EXECUTIVE SUMMARY

RECOTAZO is an upcycling business that specializes in creating unique and sustainable

products from second-hand clothing through the art of macramé. It believes in the importance of

reducing waste and preserving the planet while also providing pleasing and functional products

for our customers. Its main product is the macramé tumbler holder, which is handcrafted by

Bicolano artisans and craftsmen. This product is not only visually appealing but also functional,

as it allows you to carry your drink with ease while on the go. RECOTAZO is dedicated to

delivering standardized and sustainable products that you can feel good about using.

The proponents of this business are Maria Ann D. Reorizo, Janine L. Portugal, Francis L.

Clemente, Julius P. Diaz, Angel N. Gonzales, and Reygenald Verdejo. RECOTAZO is mainly a

Partnership form of business as it was built up and developed by its proponents.

The business tends to enter the fashion industry wherein there are a lot of different

companies that are already competing for years. Despite the fact that several fashion companies

are already competing, there is still potential for RECOTAZO Company to capture market share.

At this time, tumblers or water bottles with different brands gained popularity as it has the

newest range of patterns, features, sizes, and colors.

The company will focus on direct/personal selling and also will use social media

platforms. RECOTAZO Company will create a Facebook page to promote the product and

influence people about the product. Promoting the product on social media platforms like

Facebook, Marketplace, Instagram, and TikTok is the easiest way to introduce the product in the

market. RECOTAZO Company will target the market of students, individuals who are into

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outdoor activities such as camping, fitness, and travel, eco-friendly people, and individuals who

want to try new things, males and females between the ages of 8 to 50 years old.

RECOTAZO Company will be using a direct distribution channel. As the manufacturer

of the products, RECOTAZO Company will directly sell the product to the end consumer.

The initial project cost of RECOTAZO in its first month is ₱9,015.03 and each

proponent will contribute ₱1,502.505. RECOTAZO will primarily rely on the capital

contributions made by its founders as its primary source of financing. Additionally, the founders

may choose to seek out other sources of financing, such as loans or investments from venture

capitalists, as the business grows and evolves. Furthermore, RECOTAZO sales projections for

the first year are 106,800 with a 21% growth in the next year. By year three the company

projected 55.12% of gross margin. Financial analyses show that the company will have both a

positive cash flow and profit in the first year and the next two following years . The expected

return on investment is 50.6%.

RECOTAZO goals are to build a community of Bicolano artisans who specialize in

macramé and other upcycling techniques. Develop and implement training programs that focus

on macramé and upcycling techniques for interested individuals in Naga City. Partner with local

businesses and organizations to promote sustainable fashion and upcycling practices. Create a

sustainable supply chain that sources second-hand clothing from local sources and donations. To

develop marketing strategies that promote the unique and beautiful nature of upcycled macramé

products. And additionally, RECOTAZO will commit to support Bicolano artisans and

craftsmen for their empowerment and sustainability livelihood.

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ACKNOWLEDGMENT

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 The business proponents would like to express sincere appreciation to the following

persons who helped in accomplishing this business plan.

First of all, we would like to show our heartiest gratitude to the Almighty God for

providing us with the opportunity and strength to complete this business plan. This success is the

result of the teamwork of each other that makes us able to successfully compile this Business

Plan.

We would like to express our deepest gratitude to all the individuals who have

contributed their knowledge, expertise, and their valuable time to the development and

preparation of our Business Plan. Their insights and feedback were invaluable in shaping our

vision, and we are truly grateful for their support.

We extend our sincere appreciation to Ms. Rachelle Esguerra our professor in Business

Plan Preparation, Mr. Dylanjose M. Barrameda our Business Guru, Ms. Ana Marie A. Binalla, our

Financial Adviser, and Engr. Dominic P. Bolima our Technical Adviser. Thank you for the

opportunity, unwavering dedication, and commitment and for guiding us toward the successful

preparation of this project.

CHAPTER 1

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 INTRODUCTION

This chapter contains the business's vision, mission, goals, and objectives. It also

presents the business description and socio-economic impact of RECOTAZO Company.

I. VISION, MISSION, GOALS, AND OBJECTIVES OF THE BUSINESS

The vision, mission, goals, and objectives of the business are represented in this part. It

reveals the strategies, tactics, and purpose that the business wants to accomplish for the

business.

A. VISION

To be a Bicolano artisan group that promotes sustainability by upcycling second-

hand clothing towards environmentally friendly communities.

B. MISSION

To promote sustainability by upcycling second-hand clothing through macramé,

while also supporting local artisans and craftspeople in the Bicolano community. We

strive to create unique and visually appealing art that is both eco-friendly and socially

responsible.

C. GOALS

RECOTAZO has the following goals for the next three (3) years.

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 Build a community of Bicolano artisans who specialize in macramé and other upcycling

techniques. Develop and implement training programs that focus on macramé and upcycling

techniques for interested individuals in Naga City. Partner with local businesses and organizations

to promote sustainable fashion and upcycling practices. Create a sustainable supply chain that

sources second-hand clothing from local sources and donations. Develop marketing strategies

that promote the unique nature of upcycled macramé products.

D. OBJECTIVES

RECOTAZO Company objectives are the following

● To reach the monthly quota from 100.

● Develop a process for sourcing and selecting high-quality second-hand clothing for

upcycling.

● Identify and recruit local artisans who specialize in macramé and upcycling.

● Provide training and support for artisans to develop their skills and create high-quality

products.

● Develop and implement a marketing strategy that promotes Bicolano artisans and

their work to a broader audience.

● Host events and social media campaigns that highlight the importance of

sustainability in fashion.

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II. BRIEF DESCRIPTION OF THE BUSINESS

RECOTAZO Company will sell upcycled fashionable bags and home decor products

made from second-hand clothing or pre-loved clothes that will come from donors and customers

from residents in Naga City. Its product will be made through macramé methods and packed in

eco-friendly packaging. The United Nations Environment Programme (UNEP) and the Ellen

MacArthur Foundation predicted that at this rate, the greenhouse gas emissions from the fashion

industry will increase by more than 50% by 2030 (Baclig 2022). RECOTAZO Company's

primary purpose is to promote sustainable livelihood among young artisans at Bicol State College

of Applied Sciences and Technology while creating an innovative solution to Naga City's textile

waste problems towards a community that is environmentally friendly.

The business name RECOTAZO is based on the Spanish word “Retazo” which is a

scrap, leftover, or remaining fabric, and “Eco” which is the eco-friendly product.

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 Figure 1 shows the RECOTAZO Company's official logo.

RECOTAZO Company products will be available in Naga City, specifically at the

Business Resource Incubation and Development Center located at Penafrancia Avenue, Naga

City, Philippines. It will be accessible in online stores and on social media pages such as the

Facebook Marketplace, website, and Facebook page. It will connect with the customers through

its accounts, such as email, Messenger, Instagram, and SMS. Additionally, it will also be seen in

publicity materials such as printed posters that will be posted at selected private establishments

and in social media posts on Facebook and Instagram feeds, Facebook and Instagram stories, and

on its website.

RECOTAZO Company will adopt a modern and Bicol cultural design that suits Bicolano

fashion and home decor design. Its selling price will be computed using the full-cost pricing

method to offer a reasonable price. RECOTAZO Company will also offer discounted prices to

those customers who will voluntarily give a piece of their pre-loved goods and those who will

purchase multiple items. RECOTAZO Company will also expand business knowledge by

attending trade fairs and implementing programs that will further encourage communities in

Naga City to share the same primary vision as the company.

The story behind RECOTAZO Company started in the passion and interest of one of its

proponents who began as a hobbyist, transforming pre-loved clothes into stylish and fashionable

pieces. As an individual that is interested in sustainability and consumption, it becomes a great

adventure. And today's fast-paced and throwaway culture can be overwhelming, recognizing the

need for change, the company emerged as a platform to promote positivity that relates to

sustainability and consumption. RECOTAZO aimed to challenge and encourage people to view

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 clothing as an opportunity for self-expression and creativity while minimizing waste. By

transforming pre-loved garments into trendy and fashionable pieces, they sought to inspire others

to embrace a more sustainable approach to fashion and consumption that contribute to a more

sustainable and positive future.

RECOTAZO Company will target to reach more than Php45,000.00 in sales in its first

month of product launching and will target to achieve Php540,000.00 in its yearly sales and

increase annually by Php580,000.00 over the next two years.

III. Socio-Economic Impact

This section focuses on the benefits and purpose of the business to the customer,

community, business, and to the economy. RECOTAZO Company not only focused on its

profits but as well on its future contributions to society.

RECOTAZO Company is a Bicolano artisan group that aims to promote sustainability

among young artisans in the Bicol State College of Applied Sciences and Technology through

upcycling second-hand or pre-loved clothing while creating an innovative solution to the Naga

City textile waste problem towards an environmentally friendly community.

According to the World Resources Institute, one cotton garment requires 2,700 gallons of

water to produce, and on top of wasting money and resources when people throw away clothes

in the trash, it can take more than 200 years for the components to degrade in a landfill. Textiles

produce the greenhouse gas methane during the breakdown process and release hazardous

chemicals and dyes into our land and groundwater, causing global warming to occur (Brown

2022). To mitigate the rapid problems caused by textile and plastic waste, RECOTAZO

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Company will primarily use second-hand or pre-loved clothing as its main product material,

creating upcycled bags and home decor textiles. Furthermore, the Bicolano's love of fashion will

not be compromised. Furthermore, young artisans at Bicol State College of Applied Sciences and

Technology will also have the opportunity to showcase their talents, skills, and craftsmanship

while empowering themselves and investing in their future. Additionally, RECOTAZO Company

will look for Naga City residents who may have excess or old clothes, so they will have the

chance to still earn from them as well.

By upcycling second-hand or preloved clothes that are continuously causing a big

problem to the world’s textile waste, RECOTAZO Company will commit itself to upcycle them,

selling products that are safe, reusable, aesthetically pleasing, with reasonable prices, and most of

all, helping the community not just financially but by finding better ways to prevent the

community from textile and plastic waste problems.

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 CHAPTER II

MARKETING PLAN

In this chapter, RECOTAZO Company will discuss the description of the

product/service, market and industry analysis, market size, and the target market, including

marketing programs and strategies.

MARKET ANALYSIS

In this section, RECOTAZO Company will discuss the industry it will enter and the

available competition. It will provide information about potential customers, competitors, and

threats that may affect the business.

A. Market Definition

Entering the market as a newly established company is challenging as the business tends

to enter the fashion industry wherein there are a lot of different companies that are already

competing for years. Despite the fact that several fashion companies are already competing, there

is still potential for RECOTAZO Company to capture market share. At this time, tumblers or

water bottles with different brands gained popularity as it has the newest range of patterns,

features, sizes, and colors. However, the inconvenience of carrying it by its cap loop with the use

of fingers, additionally, it is a bit heavier that makes the user uncomfortable.

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 The RECOTAZO Company's direct competitors are the business owners of bags and

accessories in Naga City who are selling the same product just as the product offered by

RECOTAZO Company. The indirect competitors are the businesses in Naga City that offer

plastic fashion accessories, and leather bags.

A.1. Porter’s Five Forces Analysis

The business competitive landscape along with the factors affecting its sector is covered

in Porter’s Five (5) Forces Analysis formed by Michael E. Porter of Harvard Business School in

1979. The analysis focuses on determining the company's position in relation to forces such as

the threat of new entrants, the threat of substitutes, the bargaining power of customers, the

bargaining power of suppliers, and market competition.

RECOTAZO' Five Forces analysis aids in evaluating the company's current position in the

market in light of multiple internal and external factors, including competitors, customers,

suppliers (partners and vendors), financial strength, future potential, and alternative solutions.

A.1.1 Rivalry among Existing Competitors

Figure 2 below shows the direct competitors of RECOTAZO Company within the

industry. This refers to the number of competing companies and their features used to

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distinguish and determine the strengths and weaknesses of their business in the industry.

Figure 2 shows the Top Competitors of RECOTAZO

The figure will influence the customers to buy from RECOTAZO Company despite its

competitors. RECOTAZO Company is committed to producing and offering products that are

safe, innovative, and aesthetically pleasing, at reasonable prices. The company will have a plan,

strategies, and methods to improve and exceed competitors by identifying, analyzing, and

determining their strengths and weaknesses.

A.1.2. Threat of New Entrants

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 A tumbler holder, fashionable bags, house decor, and other accessories made from

recycled materials that are made through the macrame method will be the product that

RECOTAZO Company will be producing. As the business is a low-cost capital company, making

it simple for new entrants to enter the market. And today’s eco-friendly fashion has become a

new trend, with an increasing number of people adopting a more eco-friendly, and sustainable

lifestyle, RECOTAZO will be promoting its very own local tumbler holder, bags, home decor,

and other accessories made from recycled materials that are made through the macrame method

that is driven by the simple market trends of a growing number of eco-friendly individuals.

RECOTAZO Company is committed to ensuring that the products that the business will offer

are in great condition and sufficient for the consumers to be satisfied.

A.1.3. Bargaining Power of Suppliers

The materials that RECOTAZO Company will be using are readily available and non-

specialized. The business will primarily use second-hand or pre-loved clothing as the main

materials come from donors and in return, the business will give small tokens to the residents in

Naga City that will donate their used clothes. The company needs to secure enough supplies so if

no donations are available, the company may acquire used clothes from the customers to make

them the Macrame product.

A.1.4. Bargaining Power of Buyers

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 Customers are technically in a sea of options, where they can choose from several brands

or different substitute products available. Considering that tumblers or water bottles with several

brands are in today’s trend, people tend to buy accessories at the same time to protect their

tumblers. As most individuals are price-conscious, RECOTAZO Company now has the

advantage of offering innovative products at reasonable prices. Customers can easily access the

products since they will be available at the Business Resource Incubation and Development

Center located at Peñafrancia Avenue, Naga City, Philippines. It will also be accessible in online

stores and social media pages such as the Facebook Marketplace, website, and Facebook page.

A.1.5. Threats of Substitutes

There are various substitute products available to satisfy the desire and needs of the

customer towards purchasing a product that can affect the business. Crochet bags, leather bags,

and silicone handle bags are some of the effective substitutes for RECOTAZO products.

However, due to the characteristics of the company’s product, it can keep its position and can

also serve as a substitute for another product that might be a better fit for the market. The

Company will produce products that are made from recycled materials that might gain traction

with eco-friendly people and individuals who want to try new things that will not only produce

positive outcomes but will also be beneficial to themselves and the environment.

RECOTAZO Company is aware of these possibilities, so the company will monitor the

prices and features of the competing products that are available in the market in order to develop

a more effective plan for improving its goods and services.

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 B. Market Profile

A market profile reveals the characteristics of the business's typical customer and

customer groups. It provides an overview of whom the business will be selling to and

what the company’s typical customer looks like. This includes demographics, geographic,

psychographics, and behavioral characteristics of the target market.

Figure 3. RECOTAZO Company Buyer Persona

RECOTAZO Company will target the market of Mr. Lumanog who is currently

on his weight loss journey. He wanted an accessory for his bottle that is eco-friendly yet

fashionable. His goal is to purchase an affordable tumbler holder or bag to protect it from

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unwanted scratches and bumps. Due to this, RECOTAZO Company will offer a product such as

a tumbler holder/bag which will fulfill his need.

Demographic Segmentation

RECOTAZO Company will target the market of students, individuals who are into

outdoor activities such as camping, fitness, and travel, eco-friendly people, and individuals who

want to try new things, males and females between the ages of 8 to 50 years old. These people are

most likely to have a tumbler or a water bottle and have the means to pay as they are students

and some earn their own money.

Geographic Segmentation

RECOTAZO Company will adopt business-to-consumer. The products of the business

will be available in Naga City. Furthermore, the company considers clients beyond Naga City to

be within the distributor's reach.

Psychographic Segmentation

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 As to psychographic segmentation, RECOTAZO Company is segmenting a target market

based on lifestyle and interests. Young and adults who are into outdoor activities, green lifestyle

enthusiasts, and individuals who want to try new things.

Target Market

The business target market is both genders: male and female who are eco-friendly

individuals, students, people who want to buy accessories, and people who mostly are in outdoor

activities such as fitness, camping, and traveling. Tumbler holders for ages 8 yrs old and above,

plant holders for plantitas.

C. Market Size (Tam Sam Som)

TAM, SAM, and SOM are acronyms for three metrics to describe the market an

organization operates. These metrics are the key components of any business plan,

particularly crafting marketing strategies, setting realistic revenue goals, and choosing

markets.

TAM( Total Addressable Market)

According to the 2020 Philippine Statistics Authority census, the population in

Naga City was 209,170 and represents the Total Addressable Market for the absolute

market maximum size that the business can generate with their product or service.

SAM(Serviceable Available Market)

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 RECOTAZO Company assumed a Serviceable Available Market of 161,937

people or 77.42% of their Total Addressable Market in Naga City, Bicol, with a Total

Addressable Market of 209,170 people, maybe male or female ages 8-50.

SOM (Serviceable Obtainable Market )

For the Serviceable Obtainable Market, RECOTAZO Company assumed that

they could really capture 6,000 people or 3.705% of their SAM. Still small as this business

is new, this business believes that in no time it will get bigger and higher.

MARKETING PROGRAM AND STRATEGIES

A. Product Description (Product Differentiation and Positioning)

RECOTAZO Company bags and accessories are products that can be used every

day. It is a tumbler holder that is made of used clothes. RECOTAZO Company are more

affordable and durable than others. It is a combination of machine-made and handmade

products that is very useful, unique, and different from other tumbler holders because of

the material used and it is washable. RETAZO Company targets all ages but most

especially the students who always have their tumblers which are the elementary students.

B. Pricing Strategy

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 RECOTAZO Company will offer a reasonable price using the Full Cost pricing

method. The pricing method is computed by adding all the expenses spent per product

and the addition of the desired markup of the company. RECOTAZO Company will

offer discounts to those customers who will donate their pre-loved clothes and those who

will purchase multiple items. Occasionally, RECOTAZO Company will offer sales

discounts on holidays specifically on Earth Month which is celebrated every year in

April.

C. Promotional Strategy

RECOTAZO Company will focus on direct/personal selling and also will use

social media platforms. RECOTAZO Company will create a Facebook page to promote

the product and influence people about the product. Promoting the product on social

media platforms like Facebook, Marketplace, Instagram, and TikTok is the easiest way to

introduce the product in the market. Also, flyers and brochures will be used to promote

and interact with customers.

D. Distribution Channel

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 Figure 4. RECOTAZO Company Distribution Channel.

RECOTAZO Company will be using a direct and indirect distribution channel.

As the manufacturer of the products, RECOTAZO Company will directly sell the

product to the customers and also will sell to other businesses. The company will be

distributing the product to the other businesses and to retailers who will sell the product

to the end consumer to help the company to widen the scope of distribution of the

products easily.

CHAPTER III

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 PRODUCTION PLAN

This chapter contains the product description and specification, production process, raw

materials required, tools and equipment, plant location, plant layout, total production cost, utility

requirements, waste disposal management, and labor requirement.

Product Description and Specification

This section shows the detailed description and specification of RECOTAZO products.

RECOTAZO is a product that can make the life of customers easier. It also comes with a

variety of items such as tumbler holders, bags, and more. The product is also made of worn

clothes, cut into small parts, and sewn and knotted. In that way, the product can be more

attractive to the customer. It is also safe because it is checked carefully by the producers which

also makes it affordable for the customer.

According to James Evans (2023) fashion industry, the increase in the number of styles

and collections of clothing, along with lower prices has led to a significant increase in fashion

waste. The average individual purchases more clothing, wears less, and produces more waste.

Inefficient production techniques also result in clothing being thrown out rather than recycled,

and many businesses continue to burn millions of dollars worth of unsold apparel at the end of

each season. That is why the business practices recycling used clothes to decrease waste and be

environmentally friendly.

Production Process

This section shows a detailed illustration and the step-by-step process of RECOTAZO

Company in coming up with the production process.

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 Figure 5. RECOTAZO Company Production Process Chart

In order to get materials, the company will conduct a donation drive like giving the

company their used clothes in exchange for a token. There are also ways in which the customer

will give their used clothes for customization. After that the company will inspect the used

clothes if there are any kind of damages or stains and check the clothes if it is compatible with

making a new product then after inspecting the product, the clothes will go to a laundry shop for

cleaning to ensure that it is safe to use. The next step is cutting the used clothes and making them

a strip and the other clothes that will not be used will go into the sorting area. The sorting area

has different types, the strips of clothes that are sorted by color and size and the clothes that are

sorted in color and ready to be used in the process. After the sorting process, the strip clothes

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will be sewn to make sure that the strips will not be damaged and to make sure that it is strong

before knotting. The next process is the knotting of strips of clothes that are used to create a

product like bags, tumblr, and many more. After that, the new product is going to be inspected to

know if there are damages, flaws, or wrong knots. The last step is packaging the product using

cartolina paper and labeling it using a stamp.

Direct Materials

The table below shows the raw materials needed to produce 100 units per month. It

includes second-hand clothes or pre-loved clothes that the company will get from the residents

of Naga City which will be the primary source of raw materials. It will only need threads with an

estimated cost of 75.00 pesos for 100 units.

Materials Description Quantity Price Suppliers

Used Clothes The main base — Donation drive and

of the product. customers who want a
customized product.

Threads A thin strand of 5 pcs. ₱75.00 Market

cotton is used
for sewing.

Direct Labor

RECOTAZO has 4 labor requirements in making the product that requires 1 helper and

3 product makers which will be for production only or the labor is paid per unit of output . The

table of direct labor is shown below.

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 Total monthly
Labor requirement Job description Number of laborer Price rate per day expense

Do the laundry,
sanitizing and ₱310.00 per day
Helper sorting of clothes 1 (38.75 per unit) ₱310.00

Knotting, and
finishing of the ₱310.00 per day
Product Maker product 3 (38.75 per unit) ₱3,720.00

Total 4 ₱1,240.00 ₱4,030.00

Manufacturing Overhead Expenses

The table below shows the RECOTAZO Manufacturing Overhead Expenses. It includes

the monthly expenses of the product including utilities and other needed materials in the

production.

Variable Overhead Cost Estimated usage Per Total Monthly

Month Overhead

Ink ₱50.00 1 ₱50.00

Cartolina Paper for ₱5.00 25 pcs ₱125.00

Packaging

Tailor’s Chalk ₱10.00 2 ₱20.00

Other Expenses ₱60.00 2 ₱120.00

Total Manufacturing Overhead Expenses ₱315.00

Fixed Cost

Details Cost Estimated usage Per Total Monthly

Month Overhead

Travel expenses ₱100.00 2 ₱200.00

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 Marketing Expenses ₱100.00 1 ₱100.00

Miscellaneous Expenses ₱200.00 1 ₱200.00

Supplies Expenses ₱390.00 1 ₱390.00

Amortization pre- ₱100.00 1 ₱100.00

operating cost

Total Selling and Administrative Expenses ₱990.00

Tools and Manufacturing Equipment

The table below shows the indirect materials used in producing the RECOTAZO bag

and accessories. It is the materials that are needed in making the product and the table also shows

what the materials need, description, quantity, price, and where the suppliers of the product are.

Tools and Equipment

Manufacturing Description Quantity Price Supplier/s

Equipment

Embroidery A machine used in 1 ₱2,610 Lcc Naga

Machine sewing

Total Monthly Production Cost

The total production cost of RECOTAZO per unit is ₱16.3 The computation of the

product is shown below.

Variable Costs

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 Direct Raw Materials ₱75.00

Direct Labor ₱1,240.00

Manufacturing Overhead ₱315.00

TOTAL MONTHLY VARIABLE COST: ₱1,630.00

Number of Units Produced 100

Product Cost Per Unit ₱16.3

Fixed Cost

Fixed Cost ₱990.00

TOTAL FIXED COST ₱990.00

To get the total production per unit, the company adds the direct materials, direct labor,

and overhead expenses, and the total is divided to the number of units produced as illustrated

above.

Plant Location and Layout

RECOTAZO bags and accessories will be available at the Business Resource Incubation

and Development Center located at Peñafrancia Avenue, Naga City. The plant location of

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RECOTAZO will be on the 1st floor, College of Engineering and Architecture, Bicol State

College of Applied Sciences and Technology, Penafrancia Ave., Naga City, Camarines Sur.

Figure 6. Shows the birds-eye-view map of RECOTAZO Company plant location.

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 Figure 7. Shows the RECOTAZO plant layout.

Figure 7 shows the plant layout of RECOTAZO Company from the receiving area to the

packaging area where bags and accessories will be safely made accordingly.

Waste Management Disposal

The most critical feature of any business is cleanliness. One of the reasons that entices

buyers to purchase is this. The ease with which they may purchase the product, the safety of the

products they purchase in addition to cleanliness.

The RECOTAZO company uses cartolina paper as packaging when selling its product to

minimize the usage of plastics that are not good for the environment. In terms of waste, the

company will follow the proper waste disposal for the company’s safety and cleanliness. The

waste materials will also be collected by the garbage collector in the locality.

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 CHAPTER IV

ORGANIZATION AND MANAGEMENT PLAN

Form of Business

RECOTAZO company is a new business that uses upcycled clothes as their raw

materials. It will be hard for the business to thrive since it’s new in the market and because of

this, the company needs to have a partnership. In this way, the company will lessen its expenses

and can easily get into the market. This can also be a big advantage for the company since it has

more people to help with the business and lessen the problems that it is facing. Partnership also

makes the business successful in the market with the help of other businesses, making the

company grow much faster and giving good decision-making in performing a business.

Organizational Structure

In this section, the company will explain and provide a visual representation of the

structure of the organization. Every team member has unique skills and credentials that enable

them to carry out their designated responsibilities effectively.

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 Figure 8. Shows the RECOTAZO Organizational Structure.

Figure 8 shows the organizational structure of RECOTAZO Company, outlining the

various positions and hierarchies within the company. Each member is placed in a specific

position based on their qualifications and skills, and they are expected to carry out specific

responsibilities in accordance with their position.

Business Experience and Qualifications of the Entrepreneurs

In this section, the business experiences and qualifications of the respective managers of

RECOTAZO will be further discussed in order to provide fair standards in their positions. Each

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position requires significant skills that shall be orderly aligned with managers to establish a well-

organized company structure.

General Manager

A general manager of RECOTAZO shall have experience in manufacturing and

operations management. He or she should have knowledge of the materials used in macrame bag

holder production, as well as experience in managing inventory, supply chain management and

logistics. Additionally, he or she should be able to develop product strategies, oversee the design

and development of macrame bag holders, and manage a team of designers, and production

workers. Strong communication and leadership skills are also important, as he or she will need to

collaborate with other departments, build relationships with suppliers and distributors, and

manage customer relationships.

In terms of qualifications, a general manager of RECOTAZO should have a degree in

business administration, engineering, or a related field, paired with several years of experience in

manufacturing or operations management. Experience in the fashion or consumer goods

industries may also be beneficial.

Marketing Manager

A marketing manager at RECOTAZO shall have a strong understanding of marketing

principles and tactics, as well as experience in the bag industry specifically. He or she has to have

at least some experience working in marketing or advertising with a focus on bags or other retail

products. He or she has knowledge of branding, product positioning, and market research. Has

familiarity with various marketing channels, including digital marketing, social media, advertising,

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and public relations. He or she shall have strong analytical skills, including the ability to track and

analyze marketing metrics and customer data; excellent communication and interpersonal skills;

as the marketing manager, he or she will need to work closely with other departments such as

sales, product development, and customer service, A bachelor's degree in marketing, business, or

a related field is typically required, although some employers may accept equivalent work

experience instead.

Financial Manager

As a financial manager of RECOTAZO, he or she shall have a strong understanding of

accounting principles and financial management, including budgeting, forecasting, and financial

analysis. With experience in financial management within a manufacturing environment,

preferably in the bag industry or a related field. Has familiarity with cost accounting and

inventory management. Studied tax laws, financial regulations, and compliance requirements.

Have strong analytical skills, including the ability to analyze financial statements and identify areas

for improvement. With acceptable communication and interpersonal skills, he or she will need to

work closely with other departments, such as production, sales, and marketing. Studied finance,

accounting, or a related field or gained work experience instead.

In addition to these qualifications, a financial manager in the bag manufacturing business

needs to be detail-oriented, organized, and able to work well under pressure. They should also be

able to manage a team and delegate tasks effectively.

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Production Manager

A production manager at RECOTAZO should have a combination of education and

experience related to manufacturing. A bachelor's degree in business, engineering, or a related

field is required, or an associate's degree or vocational training.In addition to education,

production managers should have experience in manufacturing or production environments.

They should possess strong leadership and communication skills to effectively manage a team of

workers and coordinate with other departments. A production manager should also have a good

understanding of safety regulations, quality control, budgeting, and inventory management.

Experience with lean manufacturing principles and using software to track production processes

is also highly valued.

Human Resource Manager

For a human resources manager position at RECOTAZO, a candidate typically needs a

bachelor's degree in human resources, business administration, or a related field and several years

of experience in HR management. Some of the key qualifications and skills that are often sought

after include strong communication and leadership abilities, expertise in HR policies and

procedures, experience in employee recruitment and retention, knowledge of employment laws

and regulations, and proficiency in HR software and technologies. Additionally, experience in the

manufacturing industry or a related field may be preferred.

Research and Development Manager

Knot and Threads requires a Research and Development (R&D) Manager to be

responsible for overseeing all research and development activities within the organization. To be

34
successful in this role, an R&D manager should have a combination of business experience and

technical knowledge. Managers should have a deep understanding of the technical aspects of the

products or services their company offers. This knowledge helps them identify areas that require

research and development and assess the feasibility of potential projects. Additionally, he or she

should be able to think strategically and develop long-term plans for their department. They

should be able to align the R&D department's goals with those of the organization as a whole.

He or she should have a solid understanding of business principles and practices. He or she

should be able to analyze market trends, identify new opportunities, and make decisions that are

in the best interest of the company. should be strong leaders who can motivate their teams to

achieve their goals. And he or she should also be able to manage and develop their staff, delegate

responsibilities, communicate effectively, and communicate complex technical concepts to non-

technical stakeholders. They should be able to present information clearly and timely.

Key Partners and Resources

This section contains the potential partnerships that will help the company in carrying out

the business plan. The business will partner with government organizations for the approval and

issues of licenses and permits, non-government organizations, and other organizations that will

help in promoting new businesses, the school, Bicol State College of Applied Sciences and

Technology can help the business in providing technical support. The investors of the business

are the entrepreneur students and their parents. The potential future partners listed below are the

RECOTAZO potential future partners who can support, invest and help the company grow.

1. Bicol State College of Applied Sciences and Technology (BISCAST). The company needs

an area where it can successfully create the production of the products and so with the

35
 help of the professors and faculties, the company will use the Manufacturing and

Fabrication Laboratory (ManFabLab) as its production area.

2. Department of Trade and Industry (DTI). DTI offers a lot of opportunities and services

for entrepreneurs, particularly those who are starting new businesses, including patent

application guides, market development services, product development, export

assistance, and available financing options. RECOTAZO intend to request financial

assistance and DTI can also help the company by allowing the company to attend trade

fair events within the areas.

3. Barangays within the area. The company intends to coordinate with different barangays in

requesting donations of preloved clothing from the different households that can be used

in the production.

Pre-operating Activities and Expenses

This section will show the Pre-operating Activities and Expenses of the company that are

needed before the business can operate and how much its costs.

Pre-operating activities and expenses include permits and licenses, registration of the

business, administrative expenses, training, and market research.

Pre-operating Expense: Cost:

Permits and Licenses 1,500

Other Expenses 1,000

1. Mayor’s Permit/ Business Permit

Business License Application/Assessment Form

Business Tax - 0.005% of Capitalization

36
Permit Fee - 0.002% of Capitalization (Min. of 75 pesos & max of 2,000 pesos)

Zoning Clearance - Php 550

Fire Clearance - 0.10% of the assessed value of buildings or structures.

Sanitation Permit - Php 200

Barangay Clearance - 200

2. (DTI) Department of Trade and Industry Business Name Registration

Business Territorial Scope:

Barangay - Php 200

City/Municipality - Php 500

Regional - Php 1,000

National - Php 2,000

3.(SEC) Securities and Exchange Commission Articles of Incorporation Registration (for

corporations)

4.(BIR) Bureau of Internal Revenue Registration

Organizational GANTT Chart

This figure shows Knot and Threads organizational flow of activities for the second

semester of operation, from planning up to business expanding.

37
 Figure 9. Show the RECOTAZO Organizational Gantt Chart

Figure 9 shows the consecutive plans or activities of the organization for the second

semester until the next school year. It starts from February 2023 to May 2024. The following

activities include planning, capital funding, supplier sourcing, production and product survey,

marketing, company name registration, trade fair participation, and expanding the business area.

38
 CHAPTER V

FINANCIAL PLAN

Financial Assumptions

RECOTAZO is a start-up business specializing in upcycling second-hand clothing

through macrame. In order to make informed decisions about the future of the business, the

management team has developed a set of financial assumptions that guide their planning and

forecasting. These assumptions are based on a variety of factors, including the expected total

project cost per month, sources of financing, projected financial statements, market trends, and

industry benchmarks. By using these financial assumptions to project future revenues and

expenses, RECOTAZO can make strategic decisions about inventory management, pricing, and

marketing in order to achieve long-term growth and profitability. Financial assumptions are

essential parts of a business plan since they serve as the starting point for financial estimates.

Financial assumptions are the variables that you use to anticipate how strategic initiatives will

affect revenue, expenses, and cash flow. Here, we will be able to predict our business flow since

having a good foundation of financial planning drives growth and efficiency.

● Allowance for discount is 5%

● Allowance for damages is 5%

● Increase in production by 10% annually.

● Increase in selling price by 10% annually.

● Increase in the average cost of raw materials by 5% annually.

● Increase in the production overhead costs by 5% annually.

39
 ● The cost of labor will remain the same.

● Ending Inventory is 5% of the Raw Materials Purchases

● The estimated life of Tools and Equipment is 5 years.

● Partners Withdrawal is 14%.

Total Project Cost

TOTAL PROJECT COST

Pre-Operating Expenses 2,000.00

Tools and Equipment 3,000.00

Working Capital For a Month

Direct materials 39.06

Labor 3,875.00

Manufacturing Overhead 100.96 4,015.03

Total Project Cost 9,015.03

Sources of Financing

40
 RECOTAZO will primarily rely on the capital contributions made by its founders as its

primary source of financing. This is a common approach for startups that are just getting off the

ground and allows the founders to maintain control over the business. Additionally, the founders

may choose to seek out other sources of financing, such as loans or investments from venture

capitalists, as the business grows and evolves. However, at this early stage, the founders are taking

the necessary steps to ensure the long-term success of RECOTAZO by investing their own

capital into the business. Since the total project cost for a month is ₱9,015.03, each proponent

will contribute ₱1,502.505.

Partners Capital Sharing

Partner 1 16.67% ₱1,502.505

Partner 2 16.67% ₱1,502.505

Partner 3 16.67% ₱1,502.505

Partner 4 16.67% ₱1,502.505

Partner 5 16.67% ₱1,502.505

Partner 6 16.67% ₱1,502.505

Total Shares 100% ₱9,015.03

Projected Financial Statements

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 A. Projected Income Statement
PROJECTED INCOME STATEMENT

Year 1 Year 2 Year 3

Sales 106,800.00 129,228.00 156,365.88

Less: Sales returns and allowances 7,476.00 7,753.68 7,818.29

Gross Sales 99,324.00 121,474.32 148,547.59

Less: Gross of Sales

● Direct Materials

Beginning Inventory - 46.88 54.14

Raw Materials Purchases 468.75 541.41 625.32

Allowance for damage 23.44 21.66 18.76

Total Goods available for sale 492.19 609.94 698.22

Less: Ending Inventory 46.88 54.14 62.53

Direct Materials 445.31 555.80 635.69

● Direct Labor 46,500.00 56,265.00 68,080.65

● Manufacturing Overhead 1,211.55 1,332.13 1,464.73

Cost of Goods Sold 48,156.86 58,152.92 70,181.08

Gross Profit 51,167.14 63,321.40 78,366.51

Less: Selling, General & Admin. Expenses

Water 2,400.00 2,520.00 2,646.00

Electricity 2,400.00 2,520.00 2,646.00

Transportation expenses 6,000.00 6,300.00 6,615.00

Miscellaneous expense 6,000.00 6,300.00 6,615.00

Amortization of pre-oprtg. exp. 400.00 400.00 400.00

Depreciation Expense 600.00 600.00 600.00

Total Operating Expense 17,800.00 18,640.00 19,522.00

Net Income 33,367.14 44,681.40 58,844.51

B. Projected Balance Sheet

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 PROJECTED BALANCE SHEET
YEAR
Pre 1 2 3
Operating
ASSETS
Cash 4,015.03 28,348.58 60,639.95 102,841.48
Tools and Equipment 3,000.00 2,400.00 1,800.00 1,200.00
Pre-Operating Cost 2,000.00 1,600.00 1,200.00 800.00
Add: Ending Inventory 46.88 54.14 62.53
Less: Allowance for damage 23.44 45.09 63.85
TOTAL ASSETS 9,015.03 32,372.02 63,649.00 104,840.16

PARTNER'S EQUITY
Total Capital 9,015.03 9,015.03 32,372.02 63,649.00
Profit 33,367.14 44,681.40 58,844.51
Less: Drawing 10,010.14 13,404.42 17,653.35
TOTAL PARTNER'S CAPITAL 9,015.03 32,372.02 63,649.00 104,840.16

TOTAL LIABILITIES & 9,015.03 32,372.02 63,649,00 104,840.16

PARTNER'S CAPITAL

C. Projected Cash Flows

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 YEAR
Pre
Operating 1 2 3
Cash Receipts
Gross sales - 99,324.00 121,474.32 148,547.59
Investment (Project Cost) 9,015.03
Total Cash Receipts 9,015.03 99,324.00 121,474.32 148,547.59

Cash Disbursement
Pre-Operating 2,000.00
Tools and Equipment 3,000.00
Cost of Sales - 48,180.30 58,138.53 70,170.71
Operating Expenses - 16,800.00 17,640.00 18,522.00
Total Disbursement 5,000.00 64,980.30 75,778.53 88,629.71

Total Cash Inflow/Outflow 4,015.03 34,343.70 45,695.79 59,854.88

Less: Drawing 10,010.14 13,404.42 17,653.35

CASH BALANCE 4,015.03 24,33.56 32,291.37 42,201.52
Cash Balance, Beginning 4,015.03 28,348.58 60,639.95
Cash Balance, Ending 4,015.03 28,348.58 60,639.95 102,841.48

Profitability Ratios

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 A. Return on Investment (ROI)

RATE OF RETURN OF INVESTMENT

ROI = Average Net Profile(3 years)

Total Project Cost

= _______138,893.04 / 3___ ____

9,015.03

45,631.01 _
9,015.03

= 5.06

The rate of return of investment is 50.6%

B. Payback Period

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PAYBACK PERIOD FOR THE PROJECT COST

Year Cost of Investment Net Cash Inflow Balance Cash Payback

to be Recovered Period

1 9,015 34,3344 (25,329) 1 Year

2 -

3 -

The Payback Period for the project is less than 1 year

C. Break-Even Point

Break-Even Fixed Cost 17,800.00

Point SP-CV 38.31

465 annual BEP in units

99 monthly BEP in units

Appendices

Definition of Terms

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Artisan

An artisan is a skilled worker who creates handmade goods and products using traditional

techniques and tools. The type of artisan who works in RECOTAZO is one who specializes in

the art of knotting and weaving various types of cords and strings into intricate patterns and

designs.

Bicolano

It is the name of a group of people who live in the Bicol Region, Philippines, specifically the

name of the root of the proponents and the other person involved in RECOTAZO.

Macrame

The practice of creating attractive objects by knotting thread or string in patterns. It is the

primary technique that will be used by the artisan of the RECOTAZO.

Knots

A knot is formed when portions of one or more ropes, cords, or other flexible materials are

interlaced. Knots are frequently used to connect objects together.

Business Name Registration

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Barangay Business Permit

Certificate of Recommendation for the Business Plan for Implementation

Partnership Agreement

Curriculum Vitae

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REFERENCES

Baclig, C. E. (2022, August 9). P100,000 'trash' bag and the unseen climate costs of Fashion.

INQUIRER.net. Retrieved March 1, 2023, from

https://newsinfo.inquirer.net/1643474/for-posting-edited-p100000-trash-bag-and-the-

unseen-climate-costs-of-fashion#:~:text=Unfortunately%2C%20data%20showed%20that

%20across,longer%20fit%20(60%20percent).

Brown, R. (2021, January 8). The environmental crisis caused by textile waste. rr-lgo-1. Retrieved

March 1, 2023, from https://www.roadrunnerwm.com/blog/textile-waste-environmental-

crisis#:~:text=And%20when%20consumers%20throw%20away,the%20groundwater

%20and%20our%20soil.

https://sustainableninja.com/fashion-industry-waste-statistics/

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