SORBETEROS

A Business Plan
Presented to the Faculty of the
College of Accounting Education

Katrinna Louise B. Gravina

Hazel N. Mellomida
Jocelyn L. Rivera
King Mark Lester B. Sardido

February 2021
 Executive Summary
As the earth gets warmer, A company was born. The KJHK Corporation is a
company build with passion and perseverance by 4 university students namely
Katrinna Louise B. Gravina, Hazel N. Mellomida, Jocelyn L. Rivera and King Mark
Lester B. Sardido. It was created in 2021. Started as a course requirement, the
corporation put into action and gave birth to “Sorbeteros”, a pure Pinoy ice cream
product, later transformed into a business when the owners noticed that their
business offered a unique value to the consumers. “Sorbeteros” products are all
“Tatak Pinoy” from its flavors down to its last process. Born in The company
envisions to represent the country in the world of dairy.

All the fruits are sorted, and processed at the facility located in the farms of Calinan,
Davao City. The ice cream mix formula that we use for making our product is made
in our own factory. Limited according to our formula. We currently make five natural
fruit flavors of ice cream namely, Mango, Ube, Chocolate, Melon, Cheese, Durian
and many more. These have received fantastic feedback from our customers. Value
addition to the fruit helps improve the quality of the end product and lengthen the
storage life. This helps cut losses while enabling us to sell premium quality product
that our clients will love. Our goal is to reach small retailers of ice cream and soon on
5 star hotels and huge food businesses as their primary provider of ice cream.

For the longest time, manufacturers have been making three major flavors of ice
cream such as vanilla, strawberry and chocolate. However, the recent health
awakening has created an awareness of healthy foods, making it necessary for
manufacturers to think natural additives such as real fruit. Luckily, not many local
manufacturers have picked up this trend. As economy rise in the Philippines, the four
creators of “Sorbeteros” decided to be able to catch up on trends in world market.
We, being the early adopters of the real fruit infused ice cream in the country stand a
better chance of acquiring a huge market share.

We are on a mission to be the best ice cream company in the region. To achieve this
grand vision, we know we’ll be required to work very hard.
 Table of Contents
Page
Cover Page i
Executive Summary ii
Table of Contents iii

I. Business
a. Description of Business 1
b. Marketing
i. Product 2
ii. Market Description 2
iii. Promotion 2
iv. Sales Projection (five years) 3
c. Competition 3-4
d. Manufacturing Procedure
i. Ingredients 4-5
ii. Equipment 5-6
iii. Production Schedule (5 years) 7
e. Infrastructure 7
f. Personnel 8
g. Business Registration Procedure 8-10
II. Financial Data
a. Capital Requirement
i. Working Capital 11-12
ii. PPE 12-13
b. Capital Source 13
c. Statement of Financial Position Projection 14
d. Income Statement Projection 15
e. Statement of Cash Flow Projection 16
f. Statement of Changes in Equity 17
g. Payback Period 17
h. NPV 17
III. Conclusion
I. Business

Description of Business

When they think of Ice Cream, we wanted “Sorbeteros” as their first choice. The
owners, being very competitive, wanted to become the first choice when they think of
ice cream not just in Davao City but the whole world. It may never be easy but with
putting value to work we will be able to achieve it. We had a thought of enriching the
natural fruits in Davao, as the city and even the region is proud to its natural
produce. We want to be the ice cream brand that every person would reach out in
the shelf for; the yard stick for excellent quality ice cream.

To marry fruit production with dairy production by using the fruit to add value to ice
cream. To make it more interesting, we thought of making flavors of ice cream
names mixture of famous Filipino Cuisine. We are looking to be fully fledged in the
future; manufacturing everything for ourselves. This will eliminate the need to source
ingredients (like ice cream mix) from other manufacturers. To increase our customer
base beyond Davao City. Increasing our customer base will allow us to expand our
manufacturing plant.

Mission:
To supply customer with the ice cream of their choice and ensure utmost
satisfaction.

Vision:
By 2026, to be the best premium quality ice cream company in the Philippines.

Motto:
“When its Ice Cream, It’s Sorbeteros.”

1
Marketing

I. Product

If we intent capturing a large shape of the market, then we should be able to bring
out innovative service not available in other ice cream factories. Hence, many ice
cream factories are trying to bring out better ice cream flavors to satisfy their
customers based on our analysis about ice cream market and neglect those
customers who are not enthusiastic about change. So, there are others who are
neglected with their own satisfaction, it will be an area for us to explore since we do
not allow this segment of the market to be unattended at.

We will ensure that all Filipinos known flavors are still maintained for the benefit of
this segment of our market while focusing our services in making sure that we will be
able to formulate our own signature ice cream flavors.

II. Market Description

Our Target Market

Sorbeteros targets client residing within our rational area, a corporate world,
students, tourists and celebrities among a wide segment of our target market. Also,
our factory will be located within areas where foot traffic is high such as malls,
central business and districts among other busy area.

Marketing and Sales Strategy

Sorbeteros will hire the services of an experienced marketing and sales expert to
guide and oversee our marketing and sales operation. We will be going all out to
please our customers by making our services cheaper that is very attainable in the
market and we will be offering the best services to our customers nationwide. This is
in bid to capture new prospective clients. Our strategy will be publicized to ensure
that new clients will really try out our best services.

2
Competitive advantage

At Sorbeteros, what sets up apart from our competition is the difficult variety of ice
cream which will continually be produced to ensure that we have more varieties of
ice cream on offer at rock bottom prices and also providing the very best and unique
flavors. With utmost dedication, this will all be done by well dedicated motivated
staffs.

III. Promotion

Promotions

Our products and services to general public will be advertised with the use of social
media, our website, banners, flyers and erection of bill boards at strategic places to
ensure that public viewing will be achieved at the highest exposure. Also, adverts will
be placed in yellow pages, local TV, radio station to advertise our services.

IV. Sales Projection (5 years)

Competition

In recent years, there has been a trend for the national ice cream manufacturers to
open more scoop shops as a way to increase profitability.  Each of these competitors
has a unique product that differentiates them from their competition.  Many of these
national chains have strong brand recognition and their products are known for
consistent quality.  Most of our competitors have emphasized the high quality of their
products to justify their prices.

Some of the well-known ice cream manufacturer in the Philippines are:

1. Dan Eric

2. Carmen’s Best

3
3. Aice

4. Selecta

5. Hernz

Our aim of starting Sorbeteros is to build a business that can grow within the first 10
years of establishing the business to be listed amongst the top 5 ice cream
production companies in the Philippines.

With that in mind, we have been able to come up with competitive strategies that will
help us compete favorably in the industry. Another competitive advantage that we
have is the vast experience of our management team, we have people on board who
are highly experienced and understands how to grow business from the scratch to
becoming a national phenomenon.

One thing is certain, we will ensure that we open our outlets in various cities in the
Philippines and also sell our franchise. With that our brand will be well
communicated and accepted nationally.

Manufacturing Procedure

I. Ingredients

The main constituents of ice cream are fat, milk solids-not-fat (skim-milk powder),
sugar, gelatin (or other suitable stabilizer), egg and flavouring.

A variety of milk products can be used: cream, whole milk, condensed milk and
instant skim-milk powder. The recipes stated below proved satisfactory using
whipping cream (32-35% fat), table cream (18% fat) and whole milk. The fat gives
the product richness, smoothness and flavour. Skim-milk powder is used to increase
the solids content of the ice cream and give it more body. It is also an important
source of protein which will improve the ice cream nutritionally. Use good quality,
fresh powder to avoid imparting a stale flavour to the ice cream.

4
Liquid coffee whitener (usually purchased frozen) is a cream substitute in one of the
recipes. It will yield a slightly different flavour which is still very acceptable. The
texture of the ice cream is very creamy. Liquid coffee whitener offers the
convenience of being stored frozen in your freezer and is readily available if a quick
decision is made to make ice cream.

Sugar is a common ingredient to use as a sweetener. It increases the palatability

and improves the body and texture.

The next ingredient, gelatin (or similar substance) assists in absorbing some of the
free water in the ice cream mix and helps prevent the formation of large crystals in
the ice cream.

It also gives substance or a less watery taste when the ice cream is consumed. The
eggs are added to make the fat and water more miscible and also to improve the
whipping ability which gives the ice cream greater resistance to melting.

Although vanilla is the flavour added to all of the mixes listed below, you may add
flavours to suit you taste.

II. Equipment

Ice cream production is a skilled craft that dates back many generations. Many, if not
all, ice cream companies rely on manufacturing equipment to efficiently produce ice
cream that keeps up with market demand and consumer tastes. By not having the
right ice cream production equipment, many manufacturers find it difficult to keep up
in such a competitive market. We know that it can be challenging to find the budget
and used dairy equipment to enhance our production.

Here are the equipments and tools used in our Ice Cream Factory:

Mix Preparation - responsible mixing of necessary

ingredients.

5
Walk-in Freezer - used to keep the ice cream
frozen.

Robot Fillers - used to add more flavours.

Delivery Trucks - used to delivery orders and pick-

up ingredients used for the production.

Laptops - used to record sales, expenses and other

important transactions in the business.

6
 III. Production Schedule (5 years)

PRODUCTION SCHEDULE

Year 1 Year 2 Year 3 Year 4 Year 5

Number of Liters of Ice Cream

Forecast 25,000 32,000 35,000 40,000 44,000

Customers Demand:
Local
Convenience Store 2,000 3,000 3,500 4,500 5,500
Supermarket 5,000 6,500 7,000 8,000 8,500
Ice Cream Shop 3,000 4,500 5,000 6,000 6,500
National
Convenience Store 2,500 4,500 5,000 6,000 6,500
Supermarket 6,500 7,000 8,000 8,500 9,000
Ice Cream Shop 3,500 5,000 5,500 6,500 7,000
Total Customers Demand 22,500 30,500 34,000 39,500 43,000
Available Next Year 2,500 1,500 1,000 500 1,000

Infrastructure

7
Personnel

Name Designation Work Schedule

Karinna Louise B. Gravina CEO Monday to Friday
King Mark Lester B. Sardido Production Manager Monday to Friday
Hazel N. Mellomida Marketing Manager Monday to Friday
Jocelyn L. Rivera Warehouse Supervisor Monday to Friday
Employee #001 (5) Office Staff Monday to Friday
Employee #002 (2) Customer Service
Representative Monday to Friday
Employee #003 (1) Environmental Head
Specialist Monday to Friday
Employee #004 (7) Machine Operator Monday to Friday
Employee #005 (15) Packer Monday to Friday
Employee #006 (2) Food Safety Technician Monday to Friday
Employee #007 (3) Janitor Monday to Friday
Employee #008 (2) Maintenance Technician Monday to Friday
Employee # 009 (1) Bookkeeper Monday to Friday
Employee # 010 (1) Accountant Monday to Friday

Business Registration Procedure

Here are the government agencies where are required to register in our Corporation.

1. Securities and Exchange Commission

2. Local Government Units where the business is located:
o Barangay - Brgy. Malagos
o Mayor’s Office
3. Bureau of Internal Revenue
4. We need to register the benefits of our employee
o Social Security System
o Philippine Health Insurance Corporation

8
 o Home Development Mutual Fund

Basic Requirements and Procedure in Registering our Corporation

In this part of the article, we will guide us on how to register our business in many
different government agencies.

1. Register a business name at Securities & Exchange Commission

After we claim the Articles of Incorporation at the SEC, we proceed to register to

Local Government Units (LGU), such as Barangay and Mayor’s Office:

2. Registration with Barangay

a) Go to the barangay Malagos where our business is located to secure and

fill-up application form

b) Submit your completed application form together with the following:

i. Attached Articles of Incorporation

ii. Two (1) valid IDs

iii. Proof of Address such as Contract of Lease (if rented) or Certificate of

Land Title (if owned)

iv. Claim our Barangay Clearance from Barangay Malagos then proceed to
Business Bureau or Mayors Office

3. Register in Food and Drug Administration

4. Register your business in the Mayor’s Office

Go to the SP Bldg is located at San Pedro Street, Davao City to secure and fill-up
application form

9
Submit our completed application form together with the following:

1. Articles of Incorporation

2. Barangay Clearance Certificate

3. Two (2) valid IDs/ Secretary Certificate

4. Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title
(if owned)

5. City Health Card By employee

6. Claim you Mayor’s Business Permit and Licenses

We have already got all the certificate and permits from SEC and LGUs, we may
now register to the Bureau of Internal Revenue (BIR)

5. Register our business in the Bureau of Internal Revenue (BIR)

a. Go to the Regional District Office (RDO 113) where your business is located at
Bolton Street Davao City

b. Fill-up the BIR Form 1903 – Application for Registration (for Corporation)

c. Submit completed registration form together with the following:

a) Articles of Incorporation

b) Barangay ClearanceMayor’s Business Permit

c) Proof of Address such as Contract of Lease (if rented) or Certificate of Land

Title (if owned)

d) Valid IDs, if applicable with Secretary Certificate

. Pay the Registration Form (BIR Form 0605)

. Register your book of accounts and receipts/invoices.
. Claim our Certificate of Registration (BIR Form 2303)

10
II. Financial Data

Capital Requirement

I. Working Capital

Cash Management
It is predicted that “Sorbeteros” will have a positive cash flow due to the quick
turnover of the inventory. Ice cream is a quick moving product that will not remain
stocked for long. We expect highest sales during the festive seasons and during
school vacation. There will be steady sales from our contracted outlets such as
hotels and social joints. These will be our largest The company will incur substantial
costs in procuring and processing the fruits. However, these costs will be justified by
the premium costing structure that we will adopt for the final product to give healthy
returns.

Inventory Management
“Sorbeteros” will keep inventory for the ice cream making ingredients (ice cream mix
and the fruits) in cold storage at the site. The average inventory for the finished
product will be 30 days to ensure that we have enough stock to meet any surge in
demand for the product. We will also keep two months’ worth of fruit inventory to
ensure that we do not run out of supply. We will keep larger batches of fruits that are
hard to find to ensure that we are always ready to produce all the flavors, even if
there is an upsurge of orders.
Even though sales are projected to be constant throughout the year, there will be
spikes in product demand during vacations, school holidays and when the contracted
suppliers have conventions at their premises.

Accounts Payable
Permanent staffs will be paid monthly salaries. Contracted workers will be paid on
per-project basis. All the utilities will be paid every month (within 18 days after

11
receiving the bill). Ice cream mix will be paid within 30 days of receiving the invoice.
Since defaulting on this payment attracts an interest, we will try never to default.

Cash Conversion Cycle (CCC)

We are looking to hold only 60 days’ worth of processed fruit in our inventory. We will
have a 30-day credit window for our collectible accounts and up to 30 days for our
accounts payables. Given that we will have a day’s worth of ice cream as work in
progress, we will have an average of 61 days to generate cash inflows from the
inventory. This period will be sufficient for us to pick up revenue generation since the
working capital has been set aside to start the business.

The calculation is given by the formula:

CCC = Average Days Inventory + Average Collection Period – Average Days
Payable CCC = 61 +3 0 – 30 CCC = 61 days
II. PPE

Capital Budget for “Sorbeteros”

Sorbeteros Capital Budget
Project/Activity Est. Cost(In Peso)
Land Acquisition and Plant Building
Acquisition of piece of land, preparation, building and
installation of the plant (with utilities)
Total Cost P 4,000,000.00
Required Equipment
Walk in Freezer (Insulated) 300,000.00
Sink (4 compartments) 250,000.00
Stools (5) 150,000.00
1 Fruit sorting table (with conveyor) + 2 processing
table 200,000.00
1 ton refrigerated van 150,000.00
Assorted Utensils 100,000.00
Ice cream making machine(s) 450,000.00
Weighing Scale 150,000.00
Vacuum Sealer 250,000.00
Double door cooler 250,000.00

12
 Gas Stove 150,000.00

Total Equipment Costs 2,400,000.00

Total Working Capital 5,000,000.00
Total Capital Needed 20,000,000.00

Capital Source

Initial Investment
Katrinna Louise B. Gravina 5,000,000.00
King Mark Lester B. Sardido 5,000,000.00
Hazel N. Mellomida 5,000,000.00
Jocelyn L. Rivera 5,000,000.00
Total Initial Investment 20,000,000.00

13
Statement of Financial Position Projection

KGHK Corporation
Sorbeteros
Financial Statement Projection
First Year of Operation

ASSETS
CURRENT ASSETS
Cash & Cash Equivalents Php 2,675,000.00
Merchandise Inventory 550,000.00
Accounts Receivable 230,000.00
Notes Receivable 150,000.00
Total Current Assets Php 3,605,000.00

NON-CURRENT ASSETS
Plant Php 1,500,000.00
Equipment 750,000.00
Total Non-Current Assets Php 2,250,000.00

TOTAL ASSETS Php 5,855,000.00

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES
CURRENT LIABILITIES
Accounts Payable Php 350,000.00
Total Current Liabilities Php 350,000.00

NON-CURRENT LIABILITIES
Notes Payable Php 400,000.00
Total Non-Current Liabilities Php 750,000.00

TOTAL LIABILITIES Php 1,100,000.00

SHAREHOLDER'S EQUITY
Paid-in Capital Php 5,000,000.00
Retained Earnings 105,000.00
Total Shareholder's Equity Php 5,105,000.00

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY Php 5,855,000.00

14
Income Statement Projection

KGHK Corporation
Sorbeteros
Income Statement Projection
First Year of Operation

Sales Php. 3,500,000.00

Cost of Goods Sold 1,150,000.00
Gross Profit Php. 4,650,000.00

Less: Operating Expenses

Selling Expense
Distribution Expenses Php. 165,000.00
Selling Expenses 350,000.00
Marketing Expenses 100,000.00
Total Selling Expense Php. 615,000.00

General and Administrative

Expense
Salary Expense Php. 700,000.00
Office Supplies 100,000.00
Communication 50,000.00
Transportation Expense 50,000.00
Depreciation Expense 150,000.00
Taxes & Licenses 60,000.00
Total General and Administrative
Php.
Expense 1,110,000.00

Total Net Profit Php. 2,925,000.00

15
Statement of Cash Flow Projection

KGHK Corporation
Sorbeteros
Statement of Cash Flow Projection
First Year of Operation

Cash at Beginning of Year Php 1,200,000

Operations
Cash receipts from
Customers Php 3,500,000
Cash paid for
Inventory purchases -1,150,000
General operating and
-410,000
administrative expenses
Wage expenses -700,000
Net Cash Flow from
Php 1,240,000
Operations

Investing Activities
Cash receipts from
Sale of property and equipment Php 1,150,000
Collection of Receivables 185,000
Cash paid for
Purchase of property and equipment -550,000
Making loans to other entities -700,000
Net Cash Flow from
Php 85,000
Investing Activities

Financing Activities
Cash receipts from
Issuance of stock Php 650,000
Borrowing 250,000
Cash paid for
Repayment of loans -750,000
Net Cash Flow from
150,000
Financing Activities

Net Increase in Cash Php 1,475,000

Cash at End of Year Php 2,675,000

16
Statement of Changes in Equity

Sorbeteros
Statement of Changes in Equity
For The Year Ended December 31, 2020

Beginning Balance, Jan. 1, 2020 Php 5,000,000.00

Add:
Additional Investment Php 1,350,000.00
Net Profit 2,925,000.00
Sub-Total Php 9,275,000.00
Less:
Withdrawals Php 500,000.00
Ending Balance, Dec. 31, 2020 Php 8,775,000.00

Payback Period
Payback Period Formula = Net Cost of Initial Investment
Annual Net Cash Inflows

= 20,000,000.00
1,969,200.00

=10.16%

NPV

Net Present Value = Net Cash Flow at Time t

(1 + disc. rate)5

= 6,126,200.00
(1.13)5

17
=3,325,055.92

18