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1 BUSINESS PLAN
2. Entrepreneurs Profile Abhushan garment will be a partnership firm consisting of three partners and their profiles are as follows: Ms. Prakriti Nepal Ms. Prajita Shrestha Ms. Pranita Rana The above mentioned partner will contribute equally in this project in order to complete in time. Each partner will contribute their valuable time to make this project a success with their innovation, experience, self confidence and hard work. They have high level of energy, high degree of commitment and tolerance for ambiguity.
3. Projects Contribution to the Local Economy The project to contribute following benefits to local economy: Employment opportunity: As the industry needs large no. of labor it will automatically create employment opportunity by hiring the local people. Growth in economy: Establishment of business will help the country to increase its economy as we target to export the garment.
2 BUSINESS PLAN
Marketing Plan
1.1 Description of Product
The main garments we are going to produce are: Pashmina, skirts/trousers, and t-shirts for both ladies and gents. We are going to produce these garments in different colors and sizes like: small, medium, and large with different designs. The features of different garments that will be offered are as follows: Pashmina: The pashmina product (shawls) are in different sizes (i.e. small and big) with the length of 1.5 meters and an approximately weight of 250 gms. The shawls are available in a wide range of colors like: red, black, white, blue, pink, green and many more. We are offering the shawls with different embroideries designs as per customers preference. T-shirts: T-shirts will be offered in different prints that especially reflect the culture of our country such as: print of Mt. Everest, Buddha, map of Nepal, and many more. Skirts/Trousers: Skirts/Trousers will be of different lengths as: full, knee and quarter length with the simple embroideries.
1.2
There are many existing popular Apparel industries in the market which are being captured by many procedure and manufacturers like: Surya Garments, Sashi Garments, Springwood and so on. We differentiate our products from other competitors on the basis of: High variety: we provide varieties of apparel, variety ranges from skirts, shirts to pashmina product as well varieties giving traditional and modern looks Better quality: we dont compromise with the quality of textile. We use cotton textile having attractive colors and good quality. Affordable price: the price of product is not that high, we provide it in reasonable price. Availability
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1.3
Location
We have chosen Bhaktapur as head office, the reasons are as follows: 1.4 1.5 Linked by 6 lane road Low wages and rent charge Near to the airport Cheap labour cost Pleasant environment Marketing Areas Head office: Bhaktapur Branches: Thamel, Pokhara, Palpa, Chitwan, Lumbini Abroad: USA, Germany, UK, India, China, Canada, Bangladesh Main Customers
The target customers of New Arrival Apparel are as follows: Local Customers: Local customers prefer products with reasonable price and moderate quality, so we are going to produce the products to satisfy their needs targeting only the local people. Foreigners: Knowing the fact that foreigners are attracted with our national cultures and traditions. We will be targeting them with the different prints and designs that reflect our culture, and it is obvious that they will like it. For the foreign export we are going to produce products with high quality and increase the price.
1.6
By survey, the total market demand for the business is 150,000/unit per month. Pashmina: 25,000/unit Skirts/Trousers: 75,000/unit T-shirts: 50,000/unit
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1.7
Market Share
Out of the total market demand of 150,000 per unit per month we will be targeting 15% which makes our targeted market share 22,500 per unit per month.
1.8
Sales Forecast
At the starting point of our business we will not be able to capture the 15% of the total market demand. Therefore, the company will target only 80% of the total targeted market shares in the 1st year i.e. 0.80x22500 = 18,000 per unit per month. In the 2nd year it can be assumed that the sales will grow to 90% i.e. 0.90x22500 = 20,250 per unit per month. In the 3rd year it can be assumed that the business can capture the targeted market share of 22,500 per unit per month.
Sales Forecast Units per month 40% 30% 30%
Pashmina Year 1 Year 2 Year 3 onward 80% 90% 100% 18,000 20,250 22,500 7,200 8,100 9,000
1.9
Selling Price:
The selling price for the different products is: Products Rs/piece Pashmina 2500 Trousers and skirts 800 T-shirts 700
1.10
Promotional Activities Advertisement Exhibitions programs Hoarding boards/posters Media advertisement through famous models in TV and magazines Special schemes to be provided during festive seasons like: buy 2 get 1 free
5 BUSINESS PLAN
1.11
Marketing Expenses The marketing activities will cost money to our business so one has to be sure that for every promotional measure adopted there is a foreseeable increase in sales. The estimated marketing expenses for the business are Rs. 1,200,000 per year.
Production Plan 2.1 Production process 1. Allocation and separation of area 2. Building 3. Setting of the machine 4. Procure a raw material from supplier 5. Managing the raw material 6. Design of clothes and pashmina 7. Produce goods 8. Cleaning and dying 9. Storage of fixed product 10. Distribution channel 2.2 Fixed capital requirement S.N. 1 2 3 4 5 Description Land Building Furniture Vehicle Machinery and equipment: - dying machine - sewing machine - piko machine - packaging machine - computer Total 6 Office and equipment TOTAL Quantity 4 ropanies Rate 7500000 Amount (Rs) 30000000 15000000 466004 10000000
S.N. 1 2 3
Description Building Machinery and Equipment Vehicle Total depreciation Depreciation per month
2.4 Repair and maintenance The total repair and maintenance cost is estimated to be Rs. 50000 per month.
2.5 Source of machinery and equipment We will purchase machine from our own country and if necessary we will import from abroad.
2.6 Plant capacity We will utilize 100% capacity in order to produce garment for every season.
2.7 When and how will the machinery be paid for? We will buy all the required machinery and equipment from our investment and loan.
2.8 Factory location and layout 1. Located at Bhaktapur along with its main head office 2. Sewing machine will be arranged in u-shaped so that it is easy for the worker to work with each other 3. Well try to separate each hall for each work so that there will not be any disturbance for worker to work 4. Spacious working place within the factory with refreshment area
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Thread Needle Fiber Chalk Machine oil Glue Stone Total Cost ( per month ) Total Cost ( per year )
10 500
5000 6000
5 10 10
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2.11 Labor availability As we starting our business in Bhaktapur it will not be problem for us regarding availability of labor.
2.12 Factory overhead & expenses S.N. 1 2 3 4 5 6 Indirect labor Electricity & water Repair & maintenance Transportation of raw material Tea for worker Depreciation Total Factory Expenses (per month) Total Cost (per year) Description Amount (per month) 135000 60000 50000 16667 1166 312500 575333 6903996
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2.13 Production cost per unit S.N. 1 2 3 Raw material Direct labor Factory overhead Total cost of production Pashmine (40%) Skirt & trouser (30%) T-shirt (30%) Description Amount (Rs) 1752500 3050000 575333 5377833 2151133 645340 645340
Total unit of production Pashmine Skirt & trouser T-shirt 4200 9000 11000 24200
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3.1
Form of Business
The business will be register as ABUSHAN GARMENT, registered under Partnership act 2020. It will be the partnership firm. Partnership will involve co-ownership of the business by one or a few partners. Partners will bring into their capital or their expertise or both. In our case we have 3 partners. The member has contributed Rs 500, 00,000 each for the working of the organization. Abhushan Garments will be registered under the Partnership Act 2020. There will be three partners but. All three will invest the same amount and share same amount of profit while they are liable for same amount of losses and liabilities. All three will however supervise and overlook the day to day activities of the shop.
Owners (Prakriti Prajita,Pranita) Marketing & Production Manager (Prajita) Financial Manager (Prakriti)
Supervisor
Supervisor
Supervisor
Staff
Staff
Staff
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3.3 Business Experience and Qualification In order to run the business effectively and efficiently people are the most important resources of organization. It is important that these people exhibit proper qualification and suitable experience for the related job. All the promoters of the Abhushan Garments are highly professional and have BBIS degree with few year of experience in the respected field of finance, marketing, human resource, production, administrative. Because of their knowledge in different field and their year of experience it is the plus point for the success of organization.
3.4 Pre-Operating Activities Activities Registration of business Preparing business plan Applying for a loan an approval Contracting equipment supplier Hiring labor Installing the new equipment Sourcing raw material Trial production Total pre- operating activities Duration 2 weeks 4 weeks 4 weeks 2 weeks 1 weeks 1 weeks 4 weeks 1 weeks Cost 75,000 35,000 25,000 50,000 3,185,000 1,000,000 1,752,500 877500 7000,000
3.5 Office Equipment The total office equipment is around four lakhs i.e. chair, table, calculator, computer, fans, printer, scanner. The life of the office equipment will be five years with the scrap value 40,000.
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Description General managers salary Marketing managers salary Production managers salary Finance and accounting managers salary Human resource managers salary Administrative managers salary Supervisors salary Workers salary Supplies and communication Rent, land and building Miscellaneous expenses Total administrative expenses per year Add Deprecation Total
Amount/Month 35000 30000 28000 25000 25000 25000 15000 8000 5000 200000 10000 406,000*12 =4,872,000 1,000,000 5,872,000
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Financial Plan
4.1
4.2
Owners equity
Loan
Total
Machinery and Equipment 10,000,000 Office Equipment Furniture Vehicle Pre-operating Activities Working Capital Total 10,000,000 466,004
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4.3 Year 1 2 3 4 5
Loan Amortization Loan Amount 80,000,000 66896275 52482177 36626669 19185610 Interest (10%) 8,000,000 6689627 5248217 3662666 1918561 Payment 21103725 21103725 21103725 21103725 21103725 Principle Amount 13103725 14414098 15855508 17441059 19185610
4.4
Particulars
1. Sales forecast of total pieces Pashmina Trousers and skirts T-shirts 2. Total sales A Raw materials B Direct labor C Indirect labor 3. Total factory overhead (A+B+C) 4. Gross profit (2-3) 5. Other expenses Administrative expenses
181,080,000
203,715,000
226,350,000
226,350,000
226,350,000
4857600
5464800
6072000
6072000
6072000
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Selling cost 6. Total Administrative Cost 7. EBIT 8. Interest 9. EBT TAX 20% 10. Accumulated Profit
168000 5025600
189000 5653800
210000 6283000
210000 6283000
210000 6283000
85506004
4872000
4872000
4872000
4872000
4872000
168000
189000
210000
210000
210000
8,000,000
6689627
5248217
3662666
1918561
16 BUSINESS PLAN
Loan amortization Total Cash Outflow Net cash flow Opening Cash Balance End 57493996 92506004 57493996
258263271
2786871546
3044718821
3302566096
4.6
Balance Sheet
Pre operating
Particular Assets: Cash A/c receivable Total gross fixed assets Less: Acc.dep Net fixed Assets Pre-operating expenses Total assets Liabilities:
1st
2nd
3rd
4th
5th
57493996
258263271 1567000
2786871546 1567000
3044718821 1567000
3302566096 1567000
3560412925 1567000
85506004
85506004
7,000,000
7,000,000
7,000,000
7,000,000
7,000,000
7,000,000
150000000
356086275
2888444550
3150041825
3411639100
3673235929
Long term loan 8,000,000 payable Equity Acc. profit Overdraft 70,000,000
6689627
5248217
3662666
1918561
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150000000
356086275
2888444550
3150041825
3411639100
3673235929
4.7
Break-even Point, Return on Investment and Return on Equity 1st Year BEP (FC/TS-VC) Return on investment (ROI) Return on equity (ROE) 27% 30% 70% 2nd Year 20% 33% 73% 3rd Year 18% 36% 75% 4th Year 18% 40% 75% 5th Year 18% 47% 75%
4.8
Financial Projection and Analysis BEP Analysis: The expected profit is obtained from the first year, as our sales started from first year. The BEP at the third year is 18% which is low and at the same time attracted from the companys point of view. Lower BEP means contribution margin is much higher as compared to fixed cost expenses. According to the figure the BEP decreases from 27 percent to 18 percent. ROI: The projected ROI at the end of fifth year is 47% which is quite beneficial for the company, which means we are getting back 47 percent of our investment in the fifth year. This is due to increase in both net profit and assets. ROE: The projected ROE at the end of fifth year is 75 percent this means that we will be earning 75 percent of total equity investment which is favorable for the business, because of high accumulated profit.
4.9 Project feasibility Once the Abhushan company is established the company will give employment to many people and helps in local economy. Considering the products better quality and affordable price, it will be able to satisfy the customers needs. The qualified and experience entrepreneur and the sound financial position from the first year are able to make the project feasible.
18 BUSINESS PLAN
SWOT Analysis
Strengths Quality products Well trained staff Good management skills Good production location Branches in different parts of country and world Variety of products Attractive product designs High market demand
Weaknesses Regular marketing required to keep the brand recognized High overhead cost (rents of different branches, salaries of many staff, advertisement etc.)
Opportunities Threats Increase in employment opportunity Instable Political situation Increasing Tourism Increasing numbers of competitors Trend of wearing pashmina, t-shirts, etc Instable market price of raw materials never outdated Unpredictable changes in supply of raw materials Increasing demand of pashmina and cotton garments Increasing Labor cost Growing income level of potential Decreasing number of labors customers Frequent visits by extortionists Increasing population (for donation, providing security etc) Can be used as both casual and formal wear
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