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BUSINESS PLAN
XXXXXXX / 027404 / 23
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Submitted by: Phil4 Consulting Sept XXXXXX
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XXXXXXX
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Business Plan
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Private and Confidential
Address 1 Address 2
For the attention of: of: XXXXXXX
This Business Plan was completed on 17 September 2009. 2009 No updates have been made since the report was finalised on the aforementioned date. Contained in the report are certain forecasts and projections based on key assumptions. Where applicable these assumptions have been stated and justified. However, actual results are likely to differ from those expected due to the implicit randomness of events and circumstances. We accept no responsibility for any differences between realised and forecasted information.
Confidentiality Agreement
The undersigned reader acknowledges that the information provided by _______________ in this business plan is
confidential; therefore, reader agrees not to disclose it without the express written permission of _______________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in
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nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _______________. Upon request, this document is to be immediately returned to _______________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a business plan. It does not imply an offering of securities.
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TABLE OF CONTENTS
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Business Plan
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TABLE OF CONTENTS INTRODUCTION AND BACKGROUND ................................................ 5 EXECUTIVE SUMMARY ........................................................................ 6
Vision ........................................................................................................................................ 8 Mission ..................................................................................................................................... 8 Objectives ................................................................................................................................ 8 Keys to Success ...................................................................................................................... 9 Core Values ............................................................................................................................ 10
GENERAL INFORMATION .................................................................. 11

Owners / Members ................................................................................................................ 13 Directors / Management Team ............................................................................................. 13
Management Levels and Organisation Chart ..................................................................... 14
COMPANY SUMMARY ........................................................................ 15

Social Indicators: Scorecard ............................................................................................... 17
PROPOSED BUSINESS EXPANSION ................................................ 18

Background............................................................................................................................ 18 Proposed Changes from the Current Situation.................................................................. 18
Company Structure and Operations ................................................................................... 19
Timeline of Implementation .................................................................................................. 23
Employment ........................................................................................................................... 25
PRODUCTS .......................................................................................... 28
Product Description .............................................................................................................. 28
Premises................................................................................................................................. 28

Promotion............................................................................................................................... 30
Price ........................................................................................................................................ 29
MARKET ANALYSIS SUMMARY ........................................................ 31
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Business Plan
MARKET SEGMENTATION ................................................................. 32
Products and Services: Advantages and Uniqueness ..................................................... 40 Key Supplier Information - Current ..................................................................................... 40 Competitors - Current ........................................................................................................... 40 SWOT Analysis ...................................................................................................................... 41 Marketing Strategy/Plan ....................................................................................................... 43 Revenue Budget .................................................................................................................... 43 Customer References - Current ........................................................................................... 44
FINANCIAL ANALYSIS & PROJECTIONS ......................................... 45

Assumptions, Methods and References ............................................................................. 45
Trend Analysis ....................................................................................................................... 47
Solvency ................................................................................................................................. 52
Cash Flow Analysis ............................................................................................................... 53 Breakeven Analysis .............................................................................................................. 54
APPENDICES ....................................................................................... 56

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XXXXXXX Introduction and Background
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Business Plan for the Proposed Expansion
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Planned expansion of a XXXXXXXpaper and other XXXXXXXs products manufacturer in XXXXXXX.
Mr. XXXXXXX approached Phil4 to assist him with a business plan to describe the potential expansion of his current business model, XXXXXXX. The business will be operational in XXXXXXX, in the XXXXX. As the name implies, XXXXXXX is a manufacturer of XXXXXXXpaper and other XXXXXXX related products. Although the business is located in XXXXXXX, due to the proposed expansion of capacity it will be able to supply to large parts of central South Africa.
There is no set transaction date, since it is the expansion of the current business into more business units that is being proposed. A tentative timeline for implementation will be discussed in the report, but this is totally dependent on the timing of the financial investment.
However, in order to accomplish this goal the business will have to increase capacity. Initial machinery and equipment has already been purchased by Mr. XXXXXXX, but this is not sufficient to produce the quantities desired by the market. This plan outlines the purchase of machinery and other equipment to the value of R 985 000 and it is envisioned that it will be financed by means of a loan. Once this financing has been received the additional machinery that it will help to purchased will be put to use to drastically improve turnover as well as allowing the business to assure their customers of a more regular supply. This desire for expansion has necessitated the following report and business plan. This has formed the core sections of this plan. Supplementary information in the form of supporting documentation is either available in the appendices or on request from Mr. XXXXXXX, the owner of XXXXXXX. The reader is advised to refer to appendices to this plan as well.
The additional business units, as proposed by the expansion, have not yet been (fully) created and as such financial statements are only available for the business as it currently operates.
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XXXXXXX Executive Summary
As mentioned, this business opportunity is being evaluated to aid the financing process. XXXXXXX is a newly formed Close Corporation (CC). It was started in October XXXXXXX, due to the entrepreneurial spirit and vigour of the original investor and owner, Mr. XXXXXXX. He was offered the opportunity to purchase the machinery necessary to start a XXXXXXX manufacturing concern. The machinery was purchased for below it market value, for a price of R 300 000.
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XXXXXXX was started in October XXXXXXX with the bargain purchase of certain machinery.
Mr. XXXXXXX does currently have other business interests, but he would nevertheless like XXXXXXX to be a self-sustaining manufacturer. However, the proposed expansion of the business will entail the following general categories of investment (to be expanded upon in further sections):
Proposed Expansion
Category
With this, the business managed to begin operating by buying large XXXXXXX of XXXXXXX papers in Gauteng. These were then processed into single ply XXXXXXX of 500 sheets each. These are packaged and then sold.
Investment
Plant & Equipment Working Capital TOTAL
R 900 000 R 85 000
This plan outlines the intentions of the business to significantly expand operations due to the large degree of interest shown.
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As mentioned, the business opened in October XXXXXXX. However, XXXXXXX has not been operating in XXXXXXX. The reason for this forms the basis for this business plan and the application for finance. When the original purchase of machinery was made in XXXXXXX the entrepreneur, Mr. XXXXXXX XXXXXXX made use of a large portion of his lifes savings to purchase the machinery. However, raw material could only be purchased in very large quantities. Even though all products were eventually sold, the mismatch between the size of investment required for raw materials and the fact that all business was done on cash created cash flow constraints that will be discussed in further sections of this plan. To his credit though, Mr. XXXXXXX operated on a strictly cash basis and never incurred debt against the business until operations ceased in December XXXXXXX. However, there is a huge demand for the product that XXXXXXX produces. Mr. XXXXXXX however, wants to remain operating on a cash basis, and for this reason the proposed expansion of XXXXXXX is not only one of physical assets but also of working capital to fund the purchase of initial raw material.
R 985 000 (Incl VAT)
After the expansion of the business, XXXXXXX will be one of the few large manufacturers in the XXXXX, an area that is in severe need of social and economic upliftment. Due to the central location of XXXXXXX and the developed infrastructure system distribution to all areas of South Africa can take place ease. In fact the business has already in XXXXXXX managed to source large customers for its products. Testimonials and contact details to this effect can be found in the appendices to this document.
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Current capacity is to produce 80 000 XXXXXXX per month. The expected capacity after the expansion will be closer to 1 000 000 rolls per month.

XXXXXXX
With current machinery the business has the capacity to product roughly 80 000 XXXXXXX per month. However, after the proposed expansion the business aims to produce 400 000 to 1 million XXXXXXX per month. This is only accounting for the main product, XXXXXXX.
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The business will distribute products throughout the greater part of South Africa. A vehicle will be purchased to ensure that wholesalers from Upington to Bethlehem (and potentially beyond) can be reached. As mentioned earlier, XXXXXXX will require an investment of of R 985 000 for the proposed expansion. XXXXXXXs contribution towards this financing arrangement is as follows: All assets will be contributed towards the restructuring. These include the current machinery. The owner is currently leasing the building at which XXXXXXX will operate. Current employees and management personnel will be allocated to the expansion. Financial Projections have been prepared and the following graph details the expected results: According to market research and analysis, as well as interest received from past and projected future clients, there is a healthy demand for these products. The main factor sustaining this demand for product is the very competitive pricing structure that XXXXXXX will implement. This has resulted in purchases from as far afield as Lesotho. In addition to the healthy demand, Mr. XXXXXXX is in the process of applying for government tenders to supply XXXXXXX and XXXXXXX products to the Department of Correctional Services in both the XXXXXXXand the XXXXX. The potential for applying for further contracts is available from the Department of Health as well. The key to being able to fulfil these intended contractual agreements is two-fold: Superior quality product. Competitive pricing. XXXXXXX will be owned and managed by the XXXXXXX, brothers, namely XXXXXXX and XXXXXXX. Currently each has a 50% membership share in the CC, but due to the higher degree of investment by XXXXXXX the registration will be changed to a 60% membership share in favour of XXXXXXX XXXXXXX, with the balance to XXXXXXX. XXXXXXX will takes responsibility for the general management of the business and XXXXXXX will take responsibility for the marketing and sales.
Management team consists of two brothers.
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One of the featured attractions of the business will be the level of jobcreation. When operating during October to December XXXXXXX the business created employment for 9 people. However, the proposed expansion will necessitate an increase in staff levels to approximately 22 individuals.
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XXXXXXX
Objectives Vision
The vision of XXXXXXX is as follows:
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To produce high quality XXXXXXX products, while remaining competitive within the industry. To increase the capacity of the business to be able to utilise economies of scale and reach production levels of 400 000 to 1 million products per month. The business strategy will revolve around the need to provide quality XXXXXXX products to wholesalers and other distributors as well as to the various institutions and government departments that need them, in the process fully satisfying their requirements. This shall be undertaken through purchasing the required equipment and the adequate training of staff thereby creating a professional team dedicated to providing and catering to the customers needs.
Mission
In summary the business intends to attain the following objectives: Continuously provide high quality XXXXXXX products on time and within budget. Develop a stable and regular customer base. Ensure economical use of resources and application of economies of scale for production efficiencies. Contribute positively to the local community and environment. Establish a market presence that assures short-term and long-term profitability, growth and market share, which will ultimately convert to business success.
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To create employment opportunities for more than 23 people in the XXXXXXX area. To be the number one manufacturer and supplier of the following paper products within the XXXXXXXand XXXXX regions: XXXXXXX Serviettes Garage Paper Towels XXXXXXX Kitchen Roller Towels Wipes To obtain the required financing to be able to purchase additional machinery needed to increase capacity exponentially. To establish a distribution network servicing high volume customers within the XXXXX, XXXXX and even in Lesotho, where considerable interest has already been received. To successfully obtain and fulfill tenders to government departments, thereby ensuring a stable income stream. To develop the skills of people so that they can reach their full potential and uplift their life standards.
XXXXXXX intends to ensure that the business marketing campaign increases knowledge of its products to the various market segments that will be targeted as well as accessing market stability by supplying products on tender. This will be particularly so with organizations increasingly looking at obtaining quality products at budget prices as the business strives to increase profitability.
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XXXXXXX
Keys to Success
The mission of XXXXXXX will be achieved by setting the following objectives for the medium- to long-term: Eliminating skewed participation and inequity in the manufacturing sector within the XXXXXXXand particularly the XXXXXXX region. Maximizing growth, empowerment and income in the manufacturing sector. Ensuring efficient and effective governance. Ensuring knowledge and information management. To provide reliable, cost effective products whilst maintaining high degree of customer satisfaction. 1.
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The following factors will be key to the success and the survival of the business:
Naturally, the fundamental lasting legacy that XXXXXXX would like to fulfill is that of the promotion of the principles of Batho Pele: Consultation. Setting Service Standards, Increasing Access to Services. Ensuring Courtesy. Providing Information. Openness and Transparency. Redress. Value for Money. 2.
3.
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Timeous response to customers requests The business cannot afford to delay delivery to its clients for whatever reason, as this will have a negative bearing on its image and reputation, as well as impacting future business. Hence the business needs to continually communicate with the client, so as to ensure that products are delivered on time and according to the customers specifications. In addition, machinery and capital should be of the highest quality and perfectly maintained to ensure no delays due to mechanical failure. This will go a long way towards instilling a sense of trust in XXXXXXXs ability to establish long-term relationships with its clients. Excellence in fulfilling the promise XXXXXXX intends to distribute and provide products of uncompromised quality to its clients and excellent service. This is so as to meet their needs and standards. The owner acknowledges the fact that the business success will be based on timeous response to customer orders and hence intends to set high standards and work procedures. Networking As the majority of clients will be distributors, prisons and hospitals there is a need to effectively network with the various decisionmakers and procurement agents to ensure a ready market.
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XXXXXXX
The following is a list of positive features already in place within the business and management team:
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Reliability. Variety / diversification. Good customer relations and marketing skills. Experienced and qualified management team and personnel. BEE credentials. Industry experience. There are currently numerous clients who have requested the services offered by XXXXXXX. Furthermore, the current inactivity of the business should be seen as management experience that has been obtained due to a lack of working capital and the desire to operate on a cash-basis.
Core Values
The following list of core values reflects what is truly important to XXXXXXX. These are not values that change from time to time, situation to situation or person to person, but rather they are the underpinning of XXXXXXXs business culture. These core values are the primary reasons for the envisioned success of the business and they transcend XXXXXXXs size and growth rate. By maintaining these core values, regardless of how large the business becomes, what makes XXXXXXX special can always be preserved. These core values are the soul of XXXXXXX. Offering products of the highest possible standards. Exceeding customer expectations and desires. Creating wealth through profits and growth. Caring for the communities and the environment. Creating ongoing win-win partnerships with primary clients.
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XXXXXXX General Information
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General business information.
For documentation relating to FICA Requirements please refer to the appendices of this report.
For other FICA documentation please refer to the appendices of this plan.
Category
Name
Contact Person(s)
XXXXXXX
Primary Management/Ownership Contact Business Address
XXXXXXX
4 Faraday Street Ashburnham XXXXXXX XXXXX
Postal Address 13 Peach Road Moghul Park XXXXXXX XXXXX Tel: Business Telephone Number(s) and website (if applicable) XXXXXXX 8410 670 OR XXXXXXX 8410 942 XXXXXXX Fax: Cell: XXXXXXX 8410 670 082 543 4883 E-mail Address ncXXXXXXX@mighty.co.za Current Banking Institution Nedbank XXXXXXX Chapel Street
Contact Person: Riana
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XXXXXXX
Category
Website
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Contact Person(s)
Not Applicable XXXXXXX CK Registration Number XXXXXXX / 027404 / 23 Mr. XXXXXXXX Managing Member 082 543 4883 Names of Members M.A. XXXXXXX Currently: 50% Proposed: 60% XXXXXXX XXXXXXX Currently: 50% Proposed: 40% Organisation Chart Suppliers Potential Suppliers Refer to appropriate sections in text Gardenia XXXXXXX: Heidelberg XXXXXXX Krugersdorp Past Customers (Refer to Appendices) XXXXXXXXX (Swanvest One) 072 37222 04 XXXXXXXXX (Zees Cleaning Service) XXXXXX (Hypersave Supermarket) 082 254 2253 053 8711 526
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Owners / Members
The business has 2 members and the current membership arrangement is as follows:
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Currently there is a 50/50 membership split. However, due to the disproportionate investment in the business idea the membership will be changed to 60/40 in future.
Member
Membership Percentage
Mr. XXXXXXXXXXXXXX XXXXXXX Mr. XXXXXXX XXXXXXX
50% 50%
This is the membership arrangement as is currently displayed on the CIPRO registration information. However, due to disproportionately higher investment by Mr. XXXXXXX XXXXXXX the membership structure will be changed in future to the following:
Member
Membership Percentage
Mr. XXXXXXXXXXXXXX XXXXXXX Mr. XXXXXXX XXXXXXX 60% 40%
Directors / Management Team

As mentioned previously, the business is not currently operating, but while operational during October to December XXXXXXX the management team consisted of the XXXXXXX brothers. XXXXXXX was responsible for the general management of the business, while XXXXXXX was responsible for marketing and promotion of all sales.
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Management Levels and Organisation Chart
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The following organisation chart describes the structure of the business, particularly with regards to management of the business, and merely an indication of the number of subordinates in each department. The chart below indicates the structure of the business as it operated in XXXXXXX (naturally, this will change following the expansion, but will be discussed in relevant sections):
Current organisational structure. However, the mission of XXXXXXX is the creation of sustainable employment opportunities. The business will create a further 13 positions (at least) after the proposed expansion.
xxxxxxx
/ 027404 / 23
M.A. XXXX M. XXXX
General Manager: M.A. XXXX Sales: M. XXXX Operations Manufacturing Cutting Packaging Sealing
Harry Julian Gilbert 3 x Packers 1 x Sealer
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XXXXXXX Company Summary
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Registered as a CC. Currently only has 1 x 1.3 manufacturing machine.
XXXXXXX will be a manufacturer of XXXXXXX products, specifically XXXXXXX, within the XXXXXXX. Although XXXXXXX are the primary product it is also evident that the business will produce other lines of products relating to XXXXXXX paper. The business was established fairly recently, whereby one of the owners, Mr. XXXXXXX XXXXXXX, identified an opportunity to purchase the machinery required to start operating. The machinery was purchased for a very good price of R 300 000 by means of an investment from XXXXXXXs personal financing sources. This included a 1.3 XXXXXXXPaper manufacturing machine, a cutting machine, sealing machine and minimal raw materials. With this basis the machinery was moved into part of premises in an industrial area of XXXXXXX that Mr. XXXXXXX was renting for partial use by a mechanic concern of his that operates on a periodic basis. To fulfil the marketing and sales function of the business XXXXXXX recruited his brother XXXXXXX to manage this sphere. XXXXXXX is currently employed by a large distributor warehouse in XXXXXXX and as such has developed a large client network as well as a feel for distribution and marketing of products from manufacturing concerns. XXXXXXX XXXXXXX has also been invaluable in the pricing of products and ensuring that XXXXXXXs products are below that of competitors. The business entity was established as a Close Corporation for reasons of simplicity. The two members are the team of brothers, XXXXXXX and XXXXXXX XXXXXXX. Each has a 50% membership share in the business.
The production process of the business starts where large XXXXXXX of pre-manufactured XXXXXXX paper were purchased from suppliers in Johannesburg, namely Gardenia XXXXXXX. These XXXXXXX are roughly 1.3 metres in width and contain roughly 300 kg of XXXXXXX paper rolled onto each one. The production process at XXXXXXX then begins with the manufacturing machine, which basically XXXXXXX the single big roll into smaller XXXXXXX of 500 sheets each. These 1.3 metre XXXXXXX of 500 sheets are then cut into standard 10 XXXXXXX, single ply. All that then remains is packaging and sealing of the final product and shipping off to various customers. This production process will be described in greater detail in further sections.
One of the needs of the business is for working capital investment to be able to expand operations and stabilise production.
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As mentioned previously the business has not been operating since December XXXXXXX. The reasons for this are as follows: Working Capital: With the original purchase of the machinery Mr. XXXXXXX XXXXXXX made considerable use of his personal funds. However, as part of this purchase he received only minimal stock with the purchase. Because the 300kg XXXXXXX of XXXXXXX have to be purchased this is considerable initial cash outlay. Since an account from Gardenia XXXXXXX was not obtained and XXXXXXX had to first be manufactured and then sold and delivered it resulted in a large mismatch between cash inflows and outflows. Since he had used the majority of his personal funds for purchasing the machinery he did not have any extra to be able to purchase additional stock or pay for monthly running expenses. To his credit, the business did not accumulate any debt against it. However, this explains the need for the large proportion of working capital investment required.
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XXXXXXX
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Suppliers: At the same time the suppliers of the large XXXXXXX of XXXXXXX paper experienced mechanical difficulties, whereby one of their mills broke down. Since they produce final XXXXXXX in addition to supplying the raw materials their decreased capacity forced them to supply only for their own needs. Since then alternative suppliers have been found.
As mentioned, XXXXXXX already has the premises, the machinery and has not any incurred any debts against it and thus after the proposed expansion it would take minimal time for the business to resume operations. During the time that the business was in operation it managed to source several large clients (refer to testimonials in the appendices of this document) who were duly impressed with the quality offered by XXXXXXX. A resounding request from all though is the desire for higher volume and this on demand. This implies that XXXXXXX should have large stock values on hand to be able to supply customer desires immediately. The previous discussion highlights the need for large expansion of operations in terms of both increased infrastructure and working capital.
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XXXXXXX
Social Indicators: Scorecard
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One of the primary desires of the business is to create employment for both skilled and unskilled workers in the XXXXXXX area. It is expected that after the expansion of the business it will employment for at least an additional 13 persons, 22 in total.
SCORECARD Indicator Description Rating: 1 (poor) to 5 (very good) Comments Staff Welfare Medical facilities/benefits, health policy (esp re. HIV/Aids), sport & canteen facilities, safety measures, clothing, remuneration vs market, etc Training & Development Training & development initiatives re bursaries, scholarships, apprenticeships, career advancement, succession planning, managerial & multi-skilling, etc Employment Equity Plan, submission thereof & adherence thereto, demographic representation Employment Equity Procurement Policy Procurement policy (if practical and applicable), adherence thereto, purchases of products & services from HDPs
Environmental Issues Environmental Impact Assessment and/or Environmental Management Programme (if applicable), waste management policy & practices, recycling, etc Regional impact, rural development, indirect job creation/support, etc CSI policy/plan, CSI function within company, interaction with community, sponsorships, charity, community investment Economic Spin-offs Corporate Social Investment Other Any other issue (eg potential HDP ownership - also of related businesses) AVE SCORE (out of 5)
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XXXXXXX Proposed Business Expansion
Background
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As mentioned previously, XXXXXXX is planning to expand the current scope of its business operations. They plan to offer additional products, increase the production capacity considerably and more efficiently utilise the space available. In addition, the business will be seeking to obtain lucrative government supply contracts for products. Currently, XXXXXXX is not operational, but is nevertheless in a state of readiness to begin operations. The rationale behind the expansion is to make use of the lack of competitors in the immediate vicinity in the XXXXX. This proposed expansion will be discussed under the following subsections: Proposed changes from the Current Situation. Company Structure and Operations. Timeline of Implementation. Employment. Quality Control - Procurement. Marketing.
Proposed Changes from the Current Situation
It has already been alluded to at length during the previous sections of this report that XXXXXXX aims to apply for financing from the Industrial Development Corporation (IDC). The financing will be used to accomplish the following broad objectives: Dramatically increase the capacity of the business. Enhance stability by means of working capital investment. Obviously there are many technicalities that will need to be addressed and these will be discussed in further sections. This expansion should be phased and feasible in terms of the financial structure of the business and the ability of the business to finance this expansion. Thus, the objectives are as follows: Consider the cost and financing implications of the planned expansion. Determine a possible time-line for implementation. Examine the cash flow time-line.
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Company Structure and Operations
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Current equipment and process flow.
At this point it is worthwhile to re-iterate re iterate the current position of the business in order to more clearly delineate the proposed expansion. The business is located in one of the indus industrial areas of XXXXXXX in a warehouse that is also used for a mechanic garage by Mr. XXXXXXX XXXXXXX XXXXXXX. The following equipment is currently in place: 1.3 Manufacturing Machine: This machine takes as an input the 300kg XXXXXXX of single XXXXXXX paper from the suppliers that are 1.3 m in length and XXXXXXX 500 sheets onto a 1.3m core. Cutting Machine: This machine takes the 1.3 metre cores each with 500 sheets on and cuts them each into 10 separate XXXXXXX XXXXXXX. Sealing Machine: This machine is used to wrap each XXXXXXXroll roll in a paper wrapping. After this each XXXXXXX XXXXXXXroll is wrapped by hand.
The following flow diagram represents the current process flow of the business:
Packaging/Sealing
300kg Tissue Paper Roll Approximately 1.3m in width The roll is hoisted onto the manufacturing machine 500 Sheets at a time are rolled onto a 1.3m cardboard core The roughly 300 1.3m rolls are checked for wastage and quality Performed by machine Currently manual Final product delivered to client or stored in store room
Raw Material
Speed of transfer is contantly monitored by machine operators
Even though it is possible to manufacture a large number of products per day each machine was not being utilised to its maximum. For example even though it is possible for the manufacturing machine to operate for more hours each day it was not possible t to synchronise this with the rate at which these finished XXXXXXX could be sealed. This implies a mismatch in the production process requiring either an increase in labour or a new machine that is able to do the packaging and sealing.
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Under this process it was possible to manufacture approximately 12 800 XXXXXXX per day. However, this is under the assumption that the business has two shifts and thereby operates on a 24 hour basis, as was done at certain times during October to Dece December XXXXXXX.
Cutting
Hoist
The 1.3m core is cut into 10-11 11 finished toilet rolls
Final Product
The process flow is rather limited by the mismatch in capacity between the different stages and different machines.
Quality Control
Manufacturing
Packed into 6's, 10's, 24's and 48's
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XXXXXXX
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Once the final product is manufactured logistical problems arise. For example, should the XXXXXXX be packaged in standard multiples or according to customer desires? Another area relating to past problems experienced is transportation of the final product. Many customers would load orders at the factory premises, but others required delivery. Due to the high volume and low weight of the final product the business was renting a vehicle with which it would deliver orders. However, due to the high amount of space required the rental of a vehicle was not particularly feasible. Therefore, the expansion plan allows for the purchase of a delivery vehicle with trailer facilities. Under the existing process it is possible to produce each final XXXXXXXroll at an average cost of roughly R 0.85 per XXXXXXXroll (this cost would naturally vary depending on the final packaging units). This is excluding all fixed and variable costs and only includes the cost of sales. The business was achieving a Gross Profit margin of roughly 22.7% on each XXXXXXXroll. However, since this time input costs have increased somewhat and it appears that the cost price per XXXXXXXroll will increase to roughly R 0.95 each with a new Gross Profit margin of 20.8%. The reason for mentioning this at this point is that even after the proposed expansion we do not expect the cost per product to decrease, but we do expect a dramatically better distribution of fixed and variable costs over each product manufactured.
Proposed Expansion
Based on the findings from the aforementioned situation it should be self-evident as to the need for the following machinery for the proposed expansion: Manufacturing Equipment R 900 000 Working Capital R 85 000
Equipment that would be purchased after the proposed expansion.
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XXXXXXX
After expansion the process flow can be described as follows:
500kg Tissue Paper Roll Approximately 2.2m in width The roll is hoisted onto the manufacturing machine 500 Sheets at a time are rolled onto a 2.2m cardboard core
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Final product delivered to client or stored in store room
Packaging/Sealing
Quality Control Manufacturing Raw Material
Speed of transfer is contantly monitored by machine operators
Cutting
Hoist
The 2.2m core is cut into 17-18 finished toilet rolls
Packed into 6's, 10's, 24's and 48's
Benefits resulting from the expansion.
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The highlights of the proposed expansion above are as follows: Increased Manufacturing: The business will be able to drastically increase the number of XXXXXXX manufactured per day. Under the previous system it was possible to manufacture 12 800 XXXXXXX per day with a single machine. However, this was only achievable with the single manufac manufacturing turing machine if operation was on a 24-hour 24 basis. After the expansion the business will be able to produce in excess of 40 000 XXXXXXX per day. This will be achieved using an 8-hour work day and not a 24-hour hour work day, thereby minimising much of the complexity associated with 24 24-hour operation, e.g. supervision and management. Better Time Management: One of the deficiencies of the current system is the inability to match the capacities of the different machines. Therefore, it is theoretically possible for the manufacturing machine to run 24 hours each day, but the sealing machine and the packaging functions are not able to match the output. There is a delay. Thus, the purch purchase of improved wrapping and sealing machines is crucial to the process flow in the business. Increased Product Range: It is envisioned that the new machines will be dedicated to producing only XXXXXXX, since this is where the major demand lies. However, current machinery will still be retained and due to the design of the machinery it is possible to produce other items on these machines. Thus, the business will still manufacture XXXXXXX primarily, but will be able to diversify its product line to include includ the following products: Serviettes Garage Paper XXXXXXX XXXXXXX Kitchen Roller Towels Wipes
Final Product
More streamlined process flow will be achievable.
The roughly 300 2.2m rolls are checked for wastage and quality
Performed by machine
Performed by a dedicated new machine at exponentially faster speed
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XXXXXXX
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Effective Utilisation of Working Capital: One of the key features of the proposed expansion is the increase in working capital investment. This is both in terms of stock and other working capital. Stock: One of the problems currently is the purchase of stock. Suppliers do not sell the inputs required by XXXXXXX in XXXXXXX of 300kg or 500kg. They are strictly sold in orders of a minimum of 1 tonne weight. This was one of the limitations of the business. For example, orders amounted to roughly 750 kg at a time, but 1 tonne of raw material had to be purchased each time. Since the business was new and did not have an established credit rating it was not possible to negotiate any other payment terms except cash. The proposed expansion entails increased investment in particularly stock thereby allowing the business a smooth process flow. The increase in machinery capacity will also help decrease the cost of the stock, since the larger the quantity of material purchased at a time the greater the discount received. Ability to Fulfil Larger Contracts/Orders: One of the limiting factors for the business is that due to the working capital and machinery constraints it was not possible to supply larger orders to customers. After the expansion the business will be able to produce in excess of 40 000 XXXXXXX per month. The business is currently in the process of applying for tender from the national departments of Health and Correctional Services for the supply of products to XXXXXXXand XXXXX hospitals and prisons. The business is not currently able to supply in the volume demanded, but the expansion will change this scenario.
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SAMPLE

XXXXXXX
Timeline of Implementation
SAMPL
The following discussion represents the proposed timeline for implementation of the various phases and sub phases of each proposed expansion. This has been prepared in consultation with the management of XXXXXXX. The implementation timeline intended is a phased approach. The phases will take place according to the following diagram:
Proposed timeline for implementation of the expansion. The funding application is expected to be the lengthiest process outside of the business control.
Thus, we see that the business has a long-term outlook with regards to the achieving of specific objectives.
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SAMPLE

XXXXXXX
The next table and figures represents a summary of the Timeline for capital expenditure as presented above:
SUMMARY
SAMPL
Size of investment. SUBSIDIARY Estimated Outlay R 9 000 Business Plan Development IDC Funding Application Purchase of Assets: N/A Plant & Equipment R 900 000 R 85 000 Other Working Capital TOTAL R 985 000 (Incl VAT) R N/A 20 000 Installation Operations Begin Achieving Manufacturing Objectives Throughout
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SAMPLE

XXXXXXX
SAMPL
The sections mentioned above are offered merely as a guideline. Depending on the financing process delays could be experienced. The above timeline and cost estimates have been used to compile financial projections. These have also been combined with the current financial performance in an effort to determine the safe levels of leverage that the business should not exceed. XXXXXXXs contribution towards this financing arrangement is as follows: All assets will be contributed towards the restructuring. These include the current machinery. The owner is currently leasing the building at which XXXXXXX will operate. Current employees and management personnel will be allocated to the expansion.
Employment
One of the primary goals that XXXXXXX has set itself is the creation of sustainable employment opportunities to residents in the XXXXXXX region. Even though very asset intensive, the business will still be rather reliant on both skilled and unskilled labour.
Employment opportunities to be created. The positions mentioned here are strictly to do with the manufacturing process. More positions for drivers and administrative positions will likely be required.
The availability of unskilled labour is not particularly difficult. However, machine operators do require a basic degree of skill and should be able to work unsupervised. To minimise risks, XXXXXXX will implement the following: Adequate supervision. Constant training of employees. Ensuring that machinery is always well-serviced and in good working order. It is estimated that the business will have a relatively large monthly salary bill. All salaries will be in line with and exceed minimum wage standards for unskilled labour and will be commensurate with market-related remuneration for skilled labourers.
Furthermore, the business will seek to create employment for an additional 22 people. This is a minimum amount and could increase should drivers be required in future. The following organisational chart outlines the proposed employee structure:
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Mr. XXXXXXX XXXXXXX will continue to take full responsibility for the general management of all functions in the business. He will be assisted by his brother XXXXXXX who will manage the sales and marketing functions of the business.
SAMPLE

XXXXXXX
XXXXX / 027404 / 23
SAMPL
Proposed organisational structure after the expansion. Administrative staff is not mentioned here.
M.A. XXXXM. XXXX
General Manager: M.A. XXX
Sales: M. XXX
Operations
Manufacturing Cutting Packaging Sealing Harry Julian Gilbert Vacant 13 x Packers 3 x Sealers
This implies that by using making use of the proposed expansion, XXXXXXX will be able to create more than 13 full-time employment positions for members of the community. This is in addition to the current (or past) employees that will be offered employment.
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SAMPLE

XXXXXXX
SAMPL
The following table represents the planned payroll structure for the phased expansion (all salaries are stated as monthly figures) for all divisions: Summary of Proposed Salary and Wage Bill after Expansion
POSITION Salary bill expected per month. Salary Per Month General Manager: XXXXXXX XXXXXXX R 15 000 Sales Manager: XXXXXXX XXXXXXX R 15 000 Machine Operators: R 5 000 per month per individual Cutters: R 10 000 R 5 000 R 2 500 per month per individual Packing: R 1 500 per month per individual R 19 500 R 4 500 Sealer: R 1 500 per month per individual TOTAL: R 69 000
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SAMPLE

XXXXXXX Products
SAMPL
Given the previous discussion regarding the proposed expansion of the service, the following section is a description of the rates that will be charged for each particular type of service. Naturally this is not an exhaustive list, but should give a focused discussion of certain key issues.
Product Description
Premises
The business will be operating from the following location: 4 Faraday Street Ashburnham XXXXXXX XXXXX These premises are located in one of the industrial areas of XXXXXXX. The premises are currently rented by Mr. XXXXXXX XXXXXXX. He is a mechanic by trade and operates a contract for servicing cars. Since this only occurs on a seasonal basis the premises were used by XXXXXXX.
A range of products will be produced by the business. The new 2.2 machines will be solely used for XXXXXXX while the existing 1.3 machine will be used to produce the additional product lines as the demand requires.
The business produces XXXXXXX as its main product. These are single ply XXXXXXX with 500 perforated sheets per roll. However, the business is not limited to only these products. The machinery employed is multi-purpose and can be used to produce the following articles as well: XXXXXXX Serviettes Garage Paper XXXXXXX XXXXXXX Kitchen Roller Towels Wipes
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SAMPLE

XXXXXXX
SAMPL
As part of the proposed expansion, however, XXXXXXX would like to acquire the building for the purchase price of R 950 000. The reason is that the owner of the building pays very little attention to the property and almost no maintenance work takes place. The building would then be used solely for the purposes of XXXXXXX. The premises are large enough for the proposed machinery and will also allow significant packing area. The business will aim however, to distribute products over a wide geographical area. A delivery truck will be purchased with which deliveries will be made over central parts of South Africa. The business is in the process of applying for tenders from the National Departments of Correctional Services and Health for the XXXXXXXand XXXXX provinces. This will imply that the delivery zone would be the XXXXXXXand the XXXXX.
Price
In the past, the business charge roughly R 1.10 per XXXXXXXroll, depending on the type of packaging naturally. Due to escalation in input costs it is assumed that the price will increase and based on research the new pricing should be in the region of R 1.20 per XXXXXXXroll. The following table indicates all the direct inputs into the manufacturing of the XXXXXXX: Revenue Calculation
Item
Detailed calculation of input costs per XXXXXXXand the expected selling prices. Average Cost per XXXXXXXRoll XXXXXXX Paper Core Wrapper Plastic R 0.71 R 0.07 R 0.10 R 0.07 TOTAL COST R 0.95 SELLING PRICE R 1.20
GROSS PROFIT PERCENTAGE 20.8%
All fixed and variable costs are paid from this gross profit percentage.
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XXXXXXX
Promotion
SAMPL
The business will have a simple marketing strategy. The product is well-defined and the demand as a basic good is stable. Therefore, marketing of the business purely entails increasing the exposure to large clients and convincing them of the superior quality of the product. For this reason the business will be employing the services of one of the members, Mr. XXXXXXX XXXXXXX. In this capacity XXXXXXX did manage to generate an impressive degree of sales for the business. Clients were sourced from as far as Lesotho. The testimonials in the appendices are testimony to this fact. What is even more impressive is that this was not even achieved on a fulltime basis. XXXXXXX XXXXXXX is currently employed by one of the large wholesalers in XXXXXXX. It is this vast wholesale and resale experience that has allowed the business to create a network of potential clients. In future it is envisioned that XXXXXXX XXXXXXX will be employed on a full-time basis and will be solely responsible for the generation of sales and calling on potential clients to increase the market size. In addition to this, the business aims to eventually have two full-time representatives in the XXXXXXXand the XXXXX. These individuals will be solely responsible for the generation of new business. This will dramatically increase the visibility to potential customers and also ensure that a larger area can be covered. One of the key areas of promotion for the business is the affordability of the product. If a superior quality products is reliably sold at a better price than the closest competitor then promotion becomes a much easier task. This is where the experience of XXXXXXX XXXXXXX as well as general research in the industry is invaluable. The business aims to constantly price products lower than that of competitors.
Lastly, XXXXXXX is in the process of applying for tenders from national Departments of Correctional Services and Health. The tender process is expected to begin in April XXXXXXX and XXXXXXX will be applying for tenders in the XXXXXXXand the XXXXX. This would ensure a more stable income stream. However, due to government policies working capital investment, especially in terms of cash flow, will be required to sustain the business until the first payment is realised. XXXXXXX will also have to ensure that the business is able to fulfil the tenders for which it applies. This is further justification for the proposed expansion.
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SAMPLE

XXXXXXX Market Analysis Summary
The market size and potential of the expansion projects will be discussed below:
SAMPL
Even though the business is not currently operating it did manage to secure many clients during this short period of operation. This in itself is testimony to the demand in the market. This is demand exists not strictly because of a shortage of XXXXXXX products in the area, but rather for good quality products at the lowest possible price. The testimonials in the appendices are evidence of this. The current drive and emphasis by the government on empowering historically disadvantaged individuals by awarding long term supply contracts to qualifying individuals/businesses presents an opportunity for XXXXXXX to make a valuable contribution towards achieving this goal. Having undertaken a thorough and comprehensive research of the market, Mr. XXXXXXX realized that there is a vast opportunity for a local supplier of XXXXXXX products, with few manufacturers in the market and none located in XXXXXXX. Aware of the fact that operating in such a market is largely dependant on good networking, the owners intend to establish networks and strategic relationships with various wholesalers, XXXXXs, hospitals, old age homes, supermarkets and informal traders to ensure a steady stream of orders. In addition to this applying for national tenders from the Departments of Correctional Services and Health would also increase the available market. In so doing XXXXXXX intends to ensure that the products distributed are of extremely high quality and fully serve their purpose. The initial overall target market share shall be 10% of the market, mainly focusing on wholesalers, hospitals, prisons and other organizations located within the XXXXXXXand XXXXX.
The business will target 3 main market participants: wholesalers, supermarkets and government contracts for hospitals, prisons and even the defence force. To reduce logistical burden XXXXXXX will begin these operations in only the XXXXXXXand the XXXXX before targeting other national centres.
Mr. XXXXXXX appreciates the fact that entering this market is not a bed of roses and will require from him to establish strong networks and links with several organizations and institutions as outlined previously. Hence he intends to implement an aggressive marketing strategy, well supported by the other business functions. The above prognosis influenced his decision to enter the XXXXXXX industry.
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SAMPLE

XXXXXXX Market Segmentation
SAMPL
XXXXXXX will market it products both in the XXXXXXXand the XXXXX. The following discussion represents the major client groups that XXXXXXX will focus its attention on. Even though the XXXXX will be an important market segment this is not discussed here, given that the XXXXX market is exponentially larger in ever segment.
WHOLESALERS AND SUPERMARKETS
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The business will begin by marketing the XXXXXXX products to existing clients in the XXXXXXX area that have expressed interest in the products. The business will then systematically begin increasing its client base. The following is a list of the wholesalers and supermarkets that have already been customers of XXXXXXX as well as those that will be targeted. XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX XXXXXXXXXXX XXXXXXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXX
SAMPLE

XXXXXXX
TENDERS: DEPARTMENT OF CORRECTIONAL SERVICES and DEPARTMENT OF HEALTH
SAMPL
As mentioned previously, the business will be applying for national tenders in April for the provision of XXXXXXX and other XXXXXXX products to the aforementioned departments in the XXXXXXXand the XXXXX. Obviously, the XXXXX is a lucrative option with its larger population density and government expenditure. However, the XXXXXXXshould not be neglected in as being of minor importance.
Department of Health
XXXXXXX will be focusing on XXXXXs, hospitals and old age homes. All of these make use of the products manufactured by the business and are always in search of better quality and lower cost alternatives. One of the key objectives of the business is to focus on securing tenders from the local government for XXXXXXX.
The main target market is large enough to order from the business and ensure that the business is kept busy meeting the orders. Though XXXXXXX does not intend to fully depend on them, they shall constitute a large proportion of the business core market if the tender is obtained. One of the owners intentions will be to offer organizations an attractive alternative to South African companies mainly marketing the business lower costs and shorter order fulfillment time.
As was mentioned earlier the marketing strategy will be based mainly on making products available to the right target customer. XXXXXXX will ensure that products prices take into consideration organizations procurement budgets and that these people appreciate the quality of the products, aware that the products exist and know where to order them. The vast distribution network will ensure that the business has very good opportunities to win XXXXX, hospital and old age home tenders for the products. Only quality products shall be manufactured, serving to enhance the appearance of the business customers, in turn adding to their comfort. The large market is due to the fact that admissions are increasing at an enormous rate in hospitals and XXXXXs resulting from increased diseases and infections, as well as the increase in the population growth rate. The following hospitals and XXXXXs (75 in total) are situated within the XXXXX:
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SAMPLE

XXXXXXX
Cluster Name
De Beershoogte/ Barkley West Barkley West
SAMPL
Location Name District
XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX De Beershoogte XXXXX Mataleng XXXXX Delportshoop Delportshoop XXXXX J Kempdorp XXXXX Valspan XXXXX Jan Kempdorp 1 Jan Kempdorp 2 XXXXXXX 1 XXXXXXX 2 XXXXXXX 3 XXXXXXX 4 XXXXXXX 5 XXXXXXX 6 XXXXXXX 7 XXXXXXX 8 Betty Gaetsewe XXXXX Dr Torres XXXXX Pokwani XXXXX Masakhane XXXXX Phutanang XXXXX Galeshewe Day Hospital Recreation XXXXX Ritchie XXXXX Warrenton KATHU Ikhutseng XXXXX
KATHU XXXXX + DINGLETON XXXXX KATHU XXXXX DINGLETON XXXXX XXXXX XXXXX
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SAMPLE

XXXXXXX
Cluster Name
KURUMAN 1
SAMPL
XXXXX CHURCHILL XXXXX + BOTHITHONG XXXXX + CASSEL XXXXX CHURCHILL XXXXX XXXXX XXXXX XXXXX BOTHITHONG XXXXX CASSEL XXXXX KURUMAN 2 DITHAKONG XXXXX + GLENRED XXXXX DITHAKONG XXXXX GLENRED XXXXX XXXXX XXXXX XXXXX KURUMAN 3 KURUMAN 4 KURUMAN 5 KURUMAN 6 KAGISO CHC XXXXX XXXXX XXXXX XXXXX KURUMAN XXXXX SEODING XXXXX MARUPING XXXXX + LOOPENG XXXXX + PIETERSHAM XXXXX MARUPING XXXXX LOOPENG XXXXX XXXXX XXXXX XXXXX
PIETERSHAM XXXXX TSHWARAGANO SPRINGBOK TSHWARAGANO GATEWAY XXXXX Bergsig/M Shapiro XXXXX + Komaggas XXXXX + NABABEEP + OKIEP Bergsig/M Shapiro XXXXX Komaggas XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Nababeep XXXXX Okiep XXXXX
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SAMPLE

XXXXXXX
Cluster Name
CALVINIA
SAMPL
XXXXX Calvinia XXXXX + Niewoudtville XXXXX Calvinia XXXXX XXXXX XXXXX Niewoudtville XXXXX POFADDER POFFADER XXXXX + Onseepkans Sat XXXXX + Pella XXXXX Onseepkans Sat XXXXX Pella XXXXX XXXXX XXXXX XXXXX POFFADER XXXXX DOUGLAS 1 DOUGLAS 2 DOUGLAS 3 Bongani XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Breipaal XXXXX Douglas Central XXXXX COLESBURG 1 COLESBURG 2 HOPETOWN PRIESKA Colesberg Kuyasa XXXXX Lowryville XXXXX Hopetown XXXXX Prieska XXXXX
GRIEKWASTAD DE AAR Griekwastad CHC De Aar Town XXXXX + De Aar CHC De Aar Town XXXXX De Aar CHC VICTORIA WEST Victoria West XXXXX + Richmond XXXXX Victoria West XXXXX Richmond XXXXX XXXXX XXXXX XXXXX
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SAMPLE

XXXXXXX
Cluster Name
Petrusville/ Phillipstown
SAMPL
XXXXX Petrusville CHC + Phillipstown XXXXX Petrusville CHC XXXXX XXXXX Phillipstown XXXXX Postmasburg 1 Postmasburg 2 Postmasburg 3 Danielskuil Kakamas Keimoes BOICHOKO XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Postmasburg XXXXX POSTDENE XXXXX Danielskuil CHC Kakamas XXXXX Keimoes XXXXX + Keimoes Eilande Mob Keimoes XXXXX Keimoes Eilande Mob Olifantshoek Upington 2 Upington 3 Upington 4 Upington 5 Louisvale Olifantshoek CHC XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Lingelethu XXXXX Progress XXXXX
Sarah Strauss XXXXX Upington XXXXX Louisvaleweg XXXXX
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SAMPLE

XXXXXXX
Department of Correctional Services
SAMPL
Distributed over the whole of South Africa there are currently in excess of 160 000 prisoners incarcerated in various prisons. In the XXXXXXXalone the prison population 6023 prisoners in 1999, distributed as follows:
XXXXXXXPRISON POPULATION Demographic Black Male 2262 3532 80 Female 52 89 4 Coloured White Asian 4 0
There are currently 12 prisons in the XXXXXXXalone. Government is currently constructing a R 662m prison in XXXXXXX that will house an additional 3 000 inmates. Thus, there is much opportunity in the XXXXXXXalone for XXXXXXX.
Currently, the level of overcrowding in South African prisons averages 143.13%. The average cost per inmate per month is R 152.00. This implies a significant expenditure per inmate. Government departments are currently doing all that is within their power to reduce expenditure, and paying lower prices for the same quality of XXXXXXX products are just one of the ways.
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SAMPLE

XXXXXXX
The following graph gives and approximate breakdown of the anticipated sales:
SAMPL
Expected breakdown of customers.
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SAMPLE

XXXXXXX
Products and Services: Advantages and Uniqueness
SAMPL
The largest advantage for XXXXXXX is that it will be manufacturing the products in house. The business will have a greater degree of influence over the cost of each product as well as the selling price, within limits. In addition to this, the management team has a vast amount of business experience. It is this experience that will be relied upon heavily. The business will aim to differentiate itself from other suppliers/manufacturers by ensuring that quality is of a premium and that delivery time is within acceptable limits. Another unique aspect of the business will be in its ability to complete large orders on demand.
Key Supplier Information - Current
The business makes use of the first of these suppliers. Due to capacity concerns XXXXXXX has managed to locate other suppliers: Supplier
Contact Details / Location PO Box 42676 Gauteng
Current suppliers, Gardenia, are also competitors of XXXXXXX. Gardenia XXXXXXX Mills Selby Extension 19 2XXXXXXX2 Highveld XXXXXXX PO Box 1405 Heidelberg 1438 15 Albert Street Central Heidelberg 1441
Competitors - Current
XXXXXXX has the distinct advantage over these competitors, in that the competitors do not manufacture XXXXXXX products in the XXXXX. XXXXXXX will be the only manufacturer in the XXXXX. However, one of the larger competitors on a national level is Gardenia XXXXXXX Mills, mentioned above.
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SAMPLE
Summary of the perceived strengths and weaknesses of the business.

XXXXXXX
SWOT Analysis
SAMPL
XXXXXXX foresees the strengths of the business as the ability to respond timeously to customers orders and provide them with the correct quantity. Key personnel will be well trained in the actual buying and distribution of products so as to ensure timeous deliveries to the client. This will go a long way towards penetrating the market. Below are the summarized strengths, weaknesses, opportunities and threats. Strengths
Weaknesses A limited financial base compared to the other provinces of South Africa. The introduction of new organizational practices and personnel who have not previously worked together presents a challenge to the business. Business infancy dictates that intermediaries might be skeptical about its products.
Relationship Selling The owner intends to get to know the clients, one on one. Direct sales efforts will seek to maintain a relationship with the business customers. Diversified Customer Base The business intends to obtain orders for its products from a wide customer base. This will ensure lack of dependency on one customer. In addition to this, the business will manufacture a wide range of different XXXXXXX products limiting the dependency on a single line. Low Product Cost Due to the large investment into stock and working capital XXXXXXX will aim to buy products in bulk directly from suppliers of raw material. This should ensure that products are sold at a highly attractive price to potential clients.
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XXXXXXX
Opportunities
SAMPL
Service As the business target markets are in relatively accessible areas the business intends to be able to meet clients requirements in the shortest possible time. Government Support Current drive by the government towards encouraging the participation of indigenous entrepreneurs and diversification of the economy presents an opportunity that the business may fully utilize. Distribution Network Presently there is no reliable distributor/manufacturer within the XXXXX
Petrol price volatility. Competition from other similar outfitters. Threats Solution Volatility in the petrol price will have minimal impact on the business. Any increase in the petrol price will be charged via increased packages to the client. As for XXXXXXXs competitors - they will be affected in exactly the same way thus leveling the playing field. The owner aims to distribute products to other provinces within South Africa so as to ensure that the business expands its financial base. Staff will be fully trained by experienced business professionals to enable them to function as an effective team.
XXXXXXXs marketing strategy is to grow the business by nurturing clients and establishing good one-on-one relationships with them. All criteria from customer satisfaction, order fulfillment, price competitiveness to staff attitudes are to be looked at thoroughly in the initial stages so as to identify areas of improvement. To attain low lead times (the time it takes to meet orders) the owner will need to ensure that all functions are communicating properly and formally, using valid and accurate data to derive achievable plans and schedules for all stages of procurement, distribution and delivery. By doing so the business will differentiate itself from competitors and enable it to become the supplier of choice within the XXXXXXXand beyond.
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SAMPLE

XXXXXXX
Marketing Strategy/Plan
SAMPL
The following list represents some of the marketing objectives that XXXXXXX has: Establish the additional business units within the timelines mentioned. Development of a team of sales representatives, canvassing the entire XXXXXXXand XXXXX. Set firm targets for growth to be achieved. The business is aiming to increase production targets considerably from what is currently achieved. Current production exceeds 12 000 XXXXXXX per day if a 24 hour shift is worked. This will be changed to 40 000 XXXXXXX per day working only an 8-hour shift. The following table outlines the projected growth rates for the business
Growth targets that are estimated following the proposed expansion.
Year
Projected Growth Required

N/A
Year 1 Year 2 Year 3
24.04% 12.54%
Thus, the majority of growth from the proposed expansion will occur in Year 2. This has implications for the structure of the financing.
Revenue Budget
Revenue
The following table outlines the proposed Revenue targets that the business is planning to achieve. Past figures were not available.
Breakdowns of revenue by product. Historic FFR01 FFR02 FFR03 XXXXXXX Other Not Available R 10 348 800 R 2 205 000 R 12 988 800 R 2 583 000 R 14 752 320 Not Available R 2 772 000 TOTAL Not Available R 12 553 800 R 15 571 800 R 17 524 320
Assumptions used for the above table can be found in additional data the appendices.
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SAMPLE

XXXXXXX
Customer References - Current
SAMPL
The following are the names and contact details of some of XXXXXXXs clients that purchased from XXXXXXX and have indicated their desire to continue purchasing in future (refer to appendices): Customer
Ella Modise
Contact Details
Swanvest One
149 Transvaal Rd XXXXXXX 8300
053 832 4302
Shereen Mahomed
Zees Cleaning Service PO Box 2275 XXXXXXX 8300
082 254 2253 S Kazie Hypersave Supermarket 15 Reserve Road XXXXXXX XXXXX 053 831 1526
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SAMPLE

XXXXXXX Financial Analysis & Projections
SAMPL
Assumptions, Methods and References
The following projections were compiled at the request of XXXXXXX. In producing the forecasted financial statements and cash flows the followings assumptions, forecasting methods (if applicable) and external sources of data were applied: Assumptions: The following conservative assumptions were made as to the future of the business: 1. 2. 3. 4. 5. Audited financial statements were not obtained for XXXXXXX. The business operated from October XXXXXXX to December XXXXXXX. No financial statements were compiled during this time and thus the basis for projection is the research referred to in this plan. The projections have been compiled assuming the proposed developments do actually occur. The likely costs associated with the proposed expansion have also been estimated based on quotations and estimates received from professionals. These have been incorporated into the projections. The likely organisational structure, as discussed previously, has also been brought into account. Past data indicates that a majority of the expenditure results from wages and salaries and it is expected that this pattern of fixed costs is likely to continue. For complete details regarding these financial projections the reader is urged to refer to the appendices to this document.
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SAMPLE

XXXXXXX
The following conservative assumptions specifically apply to the projected financial performance: 1. 2.
SAMPL
3. 4. 5. 6. 7. 8. 9. 10. Expenses were estimated from researched information. A loan amount of R 985 000 was assumed. This is inclusive of VAT and assumes the following investment avenues: a. Plant & Equipment: R 900 000 f. Working Capital: R 85 000 It has been assumed that the loan will be repaid in monthly payments over a period of 7 years at a 14% interest rate (current prime rate). The owners will be contributing the existing machinery to the CC. Depreciation has been calculated on a straight line basis as follows: a. Plant & Equipment: 15 years It has been assumed that the targeted production of 1 million XXXXXXX per month will only be achieved by year 3. The following gross profit margins have been assumed: a. XXXXXXX: 20.8% b. Other Products: 23.42% Due to the lack of past results the financial analysis has been performed only on the projections. It has been assumed that the business will be registered for VAT and tax. It is expected that the first year will show subdued results due to start-up expenses associated with the business. PLEASE REFER TO THE APPENDICES TO THIS BUSINESS PLAN FOR THE COMPLETE FINANCIAL PROJECTIONS.
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SAMPLE

XXXXXXX
Trend Analysis
ACTUAL AND FORECASTED PROFIT AND LOSS: Summary Profit and Loss Accounts
SAMPL
Expected income statements resulting from the financial projections. HISTORIC Revenue NA FFR012 12,553,800 9,894,100 FFR02 FFR03 15,571,800 12,276,040 3,295,760 1,473,110 1,822,650 245,040 1,577,610 0 17,524,320 13,818,277 3,706,043 1,535,877 2,170,166 245,050 1,925,116 0 Cost of Sales Gross Profit
3
NA
NA
2,659,700
Total Expenses (Operating Costs) EBITDA EBIT4
NA
1,267,501 1,392,199 245,041 1,147,158 0
NA
Depreciation
NA NA
Investment Income
5
NA
Finance Costs (Interest) EBT
NA
729,501
728,661 848,949 84,895
714,953
NA
417,657 41,766
1,210,163 121,017
Taxation
NA
Please refer to the appendices for the detailed financial projections.
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375,891 764,054 1,089,146 Earning After Taxation NA 1. Financial Year. 2. Forecasted Financial Result (i.e. forecasted values). For a complete description of the assumptions and methods applied in producing the forecasted financial statements please refer to the Section titled Assumptions. 3. Earnings Before Interest, Tax, Depreciation and Amortisation. 4. Earnings Before Interest and Tax. 5. Earnings Before Tax.
SAMPLE

XXXXXXX
SAMPL
Overview The business is registered as a Close Corporation and as such is not subject to annual independent audits. The business will be the largest manufacturer of XXXXXXX and other XXXXXXX products after the expansion. As part of this plan, the proposed expansions are being considered. Complete descriptions can be found in the previous sections of this report. This section analyses the likely implications with regards to the capital infrastructure establishment and the potential effect of the resulting borrowings. Customer Base XXXXXXX will serve a diverse customer base, ranging from wholesalers and supermarkets to government departments, hospitals and prisons. XXXXXXX will distribute products mostly in the XXXXXXXand XXXXX. Competitors There are low degrees of competition in the manufacturing sector in XXXXXXX. For the proposed expansion, competition in most of the proposed products is present. However, demand is still robust and the expansion is definitely justified strictly in terms of the potential demand. Interest Rates and Inflation Interest rate have been unstable recently, following the Reserve Banks desire to keep inflation in check, at least to a certain degree. The current consensus is that economists believe interest rates will remain unchanged for the next 6 to 12 months, and they expect a decline in interest rates from mid- to end XXXXXXX. This is essential to the proposed expansion of XXXXXXX. Finance costs currently amount to more than 4% of turnover. Increase in borrowings would likely affect this position as well. Thus, a small increase in interest rates could have farreaching implications for XXXXXXX in terms of the amount of leverage.
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XXXXXXX
Revenue Historic revenue N/A The business does not have records of past revenue figures.
SAMPL
Product Costing The following calculations are used to calculate the proposed selling price:
Revenue Calculation
Item Average Cost per XXXXXXXRoll XXXXXXX Paper Core R 0.71 R 0.07 R 0.10 R 0.07 R 0.95 Wrapper Plastic TOTAL COST SELLING PRICE R 1.20 GROSS PROFIT PERCENTAGE 20.8%
Forecast Revenue Revenue has been forecast to increase according to the proposed expansionary opportunities. Timelines for first revenue streams from these expansions have been estimated conservatively.
Revenue Breakdown by Product
Product Revenue Revenue % of Total Revenue Cost of Sales Gross Profit (%) XXXXXXX R 10 348 800 R 2 205 000 82.44% R 8 196 250 20.80%
Other Products (e.g. serviettes and kitchen towels) Total Revenue 17.56% R 1 697 850 23.42% R 12 553 800 100% R 9 894 100 21.19%
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XXXXXXX
Key Performance Indicators: Key Performance Indicators
SAMPL
Financial performance indicators allow for large increases in both Revenue and Expenditure by the second year of operation after the expansion. HISTORIC NA Revenue Growth FFR01 N/A N/A FFR02 FFR03 24.04% 12.54% Cost of Sales Movement NA NA 24.07% 12.56% Gross Profit Margin (% of Revenue) Expenditure Movement Expenses to Revenue 21.19% 21.16% 21.15% 4.26% 8.76% NA NA NA NA NA NA NA N/A 16.22% 9.46% 10.10% EBITDA Margin (% of Revenue) EBIT Margin (% of Revenue) 11.XXXXXXX% 11.70% 10.13% 30.92% 37.52% 2.99% 4.91% 12.38% 10.99% 19.07% 22.03% 6.22% 9.14% EBITDA Growth from previous year EBIT Growth Earnings After Taxation Margin (% of Revenue) Earnings After Taxation Growth N/A N/A NA N/A 103.26% 42.55%
Forecast
The proposed expansion of the business carries with it certain assumptions regarding the projected Gross Profit Margins. These margins have been projected in consultation with XXXXXXX.
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Historic Return on Equity (ROE) Calculated as the percentage of the Earnings After Tax to the Total Equity. This gives an indication as to the returns that owners received on their investment. Return on Equity
SAMPL
Earnings After Taxation Total Equity Historic NA NA NA FFR01 R 375 892 R 675 992 FFR02 R 764 054 FFR03 R 1 089 155 R 2 529 202 R 1 440 046 53.05% Return on Equity 55.6% 43.0%
Historic Return on Assets (ROA) Calculated as the percentage of the Earnings After Tax to the Total Assets. This gives an indication as to the returns that were generated by using the assets that business had at its disposal. Return on Assets
Earnings After Taxation Total Assets Historic NA NA FFR01 R 375 892 FFR02 R 764 054 FFR03 R 1 089 155 R 6 634 623 R 5 829 116 R 6 058 084 12.6% Return on Assets NA 6.4% 16.4%
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Solvency
SAMPL
Historic Total Assets Covered by Debt This solvency measure indicates the ratio of Total Assets: Total Liabilities. A business is considered solvent if this ratio exceeds 1:1. Assets Covered by Debt
Historic NA NA NA FFR01 FFR02 FFR03 Total Assets R 5 829 116 R 6 058 084 R 6 634 623 Total Liabilities R 5 153 124 1.13 R 4 618 037 1.31 R 4 105 420 1.61 Total Assets : Total Liabilities
Debt Equity Ratio
Historic Total Equity Total Liabilities NA NA FFR01 R 675 992 R 5 153 124 0.13 FFR02 R 1 440 046 R 4 618 037 0.32 FFR03 R 2 529 202 R 4 105 420 0.62 Debt Equity Ratio NA
Historic Debt Equity Ratio This is the ratio of Equity to Liabilities. It highlights the extent to which Equity versus Debt has been used to finance business operations.
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Cash Flow Analysis
SAMPL
Please refer to the appendices to this report for the full cash flow projections. Historic cash flow projections were not available.
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Breakeven Analysis
SAMPL
The breakeven level of income and service has been calculated in the below table. The following assumptions enable the effective interpretation of the results: The breakeven turnover that has to be achieved is self-explanatory. The Revenue per Product has been assumed as follows: It has been assumed for the purposes of understanding that the price of a single XXXXXXXroll is the revenue per product. Therefore, the Breakeven Production represents the number of XXXXXXX that have to theoretically be sold in order to cover the projected expenditure. The above assumptions are not significantly skewed: during the first 3 years of operation the majority of income received will be due to XXXXXXXroll manufacture. Breakeven Inputs
FY1 FY2 FY3 Breakeven Revenue Per Annum R 10,779,592.80 R 10,779,593.45 R 10,779,593.00 Breakeven Production Per Annum 8,982,994 8,395,322 7,846,XXXXXXX5
Costs Per Year: R 2,283,8XXXXXXX.00 R 1.20 21.19% R 0.95 R 2,283,8XXXXXXX.00 R 1.28 21.19% R 1.01 R 2,283,8XXXXXXX.00 Revenue Per Product (Ave) Gross Profit Percentage Cost per Product R 1.37 21.19% R 1.08
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SAMPL
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28 xx Farm Craftsmen Workers Personal Assistant: Marietjie Tredoux
APPENDICES
September XXX

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GENERAL INFORMATION .................................................................. 11

COMPANY SUMMARY ........................................................................ 15

PROPOSED BUSINESS EXPANSION ................................................ 18

Company Structure and Operations ................................................................................... 19

Timeline of Implementation .................................................................................................. 23

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MARKET ANALYSIS SUMMARY ........................................................ 31

FINANCIAL ANALYSIS & PROJECTIONS ......................................... 45

Trend Analysis ....................................................................................................................... 47

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Business Plan for the Proposed Expansion

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Plant & Equipment Working Capital TOTAL

R 900 000 R 85 000

R 985 000 (Incl VAT)

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Primary Management/Ownership Contact Business Address

4 Faraday Street Ashburnham XXXXXXX XXXXX

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Mr. XXXXXXXXXXXXXX XXXXXXX Mr. XXXXXXX XXXXXXX

Directors / Management Team

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M.A. XXXX M. XXXX

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The 1.3m core is cut into 10-11 11 finished toilet rolls

Packed into 6's, 10's, 24's and 48's

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Business Plan for the Proposed Expansion

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Business Plan for the Proposed Expansion

The 2.2m core is cut into 17-18 finished toilet rolls

Packed into 6's, 10's, 24's and 48's

Benefits resulting from the expansion.

More streamlined process flow will be achievable.

Performed by a dedicated new machine at exponentially faster speed

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