Prepared by: Submitted to:

Mecor M. Riego Mrs. Christian Jane J. Tiu

BSM –III (Negros Group 1) Instructor –
Midwifery Entrepreneurship

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EXECUTIVE SUMMARY

Churros Company is a food business which aims to provide affordable, fun, and healthy
snacks to Doña Hortencia Salas Benedicto National High School (DHSBNHS)
management, employees, professors, and students. This enterprise offers churros and
carrot peanut butter balls to the school community at Guerra St., La Carlota City, Negros
Occidental.

The entrepreneurs involved in the creation of this partnership are Mecor Riego, Glen
Obelidon, Marie Occeña, Rizalyn Tingson and Charmaine Trocino. The partners are 4
educators of school and one is a registered midwife. This is the first time they have
embarked in a business undertaking.

As the project will require the consumption of various raw ingredients available in the
local market, it will contribute to the local economy by helping local businessmen, such
as peanut butter vendors and grocery store owners. Because Churros Company has
healthy offerings such as carrot peanut butter balls, banana churros and mango churros,
it will contribute in the long-run to the national economy by nourishing students, who
are the future labor force of the country. The taxes to be paid by the entity will also help
drive the national economy.

MARKETING PLAN

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Description of the Product
Churros are tasty deep fried, ridged sticks of dough, sugar-sprinkled and served with warm chocolate
sauce for dipping. They have long been the working man’s breakfast or after-party snack of choice in
Spain, with churrerías often the first eateries to open in the morning, and the last to close at night.
(http://www.theprisma.co.uk/2011/07/17/churros-a-secret-history/). The Churros Company will offer
three flavours of churros: original, banana, and mango.
A classic Christmas confection in some southern states in America, peanut butter balls consist of peanut
butter and other ingredients rolled into balls. When dipped in chocolate, these are called Buckeye
Candy (http://www.deepsouthdish.com/2011/08/old-fashioned-peanut-butter-balls.html). Churros Co.
will be putting a new spin into this rich dessert by adding carrots to the mixture. Customers can choose
to have their carrot peanut butter balls dipped in chocolate and topped with either rainbow or choco
sprinkles.
Three pieces of churros will be included per serving, and the carrot peanut butter balls will also be
served by three’s.
OUR VISION
Our vision is to be a sought-after pastry snack provider in La Carlota City to satisfy the urge for the
sweet taste that La Carloteños crave several times a day (After meals, in breaks and the “merienda”)
and that is part of our cultural and culinary heritage. Aside from these, Churros Co. shall have the
unique selling proposition of “Deliciously Fun!”
OUR MISSION
Our mission is “to bring customers delight with every taste and bite”. CHURROS CO is dedicated to
providing top of the line products and quality service. It is our goal to prosper as a business and grow
as entrepreneurs. By doing so we share our success in the global market, as well as provide a profitable
return to our team members and business partners.
OBJECTIVES
 To acquire 6% market shares in the La Carlota City
 To position ourselves as a small scale enterprise, with strong ties to the community.
 To be perceived as the cleanest, most responsive food stand within the school vicinity
 To end year 1 with a 10% increase in contribution margin.
 To increase sales , 10 % in year 2, 25% year 3 and 50% in year 4 and 5.

GOALS
 To maintain positive balance in our lives so that the business rounds us out and reflects our values.

 To offer our community wholesome foods that are satisfying, great tasting, and worth every cent.
 To have our employee/s and customers feel appreciated, supported and satisfied, every time they come
in.
 To introduce new products in the local market

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Comparison of the Product with its Competitors
Currently churros and carrot peanut butter (CPB) balls are not offered in Digos City. These are unique
products that will compete with the sweet offerings within the market area. The Churros Co. banks on
the novelty of its creations to entice customers to try our products. To retain customers, we will ensure
that every batch of churros and carrot peanut butter balls will have the highest quality and consistency.
The snacks considered relatively comparable to our products are fried bananas, kwek-kwek, fishballs,
tempuras, cassava cake, and kamote delight.
Our price is equivalent to the price of one cassava cake, but is higher compared to the other sweet
products mentioned. The packaging for our product is more presentable than that of the other sweet
snacks in the canteen, giving us a competitive edge.

Location
Churros Co. will operate its first stand inside the DSHBNHS campus in La Carlota City, a 3rd class city
in Negros Occidental, Philippines. Most of the production process shall take place in the individual
partners’ homes for the first three years of operations. On Year 3 onwards, initial preparation of raw
materials shall also occur in the stand.

Market Area
The Churros Company production and sales area shall be in a stand located adjacent to the Master
Siomai cubicle but inside the Students’ Lounge near the DHSBNHS canteen.

Main Customers
The main customers of Churros Co. stand shall be the students, college students, faculty, staff, and
other employees of DHSBNHS and La Carlota City College who are present during regular school
days.

Market Share
Due to time and labor limitations, it is estimated that Churros Company will serve carrot peanut butter
balls and churros at a rate of 180 servings, each, per day.

Selling Price
Churros Co. plans to sell three 3-inch pieces of churros (any flavor) in a small paper container, along
with a chocolate dip in a small plastic container, at an affordable price of P10.00. For the same price a
customer can buy three pieces of any type of carrot peanut butter ball in a wax paper container.
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Sales Revenue
Year 1 Year 2 Year 3 Year 4 Year 5
626,400.00 689,040.00 861,300.00 1,722,600.00 1,894,860.00

Promotional Measures
Churros Co. will host a grand opening and product launch with free samples on June 6, 2016. Upbeat
music shall accompany the event. Flyers shall be distributed and balloons shall be set up around the
stand.
The Churros Co. stand shall bear a sign with the Churros Co. logo and shall be decorated in a way that
reflects the Churros Co. mission and vision. The point-of-sale display will be done in a creative manner
to appear visually appealing to potential customers

Marketing Strategy
To guide the organization and to leave a distinct impression upon its customers, the Churros Co. shall
have mission and vision statements, which will be displayed prominently on its stand. Our mission is
“to bring customers delight with every taste and bite”. Our vision is to be a sought-after pastry snack
provider in La Carlota City. Aside from these, Churros Co. shall have the unique selling proposition of
“Deliciously Fun!”
Churros Co. will position itself as a leader in the sweet snacks market by offering unique products that
will satisfy customer’s cravings and budget. This product differentiation strategy is expected to capture
the attention of the academic community.
Our marketing strategy will include word-of-mouth referrals and social media campaigns. A Facebook
page shall be set up, showcasing Churros Co. products.
Marketing Budget

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Churros Co. will mostly rely on the goodwill it will generate through its innovative and high-quality
food offerings. As such, we expect our customers to share good reviews about us orally or through
social media. Thus the marketing budget is simply broken down into cash needed for the grand opening
and product launch, as follows:
DESCRIPTION QUANTITY COST TOTAL
Balloons 100 pieces 200.00/pack of 100’s 200.00
Flyers 100 pieces 1.00 100.00
Free Samples 180 servings of carrot 5.73/ serving 1,031.40
peanut butter balls

180 servings of 7.82/serving 1,407.60

churros;
60 original
60 banana
60 mango
Tarpaulin 2 2x3 ft. piece 60.00/piece 120.00
Transportation 100.00
Total 2,959.00

Raw Materials Availability

The raw materials needed are available in La Carlota Public Market and various store in Bacolod City.
These will be purchased weekly. To ensure availability and prevent stockouts, safety stock for one week
operation for non-perishable ingredients such as oil, flour, salt, and sugar shall be maintained. Safety stock
for perishable ingredients such as mango fruit, banana and carrots shall be maintained for a two-day
operation. The entity shall have its purchases of perishable ingredients every two days.

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 OPERATING REQUIREMENTS

Production Process
The business will operate in a stand at the DHSBNHS school canteen. Before the daily operation
begins, ingredients needed and products prepared shall be placed in the stall, segregated and stored in
proper containers.
The Churros Co. stand shall be open for 8 hours from 9:00am to 5:00pm.
Preparation and Storage
Churros dough and carrot peanut butter balls shall be prepared the night before. To avoid spoilage,
these products must be stored in a cool place. As it would be impractical to buy a refrigerator solely for
this purpose, the products will be stored in the refrigerators of each partner, from Year 1 to Year 3. But
on Year 3 to 5, raw materials shall also be processed fresh on the day the products will be sold, by the
additional laborer.
Cooking
The churros dough will be cooked upon customers’ orders. It will be served in a specially designed
paper container, with the Churros Company logo, along with the chocolate syrup in a separate plastic
container. Peanut butter balls will be readily available upon order and served in a
The specially-designed churros containers shall be made annually before the start of the year’s
operations. The number of containers produced per year shall correspond to the forecasted number of
servings to be produced annually. Wax paper cup.
Fixed Capital
The business’ fixed capital shall include items which are used for more than one period and are
expected to benefit future periods. The entity’s fixed capital shall include the following

Fixed Capital Description

Large frying pan Used for deep frying churros upon customers’
order
Butane gas stove Powered by butane gas refill
Portable gas stove used for cooking
Pastry Tip Stainless steel mold for forming churros
Measuring cup Brand: Pyrex
Glassware used to accurately measure
ingredients

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 Life of Fixed Capital
The estimated useful life of the large frying pan is estimated to be 5 years. The portable butane gas
stove will also have a useful life of 5 years. The pastry tip is made of stainless steel and is estimated to
have a longer useful life of 10 years after which it will be worthless. There will be 3 pieces of pastry tip
for each flavour of churros. Measuring cup which is made of glass will have an estimated life of 10
years with no residual value. Due to the immateriality of the amount of their residual values, such are
disregarded.

Maintenance and Repairs

The nature of the business’ fixed assets does not require regular maintenance and repairs. The entity
shall use replacement method. When asset is proved to be worthless, the same shall be replaced with a
new one. Any remaining carrying amount of the old asset shall be derecognized and charged to loss on
retirement of the asset.

Sources of Equipment
The business aims to produce quality products through the use of equipment with good quality
standards. To ensure such quality, the entity shall purchase equipment at the preferred and available
suppliers.
List of sources of equipment
EQUIPMENT SUPPLIER
Frying pan Season’s Trading, Bacolod City
Butane gas stove Total Gas Station, La Carlota City
Pastry tip Chef and Bakers Bacolod City
Measuring cup Chef and Bakers Bacolod
Planned Capacity
The business will operate at full capacity. All the partners will industrially contribute in the preparation
and production of the products, except for the 4th year onward, where the laborers will take over
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production. The researchers estimate the capacity of each partner to produce 108 pieces or 36 servings
of carrot peanut butter balls and 36 servings of churros dough.

Future Capacity
The partners shall hire additional laborers upon the future expansion of the business. Future capacity
will increase by 105 pcs of carrot peanut butter balls and 165 pcs of churros for each additional unit of
labor.
Terms and Conditions of Purchase of Equipment
The acquisition of the entity’s equipment shall be on a cash basis. Thus, all equipment shall be
immediately paid upon purchase.

Factory and Location Layout

The business’ production and sales area shall be in a stand located adjacent to the Master Siomai
cubicle but inside the Students’ Lounge near the DHSBNHS Canteen. Presented below is the layout of
the production area of Churros Co.

Raw Materials
The necessary raw materials for the business are as follows:
PRODUCT RAW MATERIALS SUPPLIERS
Carrot Peanut Butter Ball Peanut Butter La Carlota Public
Market/Rosario Mesaya
Margarine La Carlota Public Market
Carrot La Carlota Public Market
Colored Sprinkles Chef and Bakers
Choco Sprinkles Chef and Bakers
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 Confectioner’s Sugar Chef and Bakers
Wax Paper Cups Chef and Bakers

Churros
Brown Sugar La Carlota Public Market
Salt La Carlota Public Market
Butter Lopue’s Grocery Store
White Flour La Carlota Public Market
Eggs Taala Farms
Vanilla extract Chef and Bakers
Ground Cinnamon Chef and Bakers
Confectioner’s Sugar Chef and Bakers
Mango La Carlota Public Market
Banana La Carlota Public Market
Paper Container Chef and Bakers
Chocolate Dipping Chocolate Syrup Chef and Bakers
Small Plastic cups Chef and Bakers

Raw Materials Availability

The raw materials needed are available in La Carlota Public Market and Chef and Bakers. These will be
purchased weekly. To ensure availability and prevent stock-outs, safety stock for one week operation for
non-perishable ingredients such as oil, flour, salt, and sugar shall be maintained. Safety stock for perishable
ingredients such as mango fruit, banana and carrots shall be maintained for a two-day operation. The entity
shall have its purchases of perishable ingredients every two days.

Cost of Labor
The business will hire one (1) personnel who will be in-charge in the stand daily. Work schedule will start
from 9:00 – 5:00 pm. The partners will industrially contribute in the production of their products. The entity
shall acquire additional labor only on the third year, as well as on the fourth year.
Churros Co. shall register its employees with the SSS, PhilHealth and Pag-Ibig when they are employed.
For each unit of labor that will be acquired the entity shall incur salary expense of P286.00 per day, the
minimum wage for Region VI. The proponents estimate a business need of one additional labor on the third
year, and another additional labor on the fourth year. The cost of labor on these periods shall be P50, 050.00
per year per laborer, since the entity will not be incurring labor expenses during the 2 months of shutdown:
April and May.

Labor Productivity
Each night before every workday, each partner is expected to make 36 servings of carrot peanut butter balls
and enough churros dough to make 36 servings. However, each additional unit of external labor is expected
to produce an output of 180 servings of carrot peanut butter balls and 180 servings of churros each day,
since the laborer has the whole day to process the raw materials.

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Rent Expense
The business shall operate and produce products in a stand at Doña Hortencia Salas Benedicto National
High School canteen. The school charges P5, 000.00 as rent expense for stand vendors. Rent expense is
paid one month in advance. In addition, a P15, 000.00 rent deposit shall be paid at the beginning of the first
month. Churros Co. plans to continue operations indefinitely, thus this deposit shall be considered as non-
current asset.
Its rent expense shall be considered part of the factory overhead expense for the reason that the stand is
used for the production and operation of the business.
Production Cost
During the first year of operation, the Grand Opening of the Churros Co. stand requires free samples of 180
servings each for carrot peanut butter balls and churros. The costs of these amounts will be expensed
instead of added to inventory.
The entity shall maintain a desired ending inventory equal to the safety stock of one week operation of the
next year’s sales. Budgeted production shall equal the annual forecasted sales. The sales of each flavour and
variation are derived by multiplying the annual sales by the sales mix ratio.
It is assumed that prices will remain constant and stable for the first five years of operations.

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 ORGANIZATION AND MANAGEMENT PLAN

Form of Business

Churros Company shall operate as a partnership between Mecor Riego, Marie Occeña, Charmaine Trocino,
Rizalyn Tingson and Glen Obelidon. All partners will contribute capital and industry to the partnership.

3.2. Organizational Structure

The partnership shall be organized as follows:

The partners have decided that Ms. Riego shall be the General Manager. Ms. Trocino shall be the operations
manager, Ms. Tingson shall be the assistant operations manager, Mr. Obelidon shall be the financial
manager, and Ms. Occeña shall be the marketing manager on the first year.

FINANCIAL MANAGER

 Responsible for all financial matters relating to the business.

 Ensures that proper accountability and accounting is established.
 Collects and safe keeps any additional capital contributions from the partners.
 Finds ways to generate more income for the company.
 Initiates proposals for investing excess cash.
 Maintains a set of books for accounting.
 Prepares financial reports and budgets.

The following are the duties and responsibilities of each member of the organization
OPERATIONS MANAGER

 Oversees the business operations.

 Manages logistics and inventory concerns.
 Keeps production and product quality reasonably high and constant.

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 OPERATIONS ASSISTANT MANAGER

 Assists the operations manager in the management of the main business activity,
 Prepares inventory lists.

MARKETING MANAGER

 Manages relationships with customers.

 Develops marketing strategies and plans.
 Responsible for advertising concerns

Pre-operating Expenses
The following table shows the pre-operating expenses of Churros Company:
ACTIVITY AMOUNT
Research and development 581.22
Training 361.20
Organization Cost 14,605.00
Setup of Stand 17, 676.02
Total 33,381.02

Research and Development Breakdown Cost

Particulars Quantity Price Total
Brown sugar 37.50 g 40.00 per kg 1.50
Salt 16.68 g 18 per kg 0.30
Margarine 351.99 g 10.00 per 100 g 35.19
White flour 2 kg 42.00 per kg 84.00
Eggs 6 pcs 6.00 per pc 36.00
Vanilla extract 18 ml 260.00 per 450 ml 10.41
Ground cinnamon 4.71 g 560.00 per kg 2.64
Confectioner’s sugar 187.50 g 130.00 per kg 24.36
Chocolate 1 bottle 92.95 per bottle 92.95
Bond paper 5 pcs 1.00 per pc 5.00
Mango 1 pc 20.00 per pc 20.00
Banana 2 pcs 5.00 per pc 10.00
Peanut butter 1½ cup 35.00 per cup 52.50
Carrot 3 medium-sized 10.00 per pc 30.00
Toothpick 1 box 35.95 per 1000 pcs 35.95
Wax paper cup 6 pieces 6.25 per 90pcs 0.42
Sprinkles ½ kg 128.00 per kg 64.00
Transportation 76.00
TOTAL 581.22

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Particulars Quantity Price Total
Brown sugar 12.50 g 40.00 per kg 0.50
Salt 5.56 g 18 per kg 0.10
Margarine 72.33 g 10.00 per 100 g 7.23
White flour 656.25 g 42.00 per kg 15.75
Eggs 2 pcs 6.00 per pc 12.00
Confectioner’s sugar 62.50 g 130.00 per kg 8.12
Bond paper 10 pcs 1.00 per pc 10.00
Mango ½ pc 10.00 per pc 5.00
Banana 1 pcs 5.00 per pc 5.00
Peanut butter ½ cup 35.00 per cup 17.50
Carrot 1 medium-sized 10.00 per pc 10.00
Transportation 270.00
TOTAL P 361.20
Training Cost Breakdown

Administrative Expenses
The budget for annual administrative expenses are as follows:
ITEM QUANTITY AMOUNT
Bond Paper 1 ream 300.00
Special Books 4 pcs 150.00
Envelopes 5 pcs 40.00
Ballpens 12 pcs 60.00
Stapler 1 pc 85.00
Stapler Wires 1 box 50.00
Total 685.00

Organization Cost Breakdown

Procedure Estimated Cost
Registration and Verification at Securities and 40.00
Exchange Commission
Preparation of Legal Documents 500.00
Bank Account Opening 250.00
Notarization of SEC Documents 500.00
Registration at SEC and TIN acquisition 3,500.00
Obtain Barangay Clearance 300.00
Submit document and pay for business permits 8,100.00
Apply for Certificate of Registration and TIN at 115.00
the Bureau of Internal Revenue
Registration as Barangay Micro Business 1,000.00
Enterprise with the City Treasurer’s Office
Total 14,605.00

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 FINANCIAL PLAN

Project Cost

The cost of the investment is as follows:

Particulars Amount
Rent Expense 5,000.00
Rent Deposit 15,000.00
Fixed Assets 3,620.00
Raw Materials 35,462.34
Factory Supplies 473.50
Variable Factory Overhead 4,280.58
Transportation In 270.00
Miscellaneous Expense 70.00
Permits and License 1,200.00
Transportation Expenses 150.00
Administrative Expenses 685.00
Business Tax 1,836.00
Pre-Operating Expenses 33,381.02
Initial Cash 1,571.56
TOTAL COST 103, 500.00

Financing Plan and Loan Requirement

The partners have decided to finance the business using their own money. They shall contribute
P 20,600.00 each, amounting overall to P 103,000.00 The partners shall register the business as a
Barangay Micro Business Enterprise (BMBE) to avail of the income tax exemption. A BMBE is
defined as any business enterprise engaged in production, processing, or manufacturing of
products, including agro-processing, as well as trading and services, with total assets of not more
than P3 million (RA 9178). However, the business is not exempt from paying monthly
percentage tax of 3%. The business is exempt from the minimum wage requirement.

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 RISK MANAGEMENT PLAN
AREA RISK MANAGEMENT ACTION
Marketing Avoid over-reliance on customers or products
Over the years, test market for new products
Develop multiple distribution networks ( consider putting other business
in another place e.g. plaza,)
Operations Quality and Assurance Control
Hold spare capacity

Finance Financial manager will keep the financial records up-to-date.

Make sure payables are being paid before the deadline to avoid penalty
or interest
Practice investment appraisal technique

People In employing personnel, make a background check.

Partners will take turns in managing the business every year so that each
partner will have experience in running the business (financial manager
to operational manager, operational manager to marketing manager).

The control environment will be a result of monthly employee and

partners meetings during which we will discuss the current marketing
activities, sales, promotional activities, and ideas that will lead to
improvement.

CONTIGENCY PLAN

Disaster such as fire breakdown. Have a standby fire extinguisher. Check always the kerosene
(gasul) if it’s properly close before closing the stand. There is also a first aid in the cabinet.
Theft and fraud. Everyday sales is being check by the financial manager and monthly financial
statement will be reported. The operational manager and marketing manager together with the
personnel will conduct a twice a month inventory of stocks.
Illness. In case the worker is sick or if there is any situation that hinders him/her to report, we
will hire a person who can be in-charge in the operation. That person will be paid on a daily
basis.
Financial Crisis. Cut operational and variable cost. The financial manager should monitor the
cash flow of the business.
Failure in Marketing Strategy.
 Run promotional campaign.
 Survey customers and change the strategy to perceived value pricing.
 Think how to improve products or introduce new ones.

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CONCLUSION AND RECOMMENDATION

Based on the analyses of the projected financial reports, Churros Co. is a viable business venture.
The enterprise requires a relatively lower capital than other businesses, but gives a large positive net
present value. Because the rate of return of investing in the enterprise is higher than investing in risk-
free government securities, we conclude that it is better to invest in this business than buy related,
available bonds from the government.
In the fourth and fifth year of operation the income increases relative to the third year of the business,
this is offset by the fact that the partners will no longer participate in production during these two
years, freeing them to concentrate on other matters aside from business, while earning profit from the
business.
It is recommended that the excess cash from operations be invested in investment funds or
marketable securities, in order to earn passive income and increase the wealth of the partners.

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