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(Name of the school)

(address)

(School Logo)

HELEN’S SEW AND FIT

Business Plan

“Customization at It’s Finest.”

In Partial Fulfillment of the Requirement in ______________

Submitted by:

Submitted to:

(date)
Table of Contents

Page

I. Executive Summary

II. Opportunity

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III. Execution

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IV. Company

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V. Financial Plan

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VI. Appendices

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I. Executive Summary
T-shirt remains the most common apparel being used as company uniform by any
business organization, Helen’s Sew and Fit intends to take advantage of this opportunity by
providing customized T-shirt to various companies in the locality. The primary target
customers would be the manufacturing organizations since they perceived to have the
highest number of clothing needs for its factory workers. Public and private schools are the
secondary customers which are both users of T-shirts as well, either for use as an alternate
uniform or for special event celebrations. Being a start-up business, customized T-shirt is
what the company can offer initially. However, more clothing lines will be offered, such as
jogging pants, jackets, and sportswear, after three years of operation. The selling method is
on a per-order basis which fabric, design, color, and size are at the customer’s choice.

Helen’s Sew and Fit will be located in Sta. Cruz, Davao del Sur because aside from
the fact that the company owner is a resident of the place, manufacturing industry in the
province is also improving. The present and dynamic institution both public and private are
the primary target market of Helen’s Sew and Fit. Being the first registered provider of
customized T-shirt in the province as evidence in the List of Registered Businesses with the
Business Bureau, the company will take advantage of this opportunity.

To ensure potential market, actual survey was conducted with several respondents
authorized by manufacturing companies and schools operating in Sta. Cruz. It shows that
that Helen’s products and services are in demand in this sector. However, as a newly-
opened T-shirt manufacturing business, promotion thru print ads has to be intensified to
catch their attention. This will be reinforced with the delivery of quality finished products in
order to gain the customers’ trust. The growing economy of the locality as it aspires to
become a city, given the presence of large industrial companies like the San Miguel
Corporation, Coco Davao Inc., Franklin Baker Co., GSL Food Industries, and Sea oil
Philippines oil storage facility which is part of a 300-megawatt coal power plant run by
Aboitiz Power Corporation’s Therma South, Incorporated, posed the company to benefit as
it focus on this potential market.

Helen’s operation will start from the purchasing of machineries and equipment,
furniture and fixtures, fabric, painting materials, and other supplies and accessories needed
to make the finished product ready for delivery. The production process will begin with the
designing, pattern making, cutting, sewing, and then printing. With this process, skilled
sewers and skilled graphic layout artist will be hired. In addition, hiring of a
bookkeeper/secretary will be considered as well to take care of the financial records and at
the same time serve as the secretary. The fundamentals to engage in business start-up are
satisfied both by the market study and the technical capability of the proponent to produce
the desired products. The initial investment of Five Hundred Forty Two Thousand Four
Hundred Pesos (Php542,400.00) will be compensated with the projected net income of One
Million One Hundred Ninety Six Seven Hundred Eighty One Pesos (Php1,196,781.00) after
three years of operation.
II. Opportunity
2.1 Market Problem or Opportunity

T-shirt printing need in Sta. Cruz is dramatically increasing because of the growth of
companies and schools in the area, thus suppliers are not accessible. This gap was identified by the
proponent hence a market study was conducted. The survey results revealed that the
companies purchase T-shirts to be used as company uniform of their employees at an
average of twice per year. This comes as a package deal from the manufacturing company
which can best offer quality shirts at a cheaper price. Most of the respondents also signified
purchase of clothing needs other than shirts, such as sportswear, jogging pants, and jackets.
None of the respondents said of having their own T-shirt provider. Another group of
respondents who signified purchase of customized shirts are those from private and public
schools in the locality. Survey results showed that customized shirts are needed for its
students and faculties. All of them said that purchase of T-shirts is done twice every year.
The results revealed that companies and schools are open for providers who could
customize their t-shirt printing needs at an affordable price without compromising the
shirts’ quality.

2.2 Solution

General Company Description


Helen’s Sew and Fit will be a manufacturer of customized T-shirts of assorted styles
and printing designs. As a start-up, the company will purchase basic sewing machines,
printing machines, embroidery machine, and other basic equipment for T-shirt production
and printing. The business will produce its own shirt which will be made available to its
target market so as to assure customers of its quality and affordability.

To customize the company’s services, the customer will choose their own T-shirt
design and printing style. They will be guided with the samples or prototype shirts of
different colors, styles, clothing materials, and printing designs on display. Once decided,
Helen’s will take the job order on agreed price, quantity, sizes, and delivery schedule.
Prompt delivery of quality T-shirt with print will be adhered to in order to make every
customer smile.

The company will take advantage on the fact that T-shirt has never been out of
fashion. It is this growing interest in T-shirt clothing that inspires the company to do-it-
themselves from the designing, cutting, sewing, and printing. Highest quality finished
products at reasonable prices will be provided. More clothing choices such as jogging pants,
sportswear, and jackets will be offered after three years of operation and innovate more to
cope with the fashion trend.
Business Philosophy
Customer care and satisfaction would be the primary concern of this new business
venture. Thus, quality and reasonable pricing will be maintained. Helen’s Sew and Fit
stresses long-term relationships, while providing results in the shortest possible time frame
as the ultimate basis for success.

2.3 Target Market

The target customers are the manufacturing companies and schools operating in the
province. This business industry is seen to have an average of one thousand (1,000.00)
workforce, e.g. Franklin Baker, Co., which provide their workers with customized T-shirts to
be used as working clothes. Occasional order of T-shirts for special event purposes is also
expected from them. This is based on the fact that in today’s fashion trend, customized T-
shirt is the most common apparel to be worn as alternate company uniform or for special
event celebration. The same is true to public and private schools which are also in need of
shirts for physical education activity uniform, sports fest, intramurals, foundation day
celebrations, and other school events. Shown below are some information taken from the
records and registries of the Business Bureau of the municipality of Sta. Cruz, Davao del Sur:

Table No. 2 Business Industries

Average No. of
Industry Category No. of Employees /
Companies Students
Manufacturing 12 1,000
High Schools 6 700
Elementary Schools 27 300

While there are 12 registered manufacturing companies and 33 (27 elementary


schools and 6 high schools) operating in the province, demand from the schools is
projected at 50% only or 16 schools are likely to purchase Helen’s products. In line with
this and with the market survey conducted, analysis of Helen’s market share is hereby
presented where the projected sales volume for the first year of operation will take off:
Table No. 1 Market Share Analysis

Target Market
12 Manufacturing Companies x 880 units per order 10,560
16 Schools x 400 per order 6,400

Total no. of units per order 16,960


x No. of orders per year 2
Total no. of orders in units per year 33,920
x Percentage of market share 30%
Projected Sales in units for the first year 10,176

2.4 Competition

Because Helen’s Sew and Fit offers a specific customized product line, our
competition is limited to other custom clothing manufacturers located in Davao City
since it is just less than 50 kilometers away from the municipality of Sta. Cruz, Davao del
Sur. The popular garment-maker companies located in Davao City are: 1) Ven Mark
Garments and 2) Thread and Fold. The business has been in the garment manufacturing
business for long and can accommodate bulk orders. Their established brand and
reputation is an edge. 3) Other competitors are the online companies selling printed and
embroidered T-shirts and other custom clothing. These businesses are accessible online
however, deliveries would be a problem.

2.5 Competitive Advantage

Helen’s competitive advantage is reinforced with the fact that there is no other
registered garment or customized T-shirt manufacturer operating in Sta. Cruz area as
per registry of the Business Bureau. Thus, the company aims to be the first provider of
high quality customized clothing at reasonable prices in the province. Helen’s still
believes that customers are likely to opt for their finished products and services for
convenience and accessibility. Helen’s proximity to the targeted market is one strong
factor for a competitive price offering attributed by the lower delivery cost.

Amidst the presence of competitors, Helen’s Sew and Fit will still have the
competitive advantage based on the following factors:

o High Perceived Value. The product must convincingly offer a high level of value
and durability for the price, and give costumers confidence that their money is
well and wisely spent.

o Quality and Fashion. Fashion remains important, but quality comes first in the
minds of many costumers. Products that offer quality and fashion will have a
competitive edge.

o Brand Reputation. The brand must stand for a company that clearly puts
customer satisfaction and value above all else.
III. Execution
The successful strategic plan of Helen’s is built around the business's visions, mission, goals
and objectives and, its success is dependent upon the organization attaining its mission and the
realization of its goals and objectives.

Vision
Helen’s Sew and Fit envisioned to become the leading provider of customized T-
shirts and other clothing needs of every business organization operating in the province of
Davao del Sur.

Mission Statement
The company is dedicated to provide the community with customized T-shirts of
style and comfort at reasonable price. Thus, it is also committed to exceed the customers’
expectations in quality, delivery, and cost through continuous product innovation and
customers interaction. Attaining highest level of efficiency, integrity, and honesty among
employees, suppliers, customers, and stakeholders that will drive long term loyalty, is our
main concern.

Goals

To achieve the business’ vision and mission, Helen’s goals are as follows:
o To run a profitable operation by offering customers more clothing choices and
continuously find ways to customize their T-shirts with refined craftsmanship.
o To expand and create a reliable brand so that more customers will patronize the
products because of the perceived value and quality guarantee that comes with all
the finished products.
o To have an increased production and sales to cater the demand of T-shirts and other
clothing needs in the market.
o To contribute to the economic growth of the province through jobs generation.

Objectives
The company aims to attain the following objectives:
1. To increase the number of purchase orders for at least ten percent (10%) in year 2
and year 3, respectively
2. To achieve a net income of at least fifteen percent (15%) per year
3. To expand the business by acquiring additional four to five sewing machines in year
four
4. To uplift the economic status of some community residents through employment of
professional and skilled workers.
3.1 Marketing Plan

Products
Customized T-shirt that is carefully manufactured and printed by Helen’s will be
the finished products for the first three years of operation. Below are the different T-
shirt design and printing styles to be manufactured that comes for the whole package:

1. Polo shirt with collar which color, size and printing design at the customer’s
choice. Color-combined style can be one option as this becomes the fashion
trend nowadays especially for polo shirts. So Helen’s must be ready for this kind
of style. It goes along with the slight increase in price as it becomes labor
intensive.

2. Plain shirt without collar which color, size and printing design at the customer’s
choice.

Printing styles, such as embroidery, silkscreen, embossed, and rubberized will be the
different options than Helen’s can offer. The company representatives will be directed
to Helen’s prototype shirts with different print designs to help them decide which print
is more suited for their desired shirts. Cloth swatches of different type (i.e cotton,
polyester, jersey etc.) and colors will be made available at all times to help the customer
decide which cloth and color that Helen’s will sew for them. Sizes available are extra
small, small, medium, large, extra-large, and double or triple extra-large.

Product Features and Benefits


Quality craftsmanship is one of the features the customers can expect from the
company’s finished product because of the employment of skilled sewers. These skilled
workers will undergo extensive briefing on customer care through proper handling and
assembling of shirts from start to finish. This is in addition to clothing materials of good
quality that will be made available for the customers to choose from at a very
affordable and competitive price. Alterations, if any, will be accepted for free as our
after-sale service. Discounts will be given to customers with at least one hundred (100)
shirts per Purchase Order. Also, graphic designs and artwork at a higher resolution will
be used for the printing. Those features, cost-savings from discounts to be given, and
the convenience because of the company’s proximity to their business locations are the
benefits that the customers can get from Helen’s Sew and Fit.

Place
Helen’s Sew and Fit will be renting a space in a commercial building near the Sta.
Cruz Public Market and Commercial Complex. It is a newly constructed building as part
of the on-going development of the town. Adjacent to this building is the public
transport terminal along Davao-Cotabato national highway. Thus, this location is ideal
for the business to start because of its accessibility by the customers. Pick-up or delivery
of the finished products would be convenient for both the company owner and
customers.

The proposed location is considered strategic because it is along in this area


where intensive development of a commercial center of the town is situated. It is a
realization of the Sta. Cruz municipal officers that accessibility is important to help boost
the economy of the town. More business establishments including a hospital and the
Negosyo Center of the Department of Trade and Industry will be erected near the site.
With this economic progress, access and promotion of Helen’s finished products will be
easier.

Price
Competitive pricing proportionately with the cost of raw materials, direct labor,
factory overhead, and operating expenses will be used. Delivery within Sta. Cruz area is
free. Pricing techniques include giving trade discounts for purchase orders above 100
pieces. The company’s value proposition is to provide the highest-quality T-shirt for the
best prices. With competitive pricing and free delivery, Helen’s value proposition is clear
to the target market.

Promotion

The marketing strategy will emphasize on the efficiency of ordering system


employed by Helen's Sew and Fit would be a very easy and pleasing experience. The
marketing effort will work on the continual promotion thru print ads and streamers.
Certificate of Registration from the Philippine Government Electronic Procurement
Service (PhilGEPS) will be secured to be able to participate in the public bidding with the
government offices. Aside from the product catalogue, prototype shirts of assorted
styles and prints will be displayed in the working area for easy reference of prospect
customers. Facebook page will also be created to help promote the existence of the
business. To avail of the Department of Trade and Industry’s services such as product
development, packaging and labelling, and other similar services is also in the
Promotional Plan of the company.

Helen’s Sew and Fit will also rely on three other factors to help increase
sales. The first is excellent customer service. Having excellent service will provide the
customer with the feeling that the business is looking out for the customer's interest.
Second, when a customer places an order, they will probably be excited to see the
finished product, so Helen’s Sew and Fit fastest turnaround time possible should be
maintained. Lastly, sales will be boosted by offering customers a high quality product.
High grade cotton materials and quality printing artwork will be used.

3.2 Operations
The production of Helen’s finished products includes the operations of
purchasing fabrics and materials from a reliable textile producer, cutting and sewing
them to make a T-shirt, print, inspect, pack, and then deliver them. Shown below are
the steps:

Garment Making involves the making of T-shirts for uniform or sports attire. The
bulk of the garments to be produced by Helens’ Sew and Fit go to the
manufacturing business which employs a big number of employees.

Textile Printing involves the process of applying colors to a fabric in a definite


pattern or design, printing one or more color applied to in its certain parts only
and in sharply defined patterns.

Machine Embroidery is used to add logos and monograms to a business shirts


and sportswear produced by Helen’s Sew and Fit.

The Textile Printing will directly employ graphic artist while the Garments
Making requires Sewers and Cutters. The basic production process is illustrated
below:

Figure 1 – Process Flow

Design / Pattern Sewing /


Cutting
Sketch making assembling

Pressing /
Packing printing Inspection
finishing

Aside from the cloth which is the company’s major raw material, other supplies
and accessories such as threads, buttons, needles, and printing materials must be
purchased from reliable suppliers who can offer reasonable prices. This will be identified
thru canvassing online or thru floating of quotation sheet with the local suppliers.

Production capacity

Capacity of a factory is primarily expressed in terms of total machines the factory


have. In general, total numbers of machines in a factory mostly remains same for a
period. But factory may produce various types of product during the season. According
to the product category, machine requirement may change and daily average
production in each style may vary. So to be specific during booking orders, Helen’s Sew
and Fit manager should know exactly how much capacity the business is capable to
accept:

Basically, a factory’s capacity is calculated based on the number of machines,


working days, hours and minutes used to produce the number of finished product per
day. The method used to calculate capacity is explained below:

Table No. 6 - Production calculation

Production Line 4 Machines


Daily Operations 8 Hours
Annual Operations 312 Days
Standard Allowed Minutes 30 Shirt
Daily Production Capacity 64 Shirts

Locations & Facilities


A space with floor area of at least 20 square meters would be enough for Helen’s
Sew and Fit to start the business. It must be enclosed but well-ventilated, and with safe
electrical connections ideal and safe for a number of electrical sewing machines and
equipment to run safely. Exact location should be in a place accessible and convenient
for the customers to transact and for the delivery of our finished products. Therefore a
commercial space within the Sta. Cruz Public Market and Commercial Complex and
transport terminal will be rented.

Equipment & Tools

The basic process of finished products will start from the sizing, pattern making,
cutting, sewing, and printing. For the business to start, the company will purchase the
following machineries and equipment:

 4 High speed sewing machines


 1 Edging machine
 1 Embroidery Machine
 1 Pressing iron
 Printing equipment, cutting machine, scissors, tapes, furniture and
fixtures, and other supplies and materials

Personnel

For the operation to start, Helen’s Sew and Fit will hire four (4) highly skilled
sewers for the T-shirt making and one (1) graphic artist for the shirt printing. There will
also be one (1) bookkeeper/secretary to take charge in the financial recording and
business licensing and at the same time serve as secretary to the manager. This will
bring a total number of six (6) personnel.

One of the sewers to be hired should also be an expert in sketching, pattern


making, and cutting. The graphic artist will design and assemble several digital graphic
elements for customers to choose from and do the T-shirt printing himself. This person
will also help in the packaging of finished products to fulfill orders. Everyone will
participate in keeping the workplace and machineries clean and orderly as well as in the
packaging, dispatching, and other tasks. The salaries of the manager,
bookkeeper/secretary, and graphic artist are on fixed monthly rates to be paid on a bi-
monthly basis. The salaries of the sewers and graphic artist are piecemeal based.

Suppliers

The raw materials will be sourced out from reliable suppliers operating in Davao
City. There are plenty of them where Helen’s can canvass with for a cheaper price.
Preference goes to suppliers which offer wholesale and negotiable prices for bulk
orders. Among them are the following:

Table No. 8 - List of Suppliers


Supplier Particular
Jonny Commercial
San Pedro St., Davao City Fabric, threads, needles, buttons,
Kianbee Trading sewing equipment, spare parts
R. Magsaysay Ave., Davao City and other related materials
NCCC Department Store
R. Magsaysay Ave., Davao City
Modern Commercial
San Pedro, Davao City Textile paints and other related
Oro Ink Supply Systems, Inc. printing materials,
Door 3 Agro Bldg., Sales St. Davao City

The above suppliers have long been in their business for many years already,
catering to various garment manufacturing needs in the region. Credit terms can be
considered only after its customer’s credibility is established thru continuous patronage
of their merchandise. Helen’s will take advantage of such incentive in the future.
3.3 Milestones

Activities January February March April May June


WW W W W W W W W W W W W W W W W W W W W W W W
Activities 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Conceptualizatio
n of Business

Market Study

Dev’t. of Plans
Filing of Legal
Documents
Procurement of
Equipment and
Raw Materials
Constructing of
Building
Hiring of
Manpower
Distribution of
Promotion
Paraphernalia
Business
Launching
IV. Company
4.1 Overview

Helen’s Sew and Fit will be registered with the Department of Trade and Industry
as a Sole Proprietorship which is solely owned and operated by the business owner,
Deolly L. Roque.

4.2 Management Team

Being a sole proprietorship business, it will be the owner’s responsibility to


manage and take charge in the production, financial, and administrative functions. The
bookkeeper/secretary will handle the accounting records and should help the owner
manage payroll, financial reporting, and secretarial services.
Highly skilled production is typical in this business assisted by computers design
and only requires a lean force. It is imperative that the management should hire skilled
workers and should cash in on personnel welfare to ensure industrial peace. Settlement
of salaries and fringe benefits should be attended to create a family of employees proud
to bear an identity associated with the same breath and community that the company
and customers live. Shown below is the company’s organizational structure:

Manager

Bookkeeper Graphic
Sewers
/ Secretary Artist

Figure 2 – Organizational Structure


Table No. 9 - Personnel Qualifications and Job Description

Position Qualification Job Description


 College graduate preferably  Handles human resource
Manager business course management
 Good interpersonal and  Supervises the finance and
communication skills administrative functions
 Analytical  Handles the procurement of
 Good leadership skills office and factory supplies
 With work related experience  Other administrative matters
 Physically fit
 At least college level preferably  Bookkeeping and financial
accountancy reports preparation
Bookkeeper  Analytical  Liaison service to BIR, SSS,
/Secretary  Willing to take multi-tasking job and other government offices
 With work related experience  Process payment of claims
 Physically fit and payable accounts
 Serve as the secretary to the
manager
 Other related tasks
 Work related experience  Comes up with sewn product
Sewers  Willing to work on extended in quality craftsmanship
hours if necessary  Assists in the packaging
 Skills in cutting would be an  Maintains cleanliness of the
advantage working area
 Physically fit
 Work related experience in shirt  Takes charge in the printing
Graphic printing  Creates and suggests printing
Artist  Creative designs
 Skills in embroidery machine  Assists in the packaging and
operation dispatching
 Physically fit

4.3 Advisors

Continuous learning of the personnel and development of products to cope up


with the fashion trend and advanced technology is needed for this kind of business.
Product innovation, packaging techniques, labeling, marketing strategies, and other
form of capacity enhancement have to be considered in order to compete with what is
in the market today. This professional and advisory support will be sought from the
Department of Trade and Industry (DTI) thru its Negosyo Centers where various
entrepreneurial services are being served to Micro Small and Medium Enterprises
(MSMEs). One of these Negosyo Centers is established in Sta. Cruz proper near to the
proposed location of Helen’s. Thus, DTI’s professional help is very accessible
V. Financial Plan
5.1 Forecast

Start Up – Cost & Capitalization

The project calls for a total investment of Php542,400.00 that includes an initial
working capital of Php261,700 to cover cash requirements for the first two months of
operation and Php40,700.00 for pre-operating expenses as shown below.

Total Project Cost


Qty Unit Cost Total Cost
Pre-operating Expenses
Permits and licenses 9,000.00
Advertising/promotional expenses 10,500.00
Advance rent expenses 16,200.00
Office supplies 5,000.00 40,700.00
Acquisition of Fixed Assets
High Speed Sewing Machine 4 16,000.00 64,000.00
Industrial pressing irons 1 20,000.00 20,000.00
Edging Machine 1 15,000.00 15,000.00
Zigzag Machine 1 20,000.00 20,000.00
Embroidery Machine 1 20,000.00 20,000.00
Printing Machine 1 16,000.00 16,000.00
Other Equipment 1 50,000.00 50,000.00
Pattern makers for crafting designs.

Electronic print design maker


Hole punchers
Notches for marking seams.

Heat transfer machines for T-shirts.

Office Equipment. Furniture & Fixtures 1 35,000.00 35,000.00 240,000.00

Working Capital 261,700.00

Total Project Cost 542,400.00

Sources of Funds

Proprietor's Investment 342,400.00


Loan 200,000.00 542,400.00
Key Financial Assumptions

 The forecasted 10,176 units of T-shirts sold for the first year of operation is
based on the estimated market share.
 Use of straight-line method in depreciating the PPEs at its estimated useful
life of 5 years net of 5% book value.
 Rent expense will increase by 10% on the 3rd year.
 Property insurance is at 2% of insurable assets
 Loan of P200,000.00 is payable in 36 months at 16% interest per annum.
 Repair and maintenance cost is assumed at 5% of the book value of
machinery and equipment
 Salaries and wages of the manager, bookkeeper/secretary, and graphic artist
are fixed monthly rate
 Salaries and wages of the sewers are on a per piece basis
 Salaries and wages is targeted to increase by 10% starting in the third year of
operation
 Fringe benefits are estimated at 5% of total direct labor
 The business is tax-exempt for being a BMBE registered.
 Sales will increase by 10% in the 2nd year and 15% in the 3rd year
 Cost of direct materials will increase by 10% in the 2nd year and 15% in the 3rd
year.
 Variable cost is projected to increase by 10% in the 2nd year and 15% in the
3rd starting in year 2
 No provision for accounts payable
 Inventory is estimated at 10% of the direct material purchased
 Receivables are estimated at 16% of the total annual sales
 Transportation & Delivery expense is estimated at 0.5% of sales
 Owner’s drawing is P 20,000 per year.
Statement of Operation

Helen's Sew and Fit


Statement of Operation
For the Calendar Years Ended 2018, 2019 & 2020
CY 2018 CY 2019 CY 2020
Net Sales Note 1 2,100,414 2,310,456 2,657,024
Less: Cost of Sales
Inventory beginning Note 2 - 85,473 94,021
Direct materials purchased Note 2 854,732 940,205 1,081,236
Direct Labor Note 3 236,080 259,688 298,641
Overhead (packaging materials) Note 4 50,880 55,968 64,363
Total 1,141,692 1,341,334 1,538,261
Less: Inventory end Note 2 85,473 94,021 108,124
Cost of Sales - Net 1,056,219 1,247,314 1,430,137
Gross Income 1,044,196 1,063,142 1,226,887
Less: Operating Expenses
Salaries and wages Note 5 325,680 325,680 358,248
Fringe benefits Note 6 23,608 25,969 29,864
13th Month Pay Note 7 27,140 27,140 29,854
SSS, Philhealth, Pag-Ibig Note 8 66,466 66,466 72,437
Depreciation Note 9 45,600 45,600 45,600
Rent Expense Note 10 64,800 64,800 71,280
Repair and Maintenance Note 11 9,720 7,440 5,160
Permit and Licenses Note 12 9,000 2,500 2,500
Property Insurance Note 13 4,800 4,800 4,800
Advertising and promotions Note 14 10,500 6,750 4,050
Transportation & Delivery Note 15 10,716 11,788 13,556
Miscellaneous Expenses Note 16 6,000 6,000 6,000
Utilities Note 17 49,440 54,384 62,542
Office supplies Note 18 10,000 10,000 11,000
Total 663,470 659,316 716,891
Net Income 380,726 403,826 509,996
Less: Interest Expense Note 19 32,000 21,333 10,667
Net Income Before Tax 348,726 382,492 499,329
Less: Tax - - -
Net Income After Tax 348,726 348,726 499,329
Notes to Financial Statements

Note 1 – Sales
Year 2018 Year 2019 Year 2020
Plain/collarless shirts 916,430 1,008,073 1,159,284
Silkscreen print
3,000 pcs @ P145.00/pc 435,000 478,500 550,275
Embossed/rubberized
3,106 pcs @ P155.00/pc 481,430 529,573 609,009
Poloshirt 1,226,850 1,349,535 1,551,965
Embroidered
2,152 pcs @ P325.00/pc 699,400 769,340 884,741
Silkscreen print
1,918 pcs @ 275.00/pc 527,450 580,195 667,224
Gross Sales 2,143,280 2,357,608 2,711,249
Less: 2% 42,866 47,152 54,225
Net Sales 2,100,414 2,310,456 2,657,024
With 10% and 15% increase in sales in CYs 2019 and 2020 respectively .

Note 2 - Direct Materials


Year 2018 Year 2019 Year 2020
Plain/collarless shirts 436,738 480,412 552,474
Silkscreen print
3,000 pcs @ P70.00/pc 210,000 231,000 265,650
Embossed/rubberized
3,106 pcs @ P73.00/pc 226,738 249,412 286,824
Poloshirt 417,994 459,793 528,762
Embroidered
2,152 pcs @ P106.00/pc 228,112 250,923 288,562
Silkscreen print
1,918 pcs @ 99.00/pc 189,882 208,870 240,201
Total 854,732 940,205 1,081,236
Less: 10% Inventory of raw
materials 85,473 94,021 108,124
Total Direct Materials 769,259 846,185 973,112

With 10% and 15% increase in cost in CYs 2019 and 2020 respectively
Note 3 - Direct Labor
Year 2018 Year 2019 Year 2020
T-shirts sold (collarles shirts) 6,106 6,717 7,724
@P20.00/piece 122,120 134,332 154,482
T-shirts sold (Poloshirt) 4,070 4,477 5,149
@28.00/piece 113,960 125,356 144,159.40
Total 236,080 259,688 298,641

Direct Labor cost is based on the prevailing piecemeal rate


in the garment manufacturing business.

Note 4 - Overhead (Packaging Materials)


Year 2018 Year 2019 Year 2020
No. of t-shirts sold 10,176 11,194 12,873
@ P5.00 each 50,880 55,968 64,363
Packaging materials include plastic cellophane, labels, scotch tape.etc

Note 5 - Salaries and Wages


Year 2018 Year 2019 Year 2020
Manager @ P10,500/mo. 126,000 126,000 138,600
Bookkeeper @P8,840/mo. 106,080 106,080 116,688
Graphic Artist @ 7,800/mo. 93,600 93,600 102,960
Total 325,680 325,680 358,248
With an increase by 10% on the 3rd year

Note 6 - Fringe Benefits


Year 2018 Year 2019 Year 2020
Cash gifts:
4 Sewers 23,608 25,969 29,864

Fringe benefits for the sewers are higher than the fixed wage earners
because they do not have the 13th month pay.

Note 7 - 13th Month Pay


Year 2018 Year 2019 Year 2020
Manager 10,500 10,500 11,550
Bookkeeper/Secretary 8,840 8,840 9,724
Graphic Artist 7,800 7,800 8,580
Total 27,140 27,140 29,854
Note 8 - SSS, Phil-Health, and PAG-Ibig
Year 2018 Year 2019 Year 2020
SSS:
Manager 784 784 862
Bookkeeper/Secretary 673 673 740
Graphic Artist 489 489 538
Sewers (4) 1,956 1,956 2,152
3,901 3,901 4,291
Philhealth:
Manager 125 125 138
Bookkeeper/Secretary 100 100 110
Graphic Artist 100 100 110
Sewers (4) 400 400 440
938 938 975
Pag-Ibig
Manager 100 100 110
Bookkeeper/Secretary 100 100 110
Graphic Artist 100 100 110
Sewers (4) 400 400 440
700 700 770
Total 5,539 5,539 6,036
x 12 months 12 12 12
Grand Total 66,466 66,466 72,437
SSS Premium is inclusive of the P10.00 EC per month

Note 9 - Depreciation Expense


Useful
Quantity Unit Cost Total Cost Life Depreciation
High Speed Sewing machines 4 16,000 64,000 5 12,160
Industrial Pressing iron 1 20,000 20,000 5 3,800
Edging Machine 1 15,000 15,000 5 2,850
Zigzag Machine 1 20,000 20,000 5 3,800
Embroidery Machine 1 20,000 20,000 5 3,800
Printing Machine 1 16,000 16,000 5 3,800
Other Equipment 1 lot 50,000 5 9,500
Furniture & Fixtures 1 lot 35,000 5 6,650
Total 240,000 45,600
Computed using straight line method net of 5% scrap value
Note 10 - Rent Expense
Year 2018 Year 2019 Year 2020
Monthly rental @ P5,400 64,800 64,800 71,280
Total 64,800 64,800 71,280
Increased by 10% in Year 3

Note 11 - Repair and Maintenance


Yearly Repair
Total Cost Dep'n Book Value cost*
CY 2018 240,000 45,600 194,400 9,720
CY 2019 148,800 7,440
CY 2020 103,200 5,160
* Estimated as 5% of the book value of the properties and equipment.

Note 12 - Permit and Licenses


Year 2018 Year 2019 Year 2020
Business Name Registration 1,000
Business Permit Certifcate 1,000 1,000 1,000
Philhealth Registration 1,000
BIR Registration 1,500 1,500 1,500
SSS Registratioin 1,000
BMBE Certificate 1,000
Pag-Ibig Registration 1,000
PhilGEPS Registration 1,500
Total 9,000 2,500 2,500

Note 13 - Property Insurance

Year 2018 Year 2019 Year 2020


Insurable Properties and Equipment 240,000 240,000 240,000
x 2% 2% 2% 2%
Total 4,800 4,800 4,800
Note 14 - Advertising and Promotions
Year 2018 Year 2019 Year 2020
Printing of tarpaulin 2,000 1,000 600
Tarpauling framing/hanging 2,000 1,000 600
Brochures/calling cards 4,500 3,750 2,250
T-shirt samples/prototypes 2,000 1,000 600
Total 10,500 6,750 4,050

Note 15 - Transportation & Delivery Expenses


Year 2018 Year 2019 Year 2020
Gross Sales 2,143,280 2,357,608 2,711,249
x 0.5% 0.5% 0.5% 0.5%
Total 10,716 11,788 13,556

Note 16 - Miscellaneous Expenses


Year 2018 Year 2019 Year 2020
Meals/snacks for customers 2,000 2,000 2,000
Travel, communication, & other exp. 4,000 4,000 4,000
Total 6,000 6,000 6,000

Note 17 – Utilities
Year 2018 Year 2019 Year 2020
Electricity 37,440 41,184 47,362
Water 12,000 13,200 15,180
49,440 54,384 62,542
With 10% and 15% increase in CYs 2019 and 2020 respectively

Note 18 – Office Supplies


Year 2018 Year 2019 Year 2020
Columnar books 1,500.00 1,500.00 1,650.00

Bond papers, pens, folders, prepaid


cards, logbook, etc. 8,500.00 8,500.00 9,350.00
Total 10,000.00 10,000.00 11,000.00
With 10% increase in CY 2020
Note 19 - Interest Expense

Year Loan Principal Interest


Balance
CY 2018 133,333 66,666 32,000
CY 2019 66,666 66,666 21,333
CY 2020 - 66,666 10,667

Key Financial Ratios/Indicators

Profitability Ratios

Profitability ratios are company’s ability to generate profits from its operations. It focus
on a company’s return on investment in inventory and other assets. These ratios basically
show how well companies can achieve profits from their operations.

Year 2018 Year 2019 Year 2020


Gross Profit
Gross Profit 1,044,196 1,063,142 1,226,887
Margin =
Net Sales 2,100,414 2,310,456 2,657,024
= 0.50 0.46 0.46

Net Profit
Net Profit 348,726 382,492 499,329
Margin =
Net Sales 2,100,414 2,310,456 2,657,024
= 0.17 0.17 0.19
Payback Period

The initial working capital of the owner in the amount of Php542,400.00 will be
recovered in approximately two years and seven months computed as follows:

D. Payback Period
Expected Cumulative
Year Net Cash Net Cash
Flow Flows
0
(542,000) (542,000)
2018
197,858 (344,142)
2019
517,130 172,988
2020
922,412 1,095,401

Payback Period
= 2 + (344,142 / 517,130)
= 2 + 0.66
= 2.66 years or 2 years and 8 months
VI. Appendices
- Technical specifications of products, drawings, photos, sales brochures, and
other bulky items
- Survey Question
- Tabulation and Result of the Market Study / Marketing Research