Business Plan for

Cleanup Laundry Company Ltd (CLC)

Executive Summary
Cleanup Laundry Company Ltd (CLC) is a start-up enterprise to be established in Dar-Es-Salaam,
Tanzania as a limited liability company owned by M & B. The company will provide dry cleaning,
laundry, and garment alterations, offered with regular home pick-up and delivery services. The company
will have a service facility, but will not need a retail shop because of our pick-up and delivery service.
However, we will need a motor cycle, delivery vans, and customer service trained drivers.

Customers can choose payment either at the time of each delivery, or by monthly invoice billing. At the
end of each month we will send statements to each contract customer, itemizing service fees and the
charge for the service. All models of payments are allowed such as debt cards, credit cards, mobile
money, bank transfers cheque, however cash payment are not preferred due to high risk involved.

Our services are dedicated to consistently providing high customer satisfaction by rendering reliable
machines and furnishing a clean, enjoyable atmosphere at a competitive price and quality service.
CLC will employ new creative and innovative skills, advanced technique and professionals into making
sure the business is conducted successful, the customers are happy and the desired services are served.
The advanced skills, experience and insight into the job will generate a great market opportunity that
will allow the company to make an estimated turnover of TZS 67,647,788 in the first year with an
average monthly sales of 5.6 million which will grow progressively over the months as the market share
continues to grow.

Benefits to investors
The share value of investors will maximize as there will be tremendous profit since our services will be
of great quality and customer’s satisfaction will be our priority.
Since the business will give a positive Net Present Value (NPV) we expect to cover the cost that was
incurred into the initial investment thus guaranteeing attainment of the profit by the investors but also it
will encourage the investors to work more hard and being more exposed into innovations and skills
hence increasing the value of the company.
Customer’s benefits
The services will ensure customers receive the best laundry services and that there will be realization of
value of money they paid. However, seeing that we are targeting middle income earners and university
students, we will ensure that the set price is affordable to the majority. Going a step further the company
will offer value services such as laundry bags for easy to and from movements of the clothes, ironing
services and special discount packages to our loyal customers and high-volume customers. The company
will also ensure there is refund policy for customers not satisfied with the service and incase of any
damage to the clothes the company will be fully liable to ensure the customer is fully compensated and
happy with the service.
Venture objectives
Our company intends to be the Country’s class services provider of laundry services, we focus on
generating high brand equity and strong advertisement to allow a large number of customers to hear
about our product, we aim at high customer satisfaction and using the good experience of the customers
as a marketing tool to attract more customers. We will ensure that our customers are well attended with
minimum complaints.
We also expect our sales to double by the coming financial year, with a continuous 5% to 7% growth
rate in the coming years. And the sales are expected to be generated from our main business activities
that are income from payment fee for laundry services and extra charges due to special treatment if
required.

Financing needed

Startup expenses, funded through a combination of owner's equity capital and a commercial loan, are
summarized in the table below.

Leasing equipment: Buying new machines costs approximately TZS30,000,000 as opposed to leasing
which costs TZS 8,400,000 per year including maintenance. Evaluating the leasing solution shows NPV
higher than that of buying machines. Moreover, the business is new and has less experience in
maintenance and repair of machine breakdown, therefore the optimal solution is leasing machines. The
following machines will be leased:

 1 Washer - 38 lb capacity, high spin, microprocessor control, electric heat

 1 Tumble dryer - 40 lb capacity, stainless steel drum and gas heated
 1 Dry cleaning machine - 25 lb
 1 Roller Iron 40 x 12 inch, variable speed and vacuum exhauster
 1 Ironing table with steaming vacuum board, integral 2-gallon boiler, iron, water pump and light
Capital plan: The owner will invest TZS 30,000,000 in the business. Additional capital for the business
in the amount of TZS 20,000,000 will be borrowed from a commercial bank.

 Buying a motor cycle for fast delivery and office/facilities equipment (computer, printer, fax,
telephone instrument, tables, chairs, shelving, work tables, racks, etc.) and initial leasing of
laundry machines: approx. TZS 8,400,000
 In year 2 depending on the market growth we will consider buying a delivery van at an approx.
cost TZS 10,000,000
 Leasing facility space approx. TZS 500,000 per Month and pay 6-month advance rent of
TZS3000,000

Loan: Lending plan has to be completed and submitted to the bank 6 months before starting the
business. Loan will be needed two months in advance. We expect it to be a 5years loan with
and annual interest of 15% be paid on the long-term loans secured with fixed assets.

Start- up Estimates Requirements

Start-up Expenses
Legal 500,000.00
Stationery etc. 600,000.00
Brochures 400,000.00
Recruitment & training 1,000,000.00
Insurance 500,000.00
Rent 3,000,000.00
Utilities 800,000.00
Leased equipment 8,400,000.00
Expensed equipment 4,000,000.00
Other 800,000.00
Total Start-up Expenses 20,000,000.00
Start-up Assets
Cash Required 15,000,000.00
Start-up Inventory 4,000,000.00
Other Current Assets -
Long-term Assets 11,000,000.00
Total Assets 30,000,000.00
 Total Capital Required 50,000,000.00

Start-up Estimates Graph

Start Up Estimates
50,000,000.00

40,000,000.00
Amounts in TZS

30,000,000.00

20,000,000.00

10,000,000.00

-
Utilities

Other
Start-up Expenses

Brochures

Other Current Assets

Long-term Assets
Total Assets
Legal

Recruitment & training

Total Start-up Expenses

Insurance

Start-up Assets

Total Capital Required

Rent

Expensed equipment

Start-up Inventory
Cash Required
Stationery etc.

Leased equipment

Item

Services

CLC Ltd is going to provide the following services for customers with free home pickup and delivery
near Mlimani city area

 Dry cleaning
 Laundry for personal clothes and large items such as blankets, duvets, curtains, etc.
 Alteration services
 Delivery and Pick up services
Contents

1.0 BUSINESS DESCRIPTION .............................................................................................................. 7

1.1 General Company Description ........................................................................................................... 7
2.1 Market Research ........................................................................................................................... 11
1.1 Product Features and Benefits .................................................. Error! Bookmark not defined.
1.2 Competition .............................................................................. Error! Bookmark not defined.
1.3 Promotion ................................................................................. Error! Bookmark not defined.
1.4 Proposed Location .................................................................... Error! Bookmark not defined.
Operational Plan ..................................................................................... Error! Bookmark not defined.
Service Provision................................................................................ Error! Bookmark not defined.
Location .............................................................................................. Error! Bookmark not defined.
Legal Environment ............................................................................. Error! Bookmark not defined.
Personnel ............................................................................................ Error! Bookmark not defined.
Inventory ............................................................................................ Error! Bookmark not defined.
Suppliers ............................................................................................. Error! Bookmark not defined.
Water Supply .................................................................................. Error! Bookmark not defined.
Washing Detergents ........................................................................ Error! Bookmark not defined.
Credit Policies .................................................................................... Error! Bookmark not defined.
Management and Organization .......................................................... Error! Bookmark not defined.
1.5 Financial Plan ........................................................................... Error! Bookmark not defined.
1.6 Three years Profit and Loss Projection .................................... Error! Bookmark not defined.
1.7 Projected Cash Flow................................................................. Error! Bookmark not defined.
1.8 Projected Balance Sheet for three years ................................... Error! Bookmark not defined.
1.9 Break-Even Analysis ................................................................ Error! Bookmark not defined.
Appendices ............................................................................................. Error! Bookmark not defined.
1.0 BUSINESS DESCRIPTION
1.1 General Company Description
Laundry will be a full-service coin and card operating laundry service dedicated to consistently
providing high customer satisfaction by rendering reliable machines and furnishing a clean, enjoyable
atmosphere at a competitive price value relationship. The store will provide laundry washing, dry
cleaning, alteration services and optional folding.
Our key services will be;
 Dry cleaning and ironing
 Laundry for personal clothes and large items such as blankets, duvets, curtains, etc.
 Alteration Services
 Delivery and Pick up services

1.2 Mission statement

The mission of the business is to establish value laden relationships with its clients by providing them
with convenient, professional, eco-friendly, efficient, effective and hygienic oriented dry cleaning
and laundry management solutions.

1.3 Vision statement

To be the most preferred dry cleaning and laundry services in Dar es salaam by 2025

1.4 Objectives;
 To set up process, procedures and system for the business
 To be able to attend to the laundry needs of our customers on a timely manner
 To expand the operations of the business across other regions in Tanzania
 To successful procure capital equipment and finance the working capital requirement of the
business
 To penetrate the market further and serve the customers more effectively and efficiently.
 To further expand and diversify the business by offering additional value-added services.
1.5 Business values
The business will be guided by the following set of values
 Diligence
 Hygiene
  Effectiveness
 Efficiency
 Teamwork
 Honesty
 Timely delivery
 Professionalism

1.6 Business Philosophy: To us a customer is a King!

1.7 The market

CLC will target the middle-income earners as well as the university students. The business will offer
services to households especially the big families that face difficulties in laundry, also the university
students who have been seen to engage the cleaning staff around the university to do their laundry for
them. The business will go a step further to encompass small lodes and dispensaries as well as small
restaurant. These entities were deemed to be lucrative targets for cleanup laundry company. Key factors
such as the size, profitability, growth potential, and risks associated with the market segments were taken
into consideration prior to targeting a lucrative market.
1.8 Competition
In the laundry industry competition is mostly in the price charged for the type of dry cleaning and
services offered. The location of the customers in relation to the office to allow easy access of customers
who prefer drop off and pick up instead of delivery, also to allow walk in clients with easy accessibility
of our products. Some of the companies that will pose competition to cleanup laundry company is
crown laundry, TIMA dry cleaners, khalid laundry and dry cleaners and Ms unique dry cleaners ltd.

To combat competition, CLC will endeavor to have a better understanding of the market – this will
essentially supersede the competitors understanding of the market. Cleanup laundry company will
strive to deliver its services as per the needs and preferences of the target market.
Moreover, we shall explore to establish a way in which customers can pay by mobile money solutions
either for at the shop or online wherever they are to allow them to access the service in a timely efficient
way possible.
1.9 The management team
The business will be owned and managed by committed, motivated and hard-working women, because
we believe in easy understanding of laundry chores by women more than men, however additional
services such as delivery will be conducted by 5 men to facilitate wide coverage of the service all over
Dar es salaam. The primary owners of the business are Miriam and Baraka (M&B). They each have 50%
interest in the business and will be the managing members of the business. Miriam will manage the dry-
cleaning faction of the business and Baraka will manage and supervise the laundry, drying, folding and
pressing faction of the business plus delivery service. The managing members will employ a Finance
and Administration Assistant as well as two general assistants so as to better manage the anticipated
workload.

INDUSTRY ANALYSIS
Macro Environment
Currently our economy favors the establishment of ventures as way to improve employment but also
improving the economic condition of our country.

However, there is still a huge need of initiative skills and great efficiency as there is great competition
from other firms in the industry. Example we have crown laundry, TIMA dry cleaners, khalid laundry
and dry cleaners and Ms unique dry cleaners ltd

Also, the labor market seems to be more acute as we need skilled labor with brilliant, creative and
innovative skills so as to ensure the smooth operation of the business and ensure profitability.

And we will also have to abide the government regulations so as pace with the government restrictions
and regulations on venture establishment. This will go together with obtaining an appropriate license in
running the business and the payment of taxes as per required time and amount also other benefits like
NSSF.

Micro environment

 Customers
We as a company are targeting the middle income earners and university students, we are targeting
customers who find it hard to access cheap and affordable services, with university students we aim at
solving the problem of theft that the students face from other students as a result of hanging their clothes
in an unprotected space which mostly result to loss of their clothes.

 Support services
There are number of support services that will enable our business to grow fast, this will be through the
innovation of the social media and services and the huge usage of the social networks by the individuals,
this will help us to advertise ourselves, another support service will be the delivery system that will be
put in place to allow our customers to get laundry services while still proceeding with their other duties.

 Reliance and deservedness

The main focus will be on how the service providers and the whole business in general, relates to the
members of the society. And thus, we expect a positive atmosphere from the establishment of the
business to the members of the society and produce more positive externalities than negative
externalities.
2.0 MARKETING PLAN
To ensure the success of the business it is important to prepare a successful marketing plan. The
company is also looking forward to create awareness of the services provided in the company through
various advertising channels such as
 Television
 Radio
 Printed adverts
 Social media
The marketing techniques will allow the company to reach a wide number of customers and increase
market share and serve a wide range of customers.
FOCUS POINTS;
 Market research
 Profile of target market
 Market size, share and trends
 The level of competition in our industry of operation
 Market objectives
 Market philosophy
 Market strategies and sales projections
2.1 Market Research
Preliminary research has been done by observing the traditional hand wash laundry and commercial
dry cleaners’ business in addition to secondary research online. There will be a primary research done
by creating a survey to be conducted among residents in targeted vicinity. This research will also help
in setting of price to ensure all customers can afford the commodity. Some of the research
questionnaires to be filled include the following.

LAUNDRY BUSINESS QUESTIONAIRE

1 Gender

2 Age
3 Occupation (if student specify level)

4 How often do you do laundry?

i. Once a week

ii. Twice a week

iii. Twice a month

5 Do you..

i. hand wash

ii. use machine at home

iii. go to drycleaners

6 If you hand wash, do you..

i. do it yourself

ii. hire someone

If you hire a person to hand wash, how

7
much do you pay per piece of clothing?

If you use drycleaners (who also iron), what

8
is the average price per cloth that you pay?

9 What is the maximum price you would be

willing to pay for machine washing &
drying a load of 20 pieces of clothes?

i. 10,000 sh (500/cloth)

ii. 15,000 sh (750/cloth)

 iii. 20,000 sh (1,000/cloth)

iv. 30,000 sh (1,500/cloth)

Name top 3 additional services you would

like a laundry store to provide (e.g. tea,
10
soda, snacks, nail polish, video games,
newspapers, magazines etc)

Name top 3 services you would like to be

11 provided near a laundry store (e.g. saloon,
carwash, restaurant, supermarket)

What is your general opinion about a

12 laundry store with machines that you can
operate yourself or with assistance?

2.2 TARGETED CUSTOMERS

Our business has targeted a total of two sets of customers which are the middle-income earners and the
university students

Middle income earners; these is the group of people that is employed and earning a normal income
with ranges from TZS 500,000/= to TZS 1,500,000/= and slightly higher than that. These are the
customers that mostly work from Monday towards Saturday and have minimum time for laundry
activities. We as a company aim at easing up their weekend by doing laundry services for them to allow
them time to rest as they prepare to start a fresh new week. Most of these people opt to call temporary
laborer to assist them with laundry duties who mostly are not well trained and may lead to poor results
and clothes being destroyed or not properly cleaned. In this group we also include the small restaurants
and dispensaries.

University students; The second group of target customers are the university students, we realize the
challenges that university students get when it comes to laundry services, the students a number of
challenges some of which include

 High laundry prices

  Theft in the university hanging spaces
 Lack of time due to tight schedules
 Poor laundry experience.
We as the cleanup company aim at addressing all the problems facing the university studies, we focus
on covering the gap that exists by providing affordable and reliable services that will allow the
university students to carry on with other university duties while their laundry is being taken care of.
The universities that re targeted are University of Dar es salaam(UDSM), Institute of finance
management (IFM), Tumaini university, Mzumbe Dar campus university, Tanzania institute of
accounts(TIA), Theofilo kisanju university, Muhimbili university, St Joseph’s university

2.3 MARKET SIZE, SHARE, TRENDS AND GROWTH

2.3.1 Market trends

The current markets are moving towards digitalization and it is important to us as the business
to adapt these trends to avoid being left out of the current line of business, we as a laundry
company will facilitate online application for our services through our established website, this
website will also allow us to receive comments and communicate with our customers directly
which will allow us to inform our customers on delivery and pick up time and service to the
best of the customers convenience.

Research shows that one of the key factors in choosing a personal service, such as laundry and
dry cleaning, is not price but the convenience of the service. As stated above, with the growth of
discretionary income people tend to choose services based on how much time and effort the
service will save them. Although there are several conventional drop-off dry cleaning/laundry
service providers in the area, Cleanup laundry services will primarily market its convenient
pickup/delivery service to those busy individuals who are willing to appreciate such service, as
it saves them time for other endeavors.

2.3.2 Market share and size

There are no clear statistics on the market share of the laundry business, one of the reasons being
that the market is still growing and there are quite few laundry services in Dar es salaam
 compared to the population that lives here. There is a notion that laundry services are for the
high-income earners, we as a new start up business want to change that by allowing all income
groups access to laundry services. Basing on the customers we wish to serve our market analysis
will be as follows

Table: Market Analysis

Market Analysis
Growth
Potential Customers rate Year 1 Year 2 Year 3 Year 4 Year 5

Employees 2% 120,000 122,400 124,848 127,345 129,892

University students 2% 50,000 51,000 52,020 53,060 54,122

Others 1% 20,000 20,400 20,808 21,224 21,649

Total 5% 190,000 193,800 197,676 201,630 205,662

Market Analysis

MARKET ANALYSIS
Others
11%

Univesity
students
26%

Employees
63%

2.3.3 Market Growth

 The industry is growing at a 5% annual rate. Thus, making the market more opportunity visible.
This is believed to be due to the increase in the awareness of people on the importance of this
service we are offering. This has also led to the increase in companies that are dealing with
provision of such services. However, the growth of the market has proven the business to be
profitable thus has acted as one of our motives to engage in this business. We intend to expand
our business operations as the market grows to ensure we serve our customers with the best
services possible.

2.4 COMPETITIVE ANALYSIS

Like most industries with competition ours is not any different, the world today is venture driven making
it very competitive to start a business, but it is important to focus on the neglected group to ensure that
you operate in the most profitable way possible. Prior to the start up of our company there are a number
of key players in the laundry industry which include

 Alpha dry cleaners

 Ms uniq dry cleaners
 Khalid laundry & dry cleaners
 Tima dry cleaners & Laundry
 Royal prince dry cleaners
 Shoppers plaza dry cleaners

Just to mention a few large competitors in our industry, we aim to serve a different group of customers
and that is our competitive advantage to allow us to excel in the laundry business.

2.5 MARKETING OBJECTIVES, PHILOSOPHY ANG MARKETING STRATEGIES

2.5.1 MARKETING OBJECTIVES & STRATEGY

In our business idea we have chosen market penetration strategy. With market penetration
strategy what we do is we reduce the price of our services in comparison to our competitors so
as to be able to attract large number of customers in the market. Because our business is new in
the industry, we need to reach the largest number of customers as possible. We choose market
 penetration strategy because our main focus is gaining higher market share and this is by serving
a large group of the population and also we considered market penetration strategy because it
carries lower amount of risk and considering the customers we target to serve the lower prices
are our strong grounds. We are going to invest in marketing and advertising to advertise our
company so as to bring awareness to the society of our existence. In our market penetration
strategy, we are also going to offer a way that the customers can access our services online so as
to save their time and also to allow those customers with very tight schedule to be able to still
have access to our services. Therefore, it will not be important for our customers to come to the
office for them to access our service, they can come for the first time but after that they will be
able to access the survives from wherever they are.

2.5.2 MARKETING PHILOSOPHY

The market philosophy of our company is consumer driven. We have chosen this type of
philosophy because we are a small company that still needs to grow so we have to ensure that we
meet as much number of customers as we possibly can. And also it is important to concentrate
on our customers to facilitate further awareness of our services to the rest of the population this
will shape our market into consumer driven market philosophy this will help us to put much of
our focus on the demands of our customers which in return will act as a method of dealing with
the high level of competition. With consumer driven philosophy we will be able to attain the
loyalty of our customers by offering discounts for our loyal long-term customers. We will do so
in order to attract more customers. With consumer driven philosophy we will also put into
consideration the feedback of our customers so as to improve the services we offer, so as to make
sure we give our customers the reason to always choose us as their laundry to go to. As a
company we will also advice our customers to spread news about our business. There will be
special discount of 5% to existing customers for bringing in new customers. Therefore, we will
use our customers as a reference point of our business.

2.6 SALES FORECAST

The sales forecast gradually increases over the year 2020 and comprises total sales of Tzs 67,647,788.
Yearly forecasts are summarized in the table below.
 Sales
Forecasts

Rate Year 1 Year 2 Year 3

Dry clean 5% 19,896,408 20,891,229 21,935,790

Laundry 5% 39,792,816 41,782,457 43,871,580

Alteration 5% 7,958,563 8,356,491 8,774,316

other - - -

Total sales 67,647,788 71,030,177 74,581,686

Direct Cost
of Sales

Dry 0.1 1,989,641 2,089,123 2,193,579

Cleaning

Laundry 0.2 6,764,779 7,103,018 7,458,169

Alteration 0.1 795,856 835,649 877,432

Services

Other - - -

Total cost 9,550,276 10,027,790 10,529,179

of sales

Assumed average price of Tzs 10,000 per 20 clothes

Estimated unit sales per month

 Estimated units sales per month
800
700
600
500
units

400
300
200
100
-
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
months

Laundry Dry clean Alteration

Estimated Sales per Year

Estimated Sales per Year

80,000,000
60,000,000
Amounts

40,000,000
20,000,000
-
Year 1 Year 2 Year 3
Years

Laundry Dry clean Alteration

 3.0 OPERATIONAL PLAN

There are two ways for customers to take part in the service. Customers can sign contracts with Cleanup
Ltd to get regularly scheduled service, or, if it is more convenient, they can order over the telephone or
via e-mail.

Customers can choose payment either at the time of each delivery, or by monthly credit card billing. We
will send statements to each contract customer, itemizing service fees and the charge for the service to
their credit cards for payment, at the end of each month.

No retail shop will be rented in order to reduce the operation cost. An operations facility for installing
machines and equipment, washing and cleaning activities, and storing not yet cleaned and cleaned
garments and items is needed. The operations facility will require about 200 square feet divided into
four main sections as following:

1. Machine installation and cleaning activities

2. Sorting and storage of dirty garments received
3. Storing cleaned garments after finishing prior to delivery
4. Garment alteration workroom

The whole operation process will be controlled and monitored by a laundry expert employee, and
generally managed by the business owner.
 4.0 ORGANISATIONAL PLAN

4.1Staff Plan

Through consultations with a dry-cleaning consultant, the term of reference of a laundry expert and
workers are prepared. Employment information will be advertised in job sites. The laundry expert and
one full time worker who have experience in laundry work will be employed. The laundry expert will be
in charge of the operation and the quality of garment cleaning. Worker will be responsible for cleaning
and classifying work and have duty to report daily work to the laundry expert. The expert has to report
their working results and problems to the directors. one full time driver for picking up and delivering
clothes work from 9:00 am – 5:00pm every working day (Monday- Saturday) according to customers’
schedules.

The staff should be able to carry out working conditions and requirements:
 Understand and apply dry cleaning and washing processes
 Meet set standards by following instructions
 Work in hot, humid surroundings
 Perform the same work continuously
 Overtime may be required during peak seasons.

Number of staff and salary in the period starting January to June 2020:
Description - No of people Salary per Working
month hours/week
Owners Full-time 2 5,000,000 45
Laundry expert Full-time 1 1,500,000 45
1 Worker for start Full-time 1 1,000,000 45
Driver Full-time 1 700,000 45
Total - 5 8,200,000 180
From June 2020, we expect the business to have more customers and becomes busier, thus new staff (a
worker and a driver) will be employed. The business also may prefer to hire part-time driver to assist
with collection and delivery depending on market outcome. In case one of them becomes sick or for
other reason, other staff can replace him therefore the working process will not be effected.

An average of 5% increase in Director’s and Expert while a 10% increase to workers and drivers is
planned for the following two years of operations.
4.2 Staff Payroll plan

Year 1 Year 2 Year 3

Directors 5,000,000 5,250,000 5,512,500
Laundry expert 1,500,000 1,575,000 1,653,750
Worker-1 1,000,000 1,100,000 1,210,000
Worker-2 1,000,000 1,100,000 1,210,000
Driver-1 700,000 770,000 847,000
Driver-2 700,000 770,000 847,000
Other - - -
Total People 7 7 7
Total Payroll 9,900,000 10,565,000 11,280,250
 5.0 FINANCIAL PLAN
The following topics, the cash flow statement, profit and loss account, and balance sheet have been built
using forecasted information which is as accurate and realistic as possible. Sales increase gradually over
the 12 months showing the positive trend of sales. Cleanup Ltd is steadily gaining market share. Gross
profit and net profit rise proportionately to sales revenue. The financial statements show that the business
runs quite well and achieves expected results.

5.1 Projected Cash Flow

Cash flow increases steadily over the year creating the positive net worth. The first several
months of operation will be of critical importance to business survival, and we will be paying
special attention to our cash flows. We plan to purchase one van in July 2020 to accommodate
for the growing business volumes. Initially, we do not plan to sell on credit, with all of our
transactions being cash- or credit card based. We anticipate generating a sufficient customer base
that will allow us to maintain healthy cash balances starting from the middle of the first year of
operations, as summarized in the table below.

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash flow from operating activities
Profit Before tax (PBT) 67,647,788 71,030,177 74,581,686
Add Investment income 0 0 0
2,555,053.34
add Finance cost
3,000,000.00 2,043,364.69
Adjustments for non- cash items
Add Depreciation 1,600,000 2,100,000 2,100,000
Add loss on disposal of NCA - - -
Less gain on disposal of NCA - - -
Add increase in provision - - -
Changes in Working capital
Increase in Receivable - - -
Increase in Inventory (550,000) (605,000)
(500,000)
Decrease in Payable (Staff payables) (10,565,000) (11,280,250)
(9,900,000)
(57,813,311)
Decrease in other payables
(55,060,297) (60,703,977)
cash from operations 6,787,491 6,756,919 6,135,824
(2,555,053.4) (2,043,364.7)
Interest paid
(3,000,000.0)
Tax paid (7,560,700) (8,074,468)
(7,079,254)
Net Cash Flow Operations (3,358,835) (3,982,009)
(3,291,762)

Cash from Investing Activities

Purchases of Non-current assets( NCA) - -
(21,000,000)
Receipt from disposal of NCA - - -
Interest received - - -
Net Cash Flow Investing Activities - -
(21,000,000)

Cash from Financing Activities

Proceed from shares issued to owners 30,000,000 30,000,000
30,000,000
Proceed from loan issue - -
20,000,000
Loan repayment (5,966,311) (5,966,311)
(5,966,311)
Lease of equipment repayment
(8,400,000) (8,400,000) (8,400,000)
Net Cash Flow Financing Activities
35,633,689 15,633,689 15,633,689

Increase in Cash and Cash

equivalent 11,341,927 12,274,854 11,651,680
Cash and cash equivalent at start
15,000,000 26,341,927 38,616,781
Cash and cash equivalent at end
26,341,927 38,616,781 50,268,461

5.2 Projected Profit and Loss

The table below outlines our projected profit and loss statements for the first three years of
operation. In general, the business might meet some difficulties in the beginning months but after
that the business grows as expected and produces a small profit at the end of the year. It is not
necessary for the business to gain high profit in the first year. Nevertheless, we are expecting to
 make a small profit the first year. Our second- and third-year net profits are expected to grow
quite a bit, as shown below.

Pro Forma Profit and Loss

Year 1 Year 2 Year 3

Sales 67,647,788 71,030,177 74,581,686
Direct Cost of Sales (9,550,276) (10,027,790) (10,529,179)
Gross Margin 58,097,512 61,002,387 64,052,507
Gross Margin % 86% 86% 86%

Expenses
Payroll (9,900,000) (10,565,000) (11,280,250)
Recruitment & training (1,000,000) (1,050,000) (1,102,500)
Marketing/Promotion (400,000) (420,000) (441,000)
Depreciation (1,600,000) (2,100,000) (2,100,000)
Rent (3,000,000) (3,150,000) (3,307,500)
Utilities (800,000) (840,000) (882,000)
Insurance (500,000) (525,000) (551,250)
Telecommunications (800,000) (840,000) (882,000)
Maintenance (500,000) (525,000) (551,250)
Equipment lease (8,400,000) (8,820,000) (9,261,000)
Office Stationary & cleaning (600,000) (630,000) (661,500)
Other Expenses (4,000,000) (4,200,000) (4,410,000)
Payroll Taxes - - -
Total Operating Expenses (31,500,000) (33,665,000) (35,430,250)

Profit Before Interest and Taxes 26,597,512 27,337,387 28,622,257

EBITDA 24,997,512 25,237,387 26,522,257

Interest Expense (3,000,000) (2,555,053) (2,043,365)
Profit Before Tax 23,597,512 24,782,334 26,578,892
Taxes Expense (7,079,254) (7,434,700) (7,973,668)

Net Profit 16,518,258 17,347,634 18,605,224

Net Profit/Sales 24% 25% 31%
Gross Margin Graph

Gross Margin

65,000,000
64,000,000
63,000,000
Amounts in Tzs

62,000,000
61,000,000
60,000,000
59,000,000
58,000,000
57,000,000
56,000,000
55,000,000
Year 1 Year 2 Year 3
Years

5.3 BALANCE SHEET

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets
Current Assets
Cash 26,341,927 38,742,781 50,495,261
Inventory 4,000,000 4,000,000 4,000,000
Other Current Assets - - -
Total Current Assets 30,341,927 42,742,781 54,495,261

Long-term Assets
Long-term Assets 21,000,000 21,000,000 21,000,000
Accumulated Depreciation 1,600,000 3,700,000 5,800,000
Total Long-term Assets 19,400,000 17,300,000 15,200,000
Total Assets 49,741,927 60,042,781 69,695,261

Current Liabilities
Accounts Payable - -
Current Borrowing - - -
Other Current Liabilities - - -
Subtotal Current Liabilities - - -
Long term Liabilities
Long-term loan 17,033,689 13,622,431 9,699,485
Total Liabilities 17,033,689 13,622,431 9,699,485

Paid-in Capital 30,000,000 30,000,000 30,000,000

Retained Earnings 2,708,238 16,420,350 29,995,776
Total Capital 32,708,238 46,420,350 59,995,776
Total Liabilities and
Capital 49,741,927 60,042,781 69,695,261