UNIVERSITY OF THE IMMACULATE CONCEPTION

Bonifacio St., Davao City

BUSINESS PLAN

HELEN’S SEW AND FIT

In partial fulfillment of the requirements for the degree of

Master in Business Administration

Prepared by:

Deolly L. Roque

OCTOBER 2017
 Table of Contents

Table of Contents.................................................................................. 1

List of Tables ......................................................................................... 4

List of Figures ....................................................................................... 5

I. Executive Summary ................................................................... 6

II. General Company Description .................................................. 8

Vision ...................................................................................... 9

Mission.................................................................................... 9

Goals ...................................................................................... 9

Objectives ............................................................................... 10

Business Philosophy ............................................................... 10

Legal Form of Ownership........................................................ 10

III. Products and Services .............................................................. 11

Competitive Advantage ........................................................... 12

Pricing Structure ..................................................................... 13

IV. Marketing Plan............................................................................ 14

Market Research .................................................................... 14

Economics .............................................................................. 16

Product ................................................................................... 19

Features and Benefits ............................................................. 20

Customers .............................................................................. 20

Competition ............................................................................ 21

Strategy .................................................................................. 23

Sales Forecast ........................................................................ 26

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V. Operational Plan......................................................................... 27

Production............................................................................... 27

Location .................................................................................. 28

Legal Environment .................................................................. 29

Personnel................................................................................ 29

Inventory ................................................................................. 30

Suppliers ................................................................................. 30

Credit Policies ......................................................................... 31

Accounts Receivable .............................................................. 32

VI. Management and Organization ................................................. 33

Organizational Structure ......................................................... 33

Professional and Advisory Support ......................................... 33

VII. Financial Plan ............................................................................. 35

Start-up Costs and Capitalization ........................................... 35

Financial Assumptions ............................................................ 37

Projected Three – year Statement of Operation ..................... 38

Projected Three – year Statement of Financial Position……..39

Projected Three – year Statement of Cash Flow .................... 40

Notes to Financial Statements…………………………………..41

Liquidity Ratios ....................................................................... 48

Profitability Ratios ................................................................... 48

Solvency Ratios ...................................................................... 49

Break-even Analysis ............................................................... 50

Payback Period ....................................................................... 51

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References ........................................................................................... 53

Appendices .......................................................................................... 53

Appendix 1. T-shirt Styles ...................................................... 53

Appendix 2. Printing Styles ..................................................... 53

Appendix 3. Sportswear ......................................................... 54

Appendix 4. Process Flow of Finished Products ..................... 54

Appendix 5. Photos of Location .............................................. 55

Appendix 6. Sales Forecast for the 1st Year ........................... 56

Appendix 7. Survey Table………………………………………..58

Appendix 8. Survey Questionnaire ......................................... 59

Appendix 9. Validated Survey Questionnaire.......................... 62

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 LIST OF TABLES

Table 1.Market Share Analysis………………………………………………….19

Table 2. Business Industries…………………………………………………….22

Table 3. Competitive Analysis………………………………………………… 22

Table 4. Advertising and Promotion Expenses………………………………. 24

Table 5. Sales Forecast for the First 3 Years………………………………… 26

Table 6. Production Calculation………………………………………………...28

Table 7. Permit and Licenses…………………………………………………...29

Table 8. List of Suppliers……………………………………………………….. 30

Table 9. Personnel Qualification and Job Description………………………34

Table 10. Breakdown of Start-up and Capitalization Expenses…………… 36

Table 11. Projected Three-Year Statement of Financial Operation…………38

Table 12. Projected Three-Year Statement of Financial Position………….. 39

Table 13. Projected Three-Year Statement of Cash Flow………………….....40

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 LIST OF FIGURES

Figure 1 Process Flow……………………………………………………………28

Figure 2 Organizational Structure……………………………………………….33

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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

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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.

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.

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 II. General Company Description

Helen’s Sew and Fit will be a manufacturer of customized T-shirts of assorted

styles and printing designs. It will take orders primarily from various manufacturing
companies and schools operating in the province of Sta. Cruz. They are the identified
market because of the existence of big manufacturing companies in the area which
provide their employees with T-shirts either as company uniform or for special event
celebrations, e.g. teambuilding, anniversary and the like. This is true to public and
private schools which provide their students and faculties with T-shirts as an alternate
school uniform of for extra-curricular activities. However, this does not limit to other
business entities who would also like to avail of Helen’s finished products.

Basically, it would be the customer who 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. 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.

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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

o Dedicated to provide the community with customized T-shirts of style and comfort
at reasonable price
o Committed to exceed the customers’ expectations in quality, delivery, and cost
through continuous product innovation and customers interaction.
o Attaining highest level of efficiency, integrity, and honesty among employees,
suppliers, customers, and stakeholders that will drive long term loyalty.

Goals

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.

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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.

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.

Legal form of Ownership

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.

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 III. Products and Services

Customized T-shirt that is carefully manufactured and printed by Helen’s will be

the finished products for the first three years of operation. The customer which is
composed of manufacturing companies and schools will have to choose the clothing
material, T-shirt style, color and size as well as the printing design that Helens will make
for them. Samples of graphical print designs such as embroidered, embossed,
rubberized, plain-silk screen of assorted colors will be made available to help the
customer decide. This, however, does not limit to customer’s option to create and
suggest their own personalized graphic designs. The customer will also be made to
understand that embroidery printing design will require a good quality of clothing
material for better result. Therefore, the price per shirt with embroidered prints would be
slightly higher compared with shirts with embossed, rubberized, and plain silkscreen
printing designs. Stated 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.

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 After three years of operation, additional products such as sportswear, sweaters,
jackets and other clothing needs will be offered. 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

Competitive Advantage

The bigger share of the revenue is expected to come from businesses that are
seeking to have their corporate logo or image embossed onto standard T-shirts. Other
sources of revenue would be coming from the private and public schools who are users
of personalized shirts to be used by their students and faculties for physical education
activities and other school events. Helen’s Sew and Fit products will be priced
reasonably with durable craftsmanship to reflect the quality and exclusiveness
associated with the company’s trade name.

While there are some clothing stores in Sta. Cruz, Davao del Sur, none of them
offers manufactured customized T-shirts. This boost the business owner’s confidence to
pursue its business plan with optimism of being the first legally registered T-shirt
manufacturer in the town. Though there are competitors operating in the neighboring
cities, the proximity of Helen’s location to its target market will be an advantage.

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Pricing Structure

Helen’s Sew and Fit will ensure to design and manufacture products that will
meet the financial capacity of different classes of people. The prices for all shirts clothes
will be affordable and at the same time competitive with what is obtainable from the
other T-shirt manufacturers.

Competitive pricing will be used with due consideration also on the following
factors:
 Quality of textile fabric such as cashmere, wool blend, combed cotton,
jersey, and other clothing material
 Volume of order
 Complexity of the t-shirt style
 Complexity of the printing design

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 IV. Marketing Plan

Market Research

The company’s primary target market would be the manufacturing companies

operating within the area of Sta. Cruz who employs more than one thousand
employees. These companies are usually in need of shirts to be used as company
uniform of their employees. Generally, the shirts will be exclusively designed for them,
bearing its corporate logo and company image. That is what Helen’s will do for them.
Another potential market is the public and private schools in the locality who provide T-
shirts to its students and faculties for physical education activities and other school
events.

Based on the actual survey conducted with company respondents operating in

the province of Sta. Cruz, customized T-shirts appeared to be a common thing being
purchased. Among those surveyed are the big companies namely; Franklin Baker
Company in the Philippines, GSL Food Premium Export Corporation, Prime Synergies
Food Corporation, Coco Davao Inc., San Miguel Brewery, Inc., Davao Bioskin Tech
Laboratories, Inc., SafePac Corporation, and Coca Cola FEMSA Philippines, Inc. The
survey results revealed that said 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. Number of shirts per order is between 150 to 2,000 pieces with budgeted amount
ranging from Php30,000 to Php500,000.00. Around 60% of the respondents preferred
plain collarless shirts with silkscreen or embossed prints, while 40% preferred polo
shirts with embroidered and silkscreen prints. Purchase is made through competitive
bidding where placement of order will be awarded to the lowest bidder. 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.

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 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. Number of shirts per order is between
250 to 1,600 pieces with budgeted amount ranging from Php20,000 to Php300,000.00
with a budgeted amount of Php20,000.00 to Php300,000.00. Preferred shirts are plain
collarless with silkscreen prints. The same with the manufacturing company
respondents, schools generally get their orders from T-shirt manufacturers that can offer
lowest price. Jogging pants is another clothing need they have indicated in the survey.

As shown in the survey, manufacturing companies would like to have their shirts
personalized and unique to them. Thus, Helen’s would see to it that providing an
outstanding customer experience by allowing them to lay down their preferences boils
down to taking care of customers. This will leave the customers a 'WOW'
experience that leaves a lasting impression. Letting the customers suggest their own
unique T-shirt design and printing styles will result to personalized set of products that
every company would want to have. It is also the company owner’s stand that the
opening of this garment manufacturing company is likely to catch the attention of the
manufacturing and agricultural industries in the locality, knowing its employment and
economic contribution in their area of operation.

Data gathered from the Business Bureau of the municipality of Sta. Cruz
revealed a total of 625 registered businesses operating in the area. Fortunately, of the
total number, none is engaged into customized T-shirt manufacturing. Although 35% of
the total registered businesses belong to the RTW or merchandise retailing industry,
the presence of twelve (12) manufacturing companies operating in the area are good
potential market as it employs an average of one thousand (1,000) workers. Thus, it is
the company’s position that customized T-shirts will be in demand in this business
industry.

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Economics

In the 20th century after the invention of sewing machines (industrial sewing
machines), it became pretty much easier to produce clothes. Clothes can now go
through factory system of production and still maintain good quality and standard sizes.
It is no wonder that fashion style changes at a regular basis and in most cases people
go back to the past to re- introduce old fashion. The garment industry is indeed a rapidly
changing industry; fashion trends will always come and go at different seasons. The
bottom line is that successful clothing labels have a thorough grasp of the market and
they know how to meet the needs of the consumers, as well as cajole them to accept
what they have to offer because they are always flexible and creative (A Stitch in Time:
The Cleveland Garment Industry. Western Reserve Historical Society, 2015).

The Philippine garment industry is one of the country’s success stories. Starting
as a cottage-type industry in early 1950s, it has expanded and strongly positioned itself
as the country’s leading non-traditional export. From US$36 million worth of garments
and textiles exported in 1970, it has grown tremendously, reaching its first billion dollar
in 1987. The Philippine government and the private sector undertook aggressive joint
marketing efforts that helped sustain the industry’s performance through the 1990s
despite the Asian crisis. In 2000, the industry breached the three billion dollar mark.

Today, the industry remains the Philippines’ second biggest dollar earner, next to
electronics and semiconductor, accounting for 6.23 percent of total exports in the first
quarter of 2006. The United States remained its top market, followed by European
Union, Canada and others. The industry likewise remains the leading employer of the
manufacturing sector. As of 2005, there are 3,165 firms with direct and indirect
employment totaling to 662,000.

Seeing the significant contribution of the garments industry to the millions of

Filipino workers and to the Philippine economy as well, the Philippine government has

16
prepared package assistance for the benefit of the industry, particularly on the following
aspects:
o Productivity enhancement – To address the issue of low productivity,
training programs are being developed together with other accredited
government institutions. Advocacy/networking for productivity based wage
is also being worked out, which is addressed to the different labor unions
and employers.
o Market/product development and promotion through the establishment of
marketing
o Market/product development and promotion through the establishment of
marketing desks to attack new markets.
o Financing – The government together with some selected financing
institutions are setting up a 1.2 B facility to assist the industry.
o Trade facilitation

Investments are strongly encouraged in the areas of textile and apparel

manufacturing, dyeing, printing and finishing to promote global competitiveness in the
midst of the free trade era. The abundance of indigenous Philippine fibers such as
abaca, piña, silk and ramie provides an opportunity for the development and production
of ecologically-friendly fabrics at commercial quantities (Garment and Textile Export
Board, 2016).

Helen’s Sew and Fit will take advantage of this improving garment industry in its
proposed area of operation. It is the company’s belief that the supply and price of textile
will remain stable in the next few years. This means that the manufacturing price of
customized T-shirts can be flexible and negotiable because the cost of direct materials
will remain stable.

The growing economy of Sta. Cruz signifies increase in the demand of Helen’s
finished products. The local government leaders and populace have envisioned for a
new aspiration for the town to become a city, given the presence of large industrial

17
companies like the San Miguel Corporation, Coco Davao Inc., Franklin Baker Co., GSL
Food Industries, and Seaoil Philippines oil storage facility which is part of a 300-
megawatt coal power plant run by Aboitiz Power Corporation’s Therma South,
Incorporated. Being the oldest town in the province of Davao del Sur, there is no doubt
that the municipality of Sta. Cruz will become a city soon. Infrastructures have been
moderately improved, and most of its cityhood requirements, specifically its income and
total land area requirements, have been already met. When the municipality of Sta.
Cruz finally becomes a city, full industrialization in the area may be expected.

Coconut and other agricultural crops, i.e., banana, sugarcane, corn, coffee, and
vegetables are also abundant in the place. Thus, agricultural industry is expected to rise
in the next few years. This is in addition to the growing aquaculture industry because of
the 24-kilometer long coastline of Sta. Cruz which forms part of the Davao Gulf that
provides a rich fishing grounds and is suitable for aquaculture (Province of Davao del
Sur, Research Division. Retrieved 17 December 2016).

Davao South Greenspace Eco-Industrial Park is also expected to rise soon in

Barangay Astorga. Forty hectares have been allocated for the development of a seaport
that could host a shipbuilding facility, logistics center and a Business Park and
Information Technology Hub (Founder’s Guide, May 9, 2016). With all these industrial
developments in the province, growth potential of Helen’s is feasible. However, increase
in demand goes along with the following barriers to enter the market:

o High capital cost

o High production cost
o Customer’s loyalty
o Proximity of distance to competitors located in Davao City proper

Maintenance of good credit line with the suppliers of raw materials, close
supervision and maintenance of technical and skilled labor workforce to minimize
wastage are one of the measures to control high capital and production cost. Giving
rewards and incentives to loyal customers and strict implementation of quality control
system will be our ways to gain customers’ loyalty. Moreover, ensuring good quality of
finished products will sustain the positive image of Helen’s Sew and Fit, thereby

18
capturing the interest of customers despite having the opportunity to transact with some
suppliers from Davao City.

Fast turnover of information and communication technology is seen to affect the

company’s market in the future because of increasing number of competitors online.
Some customers might change its purchase preference to online T-shirt manufacturers
instead. Thus, Helen’s Sew and Fit intends to create its own website after three years of
operation.

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

Product

Helen’s customized T-shirts will be made from 100% pre-shrunk fabric and are
available in a range of styles, colors, and sizes at an affordable price. Prints are made
from high-grade printing materials for attractive and lasting effects. This provides
comfort and fashion style of every employee, students, and other individual whom the
target manufacturing companies, schools and other business entities will distribute their
ordered shirts. Added to that is the ability of the customers to create and suggest their

19
own fashion style and design that Helen’s will value to be able to deliver the best
product the customers would love.

Quality control is extremely important. Any items that are defective should be
replaced. It is critical to build customer trust with quality products and exceed order
expectations through excellent customer service. A “contact us” business cards will be
made available for customers with questions prior to ordering or for customer service
after receiving the orders. Helen’s Sew and Fit will strive to have a 100% customer
satisfaction guarantee.

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.

Customers
Helen’s Sew and Fit will have a wide range of customers in the province. In view
of that, the company will create strategies that will enable them to reach out to business
entities which need customized shirts for their employees and students. This cut across
different ages - male, female, young adults and students. From the market survey
conducted, all of the respondents (manufacturing firms and schools) showed T-shirts as
part of their company uniforms. Purchase Order is placed at least twice a year. Such is

20
a good motivation to strive more to ensure that the Helen’s clothing label will be well
accepted in the market place.

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

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 presence of some popular garment-maker companies located in Davao
City like Ven Mark Garments and Thread and Fold, to name a few, are likely the most
competitors of Helen’s. It is because they have been in the garment manufacturing
business for long and can accommodate bulk orders. Their established brand and
reputation is an edge compared to Helen’s which is to start operating yet. However,
Helen’s still believes that customers are likely to opt for their finished products and

21
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.

Moreover, 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. Other
competitors are the online companies selling printed and embroidered T-shirts and
other custom clothing. Though most of Helen’s target markets have access to internet,
competition may not be stiffed since no purchase orders made through online appeared
in the actual survey conducted. All of the respondents expressed preference of buying
shirts from the T-shirt manufacturer. The presence of Helen’s Sew and Fit in the area
will catch their attention of bringing in the desired products close to their doorstep.

Competitive Analysis

Table No. 3 Competitive Analysis

Factor Helen’s Sew Strength Weakness Ven Mark Thread and Importance
and Fit Garments Fold to
Customers
Product Customized T-  Same Same 1
shirt
Price Reasonable  Expensive Expensive 5

Quality High Quality  Same Same 1

Design Various  Same Same 1

Choices
Delivery Fast  Slow Slow 5

Expertise Newbie  Advanced Advanced 1

Company Newbie  Established Established 1

Reputation
Location Convenient  Far Far 5

Image Needs  Good Good 1

Promotion

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 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.

Strategy

The business owner intends on using a number of marketing strategies that

will allow Helen’s customized shirts to easily target manufacturing companies, schools,
and other business entities. These strategies include traditional print advertisements
and ads hung on various strategic places. As the targeted markets are internet users,
Helen’s Sew and Fit will also create a Facebook page where the clients can post
inquiries and purchasing needs with their suggested T-shirt designs. Delivery of flyers
and calling cards directly to the offices of manufacturing companies, schools, and other
local businesses that need customized T-shirts is also part of the promotional approach.
Above all, delivering quality, comfortable, trendy styles, and reasonable price of Helen’s
finished products will be maintained to prove customer care and satisfaction.

Promotion
The sales 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 sales effort will work on the continual promotion thru print ads and
streamers. Certificate of Registration from the Philippine Government Electronic

23
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.

Promotional Budget

A budget of P10,500 will be allocated for advertising and promotion to

cover the following expense:

Table No. 4 - Advertising and Promotion Expenses

Particular Budget
Ads & streamers Php2,000.00
Framing/hanging of tarpaulin 2,000.00
Brochures/calling cards 4,500.00
Prototype shirts 2,000.00
Total Php10,500.00

24
Pricing

The company’s objectives are twofold. Based on its mission statement,

pricing must remain reasonable and, therefore, competitive. So they will focus on
maximizing sales through volume pricing and continue to maximize their return
on sales. 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.

Proposed Location

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 monthly rate per
month would be Php5,400.00 with 3 months advance deposit payable upon
signing of the contract.

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. Thus, the construction of a
new public market and commercial complex building along the national highway
where the overland transport terminal is located. At present, clearing and
widening of the site is on-going along with the rising up of more business
establishments including a hospital and the Negosyo Center of the Department of
Trade and Industry. With this economic progress, access and promotion of
Helen’s finished products will be easier.

25
Sales Forecast

The sales forecast is reasonably conservative so that goals will be

achievable. Helen’s machineries and equipment are assumed to produce the
maximum number of shirts with the most efficient production capacity of the
skilled workers. However, sales will be slow for the first year, a function of the
fact that the company is a start-up organization and it will take time to build a
sufficient foundation. Shown below is the projected sales for the first three years
of operation which monthly details is presented under Appendix 6.

Table No. 5 – Sales Forecast for the First 3 years

Helen's Sew and Fit

Projected Sales For Years Ended 2018, 2019, and 2020

CY 2018 CY 2019 CY 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
Polo shirt 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% Trade Discount 42,866 47,152 54,225
Net Sales 2,100,414 2,310,456 2,657,024

26
 V. Operational Plan

Production

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

27
 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
Annual Output 19,968 Shirts

Location

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

28
commercial space within the Sta. Cruz Public Market and Commercial Complex and
transport terminal will be rented.

Legal Environment

All the necessary permits will be secured to avoid any legal impediments during
operations. Below are the permit and licenses to secure in order for Helen’s Sew and Fit
to operate legally:

Table No. 7- Permit and Licenses

Government office Document Title

Department of Trade and Business Name Registration
Industry
Sta. Cruz Business Bureau Business Permit
PhilHealth Insurance Employer-employee Membership
Certificate
Bureau of Internal Revenue Tax Identification Number and Permit for
printing of Official Receipt
Social Security System Employer-Employee Membership
Certificate
DTI Negosyo Center Registration for Barangay Micro
Business Enterprise (BMBE)
PAG-Ibig Fund Employer-Employee Membership
Certificate
PhilGEPS Bidder’s Registration Certificate

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

29
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.

Inventory

Raw materials such as fabric, threads, textile paints are what will compose the
inventory. Sufficient stock for commonly ordered types of fabric of assorted colors must
be made available at any given time. Supposedly, an additional purchase must be made
when the stocks of inventory of raw materials are at the level of 10% already. However,
purchased of raw materials goes along with the volume of order as this business is
order basis with periodic demand. Thus, the provision of inventory is estimated at 10%
of the total amount of raw materials purchased.

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,
Kianbee Trading buttons, sewing equipment,
R. Magsaysay Ave., Davao City spare parts and other related
NCCC Department Store materials
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

30
 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.

Credit Policies

Helen’s Sew and Fit believe that selling on credit is customary in the customized
T-shirt manufacturing business especially for bulk purchase orders. Because most of
the customers will always find a way to control their cash resources in order to maintain
liquidity. This is also true to school–based customers whose source of payments is to
be collected yet from its students and faculties. Thus, credit policy can be arranged at
some point of sales based on the following criteria:

o The company has been in existence and operational for more than three
years already
o Purchase Order is worth twenty thousand pesos (Php20,000.00) or higher

The customer will be made to sign a Promissory Note where the terms and
conditions are indicated in detail. That includes the number of payments, amount of
amortization, and its due date. Statement of Account will be sent to the customer not
later than 5 days before the due date. This will serve as a customer’s reminder to pay
their obligations on time. In case the customer failed to pay on time, they will be
reminded thru phone call, giving a grace period of 7 days to settle its amortization due.
If no payment is made after 7 days, Demand Letter will be issued giving 5 days to pay
the amount due. Failure to pay after 5 days, another Demand Letter will be served
declaring the entire outstanding amount due and demandable. Thereafter, the account
will be endorsed to the lawyer for litigation if it remains unpaid. The Aging of Accounts
Receivable will be made available every month for proper monitoring and enforcement
of collectibles especially those aging more than thirty days. Giving cash discount for
prompt payment will become part of Helen’s credit policies starting year four.

31
Accounts receivable is estimated at 16% of the total annual sales.

32
 VI. Management and Organization

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:

Figure 2 – Organizational Structure

Manager

Bookkeeper Graphic
Sewers
/ Secretary Artist

Professional and advisory support

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

33
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.

Table No. 9 - Personnel Qualifications and Job Description

Position Qualification Job Description

College graduate preferably  Handles human resource

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

34
 VII. Financial Plan

Startup Expenses and 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. Said
invested amount shall be sourced from the owner’s personal money of Php342,400.00
coming from the proceeds of her Total Accumulated Value (TAV) in Pag-Ibig Fund and
Cash Surrender Value of GSIS Policy insurance. The remaining Php200,000.00 amount
needed will be loaned from the Cooperative that is collateral-free.

35
 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
1
Other Equipment
Lot 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.

1
Office Equipment. Furniture & Fixtures Lot 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

36
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 2 nd 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.

37
 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

38
 Helen's Sew and Fit
Statement of Financial Position
For the Calendar Years Ended 2018, 2019 & 2020
CY
2018 CY 2019 CY 2020
ASSETS
Current Assets
Cash Note 20 177,858 477,130 862,412
Accounts Receivable Note 21 336,066 369,673 429,048
Prepaid rent Note 22 16,200 16,200 16,200
Inventory end 85,473 94,021 108,124
Total Current Assets 615,598 957,023 1,415,783
Fixed Assets
Properties and Equipment Note 23 240,000 240,000 240,000
Less: Accumulated Depreciation Note 23 45,600 91,200 136,800
Total Fixed Assets 194,400 148,800 103,200
TOTAL ASSETS 809,998 1,105,823 1,518,983
LIABILITIES AND CAPITAL
Current Liabilities
SSS, Philhealth & Pag-Ibig Payable Note 24 5,539 5,539 6,036

Long-term Liabilities
Loan Payable Note 25 133,333 66,667 -
Total Liabilities 138,872 72,206 6,036

Capital
Owner's Equity Note 26 671,126 1,033,618 1,512,947

Total Capital 671,126 1,033,618 1,512,947

TOTAL LIABILITIES and CAPITAL 809,998 1,105,823 1,518,983

39
 Helen's Sew and Fit
Statement of Cash Flow
For the Calendar Years Ended 2018, 2019 & 2020
CY 2018 CY 2019 CY 2020
Cash Flows from Operating Activites
Cash Inflows
Cash collections from customers 1,764,348 1,940,783 2,231,900
Cash collections from receivables 336,066 369,673
Total Cash Inflows 1,764,348 2,276,849 2,601,573
Cash Outflows
Payment of pre-operating expenses 16,200
Payment of direct materials 809,132 945,744 1,081,236
Payment of direct labor 230,541 254,149 298,641
Payment of overhead 50,880 55,968 64,363
Payment of operating expenses 663,470 613,716 674,717
Payment of loan amortization 98,667 88,000 77,334
Total Cash Outflows 1,868,890 1,957,577 2,196,291

Net Cash Provided by (used in) Operating Activities (104,542) 319,272 405,282
Cash Flows from Investing Activities
Cash Outflows
Purchase of Property & Equipment 240,000 - -
Total Cash Inflows 240,000 - -

Net Cash Provided by (used in) Investing Activities (240,000) - -

Cash Flows from Financing Activities
Cash Inflows
Investment by the owner 542,400 - -
Total Cash Inflows 542,400 - -
Cash Outflows
Owner's withdrawal 20,000 20,000 20,000
Total Cash Outflows 20,000 20,000 20,000

Net Cash Provided by (used in) Financing Activities 522,400 (20,000) (20,000)

Increase (Decrease) in Cash 177,858 299,272 385,282

Cash and Cash Equivalents, January 1 - 177,858 477,130

Cash Ending Balance (Yearly) 177,858 477,130 862,412

40
 Helen's Sew and Fit
Statement of Changes in Owner's Equity
For the Calendar Years Ended 2018, 2019 & 2020

Year
2018 Year 2019 Year 2020
Roque, Capital beg
342,400 671,126 1,033,618
Current Year Net
income 348,726 382,492 499,329
Total
691,126 1,053,618 1,532,947
Less: Drawings
(20,000) (20,000) (20,000)
Roque, Capital end
671,126 1,033,618 1,512,947

41
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% Trade Discount 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

42
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

43
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

44
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

45
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

46
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

Note 20 - Cash
Year 2018 Year 2019 Year 2020
Cash Balance per Year as

per Statement of Cash Flow 177,858 477,130 862,412

Note 21 - Accounts Receivable

Year 2018 Year 2019 Year 2020
Annual Gross Sales 2,143,280 2,357,608 2,711,249
x 16% uncollected x 16% x 16% x 16%
Yearly Accounts Receivables
to be collected in the next
preceeding Year 342,925 377,217 433,800

Note 22 - Prepaid Rent Year 2018 Year 2019 Year 2020

3 months advance deposit 5,400 5,400 5,400
@ P5,400 per month to be x 3 months x 3 months x 3 months
offsetted only upon vacating
the place. 16,200 16,200 16,200

Note 23 - Properties and

Equipment
Year 2018 Year 2019 Year 2020
Total Acquisition Cost 240,000 240,000 240,000
Less: 5% scap value 12,000 12,000 12,000
228,000 228,000 228,000
Divided by 5 yrs useful life =
accumulated depreciation 45,600 91,200 136,800
Total Fixed Assets 194,400 148,800 103,200

47
Note 24 - SSS, Phil-Hhealth & PAG-Ibig Payable
Year 2018 Year 2019 Year 2020
Annual Amount ( Note 8) 66,466 66,466 72,437
Divided by 12 mos. 12 12 12
= 1 month unpaid 5,539 5,539 6,036

Note 25 - Loans Payable

Year Payment Principal Interest Balance

200,000
2018 98,667 66,667 32,000
133,333
2019 88,000 66,667 21,333
66,667
2020 77,334 66,667 10,667
-
264,000 200,000 64,000

48
Key Financial Ratios/Indicators

Liquidity Ratios

Liquidity ratios analyze the ability of the company to pay off both its current
and long term liabilities as it becomes due. These ratios show the cash levels of a
company and its ability to turn other assets into cash to pay off liabilities and other
current obligations.

Year 2018 Year 2019 Year 2020

Current
Ratio Current Assets 615,598 957,023 1,415,783
=
Current Liabilities
5,539 5,539 6,036
=
111.14 172.79 234.54

Cash &
Quick
Equivalents+Accounts
Ratio 513,925 846,803 1,291,460
= Receivables

Current Liabilities
5,539 5,539 6,036
=
92.79 152.89 213.94

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

49
 Year 2018 Year 2019 Year 2020

Return on Net Income 348,726 382,492 499,329

=
Assets Average Total
Assets 809,998 1,105,823 1,518,983
=
0.43 0.35 0.33

Return on
Equity Net Income 348,726 382,492 499,329
= Average
Shareholder's
671,126 1,033,618 1,512,947
Equity
= -
0.52 0.37 0.33

Solvency Ratios

Solvency ratios measure a company’s ability to sustain operations indefinitely

by comparing debt levels with equity, assets, and earnings. These ratios identify going
concern issues and a firm’s ability to pay its bills in the long term.

Year 2018 Year 2019 Year 2020

Total Equity
671,126 1,033,618 1,512,947
Equity Ratio =
Total Assets
809,998 1,105,823 1,518,983
=
0.83 0.93 1.00

Total Liabilities
138,872 72,206 6,036
Debt Ratio =
Total Assets
809,998 1,105,823 1,518,983
=
0.17 0.07 0.004

Total Liabilities
Debt to = 138,872 72,206 6,036
Equity Ratio
Total Equity
671,126 1,033,618 1,512,947
=
0.21 0.07 0.004

50
Break-Even Analysis

A break-even analysis predicts the sales volume, at a given price, required to

recover total costs. In other words, it’s the sales level that is the dividing line between
operating at a loss and operating at a profit.

Year 2018 Year 2019 Year 2020

Sales 2,100,414 2,310,456 2,657,024
Less:Variable
1,105,659 1,301,698 1,492,679
Cost
Contribution
994,756 1,008,758 1,164,345
Margin

CM Ratio = 0.47 0.44 0.44

Fixed Cost 614,030 604,932 654,350

CM Ratio 0.47 0.44 0.44

Break-Even
=
Point in Pesos 1,306,447 1,374,846 1,487,158
Divided by:
Average Unit
225 225 225
Selling Price*

Break-Even
= 5,806 6,110 6,610
Point in Units

*Average price/unit
Plain collarless 150
Poloshirt 300
450
divided by 2
Average price per unit 225

51
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

52
 REFERENCES

Colovic G (2012). Strategic management in the garment industry, Woodhead Publishing

India

Paunovic D and Colovic G (2005). 'The application of SWOT analysis in designing of

garments', Management,No 37, pp. 71-77

Colovic G and Mitrovic M (2011), 'The importance of innovation in the textiles and
garment industry', Tekstilna industrija, vol. 59, iss. 2, pp. 33-37

ILO/96/33, October 28, 1996, Globalization Changes the Face of Textile, Clothing and
Footwear Industries
Garments and Textile Export Board, 2016

A Stitch in Time: The Cleveland Garment Industry. Western Reserve Historical Society,
2015

Province of Davao del Sur, Research Division. Retrieved 17 December 2016)

Founder’s Guide, May 9, 2016

https://www.score.org/resource/business-plan-template-startup-business

53
 Appendices

Appendix 1. T-shirt Styles

Polo Shirts Plain Shirts

Appendix 2. Printing Designs

Embroidered Silk Screen Embossed /

Rubberized

54
Appendix 3. Sportswear

Tops Short / Jogging Pants Jackets

Appendix 4. Process Flow of Finished Products

55
Appendix 5. Photos of the Location

56
Appendix 6. Sales Forecast for the First Year of Operation

Helen's Sew and Fit

Sales Forecast
For the Period January to June 2018
Particular Jan Feb Mar Apr May June Total
Plain/collarless shirts 60,000 60,000 64,030 67,750 97,500 75,000 424,280
Silkscreen print 29,000 29,000 29,000 29,000 47,125 36,250 199,375
3,000 pcs @ P145.00/pc 200 200 200 200 325 250 1375
Embossed/rubberrized 31,000 31,000 35,030 38,750 50,375 38,750 224,905
3,106 pcs @ P155.00/pc 200 200 226 250 325 250 1451
Poloshirt 106,250 106,250 106,250 117,300 120,000 90,000 646,050
Embroidered 65,000 65,000 65,000 76,050 65,000 48,750 384,800
2,152 pcs @ P325.00/pc 200 200 200 234 200 150 1184
Silkscreen print 41,250 41,250 41,250 41,250 55,000 41,250 261,250
1,918 pcs @ 275.00/pc 150 150 150 150 200 150 950
Total Sales 166,250 166,250 170,280 185,050 217,500 165,000 1,070,330
Less: 2% Trade Discount 3,325 3,325 3,406 3,701 4,350 3,300 21,407

Net Sales 162,925 162,925 166,874 181,349 213,150 161,700 1,048,923

Helen's Sew and Fit

Sales Forecast
For the Period July to December 2018
Particular July Aug Sept Oct Nov Dec Total
Plain/collarless shirts 67,750 75,000 75,000 124,400 75,000 75,000 492,150
Silkscreen print 29,000 36,250 36,250 61,625 36,250 36,250 235,625
3,000 pcs @ P145.00/pc 200 250 250 425 250 250 1,625
Embossed/rubberrized 38,750 38,750 38,750 62,775 38,750 38,750 256,525
3,106 pcs @ P155.00/pc 250 250 250 405 250 250 1,655
Poloshirt 90,000 90,000 90,000 130,800 90,000 90,000 580,800
Embroidered 48,750 48,750 48,750 70,850 48,750 48,750 314,600
2,152 pcs @ P325.00/pc 150 150 150 218 150 150 968
Silkscreen print 41,250 41,250 41,250 59,950 41,250 41,250 266,200
1,918 pcs @ 275.00/pc 150 150 150 218 150 150 968
Total Sales 157,750 165,000 165,000 255,200 165,000 165,000 1,072,950
Less: 2% Trade Discount 3,155 3,300 3,300 5,104 3,300 3,300 21,459

Net Sales 154,595 161,700 161,700 250,096 161,700 161,700 1,051,491

57
Appendix 6. Survey Table

Manufacturing Companies

Respondents
1 2 3 4 5 6 7 Total
No. of Employees 3,000 500 400 1,500 1,500 200 1,500 8,600
No. Employees with T-
shirts 2,000 400 300 1,300 1,000 150 1,000 6,150
No. of units per order 2,000 400 300 1,300 1,000 150 1,000 6,150
Frequency of purchase
per year 2 2 2 2 2 1 2
Estimated No. of units per
year 4,000 800 600 2,600 2,000 150 2,000 12,150
Allocated budget 500,000 80,000 60,000 300,000 300,000 30,000 250,000 1,520,000
March & Jan. & Jan. & Feb. &
Periodic schedule May & Dec. January Jan. & Nov.
October Aug. July Oct.
Polo Shirt &
Plain Plain Plain Polo Shirt Plain
Preferred T-shirt style Polo Shirt shirt jack

Preferred printing design Embroidered Silkscreen Silkscreen Silkscreen Embroidered Silkscreen Embroidered

30-day 30-day 60-day 30-day

60-day Cash on Cash on
Mode of Payment credit credit credit credit
credit term Delivery Delivery
term term term term

Preferred suppliers Factory Factory Factory Factory Factory Factory Factory

Clothing needs other than Jogging Sports
Sports wear Jacket Sports wear none Sports wear
T-shirt pants wear

Procurement criteria
Lowest Lowest Lowest Lowest
- Lowest price Lowest Price Lowest Price Lowest Price
Price Price Price Price
- Stick to the existing
- - - - - - -
provider
- Quality Quality Quality Quality

58
Schools
Respondents
1 2 3 4 5 6 Total
No. of Students 1,600 400 300 250 250 350 3,150
No. students with T-shirts 1,600 400 300 250 250 350 3,150
No. of units per order 1,600 400 300 250 250 350 3,150
Frequency of purchase per
year 2 2 2 2 1 2 11
Estimated No. of units per year 3,200 800 600 500 250 700 6,050
Allocated budget 300,000 75,000 25,000 20,000 20,000 50,000 490,000
March & Jan. & Jan. & Feb. & May &
Periodic schedule January
October Aug. July Oct. Dec.

Preferred T-shirt style Plain Plain Plain Plain Plain Plain

Preferred printing design Silkscreen Silkscreen Silkscreen Silkscreen Silkscreen Silkscreen

Cash on Cash on Cash on Cash on Cash on Cash on

Mode of Payment
Delivery Delivery Delivery Delivery Delivery Delivery

Preferred suppliers Factory Factory Factory Factory Factory Factory

Clothing needs other than T- Jogging Jogging Jogging Jogging Jogging Jogging
shirt pants pants pants pants pants pants

Procurement criteria
Lowest Lowest Lowest Lowest Lowest Lowest
- Lowest price
Price Price Price Price Price Price
- Stick to the existing provider - - - - - -
- Quality

59
Appendix 7. Survey Questionnaire

60
61
62
Appendix 8. Validated Survey Questionnaire

63
64