1.

0 EXECUTIVE SUMMARY

1.1 The following report and recommendation been stated herein relates to the proposal by

Enns Accessories to establish a bead making firm.

1.2 The project would require a start-up capital of ₦2,500,000 made up of ₦1,500,000 in

fixed capital and ₦1,000,000 in working capital.

1.3 The enterprises vision is to be the biggest bead making firm in Nigeria, particularly in the

South- South.

1.4 The project will be located in Sapele Road in Benin because of its easy access to both

source and target market from the location.

1.5 A huge market is available for the planned business based on our market survey.

1.6 The financial projection shows that the project would be financially stable and sound by

the time it matures. The sales figures stand at ₦4,800,000, ₦5,280,000, and ₦5,808,000

for years 2014. 2015 and 2016 respectively. Also, profits after taxes are: ₦491,750,

₦588,700 and ₦691,845 respectively.

1.7. The funding requirement is ₦2,500,000. As the sponsors are committing ₦1,000,000

1.8. Our project has been subjected to SWOT, and risk analysis and appropriate risk mitigants

proffered.

1.9 The competitive edge of the enterprise lies in the utilization of locally

available raw materials and technical knowhow in the production of quality,

standardized and affordable product to a larger proportion of the public.

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1.10 The profitability measures are shown below:

2014 2015 2016

₦ ₦ ₦

Turnover 4,800,000 5,280,000 5,808,000

Net profit 491,750 588,700 691,845

Return on sales 10.24% 11.15% 11.91%

Return on Equity 32.78% 39.25% 46.12%

Return on investment 19.67% 23.55% 27.67%

1.11 Conclusion and recommendations

From the point of analysis of our findings, the proposed profit is found to be

technically feasible, financially viable, and economically desirable. Thus, the project

offers good investment benefits, and is therefore highly recommended for

implementation.

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2.0 BACKGROUND

2.1 Introduction:

The project is based on the sustained sectors of both the economy and the average human life.

The South-South zone of Nigeria, particularly Benin, is a haven for fashion as a larger

percentage of its human population comprises of the elite who categorically express themselves

through what they wear and how they wear it. A product such as beaded bags, necklace, Bracelet

etc. is a new addition to the fashion line and is seen as trending to most men, women and

children.

Thus there exists a huge market with clear signs of long term sustainability dwelling in the

presence of well many citadels of learning in the State which serves as melting pots for character

formation and personality discovery with fashion playing a vital role.

2.2 Vision and mission statement

Our vision is to become the biggest bead making firm in Nigeria, specifically in the South-South.

Our mission is to put Nigeria at the top of the fashion industry in consideration with the

necessary skills for business and strong regard for preserving and elevating Nigerian culture.

2.3 Legal Status

This is a sole proprietorship wholly owned by Mbaogu Nnaemeka Paul. It has been fully

registered under the Companies and Allied Matters Act of 1990.

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2.4 Location/Facilities

The plan bead making business would be located at Sapele because of the following reason:

 Closeness to target markets.

 Nearness to raw materials

 Availability of willing and skilled labour.

 Organized infrastructural setting.

2.6 Products/services

Enns Accessories will provide the following products:

- Necklace

- Bracelet

- Bags

2.7 Business Strategy

To be known as the company that produces the best quality beaded product without endangering

African culture and environment.

2.8 Key success factors:

1) The creation of brand new label with styles and designs.

2) The adoption of local beads for foreign, sort after styles.

3) The stratification of designs under the label to satisfy all income classes.

4) The creation of designs for men, women and children.

5) Avoids not falling under any adverse government regulation.

6) The availability of raw materials (beads) within the country.

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2.9 Revenue Base

The revenue of the business will come from the sale of the beaded products.

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3.0 MARKET, CLIENTS AND COMPETITORS

3.1 Nature and Size of the Market

The business of beads is growing. The role of cultural preservation has led to an increase demand

for beads.

There are no restrictions as to the size of the market. The pattern of pricing will be with

regard to the type of raw material used by Enns Accessories we are focusing on civil staff and

other workers

3.2 Target client

My target clients are the chiefs, royal families, individuals and Brides.

3.3 Key competitors and players

The key competitors/players in this area are other bead firms that offer similar product.

3.4 Production processes

 Cut the copper wire to the desired size with a plier

 Insert the beads

 Create loops.

 packaging

3.5 Service delivery

Customer – friendly delivery and support service will be package to ensure customer retention

and market growth

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3.6 Quality assurance

The desires for profitability will not overshadow our focus on quality. To ensure this we would;

 Use the best materials

 Delivery at the right time.

3.7 Demand /Supply analysis

We have conducted a market survey and it shows that a huge demand supply gap exists.

3.8 Technology

We would do well to employ the latest materials and equipment.

3.9 Competitive edge

Our core competitive edge is having expertise knowledge, management aptitude and knowledge

of human public relations.

3.10 Market needs and customer dynamics

We would always keep abreast of the trend and changing customer needs and do well to adapt

to them.

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4.0 MARKETING PLAN

4.1 Marketing plan to be adopted

The marketing plan to be adopted by Enns Enterprise would be geared towards exploiting the

weakness of the key competitors in the area.

Key areas of focus in my marketing plan are:

 Direct delivery service.

 Awareness creation and aggressive marketing campaign.

 Going out for personal advert by telling people of the existing business.

4.2 PROMOTION AND DISTRIBUTION STRATEGY

We would mount aggressive awareness campaign to draw potential customers, as the business

grows, we could use more improved methods of making publicity.

4.3 ALLIANCES

At start –up, we will not go into alliance with any organization. However as the business grows,

we may give considerations to alliance arrangement depending on market dynamics

4.4 MARKET POSITIONING

Enns venture would be seen and perceived as:

 A sole proprietorship business

 A transparent, responsible and customer focused service provider.

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4.5 SERVICE DELIVERY STRATEGY

To ensure that customer are well served and as such, satisfied and retained the following would

be put in place:

 Customer care would be emphasized

 Unique designs of beads

 Making use of quality materials

4.5 SWOT Analysis

4.5.1 Strengths

 The location of the bead making firm makes it to have an easy access to its

targeted customers.

 The natures of the product being made are rare and spectacular.

 Raw materials could be gotten cheaply in local market

 Little technical expertise or licensing is required

 The proprietor has a good knowledge on bead making

 Adequate infrastructure are available in sighting location

 Proper waste management plus income generation

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4.5.2 Weaknesses

 Business may be dependent on market supplies of raw materials, this problem

shall be addressed through proper stores management and early contracting of raw

materials.

4.5.3 Opportunities

 The business can also go into hiring of Accessories

 Innovation and new business opportunity may arise from the proprietors’

affiliation to the SIFE network. International marketing and designing

contracts could be obtained

4.5.4 Threats

 Bead making is a skill, and skills are highly initiative. Styles and patterns could be

imitated by pirates at lower standards thus denting the company’s reputation.

 Increase competition due to entry of more structured business.

4.7 PROJECT REVENUE

Details 2014 (₦) 2015 (₦) 2016 (₦)

Necklace 1,000,000 1,100,000 1,208,000

Bracelet 1,000,000 1,100,000 1,200,000

Big Bag 1,600,000 1,800,000 2,000,000

Small Bag 1,200,000 1,280,000 1,400,000

Total 4,800,000 5,280,000 5,808,000

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5.0 Organization and management

5.1 Organizational structures

Enns is a sole proprietorship and to avoid excessive payroll cost would adopt a simple

organizational structure.

5.2 SHARE HOLDERS AND DIRECTORS

Enns venture is a sole proprietorship business not registered, and as such the promoter is the sole

owner, there are no shareholders or directors.

5.3 MANAGEMENT TEAM

The enterprises would be mange by the promoter Mbaogu Nnaemeka Paul. A student of the

department of Accountancy, University of Nigeria Enugu Campus. He is sported by his behavior

and intelligent as a student who has not failed any of his departmental causes.

5.4 External support

The planed project has external support of ₦1,000,000 which was obtained from a United Bank

of Nigeria.

5.5 Personnel Plan

The plan for personnel for the business is to start with seven staff; one manager, four

bead maker, one cleaner and one security man.

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5.6 Values and Norms of the company

Enns accessories will adopt the following norms and values:

a. To offer quality for the benefit of her customers

b. To uphold integrity and dignity, both hers and her customers

c. To see her employees as her most valuable assets

d. To be reliable and always available to her customers and employees

e. To have total freedom of business within the law

f. To maintain fastidiously, a high ethical standard.

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Legal, Regulatory, Social and Environmental issues

6.1 Legal issues

Enns plans to commence commercial operations as a sole proprietorship; therefore, the business

would be registered with the Registrar of companies in the CAC and what necessary department

in the Local Government and State Government. No special licensing shall be required for

operation. The company shall be required to pay company tax.

6.2 Regulatory issues

Enns Accessories will comply with all environmental regulations, relevant industrial safety

requirements, as well as Government regulations. The constitution of the business shall be

subject to the Nation’s constitution.

6.3 Social issues

This business will satisfy the society in the following ways:

 Job creation, wealth creation and poverty reduction

 Affecting the balance of payment positively and Increase gross domestic

production.

6.2 Environmental issues

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Defect Accessories shall pose no environmental hazards as all wastes generated are purely

recyclable. Wastes/scrap pieces of materials could be used for the production of free bracelets. In

this way, not only would the wastes be properly managed, it shall also generate goodwill to the

business.

7.0 FINANCIAL PLAN

7.1 Project cost

The proposed project is to be fully implemented with an investment of ₦2,500,000 (Two

million and five hundred thousand naira) made up of ₦1,500,000 fixed capital and

₦1,000,000 working capital.

7.2 The details of the project cost are showed

Details Amount Remark

Land ₦550,000 Not Acquired

Building ₦350,000 Not Acquired

Fixtures and Fittings ₦60,000 Acquired

Delivery/Store Van ₦400,000 Acquired

Generator Set ₦100,000 Not Acquired

Sundry tools ₦30,000 Acquired

Electrical Installations ₦5,000 Not Acquired

Plier ₦5,000 Acquired

Total Fixed Cost ₦1,500,000

WORKING CAPITAL COST

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Cash at hand/bank (3 Months’ salary and wages) ₦465,000

Beads ₦410,000

Fishing line and copper wire ₦30,000

Fashion show list ₦20,000

Cases and materials for packaging ₦50,000

Maintenance fuel for the van ₦15,000

Advertising and publicity ₦10,000

Total working capital

Total project cost ₦1,000,000

7.3 FUNDING PLAN:

The estimated total project cost of ₦2,500,000 will be funded as follows:

Details Amount(₦) Percentage (%)

Equity 1,500,000 60

Term loan 1,000,000 40

Total 2,500,000 100

7.4 FUNDING REQUIREMENT:

The funding required for the project is ₦2,500,000 as the sponsors are committing ₦1,000,000

into the project.

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7.5 PROJECTED INCOME STATEMENT

DETAILS 2014 2015 2016

Capacity Utilization 50% 60% 70%

Turnover sales ₦4,800,000 ₦5,280,000 ₦5,808,000

Less cost of Sales ₦1,960,000 ₦2,156,000 ₦2,371,600

GROSS PROFIT ₦2,840,000 ₦3,124,000 ₦3,436,400

Less Operating Expenses

Fashion show list ₦20,000 ₦22,000 ₦24,200

Cases and materials for packaging ₦50,000 ₦55,000 ₦60,500

Maintenance fuel for the van ₦15,000 ₦16,500 ₦18,150

Advertising and publicity ₦10,000 ₦11,000 ₦12,100

Depreciation ₦82,500 ₦82,500 ₦82,500

Interest on loan ₦100,000 ₦50,000 -

Salaries ₦1,860,000 ₦2,046,000 ₦2,250,600

NET PROFIT AFTER TAX ₦702,500 ₦841,000 ₦ 988,350

Tax ₦210,750 ₦252,300 ₦296,505

Net profit after tax ₦491,750 ₦588,700 ₦691,845

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Retained earnings ₦491,750 ₦1,080,450 ₦1,772,295

7.6 PROJECTED CASH FLOW STATEMENT

DETAILS 2014 2015 2016

CASH IN FLOW “A”

Equity 1,500,000 - -

Term loan 1,000,000 - -

Sales 4,800,000 5,280,000 5,808,000

TOTAL CASH INFLOWS “A” 7,300,000 5,280,000 5,808,000

CASH OUT FLOWS “B”

Acquisition of fixed assets 1,500,000 - -

Cost of sales 1,960,000 2,156,000 2,371,600

Operating expenses(less depreciation) 1,955,000 2,150,500 2,365,550

Loan repayment 500,000 500,000 -

Interest on loan 100,000 50,000 -

Tax 210,750 252,300 296,505

TOTAL CASH OUT FLOW “B” 6,225,750 5,108,800 5,033,655

NET CASH OUT FLOW (A-B) 1,074,250 171,200 774,345

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OPENING BALANCE - 1,074,250 1,245,450

CLOSING CASH BALANCE 1,074,250 1,245,450 2,019,795

7.7 PROJECTED BALANCE SHEET

CAPITAL EMPLOYED 2014 2015 2016

Fixed assets (at cost) 1,500,000 1,500,000 1,500,000

Less accumulated depreciation 82,500 165,000 247,500

Net book value 1,417,500 1,335,000 1,252,500

Cash at hand/bank 1,074,250 1,245,450 2,019,795

Less current liabilities 500,000 - -

Net current asset 574,250 1,245,450 2,019,795

Net assets 1,991,750 2,580,450 3,272,295

Financed by:

Equity 1,500,000 1,500,000 1,500,000

Retained earnings 491,750 1,080,450 1,772,295

Owner’s fund 1,991,750 2,580,450 3,272,295

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7.8 PROFITABILITY ANALYSIS

The profitability indicators of the project are shown below:

2014 2015 2016

₦ ₦ ₦

Turnover 4,800,000 5,280,000 5,808,000

Net profit 491,750 588,700 691,845

Return on sales 10.24% 11.15% 11.91%

Return on Equity 32.78% 39.25% 46.12%

Return on investment 19.67% 23.55% 27.67%

BREAK- EVEN ANALYSIS

BREAK EVEN POINT (BEP) = (FC)/1 – (VC)/ S

Where:

FC= FIXED COST

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VC= VARIABLE COST

S = SALES

1 = CONSTANT

BREAK EVEN ANALYSIS (USING YEAR 2014)

DETAILS FIXED COST VARIABLE COST

₦ ₦

Depreciation 82,500

Interest on loan 100,000

Salaries 1,860,000

Fashion show list 20,000

Cases and materials for packaging 50,000

Maintenance fuel for the van 15,000

Advertising and publicity 10,000

TOTAL 2,042,500 95,000

By substitution,

BEP = FC

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 1-VC

FC = ₦ 2,042,500

1-VC = 1 – ₦95,000

₦4,800,000

1- VC = 1- 0.01979

1- VC = 0.98021

BEP = ₦ 2,042,500

0.98021

BEP = ₦2,083,737

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8.0 RISK ANALYSIS, CONTINGENCY PLAN AND EXIT STRATEGY

8.1 Risk analysis

This project has been subjected to risk analysis. Some inherent risks and appropriate measures

preferred, to avoid the business being disrupted, have been identified.

8.1 CONTINGENCY PLAN

RISK MITIGANT

Late delivery of raw materials Materials shall be contracted at least one

week to the month’s end

Inadequate start-up demand Aggressive promotion and advertising

campaigns

Large amount of old stocks in the market at Discount issue and extension of market

the end of the month boundaries

8.3 Exit strategy

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No exit is planned rather diversification will be promised. If insolvency persist, the sale of stocks

and assets shall cover costs.

9.0 OTHER CONSIDERATION, CONCLUSION /RECOMMENDATION

9.1 Economic Justification: As proven by our studies and analysis of the findings made, the

profit offers good benefits to the promoter and the economy

9.2 Commercial Viability: The commercial viability of the project is shown through the impressive sales,

profits and cash flow positions.

9.3 Conclusion: In reference to all the above, this project is highly recommendable both on

findings and implementation.

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