Startup Business Plan and new product launch

1.

INTRODUCTION

Business Plan for a Startup Business

KING FOODS INDUSTRY Pvt. Ltd. 134-BIV Small Industry, Sahiwal, Punjab, Pakistan. ZIP Code 57000 Telephone: +92-40-4240667 Fax: +92-40-4240667 E-Mail: kingfoods_info@gmail.com

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Startup Business Plan and new product launch

2.

EXECUTIVE SUMMARY

Planning is a process that never ends for a business. It is extremely important in the early stages of any new venture when the entrepreneur will need to prepare a preliminary business plan. The business plan is a written document prepared by the entrepreneur that describes all the relevant internal and external elements and strategies for starting a new venture. It is an integration of functional plans such as marketing, operations, finance, manufacturing, sales and human resources. As students of MBA we have also created a business plan regarding biscuit industry. Biskitto is a brand of KING FOODS Industry, in the partnership of four persons. Its a newly established business which will start its operations from Jan 1st 2012. The plan came to our mind because in Pakistan only old and traditional flavour biscuits are available which being too low quality. Some local companies are manufacturing the biscuits but they are not able to maintain the quality as well. The main product of the firm will be biscuits named as Biskitto which is presented in three flavor; honey milk, salty and black pepper. Currently in Pakistan there is high trend of eating biscuits and cookies; however the trend is continuously rising especially in the rural areas. This gives us a hope and helps us to be optimistic. We can suppose that if our product is properly advertised and awareness is created among the people, our firm will have a bright future. We will have to adopt a marketing strategy which will not only make our product known to the customers but also make them realize the importance and value of cookies and biscuits. In this business plan, we start from introduction of biscuit sector and its future outlook. Continental Biscuits Limited is one of the major competitors of this particular sector. So its provide advantage to keep eye on its landmark strategies. Description of our industry like its values, vision and mission statement can be explain the reason that why we are here to start our business venture. Further our product profile, its attributes and its brief specification also added. In production plan we explain the production process, structure of production system like plant and machinery

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Startup Business Plan and new product launch

description and suppliers name are presented. Operational processes, flow of raw material and all the daily activities are explained in this business plan as well. In marketing plan chapter, all the marketing strategies like pricing, distribution, promotions along with its budget and estimating future sales of our business are briefly included. Our target customers would be the generation of 10 to 40 years of age without any discrimination of the gender. The customers of big cities would be targeted belonging to the upper and middle class. Biskitto is a consumer product so we will sell directly to the retailers as initially business will operate on small scale. For distribution purpose own vehicles would be purchased. The overall supervision will be carried by the owners of the firm, however to monitor the work of the employees effectively different managers are hired. Initially three departments are established; production, marketing and finance. One manager is hired for each department who would be held responsible for the performance of the department. To avoid risk, the product is launched in the cities of Sahiwal Division. Our plant is not running on full capacity however it has the capacity to fulfill the production needs within different cities of Pakistan. Without finance and investment our business will not be run on regular basis. So the importance of funds and its circulation can be managed in every business plan. Thats why financial strategies are adopted to make our business a profitable one. Projected financial statements and its analysis are also added in this business plan. Because of our endless efforts we are confident to achieve our vision and mission as well as sales targets. We hope that this venture not only help us in future study patterns but also beneficial in creating and developing our own business.

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Startup Business Plan and new product launch

3.

BISCUIT INDUSTRY ANALYSIS

Biscuit Market:
Perhaps one of the most underrated, least talked about and low thrill industry, the biscuit business has been making waves for the last few years. The biscuit market in Pakistan currently has a number of players but is led largely by two main companies, one of which CBL the manufacturers and marketers of the LU brand in Pakistan. Currently the biscuit market stands at a staggering Rs. 10 billion and its growing potential has attracted a number of companies with thousands of small-scale manufacturers functioning along with other in the organized, large-scale sector. Biscuits eating habit had been inculcated into the Pakistani frame work with sipping of tea. The biscuit, a natural complement during evening tea or in large receptions and parties has been a necessity at least in the upper income tier. The lower tier though not as heavy in consumption could not abstain as well. The industry as expected started growing at a fast pace. This led to the sprouting of the unbranded neighborhood bakeries that made small quantities of large variety of irresistible snacks.

Market Forecast:
Following are the different factors that are analysis before we started our business plan. They are the reasons behind our entrance in this biscuits industry. Particulars Population growth rate Total Industry production Industry growth rate Market share of competitors Export production Consumption per person (per annum) Following regulation and standards Detail 1.59% 2010est. 1,75,000 tons (Rs. 10 billion) 23% 37% (CBL) & 30% (EBM) 10,000 tons ($ 1.5 million) 1.1 kg 2009est. HACCP, GMP, ISO

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Future Outlook of Industry:

Food is the one of the most basic physiological needs of human beings. As we are familiar with different food items like burgers, chips, breads and the most common item is biscuit. So the current situation of food industry is rapidly growing. In biscuit industry, there are a lot of products are available in markets having different flavors like butter, cream flavor, chocolate, zeera etc. Now the basic question arise that what are the flavors that are not currently provided in biscuit items. So we are here to fulfill that need. In future, this industry surely has growth opportunities also have wide range of patterns that are currently uncovered. Faster domestic changes in countrys economy, if we need any future change we will do. It might be change in our marketing strategy or pricing and whatever the requirement of the time.

Competitors Analysis:
In Pakistan with the increasing trends of cookies, there are many competitors that are offering many biscuits brands, these companies are;  Continental Biscuits Limited  English Biscuits Manufacturer  Bisconni But the CBL is our major competitor so we briefly analysis its history and others business strategies.

Continental Biscuits Limited:

Company History: Incorporated in 1984, the success story of LU in Pakistan began with the initiative of Hassan Ali Khan (the founder of Continental Biscuits), who signed a joint venture agreement with Generale Biscuits, the global manufacturers of the LU range, which was

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Startup Business Plan and new product launch

subsequently acquired by the Danone Group. CBL thus started its' operations in the country since September 1986 with an initial strength of 200 employees. The company first introduced its' innovative brands - TUC, Prince and Candi which proved to be an instant success. With global merger of Generale Biscuit and the Danone Group, a more comprehensive range of products and technical know-how became available to CBL. Corporate Overview: Continental Biscuits Limited (CBL) was founded in 1984 following a Joint Venture between the family of Hassan Ali Khan and the Group Danone, the French food giants. In the year 2007 Danone sold their biscuits category to Kraft Foods of USA. Today the company has a joint venture with Kraft Foods with a shareholding of 50.5% and 49.5% respectively. For more than two decades CBL is engaged in the manufacturing and marketing of the brand LU. They have an array of products which are pre-eminent in the branded biscuit business both in Pakistan and abroad. Their unrivalled portfolio of brands has been meeting consumer needs for well over two decades and includes such favorites as TUC, Candi, Prince and Tiger. They produce some of the best known crackers, cream variants, plain and ingredient-based biscuits. Their manufacturing location based in Sukhur is a centre of excellence which provides employment to 2200 people in the region. Their marketing, sales, finance, commercial, IT and the human resources functions are located in the head office in Karachi employing a total of 180 employees. As a part of the leading FMCG their head office has close links both with the Regional Offices of Kraft in UAE and their manufacturing plant in Sukkur.

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Continental Biscuits Products:

Biscuit name 50-50

Biscuit packing

Biscuit style

Bakeri

Candi Gala

Prince

Tiger

Tuc

Wheatable

Zeera Plus

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Market Segmentation:
The market has been segmented primarily into adults and kids with further segmentations in terms of taste profiles/Lifestyles and hence. Category Soft & Sweet Plain Cream Filling Salty Snacks Indulgent/Sweet Plain Glucose Ingredient Based Healthy products Sooper, Bakeri, Gala, Bravo, Treat Prince, Rio, Cocomo, Jam Hearts TUC, Saltish Candi, Chocolate Chip Munna, Gluco, Tiger Party, Zeera Plus Wheat Slices, Wheatable

Loyalty in the category though medium to high has a high level of conjunctional usage within households. Hence segmentation becomes more difficult in the true sense with a two sets of presumably different audiences behaving in a similar way. Biscuits traditionally have been positioned a in between meals snack with 80% consumption coming from in home usage. Though strong innovations have come in to the industry none of the big players have tried to move into new segments and or positioning. Advertising and marketing in the industry has surpassed all other benchmarks in the previous years with serious investments in brand building. Over Rs. 0.5 bn is estimated to be electronic media spending in 2009 with a total marketing spending of no less Rs. 1.0 bn; this has grown at estimated 25% per annum over the last few years. However, the clarity in positioning and communication routes still fair below international standards (reference India). We still strongly focus on the emotional, jingle based, in home consumption family slice of life moments communications. The prediction of the industry in next five years is of buoyant Rs. 35 bn with 4 to 5 key players (the remaining being edged out) with good margins and portfolio meeting international quality and product standards.

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4.

OUR INDUSTRY DESCRIPTION

The name of our firm is HATZ FOODS Industry Pvt. Ltd. that manufactures biscuits and cookies. Our firm is the emerging biscuit manufacturing industry in Sahiwal region. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today.

Vision:
To provide a quality, cheap and state of the art products to customers that not only satisfies their needs but also leads them to superior. Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth.

Mission:
To become premier biscuit manufacturing industry that focused on constantly and categorically designing superior and convenient products through contribution of ideas, enrichment the community. We strive for honesty, fairness and integrity.

Values:
 Excellence  Integrity  Passion  Teamwork  Commitment  Proactive

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Industry Logo:

Product Profile:
Our product is a unique flavored also stylish, trendy and of high strength and unique design, we are having flexible manufacturing facilities to produce biscuits as per customer specification and needs. Our main product is Biskitto that is divided in three flavors; Biscuit name Biskitto Honey Milk Biscuit packing Biscuit style

Biskitto Salty

Biskitto Black Pepper

Competitive Advantage:
Major competitive advantage is our reasonable pricing along with best quality. Secondly highly advertisement strategy at the local and national level will also help us to gain a competitive advantage.

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Product Specifications:
We offer premium quality concentrates made entirely with natural ingredients that are rich in Vitamins and energy. We used pure wheat flour, hydrogenated vegetable oil, natural sugar, fresh honey, pure milk, invert syrup, salt, fresh eggs, natural black paper and food color-caramel. Biskitto has the same energy and quality value as the standard one does. Raw material is being purchased from selected reputed suppliers. The packaging of the final goods is also considered.

Features and Benefits:

 Biskitto may boost performance during working by activating the brain, removing untimely food needs because it contains those natural and fresh ingredients that are required after hard tasks like honey and pure milk.  We all know that when we work out, it's important to eat something. Sometime we may not be so clear on is what exactly we should eat when we have no time. So there is a need to fulfill it by providing Biskitto with a slogan HAR PAL TASTE ZINDAGI KA.  Ordinary butter and milk biscuits, of course, are the classic choice. But with store shelves everywhere full of biscuits, cookies of various flavored, what's an exerciser to do?  Experts say it all depends on your taste -- as well as the length and intensity of your workouts. Here's a look at how the various biscuits measure up.

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5.

PRODUCTION PLAN

Production is a process of converting (In-put) raw material into (Out-put) finished goods or services. Its like a back bone in any manufacturing organization. All the raw material which is used in the production process is approved by the quality control department. These materials should be according to the standards developed and fixed by the quality assurance department. If in any case the material does not match with the standards has a right to return it to the supplier.

Physical Plant:
The plant location for the manufacturing of Biskitto is at Small Industrial State, Sahiwal. Distance from Lahore is 178 kms. Distance from Multan is 180 kms.

Size of land= 1800 Sq ft. Approximate cost of land= Rs 22, 50,000 (Rs. 1250/ Sq Ft). Approximate construction cost= Rs 10, 00,000.

Location Advantages:
 Reasonable cost of land.  Infrastructure facilities.  Transportation facilities.  Near to target market.  Easy availability of skilled and unskilled labor.  Availability of power

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Plant Machineries and Equipment: Biscuit Plant Machine

Number of machine= 1. Cost of machine = Rs 26,00,000/Size of machine= 12 x 16 x 5 (in feet). Production capacity= 50,000 units/ shift (8 hrs). Utilized capacity = 40,000 units/ shift

Biscuit making plant have been designed to produce biscuits of various sizes and shapes whether its cream or simple. Equipped with electric oven, biscuit dyes, cooling system, stacker and several other accessories, our biscuit plant can easily produce varied range of biscuits. Some of the features of our plant are as follows:      Easy usage Low production cost Minimum wastage Long lasting Easy operation

Automatic Roller Machine

Number of machine= 1. Cost of machine = Rs 40,000/Size of machine= 6 x 8 x 6 (in feet).

Production capacity= 40,000 units/hr

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Screen Printing Machine

Number of machine= 2. Cost of each machine= Rs 22,000/- for 1 machine. Size of machine= 4 x6 x 3 (in feet).

Production capacity = 20000 wrappers per shift (8 hrs). (Single machine)

Production Process:

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Suppliers:
The supplier plays an important role for supplying the raw materials on time, at reasonable cost and at high quality. If the supplier fails then production of biscuits becomes in danger so the industry have 3 suppliers to avoid the risk of falling short of raw materials.  Name of Supplier---Premier Flour Mills Pvt. Ltd A/341 Shadaab Colony, Arifwala Road near By Pass, Sahiwal, Punjab, Pakistan. Contact No: 092-40-xxxxxxx E-mail: pfm_info@hotmail.com  Name of Supplier---Ittifaq Honey House, 582 Fish Market, Pakpatan Bazaar, Sahiwal. Phone No: +92-40-xxxxxxx

 Name of Supplier---Mehboob Traders, 659/A2 High Street, near Saddar Bazaar Chowk, Sahiwal, Punjab, Pakistan. Contact No: +92-40-xxxxxxx

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6.

OPERATIONAL PLAN

Firm operational plan explain the daily operations of the business, its location, equipment, people, processes, and surrounding environment.

Quality Control Department:

A system for ensuring the maintenance of proper standards in manufactured goods, especially by periodic random inspection is known as quality control. Its used to fulfill and verify requirements of quality. Quality control is the basic organizational objective for Biskitto production. Quality check is made from zero level to final products. For this purpose samples are taken from the production to check the quality. This sampling is done after each an hour or half an hour. These samples are tested according to the standards. Different lab test are used to verify the quality standards. In order to maintain the high quality the plant has a well equipped lab. Laboratory is sufficient to measure the standards and to test mixture of different flavours. The well equipped lab enables the smooth flow of production process.

Location:
We have purchased land and make a building in Small Industrial State, Sahiwal. The building is located 3 Km Far From main the city of Sahiwal. Plant and machinery are installed in it. All administrative departments and warehouse are in it. The building has enough space for our operational activities. Due to present condition of the power system of Pakistan we will have to arrange an alternative source of power like generator because there are frequent break downs of power now a days in Pakistan which would severely affect the production process. The use of alternative source of energy will be very expensive and it will reduce our profit margin. The location of the factory is very important for the suppliers and distributors. The building hired by our firm is easily reachable by the suppliers. The factory has a lot of parking area available.
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Legal Environment:
As such there are no special legal requirements to start up such a small business like a partnership between to persons. We didnt find any requirements before starting our operation anyways there are certain requirements we will have to fulfill after starting our operational activities like we will have to produce biscuit and cookies according to the standards established by the departments of health and environments.

Credit Policies:
For any business to run effectively credit selling or credit purchasing is very important. There are very few businesses which can effectively be run without dealing in credit. As our firm is in the introductory stage so we will have to sell on credit in order to enter into the market. Credit itself is not bad if proper credit policy is established and the danger of bad debts is minimized. We will make sales on credit for approximately 30 days. After 40 days if the debt still remains unpaid we will remind the customer by giving him a phone call. After 55 days a letter is written to the debtor for the payment of the debt. After 75 days we will contact our attorney to deliver a notice.

Flow of Raw Material:

Raw material can be transformed into finish goods by using many flows of operations. Firstly if we make Biskitto Honey Milk, all required ingredients are put into mixture machine. Then after mixing these ingredients its goes into oven machine, where it bakes at 180 C. then its cut into roll shaped and packed. Then moved into warehouse and in last distributed. The flow chart is;

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7.

MARKETING PLAN

With Biskitto we would first target the big cities of Sahiwal Division like District Sahiwal, Okara, Pakpattan, Arifwala and Chichawattni. Our plant location would be the best place between city and rural areas and towns, which is a very big advantage for us because our majority of customers reside in city area and around the city. The current demand of the product in three cities is estimated around 40lakhs/year and is expected to go high because the customers becoming more aware from Biskitto and the effective advertisement strategies has been helping Biskitto to grow and strongly compete with others products. Fashion and lifestyle of the customers are also changing has been an important factor for the growth of Biskitto. Consumer acceptance and brand recognition are the major barriers for us to enter in the market. We are new in this industry we need to first build trust, develop relationship with suppliers, develop our brand and win customer loyalty. Biskitto quality is as good as our competitors but its price differentiates from others products, we operate at low margin to build market share excellent network of transport help us to reach customers at right time, at right place with right product. We are ready to provide the higher credit than the existing supplier initially. We are committed to excellent quality of high strength and flawless products. The key to success would be excellent service, quality products at a reasonable price and sales force capabilities.

Marketing Strategy
 Marketing objective: Within three years we would like to expand our business to rest of the big cities of Punjab and other provinces and will become important domestic player in terms of market share. In the end of 5th year of our business we will try our level best to gain the maximum market share of cookies industry and would go for backward integration.

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 Target market: Our customers would be at supermarkets, mini marts, departmental stores, and other retail outlets etc. Our target market is three cities in Sahiwal Division and we are focusing primarily on Sahiwal and Okara but there are also plan for other cities and town too.  Price Strategies: Price may not be the only competitive factor but in our business plan it will become the major competitive factor. Along price another major factor affecting the mind of the customer is quality. We have chosen a price that will give us the main competitive advantage if we are able to maintain quality. Low pricing strategy we are using because of large number of competitors in the market. We are using market penetration strategy by keeping low price we would enter in to the market and expand our customer base and increase our market share.  Distribution Channels: Distribution (or place) is one of the four elements of marketing mix. An organization involved in the process of making a product or service available for use or consumption by a consumer or business user. As in the introductory stage we will make sales only in Sahiwal and Okara, so we can distribute directly to the retailers. For this purpose we have rented three new vehicles (Shahzore). We can take orders from different channels like web, mail order, phone calls, through marketing staff. Most important source will be the marketing staff. Afterwards when we will operate in different cities like Lahore, Faisalabad, Multan different independent distributers will be hired.  Promotion: Our main purpose is to provide Biskitto for everyone at everywhere so first of all we have to launch our product in the market targeting all classes. Our promotion policy includes the following advertising mediums.

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Cable Adds---this is one of the very common, effective and as well as very inexpensive way to market our product in the each city of Pakistan. FM Radio---its almost the same marketing technique but more effective comparatively, because most of people are living in rural areas so FM station provide benefit to reach there with our product. Pos Material---Pos material mean point of sale material this includes: posters and stickers display in the stores and in different areas. Biskitto posters are displayed at different retail stores for awareness purpose. Billboards and Holdings---Biskitto is very much conscious about their billboards and holdings. They have so many sites in different locations for their billboards and they try to use in different times. Other ---other promotional strategies are also considered like;  Discounts,  Salesperson incentives,  Friends network,  Commission to sale person, credit to customers,  catalogs,  Word of mouth.  Promotional Budget: Initially we have to advertise very heavily because the general perception of Pakistani people is that the new comer in food industry is not provided quality products but we are here to change this myth. Thats why we have to make a huge marketing expenditure at the start i.e. Rs.10, 00,000 on the different promotional activities described above. This amount will be treated as Deferred Cost which will be covered when the business starts to run smoothly. After that we will have to spend Rs.300, 000 as ongoing marketing expenditures. This cost will be charged to the income statement. This cost is also to be included while calculating the cost of the product.

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Sales Forecast:
Product will be launched in January on a trial basis in Sahiwal. In March it will be launched in Okara. To avoid any disaster huge investment will not be made initially. After 1 year we will have to do market research again and any modifications needed in the product would be made. Year 2011 sales are estimated as below on monthly basis;

Month January February March April May June July August September October November December Total Sales

Sales (Rs.) 240000 280000 400000 400000 460000 500000 440000 450000 460000 380000 360000 300000 4670000

Sales Forecast
Okara, 1401000 Sahiwal Okara Pakpattan

Sahiwal, 2335000

Pakpattan, 934000

Controls:
Marketing department: 1 sales manager will be responsible for the sale in three cities. 5 salesmen; 2 for Sahiwal, 2 for Okara, 1 for Pakpattan [first year].

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8.

MANAGEMENT AND ORGANIZATION

As the business is in partnership so the business would be supervised primarily by the owners. The hierarchy of the organization is as follows;

For each department a manager is hired to supervise the work of the relative department. These managers are qualified in their fields. These managers are given sufficient authorities and are held responsible for any malfunctioning. The production staff is required to be well skilled because our product is directly related to the health of the consumers. Any minor mistake can cause major loss which will affect the reputation of the industry. So no compromise will be made on this. The duty of the marketing staff is also very challenging because there is highly competitive products are available in the market. The marketing staff should promote the product effectively otherwise there is quite a chance for the failure of the business. Secondly the marketing staff should make sure that our product is available in the market and it should be properly displayed on the shops i.e. visible to the customers. The finance department requires highly qualified staff to ensure that there is no shortage of funds and the sales forecasting and achieving break even point are highly considered. Availability of finance and purchasing raw material timely, collecting cash from debtors, payment to creditors before due date; all leads to effectiveness of finance department.
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Human Resource Plan:

The most important asset of Biskitto is the workforce alleged in it. In our organization, the human asset will be considered as profit centre, not as cost centre. Organization structure of the company shows the line of authority and the work function in the concerned organization. The organization structure of the company is stated as below. The employees in an organization are differentiated as;  Administration workforce  Manufacturing workforce Administrative workforce The administrative workforce will include the management which includes the people which are not involved in production of the product directly but they play important role in generating desired profit for industry. The administrative workforce will deal with the business policy and strategies required for the growth of the organization. The projected administrative workforce and their payment are stated as below;

1st Year Name of Position Finance Manager Production Manager Sales Manager Clerk Salesman Guard Asst. Sales Manager No. of Positions 1 1 1 1 4 1 Salary/ month (Rs.) 16000 16000 16000 9000 8000 6000

2nd Year No. of Positions 1 1 1 1 6 1 Salary/ month (Rs.) 18000 18000 18000 10000 9000 6000

3rd Year No. of Positions 1 1 1 1 8 2 1 Salary/ month (Rs.) 20000 20000 20000 12000 10000 7000 15000

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Manufacturing workforce:
The manufacturing workforce will be the people who are actually working on the machine and they are related to the plant level processes. They are the people who are actually producing the desired product. It includes the plant-level employees and deals with daily functions in industry. The manufacturing workforce and their payment are stated as below;

Name of Position Supervisor Skilled Unskilled Helper

1st Year No. of Salary/ Positions month (Rs.) 1 10000 1 5 2 8000 6000 4000

2nd Year No. of Salary/ Positions month (Rs.) 1 11000 2 6 2 9000 7000 5000

3rd Year No. of Salary/ Positions month (Rs.) 2 12500 2 8 3 10000 8000 6000

Various HR related issues:

 Bonus The bonus will be given as per the guidelines provided by the law. As the industry is started newly, the rate of bonus will be minimum, i.e. 8.33% of the annual income. The rate of bonus will be revised in coming years depending on the net profit of the industry.  Attendance Every employee is bound to present in the company premises during the working hours. The employee is supposed to make an entry before entering in and leaving industry premises.  Annual leave with wages Employees are liable to annual leave with wages if they complete 240 days in a calendar year. So the employee will be entitled for one leave for 20 days actual working.

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 Holidays Every employee will be entitled for holiday for 15 days (including National holidays). It will be decided as per the list of holidays provided by Punjab state.  Working hours The minimum hour of working is 8 hours per day. There will be six working days per week. If required, the employee can do overtime but the total no of working hours should not exceed than 14 hours in a day.  Safety and health All the machinery will be properly fenced with safeguard. The machines which are involved are so sophisticated and safe, that it reduced the probability of accidents in industry. The industry will also pay attention to the guidelines for the safety and health provided by Ministry of Labor.  Benefits Different benefits such as disability benefit, sickness benefit, dependant benefits and group insurance etc. will be provided by the company under the law.  Record Maintenance The record will be maintained related to the workforce such as time keeping and attendance leaves, and other issues as well.  Measures for motivating our employees As we stated before, the human workforce is the highly-ranked source for the INDUSTRY. Hence we are paying proper attention to this area of concern. We will be handling the issues related to employees with great care. At initial stage, we are planning to schedule a small meeting every Saturday before leaving the premises. The meeting would be conducted in presence of every employee of the industry. This session will be for open discussion. Here, the workman

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can discuss any important point related to working condition and such issues. This will help in enhancing the communication between different departments of the organization and help to reduce disputes. Also we are bound to maintain proper working environment for our employees. The employees will be provided by safe and excellent working condition, so the desired productivity can be achieved.

Professional and Advisory Support:

The business is under the ownership of four persons so the final decision making authority is with the four partners. The legal matters are supervised by our attorney. The firm is not operating on a very large scale yet we have established a proper accounting system. The accounts department records the daily transactions, manage account receivable and payables. All the important decisions are being taken with the advice of all the three managers whose knowledge provides guide lines for the important decisions to be taken. All the cash involved in the business is kept in Bank Alfalah Limited.

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9.

ASSESSMENT OF RISK

Product Market Risk:

 Customer loss  Competition Increases  Product Demand Decreases

Financial Risk:
 Inflation  Default on debt  Exchange rate changes

Legal Risk:
 Shareholder lawsuits  Employee discrimination lawsuits

Tax Risk:
 Income tax increases  VAT and Excise tax increases

Input risk:
 Input price increases  Labor strikes  Key employees leave  Supplier fails

Operational Risk:
 Machinery breakdown  Product defect increases  Inventory Obsolescence

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SWOT analysis:

Strength
Low cost with high quality Dedicated & punctual staff On time delivery Favorable access to distribution networks

Weakness
Entry Inexperience High cost structure Limited area of operation Not able to enjoy economy of scale

Opportunities
Scope of export Large market Changing of lifestyle & fashion

Threats
Large number of competitors Threats of substitute product New regulation

SWOT Analysis

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10. FINANCIAL

PLAN

Assumptions:
 Inflation rate may vary between 14%-20%.  Sales target will be achieved according market research and production capacity.  Capital cost may vary but marginally.

Financial policies:
 The rate of depreciation of fixed assets is 10% per annum  Purchases will be purchased on 45 days credit.  Sales will be made on one month credit.  Raw material will be in stock for 1 month for 1st year and for 15 days from 2nd year onwards  Finished goods will be in stock for 15 days.  Extra cash will be invested in treasury bills and government bonds.  Profit margin will be 6 % on cost of capital

Startup Expenses and Capitalization:

Start-up Requirements Plant and Machinery cost
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Stationery Land

20,000 22,50,000

KING FOODS Industry Pvt. Ltd. Projected Income Statement

Construction Cost Computers Consultants Furniture Brochures Utility Cash Required Total Requirements

10,00,000 40,000 10,000 3,00,000 20,000 20,000 30,00,000 93,44,000

Capital sources:
Particulars Partners Contributions Bank Loans Total Amount (Rs.) 75,00,000 25,00,000 100,00,000

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For the year ended ..

Amount (Rs.)

Sales Less: cost of goods sold Gross margin Less marketing and adman. Expenses marketing expense Salaries Depreciation Electricity Telephone Interest Packaging Less Total expenses Earning Before Tax Less Taxes @ 30% Net Profit

63,53,400 30,76,560 32,76,840 10,00,000 8,10,000 80,000 2,25,000 60,000 16,000 1,50,000 23,41,000 9,35,840 2,80,752 6,55,088

KING FOODS Industry Pvt. Ltd. Projected Balance Sheet

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For the year ended ..

Amount (Rs.)

Liabilities & Owners Equities Share Capital Bank Loans Sundry Creditors Net profit Total Equity Assets Fixed Assets Furniture Land & building Machinery (Depreciation) Net Fixed Assets Current Assets Cash Closing Stock Sundry Debtors Investment (short term) Total current assets Total assets

75,00,000 25,00,000 5,68,000 6,55,088 112,23,088

12,00,000 30,50,000 26,84,000 (80,000) 58,54,000 5,30,468 12,45,088 6,66,284 29,27,248 53,69,088 112,23,088

KING FOODS Industry Pvt. Ltd. Projected Cash Flow Statement For the year ended ..
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Particulars

Amount (Rs.)

Inflows Share capital Loan from Banks Sales Total Inflows Outflows Fixed assets Current assets Purchases Direct expenses Indirect expenses Current liabilities Total outflows Net cash inflows

75,00,000 25,00,000 63,53,400 163,53,400 58,54,000 29,11,372 24,76,560 6,72,000 23,41,000 1,56,000 (158,22,932) 5,30,468

Break Even Analysis:

A break even analysis predicts the sales volume, at a given price, required to recover total costs. In other words, its the sales level that is the dividing line between operating at a loss and operating at a profit.

 BEP in Units = Fixed Cost / (Selling Price Variable Cost)

= 16, 30,433 units  BEP in Rupees = BEP in Units Selling Price per Unit = 16, 30,433 x 3 = Rs. 48, 91,300  Break Even Point will be achieved in 9.8 Months.

Appendix

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Startup Business Plan and new product launch

 Market research data  Price lists from suppliers. o o o

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