Table of Contents

EXECUTIVE SUMMARY 3
I) BUSINESS DESCRIPTION 3
II) MARKET 3
III) OPERATIONS 3
IV) ORGANIZATION 4
V) RENTED PREMISES 4
VI) FINANCE 4
CHAPTER ONE 5
1.0 FEASIBILITY CHECK 5
1.1 FEASIBILITY FACT SHEETS. 5
1.2) FEASIBILITY ASSESSMENT 9
CHAPTER TWO 11
2.0) BUSINESS DESCRIPTION 11
2.1) NAME OF THE OWNERS 11
2.2) DESCRIPTION OF THE PROPOSED OWNERSHIP STRUCTURE 11
2.3) DESCRIPTION OF THE PROPOSED BUSINESS 12
2.4) PRODUCTION ACTIVITY 12
2.5) MAIN CUSTOMERS 12
2.6) DESCRIPTION OF THE CHOICE OF BUSINESS LOCATION 13
2.7) DESCRIPTION OF THE INDUSTRY SIZE 13
CHAPTER THREE 15
3.0) THE MARKETING PLAN 15
3.1) CUSTOMERS 15
3.2) COMPETITION 17
3.3. PRICING STRATEGY 20
3.4) SALES TACTICS. 21
3.5) ADVERTISING STRATEGY 22
3.6) DISTRIBUTION STRATEGY: 22
CHAPTER FOUR 23
4.0) OPERATIONAL (PRODUCTION) PLAN 23
4.1) PRODUCT DESIGNS AND DEVELOPMENT: 23
4.2) PRODUCTION FACILITIES AND CAPACITY 26
4.3) PRODUCTION STRATEGY 28
4.4) DESCRIPTION OF SKILLS LEVEL 28
4.5) COMPUTATION OF COST OF PRODUCTION 29
4.6) PRODUCTION PROCESS/SERVICES AND GOVERNMENT REGULATION:
31
CHAPTER FIVE 33
5.0) ORGANIZATION PLAN 33
5.1) ORGANIZATION 33
5.2) MANAGEMENT TEAM AND THEIR DUTIES 33
5.3) SALARY/ REMUNERATION 34
5.4) EMPLOYEES RECRUITMENT AND PERFORMANCE EVALUATION 34

1
CHAPTER SIX 36
6.0) FINANCIAL PLAN 36
6.1) PROJECTED INCOME STATEMENT 36
6.2) PROJECTED BALANCE SHEET 37
6.3) PROJECTED CASH FLOW STATEMENT 38
6.4) FINANCIAL REQUIREMENTS 39
6.5) EXPECTED PROFITABILITY 39
CHAPTER SEVEN 40
7.0) CRITICAL RISK ASSESSMENT AND IMPLEMENTATION 40
7.2) IMPLEMENTATION SCHEDULE 40

2
 EXECUTIVE SUMMARY
I) BUSINESS DESCRIPTION
We are currently students of Mzumbe University in third year pursuing Bachelor of
Business Administration in Marketing Management. We are planning to establish a
furniture business that is to be known as UMOJA QUALITY FURNITURE
GROUP.
The proposed venture is expected to commence on 4th June 2009.The venture will be
situated at Nanenane area, Morogoro; the main activities will be manufacturing
various types of furniture.
Ten partners will own the proposed business venture namely,

♦ Mgeta Charles (BBA-MM)

♦ Haule Josephat (BBA-MM)

♦ Lucas Joseph (BBA-MM)

♦ Mkoka Jones (BBA-MM)

♦ Makonda Sunday (BBA-MM)

♦ Salumu Sango (BBA-MM)

♦ Mbughuni Azaria (BBA-MM)

♦ Nzunda Devotha (BBA-MM)

♦ Muhamed Mwajabu (BBA-MM)

♦ Ahmed Attie (BBA-MM)

3
II) MARKET
Nanenane area is an essential growing business centre in Morogoro, this shows that
there is high potential market for furniture products. Proper pricing, advertising and
indirect channel of distribution will be used to capture high market share.

III) OPERATIONS
The proposed business venture will use the most recent technology to produce
furniture products of high quality and differentiated from its prospective competitors.
Using modern technology will favour the position of the proposed venture.

IV) ORGANIZATION
The venture will have seventeen (17) employees each to be provided with a particular
task depending on knowledge and experience they have. The machine operators will
be highly skilled, recruited from Vocational Training Institutions like VETA or other
recognized colleges. In addition, members of the management will be recruited from
Mzumbe University.

V) RENTED PREMISES
The proposed venture will occupy 30 square metres that will be rented at affordable
rent payment. The main building will have three major parts and these are:

♦ The workshop

♦ Offices

♦ Store

VI) FINANCE
To develop the business venture a sum of Tsh 30,000,000 is needed. The money will be
used to acquire machine, equipment, and to meet initial operations
Each Partner is expected to contribute Tshs. 1,000,000/=from his or her own saving
which will make a total contribution of owners being Tshs. 10,000,000/=. This amount is
equivalent to 33%of the total capital required.

4
Other sources include:
Bank loan will be 15,000,000 that will be equal to 50%
Micro financers will be 5,000,000 that will be equal to 17%
Half of Micro credit loan will be paid within the month of the year and the remaining to
be paid at the end of the following year of operation. Bank or loan with interest of 10%
will be payable in the year basis. The bank loan will be paid in two installments at the
beginning of the third year.

CHAPTER ONE
1.0 FEASIBILITY CHECK

1.1 FEASIBILITY FACT SHEETS.

Table 1.1.0
Details Communication
Business address UMOJA QUALITY FURNITURE CENTER
P.O.BOX 723 MOROGORO
Telephone +255786216411
number umojaqf@hotmail.com
E-mail

Table 1.1.1
Critical location Reasons for being critical
factors
Geography Nanenane area has potential markets and affordable rental cost
The area is easy accessible by customers.
The area is good for availability of materials
Energy supply The location has small number of workshops therefore; we expect a
constant supply of power through out a year.

Table 1.1.2
Competitors Estimated distance from the location
J.R. Traders (Old Dar 2 kilometers
5
Road)
Sabasaba Furniture Center 7 kilometers
Masika Furniture Center 5 kilometers

Table 1.1.3
Products and services of the Business
Products: tables, chairs, desks, stools, doors and windows, frames
Services: maintenance/ repairs of the products above mentioned
Selling of above product

Table 1.1.4
Client of business Details
i) Business people Are expected to buy office furniture
ii)Government & Locally government needs office furniture and maintenance
NGOs services
iii) Households Need house furniture and maintenance service
iv) Schools Schools need desks and office furniture
v) Hotels and Need variety of furniture
churches
vi) Builders Will buy frame and shutters

Table 1.1.5
KEY MATERIALS FOR BUSINESS SUPPLIERS OF THE MATERIALS
Timber i) Sao Hill wood suppliers
ii) Fire Timber dealers
iii) Tansan timber industry
iv) Leshiya timber
Glue Hetna Hardware (Boma Road)
Nails, bolt, nuts, vanish, sand paper and glass Machale Hardware (Sokoni Road)
Omar Awadh Hardware

6
Table 1.1.6
Key equipment need for the business A known suppliers of
the equipment
Drill machine, spanners, screw ,saw plane, square bend, saw Yaman store Machine
machine, thickness planning machine and surface planning dealers
machine

Table 1.1.7
Key skill needed in the business
Management; the project managers must have the conceptual, human and technical skills,
also a degree in BBA (Marketing Management)
Supervisors; operation supervisors must have at least Full Technical Certificate in
Carpentry from a known collage for example Dar es Salaam Institute of Technology
Operators; they should be skilled in carpentry practice and have at least a certificate of
VETA in grade 1

Table 1.1.8
Environmental Details
considerations
(Waste disposal)
Non hazardous waste Include wood pieces, which will be used by household as
source of energy at homes
Solid emissions The emission will involve woods dusts but control
measures will be taken particularly immersing dust outlets
in water for washing
Soil erosion and The impact is indirect since the business firm will not b
de forestation involved in cutting trees but rather buying timber from
other suppliers

7
General impact on health of Similar the impact is direct and step in controlling the
local wildlife and plant effect involve buying timber from authorized dealers

FINANCING THE PROJECT

Maximum amount of finance to be Tsh. 30,000,000
Raised for the proposed project
Sources of finance Amount

Own Savings Tshs. 10,000,000

Micro credit scheme Tshs. 5,000,000
Bank loan Tshs. 15,000,000
TOTAL EXPECTED FUNDING Tshs. 30,000,000

Table 1.1.10
Level of entry in the market in terms of production capacity and sales volume and price
Monthly basis
ITEMS Volum Price TSHS
e
Tables 20 70,000 1,400,000
Chairs 50 12,000 600,000
Desks 100 20,000 2,000,000
Stools 40 7,000 240,000
Beds 60 100,000 6,000,000
Window frame 50 8,000 400,000

8
Door frame 25 10,000 250,,000
Total 10,890,000

1.2) FEASIBILITY ASSESSMENT

Table 1.1.11
Will it present problem?
Key issues Details Yes May be No
Products
✔

Customers/Client Households are expected to buy

✔
more frequently other customers
like schools and business might
purchase in order
Competitors Are few at the location but sell
✔
exactly similar products.

Materials and Supplies Wood materials are available near

✔
the location others are industrial-
based products.
Process and technology Technology changes day to day so
✔
management must keep track of
changes

9
Equipment suppliers Price of equipment at the location
✔
will include transport

Choice of location Is expected to favors

✔
successfulness of our business

Key skills Will base on management and

✔
operation experience

Environmental The Center wish to control its

✔
consideration effect on the environment

Self-situation, motivation, To achieve performance our

✔
skills, experience and knowledge on management is
education. expected to be risen
Project Finance The project will be financed by
✔
own saving and loan which is
expected to have constant interest
Other micro economic Currency and political changes is
✔
and political factors expected to have negligible effect.
Assessment High Moderat Low
e

10
 CHAPTER TWO

2.0) BUSINESS DESCRIPTION

2.1) NAME OF THE OWNERS

Partners are currently students at Mzumbe University expecting to graduate on June
2009.The proposed business venture will be owned by ten partners namely,

♦ Mgeta Charles (BBA-MM)

♦ Haule Josephat (BBA-MM)

♦ Lucas Joseph (BBA-MM)

11
 ♦ Mkoka Jones (BBA-MM)

♦ Makonda Sunday (BBA-MM)

♦ Salumu Sango (BBA-MM)

♦ Mbughuni Azaria (BBA-MM)

♦ Nzunda Devotha (BBA-MM)

♦ Muhamed Mwajabu (BBA-MM)

♦ Ahmed Attie (BBA-MM)

The project will need experts in the field particularly people with high technical know
how. To fulfill this aspect, we are planning to employ technicians with full technician
certificate (FTC) from a recognized college. The technicians must have specialized in
carpentry studies and practice.

2.2) DESCRIPTION OF THE PROPOSED OWNERSHIP

STRUCTURE
Each Partner is expected to contribute Tshs. 1,000,000/=from his or her own saving
which will make a total contribution of owners being Tshs. 10,000,000/=. This amount is
equivalent to 33% of the total capital required.
Other sources include
Bank loan………………………………..50%
Micro financers…………………………..17%

2.3) DESCRIPTION OF THE PROPOSED BUSINESS

NAME: UMOJA QUALITY FURNITURE GROUP

12
LOCATION: NANENANE AREA IN MOROGORO.
DAR ES SALAAM ROAD.

Our business will commence on June 2009

The business is expected to start as a partnership initially. This is due to sharing of basic
things such as skills, capital and risk. The major activities of the business will be as
follows.

2.4) PRODUCTION ACTIVITY

This will involve manufacturing of various furniture such as chairs, desks, tables,
cupboards, stools and beds.
Other activities will include.

⮚ Receiving of orders and distribution of goods to clients/customers.

⮚ The price charged to customers who are supplied with goods at their destination

will take into account the carriage cost.

⮚ Recording transitions and analyzing financial performance of the business.

⮚ The management will be planning short term and long term goals and take control

of the business activities

2.5) MAIN CUSTOMERS

● House holds

● Businesses

● Church and

● School College

13
2.6) DESCRIPTION OF THE CHOICE OF BUSINESS LOCATION
The chosen business location is considered a right place in terms of the market share
basing on the following factors.

● The infrastructure of the planned business location is good therefore easy

accessible by customers. Also for easy transportation of raw materials from

suppliers to workshop.

● The rental fee is reasonable compared to other location where rent is very high.

The annual rent for our business center is paid semi annually

● Nanenane area is still developing so one community center has been opened so

there is need for furniture. example the establishment of Daycare schools

Justification of the need for the business in the market place

There is a high demand for furniture due to ever increasing in people around the area also
the increase in enrollment and establishment of new schools have been the critical factor
for the choice of this location
There is a gap between the imported furniture and the home made in terms of price and
quality. The business is expected to produce high quality furniture to meet the need of the
customers who cannot afford high priced imported furniture.

Contribution of the business to the community

The business will create employment opportunity to unemployed skilled youths, this also
will result in improving standard of living, provision of goods and services to
surrounding community, involve in social responsibility and contribution of revenue to
the government.

14
2.7) DESCRIPTION OF THE INDUSTRY SIZE
The proposed business belongs to furniture industry. The industry is composed of small,
medium and large firms. The proposed business will be among the small firms. The
industry is very high therefore, the competition is high.

Description of the Industrial Trends and prospects

In 1990s, the places where you could get quality furniture were around Jamhuri Stadium,
near central Police Station and Tushikamane Furniture Center, Kilakala. But as time went
on other areas gradually started to produce furniture hence level of competition increased.
In the era of free market economy and increased globalization, some firms started to
import furniture of high quality that has even doubled the competition.

15
 CHAPTER THREE
3.0) THE MARKETING PLAN
In this part of the business plan the information to be presented are those of customers,
competition, pricing strategy, and sales tactics advertisement and promotion and
distribution strategy.

3.1) CUSTOMERS
The main potential customers of this business venture are groped into,

● Households

● Business

● Schools and other intuitions

● Hotels

● Churches

● Builders

Relevant Characteristics of customer

Customer group Relevant characteristics
House holds Households are attracted to durable and
high quality furniture. Some like
fashionable furniture. This group represents
a large number of buyers.
Business They like compact furniture which can
easily be accommodated in their (usually
16
 limited) premises
School and institutions School, hospitals, colleges and other
institutions are more likely to demand low
price but may buy in a large quantity.
Hotels and churches They buy in large volume but rarely
Builders They favor building frames made of hard
wood, Builders also buy frequently.

It is expected that customers will perceive will perceive the goods well since the product
design is such that it respond to customers needs and aim to exploit opportunity arising
from product innovations.

Below is the summary of the expected customer priority judgments.

Product Customer requirements

Tables, stool, chairs and beds Light but strong, smooth and attractive of
different of sizes and new styles.
Windows and door frames Hard and strong

The sales will be made thought a year this is because the needs for these products are in
most cases not seasonal. This implies a constant buying behavior.
Initially all products will be sold for cash but credit sales will be offered as far as
customers continue to be loyal. Payments will be given at the firms counter.

The markets size for the products.

Since the business is a new venture and according to the nature of its customers, it is
difficult to mention the exact number of customers until the time of its physical existence.
However in average, secondary schools primary schools, collages, kindergarten schools,
and church buildings surround the area.

17
The following are the forecasted sales as per each product per
month.
Item No. of
Table Units
Chair 20
Desks 50
Stools 100
Beds 40
Window frames 60
Door frames 50
25

3.2) COMPETITION
Description of potential Competitors
The potential Competitors are the manufactures like distributors of plastics stools, chair
insignificant threats.

The known potential competitors are as mention below

Competitors Location
J.R. Traders Old Dar Road
Sabasaba Furniture Center Sabasaba
Masika Furniture Center Masika

18
Effects of business location in relation to other competitors
Advantages
❖ The infrastructure of the planned business location is good therefore easy

accessible by customers. Also for easy transportation of raw materials from

suppliers to workshop.

❖ The rental fee is reasonable compared to other location where rent is very high.

The annual rent for our business center is paid on monthly basis while in other
place is semi annually or annually.

❖ Nanenane area is still developing so some community centers have been opened

so there is need for furniture.

The competitive advantages of the proposed products owner

those and the competitors base on three main factors.

i). Quality: As a result of proper advertisement customers will recognize the value
added on the products that will lead customers frequently visit our proposed venture.

(ii) Product innovation: Through innovation, products of different features will

be produced to give customers a wide range of choice.

(iii). Durability: Durable products will help customers to spend less of their income
on buying similar item frequently.

19
Description of the overall strengths and weaknesses of the
potential competitors
J.R. Traders Sabasaba Masika
Competitor Furniture Furniture
Center Center
Competitor Competitor
Benefit to High High Low
customer
Technology High Moderate Moderate
Location High Moderate Low
Management Moderate Low Moderate
Distribution Moderate Low Low
Channels

Referring to the competitors, overall strength and weakness two aspects are possible

❖ Easy to compete with them.

⮚ Competitive advantage will be attained from use of modern technology to

produce quality products compared to those of competitors.

⮚ High managerial skills will enable the proposed venture to operate

efficiently and effectively while minimizing costs of production through

high skills and experiences from hired workers.

20
 ⮚ Product innovation and new styling will help to capture more customers

that will result into increased market share.

❖ Difficult to Compete with them

⮚ Some competitors and the proposed business will share the advantage of

location of the business. Some have already established strong channels of

distribution.

⮚ Being in the industry for the long time, our competitors have experience

advantage in the market and have attained economies of scale hence low
cost per unit of production. Competitors to charge low price can use this
advantage.

⮚ The rivals cope with changing technology and pose intensive competition

to the business venture.

3.3. PRICING STRATEGY

The price of the products will base on the cost of manufacturing a particular product.
That is the price will be determined by adding a ten percent 10% margin on
manufacturing cost.
Several factors will be considered in setting prices. These are as follows.
1. Objective of the proposed venture is maximization of profit; The
venture will estimate the demand and costs associated with alternative prices and
choose the price that will produce the maximum profit or cash flow.
2. Government regulation on timber ; Since the government have put control
over the price this will make the cost of manufactured furniture to be high too.
3. Competitors selling price; this is the most important factor to consider since
customers are price sensitive.

21
 4. Market segments; there are groups of customer who perceive highly prices
goods as of high quality and could be comfortable to buy at that price than the
lower one.
5. Cost of production; The cost of production will be hardly the floor of pricing.
A price less than cost of manufacturing will not be set because it will imply a loss.

The forecasted selling prices are as follows.

Product Selling price (in Tshs)
Table 70,000
Chair 12,000
Desks 20,000
Stools 7,000
Beds 100,000
Door frame 10,000
Windows frame 8,000

Credit terms for products.

Credit sales will be offered to customers who buy in large volumes particularly schools,
churches, other institutions, payments should be done within 30 days, and there will be a
2% discount provision for customers who will pay within 10 days. Debtors who fail to
pay over six months will be declared uncollectible and legal actions will be taken upon
them.

22
3.4) SALES TACTICS.
Two methods will be employed in selling the products.

i) Personal selling; Customers nearby the premise and other who could wish to
buy directly from the workshop will be served accordingly.

ii) Agents: some furniture will be distributed to agents in different areas for easy
accessible by customers remote from the proposed business.
The price to be offered by agents will be monitored by the business venture staff to
protect loyalty.

3.5) ADVERTISING STRATEGY

Two main advertising media will be used by the proposed venture are appropriate for the
business venture.

⮚ Newspaper: the venture will use local newspaper to advertise, this is

because it is cheaper compared to others advertising media.

⮚ Radio and Television: the venture will also use this media to

advertise as it has a wide coverage at an affordable price such as Abood

Radio and Tv as it has a special program for entrepreneurs to publicize
their business.

3.6) DISTRIBUTION STRATEGY:

Due to the nature of the product that that they need careful handling the channels of
distribution will be as far as from Manufacture ----- Agent ---- Customers. Wholesalers
and retailers will not be involved because furniture may deteriorate in quality and

23
attractive along the way to customers. Monthly cost of transportation is expected to be
Tshs. 500,000

CHAPTER FOUR
4.0) OPERATIONAL (PRODUCTION) PLAN
The facet of the business plan covers the description of the facilities labour and overheads
required to produce propose proposed products. In addition, this part insists on indication
of compliances and regulatory framework that will affect operations of the business.

4.1) PRODUCT DESIGNS AND DEVELOPMENT:

Using modern technology, we intend to differentiate our product (furniture from those
competitors by introducing new features). For example, school desks will have special
drawers where students may keep their bags safely while they are outside classes, glass
coffee table accompanied with four stools. Before undertaking the product, development
will do the following:
i). Search for customer’ feedback as to how they perceive the products by doing
personal selling, responds to product after buying it.
ii). Do market surveys to evaluate the reach of the business in terms of market shares.
iii). Make a feasibility study on the performance of the product in the market place.

24
iv). Research comparative offerings by looking for prices.
The general findings on the performance of the products (furniture) in the market place
will guide the extent to which the furniture will have to be development or re-engineered.
All manufacturing will be done at the ventures facility at the workshop we so not intend
to use contract manufactures.
Product design and development has an implication of cost. The costs referred to as in
this case is the cost of analyzing the market trends of the product, which include a small-
scale research on customers need training to provide them with appropriate skills
necessary in product development. New styles of furniture’s may require special
equipments that mean the venture will need cash for acquisition of new equipments.
On the other hand, the following disadvantages may be encountered:
a) Most of the customers particularly households are low-income earners which
mean the tendency to repeat purchases are limited.
b) Some of customers are not sensitive towards product features that they do not
look for the value added by product features. This in turn discourages product
innovations.
c) Most customers especially offices they do like imported or readymade furniture
products.
d) Too rigid and conservatism they like to use their formal suppliers.
The size of competitors in relation to the proposed business

Our firm J.R. Sabasaba Masika

business Traders competitor competitor

competitor
Assets Medium Medium Medium Small
Sales Expected Large Medium Small
volume to be large
No. of Small Large Medium Medium
employees
No. of Large Large Medium Small

25
brands

Comparison of proposed products with those of competitors

Our firm J.R. Traders Sabasaba
business competitor competitor
Performance Moderate High Moderate
Quality High Moderate Moderate
Reputation Moderate Moderate Moderate
After sales Moderate Moderate Moderate
services
Durability High Moderate Moderate
Attractiveness High Moderate High
Product Moderate Moderate Low
innovation

The venture plans to use simple but modern technology in producing high quality
furniture. We specifically intend to use power driven machines and tools to simplify
operations and improve efficiency. All drill machines and surface planes and thickness
plane machines will be motor driven. However due to the nature of the furniture business,
some tools will remain hand-driven. These are like spanners, screwdrivers and hammers.

This level of technology is appropriate for the newly established business that will have
low capital base. We intend to acquire more technologies as far as the venture becomes
financially capable.

The appropriateness of this technology is in the following aspects:

i). Simplicity in utilization and flexibility in adoption. The operations in furniture
manufacturing is common for a person who has skill, it is easy to manage use of
the motor driven machines because nothing changes in operation but only the
source of power electricity in stead of human labour.

26
 ii). Efficiency in production
Hand- driven tools usually need more energy from labour than using power
machines. Productions with power driven machines is relatively higher. With
power machine, we can produce more furniture than what we can do with hand-
driven tools.
iii). Cost –effectiveness
Using power-driven machine one-person can so several tasks within a short
period. This implies that we can employ few operators thus reducing cost of
labour and hours used to work and leads to increase in quantity of production.

iv). Extent of availability or frequency of maintenance. Technicians will do simple

maintenance and repair activities for machinery and equipments from VETA who
are employed within the organization for major services and repairing the
company will hire specific technician where necessary.

4.2) PRODUCTION FACILITIES AND CAPACITY

The acquisition of machinery and equipments will be as follows.

Item Cost per Units Installation Total cost
unit (Tshs) required cost (Tshs) (Tshs)
File 200,000 3 50,000 650,000
Drill 400,000 2 65,000 865,000
Machine
Squire 5000 8 - 40,000
Plane 140,000 5 - 700,000
Bend saw 600,000 2 80,000 1,280,000
Thickness 600,000 2 80,000 1,280,000
plane
machine

27
Surface 600,000 2 80,000 1,280,000
plane
machine
Hammer 80,000 5 - 400,000
Spanners 6,000 5 (Sets) - 30,000
Screws- 6,000 5 (Sets) - 30,000
driven
sandpapers - - - 10,000

Description of the monthly raw material and consumable requirements

Type of raw Frequency Source Cost per unit Total Cost

material required quantity (Tshs) (Tshs)
Softwood 1 700 piece 3000 2,100,000
Hard wood 1 200 piece 4500 900,000
Glue 1 15 Tins 5000 75,000
Sand paper 1 15 Boxes 2000 30,000
Bolts and nuts 1 - - 30,000
Nails
-Small size 500kg 600 300,000
-Medium 1 800kg 1000 800,000
-large 500kg 1500 750,000
Total costs 5,255,000

28
Other supportive equipment will be acquired to enhance smooth operation and to attain
close interaction with the external environment.
The supportive equipment includes the following:
Item Quantity Cost per Installation Total cost
unit (Tshs) cost (Tshs) (Tshs)
Telephone 1 points 70,000 45,000 85,000
Office 1 300,000 50,000 350,000
computer

4.3) PRODUCTION STRATEGY

The monthly labour requirement is as follows;
i). Direct workers: the ventures being small will require an average of 12 skilled direct
workers.
ii). Indirect workers: 10 indirect workers will be needed for such tasks as up loading
furniture on Lorries at the workshop and down loading them at the agent’s places.
They are employed when needed.

4.4) DESCRIPTION OF SKILLS LEVEL

Function of an employee Skills required
Machine operators and other workers Carpentry knowledge should have an FTC
dealing with production from a recognized institution.
Indirect workers Need not have technical skills but rather
experience and hard working
Sales workers -Marketing knowledge

29
 -Computer literate

The total cost of production labour per month is as follows;

No. of direct workers x cost per hour x No. of hours per month
12 x Tshs 782 x 1 92 = Tsh 1,807,728/-
Assume hours per day x 6 days= 48 x 4 weeks= 192 total hours

These are some preliminary expenses that the venture will incur during production.
These are as follows
Expenses Amount
Stationeries 10,000
Meal allowance 20,000
Safari allowances 30,000
Total (Tshs) 60,000

Monthly production overheads will be as follows:

Electricity Tsh 100,000
Telephone 40,000
Water 20,000
Rent 50,000
Total 210,000

4.5) COMPUTATION OF COST OF PRODUCTION

Volume of production

Item Volume per Volume per Volume per Volume per

30
 week month quarter year
Table 5 20 60 240
Chair 12 50 150 600
Desks 25 100 300 1200
Stools 10 40 120 480
Beds 15 60 180 720
Windows/ 12 50 150 600
Doors Frames 6 25 75 300

Weekly cost of production

Item Volume per week Unit cost (Tshs) Total cost per week
(units) (Tshs)
Table 5 70,000 350,000
Chair 12 12,000 144,000
Desks 25 20,000 500,000
Stools 10 7,000 70,000
Beds 15 100,000 1,500,000
Frames(window) 12 8,000 96,000
Frames (door) 6 10,000 60,000

Monthly cost of production

Item Volume per Unit cost Total cost per

unit (Tshs) share
Table 20 46,000 920,000
Chair 50 8,000 400,000
Desks 100 13,000 1,300,000
Stools 40 4,600 1,840,000
Bed 60 6,600 396,000
Window Frame 50 5,300 265,000

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Door Frame 25 6,600 165,000
Total Monthly Cost 5,286,000

Assumptions; mark up of 33.33%

Quarterly cost of production

Item Volume per Unit cost (Tshs) Total cost (Tshs)
quarter (units)
Table 60 56,000 3,360,000
Chair 150 9,600 1,440,000
Desk 300 16,000 4,800,000
Stools 120 5,600 672,000
Bed 180 80,000 14,400,000
Frames-window 150 6,400 960,000
Frames-doors 75 8,000 600,000
Total Quarterly 26,232,000
cost

Cost of production per year

Item Volume per year Unit cost (Tshs) Total cost(Tshs)
(unit)
Table 240 70,000 16,800,000
Chair 600 12,000 7,200,000
Desk 1,200 20,000 24,000,000
Stool 480 7,000 3,360,000
Bed 720 100,000 72,000,000
Frames-window 600 8,000 4,800,000
Frames-door 300 10,000 3,000,000

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Total year cost of 131,160,000
production

4.6) PRODUCTION PROCESS/SERVICES AND GOVERNMENT

REGULATION:
The following external factors are likely to affect the production process.
i). Weather condition

− The transportation of raw materials (wood) may be very cost full and inefficient

during rain season.

ii) Power supply

− During power rationing, production may be fluctuating. The firm is expecting to

expect to acquire other alternative sources of power like generator.

iii) Competitors’ level of technology

− Competitors may acquire new technology improving quality of their products. In

turn, this will pose an intensive competition in market place, low market share
means the venture will have to change with new modern technologies so that it
will keep on growing in the market.

How to minimize those effects;

a) The venture will maintain a large stock of materials (wood) before rainy season to
avoid shortage.
b) The firm plans to acquire a standby generator in order to combat power problems. The
generator will ensure a constant operation hence reducing the chance for idle time to
occur.
c) To minimize loss of market shares, the venture will; keep track with change in
technology to use the latest available technology.

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d) The venture plans to advertise to create awareness to potential customers as well as to
retain existing customers.

Government power and regulation;

-The proposed business is likely to be affected by the forestry resources policy of the
government. The policy deals with matters relating to authorization and licensing wood
dealings.
-Tax compliance certificate is renewable in annual terms at a cost of Tshs 100,000

CHAPTER FIVE
5.0) ORGANIZATION PLAN
This part is mainly composed of description on polices of the organization and human
resource management that will facilitate achievement of efficient production and
distribution of goods.

5.1) ORGANIZATION
The organization will compose of Owners, one director, two managers, ten operators,
three (3) sales person and one office attendant.

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5.2) MANAGEMENT TEAM AND THEIR DUTIES
Owners will manage the venture with assistance of the director and managers. Their
duties include overall management of the business, finance management and
Administration. The operation manager will manage production activities including
ordering of materials and processing activities.

5.3) SALARY/ REMUNERATION

The employees and their respective salaries

Title Numbers Proposed salaries Total (Tshs.)

(Tshs.)
Director 1 200,000 200,000
Manager 2 170,000 340,000
Operators 10 150,000 1,500,000
Sales people 3 100,000 3000,000
Office 1 50,000 50,000
attendant
Total 2,390,000

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5.4) EMPLOYEES RECRUITMENT AND PERFORMANCE
EVALUATION

Machine operator will be recruited from Graduates of Technical Collages particularly

VETA, Registered collages and Full Technician Collages.

Employee Evaluation base

s
Director Organization Performance
Managers Organization Performance
Operators Volume of production
Sales People Sales turnover
Attendant Attractiveness of environment

Trainings to employees will be offered after three yeas of work within the venture to
improved performance. The trainings will be at the ventures expense.
To improve performance of employees each employee will be offered one set of furniture
once a year
The employees’ health will be taken into consideration by paying in advance to the
nearest health center.
The management will maximize link with individual furniture manufacturer in order to
recruit them in case of illness or terminated employee.

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 CHAPTER SIX

6.0) FINANCIAL PLAN

6.1) PROJECTED INCOME STATEMENT

UMOJA QUALITY FURNITURE GROUP PROJECTED INCOME STATEMENT

  QUARTER QUARTER QUARTER QUARTER TOTAL
1 2 3 4
Sales 32,790,000 32790000 32790000 32790000 131,160,000
Cost of goods sold 21,860,000 21860000 21860000 21860000 87,440,000
Gross profit 10,930,000 10930000 10930000 10930000 43,720,000
Operating Expenses          
Wages and Salaries          
Director 600,000 600,000 600,000 600,000 2,400,000

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Managers 1,020,000 1,020,000 1,020,000 1,020,000 4,080,000
Operators 4,500,000 4,500,000 4,500,000 4,500,000 18,000,000
Office Attendant 150,000 150,000 150,000 150,000 600,000
Depreciation 437,500 437,500 437,500 437,500 1,750,000
Electricity 200,000 200,000 200,000 200,000 800,000
Telephone 40,000 40,000 40,000 40,000 160,000
Water 20,000 20,000 20,000 20,000 80,000
Rent 210,000 210,000 210,000 210,000 840,000
Total Operating Costs 7,177,500 7,177,500 7,177,500 7,177,500 28,710,000
Operating Income Before Tax 3,752,500 3,752,500 3,752,500 3,752,500 15,010,000
Corporation Tax 30% 1,125,750 1,125,750 1,125,750 1,125,750 4,503,000
Net Profit 2,626,750 2,626,750 2,626,750 2,626,750 10,507,000
           

6.2) PROJECTED BALANCE SHEET

UMOJA QUALITY FURNITURE GROUP PROJECTED BALANCE

SHEET
Fixed Assets:  
File 650,000
Drill Machine 865,000
Plane 700,000
Bend Saw Machine 1,280,000
Thickness Plane Machine 1,280,000
Surface Plane Machine 1,280,000
Other Assets 945,000
Total Fixed assets 7,000,000
Bank account 23,000,000
Total Assets 30,000,000
Financed by:  

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Bank Loan 15,000,000
Micro-credit schemes 5,000,000
Owners Equity 10,000,000
 Total owners equity and Liabilities 30,000,000 

6.3) PROJECTED CASH FLOW STATEMENT

PROJECTED CASH FLOW STATEMENT OF UMOJA QUALITY FURNITURE GROUP
DETAILS QUARTER QUARTER QUARTER QUARTER TOTAL
1 2 3 4
CASH INFLOW          
Revenue 32790000 32790000 32790000 32790000 131160000
TOTAL INFLOW 32790000 32790000 32790000 32790000 131160000
CASH OUTFLOW          
Operating expenses 6530000 6530000 6530000 6530000 26120000
Tax       4508000 4508000
Plant and 6490000       6490000
equipment
Fittings 510000       510000
Rent   420000   420000 840000

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 Macro credit       2500000 2500000
Purchases 21860000 21860000 21860000 21860000 87440000
TOTAL OUTFLOW 35390000 28810000 28390000 35813000 128403000
Closing balance -2600000 3980000 4400000 -3023000 2757000
Balance b/f 30000000 27400000 31380000 35780000 30000000
Balance c/f 27400000 31380000 35780000 32757000 32727000

IMPORTANT ASSUMPTIONS MADE TO REACH THE FIGURES IN THE

FINANCIAL STATEMENTS PROJECTED.
i. Depreciation will be calculated on straight-line basis at the rate of 25%.
ii. All assets assumed to have zero salvage value at the end of their respective useful
life.
iii. Rent will be paid on two installments at the end of every six months.
iv. Corporate tax expected is 30% and will be paid at the end of the year.
v. Loan and equity will be received before the first quarter begins.
vi. All purchases will be done at the beginning of the month and recorded at the end
of the same month.
vii. All assets will be purchased at the first quarter.

6.4) FINANCIAL REQUIREMENTS

Total amount of money required at start up Amount (in Tshs)
Working capital 23,000,000
Fixed assets:
Plant and equipment 6,490,000
Fittings 510,000 7,000,000
Total financial requirement 30,000,000

Proposed capitalization
Total investment will be 30,000,000

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Funds from our own savings 10,000,000
Borrowings: Micro credit scheme 5,000,000
Bank loan 15,000,000

The security for loan will be our degree certificates. Half of Micro credit loan will be
paid in the last month of the year the remaining will be paid at the end of the following
year of operation. Bank or loan interest of 10% will be payable in the year basis. The
bank loan will be paid in two installments at the beginning of the third year.

6.5) EXPECTED PROFITABILITY

As indicated in the profit and loss projections, the profit margin of 33.33% will be used
for the current year.

CHAPTER SEVEN

7.0) CRITICAL RISK ASSESSMENT AND IMPLEMENTATION

The main risk that may happen during the business operations is the default risk. The
customer may fail to honor their obligation to pay their debt thus to affect the operations
of the business to deal with this problem the management will set up standards for
offering credit sales (customer credit worthy rating). Also proper follow up will be made
frequently.
In addition, imported furniture (ready-made furniture) can lead to loss of large market
share to address this management will insure quality production of furniture which will
meet international standards.

7.2) IMPLEMENTATION SCHEDULE

EVENT EXPECTED START EXPECTED DATE
DATE OF
COMPLETION
Registration - June 2009

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Acquisition of start up requirement July 2009 August 2009
Installation of machines and September 2009 September 2009
equipment
Start of the operations October 2009 -

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