Executive Summary

The disposable nappy, an invention that revolutionized the baby care industry, exists today as a practical solution to the problem of dirty, smelly,
wet baby bottoms throughout the world.
We are on the verge of entering a lucrative market in a growing country. The current population fertility rate estimated at 4.2 children 1, and
increased admissions in hospitals and clinics presents an opportunity for Baby Nappies World to enter and penetrate the baby nappies and sanitary
pads market. Baby Nappies World is poised to take advantage of this growth rate and minimal local competition, with a dedicated and experienced
staff, excellent order procurement, and effective management and marketing. The initial intention will be to provide nappies and sanitary pads to
institutions and organisations including hospitals and wholesalers throughout Botswana.
Initial plans are to produce approximately 300 diapers per hour 5 days a week, utilizing an 8 hour working day, enabling us to produce a total of
48,000 diapers per month. As time progresses and we become more efficient in their production this figure should rise to approximately 56,000 per
month. This would be for the diapers only though we do intend to also produce sanitary pads, though on an order basis.
We realise the fact that for us to prosper in this relatively untapped market, there is need to be flexible and responsive, to delight our customers by
providing them with what they want, when they want it and in the exact quantity. Our primary goal will be to establish and strengthen our existence
in the market, which will be bestowed by the business environment in which we function.
Our marketing strategy will be based mainly on ensuring that customers know about our existence and the products we produce. Hence our
intention is to make the right information available to the right target customers. This will be done through implementing a market penetration
strategy that will ensure that we are well known and respected in the market. We will ensure that our products' prices are favorable relative to our
South African counterparts' prices, and that our potential customers appreciate the quality of our products. However, the prices we charge will also
take into consideration the cost of production and distribution so as to ensure that we remain viable and operational. We appreciate the fact that the
majority of wholesalers and intermediaries that order our products perceive South African products to be of higher quality and reliability. To

counteract this there will be need for us to not only aggressively market the high quality of our products, but also to go out of our way in serving
our customers and clients so as to establish a good long-term relationship.
Our target markets will primarily constitute institutions, wholesalers and other intermediaries who often order in bulk for their customers, and
concerned individuals. Hence there will be need to network with the various decision-makers/order-makers to ensure we receive orders for our
products.
We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure job satisfaction and enrichment through
delegation of authority. We intend to achieve optimal productivity whilst realizing the full potential of each of our employees through provision of
health care, generous profit sharing, plus a minimum of three weeks vacation. Awards will be given out to outstanding individuals for hard work
and production so as to not only show our appreciation, but to instill a sense of fun into the work and promote the maintenance of high standards.
We project sales to increase from more than P748,800 the first year to more than P1,075,200 the second, and P1,142,400 in the third year.
Ultimately the attractiveness of our venture lies with the fact that customers will choose our products above those of competitors because of the
relatively lower prices as well as their high quality. Hence Baby Nappies World's ongoing initiatives will be to drive sales, market share and
productivity so as to provide additional impetus towards attainment of the corporate goals and objectives.
1

Courtesy: Central Statistic Office

NOTE: All currency figures in this plan are in Botswanan Pula (P).

1.1 Keys to Success

1.

Timely response to customers' requests: We cannot afford to delay our clients for whatever reason, as this will have a negative bearing on
our image and reputation,as well as impacting future business. Hence we need to be continually communicating with the client, so as to ensure
that products are delivered on time and according to the customer's specifications. This will go a long way towards instilling a sense of trust in
our ability and establishing long-term relationships.

2.

Excellence in fulfilling the promise: We intend to produce and provide products of uncompromised quality to our customers, and excellent
service. This is so as to meet their needs and standards. We acknowledge the fact that the company's success will be based on timeous response
to customer orders and hence we intend to set high standards and work procedures.

3.

Assembly Technology: To ensure quality diapers and sanitary pads it is essential to utilize the latest and most efficient production machines.
We also intend to keep abreast with technological developments, which will ensure we gain and maintain a competitive advantage utilizing the
latest production techniques.

4.

Networking: As the majority of our customers will be wholesalers and intermediaries there is need to effectively network with the various
decision-makers and order-makers to ensure a ready market.

1.2 Objectives
Our business strategy will revolve around the need to provide quality disposable baby nappies, geriatric/adult diapers and sanitary pads to the
various institutions and wholesalers that need them, in the process fully satisfying their requirements. This shall be undertaken through adequate
training and recruitment of a professional team dedicated to providing and catering the customer's needs.
We intend to ensure that our marketing campaign increases the knowledge of our products and services to the various market segments we shall be
targeting. This is particularly so with organisations increasingly looking at obtaining quality products at the lowest prices as they strive to increase
profitability.
We also intend to have well laid out introductory letters and other promotional material that will enable clients to have an understanding of the
types of products we offer and advantages of utilizing them. In addition well-done company profiles and business cards often have a triggering
effect on clients contemplating ordering our products. Hence this will undoubtedly generate increased sales of our products.
In summary we intend to attain the following objectives:

Continuously provide high quality diapers and sanitary pads on time and on budget.

Develop enthusiastically satisfied customers all of the time.

Ensure economical use of resources from capacity utilization, minimising inventory/stock and low cost, and high quality materials.

Contribute positively to our communities and our environment.

Establish a market presence that assures short-term and long-term profitability, growth and market share, which will ultimately convert to
business success.

1.3 Mission
We are fully committed towards the production and delivery of high quality disposable baby nappies, geriatric/adult diapers and sanitary pads to the
respective communities. Internally we intend to create and nurture a healthy, productive, satisfying and enjoyable environment, in which our
employees are fairly compensated and encouraged to respect the customers' requests and the quality of the products we intend to produce. We seek
fair and responsible profit, enough to keep the company financially healthy for the short and long term, and to fairly remunerate employees for the
work and effort.
Company Summary
The primary nature of the business is to manufacture and sell disposable baby nappies, geriatric/adult diapers and sanitary pads. Our
intention is to produce disposable nappies that will meet all the requirements of a quality standard, particularly considering that the
majority of those currently on the market are imported from South Africa.
2.1 Company Ownership
Baby Nappies World is a company incorporated at the Registrar of Companies through the foresight and vision of Mrs. X and Mr. X. Though
relatively new, the directors realize their Company's vast potential market and opportunity for growth given implementation of the
appropriate strategies, aided by the necessary finances.

2.2 Company Locations and Facilities

At present the business is located at Plot Number 5767, Partial, Gaborone. However, as time progresses and the business expands, the
intention will be to move into a more accessible and attractive commercial area. This regardless of the fact that our type of business is not
too dependent on office location and size, with the quality of our products being the primary concern.
2.3 Start-up Summary
Total start-up expenses covered (including legal costs, business plan compilation, stationery and related expenses) came to approximately
P5,000. Start-up assets in the company's possession include a vehicle, computer, printer and fax, the last of which is relatively new.

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START-UP REQUIREMENTS

Start-up Expenses

Legal

P1,000

Stationery etc.

P100

Brochures

P900

Consultants

P0

Insurance

P1,000

Rent

P1,000

Research and development

P0

Expensed equipment

P1,000

Other

P0

TOTAL START-UP EXPENSES

P5,000

Start-up Assets

Cash Required

P37,043

Start-up Inventory

P3,680

Other Current Assets

P0

Long-term Assets

P54,277

TOTAL ASSETS

P95,000

START-UP FUNDING

Start-up Expenses to Fund

P5,000

Start-up Assets to Fund

P95,000

TOTAL FUNDING REQUIRED

P100,000

Assets

Non-cash Assets from Start-up

P57,957

Cash Requirements from Start-up

P37,043

Additional Cash Raised

P0

Cash Balance on Starting Date

P37,043

TOTAL ASSETS

P95,000

Liabilities and Capital

Liabilities

Current Borrowing

P0

Long-term Liabilities

P0

Accounts Payable (Outstanding Bills)

P0

Other Current Liabilities (interest-free)

P0

TOTAL LIABILITIES

P0

Capital

Planned Investment

Investor 1

P100,000

Investor 2

P0

Other

P0

Additional Investment Requirement

P0

TOTAL PLANNED INVESTMENT

P100,000

Loss at Start-up (Start-up Expenses)

(P5,000)

TOTAL CAPITAL

P95,000

TOTAL CAPITAL AND LIABILITIES

P95,000

Total Funding

P100,000

Products

Baby Nappies World intends to manufacture and sell disposable baby nappies, geriatric/adult diapers and sanitary pads. These products shall be of
high quality standard so as to ensure customer satisfaction and meet all the customers' requirements.

3.1 Product Description

Baby Nappies World initially intends to focus on the production of the following products:
1.

Baby Nappies
The disposable nappy may be described as an invention that revolutionized the baby care industry. It exists today as a practical solution to the
problem of dirty, smelly, wet baby bottoms throughout the world. The vast amount of births here in Botswana dictates that the baby nappy is
very much in demand, and that demand continuously increasing. With this in mind we intend to produce a quality nappy. Our diaper will have
(discussion omitted).

2.

Geriatric/Adult & Sanitary Pads

These are mainly used in medical institutions such as hospitals and clinics where patients often require disposable pads to overcome the
problem of dirty, smelly and wet bottoms. This is particularly so as these adult patients are incontinent and often do not have the ability to
control their bladder.

3.2 Competitive Comparison

There is very little competition from local companies manufacturing products similar to our main products. However considering the pace of
change and current growth rate of the economy luring companies into the market, this may be short-lived. Hence there will be a need to not only
firmly establish ourselves in the market, but also strongly differentiate ourselves from these other businesses. However on a broader scale our
competition comes in several forms:

1.

The most significant competition are South African manufacturers of diapers and sanitary pads including reputable brands such as X and Y,
which have a well established distribution network in place. This network ensures that their products are widely available on the market. Our
key advantages over these producers will be our order response time as well as lower costs, which will be attractive to many of our prospective
clients.

2.

Existing local manufacturers of diapers and sanitary pads are few with research indicating that there are currently two in Gaborone and one
in Francistown, though additional information regarding their products and operations were still being collected during compilation of this
plan.

3.

An existing textile company is also contemplating entering the baby nappies market.

An analysis of competition is provided in the competition section of this plan.

3.3 Sales Literature

The business will begin by formulating letters of introduction establishing its position on the market, as well as the products it manufacturers.
These letters will be developed as part of the start-up expenses together with the business cards and the Company Profile, mainly for the large
organisations and institutions. Complementary coupons are also intended so as to raise awareness of the company and its products.
Hence literature and mailings for the initial market forums will be very important.

3.4 Technology

The machine responsible for the manufacturing process is a new and unique concept. It is capable of producing different sized nappies, that is,
small, medium and large geriatric/adult and sanitary pads. It is capable of producing 350+/- diapers per hour, which converts to 2,500+/- per day, or
8,000+/- sanitary pads per day.
The one certainty in our industry is that technology will continue to evolve and develop, changing the quantity that can be produced at any one
time, as well as its quality. Our aim will be to be aware of the implications of this new technology and utilize it in our existing framework where
possible. However our initial aim will be to pay back the initial cost of the machine.

3.5 Future Products

In putting the company together we have attempted to offer enough products to allow us to always be in demand by our customers and clients. The
most important factor in developing future products is market need. As time progresses we intend to produce towels, t-shirts and sportswear.
However, we should stress that in doing so, we will strive to ensure that it is compatible with the existing products and company personnel.

Market Analysis Summary

The current drive and emphasis by the government on diversification of the industrial base away from the minerals sector presents an opportunity
for Baby Nappies World to make a valuable contribution towards achieving this goal. Having undertaken a thorough and comprehensive research
of the market we realized that there was a vast opportunity for a local manufacturer of diapers and pads, with less than a handful currently on the
market.
Aware of the fact that operating in such a market is largely dependent on good networking, we intend to establish networks and strategic
relationships with various wholesalers, clinics and hospitals to ensure a steady stream of orders. In so doing we intend to ensure that the products
we produce are of extremely high quality and fully serve their purpose. Our initial overall target market share shall be 10% of the market, mainly
focusing on the wholesalers and organisations in Botswana.

We appreciate that entering such a market is not a 'bed of roses' and will require us establishing strong networks and links with several
organisations and institutions as outlined previously. Hence we intend to implement an aggressive marketing strategy, well supported by the other
business functions. The above prognosis influenced our decision to enter the diaper and sanitary pad manufacturing industry.

4.1 Market Segmentation

We will be focusing on wholesalers, academic institutions, hospitals and clinics that either sell or utilize our intended products. We also intend to
focus on government tenders for our diapers and sanitary pads.
Our main target market is large enough to order from us and ensure that we are kept busy meeting their orders. Though we do not intend to fully
depend on them, they shall constitute our 'core' market. One of our intentions will be to offer organisations an attractive alternative to South African
companies mainly marketing our lower costs and shorter order fulfillment time.

4.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making our products available to the right target customer. We will ensure that our products' prices
take into consideration organisations order-makers' budgets, and that these people appreciate the quality of our products, are aware our products
exist,, and know where to order them. Our low production costs, which will naturally be reflected in lower prices for our products, will ensure that
we have very good opportunities to win hospital, clinic, and institution tenders for our products, besides obtaining orders from all the other markets
including wholesalers, chemists, informal traders and supermarkets we shall be targeting.
We realize the need to focus our marketing message and our product offerings. We need to develop our message, communicate it, and make good
on it. This shall be undertaken in order to establish ourselves on the market and long-term relationships.

4.2.1 Market Needs

Baby Nappies World will set out to provide high quality disposable baby nappies, geriatric/adult diapers and sanitary pads that will facilitate the
hygienic and easier changing of individuals, both adult and children. The quality of raw materials and assembly technology we shall utilize will be
evident in our products, serving to enhance the appearance of our 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 clinics resulting from increased diseases and infections, as well as the increase in the
population growth rate.
We understand that our target markets need more than just something that absorbs. Our target customer wants something that absorbs as well as
being hygienic, comfortable, easy to use and of good quality. Price also plays an important part in the purchase decision.

4.2.2 Market Trends

Botswana currently has one of the fastest population growth rates in the world, resulting in a population of over 1.6 million now compared to just
600,000 in 19711. By 2021 the workforce between 25-59 years old is expected to increase from around 500,000 to over 1 million. However, a drop
in the fertility rate is anticipated because of increased opportunities and better education. In 1981 Botswana women had an average of 7.1 children,
in 1991 they had 4.2 children and this is forecast to fall below there in the next 10 years. This is causing a shift in the demographic structure of the
population, from a situation where over 50% of the population are under 19 years old, to one where more of the population is of working age. As a
result the dependency ratio is likely to fall, resulting in increased household savings. The current population growth rate shows that there is a
demand for diapers and nappies in households, particularly considering the increase in the workforce prompting mothers to stock diapers,
especially disposables, as they are easier and faster to handle.
1

Source: Central Statistics Office

4.3 Industry Analysis

Industry competition information appears in the following subtopics.

4.3.1 Competition and Buying Patterns

The key element in service utilization decisions made at the company's client level is trust in the reputation and reliability of the firm. The most
important factor in this market will be the quality of the product. Unlike our competitor's nappies and pads, ours are going to have double the
absorbent super gel making our absorbency superior to most top brands. This converts into fewer diapers and pads being used per day, encouraging
customers to order our products.

4.3.2 Main Competitors

There are currently few local companies competing in our market niche. However upon closer research it was identified that South African
products constitute approximately 70% of the market, dominating the market. Hence we intend to market ourselves as a local quality manufacturer
of diapers and pads in such a way that with time customers will choose our products over competitors' on the basis of our lower costs, faster order
fulfillment times and high quality. The following were identified as our main local competitors:
1.

X
Located in Francistown, X, also known as N, specializes in the manufacture of baby napkins, bath and hand towels, face and wash cloths,
beach towels, bath sheets and waffle gowns. With a large share of the northern market, mainly due to the large distance between Francistown
and South Africa, N is an established player on the market and was rated as the best performer in the textile sector in 1999. It has had
tremendous growth in a short time, with state of the art machinery currently in place.
During 1999 the company pursued the European markets with employment rising to 340 people. It has a well-coordinated sales office, which
ensures orders are met and delivered on time, as well as a professional sales staff that ensures customer inquiries are well handled. Its customer
base is largely from South Africa with few local customers. Prices are extremely competitive with a pack of four black diamond napkins
(70x70cm) selling for P27.08. Though the local orders are few they tend to be of large amounts. It obtains most of its raw materials, including
yarn from Zimbabwe, with the actual weaving being done in the factory. Transport is normally provided for bulk orders of above P2,500.00

throughout Botswana taking four weeks at maximum to deliver the order. The actual delivery time often depends on whether the stock is
available in-house. The company is an investment product of B, with a considerable degree of financial and technical backing.
2.

Y
Located in Gaborone West, Y specializes in the manufacture of baby napkins, towels, face cloths, tea towels and dish cloths. It has a large
warehouse whose logistics/operations are well organised, coordinated and closely supervised. Prices are extremely competitive due to the
above-mentioned factors with baby napkins selling at approximately P4.00 (70x70cm); Infant napkin approximately P3.00 (60x60cm) and a
printed baby napkin selling at P6.00 (70x70cm). It targets both retailers and consumers ensuring a large customer base.

3.

Z
Located in Tlokweng Industrial, Z specializes in the manufacture of baby napkins, towels, face cloths, dishcloths, swabs and other textiles.

4.

K
Located in Tlokweng, K intends to go into manufacturing of baby napkins in bulk in the near future. It currently has the capacity to do so and
manufactures face cloths and dish towels, all for the South African market. It employs 145 people and is also an investment product of B.

Strategy and Implementation Summary

Baby Nappies World intends to win and maintain customers by providing products that add value in terms of price, quality, safety,
availability and functionability, and are supported by a dedicated, well-trained team. This shall be important to the successful
implementation of our overall strategy and hence the need to ensure we are focused and working harmoniously towards attainment of the
goals and objectives. We initially intend to be focusing on satisfying the local market.
Our marketing strategy emphasises focus. We are a new company and hence must focus our efforts towards informing customers of our
existence and the products we are able to supply. Initially Baby World Nappies will focus on the local market before contemplating entering
the regional market. This is mainly due to our limited resources and the need to instill confidence in our products as well as business
operations. The target customers will include key decision-makers and order-makers in hospitals, clinics, wholesalers and informal traders,

who often order or recommend on behalf of the whole organisation, the aim being to obtain an initial order and fully satisfy the customer
from then on. Hence:

We intend to focus on delivering quality products at affordable prices that in turn will produce good referrals, which can then
generate revenue.

We intend to build image and awareness through consistency and distinctiveness in our order fulfillment.

Our strategy is to grow the business by nurturing clients and establishing good one to 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) we 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, manufacturing and delivery.
Baby Nappies World will develop new channels of distribution as the company grows. Its plan to become a nationally known brand may be
pushed forward by entering into contracts with the numerous clinics and hospitals throughout the country, such that it gives Baby Nappies
World exclusive access to the relatively remote areas in the country.
5.1 SWOT Analysis
We shall be in a highly lucrative market in a growing economy. We foresee our strengths as the ability to respond timeously to customer's
orders and provide them with the correct quantity. Our key personnel will be well trained in the actual production of our products so as to
ensure on time deliveries to the client. This will go a long way towards penetrating the market. Below are the summarized strengths,
weaknesses, opportunities and threats.
5.1.1 Strengths

Relationship selling: We intend to get to know our customers, one on one. Our direct sales efforts will seek to maintain a
relationship with our customers.

Diversified customer base: We intend to obtain orders for our products from a wide customer base. This will ensure lack of
dependency on one customer.

Low production costs: The costs of our products will be approximately a third less than the famous brand names and end user
prices.

5.1.2 Weaknesses

A limited financial base compared to our South African counterparts.

The introduction of new organisational practices and personnel who have not previously worked together presents a challenge to
the organisation.

Our infancy dictates that wholesalers and other intermediaries might be skeptical about our products.

5.1.3 Opportunities

Service. As our intended target markets are in relatively accessible areas we intend to be able to meet their requirements in the
shortest possible time.

Current drive by government towards encouraging the participation of indigenous entrepreneurs and diversification of the economy
presents an opportunity that we may fully utilize.

Presently there is no reliable local manufacturer of diapers and sanitary pads, with less than a handful currently on the market.

5.1.4 Threats

The "Foreign is good, local is poor" belief may present a difficult hurdle to be overcome.

Existing competition, both local and foreign. Wholesalers and institutions may express satisfaction with their current diapers and
sanitary pads.

The possibility of other start up diaper/sanitary pad manufacturing companies generated by healthy economic growth, establishing
in the market.

5.2 Marketing Strategy

We intend to implement a progressive marketing strategy. In terms of marketing we intend that our name and products are marketed on
an extensive basis to ensure that customers are aware of our existence. In price, we intend to offer reasonable and competitive prices in
comparison to South African competitors and we need to be able to sustain that. Our marketing will strive to ensure that we establish long
relationships with clients.
5.2.1 Pricing Strategy
Baby Nappies World's products will be competitively priced in relation to its South African competitor's products. Due to the introductory
nature of our products we intend to implement a penetration pricing strategy which will ensure that potential customers are attracted by
our lower prices, up until our products are fully appreciated on the market, especially in terms of their quality. We will initially charge PX
per nappy. However this will dictate that our costs are prudently kept so as to ensure our financial goals come to fruition.
5.2.2 Promotion Strategy

The promotion strategy shall initially revolve around informing customers of our existence, the products we produce, and how to order
them. The intention will be to highlight the following key benefits of ordering our products instead of competitors, including:

Our lower production costs which will convert to lower order prices.

Quality products able to compete with the top brands.

Faster order fulfillment times.

We intend to be well known by all our stakeholders in particular wholesalers, hospitals and other such institutions that may utilize our
products, as well as informal traders. Hence we shall leverage our presence using introductory letters, brochures and other sales literature.
We intend to spread the word about our business through the following:
1. Personal Selling. Undoubtedly customer solicitation face-to-face will be our most powerful form of promotion mainly due to the
fact that our products are mainly ordered by individuals in organisations and institutions. Its flexibility will enable us to give our
customers concise details of what we have to offer and the benefits of using our products. Another important determinant in
utilizing personal selling is the fact that we are relatively new on the market. As such potential customers/clients will to a certain
degree be skeptical towards our products and their efficacy.

2. Advertising. In view of the fact that we are new on the market we intend to undertake adequate advertising of our name and
products we offer. This is to instill awareness and knowledge of our existence in the market place, which hopefully shall convert into
market share. A constant look out will be made of any special editions in the local newspapers, which may provide an opportunity
for us to advertise our products and business name.

3. Direct Marketing. This will be used to a limited extent in the form of telemarketing and informing potential customers and
obtaining referrals where possible. In the case of telemarketing it will involve our targeting potential customers of our products and
informing them of our existence. We may then arrange for an appointment with the respective decision-maker/order-maker, with the
intention being to encourage them to order our products.

4. Events. We intend to attend trade shows and exhibitions to increase awareness of our products and services. These events will also
enable us to interact with potential clients who may decide to order our products. Trade shows that instantly come to mind include
Botswana International Trade Fair (BITF) and BITEC, though the latter might not be as important as the former.
5.2.3 Distribution Strategy
Our products shall initially be mainly sold through personal selling and referral business, with relationships and customer experience
being, by far, the most important factor. Relationships in this regard means establishment of links with the various wholesalers, hospitals
and clinics which often order or require our products for their customers. Invariably the experience a customer has with our products will
go a long way toward influencing the intermediary to continue to order our products, and whether they should refer their friends to order
our products. To this end we intend to ensure we provide a quality product with superior absorbency and comfort. Hence we initially intend
to use the following channels: (discussion omitted).
5.2.4 Positioning Statement
We intend to position ourselves as a desirable alternative source of high quality disposable baby nappies, geriatric/adult diapers and
sanitary pads. This shall be undertaken through use of high quality raw materials and production processes so as to ensure the efficient
delivery of quality products. The product strategy will also be based on quality, combined with making the product easily available to the
customers. An important competitive edge will be our assembly strategy, which will be based on good quality, such that production and
delivery are not only a pleasure, but also a feature that enhances the sense of quality and perception by clients. Our faster delivery,
relative to our South African counterparts, will also serve as an important competitive advantage on the market.
Through our lower prices, made possible by reduced local delivery charges, we intend to attract a large portion of the market, both directly
and indirectly through referrals.
5.3 Sales Strategy
For the short term at least, the selling process will depend on personal selling/networking and advertising to inform potential customers
about the products we offer and the benefits of utilizing our products. Our marketing does not intend to affect the perception of need as
much as knowledge and awareness of the product category.
5.3.1 Sales Forecast
Sales forecast information is presented in the chart and table below.

SALES FORECAST

YEAR 1

YEAR 2

YEAR 3

Nappies, diaper, pads

P748,800

P1,075,200

P1,142,400

Other

P0

P0

P0

TOTAL SALES

P748,800

P1,075,200

P1,142,400

Sales

Direct Cost of Sales

Year 1

Year 2

Year 3

Nappies, diaper, pads

P361,920

P389,760

P389,760

Other

P0

P0

P0

Subtotal Direct Cost of Sales

P361,920

P389,760

P389,760

Management Summary
Our human resources strategy shall constitute an important element in realizing our business objectives and goals. By having enthusiastic, capable
and motivated staff we intend to meet customers' order fulfillment times and ensure their satisfaction with our products and service. This will also
ensure that we build the competitive advantage of being able to comprehensively meet our customers' needs. There will be need to evaluate jobs
and remuneration packages against market benchmarks to employees for their agreed and set out tasks so as for ensure they are competitive.

6.1 Organizational Structure

Baby Nappies World shall be managed primarily by the directors/owners. The company will engage a non-formal functional organisation structure
whereby people shall be focusing on their prime area of expertise. A non-formal structure is flexible and responsive to the market dictates, enabling
the company to delight customers by providing them with what they want, when they want it and faster than the competition. In engaging this
organisation structure we intend that there is open communication between all personnel at all levels.
As the company grows there will be more structure to the organisation, with new employees being assigned a supervisor or subordinate. When the
company is at its full staff potential, it will operate as any closely held organisation, but maintain the personal interest in each employee's personal
and family welfare and their contributions to the business.

6.2 Management Team

The founders of Baby Nappies World are passionate about the activities it will promote and offer on the market. Management style will reflect the
participation of the directors/shareholders. As outlined previously we do not intend to be very hierarchical especially considering our size and need
to respond timeously to customers' orders. Management's ongoing initiatives will include driving sales, market share and productivity. Please find
below a brief outline of the directors' work experience and qualifications. (discussion omitted)

6.3 Personnel Plan

We believe this plan meets the commitments of our mission and business objectives. We intend to grow into a large organisation, though in doing
so ensure that we wish to stay responsive to customers orders and requests. We want the company to stay lean and flexible so that we can respond
to our markets' needs quickly. As we expand and increase in size we do expect to increase our personnel.
Baby Nappies World recognises that our employees contribute fundamentally to the Company's long-term prosperity, acknowledging our obligation
to remunerate them competitively. We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure job
satisfaction and enrichment through delegation of authority. Our compensation will include a competitive salary, generous profit sharing, plus a
minimum of three weeks vacation. As time progresses we intend to enhance our capacity to attract and retain people of quality, inter alia, through
benefits such as housing and family education grants.

PERSONNEL PLAN

All departments

YEAR 1

YEAR 2

YEAR 3

P43,824

P76,174

P104,661

Other

TOTAL PEOPLE

Total Payroll

P0

P0

P0

10

12

P43,824

P76,174

P104,661

6.4 Training
At the onset training shall be obtained from Q, the suppliers of the manufacturing equipment, in the actual operations of the machines. Thereafter
in-house training shall be undertaken. This training will not only include product and technical aspects, but also expand to give much greater
knowledge of customers, market trends, products, new technology aids, and time management amongst other such variables. This is to ensure that
we are continuously able to anticipate our markets needs-a proactive approach, which is so essential if we are to gain and maintain a competitive
advantage on the market.
External training will be conducted, mainly in South Africa with reputable organisations to stay aware of the latest products and services on the
market, and how to install or maintain them. This will also ensure that our personnel are able to meet the high standards, of these organisations.

6.5 Feedback and Control

1.

Important notices and developments will be continuously communicated to employees to keep them abreast of developments and promoting
a sense of belonging and oneness in the organisation.

2.

We will encourage our employees to put forward any suggestions they might have regarding the improvement of any of the company's
functions-an open door philosophy. Such a culture will enhance innovativeness and creativity, in turn leading to job satisfaction and
enrichment.

3.

We intend to make sure that our employees understand the goals of the firm, are customer focused, proud of their work and work as a team.
This will encourage employees to become entrepreneurial and customer responsible, in addition to unifying staff in customer focus and values.

6.6 Corporate Social Responsibility

We recognise the fact that the broader community in which we operate affords us our 'license to trade'. We intend to establish relationships based on
trust and mutual advantage through engaging in a wide range of active social responsibility programs. Our efforts on community service will show
that the company has its own community at heart, contributing towards the establishment of a good and reputable image. We intend to be a
responsible corporate citizen fully contributing positively towards the environment in which we shall operate. Furthermore, (discussion omitted).
Financial Plan
The financial plan shall be essential if we are to meet our objectives. The intention is to finance growth through cash flow.
One of the most important factors will be the payment terms as agreed between the client or customer. We can't push our customers hard
on collection days, because they are extremely sensitive and will normally judge us on our terms. However there are certain instances
where we will have the bargaining power instead of the customer. Examples include informal traders and actual consumers of our
products. Therefore there is need to develop a permanent system of receivables financing mutually agreed between both parties. Hence in
the financial plan we intend to have the following:
1. A fundamental respect for giving our customers value, and for maintaining a healthy and congenial workplace.

2. Cash flow as first priority, growth second, profits third.

3. Respect for realistic forecasts, and conservative cash flow and financial management.
Of these only (1) and (3) are flexible.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are included in the financial plan as annual assumptions. The
monthly assumptions are included in the appendix. From the beginning, we recognize that collection days are critical, but not a factor we
can influence easily. At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and personnel burden are based
on conservative assumptions.
Some of the more important underlying assumptions are:

We assume a strong economy, without major recession.

We assume, of course, that there are no unforeseen changes in economic policy to make our products and service immediately
obsolete.

Other key financial assumptions, including 30-day average collection days, sales entirely on invoice basis including a favorable deposit
policy, expenses mainly on a net 30 day basis, 30 days on average for payment of invoices, and present-day interest rates.

GENERAL ASSUMPTIONS

Plan Month

YEAR 1

YEAR 2

YEAR 3

Current Interest Rate

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

18.08%

17.00%

18.08%

Other

7.2 Key Financial Indicators

We foresee growth in sales at a faster rate than operating expenses, and a bump in our collection days as we seek to spread the business
during start-up.
Collection days are very important. We do not want to let our average collection days get above 30 under any circumstances. This could
cause a serious problem with cash flow, because our working capital situation is chronically tight. However, we recognize that we cannot
control this factor easily, because of the relationship with our clients.

7.3 Break-even Analysis

Our break-even analysis will be based on running costs, that is costs we shall incur in keeping the business running, including salaries and
wages, rent, machine maintenance costs, water and electricity, insurance amongst others. We estimate the company will comfortably
exceed the break-even sales volume.

BREAK-EVEN ANALYSIS

Monthly Revenue Break-even

P16,967

Assumptions:

Average Percent Variable Cost

48%

Estimated Monthly Fixed Cost

P8,766

7.4 Revenue Generation

Baby Nappies World will receive its revenue streams from sales of its diapers and sanitary pads. However we will also look into whether we
are able to generate revenue from by-products obtained from manufacturing our main products. Additional research into the above shall
be undertaken.
7.5 Expense Forecast
Initial expenses shall not be extremely high considering the fact that the manufacture of our products does not require much electricity
(220v) or water. Expenses will be brought about by transport charges incurred in delivering our products to customers, as well as going out
on sales calls procuring orders. However the strategy will involve including these charges in the prices of our products. As time progresses
we intend to undertake marketing programs to ensure awareness of our existence on the market. Invariably this will result in marketing
expenses being incurred.
7.6 Projected Profit and Loss
Our projected profit and loss is shown in the appendix, with sales increasing from more than P748,800 the first year to more than
P1,075,200 the second, and P1,142,400 in the third year. We do expect to more than break-even in the first year of operation. As with the
break-even, we are projecting very conservatively regarding cost of sales and gross margin. Our cost of sales should be much lower, and
gross margin higher, than in this projection.

PRO FORMA PROFIT AND LOSS

YEAR 1

YEAR 2

YEAR 3

Sales

P748,800

P1,075,200

P1,142,400

Direct Cost of Sales

P361,920

P389,760

P389,760

Other

P0

P0

P0

TOTAL COST OF SALES

P361,920

P389,760

P389,760

Gross Margin

P386,880

P685,440

P752,640

Gross Margin %

51.67%

63.75%

65.88%

Payroll

P43,824

P76,174

P104,661

Sales and Marketing and Other Expenses

P16,200

P20,400

P20,400

Depreciation

P10,800

P10,800

P10,800

Maintenance

P800

P1,000

P800

Utilities

P2,400

P3,000

P4,200

Installation Costs

P600

P0

P0

Insurance

P12,000

P12,000

P14,400

Rent

P12,000

P13,200

P14,520

Payroll Taxes

P6,574

P11,426

P15,699

Expenses

Other

P0

P0

P0

Total Operating Expenses

P105,198

P148,000

P185,480

Profit Before Interest and Taxes

P281,682

P537,440

P567,160

EBITDA

P292,482

P548,240

P577,960

Interest Expense

P0

P0

P0

Taxes Incurred

P50,552

P91,365

P102,561

Net Profit

P231,130

P446,075

P464,598

Net Profit/Sales

30.87%

41.49%

40.67%

7.7 Projected Cash Flow

Our cash flow is shown in the following chart and table.

Need actual charts?

PRO FORMA CASH FLOW

YEAR 1

YEAR 2

YEAR 3

P187,200

P268,800

P285,600

Cash Received

Cash from Operations

Cash Sales

Cash from Receivables

P462,480

P763,194

P847,905

SUBTOTAL CASH FROM OPERATIONS

P649,680

P1,031,994

P1,133,505

Sales Tax, VAT, HST/GST Received

P0

P0

P0

New Current Borrowing

P0

P0

P0

New Other Liabilities (interest-free)

P0

P0

P0

New Long-term Liabilities

P0

P0

P0

Sales of Other Current Assets

P0

P0

P0

Sales of Long-term Assets

P0

P0

P0

New Investment Received

P9,000

P0

P0

SUBTOTAL CASH RECEIVED

P658,680

P1,031,994

P1,133,505

Expenditures

Year 1

Year 2

Year 3

Additional Cash Received

Expenditures from Operations

Cash Spending

P43,824

P76,174

P104,661

Bill Payments

P455,291

P539,916

P560,907

SUBTOTAL SPENT ON OPERATIONS

P499,115

P616,090

P665,568

Sales Tax, VAT, HST/GST Paid Out

P0

P0

P0

Principal Repayment of Current Borrowing

P0

P0

P0

Other Liabilities Principal Repayment

P0

P0

P0

Long-term Liabilities Principal Repayment

P0

P0

P0

Purchase Other Current Assets

P0

P0

P0

Purchase Long-term Assets

P0

P0

P0

Dividends

P0

P0

P0

Additional Cash Spent

SUBTOTAL CASH SPENT

P499,115

P616,090

P665,568

Net Cash Flow

P159,565

P415,904

P467,937

Cash Balance

P196,608

P612,512

P1,080,449

7.8 Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position. The three-year estimates are included in the
appendix.

PRO FORMA BALANCE SHEET

YEAR 1

YEAR 2

YEAR 3

Cash

P196,608

P612,512

P1,080,449

Accounts Receivable

P99,120

P142,326

P151,222

Inventory

P35,728

P38,476

P38,476

Assets

Current Assets

Other Current Assets

P0

P0

P0

TOTAL CURRENT ASSETS

P331,456

P793,314

P1,270,146

Long-term Assets

P54,277

P54,277

P54,277

Accumulated Depreciation

P10,800

P21,600

P32,400

TOTAL LONG-TERM ASSETS

P43,477

P32,677

P21,877

TOTAL ASSETS

P374,933

P825,991

P1,292,023

Liabilities and Capital

Year 1

Year 2

Year 3

Accounts Payable

P39,803

P44,786

P46,220

Current Borrowing

P0

P0

P0

Other Current Liabilities

P0

P0

P0

Long-term Assets

Current Liabilities

SUBTOTAL CURRENT LIABILITIES

P39,803

P44,786

P46,220

Long-term Liabilities

P0

P0

P0

TOTAL LIABILITIES

P39,803

P44,786

P46,220

Paid-in Capital

P109,000

P109,000

P109,000

Retained Earnings

(P5,000)

P226,130

P672,205

Earnings

P231,130

P446,075

P464,598

TOTAL CAPITAL

P335,130

P781,205

P1,245,804

TOTAL LIABILITIES AND CAPITAL

P374,933

P825,991

P1,292,023

Net Worth

P335,130

P781,205

P1,245,804

7.9 Business Ratios

Standard business ratios are shown in the following table. The Industry Profile column shows ratios for Standard Industry Code (SIC) 2676,
Sanitary Paper Products.

RATIO ANALYSIS

YEAR 1

YEAR 2

YEAR 3

INDUSTRY
PROFILE

0.00%

43.59%

6.25%

0.00%

Accounts Receivable

26.44%

17.23%

11.70%

27.60%

Inventory

9.53%

4.66%

2.98%

11.20%

Other Current Assets

0.00%

0.00%

0.00%

27.70%

Total Current Assets

88.40%

96.04%

98.31%

66.50%

Long-term Assets

11.60%

3.96%

1.69%

33.50%

TOTAL ASSETS

100.00%

100.00%

100.00%

100.00%

Current Liabilities

10.62%

5.42%

3.58%

33.80%

Long-term Liabilities

0.00%

0.00%

0.00%

20.00%

Total Liabilities

10.62%

5.42%

3.58%

53.80%

Sales Growth

Percent of Total Assets

NET WORTH

89.38%

94.58%

96.42%

46.20%

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

51.67%

63.75%

65.88%

33.60%

Selling, General & Administrative

Expenses

20.44%

22.26%

24.68%

21.20%

Advertising Expenses

0.96%

0.89%

0.84%

0.40%

Profit Before Interest and Taxes

37.62%

49.99%

49.65%

2.90%

Current

8.33

17.71

27.48

1.77

Quick

7.43

16.85

26.65

1.24

Total Debt to Total Assets

10.62%

5.42%

3.58%

53.80%

Pre-tax Return on Net Worth

84.05%

68.80%

45.53%

6.20%

Percent of Sales

Main Ratios

Pre-tax Return on Assets

75.13%

65.07%

43.90%

13.50%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

30.87%

41.49%

40.67%

n.a

Return on Equity

68.97%

57.10%

37.29%

n.a

Accounts Receivable Turnover

5.67

5.67

5.67

n.a

Collection Days

57

55

63

n.a

Inventory Turnover

10.91

10.51

10.13

n.a

Accounts Payable Turnover

12.44

12.17

12.17

n.a

Payment Days

27

28

30

n.a

Total Asset Turnover

2.00

1.30

0.88

n.a

Activity Ratios

Debt Ratios

Debt to Net Worth

0.12

0.06

0.04

n.a

Current Liab. to Liab.

1.00

1.00

1.00

n.a

Net Working Capital

P291,653

P748,528

P1,223,927

n.a

Interest Coverage

0.00

0.00

0.00

n.a

Assets to Sales

0.50

0.77

1.13

n.a

Current Debt/Total Assets

11%

5%

4%

n.a

Acid Test

4.94

13.68

23.38

n.a

Sales/Net Worth

2.23

1.38

0.92

n.a

Dividend Payout

0.00

0.00

0.00

n.a

Liquidity Ratios

Additional Ratios

Controls

The diapers and sanitary pads market has not been fully explored. With this in mind we intend to aggressively market our existence. The
introduction of quality sales and marketing literature will enable the company to effectively market to potential customers with a positive image
and impression. This will be supported by the relationships we would have established with several of our customers and clients.
Throughout the year the intention will be to undertake regular evaluations of our products and marketing programs so as to ensure that we are in
line with our intended objectives. In summary we intend to undertake the following:
1.

Tracking and follow-up: We intend to have the discipline, as an organisation, to track results of the business plan and make sure that we
implement.

2.

Market segment focus: We intend to have the discipline to maintain the market segment focus.

3.

Saying no: Though difficult initially we intend to be able to say no to special deals that take us away from the target focus but in particular
those that are unprofitable.

8.1 Financial Risks and Contingencies

1.

We intend to watch our results very carefully. We may need to drop a certain product type(s), if we cannot get the margin up or it seems to be
unviable. We might be able to avoid the straight competition with the major companies by focusing more on the target market mentioned
previously.

2.

Another possibility is the introduction of a new company(s) in our niche. Hence the need to undertake aggressive marketing and networking.

8.2 Implementation
Baby Nappies World will start by obtaining trial orders from several wholesalers and institutions with the objective being to impress them
regarding our products' quality. This will see us obtaining long-term contracts that will ensure we grow in the right direction. We will prepare our
sales literature, including business cards mainly through engaging a reputable printing organisation. In undertaking the above we intend to ensure
that the goals of the organisation are achieved as well as delegation of responsibility for maximum effectiveness.

Appendix
SALES FORECAST

MONT
H1

MONT
H2

MONT
H3

MONT
H4

MONT
H5

MONT
H6

MONT
H7

MONT
H8

MONT
H9

MONT
H 10

MONT
H 11

MONT
H 12

Sales

Nappie
s,
diaper,
pads

0
%

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

Other

0
%

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

TOTAL
SALES

Direct
Cost of
Sales

Month
1

Month
2

Month
3

Month
4

Month
5

Month
6

Month
7

Month
8

Month
9

Month
10

Month
11

Month
12

Nappie
s,
diaper,
pads

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

Other

Subtot
al
Direct
Cost of
Sales

PERSONNEL PLAN

MONT
H1

MONT
H2

MONT
H3

MONT
H4

MONT
H5

MONT
H6

MONT
H7

MONT
H8

MONT
H9

MONT
H 10

MONT
H 11

MONT
H 12

All
department
s

0
%

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

Other

0
%

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

TOTAL
PEOPLE

Total
Payroll

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

GENERAL ASSUMPTIONS

MONT
H1

MONT
H2

MONT
H3

MONT
H4

MONT
H5

MONT
H6

MONT
H7

MONT
H8

MONT
H9

MONT
H 10

MONT
H 11

MONT
H 12

10

11

12

Current
Interes
t Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Longterm
Interes
t Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Tax
Rate

30.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

17.00%

MONT
H7

MONT
H8

Plan
Month

Other

PRO FORMA PROFIT AND LOSS

MONT
H1

MONT
H2

MONT
H3

MONT
H4

MONT
H5

MONT
H6

MONT
H9

MONT
H 10

MONT
H 11

MONT
H 12

Sales

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P57,60
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

P67,20
0

Direct
Cost of
Sales

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P27,84
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P32,48
0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

TOTAL
COST OF
SALES

P27,8
40

P27,8
40

P27,8
40

P27,8
40

P27,8
40

P27,8
40

P32,4
80

P32,4
80

P32,4
80

P32,4
80

P32,4
80

P32,4
80

Gross
Margin

P29,76
0

P29,76
0

P29,76
0

P29,76
0

P29,76
0

P29,76
0

P34,72
0

P34,72
0

P34,72
0

P34,72
0

P34,72
0

P34,72
0

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

51.67
%

Payroll

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

Sales and
Marketing
and Other
Expenses

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

P1,350

Depreciati
on

P900

P900

P900

P900

P900

P900

P900

P900

P900

P900

P900

P900

Other

Gross
Margin %

Expenses

Maintenan
ce

P0

P0

P200

P0

P0

P200

P0

P0

P200

P0

P0

P200

Utilities

P200

P200

P200

P200

P200

P200

P200

P200

P200

P200

P200

P200

Installatio
n Costs

P600

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Insurance

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

Rent

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P1,000

P548

P548

P548

P548

P548

P548

P548

P548

P548

P548

P548

P548

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Total
Operating
Expenses

P9,250

P8,650

P8,850

P8,650

P8,650

P8,850

P8,650

P8,650

P8,850

P8,650

P8,650

P8,850

Profit
Before
Interest
and Taxes

P20,51
0

P21,11
0

P20,91
0

P21,11
0

P21,11
0

P20,91
0

P26,07
0

P26,07
0

P25,87
0

P26,07
0

P26,07
0

P25,87
0

EBITDA

P21,41
0

P22,01
0

P21,81
0

P22,01
0

P22,01
0

P21,81
0

P26,97
0

P26,97
0

P26,77
0

P26,97
0

P26,97
0

P26,77
0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Payroll
Taxes

Other

Interest
Expense

15
%

Taxes
Incurred

P6,153

P3,589

P3,555

P3,589

P3,589

P3,555

P4,432

P4,432

P4,398

P4,432

P4,432

P4,398

Net Profit

P14,35
7

P17,52
1

P17,35
5

P17,52
1

P17,52
1

P17,35
5

P21,63
8

P21,63
8

P21,47
2

P21,63
8

P21,63
8

P21,47
2

Net
Profit/Sale
s

24.93
%

30.42
%

30.13
%

30.42
%

30.42
%

30.13
%

32.20
%

32.20
%

31.95
%

32.20
%

32.20
%

31.95
%

PRO FORMA CASH FLOW

MONTH

MONTH

MONTH

MONTH

MONTH

MONTH

MONTH

MONTH

MONTH

MONTH

MONTH

10

11

MONTH 12

P14,400

P14,400

P14,400

P14,400

P14,400

P14,400

P16,800

P16,800

P16,800

P16,800

P16,800

P16,800

P0

P1,440

P43,200

P43,200

P43,200

P43,200

P43,200

P43,440

P50,400

P50,400

P50,400

P50,400

P57,60 P57,600 P57,600 P60,000 P60,240 P67,200 P67,200 P67,200

P67,200

Cash Received

Cash from
Operations

Cash Sales

Cash from
Receivables

SUBTOTAL
CASH FROM
OPERATION
S

Additional
Cash Received

P14,400

P15,840 P57,600

Sales Tax,

0.00%

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P9,000

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P57,60 P57,600 P57,600 P60,000 P60,240 P67,200 P67,200 P67,200

P67,200

VAT, HST/GST
Received

New Current
Borrowing

New Other
Liabilities
(interest-free)

New Longterm Liabilities

Sales of Other
Current Assets

Sales of Longterm Assets

New
Investment
Received

SUBTOTAL

P14,400

P24,840 P57,600

CASH

RECEIVED

Expenditures

Expenditures
from
Operations

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9 Month 10 Month 11

Month 12

Cash

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P3,652

P2,188

P64,631

P35,532

P35,687

P35,527

P35,532

P36,040

P45,944

P41,015

P41,170

P41,010

P41,015

P39,33 P39,179 P39,184 P39,692 P49,596 P44,667 P44,822 P44,662

P44,667

Spending

Bill Payments

SUBTOTAL

P5,840

P68,283 P39,184

SPENT ON

OPERATION
S

Additional
Cash Spent

Sales Tax,

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

VAT, HST/GST
Paid Out

Principal
Repayment of
Current
Borrowing

Other
Liabilities
Principal
Repayment

Long-term
Liabilities
Principal
Repayment

Purchase
Other Current
Assets

Purchase

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P39,33 P39,179 P39,184 P39,692 P49,596 P44,667 P44,822 P44,662

P44,667

Long-term
Assets

Dividends

SUBTOTAL

P5,840

P68,283 P39,184

CASH SPENT

Net Cash Flow

P8,560 (P43,443)

Cash Balance

P45,603

P2,160

P18,416

P18,261

P18,421

P18,416

P20,308

P10,644

P22,533

P22,378

P22,538

P22,533

P20,576

P38,837

P57,258

P75,674

P95,982 P106,627 P129,159 P151,537 P174,076

P196,608

PRO FORMA BALANCE SHEET

MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9

Assets

MONTH

MONTH

MONTH

10

11

12

Starting
Balances

Current
Assets

Cash

Accounts

P37,043

P45,603

P2,160

P20,576

P38,837

P57,258

P75,674

P95,982

P106,627

P129,159

P151,537

P174,076

P196,608

P0

P43,200

P84,960

P84,960

P84,960

P84,960

P84,960

P92,160

P99,120

P99,120

P99,120

P99,120

P99,120

P3,680

P30,624

P30,624

P30,624

P30,624

P30,624

P30,624

P35,728

P35,728

P35,728

P35,728

P35,728

P35,728

Receivable

Inventory

Other Current

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Assets

TOTAL

P40,723 P119,427 P117,744 P136,160 P154,421 P172,842 P191,258 P223,870 P241,475

CURRENT

P264,00 P286,385 P308,924 P331,456

7

ASSETS

Long-term
Assets

Long-term

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P54,277

P0

P900

P1,800

P2,700

P3,600

P4,500

P5,400

P6,300

P7,200

P8,100

P9,000

P9,900

P10,800

P54,277

P53,377

P52,477

P51,577

P50,677

P49,777

P48,877

P47,977

P47,077

P46,177

P45,277

P44,377

P43,477

Assets

Accumulated
Depreciation

TOTAL
LONG-TERM
ASSETS

TOTAL

P95,000 P172,804 P170,221 P187,737 P205,098 P222,619 P240,135 P271,847 P288,552

ASSETS

P310,18 P331,662 P353,301 P374,933

4

Liabilities and

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

P0

P63,447

P34,342

P34,503

P34,342

P34,342

P34,503

P44,577

P39,643

P39,803

P39,643

P39,643

P39,803

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

Capital

Current
Liabilities

Accounts
Payable

Current
Borrowing

Other Current

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P63,447

P34,342

P34,503

P34,342

P34,342

P34,503

P44,577

P39,643

P39,803

P39,643

P39,643

P39,803

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P0

P63,447

P34,342

P34,503

P34,342

P34,342

P34,503

P44,577

P39,643

P39,803

P39,643

P39,643

P39,803

P100,000

P100,000

P109,000

P109,000

P109,000

P109,000

P109,000

P109,000

P109,000

P109,000

P109,000

P109,000

P109,000

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

(P5,000)

P0

P14,357

P31,879

P49,234

P66,756

P84,277

P101,632

P123,271

P144,909

P166,381

P188,020

P209,658

P231,130

Liabilities

SUBTOTAL
CURRENT
LIABILITIE
S

Long-term
Liabilities

TOTAL
LIABILITIE
S

Paid-in
Capital

Retained
Earnings

Earnings

TOTAL

P95,000 P109,357 P135,879 P153,234 P170,756 P188,277 P205,632 P227,271 P248,909

CAPITAL

TOTAL

P270,38 P292,020 P313,658 P335,130

1

P95,000 P172,804 P170,221 P187,737 P205,098 P222,619 P240,135 P271,847 P288,552

LIABILITIE

P310,18 P331,662 P353,301 P374,933

4

S AND
CAPITAL

Net Worth

P95,000

P109,357

P135,879

P153,234

P170,756

P188,277

P205,632

P227,271

P248,909

P270,381

P292,020

P313,658

P335,130