BUSINESS PLAN

ON

LIQUID SOAP MANUFACTURING

Prepared By:

COOPERATIVE MULTIPURPOSE SOCIETY

ADDRESS:

Telephone:

Email:

OCTOBER 2013
1
 TABLE OF CONTENT

Chapter Page

Table of Content 2

Executive Summary 5

1.0 BUSINESS OVERVIEW 7

1.1 Business Idea

1.2 Description of Business 7

Vision and Mission Statement 8

The Objective of the Company 8

1.3 Value Proposition 8

1.4 Current Status of the Business

1.5 Description of the Business Industry 9

1.6 Contribution to Local and National Economy 10

2.0 SALES AND MARKETING PLAN 11

2.1 Market Research 11

2.2 The Opportunity 11

2.3 Target Market 11

2.4 Distribution Strategy 11

2.7 Promotional Strategy 12

2.8 Competition 12

3.0 PRODUCTION PLAN 15

2
3.1 Description of the Location / Factory 15

3.2 Raw Materials Needed 15

3.3 Production Equipment Table 16

3.3.2 Utilities Requirement & Cost 16

Equipment Depreciation (Table 3.1) 17

Documentation 18

Cost Forecast (Table 3.3) 19

3.4 Production Process / Techniques 19

3.5 Production Cost 21

Direct Material Cost Per Product (Table 3.2) 21

Cost Assumptions 22

3.6 Stock Control Process 22

Opening Stock (Table 3.4) 22

3.7 Pre-operating Activities and Expenses 23

4.0 ORGANISATIONAL AND MANAGEMENT PLAN 24

4.1 Ownership of the Business 24

4.2 Profile of the Promoter 24

4.3 Key Management of Staff 26

Table 4.1: Salary Schedule 26

5.0 FINANCIAL PLAN 27

5.1 Financial Assumptions 27

3
5.2 Start up Capital Estimation 27

Table 5.1: Required startup capital estimate 27

5.3 Source of Capital 27

Table 5.2: Source of Funds 27

5.5 Loan Repayment Plan 28

Table 5.3: Loan Repayment Schedule 28

5.6 Financial Projections 28

Table 5.4: Profit and Loss Plan

Table 5.5: Cash Flow Plan

6.0 BUSINESS RISKS AND MITIGATING FACTOR 29

6.1 Business Risks 29

4
 EXECUTIVE SUMMARY
Liquid soap as a washing agent is fast replacing detergents in Nigeria. Since the advent of liquid
soap in Nigeria, the detergent producers have not found it easy copping with the competition. This
is because of the simple fact that liquid soap is fast gaining grounds for laundry and dish washing.
Liquid soap has several advantages over Soaps and detergents hence its preference for laundry
and dish washing. Since the advent of liquid soap in Nigeria, several skill acquisition centers have
incorporated liquid soap making into their curricula hence the proliferation of several small scale
liquid soap production companies.

The Business Description

The entire process of soap making, from start to finish, takes about 2 days which include mixing
the raw materials, letting it cool down and molding the mixture to obtain the finished product.

Cooperative Background

We commence operation about a year ago. We intend to start new business by going into soap
making production.

Marketing

Our cooperative aims at producing a minimum capacity of 3,000 cartons of 75Cl bottles
per month.
There are a lot of ways to market our liquid soap. We shall package it as a souvenir in weddings
and birthday parties.
We shall extend our marketing to drop supermarkets and grocery stores, supply it to restaurants
and eateries, supply it to bars and cool joint owners, supply it to guest houses and hotels.

Financial Plan

Our Cooperative equity contribution = N2,500,000.00

Loan required = N10,000,000.00

Startup Capital = N12,000,000.00

5
Duration = 24 months

Interest rate = 20% per annum

Sales and Cost forecasts as well as Profit and Loss statement reveal the following:

Gross Profit: = N31,484,700.00

Net Profit: = N15,490,501.36

Moratorium: = 2 months

Tenure of loan: = 24 months

The purpose of the loan is for operational expenses, procurement of water treatment plant
and office equipments.

The risks

The risks identified in this business are fire outbreak, accidental discharge of reagents for
laboratory analysis, sustaining injury within the factory, motor accident that may involve the
truck drivers and theft.

We shall mitigate the risk challenges through insurance policy against fire, installation of
fire extinguisher and provision of First Aid Box for staff.

CHAPTER ONE

6
7
 BUSINESS OVERVIEW

Liquid soap as a washing agent is fast replacing detergents in Nigeria. Since the advent of liquid
soap in Nigeria, the detergent producers have not found it easy copping with the competition. This
is because of the simple fact that liquid soap is fast gaining grounds for laundry and dish washing.
Liquid soap has several advantages over Soaps and detergents hence its preference for laundry
and dish washing. Since the advent of liquid soap in Nigeria, several skill acquisition centers have
incorporated liquid soap making into their curricula hence the proliferation of several small scale
liquid soap production companies.

1.1 The Business Idea

Making soap is a creative hobby one can turn into a successful business because everyone
needs soap. Every bar must eventually dissolve, so every customer can be a steady
customer, provided our soap is good. As with anything else, quality will be the determining
factor in the success of our business. We hope to make good products in order to capture
sufficient public interest which can make our business to thrive.

1.2 Description of the Business

a. Identity of the Business

The name of the business enterprises shall be …. Cooperative, a business name

registered with state ministry of Commerce and Industry.

b. Business Location

The business is located at …………………………

Mission

Our mission is to create value for customers by continually improving health and reducing
preventable illnesses through the use of our soap.

8
Objectives of the Business
The objectives of our cooperative are the following:

 Develop a complete product which meets regulatory standards by second month of Year 1.
 Become the specialty soap of choice for restaurants and day cares across the community
by the end of Year 2.
 Achieve sales of N5 million by the end of Year2.

1.3 Keys to Success

 A branding campaign to build awareness of our products as the standard for ensuring
good washing compliance.
 Consistent education on hand washing and personal hygiene.

1.4 Current Status of the Business

The business is yet to commence operation. It is indeed a start up business.

1.5 Potential Challenges in the Soap Making Industry.

In the recent years, we have seen massive changes in this industry, these changes include:

 New technology
 National Competitive pressures
 Unstable foreign exchange.
 Workers bad attitudes
It has been a challenging time for many enterprises producing soaps. Competition has been
fierce, market shares have been changing rapidly, and some players have experienced severe
financial problems.

1.6 Contribution to Local and National Economy

The following are the benefits and contribution of this business to the economy:

 Employment generation for the teaming unemployed youth in the state.

 The company and staff pay taxes to the government which will increase government
revenue.
9
 Improved healthy living and promote longevity among the citizens. A healthy workforce is a
benefit to the economy.

10
 CHAPTER TWO

MARKETING PLAN
The industry is highly competitive due to the fact that many players are involved. A lot of trainings
on soap making are going on every day. New players are entering the market on a regular basis.
The major strategy in order to become a force to reckon with is to have a well planned out sales
and marketing strategy.

Considering the large scope of our potential markets, we feel it is imperative to focus our limited
resources on a particular geographic region where we can establish demand for our product. After
successful market penetration, we will begin implementation into the restaurant and hospital
markets.

Target Market Segment Strategy

 Our target market includes restaurants, eateries, laundry and dry cleaning companies.
These markets consist of medium to large organizations. Organizations such as Mr.
Biggs, Tantalizers, Chicken Republic and Captain Cook represent very attractive
opportunities for our products.
 Organizations of this type are attractive because they are well managed, successful,
health conscious and nationwide. Within these organizations we will target decision level
managers with the power to implement use of our product in those locations.

2.1 Product Packaging and Delivery

Our Coop will produce a line of institutional liquid soaps with a quality raw materials blended into
the mixture, utilizing the brightest colors possible .
The liquid product will be packaged in 75cl plastic bottles while the bar soaps will be wrapped in
high density nylon.

2.2 The Opportunity

The market survey shows that there is a great demand for soaps for washing and
cleansing.

Pricing Strategy
11
 The method adopted for setting our prices is prevailing market price method. We intend to
have an introductory price that is 10% less than the prevailing market price.

Selling Price:

S/N PRODUCT DEALER’S PRICE (N) MARKET PRICE (N)

1. Toilet Cleanser (75Cl) 3,600.00 4,080.00
2. Liquid Soap (75Cl)x12 3,000.00 3,360.00
3. Bar Soap (180g)x20 800.00 1,000.00

2.4 Distribution Strategy

We shall canvass to market men and women perceived to be dealers of similar products. Friend,
families and associates are not out left. We wish to adopt two approaches, first, direct sales to the
customers, and secondly, to supply the dealers in the major markets in Ondo State and the
neighbouring states.
As we introduce our business to various people, we shall ask them for referral to potential buyers.
This shall be handled by our marketing team. We shall also employ the services of sales agents.
Our products shall be conveyed to desired destinations through a truck, preferably a 2.5 tons
truck.

2.7 Promotional Strategy

Our strategy for penetrating the market is as follows:

a. Publicity and Advertisement

Publicity and advertisement in this context involve creating public awareness.

b. Sales Method
We shall give priority to customer care and satisfaction. Good public relations must be
established. We shall see our prospective customers to be our real employers. In selling our

12
 products, we shall supervise our sales agent in the selling process. Every member of staff is a
potential marketer of our products. Appropriate commission shall be giving to members of
staff that could open and close a sale. We shall give some determined discount to consistent
customers, dealers and agents.
As a matter of policy, we shall allow credit facility to only accredited dealers and those who
can give us a credible guarantor.

2.8 Competition
In the market we shall be competing with, but not limited, to the following products:
1. Morning Fresh
2. Mama Lemon
3. Harpic
4. B-29 Bar Soap
5. Sunlight Soap
6. Canoe Soap

Sales Assumptions:
1. The sales are expected to be high during dry season. Obviously, a lot of people get thirsty
when the weather gets hot. In addition, during ceremonies like house warming, naming,
wedding, burial, Christian and Muslim festivals, there shall be increase in sales.
2. Sales fall during the raining season.

13
 Sales Forecast

Table 2.2: SALES FORECAST (Bi-monthly)

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10
50Cl Qty
Bottle 8,000 10,000 12,000 14,000 12,000 10,000 9,000 9,500 10,000 12,000 14
Price/
Unit 650 650 650 650 650 650 650 650 650 650 65
Amt
5,200,000 6,500,000 7,800,000 9,100,000 7,800,000 6,500,000 5,850,000 6,175,000 6,500,000 7,800,000 9,
75Cl Qty
Bottle 10,000 12,000 14,000 15,000 13,000 12,000 11,000 10,000 11,000 12,000 1,
Price/
Unit 420 420 420 420 420 420 420 420 420 420 42
Amt
4,200,000 5,040,000 5,880,000 6,300,000 5,460,000 5,040,000 4,620,000 4,200,000 4,620,000 5,040,000 58
Sachet Qty
14,000 14,500 15,000 15,800 14,500 14,200 14,000 13,800 14,500 15,500 17
Price/
Unit 100 100 100 100 100 100 100 100 100 100 10
Amt
1,400,000 1,450,000 1,500,000 1,580,000 1,450,000 1,420,000 1,400,000 1,380,000 1,450,000 1,550,000 1,
Total Revenue
10,800,00 12,990,00 15,180,00 16,980,00 14,710,00 12,960,00 11,870,00 11,755,00 12,570,00 14,390,00 11
0 0 0 0 0 0 0 0 0 0 0

14
 CHAPTER THREE

PRODUCTION PLAN

3.1 Description of the Location / Factory

The factory is located within the industrial park. The factory is easily accessible with good
facilities, such as water, dedicated power line and hospital facility.

3.2 PRODUCTION EQUIPMENTS AND DEPRECIATION SCHEDULE

Table 3.1
Equipment Unit Cost Value Life Span Monthly
(Months) Depreciation
Reverse Osmosis 1 1250000 60
1,250,000.00 20,833.33
Bottle Packaging 1 1450000 60
Machine 1,450,000.00 24,166.67
PVC Label 1 250000 60
250,000.00 4,166.67
60 kva generator set 1 750000 120
750,000.00 6,250.00
Distribution Van 1 1500000 60
1,500,000.00 25,000.00
Shrink Wrapper – 1 850000 60
Full Automatic 850,000.00 14,166.67
Composite filters 1 1100000 60
(sand and carbon) 1,100,000.00 18,333.33
Air Ultraviolet 2 45000 60
Sterilizer (AUV) 90,000.00 1,500.00
Water Tanks 3 30000 60
(2,000L) 90,000.00 1,500.00
Pumping machine 6 15000 60
90,000.00 1,500.00
Ozonator (8g) 1 850000 60
850,000.00 14,166.67
Automated Sachet 1 420000 60
filling Machine 420,000.00 7,000.00
1

15
 - -
1
- -

8,690,000.00 138,583.33

UTILITIES REQUIREMENT / OPERATING COST

Table 3.2
S/N Particulars Qty Used Unit Price Monthly
Monthly Cost
1. PHCN 1,800 12.00 21,600.00
2. Fuel (Diesel) 240L 160 38,400.00
3. Office Stationeries 1500 2.00 3,000.00
4. Laboratory Analysis 5,000.00
TOTAL 68,000.00

COST ASSUMPTION
1. It is expected that when sales or demand increases, the cost of production must also
increase.
2. Since season affects our business positively as well as negatively, the cost of production is
likely going to fall during the raining season.

16
3.3 Cost Forecast

Table 3.3: COST FORECAST (Bi-monthly)

Cost P1 P2 P3 P4 P5 P6 P7 P8 P9 P1
50Cl Qty
Bottle 8,000 10,000 12,000 14,000 12,000 10,000 9,000 9,500 10,000 12,00
Cost/
Unit 535 535 535 535 535 535 535 535 535 535
Amt
4,280,000 5,350,000 6,420,000 7,490,000 6,420,000 5,350,000 4,815,000 5,082,500 5,350,000 6,420
75Cl Qty
Bottle 10,000 12,000 14,000 15,000 13,000 12,000 11,000 10,000 11,000 12,00
Cost/
Unit 348 348 348 348 348 348 348 348 348 348
Amt
3,480,000 4,176,000 4,872,000 5,220,000 4,524,000 4,176,000 3,828,000 3,480,000 3,828,000 4,176
Sachet Qty
14,000 14,500 15,000 15,800 14,500 14,200 14,000 13,800 14,500 15,50
Cost/
Unit 67 67 67 67 67 67 67 67 67 67
Amt
938,000 971,500 1,005,000 1,058,600 971,500 951,400 938,000 924,600 971,500 1,038
Total Cost of
Sales 8,698,000 10,497,50 12,297,00 13,768,60 11,915,50 10,477,40 9,581,000 9,487,100 10,149,50 11,63
0 0 0 0 0 0 0

17
 3.4 Operating Activities

Table 3.4: Operating Activities and Expenses (Bi-monthly)

Expenses P1 P2 P3 P4 P5 P6 P7 P8 P9 P11 P12

Salary
Expenses 494,000 494,000 494,000 494,000 494,000 494,000 494,000 494,000 494,000 494,000 494,000 494,000
Repair &
Maintenance
100,000 80,000 110,000 50,000 85,000 60,000 40,000 10,000 120,000
Advertising
4,000 5,000 8,000 5,000
Delivery
/transport 24,000 24,000 24,000 28,000 28,000 30,000 24,000 24,000 26,000 28,000 28,000 30,000
Telephone
6,000 4,000 4,000 6,000 6,000 6,000 6,000 5,000 5,000 5,000 4,000 6,000
Utilities

136,000 136,000 136,000 136,000 136,000 136,000 136,000 136,000 136,000 136,000 136,000 136,000
Total
Operating
Expenses 764,000 743,000 768,000 714,000 749,000 734,000 700,000 659,000 671,000 668,000 662,000 786,000

Initial
Operating
Expenses 764,000

18
3.5 Production Process and Techniques

1. Put all of your oils and beeswax into the pot and place it on the stove element at about level 3 (low). You
want to heat the oils very slowly. If you heat the oils too high it will take much longer for it to cool to the
temperature to make soap.
While the oils are heating use a bit of vegetable oil to oil the plastic container that
you will be using as your mold. Use the freezer paper (shiny side towards the
soap) to line the bottom of the plastic container, smooth the paper as much as
possible. The oil keeps the paper in place and the paper ensures that you can
remove your soap from the mold without sticking. Tape the edges of the freezer
paper to the outer sides of the mold.

2. Clip your thermometer on the edge of the pot and remove the pot from the element.. The temperature
should be about 150o . If it is higher, don't worry, it will cool down in time.

19
Mixing the Lye:
Important: Please read the warnings on all of the pages

Gather the following items

Lye
Distilled Water
Stir Stick
Rubber Gloves
Pyrex Container
and
Safety Glasses

3. When the oils and lye mixture are at the right temperature you are ready to begin pouring. Remove the
Thermometer and rinse and wash thoroughly. Set aside

Slowly mixing the oils pour the lye mixture into the pot with the
oils. Keep stirring slowly. Stir, stir, stir,…. and stir some more.
Some people say that if you stir too quickly you will ruin the soap,
others say if you stir too slowly you will ruin the soap. There is
much discussion about this stirring, I suppose because there is so
much of it. I stir so as not to slop any out of the pot, otherwise I
have not had any problems in that regard. You have to stir for
about 20- 30 minutes, I usually only can stand to wait 20 minutes.
If the mixture starts to thicken, you are just about done, if not
proceed to the next step.

If you have a stick blender, put it into the pot and turn it on. Make
sure you don't mix in any air, always keep the hand blender under
the surface of the liquid, you don't want to stir in any air, or
splash any of the mixture.

20
Add any herbs or colouring quickly and all at
once. Use the stick blender to mix everything
together.
Add your fragrance. Some fragrances are not
designed for soapmaking and will seize your
soap. Always use
fragrances which have been tested in cold process
soap or essential oils.

4. Cutting and shaping the soap

After 24 hours uncover the soap, and measure and score the top of the soap lightly in the shape of the bars
you like. Each person is different in the size of bar that they prefer. A small bar of soap sold in the grocery
store is 2"X3", but I have found 2 1/2 X 3 1/2 makes a much nicer sized bar.

3.6 PRODUCTION COST

a. Direct Material Cost for 50CL Bottle

Direct Materials Qty Cost Per Unit (N) Amount (N)

1. Raw Material 100,000L 15.00 1,500,000.00
2. 50cl Bottle 200,000 12.00 2,400,000.00
Cap cover 200,000 1.00 200,000.00
Packaging Cartons Nylon 8,333 2.00 16,666.00
3. Transportation 8,333 3.00 24,999.00
Label 200,000 1.00 200,000.00
4. Labor 5 18,000.00 90,000
5. Electricity 1,800Kwh 12.00 21,600.00
Total Cost of Production 4,453,265.00
Total Cost per Crate 534.41
Total Cost per unit 22.27

21
 Table 3.5: Opening Stock
Stock / Item Quantity Unit Total
Cost
50cl Sachet Nylon 150000 1
150,000.00
Packaging Nylon 15000 3
45,000.00
50cl Bottle 80000 12
960,000.00
75cl Bottle 55000 14
770,000.00
-
Bottle caps 135000 1
135,000.00
Labels 135000 1
135,000.00
-

TOTAL
2,195,000.00

3.7 Pre-operating Activities and Expenses

Table 3.6: PRE-OPERATING ACTIVITIES AND EXPENSES

Item Description Amount

Rent Two years 144,000.00

Equipment See Table 3.1 for Details 8,690,000.00
Renovation/ For all the painting, re- 447,000.00
demarcation fixing
Advertising To create awareness of the
business
Business registration NAFDAC Registration 260,000.00
TOTAL 9,541,000.00

22
 CHAPTER FOUR

4.0 ORGANISATIONAL AND MANAGEMENT PLAN

4.1 Ownership of the Business

The business is owned by Akure Solid Pillar Foundation Cooperative Multipurpose Society,
comprising of ten members.

4.2 Key Management Staff

 General Manager
 Production Manager
 Marketing Manager
 Accountant

ORGANISATION CHART
Managing Director
Production Manager (Existing)

Factory AssistantFactory Assistant (Proposed)

(existing) Sales Officers (Proposed)
Proposed Account Officer

23
 Details of Salary Schedule

SN Designation No of staff Salary Monthly Salary Annual Salary

1. Managing Director 1 N65,000 #65,000 N780,000

2. Production Manager 1 N300,000 #30,000 N360,000

Marketing Director 1 #30,000 #30,000 N360,000

3. Sales/Marketing 2 N12,0000 #24,000 N288,000

4. Factory Workers 4 N12,000 #48,000 N576,000

5. Cleaner/Office Assistantt 1 N10,000 #10,000 N120,000

6. Drivers 2 N20,000 #40,000 N480,000

TOTAL SALARY 12 N247,000 N2,964,000

24
 CHAPTER FIVE

5.0 FINANCIAL PLAN

5.1 Financial Assumptions

We assume inflation will be relatively stable, while the interest rate is taken to be 20% per annum
to illustrate the worse scenario. Other assumptions include: Tax at 5% of net profit, depreciation
is considered using straight line method, the insurance at 5% on total capital expense.

5.2 Startup Capital Estimation

Table 5.1: Required

Startup Capital Estimate

ITEMS AMOUNT COMMENT

Pre-operating Expenses 9,541,000.00

Opening Stock 2,195,000.00

Initial Operating Expenses -
2months 764,000.00

Total Startup Capital Estimated 12,500,000.00

SOURCES OF FUNDS AMOUNT %

Personal Fund /Equity 2,500,000.00 20%

Bank Loan 10,000,000.00 80%

Total Funds Sourced 12,500,000.00 100%

Table 5.2: Loan Repayment Schedule

Monthly Monthly Principal +
Month Principal Principal Interest Interest Cumulative

0 10,000,000.00

25
 1 10,000,000.00 - 166,666.67 166,666.67 166,666.67

2 10,000,000.00 - 166,666.67 166,666.67 333,333.33

3 10,000,000.00 454,545.45 166,666.67 621,212.12 954,545.45

4 9,545,454.55 454,545.45 166,666.67 621,212.12 1,575,757.58

5 9,090,909.09 454,545.45 166,666.67 621,212.12 2,196,969.70

6 8,636,363.64 454,545.45 166,666.67 621,212.12 2,818,181.82

7 8,181,818.18 454,545.45 166,666.67 621,212.12 3,439,393.94

8 7,727,272.73 454,545.45 166,666.67 621,212.12 4,060,606.06

9 7,272,727.27 454,545.45 166,666.67 621,212.12 4,681,818.18

10 6,818,181.82 454,545.45 166,666.67 621,212.12 5,303,030.30

11 6,363,636.36 454,545.45 166,666.67 621,212.12 5,924,242.42

12 5,909,090.91 454,545.45 166,666.67 621,212.12 6,545,454.55

13 5,454,545.45 454,545.45 90,909.09 545,454.55 7,090,909.09

14 5,000,000.00 454,545.45 90,909.09 545,454.55 7,636,363.64

15 4,545,454.55 454,545.45 90,909.09 545,454.55 8,181,818.18

16 4,090,909.09 454,545.45 90,909.09 545,454.55 8,727,272.73

17 3,636,363.64 454,545.45 90,909.09 545,454.55 9,272,727.27

18 3,181,818.18 454,545.45 90,909.09 545,454.55 9,818,181.82

19 2,727,272.73 454,545.45 90,909.09 545,454.55 10,363,636.36

20 2,272,727.27 454,545.45 90,909.09 545,454.55 10,909,090.91

21 1,818,181.82 454,545.45 90,909.09 545,454.55 11,454,545.45

22 1,363,636.36 454,545.45 90,909.09 545,454.55 12,000,000.00

23 909,090.91 454,545.45 90,909.09 545,454.55 12,545,454.55

24 454,545.45 454,545.45 90,909.09 545,454.55 13,090,909.09

GRAND
TOTAL 10,000,000.00 3,090,909.09 13,090,909.09

26
Table 5.3:Bi-Monthly Profit and Loss Statement (24 Months)
Components 1 2 3 4 5 6 7 8 9

TOTAL
SALES 10,800,00 12,990,000. 15,180,000. 16,980,000. 14,710,000. 12,960,000. 11,870,00 11,755,000. 12,570,000. 1
0.00 00 00 00 00 00 0.00 00 00 0
TOTAL
COST OF 8,698,000 10,497,500. 12,297,000. 13,768,600. 11,915,500. 10,477,400. 9,581,000. 9,487,100.0 10,149,500. 1
SALES .00 00 00 00 00 00 00 0 00 0
GROSS
PROFIT 2,102,000 2,492,500.0 2,883,000.0 3,211,400.0 2,794,500.0 2,482,600.0 2,289,000. 2,267,900.0 2,420,500.0 2
.00 0 0 0 0 0 00 0 0 0
EXPENSES

Operating
Expenses 764,000.0 743,000.00 768,000.00 714,000.00 749,000.00 734,000.00 700,000.0 659,000.00 671,000.00 6
0 0
Interest
333,333.3 333,333.33 333,333.33 333,333.33 333,333.33 333,333.33 181,818.1 181,818.18 181,818.18 1
3 8
Depreciation 277166.6
667 277,166.67 277,166.67 277,166.67 277,166.67 277,166.67 277,166.6 277,166.67 277,166.67 2
7
Rent
12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 1

TOTAL
EXPENSES 1,386,500 1,365,500.0 1,390,500.0 1,336,500.0 1,371,500.0 1,356,500.0 1,170,984. 1,129,984.8 1,141,984.8 1
.00 0 0 0 0 0 85 5 5 5
NET
PROFIT 715,500.0 1,127,000.0 1,492,500.0 1,874,900.0 1,423,000.0 1,126,100.0 1,118,015. 1,137,915.1 1,278,515.1 1
BEFORE 0 0 0 0 0 0 15 5 5 5
TAX
Income Tax
35,775.00 56,350.00 74,625.00 93,745.00 71,150.00 56,305.00 55,900.76 56,895.76 63,925.76 8

NET
PROFIT 679,725.0 1,070,650.0 1,417,875.0 1,781,155.0 1,351,850.0 1,069,795.0 1,062,114. 1,081,019.3 1,214,589.3 1
AFTER 0 0 0 0 0 0 39 9 9 9
TAX

Table 5.4: Bi-Monthly Cash flow Plan (24 Months)

Components Pre 1 2 3 4 5 6 7 8
Startup

CASH
INFLOW
Cash at Hand
(beginning of 764,000.0 1,732,891. 2,183,617.4 2,981,568. 4,142,798.9 4,874,72 5,324,59 5,766,78 6,227,
month) 0 67 2 18 4 4.70 5.45 5.61 0.76
Cash Sales
10,800,00 12,990,00 15,180,000. 16,980,00 14,710,000. 12,960,0 11,870,0 11,755,0 12,570,
0.00 0.00 00 0.00 00 00.00 00.00 00.00 00.00

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 Equity
2,500,00
0.00
Loan Proceed
10,000,0
00.00
Total Cash
Inflow 12,500,0 11,564,00 14,722,89 17,363,617. 19,961,56 18,852,798. 17,834,7 17,194,5 17,521,7 18,797,
00.00 0.00 1.67 42 8.18 94 24.70 95.45 85.61 80.76
CASH
OUTFLOW
Pre-operating
Expenses 9,541,00
0.00
Opening
inventory 2,195,00 8,698,000. 10,497,50 12,297,000. 13,768,60 11,915,500. 10,477,4 9,581,00 9,487,10 10,149,
Total Cost 0.00 00 0.00 00 0.00 00 00.00 0.00 0.00 00.00
Operating
Expenses 764,000.0 743,000.0 714,000.0 734,000. 700,000. 659,000. 671,00
0 0 768,000.00 0 749,000.00 00 00 00 00
Interest
333,333.3 333,333.3 333,333.3 333,333. 181,818. 181,818. 181,81
3 3 333,333.33 3 333,333.33 33 18 18 18
Loan
Repayment 909,090.9 909,090.9 909,090. 909,090. 909,090. 909,09
- 1 909,090.91 1 909,090.91 91 91 91 91
Income Tax
56,305.0 55,900.7 56,895.7 63,925.
35,775.00 56,350.00 74,625.00 93,745.00 71,150.00 0 6 6 6
Total Cash
Outflow 11,736,0 9,831,108. 12,539,27 14,382,049. 15,818,76 13,978,074. 12,510,1 11,427,8 11,293,9 11,975,
00.00 33 4.24 24 9.24 24 29.24 09.85 04.85 34.85
Cash Balance
(end of the 764,000. 1,732,891. 2,183,617. 2,981,568.1 4,142,798. 4,874,724.7 5,324,59 5,766,78 6,227,88 6,822,
month) 00 67 42 8 94 0 5.45 5.61 0.76 5.91

SENSITIVITY ANALYSIS
0 1 2 3 4 5 6 7 8 9 10

12,50 11,564,0 14,722,8 17,363,6 19,961,5 18,852,7 17,834,72 17,194,5 17,521,78

Cash Inflow 0,000 00 92 17 68 99 5 95 6 18,797,881 21,212

Red Rev 9,251,20 11,778,3 13,890,8 15,969,2 15,082,2 14,267,78 13,755,6 14,017,42
20% 0 13 94 55 39 0 76 8 15,038,305 16,970

Cash 9,831,10 12,539,2 14,382,0 15,818,7 13,978,0 12,510,12 11,427,8 11,293,90

Outflow 8 74 49 69 74 9 10 5 11,975,335 13,474

Inc Cost 11,305,7 14,420,1 16,539,3 18,191,5 16,074,7 14,386,64 13,141,9 12,987,99
15% 75 65 57 85 85 9 81 1 13,771,635 15,495

(12,50 1,732,89 2,183,61 2,981,56 4,142,79 4,874,72 5,766,78

Presented 0,000) 2 7 8 9 5 5,324,595 6 6,227,881 6,822,546 7,738,3

(12,50 (579,908 (760,961 (491,155 1,104,16 2,327,86

Scenerio 1 0,000) ) ) ) 150,485 5 1,757,651 7 2,723,524 3,062,970 3,495,8

(12,50 1,769,98 2,778,01 4,052,61

Scenerio 2 0,000) 258,225 302,726 824,261 4 4 3,448,076 4 4,533,795 5,026,246 5,717,1

Presente Scenario Scenario

d 1 2

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 4,808,83 (7,623,9 (2,231,9
NPV 3.47 55.15) 32.97)
IRR 28% 6% 16%

CHAPTER SIX

6.0 BUSINESS RISK AND MITIGATION FACTOR

6.1 Identified Risks

The water processing factory is associated with some risks which include:
i. Fire hazard / outbreak
ii. Machine breakdown
iii. Employee accident
iv. Vehicle breakdown
v. Equipment safety

Mitigation Strategies
i. Fire Hazard / Outbreak
Fire Hazard or Outbreak refers to a situation when the factory and/or its machinery
ignite as a result of error committed by member of staff.
In order to prevent such occurrence, the management shall ensure strict compliance
to instructions on the usage of the machineries. All electrical appliances must be
switched off before the company closes for the day. Industrial fire extinguisher must
be installed at strategic point in the factory.
ii. Machine and Vehicle Breakdown
Machine and vehicle breakdown is a situation where these equipments cease to
function due to technical fault
In order to avoid these situations, control measures must be put in place to provide
adequate servicing for all machines.
iii. Employee Accident
To curb this accident, operators must be well trained and vast in the used of the
equipment. He/she must be sensitive and conscious to the factory environment.
Secondly, men and women of good medical records shall be employed. However,
First Aid Boxes shall be made available in the company.
iv. Safety of the Equipment Location

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The equipments are safe and secure due to the tight security arrangement put in place by the Cooperative
Society coupled with the security surveillance of the industry park.

6.2 SWOT ANALYSIS

Analysis Implication on the business

i. Strength:
We have quality products with Timely production. Timely delivery of
attractive Packaging at affordable Products. Our products are prepared
prices. to meet needs of people, result is
We have competent, efficient and loyal good sales
Staffs that are purpose driven to
Succeed.

ii. Weakness: There shall be limitation to the level

Presently having low market share, of our capacity. This limitations may
low financial and equipment Affect our advertisement, promotional strategy
capacities. and, production level.

iii. Opportunity:
We are close to our target market.
Also close to the source of raw
Materials.
iv. Threat:
Power failure. poor water supply
and poor maintenance culture
of the facilities being managed by
Government officials.
We shall be seen as part of the
community that offers the citizens not
Only good products but also provide employment
for the people.
These will affect our production since
we largely depend on these for
production.

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