state, people usually consult for updates
and gather some information with the use of these networking sites.
Having an official product website could also be a good and clear
form of advertising on a wider scope opportunity in disseminating
information that gives a lesser implication of cost.
Image 6.11. Official Product Website

Product Testing (in malls, personal care shops, and exhibits)


Product testing is a form advertising that needs a close

contact to its potential buyers allowing to try and test the product.
This advertisement can be held through an exhibit campaigning a
certain goal, booth stand and product sampling in malls, and
through presenting a testimonial AVR of the product that
encourages the customers to test it.

Television Advertising
Nowadays, even if it is too expensive on having television

advertisements; it is still the main and most effective form of


advertisement among others. Television advertisement could blow
the information nationwide but the only limits this kind of advertising
is the budget.
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LED Advertising
Nowadays, as modern technology offers, LED advertising is
now on its way to become one of the most advantageous forms
of advertising. It is in an advantage and in a most attractive way
of exposure, disseminating information, and introducing the
product since this form of advertisements is usually installed in
high-traffic areas. People passing by will definitely be fascinated
and attracted to see such scenery.

2.4.4.3 Consumer Promos


The company will use some forms of sales promotion such as
offering product samples, freebies, and discounts. These are short-term
strategies to encourage purchase or sale of TropiAid products.
The firm will offer product samples during personal selling to allow
the target customers to actually try the products. These samples are for
free so that attracting probable customers will be easy. Eight hundred
100ml regular and massage liniments and 900 pieces of ointments will be
given away every year.
Moreover, starting on second year, the firm will give showcase kit
that contains the different varieties of the product. Specifically, the package
will contain one (1) inhaler, one (1) regular 50ml liniment, one (1) massage
50ml liniment, and one (1) of each variety of ointment. Instead of buying it
in its regular price, it will be offered with Php63.00 cash discount. Five
thousand packs will be made available each year.
2.4.4.4 Trade Promos
The firm will offer free products stands to each of the distributed
retailers for the first three years.
On the fourth and fifth year, the strategies above are continued, the
budget of which during those year will be doubled to intensify product
awareness so as to increase sales in these years.
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2.4.4.5 Budget
Table 6.6. Advertising Cost
2014
61,724.26
25,718.44
20,574.75
5,143.69
154,310.65
89,463.58
5,143.69
362,079.05

Brochures
Flyers
Posters
LED Advertising
Business Cards
TV Advertising
Product Exhibit
Product Samples
Freebies
Discounts
Trade Promos
Total Costs

2.4.5

2015
63,279.11
26,366.30
21,093.04
105,465.19
5,273.26
158,197.79
91,717.20
104,289.80
34,276.19
5,273.26
615,231.13

2016
64,648.67
26,936.95
21,549.56
107,747.78
5,387.39
215,495.57
161,621.68
93,702.24
106,546.95
35,018.03
5,387.39
844,042.20

2017
65,818.54
27,424.39
21,939.51
109,697.57
5,484.88
219,395.13
164,546.35
95,397.86
108,475.00
35,651.71
5,484.88
859,315.82

2018
66,776.10
27,823.38
22,258.70
111,293.50
5,564.68
222,587.01
166,940.26
96,785.76
110,053.15
36,170.39
5,564.68
871,817.60

Price Strategies
2.4.5.1 Objective

To set TropiAid products at premium to suggest quality but still


considering competitors pricing

To have a high mark that compromises with the operating cost


(promotions and distribution cost) and a profit margin of at least
60%.

To have a standard selling price in the different regions.

2.4.5.2 Method
In calculating for the prices, the proponents are guided by the
following pricing methods:

Customer-Based Pricing
The price is based on the customer demand or need for the

product. This demand is taken from the market research


conducted by the proponents through the price values they have
given for the given products. (See Appendix C: Survey Results)
Through the market research, it was discovered that the budgets
for a regular sized liniment and 10g ointments are:
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Table 6.7. Liniment and Ointment Budget Allocated by Target Market
Liniment (51-100ml)

Ointment (10g)

P51 to P60

P100 to P150

Price

Since TropiAid is a premium product, prices will fall slightly


above the range shown. This slight difference will promote the
products image into premium.

Competition-Based Pricing
This method will help TropiAid be competitive in terms of

price with other premium pharmaceutical products. The prices of


the products will only have slight differences with other premium
brands. This will suggest a good market share in the industry in the
future. (See Appendices E and F: Liniment and Ointment of
Category Matrixes)

Cost-Based Pricing
The cost in producing and selling the products are identified.

A desired net profit margin is then identified. The total cost and profit
margin are then added to get the selling price.

Price Map

Table 6.8. Average Price of Competitors (Liniments)


Liniment
Brand

Average Price/ml

Efficascent Oil

1.04

Omega

1.09

Pau Liniment

1.50

Rhea Superscent Oil

0.87

Salonpas Liniment

1.83

Ave/ml

1.27

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Table 6.9. Average Price of Competitors (Antifungal)
Ointment (Antifungal)
Brand

Average Price/g

Canesten Cream

26.50

Nizoral Cream

30.97

Trosyd Cream

30.97

United Home Ketoconazole


Cream

15.47

Ave/g

25.98

Table 6.10. Average Price of Competitors (Antipruritic)


Ointment Cream (Antipruritic)
Brand

Average Price/g

Systral

20.76

Ave/g

20.76

Table 6.11. Average Price of Competitors (Corticosteroid)


Ointment (Corticosteroid)
Brand

Average Price/g

Aplosyn 10-N

24.80

Baycuten-N

59.90

Dermovate

48.82

Diprolene

47.17

Ave/g

45.17

(See Appendices E and F: Liniment and Ointment of


Category Matrixes)
After going through the methods, the proponents then
identified the following prices for its products:

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Table 6.12. Suggested Retail Prices of TropiAid Liniments (2014)
Linim ent Pricing
Linim ent
Size
Inhaler
Regular
Large

ml
2
50
100

Variety
Regular
Massage
Php/m l
Unit Price
Php/m l
Unit Price
30.00
1.75
87.50
2.00
100.00
1.75
175.00
2.00
200.00

Table 6.13. Suggested Retail Prices of TropiAid Ointments (2014)


Ointm ent Pricing
Ointm ent
Size
Regular

g
10

Anti-Fungal
Php/g
Unit Price
13.00
130.00

Variety
Antipruritic
Php/g
Unit Price
11.00
110.00

Corticosteroid
Php/g
Unit Price
23.00
230.00

The tables above show the suggested retail price of


TropiAid products. In the liniment product line, the variety with the
least price is the Massage. This is due to the fact that massage
variant has less camphor content compared to the regular one.
In the ointment product line, the variety with the highest
price is the corticosteroid. This is due to the additives needed to the
increase of its effectiveness, thus, a higher cost is expected.
As shown in the table, the price per ml of TropiAid
corresponds basically to its costs considering some factors like
competitors price and survey results. But the level of effectiveness
proportionally increases as pricing increases. Its all-natural
formulation is the main difference of our product to its competitors.
In year 1, the unit price of liniment inhaler (2ml) is Php 30.00,
regular size (50ml) is Php 87.50 and Php 175.00 for regular and
massage respectively, and large size (100ml) is Php 175.00 and
P200.00 for regular and massage respectively For the ointment unit
prices, consisting only one size for three variants, antipruritic is
Php110.00, anti-fungal is Php 130.00 and the corticosteroids is Php
230.00.

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These prices already comprise the VAT (12%), the expected
net profit margin of 60% and incurred cost comprises these SRPs.
Table 6.14. Suggested Retail Prices of Liniments per Year

2014

2015

2016

2017

Linim ent SRP


2018
2014

SRP
Calculated Price
VAT
Price before VAT
Profit Margin
Cost per Unit
SRP
Calculated Price
VAT
Price before VAT
Profit Margin
Cost per Unit

30.00
30.00
3.60
26.40
6.17
20.23
87.50
87.50
10.50
77.00
29.97
47.03

SRP
175.00
Calculated Price
175.00
VAT
21.00
Price before VAT 154.00
Profit Margin
69.16
Cost per Unit
84.84

50m l (Regular)
91.90 96.50 101.40
91.90 96.50 101.40
11.03 11.58 12.17
80.87 84.92 89.23
32.66 35.92 39.52
48.21 49.00 49.71
100m l (Regular)
183.80 193.00 202.70
183.80 193.00 202.70
22.06 23.16 24.32
161.74 169.84 178.38
74.77 81.28 88.40
86.98 88.56 89.98

106.50
106.50
12.78
93.72
43.43
50.29

100.00
100.00
12.00
88.00
40.09
47.91

212.90
212.90
25.55
187.35
96.21
91.14

200.00
200.00
24.00
176.00
90.21
85.79

2015 2016 2017


Inhalers (Massage)
31.50 33.10 34.80
31.50 33.10 34.80
3.78
3.97
4.18
27.72 29.13 30.62
6.98
8.32
9.76
20.74 20.80 20.86
50m l (Massage)
105.00 110.30 115.90
105.00 110.30 115.90
12.60 13.24 13.91
92.40 97.06 101.99
43.29 47.20 51.42
49.11 49.86 50.57
100m l (Massage)
210.00 220.50 231.60
210.00 220.50 231.60
25.20 26.46 27.79
184.80 194.04 203.81
96.85 104.59 112.93
87.95 89.45 90.87

2018
36.60
36.60
4.39
32.21
11.30
20.91
121.70
121.70
14.60
107.10
55.94
51.16
243.20
243.20
29.18
214.02
121.98
92.04

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Table 6.15. Suggested Retail Prices of Ointments per Year

2014
SRP
130.00
Calculated Price
130.00
VAT
15.60
Price before VAT 114.40
Profit Margin
94.98
Cost per Unit
19.42
SRP
110.00
Calculated Price
110.00
VAT
13.20
Price before VAT 96.80
Profit Margin
77.37
Cost per Unit
19.43
SRP
Calculated Price
VAT
Price before VAT
Profit Margin
Cost per Unit

230.00
230.00
27.60
202.40
182.95
19.45

Ointm ent SRP


2015 2016 2017
10g (Antifungal)
136.50 143.40 150.60
136.50 143.40 150.60
16.38 17.21 18.07
120.12 126.19 132.53
101.09 107.17 113.44
19.03 19.02 19.09
10g (Antipruritic)
115.50 121.30 127.40
115.50 121.30 127.40
13.86 14.56 15.29
101.64 106.74 112.11
82.59 87.61 92.92
19.05 19.13 19.19
10g (Corticosteroid)
241.50 253.60 266.30
241.50 253.60 266.30
28.98 30.43 31.96
212.52 223.17 234.34
193.46 204.08 215.19
19.06 19.09 19.15

2018
158.20
158.20
18.98
139.22
120.08
19.14
133.80
133.80
16.06
117.74
98.50
19.24
279.70
279.70
33.56
246.14
226.93
19.20

The cost per unit is composed of the production expenses.


TropiAid products prices increase each year due to the predicted
inflation rate of 2.16% in years 2015, 2016, 2017, and 2018.
Expansion of territory during the introductory years dictates the
(See Appendix G: Forecasted Inflation and GDP Rates) increase in
costs for distribution. Because of this, a decision of 5% increase in
price was made by the proponents. In the succeeding years,
advertising became more extensive compared to the former years,
thus, the 5% increase is still applied.
Such price increase does not greatly affect the customers.
According to the survey conducted by the proponents, in both
liniments and ointments consumers look for effectiveness, quality,
and their availability first before considering the prices. (See
Appendix C: Survey Results) Furthermore, prices increase due to
these factors, thus, they are reasonable enough to increase in such
rate.
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All TropiAid products sold in retail channels will be paid once
purchased. Online purchases, credit cards are accepted. Other
costs incurred for delivery are not included in the computed prices.
2.4.6

Placement Strategies
2.4.6.1 Objective
Tropical Pharmaceuticals aims to penetrate a target market of
about 25% in Mindanao and 78% in Cebu. In order to do so, the products
are distributed depending on the deals arranged between the firm and the
retailers, pharmacies and drugstores, personal care shops, and malls,
corresponding to its locations. Once the deals were closed, it will then be
distributed throughout the branches under those retailers. The strategy for
further distribution to its branches will depend now on the retailers.
Furthermore, the company aims to make the products available and
accessible for their target market.
2.4.6.2 Distribution Blueprint
There are several urbanized cities that are considered to be primary
target markets of the firm. These cities are the following:

Davao Region: Davao City, Tagum City

Northern Mindanao: Cagayan de Oro City, Iligan City

SOCSKSARGEN: General Santos City

Zamboanga Peninsula: Zamboanga City

CARAGA: Butuan City, Surigao City

VISAYAS: Cebu City, Mandaue City, Lapu-Lapu City, Talisay


City, Carcar City, Consolacion City

(See Appendix H: Gantt Chart of Mall Distribution)


2.4.6.3 Distribution Channel
The primary target markets of the firm are the urbanized areas,
households and basically the ABC income level in the Mindanao and Cebu
area.
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Given the selected key cities as the main potential target of the firm,
the company also taps the pharmacies, drugstores, personal care shops
and malls as their main retailers of their product to respective areas. In
order to penetrate those areas, it is the retailers responsibility to distribute
the products covered by the deal, agreed by the firm and the retailers, all
throughout their branches. Through this, the products are made available
and accessible enough by the consumers.
In order to penetrate those potential target establishments, there
must be assigned key accounts to hold each selected regions together with
the sales force to sell and promote the products.
Table 6.16. Distribution Channel
Rose
Pharmacy

Mercury
Drugs

Watsons

Malls

Davao

10

12

Tagum

GenSan

Butuan

Surigao

CDO

10

Iligan

Zamboanga

Cebu City

Mandaue

Lapu-Lapu

Talisay

Carcar

Consolacion

The table above shows the areas that can be potential market of
the firm. Pharmacies and drugstore include only those companies who
were known nationwide like Mercury Drug and Rose Pharmacy. For
personal care shops, the data above include only the Watsons personal
care shops. Malls are also included to the potential market.

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2.4.6.4 Trade Discounts
The company will offer incentives to its distribution channels in
order for them to pursue and push the products to its potential buyers. The
company will give a discount, 1% of SRP, for all its variants and sizes to
the retailers of the products. Retailers include the pharmacies and
drugstores. Their payment can be in a form of credit or direct cash pay. For
credits, it will have two months credit term as allowance. But, if they will
pay in cash upon delivery, they can also avail the 3% discount of the SRP
product instead of 1% discount. For the long term discounts, the company
also gives incentives to those who are serving with loyalty to the products.
2.4.6.5 Trade Incentives
Image 6.12. Trade Incentives

2.4.6.6 Sales Force


The company will have its main office in Davao. The employees,
key accounts, sales, and logistics staff stays at the office. The key accounts
are the ones who will offer deals and business arrangements to the
potential markets in Mindanao and Cebu. The sales person will then be of

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close contact and be the one responsible to introduce the products to the
customers. Davao Office has distribution teams (logistics and staff) which
comprise two persons. The distribution team will then deliver the orders
and stocks to every mall and to main branches of retailers. On the first year,
the company will hire one (1) key accounts executive and two (1)
salesperson every time stalls are opened in target malls. In the said malls,
the company will assign two (1) sales person to manage the stalls. The
General Manager should make sure that these persons are performing well
with the assigned tasks given to them.
To motivate the salespersons in selling and promoting the products,
they will work as partners, if the set of quota is achieved for certain time or
period, both of them will receive an additional incentive of 10 percent, a
separate pay to their regular salary.
The distributor team will deliver the TropiAid products to the main
branches of the retailers, pharmacies and personal care shops. However,
for the distribution to malls in the different targeted cities of the company in
Mindanao, the company will directly deliver the products in the said malls
from the respected offices.
2.4.6.7 Cost Implications to Total Product Cost
Table 6.17. Distribution Cost

New Product Intro Fee


Delivery Cost
Royalty Fees
Mall Lease
Total Costs

2014
75,000.00
320,000.00
360,585.00
144,000.00
899,585.00

Distribution Cost
2015
2016
76,889.28
78,553.40
328,060.92
335,161.17
450,203.63
726,836.84
383,831.27
633,454.60
1,238,985.10 1,774,006.01

2017
79,974.89
341,226.18
877,686.62
890,600.32
2,189,488.00

2018
81,138.40
346,190.52
1,049,004.65
1,059,342.98
2,535,676.54

2.4.6.8 Sales Projection


Table 6.18. Sales Projection in Units

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Inhalers (2-ml Liniment)


50-ml Liniment (Regular)
50-ml Liniment (Massage)
100-ml Liniment (Regular)
100-ml Liniment (Massage)
10-g Ointment (Antifungal)
10-g Ointment (Antipruritic)
10-g Ointment (Corticosteroid)
TOTAL

2014
6,173.00
7,754.00
5,169.00
7,066.00
4,709.00
10,810.00
10,810.00
9,262.00
61,753.00

2015
7,811.00
9,810.00
6,538.00
8,939.00
5,957.00
13,672.00
13,672.00
11,722.00
78,121.00

2016
12,701.00
15,952.00
10,635.00
14,532.00
9,689.00
22,223.00
22,223.00
19,048.00
127,003.00

2017
15,630.00
19,628.00
13,084.00
17,882.00
11,922.00
27,353.00
27,353.00
23,441.00
156,293.00

2018
19,100.00
23,984.00
15,988.00
21,852.00
14,570.00
33,424.00
33,424.00
28,647.00
190,989.00

2015
246,046.50
901,539.00
686,490.00
1,642,988.20
1,094,896.60
1,866,228.00
1,579,116.00
2,830,863.00
10,848,167.30

2016
420,403.10
1,539,368.00
1,173,040.50
2,804,676.00
2,136,424.50
3,186,778.20
2,695,649.90
4,830,572.80
18,786,913.00

2017
543,924.00
1,990,279.20
1,516,435.60
3,624,681.40
2,761,135.20
4,119,361.80
3,484,772.20
6,242,338.30
24,282,927.70

2018
699,060.00
2,554,296.00
1,945,739.60
4,652,290.80
3,543,424.00
5,287,676.80
4,472,131.20
8,012,565.90
31,167,184.30

Table 6.19. Sales Projection in Pesos


Inhalers (2-ml Liniment)
50-ml Liniment (Regular)
50-ml Liniment (Massage)
100-ml Liniment (Regular)
100-ml Liniment (Massage)
10-g Ointment (Antifungal)
10-g Ointment (Antipruritic)
10-g Ointment (Corticosteroid)
TOTAL

2014
185,190.00
678,475.00
516,900.00
1,236,550.00
941,800.00
1,405,300.00
1,189,100.00
2,130,260.00
8,283,575.00

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3 Operational Plan
3.1

Technical Specifications
Banana oil is the main ingredient of all TropiAid products. This is integrated with

different natural substances to produce such products. The following are the formulations
of the TropiAid products:
Table 7.1. Liniment and Ointment Formulation
Linim ent Form ulations
Regular Massage
Banana Oil
5.00%
10.00%
Menthol
60.00% 55.00%
Pepperm int 5.00%
5.00%
Cam phor
10.00% 10.00%
Borneol
10.00% 10.00%
Eucalyptus
10.00% 10.00%

3.1.1

Banana Oil
Beesw ax
Other Oils
Citronella Oil

Ointm ent Form ulations


Antipruritic Antifungal Corticosteroid
40.00%
45.00%
50.00%
30.00%
30.00%
30.00%
20.00%
15.00%
10.00%
10.00%
10.00%
10.00%

Raw Materials Requirements


Due to the Bagyong Pablo incident which damaged 18 percent of the

banana plantations in Mindanao, the company decided to purchase pre-extracted


banana oil, 25 percent of the banana quantity, to cover up such damage.
Table 7.2. Raw Materials Requirement per Unit (Liniments) for Years 1 and 2

MassageRegular
MassageRegular

Liniment

Liniment

Raw Materials Requirem ents Per Unit


50-m l Linim ent
Inhaler
Regular Massage
Banana (g)
0.15
1.87
3.74
Banana Oil (g)
0.04
0.55
1.10
50 m l
1.00
100 m l
Prim ary Packaging
2 ml
1.00
50 m l
1.00
100 m l
50 m l
1.00
100 m l
Secondary Packaging
2 ml
1.00
50 m l
1.00
100 m l
Tertiary Packaging
0.01
0.01
0.01

100-m l Linim ent


Regular Massage
3.74
7.49
1.10
2.19
1.00
1.00
1.00
1.00
0.02
0.02

Table 7.3. Raw Materials Requirement per Unit (Liniments) for Years 3, 4 and 5

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MassageRegular
MassageRegular

Liniment

Liniment

Raw Materials Requirem ents Per Unit


50-m l Linim ent
Inhaler
Regular Massage
Banana (g)
0.20
2.50
4.99
50 m l
1.00
100 m l
Prim ary Packaging
2 ml
1.00
50 m l
1.00
100 m l
50 m l
1.00
100 m l
Secondary Packaging
2 ml
1.00
50 m l
1.00
100 m l
Tertiary Packaging
0.01
0.01
0.01

100-m l Linim ent


Regular Massage
4.99
9.99
1.00
1.00
1.00
1.00
0.02
0.02

Table 7.4. Raw Materials Requirement per Unit (Ointments) for Years 1 and 2

Prim ary Packaging

Secondary Packaging

Ointment Ointment

Raw Materials Requirem ents Per Unit


Ointm ent
Anti-Fungal
Antipruritic Corticosteroids
Banana (g)
3.42
3.85
4.28
Banana Oil (g)
1.00
1.13
1.25
Citronella Oil (g)
1.00
1.00
1.00
AF 10 g
AP 10g
C

10g

AF 10 g
AP 10g
C

10g

Tertiary Packaging

1.00
1.00
0.01

1.00
1.00
0.01

1.00
1.00
0.01

Table 7.5. Raw Materials Requirement per Unit (Ointments) for Years 3, 4 and 5

Prim ary Packaging

Secondary Packaging

Ointment Ointment

Raw Materials Requirem ents Per Unit


Ointm ent
Anti-Fungal
Antipruritic Corticosteroids
Banana (g)
4.56
5.13
5.70
Citronella Oil (g)
1.00
1.00
1.00
AF 10 g

1.00

AP 10g

C 10g

AF 10 g
AP 10g

Tertiary Packaging

C 10g

1.00
0.01

1.00
1.00
0.01

1.00
1.00
0.01

34 | P a g e

A Business Plan of TropiAid


3.2

Toll Manufacturing
Tropical Pharmaceuticals will produce the products through toll
manufacturing, an arrangement in which another company processes the raw
materials supplied by our company. Specifically, the company will supply the
banana, primary, secondary, and tertiary packaging to the toll manufacturer. After
the whole processing, the company picks up the packed finished goods then
brought and stored in the company warehouse.
If a breach of contract or discontinuity of agreement arises between
Tropical Pharmaceuticals and InventFoods, the firm will then push to deal with
Greenplus Corporation. With this, the alternative plan in line with the change of the
toll manufacturer will then pursue to continue the production. Due to the fact that
shipping a batch of banana fruits would be very expensive, it would be more
practical if the extracted oil from the banana is shipped to the toll manufacturer.
Therefore, the company will outsource Neoteheo International Inc., a company that
provides services in extracting essential oils from banana located in Toril, Davao
City. (For agreement details, see Appendix I and J: Toll Manufacturing Agreement
and SRP)
3.2.1

Operations
After several testing and certification procedures, the tolling operations

start. To further breakdown the processes that the supplied materials undergo, the
following flow chart is followed:

35 | P a g e

A Business Plan of TropiAid


Image 7.1 Toll Manufacturing Operations
Banana Fruit

Delivery of Banana
Fruit

Stability Test

Distillation

Mixing with Other


Essential Oils

Primary
Packaging

Delivery of Primary
Packaging

Bottling

Secondary
Packaging

Delivery of
Secondary
Packaging

Package in
Secondary Boxes

Tertiary
Packaging

Delivery of Tertiary
Packaging

Package in
Tertiary Boxes

Purchase/Delivery
of Other Oils

Delivery to Office

Storage

The operations enclosed within the red border are the responsibilities of
the toll manufacturer. The remaining operations outside the red border are the
responsibilities of the company.

36 | P a g e

Other Oils

A Business Plan of TropiAid


3.3

Inventory Management
3.3.1

Finished Goods

Tropical Pharmaceuticals will maintain a 30-day inventory. The inventory is based


on the forecasted demand. Part of the 30-day inventory is an allowance for possible
defects and additional stocks to avoid stock out. As much as possible, the company targets
in satisfying the actual demand given a possible fluctuation of demand.

Table 7.6. Production Plan


Inventory, Inhaler (2-m l
Linim ent)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level
Inventory, 50-m l Linim ent
(Regular)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level
Inventory, 50-m l Linim ent
(Massage)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level
Inventory, 100-m l Linim ent
(Regular)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level

2014
7,200
36
69
6,173
958
37

2014
8,900
89
83
7,754
1,063
33

2014
5,900
59
60
5,169
671
31

2014
8,050
161
79
7,066
905
31

2015
958
8,400
42
84
7,811
1,463
35

2015
1,063
10,500
105
103
9,810
1,650
31

2015
671
7,000
70
72
6,538
1,061
30

2015
905
9,600
192
98
8,939
1,468
30

2016
1,463
13,000
65
132
12,701
1,630
31

2016
1,650
16,500
165
168
15,952
2,030
31

2016
1,061
11,000
110
112
10,635
1,314
30

2016
1,468
15,050
301
152
14,532
1,834
31

2017
1,630
16,200
81
164
15,630
2,036
32

2017
2,030
20,200
202
200
19,628
2,402
30

2017
1,314
13,600
136
138
13,084
1,692
32

2017
1,834
18,450
369
187
17,882
2,215
30

2018
2,036
19,200
96
202
19,100
1,934
30

2018
2,402
24,300
243
249
23,984
2,469
31

2018
1,692
14,400
144
168
15,988
(64)
30

2018
2,215
22,050
441
227
21,852
2,186
30

37 | P a g e

A Business Plan of TropiAid


Inventory, 100-m l Linim ent
(Massage)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level
Inventory, 10-g Ointm ent
(Antifungal)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level
Inventory, 10-g Ointm ent
(Antipruritic)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level
Inventory, 10-g Ointm ent
(Corticosteroid)
Beginning Inventory
Production
Production (in boxes)
Allow ance for Scraps
Sales
Ending Inventory
Days Level

2014
5,400
108
52
4,709
639
32

2014
11,900
238
112
10,810
978
31

2014
11,900
238
112
10,810
978
31

2014
10,200
204
100
9,262
838
31

2015
639
6,350
127
66
5,957
966
30

2015
978
14,400
288
142
13,672
1,564
30

2015
978
14,400
288
142
13,672
1,564
30

2015
838
12,350
247
124
11,722
1,342
30

2016
966
10,050
201
100
9,689
1,227
31

2016
1,564
22,850
457
230
22,223
1,961
31

2016
1,564
22,850
457
230
22,223
1,961
31

2016
1,342
19,550
391
200
19,048
1,644
30

2017
1,227
12,300
246
127
11,922
1,478
30

2017
1,961
28,050
561
283
27,353
2,375
30

2017
1,961
28,050
561
283
27,353
2,375
30

2017
1,644
24,050
481
241
23,441
2,012
30

2018
1,478
14,750
295
152
14,570
1,506
31

2018
2,375
34,100
682
342
33,424
2,709
30

2018
2,375
34,100
682
342
33,424
2,709
30

2018
2,012
29,250
585
295
28,647
2,320
30

The firm will use First in First Out (FIFO) in delivering and distributing finished
products to the identified outlets. This method may avoid the damages and spoilage of
materials and products.
Also, the firm considers the Just-in-Time method in the distribution operations. As
stated in the previous chapter, the firm has its own distribution teams. The delivery times
are to be scheduled that is agreeable to both the company and its retailers.

38 | P a g e

A Business Plan of TropiAid


3.3.2

Raw Materials

Based on the production plan (see Table 7.6: Production Plan) and raw materials
requirements per unit (see Tables 7.2, 7.3, 7.4, and 7.5: Raw Material Requirements Per
Unit), the company is required to purchase the following quantity of raw materials:
Table 7.7. Annual Raw Materials Requirements
2014

2015

2016

2017

2018

Banana (kg)
Banana Oil (kg)
Citronella Oil (kg)
Primary Packaging (pcs)

240.52
281.31
34.00
-

288.09
336.95
41.15
-

607.08
65.25
-

745.42
80.15
-

890.96
97.45
-

Inhalers (2-ml Liniment)


50-ml Liniment (Regular)
50-ml Liniment (Massage)
100-ml Liniment (Regular)
100-ml Liniment (Massage)
10-g Ointment (Antifungal)
10-g Ointment (Antipruritic)
10-g Ointment (Corticosteroid)
Secondary Packaging (pcs)
Inhalers (2-ml Liniment)
50-ml Liniment (Regular)
50-ml Liniment (Massage)
100-ml Liniment (Regular)
100-ml Liniment (Massage)
10-g Ointment (Antifungal)
10-g Ointment (Antipruritic)
10-g Ointment (Corticosteroid)
Tertiary Packaging (pcs)
Inhalers (2-ml Liniment) - 10x10x6
50-ml Liniment - 10.5x10.5x8
Other - 10x10x10

7,200
8,900
5,900
8,050
5,400
11,900
11,900
10,200
7,200
8,900
5,900
8,050
5,400
11,900
11,900
10,200
36
142
637

8,400
10,500
7,000
9,600
6,350
14,400
14,400
12,350
8,400
10,500
7,000
9,600
6,350
14,400
14,400
12,350
42
164
764

13,000
16,500
11,000
15,050
10,050
22,850
22,850
19,550
13,000
16,500
11,000
15,050
10,050
22,850
22,850
19,550
65
244
1,202

16,200
20,200
13,600
18,450
12,300
28,050
28,050
24,050
16,200
20,200
13,600
18,450
12,300
28,050
28,050
24,050
81
296
1,467

19,200
24,300
14,400
22,050
14,750
34,100
34,100
29,250
19,200
24,300
14,400
22,050
14,750
34,100
34,100
29,250
96
308
1,769

In the procurement operations, the company considered the Minimum Order


Quantity (MOQ) and turnover of each of the raw materials. From such considerations, the
days level of the materials are also identified.

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A Business Plan of TropiAid


3.4

Suppliers
Table 7.8. Possible Suppliers
Banana

Banana Oil

Citronella Oil

Supplier

Dr. Maria Isabel


Sangutan

Tadeco

Dezhou Tonglin
Chemicals Limited
Liability Company

GuangZhou HuangPu

Gezer Enterprises

Location

Carmen

Panabo, Davao Del


Norte

Shandong, China

Guangdong, China

Bayabas, Cagayan
de Oro City

EFKS General
Merchandise and
Corporate
Giveaw ays
Grace Park, Caloocan
City

1000 kg/day

300 kg/day

2000 kg/month

5000 kg/month

20 kg

50 kg

100 kg

100 kg

16 kg

50 kg

9.00

11.00

100.00

90.00

1300.00

2500.00

On Pick-Up

On Pick-Up

30% DP, 70% On


Receipt

30% DP, 70% On


Receipt

30% DP, 70% On


Receipt

30% DP, 70% On


Receipt

Shipment Cost
at Minimum
Order (in Php)

120.23

85.78

*included in price

*included in price

553.07

1712.00

Total
Price/Unit (in
Php)

15.01

12.72

100.00

90.00

1300.00

2500.00

Maximum
Capacity
Wholesale
Minimum
Order
Price/Unit (in
Php)
Payment
Terms

Finished Products (Tolling) - 60 m l

2 ml

50 m l

100 m l

Prim ary Packaging


10 g
2 ml

50 m l

100 m l

10 g

Supplier

Invent Foods

Greenplus

Metroace Innovplas

Davao Dynamic Industries

Location

Tibungco, Davao City

Calamba, Laguna

R. Castillo, Davao City

Buhangin, Davao City

80,000 pcs

100,000 pcs

1,000 pcs

1,000 pcs

500
pcs/bag

500
pcs/bag

400
pcs/bag

100
pcs/bag

500
pcs/bag

300 pcs

250 pcs

100 pcs

90.00

100.00

10.00

2.10

2.90

6.50

10.00

2.50

5.00

11.25

On Pick-Up

On Pick-Up

On Pick-Up

On Pick-Up

Shipment Cost
at Minimum
Order (in Php)

85.04

2000.00

75.64

94.51

Total
Price/Unit (in
Php)

90.09

100.20

21.55

28.83

Maximum
Capacity
Wholesale
Minimum
Order
Price/Unit (in
Php)
Payment
Terms

20,000 pcs 20,000 pcs 20,000 pcs

20,000 pcs 20,000 pcs 20,000 pcs

40 | P a g e

A Business Plan of TropiAid

Secondary Packaging

Tertiary Packaging

Mindanao
Davao
Cortes Printing Corp. Corrugated Corrugated
Fibreboard
Carton

Supplier

Castaneda Printing
Press

Location

Magallanes, Davao
City

Rizal Extension
Davao City

Sasa,
Davao City

Lanang,
Davao City

10,000 pcs

10,000 pcs

7,000 pcs

5,000 pcs

50 pcs

50 pcs

100 pcs

100 pcs

5.00

6.00

24.00

25.00

30% DP, 70% On PickUp

On Pick-Up

102.68

94.99

39.89

74.56

7.05

7.90

24.40

25.75

Maximum
Capacity
Wholesale
Minimum
Order
Price/Unit (in
Php)
Payment
Terms
Shipment Cost
at Minimum
Order (in Php)
Total
Price/Unit (in
Php)

On Pick-Up On Pick-Up

Among these suppliers, the company will choose the following companies: Tadeco,
for the banana; GuangZhou HuangPu, for the banana oil; Gezer Enterprises, for the
citronella oil; InventFoods, as our toll manufacturer; Metroace Innovplas Industries, for the
primary packaging; Castaneda Printing Press, for the secondary; and Mindanao
Corrugated Fibreboard, for the tertiary. These are chosen because of their cost
effectiveness. Also, their minimum order quantity can accommodate and adequate to
satisfy Tropical Pharmaceuticals demand.
3.5

Quality and Safety


3.5.1

Control Measures

Statistical Process Control (SPC)


SPC will be installed to the toll manufacturing company,

InventFoods, by Tropical Pharmaceutical through regular check-up of the


production and knowing the capacity of the toll manufacturing company in
order to achieve and maintain the standard of the desired output of the
products. SPC could verify product quality before distribution and may
provide a monthly based report through conducting a constant check of an

41 | P a g e

A Business Plan of TropiAid


in-house inspector. Through getting some samples in the batches of
products periodically, performing a gradual inspection in terms of the
product quality to and filing records per batch, will give assurance in
achieving the standard quality.

Quality Function Deployment (QFD)


QFD, by conducting a periodic survey, will be done to random

customers to determine the feedback of its product and its services.


Problems incurred are noted and assessed through the Corrective Action
Report (CAR). Given the results of this survey, it will determine some
adjustments in terms of its production volume and product quality. Through
the feedbacks, it may answer the question of the firm of whether to increase
or decrease the volume of the production and also it will pin point of certain
areas for improvement and points to develop.
3.5.2

Compliance Standards

International Organization for Standardization (ISO): Cosmetics


and Pharmaceuticals
The company will comply in ISO standard in checking the quality of

its finished products. By checking its physical characteristics, such as


formulations, weight, volume, labeling and other factors will ensure
qualified and safety products were distributed to the customers or buyers.

Halal
The company is engaged in toll manufacturing. The toll

manufacturer is Halal-approved in which all the products produced does


not contain any animal-based content that secures safeties to Islam users.
3.5.3

Standards Specifications
3.5.3.1 Raw Materials
Before sending the raw materials to the manufacturer, the company
ensures the quality of these materials according to the tools presented on

42 | P a g e

A Business Plan of TropiAid


the previous lines. This is done through an agreement between the supplier
and the company. In return, the company sets a premium for the supplier
in terms of their pricing. The following are the list of acceptable or nonacceptable levels of quality:
Table 7.9. Standard Specifications of Raw Materials

Level

Banana

Primary

Secondary

Tertiary

Packaging

Packaging

Packaging

Complete
parts or

Acceptable

Yellow,

segments,

green, no

properly and

black dots

clearly

on its skin

labeled, good
shape and

Standard size
and shape,
properly and
clearly
labeled

Standard size
and shape,
durable,
properly and
clearly
labeled

size
Wet,

Wet,

deformed

deformed

shape, visible

shape, visible

Deformed

scratches and

scratches and

shape, holes

cuts,

cuts,

smudged

smudged

labels,

labels,

mislabeled

mislabeled

Full of black
dots,
Reject

exposed
banana
flesh, moldy

3.5.3.1 Finished Goods


Finished goods are then subjected to final inspection to ensure
quality. The following are the list of acceptable and non-acceptable (rework
or completely rejected) levels of quality:

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Table 7.10. Standard Specifications of Finished Goods

Level

Liniment

Ointment

Primary

Secondary

Tertiary

Packaging

Packaging

Packaging

Standard

Acceptabl
e

Standard

Standard

shape and

Standard

Standard

liquid level

weight

size,

size and

shape and

(5%),

(5%),

complete

shape,

size, clear

standard

standard

segments,

clear

labeling,

quality

quality

secured

labeling

durable

locks

Rework

Reject

3.6

Beyond

Beyond

the control

the control

limits of

limits of

acceptabl

acceptabl

e liquid

e weight

level

level

(5%)

(5%)

Loose
threads
(caps),
slightly
deformed
shape

Low
Manageabl

durability,

e blur of

manageabl

label, slight

e blur of

bends/

label, slight

scratches

bends/
scratches

Leak/holes

Smudged

Smudged

Below

Below

, damaged

labels, wet,

labels, wet,

standard

standard

caps,

deformed

deformed

quality

quality

incomplete

shape,

shape,

segments

mislabeled

mislabeled

Waste Disposal
3.6.1

Returned Products
Rejects are the only wastes that the company encounters. Some of these

are returned to the firm due to some defects. These are then returned to the toll
manufacturer for replacement if the toll manufacturer is liable for such damage.
The usual factors of returns are damages upon delivery and damaged labels and
packaging. The damages in which the tolling firm is of responsibility are the
following:
44 | P a g e

A Business Plan of TropiAid


3.6.1.1 Damages upon Delivery
Products returned because of damages upon delivery are under
the responsibility of the tolling firm. The damaged products will then be
replaced by the firm without incurring any additional payments for
Tropical Pharmaceuticals. If such incident happen, the delivery team,
which belong to the firm, should necessary be aware in caring and
maintain the quality and safety of the product within the transportation
period.
3.6.1.2 Damaged Labels and Packaging
The tolling firm will be accountable for the products that contain
damaged labels and packaging. The retailers must inform the firm
regarding the concern of the defect of the products packaging for them
to replace it. The returned products will then be returned to the toll
manufacturer to be re-labeled and re-packaged subject again for resale.

Finished products returned from the market and which have left the control
of the toll manufacturer and the firm shall be considered for re-sale, re-labeling or
incorporation in a subsequent batch only after the person responsible for quality
control has critically assessed them. If finished products were not approved for
resale and any doubt arises over quality of the product, they will then be
reprocessed for other uses.

45 | P a g e

A Business Plan of TropiAid

4 Management and Organization


4.1

Pre-Operating Period
4.1.1

Project Originators and Promoters


The project originators of the firm are Eugene Angelo I. Subang, and

Princess Grace B. Baquirel. (See Appendix K: Owners Resume) They will be one
of the incorporators of the corporation. The project originators will also be the one
who will overlook on all operations, from the pre-operating period to the
actualization of the business operations. Most especially, they are the main
decision makers in the company.
The project promoters of the company will be the proponents of this project.
Since the proponents are the project originators, they are knowledgeable of the
nature of the product, how the product was made, and its profile and benefits.
4.2

Operating Period
The type of business organization of the company will be a corporation. It is a

corporation shared among nine (9) investors. In a corporation, owners have a limited
liability since a corporation is a separate distinct legal entity. Owners of a corporation are
only indebted to the extent of their interest in the corporation. In addition, the corporations
power of succession enables it to enjoy a continuous existence since the shares of its
interest can be transferred from one owner to another. Also, because of limited liability,
ease of transfer of shares and continuity, investors are more attracted to investing in
corporations rather than in sole proprietorships and partnerships. This attraction allows
corporations to raise the capital needed to manage and expand their operations.

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4.3

Internal Organization
4.3.1

Organizational Structure

Image 8.1. Organizational Structure

General Manager
(1)

Administrative
Assistant (1)

Sales and
Marketing Head
(1)

Logistics and
Quality Assurance
Staff (3)

Key Accounts
Executive (4)

Stall Attendants
(4)

4.3.2

Functions

General Manager
o

The General Manager will oversee and control the all


branches of the business. He will be the one training
employed workers to see the level of performance of the
employee. Also, he will handle the financial aspect of the
firm.

Sales and Marketing Head


o

The Sales and Marketing will manage the strategic planning


of selling and marketing of the products. This will include
looking for potential customers and close deals with them.
The head will be responsible on looking after customer
service. This will include answering their concerns, keeping

47 | P a g e

A Business Plan of TropiAid


good relations with them, and stabilizing their patronage
towards our products.

Administrative Assistant
o

The Administrative Assistant will perform general clerical


duties. This will include bookkeeping, copying, faxing,
mailing, and filing. In addition, she will be responsible in
taking and transcribing meeting notes and more. In addition,
she will entertain walk-in customers and other immediate
businesses in the office.

Key Accounts Executives


o

The Key Accounts Executives will have a close contact to


the prospect buyers. They will handle the promotion of
products and closing deals in different outlets, specifically in
personal care shops, convenience stores, and pharmacies
and drugstores.

Stall Attendants
o

The Stall Attendants (or salespersons) will be situated in


stalls in different malls. They will handle the direct selling
activities of the firm.

Logistics and Quality Assurance Staff


o

The Logistics and Quality Assurance Head will manage


inventory plans, close deals with the suppliers, schedule
and purchase raw materials, and ensure quality of both raw
materials and finished goods. Also, he will be in-charge of
the distribution of the products at the right time at the right
place.

4.3.3

Owners
Tropical Pharmaceuticals is proudly a Dabaweo company. All of the

owners of the corporation reside in the Davao Region. In addition, the percent of
ownership of the incorporators are illustrated below.

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A Business Plan of TropiAid


Image 8.2. Capital Stockholders

Percentage of Ownership
Common Stocks,
5%
Baquirel, R., Sr.,
11%

Subang, E. A.,
15%

Baquirel, G., 7%

Subang, N., 13%

Baquirel, P. G.,
15%

Tan, T., 10%

Inguillo, N., 10%

De Leon, W.,
13%

4.3.4

Management Personnel

Table 8.1. Requirements, Qualification and Compensation for Management Personnel

Time

Qualifications

Requirements

Recruitment

Resume

Screening

Application

Comprehen

Compensatio
n

Male or Female
Graduate of BS Industrial
Engineering

or

any

General Manager

business related course


5-year
5 days a week,
8 hours a day

letter

experience

regarding management of

a company
Positive

referral

from

Organized
Excellent oral and written

Medical

Interview

certificate

NBI
clearance

previous employer

sive Exam

month

P20,000
Monthly

training
Training

Transcript

and

of record

seminars

communication skills
Good moral character

49 | P a g e

A Business Plan of TropiAid

Male or Female
Graduate of BS Industrial

Sales and Marketing Head

Engineering

or

any

business related course


5-year
Positive

8 hours a day

Resume

Screening

Application

Comprehen

experience

regarding position
5 days a week,

letter

referral

from

previous employer

Has sufficient knowledge


in sales and marketing

Medical

Interview

certificate

NBI
clearance

Organized

sive Exam

P18,000
Monthly

month

5%

training

Incentives

Training

Transcript

and

of record

seminars

Excellent oral and written


communication skills
Good moral character

4.3.5

Labor Workforce

Table 8.2. Requirements, Qualifications and Compensation for Labor Workforce


Number of Employees
Needed

Administrative Assistant

2018

2017

2016

2015

2014

Qualifications

Recruitment

Labor

Compensatio

Program

Training

Female
Organized
Excellent
1

and

Comprehens
oral
written

ive Exam
3-month

communication

work

skills

evaluation

Good

Sales

Talk

Seminar
Interaction

P15,000
Monthly

Training

moral

character

50 | P a g e

A Business Plan of TropiAid

Male or Female

Has

sufficient

Logistics and Quality Assurance Staff

knowledge

in

inventory
management
and

Organized

Excellent
and

Comprehe
nsive

Application

Exam

letter

Interview

Medical

certificate
oral

written

NBI

training

3-month

seminars

work

Good

evaluation

15,000

Training
and

skills
moral

month

clearance

Monthly

FIFO
Seminar

character

Resume

communication

Screening

quality

assurance

ISO
Seminar

Willing to work
in early hours

Hardworking

Male or Female
Physically fit
Willing to work in
Sales

Key Accounts Executive

early hours
Hardworking

Comprehens

Good
background
1

sales

in
and

and

3-month
work

marketing
Excellent

ive Exam

oral
written

evaluation

Talk

Seminar
Interaction
Training
FIFO
Seminar

P15,000
Monthly
10%
Incentives

ISO
Seminar

communication
skills
Good

moral

character

51 | P a g e

A Business Plan of TropiAid

Male or Female
Physically fit
Willing to work in

Stall Attendants

early hours
At

least

high

school graduate
4

12

16

20

Hardworking
Good

oral

and

Comprehens
ive Exam
1-month
work
evaluation

written

Sales

Talk

Seminar
Interaction
Training
5S+1

P9,000
Monthly
10%
incentives

Seminar

communication
skills
Good

moral

character

4.4

External Firm Relationship


The firm will hire a corporate lawyer. A corporate lawyer must acquire at least two

years of experience with corporations and has the capacity to handle agreements,
settlements, acquisitions and certifications and at least has a bit knowledge of other
business related transactions with regards to financing and/or accounting. The lawyer
must be hired during the pre-operational period to guide and would serve as the consultant
with regards to every deals, agreements, settlement and business processes that needs
to be prepared before the launching of the production. The compensation for the lawyer
shall be P30,000.
A Pharmaceutical Analysts or skincare expert is needed to be hired by the
company. The firm requires expert/analysts that has a manufacturing experience for at
least two to three years and has background practicing chemistry and other related
professions that could function as consultant and help guide for the production processes
and product formulations. The Pharmaceutical Analysts/Experts should be able to provide
any development or progress regarding the effectiveness to the current production
formulations for each variant. He should be hired in the first year of the operational period
and the compensation shall P60,000.

52 | P a g e

A Business Plan of TropiAid

5 Social Responsibility
5.1

Economy
Tropical Pharmaceutical offers business with other companies, introducing a

Davao brand product and operates business provides contribution to the growth of the
economy and at the same time provides employment as a way to help the community,
helps circulate money by dealing with other business organization, and provides name
that acknowledges the work of Dabaweos.
5.2

Community
Tropical Pharmaceutical provides ready-made and all natural medicine that could

help repel mosquitoes, relieve body pains, and medicate insect bites and skin illnesses.
The company also aims to contribute to the programs held by Department of Health: (1)
Dengue Awareness Month during the month of June, (2) World Psoriasis Day for the
month of October and (3) National Skin Disease Detection and Prevention Week every
2nd week of November. The company also offers job opportunities and at the same time
helping other retailers earn money.
5.3

Environment
Tropical Pharmaceutical follows laws and provisions with regards to solid wastes

and disposal management as contribution in saving and preserving the environment.


Proper segregation and waste disposal are part of the companys implementing rules and
regulations. In addition, the company also implements recycling in form of converting
wastes, such as banana peels and production scraps, into fertilizers.

53 | P a g e

A Business Plan of TropiAid

6 Financing Plan
6.1

Start-up and Capitalization


Table 10.1. Start-Up and Capitalization
CAPITAL EXPENDITURES
Office Equipment
Office Renovation and Utilities Installation (Appendix L)
Trucks
TOTAL

179,886.00
122,500.00
350,000.00
652,386.00

PRE-OPERATING EXPENSES
Licenses, Permits, and Registration Fees
Trial Run
TOTAL

170,352.00
98,000.00
268,352.00

WORKING CAPITAL (2 MONTHS)


TOTAL

835,171.33

CONTINGENCY
TOTAL
TOTAL STARTUP AND CAPITALIZATION

6.2

176,000.00
1,936,000.00

Sourcing
Since the company is a corporation, one of its financing sources is from capital

stocks. The total amount of available capital stock is 154,800. The par value of each stock
amounts P5.00. The said available stocks, which amounts to P774,000.00, are distributed
among the nine (9) preferred stockholders while the remaining P55,000.00 will be shared
among the common stockholders. The dividends paid for the preferred stockholders will
be 40% of net income while half of the remaining will go to the common stockholders.

54 | P a g e

A Business Plan of TropiAid


Table10.2. Capital Stocks
CAPITAL STOCKS
Stockholders

Stocks

Subang, Eugene Angelo

Value

Ownership

4,600.00

23,000.00

15%

Subang, Nimfa

27,800.00

139,000.00

13%

Tan, Tyrone

20,200.00

101,000.00

10%

Inguillo, Norma

20,200.00

101,000.00

10%

De Leon, William

27,800.00

139,000.00

13%

4,600.00

23,000.00

15%

Baquirel, Gregorio

15,400.00

77,000.00

7%

Baquirel, Raphael, Sr.

23,200.00

116,000.00

11%

Common Stocks

11,000.00

55,000.00

5%

154,800.00

774,000.00

100%

Baquirel, Princess Grace

TOTAL CAPITAL STOCKS

Twenty-five percent of the total stocks are allotted for intellectual property. Thus,
such is distributed between the two originators having percentage of ownership stated in
the table above.
Loaning from the bank is another source of the companys financing. The loan will
amount to P1,162,000.00, The amount will be loans from the Bank of Philippine Islands
(BPI).
Table 10.3. Short-Term Loan

Bank

Amount

BPI

P1,162,000.00

Interest
Rate
6%

Monthly

0.5%

Years to
Pay
1

Start

January

Therefore, the total capitalization of the company is P1,936,000.00. The 60% of


the total start-up and capitalization is from bank loan while the other 40% is from the capital
stocks. The investors aim to earn 20.00%. Given the interest rate of 6.00%, the calculated
hurdle rate that the company has to overcome is 11.60%.

55 | P a g e

A Business Plan of TropiAid

7 Financial Plan
In this section, the companys financial plan of the company is presented. It is
supported through projected financial statements from the first to the fifth operating year,
broken down monthly in the first year. Afterwards, a financial analysis of the company is
presented to show how well the companys performance will be.
7.1

Major Assumptions
7.1.1

Assets

The Company will be operating 360 days a year.

Office equipment will be useful for 20 years.

Office renovation and Water, Electricity and Internet Installation will be useful for
20 years.

Delivery Trucks will be useful for 20 years.

All depreciations and amortizations will be calculated through straight line method.

Pre-operational expenses will be amortized for one year.


(See Appendix L and N: Renovation and Utilities Installation and Depreciation,
Amortization, and Loan Schedules)
7.1.2

Liabilities

Accounts payables for direct materials will be fully paid after 30 days. (See Section
7.10.3: Accounts Payable Management)

The long-term loan will be paid at most ten years. (See Appendix N: Depreciation,
Amortization, and Loan Schedules)

56 | P a g e

A Business Plan of TropiAid


7.1.3

Sales

Product prices are as follows:

Table 11.1. Product Pricing

Inhaler (2-ml Liniment)


50-ml Liniment (Regular)

2014

2015

2016

2017

2018

25.00

26.30

27.70

29.10

30.60

87.50

91.90

96.50

101.40

106.50

50-ml Liniment (Massage)

100.00

105.00

110.30

115.90

121.70

100-ml Liniment (Regular)

175.00

183.80

193.00

202.70

212.90

100-ml Liniment (Massage)

200.00

210.00

220.50

231.60

243.20

10-g Ointment (Antifungal)

130.00

136.50

143.40

150.60

158.20

10-g Ointment (Antipruritic)

110.00

115.50

121.30

127.40

133.80

10-g Ointment (Corticosteroid)

230.00

241.50

253.60

266.30

279.70

The increase of prices is based on an inflation rate of 2.16% for years 2014, 2015,
2016, 2017, and 2018. (See Appendix G: Forecasted Inflation and GDP Rates)

90% of the sales transactions will be on credit and be collected after 30 days.

Bad Debts at 3% of Accounts Receivables (See Section 7.10.2: Accounts


Receivable Management)
7.1.4

Expenses

Full absorption costing method is used for calculating the COGS. (See Appendix
M: Annual Cost of Goods Sold)

All costs except depreciations and amortizations rates are inflated according to the
said inflation rate. (See Appendix G: Forecasted Inflation and GDP Rates)

Salaries and Wages increase by an average of 25% per year. (See Appendix O:
Salaries and Wages Schedule)

Pharmaceutical Consultations are done every year with a fee of P60,000.00.

Office rent will be P15, 600 per month. (See Section 7.8: Office Location)

Telecommunication rates are based on PLDT product package.

Light and power rate is based on Davao Light and Power Co. charges per Kilowatthour.

Water rate is based on the Davao City Water District charges per cubic meter.
(See Appendix L: Renovation and Utilities Installation)

Advertising expenses will be based on the promotional strategy of the company


approximately 4% of the sales. (See Table 6.6: Advertising Cost)
57 | P a g e

A Business Plan of TropiAid

SSS, PhilHealth, and Pag-Ibig premium expenses are based on the SSS,
PhilHealth, and Pag-Ibig contribution schedules. (See Appendix P: SSS,
PhilHealth, and Pag-ibig Contribution Schedules)

Compensation covers only 13.5 months including bonuses to its regular workers;
daily salaries and wages per position

7.1.5

Interest and Taxes

There is a 12% VAT on all product sales. (See Section 6.4.5: Price Strategies)

Interest rate of short-term loans will be 6% per annum. (See Table 10.3: ShortTerm Loan)

Desired return on capital to owners will be 20%. (See Section 10.2: Sourcing)

58 | P a g e

7.2

Financial Statements

Table 11.3. First Year Monthly Income Statement, January to June 2014
Pre-Operating

January

February

March

April

May

June

REVENUE
Inhalers (2-ml Liniment)

18,240.00

14,580.00

16,410.00

12,930.00

12,930.00

18,450.00

50-ml Liniment (Regular)

66,850.00

53,462.50

60,112.50

47,337.50

47,337.50

67,637.50

50-ml Liniment (Massage)

50,900.00

40,700.00

45,800.00

36,100.00

36,100.00

51,500.00

100-ml Liniment (Regular)

121,800.00

97,475.00

109,550.00

86,275.00

86,275.00

123,200.00

100-ml Liniment (Massage)

92,800.00

74,200.00

83,400.00

65,800.00

65,800.00

93,800.00

10-g Ointment (Antifungal)

96,850.00

96,850.00

96,850.00

140,010.00

140,010.00

140,010.00

10-g Ointment (Antipruritic)

81,950.00

81,950.00

81,950.00

118,470.00

118,470.00

118,470.00

10-g Ointment (Corticosteroid)


Total Sales

146,740.00

146,740.00

146,740.00

212,290.00

212,290.00

212,290.00

676,130.00

605,957.50

640,812.50

719,212.50

719,212.50

825,357.50

less: VAT

81,135.60

72,714.90

76,897.50

86,305.50

86,305.50

99,042.90

less: Sales Discounts

6,085.17

5,453.62

5,767.31

6,472.91

6,472.91

7,428.22

588,909.23

527,788.98

558,147.69

626,434.09

626,434.09

718,886.38

416,377.47

204,238.69

190,823.94

191,554.47

250,042.55

241,416.30

Net Sales
COST OF GOODS SOLD
Cost of Goods Manufactured

Finished Goods Inventory, Beg.

217,204.51

206,152.87

195,578.58

194,080.28

250,560.73

Available for Sale

416,377.47

421,443.20

396,976.81

387,133.05

444,122.83

491,977.02

Finished Goods Inventory, End.

217,204.51

206,152.87

195,578.58

194,080.28

250,560.73

248,784.59

less: Cost of Goods Sold

199,172.96

215,290.33

201,398.23

193,052.77

193,562.10

243,192.43

GROSS PROFIT

389,736.27

312,498.65

356,749.46

433,381.32

432,871.98

475,693.95

A Business Plan of TropiAid

Pre-Operating

January

February

March

April

May

June

OPERATING EXPENSES
Depreciation Expense

Bad Debts Expense

Amortization

22,362.67

22,362.67

22,362.67

22,362.67

22,362.67

22,362.67

Salaries and Wages

101,506.99

103,219.32

103,858.91

119,676.57

119,676.57

122,403.43

Professional Fees Expense

Office Supplies Expense

Repairs and Maintenance

Rental Expense

15,600.00

15,600.00

15,600.00

15,600.00

15,600.00

15,600.00

Utilities Expense

8,150.00

8,150.00

8,150.00

8,150.00

8,150.00

8,150.00

Advertising Expense

27,045.20

24,238.30

25,632.50

28,768.50

28,768.50

33,014.30

Distribution Expense

45,326.67

39,836.67

42,581.67

55,328.33

55,328.33

63,608.33

SSS Premuim Contribution

6,060.70

6,060.70

6,060.70

6,060.70

6,060.70

6,060.70

Philhealth Contribution

1,075.00

1,075.00

1,075.00

1,075.00

1,075.00

1,075.00

Pag-ibig Contribution

1,840.00

1,840.00

1,840.00

1,840.00

1,840.00

1,840.00

les: Operating Expenses

237,035.99

263,706.94

251,591.07

299,232.48

286,349.28

316,601.95

INCOME BEFORE INTERESTS

152,700.28

48,791.72

105,158.39

134,148.84

146,522.70

159,092.01

5,810.00

5,339.00

4,865.65

4,389.94

3,911.84

3,431.35

146,890.28

43,452.71

100,292.74

129,758.90

142,610.86

155,660.65

44,067.08

13,035.81

30,087.82

38,927.67

42,783.26

46,698.20

102,823.19

30,416.90

70,204.92

90,831.23

99,827.60

108,962.46

Interest Expense
INCOME BEFORE TAXES
Income Tax (30%)
NET INCOME

6,687.03
-

1,381.75
-

6,687.03

6,687.03

6,687.03

6,687.03

6,687.03

18,255.51

16,360.85

17,301.94

19,418.74

19,418.74

1,381.75
15,000.00

1,381.75
-

1,381.75
15,000.00

1,381.75
-

1,381.75
15,000.00

60 | P a g e

A Business Plan of TropiAid

Table 11.4. First Year Monthly Income Statement, July to December 2014
July

August

September

October

November

December

REVENUE
Inhalers (2-ml Liniment)

18,600.00

11,160.00

14,880.00

16,920.00

11,280.00

18,810.00

50-ml Liniment (Regular)

68,162.50

40,862.50

54,512.50

62,037.50

41,300.00

68,862.50

50-ml Liniment (Massage)

51,900.00

31,200.00

41,500.00

47,200.00

31,500.00

52,500.00

100-ml Liniment (Regular)

124,250.00

74,550.00

99,400.00

113,050.00

75,250.00

125,475.00

100-ml Liniment (Massage)

94,600.00

56,800.00

75,600.00

86,000.00

57,400.00

95,600.00

10-g Ointment (Antifungal)

141,050.00

141,050.00

98,800.00

99,840.00

99,840.00

114,140.00

10-g Ointment (Antipruritic)

119,350.00

119,350.00

83,600.00

84,480.00

84,480.00

96,580.00

213,900.00

213,900.00

149,730.00

151,340.00

151,340.00

172,960.00

831,812.50

688,872.50

618,022.50

660,867.50

552,390.00

744,927.50

99,817.50

82,664.70

74,162.70

79,304.10

66,286.80

89,391.30

7,486.31

6,199.85

5,562.20

5,947.81

4,971.51

6,704.35

724,508.69

600,007.95

538,297.60

575,615.59

481,131.69

648,831.85

Cost of Goods Manufactured

179,200.21

184,423.94

213,308.34

157,943.41

238,867.87

280,292.44

Finished Goods Inventory, Beg.

248,784.59

183,480.90

193,907.12

217,417.55

163,995.23

246,469.44

Available for Sale

427,984.81

367,904.84

407,215.46

375,360.96

402,863.09

526,761.87

Finished Goods Inventory, End.

10-g Ointment (Corticosteroid)


Total Sales
less: VAT
less: Sales Discounts
Net Sales
COST OF GOODS SOLD

183,480.90

193,907.12

217,417.55

163,995.23

246,469.44

287,803.59

less: Cost of Goods Sold

244,503.91

173,997.72

189,797.91

211,365.74

156,393.66

238,958.28

GROSS PROFIT

480,004.78

426,010.23

348,499.69

364,249.86

324,738.03

409,873.57

61 | P a g e

A Business Plan of TropiAid

July

August

September

October

November

December

OPERATING EXPENSES
Depreciation Expense
Bad Debts Expense
Amortization
Salaries and Wages
Professional Fees Expense
Office Supplies Expense
Repairs and Maintenance

6,687.03

6,687.03

6,687.03

6,687.03

6,687.03

6,687.03

22,284.65

22,458.94

18,599.56

16,686.61

17,843.42

14,914.53

22,362.67

22,362.67

22,362.67

22,362.67

22,362.67

22,362.67

137,774.77

133,053.46

130,713.28

146,079.22

141,699.98

298,945.45

1,381.75
-

1,381.75
15,000.00

1,381.75
-

1,381.75
15,000.00

1,381.75
-

60,000.00
1,381.75
15,000.00

Rental Expense

15,600.00

15,600.00

15,600.00

15,600.00

15,600.00

15,600.00

Utilities Expense

8,150.00

8,150.00

8,150.00

8,150.00

8,150.00

8,150.00

Advertising Expense

33,272.50

27,554.90

24,720.90

26,434.70

22,095.60

29,797.10

Distribution Expense

81,800.00

70,640.00

76,220.00

97,246.67

88,786.67

100,081.67

SSS Premuim Contribution

6,060.70

6,060.70

6,060.70

6,060.70

6,060.70

6,060.70

Philhealth Contribution

1,075.00

1,075.00

1,075.00

1,075.00

1,075.00

1,075.00

Pag-ibig Contribution

1,840.00

1,840.00

1,840.00

1,840.00

1,840.00

1,840.00

les: Operating Expenses

338,289.06

331,864.44

313,410.88

364,604.34

333,582.82

581,895.88

INCOME BEFORE INTERESTS

141,715.72

94,145.79

35,088.80

2,948.46

2,463.16

1,975.43

1,485.26

138,767.26

91,682.63

33,113.37

(1,839.74)

41,630.18

27,504.79

9,934.01

97,137.08

64,177.84

23,179.36

Interest Expense
INCOME BEFORE TAXES
Income Tax (30%)
NET INCOME

(354.48)

(1,839.74)

(8,844.78)
992.64
(9,837.42)
(9,837.42)

(172,022.32)
497.56
(172,519.87)
(172,519.87)

62 | P a g e

A Business Plan of TropiAid

Table 11.5. First Year Monthly Statement of Cash Flows, Pre-operating Period to June 2014
Pre-Operating
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid for purchases
Cash paid for salaries and wages
Cash paid for professional fees
Cash paid for office supplies
Cash paid for repairs and maintenance
Cash paid for rental
Cash paid for utilities
Cash paid for advertising
Cash paid for distrubution
Cash paid for SSS Premium
Cash paid for PhilHealth
Cash paid for Pag-ibig
Cash paid for interest
Cash paid for taxes
Income Tax
VAT
Cash paid for Pre-Operating Expenses
Net Cash provided by Operating Activities

(268,352.00)
(268,352.00)

CASH FLOW FROM INVESTING ACTIVITIES


Cash paid for Capital Expenditures
Net Cash provided by Investing Activities

(652,386.00)
(652,386.00)

CASH FLOW FROM FINANCING ACTIVITIES


Cash invested by owners
Cash loaned from bank
Cash paid for loans
Cash dividends paid to owners
Net Cash provided by Financing Activities
add: Cash, Beginning
Cash, Ending

774,000.00
1,162,000.00
1,936,000.00
1,015,262.00

January

February

67,613.00
(454,040.23)
(101,506.99)
(1,381.75)
(27,045.20)
(45,326.67)
-

663,027.58
(254,021.49)
(103,219.32)
(1,381.75)
(15,000.00)
(15,600.00)
(8,150.00)
(24,238.30)
(39,836.67)
(6,060.70)
(1,075.00)
(1,840.00)
-

603,989.38
(148,582.39)
(103,858.91)
(1,381.75)
(15,600.00)
(8,150.00)
(25,632.50)
(42,581.67)
(6,060.70)
(1,075.00)
(1,840.00)
-

624,629.68
(302,023.46)
(119,676.57)
(1,381.75)
(15,000.00)
(15,600.00)
(8,150.00)
(28,768.50)
(55,328.33)
(6,060.70)
(1,075.00)
(1,840.00)
-

696,378.74
(232,567.75)
(119,676.57)
(1,381.75)
(15,600.00)
(8,150.00)
(28,768.50)
(55,328.33)
(6,060.70)
(1,075.00)
(1,840.00)
-

706,052.15
(153,915.00)
(122,403.43)
(1,381.75)
(15,000.00)
(15,600.00)
(8,150.00)
(33,014.30)
(63,608.33)
(6,060.70)
(1,075.00)
(1,840.00)
-

(561,687.84)

192,604.36

249,226.46

69,725.37

225,930.13

284,003.63

(94,199.19)
(94,199.19)

March

April

May

June

(94,670.19)
(94,670.19)

(95,143.54)
(95,143.54)

(95,619.26)
(95,619.26)

(96,097.35)
(96,097.35)

(96,577.84)
(96,577.84)

1,015,262.00

359,374.97

457,309.14

611,392.07

585,498.18

715,330.95

359,374.97

457,309.14

611,392.07

585,498.18

715,330.95

902,756.75

63 | P a g e

A Business Plan of TropiAid

Table 11.6. First Year Monthly Statement of Cash Flows, July to December 2014
July
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid for purchases
Cash paid for salaries and wages
Cash paid for professional fees
Cash paid for office supplies
Cash paid for repairs and maintenance
Cash paid for rental
Cash paid for utilities
Cash paid for advertising
Cash paid for distrubution
Cash paid for SSS Premium
Cash paid for PhilHealth
Cash paid for Pag-ibig
Cash paid for interest
Cash paid for taxes
Income Tax
VAT
Cash paid for Pre-Operating Expenses
Net Cash provided by Operating Activities
CASH FLOW FROM INVESTING ACTIVITIES
Cash paid for Capital Expenditures
Net Cash provided by Investing Activities

August

September

October

November

December

799,156.05
(229,256.43)
(137,774.77)
(1,381.75)
(15,600.00)
(8,150.00)
(33,272.50)
(81,800.00)
(6,060.70)
(1,075.00)
(1,840.00)
-

790,613.45
(228,776.81)
(133,053.46)
(1,381.75)
(15,000.00)
(15,600.00)
(8,150.00)
(27,554.90)
(70,640.00)
(6,060.70)
(1,075.00)
(1,840.00)
-

653,303.00
(198,650.36)
(130,713.28)
(1,381.75)
(15,600.00)
(8,150.00)
(24,720.90)
(76,220.00)
(6,060.70)
(1,075.00)
(1,840.00)
-

594,285.86
(100,403.22)
(146,079.22)
(1,381.75)
(15,000.00)
(15,600.00)
(8,150.00)
(26,434.70)
(97,246.67)
(6,060.70)
(1,075.00)
(1,840.00)
-

625,472.39
(278,238.32)
(141,699.98)
(1,381.75)
(15,600.00)
(8,150.00)
(22,095.60)
(88,786.67)
(6,060.70)
(1,075.00)
(1,840.00)
-

549,985.63
(299,650.40)
(298,945.45)
(60,000.00)
(1,381.75)
(15,000.00)
(15,600.00)
(8,150.00)
(29,797.10)
(100,081.67)
(6,060.70)
(1,075.00)
(1,840.00)
-

(215,599.84)
(502,401.90)
(435,056.85)

281,480.83

188,891.00

175,014.60

60,544.37

(287,596.43)

CASH FLOW FROM FINANCING ACTIVITIES


Cash invested by owners
Cash loaned from bank
Cash paid for loans
Cash dividends paid to owners
Net Cash provided by Financing Activities

(97,060.73)
(97,060.73)

(97,546.03)
(97,546.03)

(98,033.76)
(98,033.76)

(98,523.93)
(98,523.93)

(99,016.55)
(99,016.55)

(99,511.63)
(270,353.37)
(369,865.00)

add: Cash, Beginning

902,756.75

370,639.17

554,573.97

645,431.21

721,921.88

683,449.69

Cash, Ending

370,639.17

554,573.97

645,431.21

721,921.88

683,449.69

25,988.26

64 | P a g e

A Business Plan of TropiAid

Table 11.7. First Year Monthly Balance Sheet, January to June 2014
Pre-Operating

January

February

March

April

May

June

ASSETS
Current Assets
Cash
Accounts Receivable
less: Allowance for Bad Debts
Inventory, Raw Materials
Inventory, Finished Goods
Total Current Assets
Non-Current Assets
Office Equipment
less: Acc. Dep., OE
Machineries & Equipments
less: Acc. Dep., M&E
Truck
less: Acc. Dep., Truck
Other Assets
Amortization of Pre-Op
Total Non-Current Assets
TOTAL ASSETS

1,015,262.00
1,015,262.00

359,374.97
602,431.83
157,659.25
217,204.51
1,336,670.56

457,309.14
539,908.13
18,255.51
87,445.56
206,152.87
1,272,560.20

611,392.07
552,708.43
16,360.85
95,319.30
195,578.58
1,438,637.53

585,498.18
624,457.49
17,301.94
225,554.21
194,080.28
1,612,288.21

715,330.95
623,516.40
19,418.74
138,198.21
250,560.73
1,708,187.56

902,756.75
715,974.80
19,418.74
50,696.92
248,784.59
1,898,794.31

179,886.00
122,500.00
350,000.00
-

179,886.00
749.53
122,500.00
2,291.67
350,000.00
3,645.83

179,886.00
1,499.05
122,500.00
4,583.33
350,000.00
7,291.67

179,886.00
2,248.58
122,500.00
6,875.00
350,000.00
10,937.50

179,886.00
2,998.10
122,500.00
9,166.67
350,000.00
14,583.33

179,886.00
3,747.63
122,500.00
11,458.33
350,000.00
18,229.17

179,886.00
4,497.15
122,500.00
13,750.00
350,000.00
21,875.00

268,352.00
920,738.00
1,936,000.00

245,989.33
891,688.31
2,228,358.87

223,626.67
862,638.62
2,135,198.81

201,264.00
833,588.93
2,272,226.45

178,901.33
804,539.23
2,416,827.45

156,538.67
775,489.54
2,483,677.10

134,176.00
746,439.85
2,645,234.16

65 | P a g e

A Business Plan of TropiAid

Pre-Operating

January

February

March

April

May

June

LIABILITIES
Current Liabilities
Accounts Payables
Purchases
Rental
Utilities
SSS, PhilHealth, and Pag-ibig Payables
Interest Payables
Accrued Taxes
Income Tax
VAT
Loans Payable (Short Term)
Total Current Liabilities
Non-Current Liabilities
Loans Payable (Long Term)
Total Non-Current Liabilities
TOTAL LIABILITIES

119,996.49
15,600.00
8,150.00
8,975.70
5,810.00

15,600.00
8,150.00
8,975.70
11,149.00

50,115.29
15,600.00
8,150.00
8,975.70
16,014.66

69,881.20
15,600.00
8,150.00
8,975.70
20,404.59

15,600.00
8,150.00
8,975.70
24,316.43

15,600.00
8,150.00
8,975.70
27,747.78

1,162,000.00
1,162,000.00

44,067.08
81,135.60
1,067,800.81
1,351,535.68

57,102.90
153,850.50
973,130.62
1,227,958.72

87,190.72
230,748.00
877,987.08
1,294,781.45

126,118.39
317,053.50
782,367.83
1,348,551.21

168,901.65
403,359.00
686,270.48
1,315,573.25

215,599.84
502,401.90
589,692.64
1,368,167.86

1,162,000.00

1,351,535.68

1,227,958.72

1,294,781.45

1,348,551.21

1,315,573.25

1,368,167.86

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

102,823.19
102,823.19

102,823.19
30,416.90
133,240.09

133,240.09
70,204.92
203,445.01

203,445.01
90,831.23
294,276.24

294,276.24
99,827.60
394,103.84

394,103.84
108,962.46
503,066.30

876,823.19
2,228,358.87

907,240.09
2,135,198.81

977,445.01
2,272,226.45

1,068,276.24
2,416,827.45

1,168,103.84
2,483,677.10

1,277,066.30
2,645,234.16

STOCKHOLDERS' EQUITY
Paid-In Capital, Beg.
add: Additional Paid-In Capital
Paid-In Capital, End.
Retained Earnings, Beg.
add: Net Profit
less: Cash Dividends
less: Stock Dividends (added to Paid-in Capital)
Retained Earnings, End.
TOTAL STOCKHOLDERS' EQUITY
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY

774,000.00
1,936,000.00

66 | P a g e

A Business Plan of TropiAid

Table 11.8. First Year Monthly Balance Sheet, July to December 2014
July

August

September

October

November

December

ASSETS
Current Assets
Cash
Accounts Receivable
less: Allowance for Bad Debts
Inventory, Raw Materials
Inventory, Finished Goods
Total Current Assets
Non-Current Assets
Office Equipment
less: Acc. Dep., OE
Machineries & Equipments
less: Acc. Dep., M&E
Truck
less: Acc. Dep., Truck
Other Assets
Amortization of Pre-Op
Total Non-Current Assets
TOTAL ASSETS

370,639.17
721,726.20
22,284.65
199,502.47
183,480.90
1,453,064.09

554,573.97
591,500.75
22,458.94
166,353.16
193,907.12
1,483,876.05

645,431.21
528,199.11
18,599.56
130,448.03
217,417.55
1,502,896.34

721,921.88
570,233.39
16,686.61
72,907.84
163,995.23
1,512,371.72

683,449.69
475,492.88
17,843.42
211,027.63
246,469.44
1,598,596.21

25,988.26
645,886.98
14,914.53
131,636.26
287,803.59
1,076,400.55

179,886.00
5,246.68
122,500.00
16,041.67
350,000.00
25,520.83

179,886.00
5,996.20
122,500.00
18,333.33
350,000.00
29,166.67

179,886.00
6,745.73
122,500.00
20,625.00
350,000.00
32,812.50

179,886.00
7,495.25
122,500.00
22,916.67
350,000.00
36,458.33

179,886.00
8,244.78
122,500.00
25,208.33
350,000.00
40,104.17

179,886.00
8,994.30
122,500.00
27,500.00
350,000.00
43,750.00

111,813.33
717,390.16
2,170,454.25

89,450.67
688,340.47
2,172,216.52

67,088.00
659,290.78
2,162,187.11

44,725.33
630,241.08
2,142,612.80

22,362.67
601,191.39
2,199,787.61

0.00
572,141.70
1,648,542.25

67 | P a g e

A Business Plan of TropiAid

July

August

September

October

November

December

LIABILITIES
Current Liabilities
Accounts Payables
Purchases
Rental
Utilities
SSS, PhilHealth, and Pag-ibig Payables
Interest Payables
Accrued Taxes
Income Tax
VAT
Loans Payable (Short Term)
Total Current Liabilities

98,749.34
15,600.00
8,150.00
8,975.70
30,696.25

21,247.15
15,600.00
8,150.00
8,975.70
33,159.41

15,600.00
8,150.00
8,975.70
35,134.84

15,600.00
8,150.00
8,975.70
36,620.10

98,749.34
15,600.00
8,150.00
8,975.70
37,612.74

15,600.00
8,150.00
8,975.70
38,110.30

41,630.18
99,817.50
492,631.91
796,250.87

69,134.97
182,482.20
395,085.88
733,835.30

79,068.98
256,644.90
297,052.11
700,626.53

79,068.98
335,949.00
198,528.18
682,891.96

79,068.98
402,235.80
99,511.63
749,904.19

79,068.98
491,627.10
(0.00)
641,532.07

796,250.87

733,835.30

700,626.53

682,891.96

749,904.19

641,532.07

Paid-In Capital, Beg.


add: Additional Paid-In Capital
Paid-In Capital, End.

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
774,000.00

774,000.00
202,765.03
976,765.03

Retained Earnings, Beg.


add: Net Profit
less: Cash Dividends
less: Stock Dividends (added to Paid-in Capital)
Retained Earnings, End.

503,066.30
97,137.08
600,203.38

600,203.38
64,177.84
664,381.22

664,381.22
23,179.36
687,560.58

687,560.58
(1,839.74)
685,720.84

685,720.84
(9,837.42)
675,883.42

675,883.42
(172,519.87)
270,353.37
202,765.03
30,245.15

1,374,203.38
2,170,454.25

1,438,381.22
2,172,216.52

1,461,560.58
2,162,187.11

Non-Current Liabilities
Loans Payable (Long Term)
Total Non-Current Liabilities
TOTAL LIABILITIES
STOCKHOLDERS' EQUITY

TOTAL STOCKHOLDERS' EQUITY


TOTAL LIABILITIES & STOCKHOLDER'S EQUITY

1,459,720.84
2,142,612.80

1,449,883.42
2,199,787.61

1,007,010.18
1,648,542.25

68 | P a g e

A Business Plan of TropiAid

Table 11.9. Annual Income Statement


Pre-Operating

2014

2015

2016

2017

2018

REVENUE
Inhalers (2-ml Liniment)

185,190.00

246,046.50

420,403.10

543,924.00

699,060.00

50-ml Liniment (Regular)

678,475.00

901,539.00

1,539,368.00

1,990,279.20

2,554,296.00

50-ml Liniment (Massage)

516,900.00

686,490.00

1,173,040.50

1,516,435.60

1,945,739.60

100-ml Liniment (Regular)

1,236,550.00

1,642,988.20

2,804,676.00

3,624,681.40

4,652,290.80

100-ml Liniment (Massage)

941,800.00

1,094,896.60

2,136,424.50

2,761,135.20

3,543,424.00

10-g Ointment (Antifungal)

1,405,300.00

1,866,228.00

3,186,778.20

4,119,361.80

5,287,676.80

10-g Ointment (Antipruritic)

1,189,100.00

1,579,116.00

2,695,649.90

3,484,772.20

4,472,131.20

10-g Ointment (Corticosteroid)


Total Sales

2,130,260.00

2,830,863.00

4,830,572.80

6,242,338.30

8,012,565.90

8,283,575.00

10,848,167.30

18,786,913.00

24,282,927.70

31,167,184.30

less: VAT

994,029.00

1,301,780.08

2,254,429.56

2,913,951.32

3,740,062.12

less: Sales Discounts

74,552.18

97,633.51

169,082.22

218,546.35

280,504.66

7,214,993.83

9,448,753.72

16,363,401.22

21,150,430.03

27,146,617.53

Net Sales
COST OF GOODS SOLD
Cost of Goods Manufactured

Finished Goods Inventory, Beg.

2,748,489.62
-

3,263,683.45
287,803.59

5,152,534.97
442,800.89

6,398,094.96
560,393.13

7,664,468.66
696,170.42

Available for Sale

2,748,489.62

3,551,487.04

5,595,335.86

6,958,488.09

8,360,639.08

Finished Goods Inventory, End.

287,803.59

442,800.89

560,393.13

696,170.42

560,902.96

less: Cost of Goods Sold

2,460,686.03

3,108,686.14

5,034,942.73

6,262,317.67

7,799,736.12

GROSS PROFIT

4,754,307.80

6,340,067.57

11,328,458.50

14,888,112.36

19,346,881.40

(See Appendix M: Annual Cost of Goods Sold)

69 | P a g e

A Business Plan of TropiAid

Pre-Operating

2014

2015

2016

2017

2018

OPERATING EXPENSES
Depreciation Expense

80,244.30

57,744.30

57,744.30

57,744.30

57,744.30

Bad Debts Expense

203,543.48

286,915.68

488,082.65

642,820.98

825,038.81

Amortization

268,352.00

Salaries and Wages

1,658,607.95

2,610,092.89

4,839,042.85

6,784,220.08

9,347,987.08

Professional Fees Expense

60,000.00

60,000.00

60,000.00

60,000.00

60,000.00

Office Supplies Expense

16,581.00

16,939.86

17,306.49

17,681.06

18,063.73

Repairs and Maintenance

90,000.00

92,400.00

94,800.00

97,200.00

99,600.00

Rental Expense

187,200.00

191,251.59

195,390.86

191,251.59

191,251.59

Utilities Expense

97,800.00

99,916.69

102,079.20

104,288.51

106,545.63

Advertising Expense

331,343.00

433,926.69

751,476.52

971,317.11

1,246,687.37

Distribution Expense

816,785.00

1,167,148.22

1,707,651.01

2,181,806.57

2,621,084.12

SSS Premuim Contribution

72,728.40

74,302.47

75,910.60

77,553.54

79,232.04

Philhealth Contribution

12,900.00

13,179.20

13,464.43

13,755.85

14,053.57

Pag-ibig Contribution

22,080.00

22,557.88

23,046.10

23,544.89

24,054.47

les: Operating Expenses

3,918,165.13

5,126,375.47

8,425,995.02

11,223,184.48

14,691,342.71

INCOME BEFORE INTERESTS

836,142.66

1,213,692.11

2,902,463.48

3,664,927.88

4,655,538.69

38,110.30

798,032.37

1,213,692.11

2,902,463.48

3,664,927.88

4,655,538.69

294,668.82

427,325.14

941,225.19

1,194,955.30

1,543,019.30

503,363.55

786,366.97

1,961,238.29

2,469,972.58

3,112,519.39

Interest Expense
INCOME BEFORE TAXES
Income Tax (30%)
NET INCOME

70 | P a g e

A Business Plan of TropiAid

Table 11.10. Annual Statement of Cash Flows


Pre-Operating
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid for purchases
Cash paid for salaries and wages
Cash paid for professional fees
Cash paid for office supplies
Cash paid for repairs and maintenance
Cash paid for rental
Cash paid for utilities
Cash paid for advertising
Cash paid for distrubution
Cash paid for SSS Premium
Cash paid for PhilHealth
Cash paid for Pag-ibig
Cash paid for interest
Cash paid for taxes
Income Tax
VAT
Cash paid for Pre-Operating Expenses
Net Cash provided by Operating Activities

(268,352.00)
(268,352.00)

CASH FLOW FROM INVESTING ACTIVITIES


Cash paid for Capital Expenditures
Net Cash provided by Investing Activities

(652,386.00)
(652,386.00)

CASH FLOW FROM FINANCING ACTIVITIES


Cash invested by owners
Cash loaned from bank
Cash paid for loans
Cash dividends paid to owners
Net Cash provided by Financing Activities
add: Cash, Beginning
Cash, Ending

774,000.00
1,162,000.00
1,936,000.00
1,015,262.00

2014

2015

2016

2017

7,374,506.89 10,275,905.78 17,528,502.57


(2,880,125.87) (3,230,393.81) (5,140,417.38)
(1,658,607.95) (2,610,092.89) (4,839,042.85)
(60,000.00)
(60,000.00)
(60,000.00)
(16,581.00)
(16,939.86)
(17,306.49)
(90,000.00)
(92,400.00)
(94,800.00)
(171,600.00)
(190,913.95)
(195,045.92)
(89,650.00)
(99,740.30)
(101,898.99)
(331,343.00)
(433,926.69)
(751,476.52)
(816,785.00) (1,167,148.22) (1,707,651.01)
(66,667.70)
(74,171.29)
(75,776.59)
(11,825.00)
(13,155.93)
(13,440.66)
(20,240.00)
(22,518.06)
(23,005.42)
(27,747.78)
(10,362.51)
(215,599.84)
(502,401.90)
443,079.63

(362,603.69)
(1,150,841.45)
723,311.85

(729,142.04)
(1,788,636.58)
1,980,499.61

2018

23,019,463.69
(6,366,948.62)
(6,784,220.08)
(60,000.00)
(17,681.06)
(97,200.00)
(191,596.52)
(104,104.40)
(971,317.11)
(2,181,806.57)
(77,416.63)
(13,731.56)
(23,503.32)
-

29,544,776.60
(7,659,924.56)
(9,347,987.08)
(60,000.00)
(18,063.73)
(99,600.00)
(191,251.59)
(106,357.54)
(1,246,687.37)
(2,621,084.12)
(79,092.16)
(14,028.76)
(24,012.01)
-

(1,090,178.43)
(2,594,499.38)
2,445,259.99

(1,387,179.47)
(3,335,259.74)
3,354,248.47

(1,162,000.00)
(270,353.37)
(1,432,353.37)

(410,934.86)
(410,934.86)

(917,467.29)
(917,467.29)

(1,296,550.27)
(1,296,550.27)

(1,701,813.85)
(1,701,813.85)

1,015,262.00

25,988.26

338,365.25

1,401,397.58

2,550,107.29

25,988.26

338,365.25

1,401,397.58

2,550,107.29

4,202,541.91

71 | P a g e

A Business Plan of TropiAid

Table 11.11. Annual Balance Sheet


Pre-Operating

2014

2015

2016

2017

2018

1,015,262.00
1,015,262.00

25,988.26
645,886.98
14,914.53
131,636.26
287,803.59
1,076,400.55

338,365.25
838,088.78
19,404.00
128,234.34
442,800.89
1,728,085.26

1,401,397.58
1,453,492.49
33,562.15
191,284.95
560,393.13
3,573,006.00

2,550,107.29
1,865,106.40
43,079.38
153,832.03
696,170.42
5,222,136.76

4,202,541.91
2,394,177.93
55,286.67
140,647.36
560,902.96
7,242,983.48

179,886.00
122,500.00
350,000.00
-

179,886.00
8,994.30
122,500.00
27,500.00
350,000.00
43,750.00

179,886.00
17,988.60
122,500.00
32,500.00
350,000.00
87,500.00

179,886.00
26,982.90
122,500.00
37,500.00
350,000.00
131,250.00

179,886.00
35,977.20
122,500.00
42,500.00
350,000.00
175,000.00

179,886.00
44,971.50
122,500.00
47,500.00
350,000.00
218,750.00

268,352.00
920,738.00
1,936,000.00

0.00
572,141.70
1,648,542.25

514,397.40
2,242,482.66

456,653.10
4,029,659.10

398,908.80
5,621,045.56

341,164.50
7,584,147.98

ASSETS
Current Assets
Cash
Accounts Receivable
less: Allowance for Bad Debts
Inventory, Raw Materials
Inventory, Finished Goods
Total Current Assets
Non-Current Assets
Office Equipment
less: Acc. Dep., OE
Machineries & Equipments
less: Acc. Dep., M&E
Truck
less: Acc. Dep., Truck
Other Assets
Amortization of Pre-Op
Total Non-Current Assets
TOTAL ASSETS

72 | P a g e

A Business Plan of TropiAid

Pre-Operating

2014

2015

15,600.00
8,150.00
8,975.70
38,110.30

29,887.72
15,937.63
8,326.39
9,169.96
10,362.51

1,162,000.00
1,162,000.00

79,068.98
491,627.10
(0.00)
641,532.07

1,162,000.00

774,000.00
774,000.00

2016

2017

2018

105,055.92
16,282.57
8,506.60
9,368.43
0.00

98,749.34
15,937.63
8,690.71
9,571.19
0.00

90,108.77
15,937.63
8,878.80
9,778.34
0.00

143,790.43
642,565.73
860,040.37

355,873.58
1,108,358.71
1,603,445.81

460,650.44
1,427,810.65
2,021,409.96

616,490.28
1,832,613.02
2,573,806.84

641,532.07

860,040.37

1,603,445.81

2,021,409.96

2,573,806.84

774,000.00
202,765.03
976,765.03

976,765.03
308,201.14
1,284,966.17

1,284,966.17
688,100.47
1,973,066.64

1,973,066.64
972,412.70
2,945,479.34

2,945,479.34
1,276,360.39
4,221,839.73

503,363.55
270,353.37
202,765.03
30,245.15

786,366.97
410,934.86
308,201.14
67,230.97

1,961,238.29
917,467.29
688,100.47
355,670.54

2,469,972.58
1,296,550.27
972,412.70
201,009.60

3,112,519.39
1,701,813.85
1,276,360.39
134,345.15

1,007,010.18
1,648,542.25

1,352,197.14
2,242,482.66

2,328,737.17
4,029,659.10

3,146,488.94
5,621,045.56

4,356,184.88
7,584,147.98

LIABILITIES
Current Liabilities
Accounts Payables
Purchases
Rental
Utilities
SSS, PhilHealth, and Pag-ibig Payables
Interest Payables
Accrued Taxes
Income Tax
VAT
Loans Payable (Short Term)
Total Current Liabilities
Non-Current Liabilities
Loans Payable (Long Term)
Total Non-Current Liabilities
TOTAL LIABILITIES

STOCKHOLDERS' EQUITY
Paid-In Capital, Beg.
add: Additional Paid-In Capital
Paid-In Capital, End.
Retained Earnings, Beg.
add: Net Profit
less: Cash Dividends
less: Stock Dividends (added to Paid-in Capital)
Retained Earnings, End.
TOTAL STOCKHOLDERS' EQUITY
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY

774,000.00
1,936,000.00

(See Appendix Q: Annual Stockholders' Equity)


73 | P a g e