Brief Description of the Project Business Idea: Housewives love plastic bags and shoppers find it indispensable because

plastic bags are light enough for anyone to carry it easily. There is more harm than benefit by the use of plastics bags. Plastic is not biodegradable and releases harmful dioxins into the air. Besides, people who work in plastic industries are at a greater risk for cancer and other diseases. Colored plastic bags contain harmful toxic metals like chromium and copper which can cause allergies. ow everyone has come to reali!e that plastic bags have many disadvantages that have adversely affected the environment. " think #ute can be a most viable option to the light plastic bags. $ute being bio%degradable it does not pollute the air. &isposal of #ute will be no problem as they rot easily and turn to soil. There are two manufacturers of #ute bags in the market till date. They are covering '(() market share in the premium segment but they have a very limited distribution. Consumers have to go to department stores and Thamel area to get those bags. The bags they are producing are less attractive, heavier and expensive. The price they have charged doesn*t go with the product +uality. " conducted a survey with '(( people in the department stores and local markets to know the view regarding the +uality and availability of #ute bags. ,rom that survey " found that people are very much aware about their health and they want to use #ute bag which is environment friendly but the bags are expensive, less attractive and are not available in the local market. Opportunity: -s per the market survey ma#ority of people are ready to use #ute bags instead of plastic bags. They said that the #ute bags which are in the market are heavier, expensive, not well designed and limited distribution. They also said that if they get the #ute bags which are reasonable, well designed, environment friendly and don*t have any harmful affects on human health they will be happily using such bags for their daily use. .o " want to start this business. " want to manufacture #ute bags which have good finishing, reasonable price, lightness, attractive design and wide distribution. Chapter1. Marketing Plan '. '. Product The product we are dealing with is #ute bag. $ute bag is the best alternative for the plastic bag. "ts si!e will be '/ by 0 inches. Their will be two colours which will be normal #ute color and other one will be in black. Both color bags will be embroided with different color thread and with !ipper. "t is durable, can be reuse and carry up to '1 kilograms. "t can reuse even after people reach home, for their future shopping and packing needs. '. 2. 3arket simulation The target segment of this business is segment - which is upper class. Till now all the #ute bags are prices similar and have similar +uality. There are two ma#or competitors engaged in this business. The competitors are covering 4() and 5() market share respectively. " estimate to cover 5( ) market share by the end of 6 rd year. This business targets the upper class segment because they are the ma#or shoppers and are willing to pay premium price for the natural and environment friendly product. The average cost of the product is 7s.4( and the market price per bag is 7s.81 for the existing competitors. The product demand is highly sensitive to price, promotion and place9 % one unit change in price effects sales by '(( units, when 7s.'(((( is spend on promotion, it has '2(( units of effect on sales units. .imilarly, spending 7s. 1((( on Place or distribution will have 1(( units* effect on sales units.

Business Plan for Jute Bag

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'.6. &emand forecasting9 "n 2((' the demand for #ute bag was 2/(((."t*s demand has been increasing due to increase in population and urbani!ation by 2.1) and 5.1) respectively. Hence the effect will be increased by 1). Till 2((0 the demand for #ute bag will be around 5((((. '. 5. 3arker share9 The firm estimates to capture 5( ) of the total market share within three years. The total bags sold in the year 2((/ were 6/(48: we have forecasted the units sold will be around 5(((( in 2((0. .o the total demand will be 6,666 bags per month. ;ith 5( ) market share we plan to capture /( ) of our target in the first year. .o we need to sell '4((( bags per year which is '666 bags per month and 48 bags per day. '.1. 3arketing < Promotion "n order to market the product, initially campaigning program will be conducted to create the awareness to the customers about its impact on environment and human health. Promoting the product is a must for selling the product because as per the mini research, most of the consumers are unaware of the product. But upon having learned the benefits, most of them are willing to buy. 3y promotion strategy will be basically word of mouth =uality%>value%>satisfaction%>word of mouth '. 4. 3arket expansion9 3arket expansion will be done with the aid of considerable advertising and promotion activities. ;e will be advertising our product in T?, radio and newspaper and make consumers aware of the usage of environment friendly #ute bag in their daily life. ". 8. 3ain Customers The main target customers of this business are upper class customers, shopping centers and department stores as they have the purchasing power and also are most willing to switch over from plastic shopping bags for #ute bags which are durable and environment friendly. './. &istribution &istribution is the ma#or concern of our business. -n outlet will be opened at @upodole and it will also be the distribution centre for @athmandu, Aalitput and Bhaktapur. ". 0. .elling Price Bur manufacturing cost is 7s.4( per bag and our selling price is 7s.8(. "n market it will be sold at 7s. 81 but we will be charging 7s 8(. Bur unit cost of production cost is 7s 50 and after adding other administrative cost and marketing cost it will become around 7s 4(. ;e will not be charging the market price as our competitors are charging because we will be following low price strategy as a beginner. Bur margin will be '5.2/ ). '. '(. 3arketing Cxpenses The company will have wide promotional activities because at first it is necessary to make consumers aware about the value about the product and its availability. Brochures, hoarding board, posters and flex will be made. "t will be an informative ad targeting the intended market. ;e will be advertising our product in T?, radio and newspaper and make consumers aware of the usage of environment friendly #ute bag in their daily life. The total marketing expenses will be around to 7s. ''444 per month in the initial phase. - total of 7s.'5(((( will have to be expensed in order to gain targeted sales. '.''. Aocation The business will be located at .atdobato, Aalitpur. The location is chosen because: ear at the markets9 Aalitpur, @athmandu and Bhaktapur.

Business Plan for Jute Bag

Cost of rent is lower ear the transportation hub Chapter 2. Operation Plan

The production process of bag will be using automatic machinery and e+uipment which re+uires minimum human effort and supervision. The whole production process is shown in the diagram below9%

&rying of #ute

Cutting and sewing the bags

Colouring the bags

&esigning and Cmbroidry

2. '. ,ixed Capital 7e+uirement 3achineries and e+uipments, vehicle, other tools and furniture, office e+uipments are our initial investment. The total investment in the fixed assets will be 7s. '1(((( 2. 2. Aife of ,ixed Capital 3achineries and e+uipments will be depreciated at the rate of 8), vehicle will be depreciated at the rate of /). Bther tools < furniture will be depreciated at the rate of 8) and office e+uipments will be depreciated at the rate of 8). These are the ongoing rate of depreciation for similar kinds of assets. The total depre5ciation in a year will be 7s. ''1((. 2. 6. 7epair < 3aintenance Because of the simplicity in handling and using the product it*ll not re+uire any repair work at all. However, if users face any kind of problems, the service will be provided by the owner herself. 2. 5. 7aw 3aterials 7e+uired9 The raw material in this business is the critical factor. "t constitutes total of 1() of selling price. The raw material will be procured from Biratnagar #ute mill. Bther raw materials re+uired like threads and colors are procured from the local market. 2. 1. -dministrative Cxpenses The total rent for land and building per month will be 7s.1(((. Bur owner and manager will be the same person. The salary for the manager will be 7s. 1(((. -n electricity and water cost per month will be 7s./((. total administration cost will be 7s 4((( per month. 2.4. Cost of Aabor9 There will be 6 staffs at the factory for operation: each will be for cutting, stitching and embroidery. There will be 2 staffs one for supervision and other for distribution .The cost of five labours will be 7s 0(((( annually. " will myself look after other activities of the business like 3arketing, ,inance and -ccounting ,H73 and Bperational management in the beginning five years of the operation. -ll the administrative work will also be handled by myself and will be paid a monthly salary of 7s.1, (((. Chapter . Organi!ation " Manage#ent Plan 6. '. ,orm of Business The business will be registered under the name DBaliyo 7amro $ute BagE as a sole proprietorship and owned by 3s. 7an#u .hakya.

Business Plan for Jute Bag

6. 2. Brgani!ation .tructure

BwnerG3anager

,inance and -ccounting HmyselfI

Production Personnel HmyselfI

H73 and 3arketing HmyselfI ,our ;orkers Hto be hiredI

,actory .upervisor Hto be hiredI

The business will be managed by 3s 7an#u .hakya who will act as the Feneral 3anager. "*ll look after ,inance, H73, 3arketing, production as well. " will also hire a factory supervisor to assist me in the production process and act as production in charge in my absence. The supervisor will also be responsible to assign duties to three semi%skilled workers and distributor in the factory. The goods will be brought from the factory to its retail outlets using a mini tata. 6. 6. Business Cxperience < =ualifications of the Cntrepreneur 3s. 7an#u .hakya, an entrepreneur, is an active member of Handicraft -ssociation of epal. .he has taken training in cotton bags from $apan and has participated in national and international seminars. .he has done her 3B- from .-"3. .he has also worked and participated in her family handicraft business. .he is also well known social activist. ;ith a strong desire to establish her own business, she has chosen this field for her career as an entrepreneur. 6. 5. Pre%operating -ctivities < Cxpenses The re+uired pre%operating activities along with their details and cost involved are shown in the excel file. 6. 1. Bffice C+uipment The details of the e+uipments and tools re+uired for the office setup is going to be financed by the owner herself but the vehicle is going to be financed by the bank. The details of the office setup cost is shown in the excel file. Chapter I$. %inancial Plan 5. '. ,inancial Plan < Aoan 7e+uirement The total initial capital re+uired for the pro#ect is 7s.5/2, 245. The investment in the fixed assets will be 7s. '1(((( in total. The working capital will constitute the maximum share of capital i.e 7s 622845. The owner has planned to manage the funding by taking a loan of 7s. '((((( from bank as a long term loan and 7s '((((( as short term loan from her own sister and remaining 2/2245 will be financed by herself. " have planned to pay my sister*s loan within the first year of operation so " don*t have to pay any interest for that. ,or Bank loan of 7s. '((((( " had to pay interest of '() and " plan to pay back the loan e+ually in five installments, 2(((( in each year. 5. 2. BCP < 7B" "nterpretation The average BCP for five years is 86). Therefore " can achieve my total variable cost as soon a " can sell 86 ) of her production units. ;ith the increasing awareness about the environment and low price of the product " think the BCP of 86) can be easily achieved. ;e can also see that due to the economies of

Business Plan for Jute Bag

scale and efficient use of capacity in the coming years the BCP has decreased with the increasing in capacity utili!ation. 7eturn on investment is 2' ) on average which is +uite good enough, as the maximum return from the market is only '5 ) Hfrom finance CompaniesI. .o return of 2' ) is very good. 7BC is also satisfactory which 26 ) is. .o the investors will be happy enough. The 7BC and 7B" is reasonable and it is less likely that it will invite big players in the market. 7aw material constitutes 1( ) of the cost of selling price. This is the variable that has highest proportionate share in the cost of the product. &ue to fre+uent bandhs and strikes in the #ute mill company the regular supply is not guaranteed. .o in such situation the cost of raw material will be very high. .o " have taken 7aw material as the most sensitive variable in my product. ;hen the cast of raw material is 5() of the selling price, the "77 is '21 ) and the probability of cost being 5() is only 2(). The probability of cost being 1( ) is 4() and "77 for this situation is 4') and when the cost of raw material is 4() and probability is 2(), "77 is only 2(). 5.6 Payback Period9 year ' "nvestment balance Cash ,low .urplus
482264 -212,264

Jear 2 405,12/ ''/,/((

Jear 6 181,82/ '8/,5((

Jear 5 608,62/ '/(,5((

Jear 1 2'4,02/ '/(,5((

Year 6 36,528 180,400 143,872

"t will take total of 1 years and 86 days to recover the initial investment. The total risk of having the "77 of the pro#ect less than the cost of capital which is between 1.1 ).and /.'). This value is less than '()so we can conclude that the business has lower risk. Chapter &. 'ntrepreneurial (trategy ;e will follow focused differentiation leadership strategy in order to retain the market leadership in the years to come. Though the business currently is small, it aims to create dominance in the market. The following activities will be carried in order to achieve this target9 T=39 T=3 is an effective strategy for sustainable competitive advantage. ;e will adopt T=3 program for high performance and better +uality. =uality can work as a strategy for sustainable competitive advantage because it is not easy to implement and everyone cannot master it. $"T9 ;e will follow $"T approach because we believe that $"T will help us to achieve strategic competitive advantage over our competitors. 7etain human resource9 Human resource is the greatest asset of any company. "t is the only resource which cannot be copied and has the greatest value among other resources. .o to retain the skilled and trained employees is the greatest success of any company which helps to achieve competitive advantage.

Business Plan for Jute Bag