Republic of the Philippines

LAGUNA STATE POLYTECHNIC UNIVERSITY

San Pablo City Campus
Del Remedio, San Pablo City

FRANZCEL’S GENERAL MERCHANDISE

BUSINESS PLAN

FRANZCEL’S GENERAL MERCHANDISE is a merchandise whose principal business is to

manufacture ready to serve and help people, belonging to the lower and lower –middle-income
category. The purpose of this plan is to outline the enterprise goals for the first two years and
present the detailed activities required accomplishing the objectives.

I. OBJECTIVES

The proponent, Mr. Frannie M. Rodil & Ms. Maricel P. Mercadejas aims to generate a
return on investment (ROI) of more than 20 percent at the end of the first year of the business
operation.

II. SITUATIONAL ANALYSIS

An assessment of his internal and external environment shows the following relevant
factors to his business plan.

Strengths
Has experience in selling.
Good location.

Weaknesses
Limited capital.
Must extend credit to be able to sell.

Opportunities
Improve economic situation.
Increase population in the target market area.

Threats:
Competition from low-cost, important products especially those coming from China.
 FRANZCEL’S GENERAL MERCHANDISE

MARKETING PLAN

I.PROJECTED SALES

Monthly Annual Year 1 Year 2

Projected sales volume 250 3,000 3,600 5,400

(Pieces)

Selling price/unit 100 100 100 100

(Pesos)

Total sale volume 25,000 300,000 360,000 54,000

(Pesos)

During the initial year, the company projects a monthly sale of 250 pieces. This is
expected to increase by 50 percent during the second year. Moreover, selling price will also be
raised by 20 percent on the second year.

II. MARKETING STRATEGY

Target Buyers

The products will be sold to the people, belonging to the lower and lower-middle-income
category.

Products

All kinds of product.

Price

All products will be sold at P100 each. A 15-day credit may be extend to buyers.

Channels of Distribution

The proponent will sell through small grocery in the town of Pagbilao.

Promotion

Word- of- month will promote the reasonable quality and price of products. The label
FRANZCEL’S will attached to each product.
 FRANZCEL’S GENERAL MERCHANDISE

PRODUCTION

I.PRODUCTION SCHEDULE

Monthly Year1 Year2

Planned sales volume 250 3,600 5,400

Add: Inventory end

(20% of sales volume) 50 720 900

Total volume available 300 4,320 5,400

For sale

Less: Inventory beginning

0 720

Total production volume 300 4,320 4,680

II. ESTIMATED COST OF PRODUCTION

It is estimated that each product will cost P79.16. The cost has been broken down as
follows:

Item Volume Unit cost Total cost

Direct Materials
Canned goods 1.22 P 35.00 P 50.54
Label(pieces) 1.00 1.50 1.50
Total direct materials P 52.04

Direct Labor

Saleslady P 6.00 P 6.00

Boy 1.00 1.00
Security guard 1.25 1.25

Total direct labor P 8.25

Overhead
Indirect labor P 7.58 P 7.58
Depreciation 1.00 1.00
Electricity 0.61 0.61
Indirect materials 1.25 1.25
Repairs and maintenance 0.11 0.11
Transportation 0.20 0.20
Rentals 8.00 8.00

Total overhead P 18.87

Total Cost of Production P 79.16

Thus, the projected production cost on a yearly basis with a provision for a 20 percent increase
on the total volume of production, are as follows:

Item Unit cost Monthly Year 1 Year2

Direct
Materials 52.04 16,205.10 200,273.40 320,035.20

Direct
Labor 8.25 2,200.00 38,000.00 50,456.30

Overhead
Cost 18.87 6,755.10 70,061.20 120,555.50

Total 79.16 25,160.70 308,334.60 491,047

III. ESTIMATED FIXED INVESTMENT

The following machinery and equipment will be purchased.

Item Number Unit cost Total cost

Basket 5 150.00 750

Stroller 2 500.00 1000

Scissors 2 50.00 100

Computer 2 100,000 200,000

Total 201,850

IV. LOCATION
 The proponent will rent a small vacant shop near their residence for the production
operation.

FRANZCEL’S GENERAL MERCHANDISE

ORGANIZATIONAL PLAN

I. ORGANIZATIONAL STRUCTURES

The proponent, Mr.Rodil and Ms. Mercadejas will invest operate and manage the
business with the help of their family.

Owner and Manager: Frannie M. Rodil- Bukal, Pagbilao, Quezon

Maricel P. Mercadejas- Intertown Homes, Pagbilao, Quezon
Clerk : Jasmin Jabrica
Saleslady : Louwanna M.Rodil
Maricar Portea
Boy : Mark Apostol
Rico Mataac
Security Guard : Jojo Pujeda

II. MANPOWER REQUIREMENT

The business will require the following workers.

Skills Number Salary

Saleslady 2 350.00

Boy 2 300.00

Security guard 1 400.00

It is a partnership business, the owner Mr. Rodil and Ms. Mercadejas will look to the
worker as well as budgeting and collecting while their family will help in supervising and
purchasing the products.
 FRANZCEL’S GENERAL MERCHANDISE

FINANCIAL PLAN

I. TOTAL PROJECT COST

Fixed Capital 201,850

Working Capital

Inventories 2,000
Receivables 14,000
Minimum Cash Balance 5,000

21,000
Pre-operating 2,000

Total Project Cost 224,850

II.SOURCE OF CAPITAL

Amount Percent

Loan P 20,000 34
Capital P 50,000 66

Mr. Rodil and Ms. Mercadejas will invest P50, 000 into the business and borrow P20,000
from a bank to be paid within one year at 15% interest.

I. PROJECT PROFIT AND LOSS STATEMENT

Monthly Year1 Year2

Projected Sales 25,000 360,000 540,000

Less: cost of sales
Cost of production 25,160 308,334 401,047
Less Inventory
End Cost 2,474 29,682 48,975

Add: Inventory
Beginning cost 0 0 32,650
Total cost of sales P24, 735 P296, 820 P489, 000
Gross Profit P5, 265 P63, 180 P104, 247
Less: Administrative and selling expenses:

Salaries P3, 000 P36,000 P39,000

Transportation 200 3,600 3,800
Representation 200 2,400 2,600

Next Profit before Investment

And Tax P1,765 P21,180 P55,047

Less: Interest 349 4,192 0
Net profit before tax P1,416 P16,988 P55,047

I. RETURN ON INVESTMENT

PAYBACK PERIOD= Investment Depreciation+ Income=5

Mr. Rodil and Ms. Mercadejas expects to earn P 0.33 per peso investment and recover
their investment in four years.