Diaper Manufacturer Business Plan

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Baby Nappies World

Executive Summary

The disposable nappy, an invention that revolutionized the baby care industry, exists
today as a practical solution to the problem of dirty, smelly, wet baby bottoms
throughout the world.

We are on the verge of entering a lucrative market in a growing country. The current
population fertility rate estimated at 4.2 children1, and increased admissions in hospitals
and clinics presents an opportunity for Baby Nappies World to enter and penetrate the
baby nappies and sanitary pads market. Baby Nappies World is poised to take
advantage of this growth rate and minimal local competition, with a dedicated and
experienced staff, excellent order procurement, and effective management and
marketing. The initial intention will be to provide nappies and sanitary pads to
institutions and organisations including hospitals and wholesalers throughout Botswana.

Initial plans are to produce approximately 300 diapers per hour 5 days a week, utilizing
an 8 hour working day, enabling us to produce a total of 48,000 diapers per month. As
time progresses and we become more efficient in their production this figure should rise
to approximately 56,000 per month. This would be for the diapers only though we do
intend to also produce sanitary pads, though on an order basis.

We realise the fact that for us to prosper in this relatively untapped market, there is
need to be flexible and responsive, to delight our customers by providing them with
what they want, when they want it and in the exact quantity. Our primary goal will be to
establish and strengthen our existence in the market, which will be bestowed by the
business environment in which we function.

Our marketing strategy will be based mainly on ensuring that customers know about our
existence and the products we produce. Hence our intention is to make the right
information available to the right target customers. This will be done through
implementing a market penetration strategy that will ensure that we are well known and
respected in the market. We will ensure that our products’ prices are favorable relative
to our South African counterparts’ prices, and that our potential customers appreciate
the quality of our products. However, the prices we charge will also take into
consideration the cost of production and distribution so as to ensure that we remain
viable and operational. We appreciate the fact that the majority of wholesalers and
intermediaries that order our products perceive South African products to be of higher
quality and reliability. To counteract this there will be need for us to not only
aggressively market the high quality of our products, but also to go out of our way in
serving our customers and clients so as to establish a good long-term relationship.

Our target markets will primarily constitute institutions, wholesalers and other
intermediaries who often order in bulk for their customers, and concerned individuals.
Hence there will be need to network with the various decision-makers/order-makers to
ensure we receive orders for our products.

We intend to compensate our personnel well, so as to retain their invaluable expertise

and to ensure job satisfaction and enrichment through delegation of authority. We
intend to achieve optimal productivity whilst realizing the full potential of each of our
employees through provision of health care, generous profit sharing, plus a minimum of
three weeks vacation. Awards will be given out to outstanding individuals for hard work
and production so as to not only show our appreciation, but to instill a sense of fun into
the work and promote the maintenance of high standards.

We project sales to increase from more than P748,800 the first year to more than
P1,075,200 the second, and P1,142,400 in the third year.

Ultimately the attractiveness of our venture lies with the fact that customers will choose
our products above those of competitors because of the relatively lower prices as well
as their high quality. Hence Baby Nappies World’s ongoing initiatives will be to drive
sales, market share and productivity so as to provide additional impetus towards
attainment of the corporate goals and objectives.

1
Courtesy: Central Statistic Office

NOTE: All currency figures in this plan are in Botswanan Pula (P).
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1.1 Keys to Success
1. Timely response to customers’ requests: We cannot afford to delay our clients for
whatever reason, as this will have a negative bearing on our image and reputation,as
well as impacting future business. Hence we need to be continually communicating with
the client, so as to ensure that products are delivered on time and according to the
customer’s specifications. This will go a long way towards instilling a sense of trust in our
ability and establishing long-term relationships.
2. Excellence in fulfilling the promise: We intend to produce and provide products of
uncompromised quality to our customers, and excellent service. This is so as to meet
their needs and standards. We acknowledge the fact that the company’s success will be
based on timeous response to customer orders and hence we intend to set high
standards and work procedures.
3. Assembly Technology: To ensure quality diapers and sanitary pads it is essential to
utilize the latest and most efficient production machines. We also intend to keep abreast
with technological developments, which will ensure we gain and maintain a competitive
advantage utilizing the latest production techniques.
4. Networking: As the majority of our customers will be wholesalers and intermediaries
there is need to effectively network with the various decision-makers and order-makers
to ensure a ready market.
1.2 Objectives
Our business strategy will revolve around the need to provide quality disposable baby
nappies, geriatric/adult diapers and sanitary pads to the various institutions and
wholesalers that need them, in the process fully satisfying their requirements. This shall
be undertaken through adequate training and recruitment of a professional team
dedicated to providing and catering the customer’s needs.

We intend to ensure that our marketing campaign increases the knowledge of our
products and services to the various market segments we shall be targeting. This is
particularly so with organisations increasingly looking at obtaining quality products at the
lowest prices as they strive to increase profitability.

We also intend to have well laid out introductory letters and other promotional material
that will enable clients to have an understanding of the types of products we offer and
advantages of utilizing them. In addition well-done company profiles and business cards
often have a triggering effect on clients contemplating ordering our products. Hence this
will undoubtedly generate increased sales of our products.

In summary we intend to attain the following objectives:

 Continuously provide high quality diapers and sanitary pads on time and on budget.
 Develop enthusiastically satisfied customers all of the time.
 Ensure economical use of resources from capacity utilization, minimising inventory/stock
and low cost, and high quality materials.
 Contribute positively to our communities and our environment.
 Establish a market presence that assures short-term and long-term profitability, growth
and market share, which will ultimately convert to business success.

1.3 Mission
We are fully committed towards the production and delivery of high quality disposable
baby nappies, geriatric/adult diapers and sanitary pads to the respective communities.
Internally we intend to create and nurture a healthy, productive, satisfying and enjoyable
environment, in which our employees are fairly compensated and encouraged to
respect the customers’ requests and the quality of the products we intend to produce.
We seek fair and responsible profit, enough to keep the company financially healthy for
the short and long term, and to fairly remunerate employees for the work and effort.

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Company Summary

The primary nature of the business is to manufacture and sell disposable baby nappies,
geriatric/adult diapers and sanitary pads. Our intention is to produce disposable nappies
that will meet all the requirements of a quality standard, particularly considering that the
majority of those currently on the market are imported from South Africa.

2.1 Company Ownership

Baby Nappies World is a company incorporated at the Registrar of Companies through
the foresight and vision of Mrs. X and Mr. X. Though relatively new, the directors realize
their Company’s vast potential market and opportunity for growth given implementation
of the appropriate strategies, aided by the necessary finances.

2.2 Company Locations and Facilities

At present the business is located at Plot Number 5767, Partial, Gaborone. However, as
time progresses and the business expands, the intention will be to move into a more
accessible and attractive commercial area. This regardless of the fact that our type of
business is not too dependent on office location and size, with the quality of our
products being the primary concern.

2.3 Start-up Summary

Total start-up expenses covered (including legal costs, business plan compilation,
stationery and related expenses) came to approximately P5,000. Start-up assets in the
company’s possession include a vehicle, computer, printer and fax, the last of which is
relatively new.
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Start-up

Requirements

Start-up Expenses

Legal P1,000

Stationery etc. P100

Brochures P900

Consultants P0
Insurance P1,000

Rent P1,000

Research and
P0
development

Expensed equipment P1,000

Other P0

Total Start-up Expenses P5,000

Start-up Assets

Cash Required P37,043

Start-up Inventory P3,680

Other Current Assets P0

Long-term Assets P54,277

Total Assets P95,000

Total Requirements P100,000

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Start-up Funding

Start-up Expenses to Fund P5,000

Start-up Assets to Fund P95,000

Total Funding Required P100,000

Assets

Non-cash Assets from

P57,957
Start-up

Cash Requirements from

P37,043
Start-up

Additional Cash Raised P0

Cash Balance on Starting

P37,043
Date

Total Assets P95,000

Liabilities and Capital

Liabilities

Current Borrowing P0

Long-term Liabilities P0

Accounts Payable
P0
(Outstanding Bills)

Other Current Liabilities

P0
(interest-free)

Total Liabilities P0

Capital

Planned Investment

Investor 1 P100,000

Investor 2 P0

Other P0
Additional Investment
P0
Requirement

Total Planned Investment P100,000

Loss at Start-up (Start-up

(P5,000)
Expenses)

Total Capital P95,000

Total Capital and Liabilities P95,000

Total Funding P100,000

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Products

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

3.1 Product Description

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

1. Baby Nappies
The disposable nappy may be described as an invention that revolutionized the baby
care industry. It exists today as a practical solution to the problem of dirty, smelly, wet
baby bottoms throughout the world. The vast amount of births here in Botswana dictates
 that the baby nappy is very much in demand, and that demand continuously increasing.
With this in mind we intend to produce a quality nappy. Our diaper will have (discussion
omitted).
2. Geriatric/Adult & Sanitary Pads
These are mainly used in medical institutions such as hospitals and clinics where
patients often require disposable pads to overcome the problem of dirty, smelly and wet
bottoms. This is particularly so as these adult patients are incontinent and often do not
have the ability to control their bladder. The (discussion omitted).

3.2 Competitive Comparison

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

1. The most significant competition are South African manufacturers of diapers and
sanitary pads including reputable brands such as X and Y, which have a well established
distribution network in place. This network ensures that their products are widely
available on the market. Our key advantages over these producers will be our order
response time as well as lower costs, which will be attractive to many of our prospective
clients.
2. Existing local manufacturers of diapers and sanitary pads are few with research
indicating that there are currently two in Gaborone and one in Francistown, though
additional information regarding their products and operations were still being collected
during compilation of this plan.
3. An existing textile company is also contemplating entering the baby nappies market.

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

3.3 Sales Literature

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

Hence literature and mailings for the initial market forums will be very important.

3.4 Technology
The machine responsible for the manufacturing process is a new and unique concept. It
is capable of producing different sized nappies, that is, small, medium and large
geriatric/adult and sanitary pads. It is capable of producing 350+/- diapers per hour,
which converts to 2,500+/- per day, or 8,000+/- sanitary pads per day.

The one certainty in our industry is that technology will continue to evolve and develop,
changing the quantity that can be produced at any one time, as well as its quality. Our
aim will be to be aware of the implications of this new technology and utilize it in our
existing framework where possible. However our initial aim will be to pay back the
initial cost of the machine.

3.5 Future Products

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

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Market Analysis Summary

The current drive and emphasis by the government on diversification of the industrial
base away from the minerals sector presents an opportunity for Baby Nappies World to
make a valuable contribution towards achieving this goal. Having undertaken a
thorough and comprehensive research of the market we realized that there was a vast
opportunity for a local manufacturer of diapers and pads, with less than a handful
currently on the market.

Aware of the fact that operating in such a market is largely dependent on good
networking, we intend to establish networks and strategic relationships with various
wholesalers, clinics and hospitals to ensure a steady stream of orders. In so doing we
intend to ensure that the products we produce are of extremely high quality and fully
serve their purpose. Our initial overall target market share shall be 10% of the market,
mainly focusing on the wholesalers and organisations in Botswana.

We appreciate that entering such a market is not a ‘bed of roses’ and will require us
establishing strong networks and links with several organisations and institutions as
outlined previously. Hence we intend to implement an aggressive marketing strategy,
well supported by the other business functions. The above prognosis influenced our
decision to enter the diaper and sanitary pad manufacturing industry.
4.1 Market Segmentation
We will be focusing on wholesalers, academic institutions, hospitals and clinics that
either sell or utilize our intended products. We also intend to focus on government
tenders for our diapers and sanitary pads.

Our main target market is large enough to order from us and ensure that we are kept
busy meeting their orders. Though we do not intend to fully depend on them, they shall
constitute our ‘core’ market. One of our intentions will be to offer organisations an
attractive alternative to South African companies mainly marketing our lower costs and
shorter order fulfillment time.

4.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making our products available to the
right target customer. We will ensure that our products’ prices take into consideration
organisations order-makers’ budgets, and that these people appreciate the quality of
our products, are aware our products exist,, and know where to order them. Our low
production costs, which will naturally be reflected in lower prices for our products, will
ensure that we have very good opportunities to win hospital, clinic, and institution
tenders for our products, besides obtaining orders from all the other markets including
wholesalers, chemists, informal traders and supermarkets we shall be targeting.

We realize the need to focus our marketing message and our product offerings. We
need to develop our message, communicate it, and make good on it. This shall be
undertaken in order to establish ourselves on the market and long-term relationships.

4.2.1 Market Needs

Baby Nappies World will set out to provide high quality disposable baby nappies,
geriatric/adult diapers and sanitary pads that will facilitate the hygienic and easier
changing of individuals, both adult and children. The quality of raw materials and
assembly technology we shall utilize will be evident in our products, serving to enhance
the appearance of our customers, in turn adding to their comfort. The large market is
due to the fact that admissions are increasing at an enormous rate in hospitals and
clinics resulting from increased diseases and infections, as well as the increase in the
population growth rate.

We understand that our target markets need more than just something that absorbs.
Our target customer wants something that absorbs as well as being hygienic,
comfortable, easy to use and of good quality. Price also plays an important part in the
purchase decision.
4.2.2 Market Trends
Botswana currently has one of the fastest population growth rates in the world, resulting
in a population of over 1.6 million now compared to just 600,000 in 19711. By 2021 the
workforce between 25-59 years old is expected to increase from around 500,000 to over
1 million. However, a drop in the fertility rate is anticipated because of increased
opportunities and better education. In 1981 Botswana women had an average of 7.1
children, in 1991 they had 4.2 children and this is forecast to fall below there in the next
10 years. This is causing a shift in the demographic structure of the population, from a
situation where over 50% of the population are under 19 years old, to one where more
of the population is of working age. As a result the dependency ratio is likely to fall,
resulting in increased household savings. The current population growth rate shows that
there is a demand for diapers and nappies in households, particularly considering the
increase in the workforce prompting mothers to stock diapers, especially disposables,
as they are easier and faster to handle.

1
Source: Central Statistics Office

4.3 Industry Analysis

Industry competition information appears in the following subtopics.

4.3.1 Competition and Buying Patterns

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

4.3.2 Main Competitors

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

1. X
 Located in Francistown, X, also known as N, specializes in the manufacture of
baby napkins, bath and hand towels, face and wash cloths, beach towels, bath
sheets and waffle gowns. With a large share of the northern market, mainly due
to the large distance between Francistown and South Africa, N is an established
player on the market and was rated as the best performer in the textile sector in
1999. It has had tremendous growth in a short time, with state of the art
machinery currently in place.

During 1999 the company pursued the European markets with employment rising
to 340 people. It has a well-coordinated sales office, which ensures orders are
met and delivered on time, as well as a professional sales staff that ensures
customer inquiries are well handled. Its customer base is largely from South
Africa with few local customers. Prices are extremely competitive with a pack of
four black diamond napkins (70x70cm) selling for P27.08. Though the local
orders are few they tend to be of large amounts. It obtains most of its raw
materials, including yarn from Zimbabwe, with the actual weaving being done in
the factory. Transport is normally provided for bulk orders of above P2,500.00
throughout Botswana taking four weeks at maximum to deliver the order. The
actual delivery time often depends on whether the stock is available in-house.
The company is an investment product of B, with a considerable degree of
financial and technical backing.

2. Y

Located in Gaborone West, Y specializes in the manufacture of baby napkins,

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

3. Z

Located in Tlokweng Industrial, Z specializes in the manufacture of baby napkins,

towels, face cloths, dishcloths, swabs and other textiles.

4. K

Located in Tlokweng, K intends to go into manufacturing of baby napkins in bulk

in the near future. It currently has the capacity to do so and manufactures face
cloths and dish towels, all for the South African market. It employs 145 people
and is also an investment product of B.
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Strategy and Implementation Summary

Baby Nappies World intends to win and maintain customers by providing products that
add value in terms of price, quality, safety, availability and functionability, and are
supported by a dedicated, well-trained team. This shall be important to the successful
implementation of our overall strategy and hence the need to ensure we are focused
and working harmoniously towards attainment of the goals and objectives. We initially
intend to be focusing on satisfying the local market.

Our marketing strategy emphasises focus. We are a new company and hence must
focus our efforts towards informing customers of our existence and the products we are
able to supply. Initially Baby World Nappies will focus on the local market before
contemplating entering the regional market. This is mainly due to our limited resources
and the need to instill confidence in our products as well as business operations. The
target customers will include key decision-makers and order-makers in hospitals, clinics,
wholesalers and informal traders, who often order or recommend on behalf of the whole
organisation, the aim being to obtain an initial order and fully satisfy the customer from
then on. Hence:

 We intend to focus on delivering quality products at affordable prices that in turn will
produce good referrals, which can then generate revenue.
 We intend to build image and awareness through consistency and distinctiveness in our
order fulfillment.

Our strategy is to grow the business by nurturing clients and establishing good one to
one relationships with them. All criteria from customer satisfaction, order fulfillment,
price competitiveness to staff attitudes are to be looked at thoroughly in the initial stages
so as to identify areas of improvement. To attain low lead times (the time it takes to
meet orders) we need to ensure that all functions are communicating properly and
formally, using valid and accurate data to derive achievable plans and schedules for all
stages of procurement, manufacturing and delivery.

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

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5.1.1 Strengths
 Relationship selling: We intend to get to know our customers, one on one. Our direct
sales efforts will seek to maintain a relationship with our customers.
 Diversified customer base: We intend to obtain orders for our products from a wide
customer base. This will ensure lack of dependency on one customer.
 Low production costs: The costs of our products will be approximately a third less than
the famous brand names and end user prices.

5.1.2 Weaknesses
 A limited financial base compared to our South African counterparts.
 The introduction of new organisational practices and personnel who have not previously
worked together presents a challenge to the organisation.
 Our infancy dictates that wholesalers and other intermediaries might be skeptical about
our products.

5.1.3 Opportunities
 Service. As our intended target markets are in relatively accessible areas we intend to
be able to meet their requirements in the shortest possible time.
 Current drive by government towards encouraging the participation of indigenous
entrepreneurs and diversification of the economy presents an opportunity that we may
fully utilize.
 Presently there is no reliable local manufacturer of diapers and sanitary pads, with less
than a handful currently on the market.

5.1.4 Threats
 The “Foreign is good, local is poor” belief may present a difficult hurdle to be overcome.
 Existing competition, both local and foreign. Wholesalers and institutions may express
satisfaction with their current diapers and sanitary pads.
 The possibility of other start up diaper/sanitary pad manufacturing companies generated
by healthy economic growth, establishing in the market.
5.2 Marketing Strategy
We intend to implement a progressive marketing strategy. In terms of marketing we
intend that our name and products are marketed on an extensive basis to ensure that
customers are aware of our existence. In price, we intend to offer reasonable and
competitive prices in comparison to South African competitors and we need to be able
to sustain that. Our marketing will strive to ensure that we establish long relationships
with clients.

5.2.1 Pricing Strategy

Baby Nappies World’s products will be competitively priced in relation to its South
African competitor’s products. Due to the introductory nature of our products we intend
to implement a penetration pricing strategy which will ensure that potential customers
are attracted by our lower prices, up until our products are fully appreciated on the
market, especially in terms of their quality. We will initially charge PX per nappy.
However this will dictate that our costs are prudently kept so as to ensure our financial
goals come to fruition.

5.2.2 Promotion Strategy

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

 Our lower production costs which will convert to lower order prices.
 Quality products able to compete with the top brands.
 Faster order fulfillment times.

We intend to be well known by all our stakeholders in particular wholesalers, hospitals

and other such institutions that may utilize our products, as well as informal traders.
Hence we shall leverage our presence using introductory letters, brochures and other
sales literature. We intend to spread the word about our business through the following:

1. Personal Selling. Undoubtedly customer solicitation face-to-face will be our most

powerful form of promotion mainly due to the fact that our products are mainly ordered
by individuals in organisations and institutions. Its flexibility will enable us to give our
customers concise details of what we have to offer and the benefits of using our
products. Another important determinant in utilizing personal selling is the fact that we
are relatively new on the market. As such potential customers/clients will to a certain
degree be skeptical towards our products and their efficacy.
2. Advertising. In view of the fact that we are new on the market we intend to undertake
adequate advertising of our name and products we offer. This is to instill awareness and
knowledge of our existence in the market place, which hopefully shall convert into
market share. A constant look out will be made of any special editions in the local
 newspapers, which may provide an opportunity for us to advertise our products and
business name.
3. Direct Marketing. This will be used to a limited extent in the form of telemarketing and
informing potential customers and obtaining referrals where possible. In the case of
telemarketing it will involve our targeting potential customers of our products and
informing them of our existence. We may then arrange for an appointment with the
respective decision-maker/order-maker, with the intention being to encourage them to
order our products.
4. Events. We intend to attend trade shows and exhibitions to increase awareness of our
products and services. These events will also enable us to interact with potential clients
who may decide to order our products. Trade shows that instantly come to mind include
Botswana International Trade Fair (BITF) and BITEC, though the latter might not be as
important as the former.

5.2.3 Distribution Strategy

Our products shall initially be mainly sold through personal selling and referral business,
with relationships and customer experience being, by far, the most important factor.
Relationships in this regard means establishment of links with the various wholesalers,
hospitals and clinics which often order or require our products for their customers.
Invariably the experience a customer has with our products will go a long way toward
influencing the intermediary to continue to order our products, and whether they should
refer their friends to order our products. To this end we intend to ensure we provide a
quality product with superior absorbency and comfort. Hence we initially intend to use
the following channels: (discussion omitted).

5.2.4 Positioning Statement

We intend to position ourselves as a desirable alternative source of high quality
disposable baby nappies, geriatric/adult diapers and sanitary pads. This shall be
undertaken through use of high quality raw materials and production processes so as to
ensure the efficient delivery of quality products. The product strategy will also be based
on quality, combined with making the product easily available to the customers. An
important competitive edge will be our assembly strategy, which will be based on good
quality, such that production and delivery are not only a pleasure, but also a feature that
enhances the sense of quality and perception by clients. Our faster delivery, relative to
our South African counterparts, will also serve as an important competitive advantage
on the market.

Through our lower prices, made possible by reduced local delivery charges, we intend
to attract a large portion of the market, both directly and indirectly through referrals.

5.3 Sales Strategy

For the short term at least, the selling process will depend on personal
selling/networking and advertising to inform potential customers about the products we
offer and the benefits of utilizing our products. Our marketing does not intend to affect
the perception of need as much as knowledge and awareness of the product category.

5.3.1 Sales Forecast

Sales forecast information is presented in the chart and table below.

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Sales Forecast

Sales

Nappies,
diaper, P748,800 P1,075,200 P1,142,400
pads

Other P0 P0 P0
Total Sales P748,800 P1,075,200 P1,142,400

Direct
Cost of Year 1 Year 2 Year 3
Sales

Nappies,
diaper, P361,920 P389,760 P389,760
pads

Other P0 P0 P0

Subtotal
Direct
P361,920 P389,760 P389,760
Cost of
Sales

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Management Summary

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

6.1 Organizational Structure

Baby Nappies World shall be managed primarily by the directors/owners. The company
will engage a non-formal functional organisation structure whereby people shall be
focusing on their prime area of expertise. A non-formal structure is flexible and
responsive to the market dictates, enabling the company to delight customers by
providing them with what they want, when they want it and faster than the competition.
In engaging this organisation structure we intend that there is open communication
between all personnel at all levels.

As the company grows there will be more structure to the organisation, with new
employees being assigned a supervisor or subordinate. When the company is at its full
staff potential, it will operate as any closely held organisation, but maintain the personal
interest in each employee’s personal and family welfare and their contributions to the
business.

6.2 Management Team

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

6.3 Personnel Plan

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

Personnel Plan

All
P43,824 P76,174 P104,661
departments

Other P0 P0 P0

Total People 7 10 12

Total Payroll P43,824 P76,174 P104,661

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

6.5 Feedback and Control

1. Important notices and developments will be continuously communicated to employees to
keep them abreast of developments and promoting a sense of belonging and oneness in
the organisation.
2. We will encourage our employees to put forward any suggestions they might have
regarding the improvement of any of the company’s functions-an open door philosophy.
Such a culture will enhance innovativeness and creativity, in turn leading to job
satisfaction and enrichment.
3. We intend to make sure that our employees understand the goals of the firm, are
customer focused, proud of their work and work as a team. This will encourage
employees to become entrepreneurial and customer responsible, in addition to unifying
staff in customer focus and values.

6.6 Corporate Social Responsibility

We recognise the fact that the broader community in which we operate affords us our
‘license to trade’. We intend to establish relationships based on trust and mutual
advantage through engaging in a wide range of active social responsibility programs.
Our efforts on community service will show that the company has its own community at
heart, contributing towards the establishment of a good and reputable image. We intend
to be a responsible corporate citizen fully contributing positively towards the
environment in which we shall operate. Furthermore, (discussion omitted).

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Financial Plan

The financial plan shall be essential if we are to meet our objectives. The intention is to
finance growth through cash flow.

One of the most important factors will be the payment terms as agreed between the
client or customer. We can’t push our customers hard on collection days, because they
are extremely sensitive and will normally judge us on our terms. However there are
certain instances where we will have the bargaining power instead of the customer.
Examples include informal traders and actual consumers of our products. Therefore
there is need to develop a permanent system of receivables financing mutually agreed
between both parties. Hence in the financial plan we intend to have the following:

1. A fundamental respect for giving our customers value, and for maintaining a healthy and
congenial workplace.
2. Cash flow as first priority, growth second, profits third.
3. Respect for realistic forecasts, and conservative cash flow and financial management.

Of these only (1) and (3) are flexible.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are included in the
financial plan as annual assumptions. The monthly assumptions are included in the
appendix. From the beginning, we recognize that collection days are critical, but not a
factor we can influence easily. At least we are planning on the problem, and dealing
with it. Interest rates, tax rates, and personnel burden are based on conservative
assumptions.

Some of the more important underlying assumptions are:

 We assume a strong economy, without major recession.

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

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

General Assumptions

Plan
1 2 3
Month

Current
Interest 10.00% 10.00% 10.00%
Rate

Long-term 10.00% 10.00% 10.00%

Interest
Rate

Tax Rate 18.08% 17.00% 18.08%

Other 0 0 0

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7.2 Key Financial Indicators
We foresee growth in sales at a faster rate than operating expenses, and a bump in our
collection days as we seek to spread the business during start-up.

Collection days are very important. We do not want to let our average collection days
get above 30 under any circumstances. This could cause a serious problem with cash
flow, because our working capital situation is chronically tight. However, we recognize
that we cannot control this factor easily, because of the relationship with our clients.
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7.3 Break-even Analysis
Our break-even analysis will be based on running costs, that is costs we shall incur in
keeping the business running, including salaries and wages, rent, machine maintenance
costs, water and electricity, insurance amongst others. We estimate the company will
comfortably exceed the break-even sales volume.

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Break-even Analysis

Monthly Revenue Break-

P16,967
even
Assumptions:

Average Percent Variable

48%
Cost

Estimated Monthly Fixed

P8,766
Cost

7.4 Revenue Generation

Baby Nappies World will receive its revenue streams from sales of its diapers and
sanitary pads. However we will also look into whether we are able to generate revenue
from by-products obtained from manufacturing our main products. Additional research
into the above shall be undertaken.

7.5 Expense Forecast

Initial expenses shall not be extremely high considering the fact that the manufacture of
our products does not require much electricity (220v) or water. Expenses will be brought
about by transport charges incurred in delivering our products to customers, as well as
going out on sales calls procuring orders. However the strategy will involve including
these charges in the prices of our products. As time progresses we intend to undertake
marketing programs to ensure awareness of our existence on the market. Invariably this
will result in marketing expenses being incurred.

7.6 Projected Profit and Loss

Our projected profit and loss is shown in the appendix, with sales increasing from more
than P748,800 the first year to more than P1,075,200 the second, and P1,142,400 in
the third year. We do expect to more than break-even in the first year of operation. As
with the break-even, we are projecting very conservatively regarding cost of sales and
gross margin. Our cost of sales should be much lower, and gross margin higher, than in
this projection.
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Pro Forma Profit and Loss

Sales P748,800 P1,075,200 P1,142,400

Direct Cost of
P361,920 P389,760 P389,760
Sales

Other P0 P0 P0

Total Cost of
P361,920 P389,760 P389,760
Sales

Gross Margin P386,880 P685,440 P752,640

Gross Margin % 51.67% 63.75% 65.88%

Expenses

Payroll P43,824 P76,174 P104,661

Sales and
Marketing and P16,200 P20,400 P20,400
Other Expenses

Depreciation P10,800 P10,800 P10,800

Maintenance P800 P1,000 P800

Utilities P2,400 P3,000 P4,200

Installation
P600 P0 P0
Costs

Insurance P12,000 P12,000 P14,400

Rent P12,000 P13,200 P14,520

Payroll Taxes P6,574 P11,426 P15,699

Other P0 P0 P0

Total Operating
P105,198 P148,000 P185,480
Expenses

Profit Before
Interest and P281,682 P537,440 P567,160
Taxes

EBITDA P292,482 P548,240 P577,960

Interest
P0 P0 P0
Expense

Taxes Incurred P50,552 P91,365 P102,561

Net Profit P231,130 P446,075 P464,598

Net Profit/Sales 30.87% 41.49% 40.67%

7.7 Projected Cash Flow

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

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Pro Forma Cash Flow

Cash Received
Cash from
Operations

Cash Sales P187,200 P268,800 P285,600

Cash from
P462,480 P763,194 P847,905
Receivables

Subtotal Cash
P649,680 P1,031,994 P1,133,505
from Operations

Additional Cash
Received

Sales Tax, VAT,

HST/GST P0 P0 P0
Received

New Current
P0 P0 P0
Borrowing

New Other
Liabilities P0 P0 P0
(interest-free)

New Long-term
P0 P0 P0
Liabilities

Sales of Other
P0 P0 P0
Current Assets
Sales of Long-
P0 P0 P0
term Assets

New Investment
P9,000 P0 P0
Received

Subtotal Cash
P658,680 P1,031,994 P1,133,505
Received

Expenditures Year 1 Year 2 Year 3

Expenditures
from Operations

Cash Spending P43,824 P76,174 P104,661

Bill Payments P455,291 P539,916 P560,907

Subtotal Spent
P499,115 P616,090 P665,568
on Operations

Additional Cash
Spent

Sales Tax, VAT,

HST/GST Paid P0 P0 P0
Out

Principal P0 P0 P0
Repayment of
Current
Borrowing

Other Liabilities
Principal P0 P0 P0
Repayment

Long-term
Liabilities
P0 P0 P0
Principal
Repayment

Purchase Other
P0 P0 P0
Current Assets

Purchase Long-
P0 P0 P0
term Assets

Dividends P0 P0 P0

Subtotal Cash
P499,115 P616,090 P665,568
Spent

Net Cash Flow P159,565 P415,904 P467,937

Cash Balance P196,608 P612,512 P1,080,449

7.8 Projected Balance Sheet

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

Pro Forma Balance Sheet

Assets

Current Assets

Cash P196,608 P612,512 P1,080,449

Accounts
P99,120 P142,326 P151,222
Receivable

Inventory P35,728 P38,476 P38,476

Other Current
P0 P0 P0
Assets

Total Current
P331,456 P793,314 P1,270,146
Assets

Long-term
Assets

Long-term
P54,277 P54,277 P54,277
Assets

Accumulated
P10,800 P21,600 P32,400
Depreciation
Total Long-term
P43,477 P32,677 P21,877
Assets

Total Assets P374,933 P825,991 P1,292,023

Liabilities and
Year 1 Year 2 Year 3
Capital

Current
Liabilities

Accounts
P39,803 P44,786 P46,220
Payable

Current
P0 P0 P0
Borrowing

Other Current
P0 P0 P0
Liabilities

Subtotal
Current P39,803 P44,786 P46,220
Liabilities

Long-term
P0 P0 P0
Liabilities

Total Liabilities P39,803 P44,786 P46,220

Paid-in Capital P109,000 P109,000 P109,000

Retained
(P5,000) P226,130 P672,205
Earnings

Earnings P231,130 P446,075 P464,598

Total Capital P335,130 P781,205 P1,245,804

Total Liabilities
P374,933 P825,991 P1,292,023
and Capital

Net Worth P335,130 P781,205 P1,245,804

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

Ratio Analysis

Sales Growth 0.00% 43.59% 6.25% 0.00%

Percent of Total
Assets
Accounts
26.44% 17.23% 11.70% 27.60%
Receivable

Inventory 9.53% 4.66% 2.98% 11.20%

Other Current
0.00% 0.00% 0.00% 27.70%
Assets

Total Current
88.40% 96.04% 98.31% 66.50%
Assets

Long-term Assets 11.60% 3.96% 1.69% 33.50%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 10.62% 5.42% 3.58% 33.80%

Long-term
0.00% 0.00% 0.00% 20.00%
Liabilities

Total Liabilities 10.62% 5.42% 3.58% 53.80%

Net Worth 89.38% 94.58% 96.42% 46.20%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 51.67% 63.75% 65.88% 33.60%

Selling, General
& Administrative 20.44% 22.26% 24.68% 21.20%
Expenses

Advertising
0.96% 0.89% 0.84% 0.40%
Expenses

Profit Before
Interest and 37.62% 49.99% 49.65% 2.90%
Taxes

Main Ratios

Current 8.33 17.71 27.48 1.77

Quick 7.43 16.85 26.65 1.24

Total Debt to
10.62% 5.42% 3.58% 53.80%
Total Assets

Pre-tax Return on
84.05% 68.80% 45.53% 6.20%
Net Worth

Pre-tax Return on
75.13% 65.07% 43.90% 13.50%
Assets

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 30.87% 41.49% 40.67% n.a

Return on Equity 68.97% 57.10% 37.29% n.a

Activity Ratios

Accounts
Receivable 5.67 5.67 5.67 n.a
Turnover

Collection Days 57 55 63 n.a

Inventory
10.91 10.51 10.13 n.a
Turnover

Accounts Payable
12.44 12.17 12.17 n.a
Turnover

Payment Days 27 28 30 n.a

Total Asset
2.00 1.30 0.88 n.a
Turnover

Debt Ratios

Debt to Net
0.12 0.06 0.04 n.a
Worth
Current Liab. to
1.00 1.00 1.00 n.a
Liab.

Liquidity Ratios

Net Working
P291,653 P748,528 P1,223,927 n.a
Capital

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.50 0.77 1.13 n.a

Current
11% 5% 4% n.a
Debt/Total Assets

Acid Test 4.94 13.68 23.38 n.a

Sales/Net Worth 2.23 1.38 0.92 n.a

Dividend Payout 0.00 0.00 0.00 n.a

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Controls

The diapers and sanitary pads market has not been fully explored. With this in mind we
intend to aggressively market our existence. The introduction of quality sales and
marketing literature will enable the company to effectively market to potential customers
with a positive image and impression. This will be supported by the relationships we
would have established with several of our customers and clients.

Throughout the year the intention will be to undertake regular evaluations of our
products and marketing programs so as to ensure that we are in line with our intended
objectives. In summary we intend to undertake the following:

1. Tracking and follow-up: We intend to have the discipline, as an organisation, to track

results of the business plan and make sure that we implement.
2. Market segment focus: We intend to have the discipline to maintain the market segment
focus.
3. Saying no: Though difficult initially we intend to be able to say no to special deals that
take us away from the target focus but in particular those that are unprofitable.

8.1 Financial Risks and Contingencies

1. We intend to watch our results very carefully. We may need to drop a certain product
type(s), if we cannot get the margin up or it seems to be unviable. We might be able to
avoid the straight competition with the major companies by focusing more on the target
market mentioned previously.
2. Another possibility is the introduction of a new company(s) in our niche. Hence the need
to undertake aggressive marketing and networking.

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

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Appendix
Sales Forecast

Sales

Nappies,
diaper, 0% P57,600 P57,600 P57,600 P57,600 P57,600 P57,600 P67,200 P67,200 P67,200 P
pads

Other 0% P0 P0 P0 P0 P0 P0 P0 P0 P0 P

Total Sales P57,600 P57,600 P57,600 P57,600 P57,600 P57,600 P67,200 P67,200 P67,200 P

Direct
Cost of Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Sales

Nappies,
diaper, P27,840 P27,840 P27,840 P27,840 P27,840 P27,840 P32,480 P32,480 P32,480 P
pads

Other P0 P0 P0 P0 P0 P0 P0 P0 P0 P

Subtotal
Direct
P27,840 P27,840 P27,840 P27,840 P27,840 P27,840 P32,480 P32,480 P32,480 P
Cost of
Sales

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Personnel Plan

All
0% P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3
departments

Other 0% P0 P0 P0 P0 P0 P0 P0 P0 P0 P0 P0

Total People 7 7 7 7 7 7 7 7 7 7 7

Total Payroll P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3

General Assumptions

Plan
1 2 3 4 5 6 7 8 9 10
Month

Current
Interest 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.0
Rate

Long-
term
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.0
Interest
Rate

Tax Rate 30.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.0
Other 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss

Sales P57,600 P57,600 P57,600 P57,600 P57,600 P57,600 P67,200 P67,200

Direct Cost of
P27,840 P27,840 P27,840 P27,840 P27,840 P27,840 P32,480 P32,480
Sales

Other P0 P0 P0 P0 P0 P0 P0 P0

Total Cost of
P27,840 P27,840 P27,840 P27,840 P27,840 P27,840 P32,480 P32,480
Sales

Gross Margin P29,760 P29,760 P29,760 P29,760 P29,760 P29,760 P34,720 P34,720

Gross Margin % 51.67% 51.67% 51.67% 51.67% 51.67% 51.67% 51.67% 51.67%

Expenses

Payroll P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652

Sales and
Marketing and P1,350 P1,350 P1,350 P1,350 P1,350 P1,350 P1,350 P1,350
Other Expenses

Depreciation P900 P900 P900 P900 P900 P900 P900 P900

Maintenance P0 P0 P200 P0 P0 P200 P0 P0

Utilities P200 P200 P200 P200 P200 P200 P200 P200

Installation Costs P600 P0 P0 P0 P0 P0 P0 P0

Insurance P1,000 P1,000 P1,000 P1,000 P1,000 P1,000 P1,000 P1,000

Rent P1,000 P1,000 P1,000 P1,000 P1,000 P1,000 P1,000 P1,000

Payroll Taxes 15% P548 P548 P548 P548 P548 P548 P548 P548

Other P0 P0 P0 P0 P0 P0 P0 P0

Total Operating
P9,250 P8,650 P8,850 P8,650 P8,650 P8,850 P8,650 P8,650
Expenses

Profit Before
Interest and P20,510 P21,110 P20,910 P21,110 P21,110 P20,910 P26,070 P26,070
Taxes

EBITDA P21,410 P22,010 P21,810 P22,010 P22,010 P21,810 P26,970 P26,970

Interest Expense P0 P0 P0 P0 P0 P0 P0 P0

Taxes Incurred P6,153 P3,589 P3,555 P3,589 P3,589 P3,555 P4,432 P4,432
Net Profit P14,357 P17,521 P17,355 P17,521 P17,521 P17,355 P21,638 P21,638

Net Profit/Sales 24.93% 30.42% 30.13% 30.42% 30.42% 30.13% 32.20% 32.20%

Pro Forma Cash Flow

Cash Received

Cash from
Operations

Cash Sales P14,400 P14,400 P14,400 P14,400 P14,400 P14,400 P16,800 P16,800

Cash from
P0 P1,440 P43,200 P43,200 P43,200 P43,200 P43,200 P43,440
Receivables

Subtotal Cash
P14,400 P15,840 P57,600 P57,600 P57,600 P57,600 P60,000 P60,240
from Operations

Additional Cash
Received

Sales Tax, VAT,

HST/GST 0.00% P0 P0 P0 P0 P0 P0 P0 P0
Received

New Current
P0 P0 P0 P0 P0 P0 P0 P0
Borrowing
New Other
Liabilities P0 P0 P0 P0 P0 P0 P0 P0
(interest-free)

New Long-term
P0 P0 P0 P0 P0 P0 P0 P0
Liabilities

Sales of Other
P0 P0 P0 P0 P0 P0 P0 P0
Current Assets

Sales of Long-
P0 P0 P0 P0 P0 P0 P0 P0
term Assets

New Investment
P0 P9,000 P0 P0 P0 P0 P0 P0
Received

Subtotal Cash
P14,400 P24,840 P57,600 P57,600 P57,600 P57,600 P60,000 P60,240
Received

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8

Expenditures
from Operations

Cash Spending P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652 P3,652

Bill Payments P2,188 P64,631 P35,532 P35,687 P35,527 P35,532 P36,040 P45,944

Subtotal Spent
P5,840 P68,283 P39,184 P39,339 P39,179 P39,184 P39,692 P49,596
on Operations
Additional Cash
Spent

Sales Tax, VAT,

HST/GST Paid P0 P0 P0 P0 P0 P0 P0 P0
Out

Principal
Repayment of
P0 P0 P0 P0 P0 P0 P0 P0
Current
Borrowing

Other Liabilities
Principal P0 P0 P0 P0 P0 P0 P0 P0
Repayment

Long-term
Liabilities
P0 P0 P0 P0 P0 P0 P0 P0
Principal
Repayment

Purchase Other
P0 P0 P0 P0 P0 P0 P0 P0
Current Assets

Purchase Long-
P0 P0 P0 P0 P0 P0 P0 P0
term Assets

Dividends P0 P0 P0 P0 P0 P0 P0 P0

Subtotal Cash
P5,840 P68,283 P39,184 P39,339 P39,179 P39,184 P39,692 P49,596
Spent
Net Cash Flow P8,560 (P43,443) P18,416 P18,261 P18,421 P18,416 P20,308 P10,644

Cash Balance P45,603 P2,160 P20,576 P38,837 P57,258 P75,674 P95,982 P106,627

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Pro Forma Balance Sheet

Assets Starting Balances

Current
Assets

Cash P37,043 P45,603 P2,160 P20,576 P38,837 P57,258 P75,674

Accounts
P0 P43,200 P84,960 P84,960 P84,960 P84,960 P84,960
Receivable

Inventory P3,680 P30,624 P30,624 P30,624 P30,624 P30,624 P30,624

Other
Current P0 P0 P0 P0 P0 P0 P0
Assets

Total P40,723 P119,42 P117,74 P136,16 P154,42 P172,84 P191,25

Current 7 4 0 1 2 8
Assets

Long-term
Assets

Long-term
P54,277 P54,277 P54,277 P54,277 P54,277 P54,277 P54,277
Assets

Accumulate
d
P0 P900 P1,800 P2,700 P3,600 P4,500 P5,400
Depreciatio
n

Total Long-
P54,277 P53,377 P52,477 P51,577 P50,677 P49,777 P48,877
term Assets

P172,80 P170,22 P187,73 P205,09 P222,61 P240,13

Total Assets P95,000
4 1 7 8 9 5

Liabilities
Month 1 Month 2 Month 3 Month 4 Month 5 Month
and Capital

Current
Liabilities

Accounts
P0 P63,447 P34,342 P34,503 P34,342 P34,342 P34,503
Payable

Current
P0 P0 P0 P0 P0 P0 P0
Borrowing
Other
Current P0 P0 P0 P0 P0 P0 P0
Liabilities

Subtotal
Current P0 P63,447 P34,342 P34,503 P34,342 P34,342 P34,503
Liabilities

Long-term
P0 P0 P0 P0 P0 P0 P0
Liabilities

P0

Total
P63,447 P34,342 P34,503 P34,342 P34,342 P34,503
Liabilities

Paid-in P100,00 P109,00 P109,00 P109,00 P109,00 P109,00

P100,000
Capital 0 0 0 0 0 0

Retained
(P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000) (P5,000
Earnings

Earnings P0 P14,357 P31,879 P49,234 P66,756 P84,277 P101,63

2
 P109,35 P135,87 P153,23 P170,75 P188,27 P205,63
Total Capital P95,000
7 9 4 6 7 2

Total
P172,80 P170,22 P187,73 P205,09 P222,61 P240,13
Liabilities P95,000
4 1 7 8 9 5
and Capital

P109,35 P135,87 P153,23 P170,75 P188,27 P205,63

Net Worth P95,000
7 9 4 6 7 2

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