(Date)

  • Category:
    Business
  • Document type:
    Research Proposal
  • Level:
    Undergraduate
  • Page:
    5
  • Words:
    3515

BUSINESS PLAN FOR QUANTUM SPINNERS LIMITED 1

BUSINESS PLAN FOR QUANTUM SPINNERS LIMITED

(Student Name)

(Lecturer)

Executive Summary

Quantum Spinners Limited is a state of art industry that will deal with the production of all types of uniforms for schools, college uniforms, and games kits. Upon establishment, the industry will be under the Council of Textile & Fashion Industries of Australia (TFIA). To make sure that the business entry is recognized, it will ensure that learning institutions are aware of its quality product through media advertising and read shows (Abrams, 2003).

Opportunity and Entry Strategies

Quantum Spinners Limited aims at achieving both the short-term and long-term goals. This will be put into practice by ensuring that the product is of high standards, and are affordable.

The Target Market

The industry targets school going children, sports club, college and university students who need appropriate dressing code.

Competitive Advantages

The business will ensure that it capitalizes on the competitors weaknesses to win a large percentage of the customers. The initial stage of the business wishes to serve a market share of 30%.

The Management Team

The business organization structure will be short and cost effective with various management team such as Managers and other employees for various departments in place.

Financial Plan

The business will acquire its material and equipment by purchase from specific distributors and good financial management plan developed for business success.

Table of Contents

2Executive Summary

2Opportunity and Entry Strategies

2The Target Market

2Competitive Advantages

2The Management Team

2Financial Plan

51.0 Background Information

51.1 Business Description

51.2 Form of Ownership / Business Status

51.3 Type of Business

51.4 Objectives

6MARKET FEASIBILITY 2.0

62.1 Market Share

62.2 Growth rate

62.3 Customer Analysis

62.4 Competition

72.5 Product / Services Strategy

72.6 Pricing Strategy

72.7 Barriers to Entry

83.0 TECHNICAL FEASIBILITY

83.1 Operation Plan

83.2 Production Facilities and Capacity

83.3 Raw Materials Required Per Month

83.4 Production Strategy

93.5 Regulation Affecting Operation

94.1 Pre-Operational Costs

104.2 Working Capital Requirement (Year 1)

104.3 Proforma Income Statement (Appendix)

104.5 Break Even Analysis

104.5.1 Total Contribution Margin

104.5.2 Contribution Margin percentage

114.6 Break-even levels

124.7 Break-even revenue

124.7.1 Contribution Ratio %

124.7.2 Break even turn over

134.8 Break Even Units

134.9 Desired Financing

13Capitalization

134.10 Profitability

144.11 Return on equity

144.12 Return on Investments

155.0 HUMAN RESOURCE FEASIBILITY

155.1 Organization Structure

165.2 Management Team and Qualifications

19uilding and Capacity B5.3 Training

195.4 Promotions

205.6 Conclusion

215.7 References

22Appendix

1.0 Background Information

1.1 Business Description

The name of the business is QUANTUM SPINNERS LIMITED. The main objective of the industry is to produce high-quality products using state of the art technology to produce quality and affordable clothing for the customers. The location of the industry is yet to be decided by the owners, but the proposed location is near the supply of raw material such as cotton and wool (Covello & Hazelgren, 2006). The rise in some schools going children, and sports clubs that require proper and affordable outfits is rising in Australia (Pinson, 2008).

1.2 Form of Ownership / Business Status

The plans is to start the new business as an entrepreneur meaning that owner is the sole manager of the business and will manage all the finances and eliminate cases of delay in decision making since there will be no consultations in making business decisions. (Ogunkoya & Shodiya, 2013).

1.3 Type of Business

The business will include manufacturing part whereby it will have to make all types of uniforms as designed by various institutions. The use of highly qualified experienced and competed human resource plus modern machines and facilities will ensure the production of high-quality goods under a state of art technology.

1.4 Objectives

Short-term objectives

  1. Making / maximizing profits

  2. Acquire customers

  3. Customer satisfaction

Long-term objectives

  1. Job creation through Employment.

  2. Expansion of the business.

  1. MARKET FEASIBILITY

One of the major targets of Quantum Spinners Limited is to dominate the market by producing quality clothing.

2.1 Market Share

The research conducted by the business indicates that the business can have a market share of 30% against other competitors. The aim of the business is to increase this market share from 30% to 48% within the first year.

2.2 Growth rate

Statistics shows that the business still have a growth potential of about 10% and in future it is expected to cover the largest area or market share possible despite stiff competition from the other related firms.

2.3 Customer Analysis

The customers that are expected to buy the products and are currently ordering from other industries are considered as follows;

A. Institutional / corporate customers: — These are the business’ major customers and are approximate to take 60% of the products.

B. Individual customers to take 25% of the sales.

C. Commercial customers to be about 12% of the total customers.

D. Other customers

2.4 Competition

Although the business is expected to grow rapidly, it will be facing stiff competition from other related firms that have been enjoying a monopoly in the region. The state of art machinery will ensure the delivery of products of high quality and standards that will attract customers. The business unique target markets are schools because in the region there is no other business that distributes uniforms to schools (Nikabadi et al., 2013).

2.5 Product / Services Strategy

Following the main point of the business of enhancing the market and maximizing sales, the business is targeting to offer goods of high quality which will be achieved through the following ways: —

  • Using current technology in producing its goods and offering quality services.

  • Using materials of high quality to make durable and valuable goods.

  • Employing trained people to produce better and high-quality products.

  • The business intends to offer produce varieties of textile products to enable customers have varieties products.

  • Total compliance to the government legal requirements.

2.6 Pricing Strategy

The pricing strategy will ensure that all the cost of production, transport, and general operation are met, and profit is realized in the long run.

2.7 Barriers to Entry

The business target is to get maximum sales possible when it became operational. To achieve this, various sales strategies applicable will include:

  • All the business sales outlets will open at 0630hrs and closed at 2000hrs on working days. This will make sure that goods are available to customers whenever they need them. The production is expected to run 24hrs to ensure that goods be produced adequately and are available to customers. Appropriate working hours: —

  • Cost reduction by define percentage to outcompete other firms.

  • Use of sales representatives to capture the market.

  • Selling at hire purchase

  • Offering discounts to Customers.

  • Product promotion in the market through advertisements in media sources.

  • Distribution strategy that will ensure an adequate supply of the products in the market. (Porembka, Carnes & Georgetown University, 2013).

3.0 TECHNICAL FEASIBILITY

3.1 Operation Plan

The plant will operate for six days a week and one day will be set for maintenance. Public Holidays will be well taken care of as workers will have time to relax on such days.

3.2 Production Facilities and Capacity

Quantum Spinners Limited plans to have advanced equipment’s, which will work efficiently for a long period. The table below shows such facilities and their costs for a start. The business will operate upon acquisition of legal license from the state organ.

3.3 Raw Materials Required Per Month

A grand total of $ 149,500 is required to purchase equipments and an amount of $ 122,000 for the purchase of raw materials per month. Before the production process starts, a survey has to be conducted to access the preference and likes of the customers available in the market. The table below shows the raw materials required per month and their estimated costs.

3.4 Production Strategy

Quantum Spinners Limited will be dealing with production of all categories students clothes. The staff will take part in organized workshops to improve on skill. (Burns, Bryant & Mullet, 2011). Moreover, audits will be conducted to ensure the required qilaity and standards are maintained.

3.5 Regulation Affecting Operation

The investors will have to meet all the state requirements before starting the operation process, such as Public Health Act, Factory Act, and Trade Licensing Act, etc. these statutory requirements will ensure the eligibility of the company and its full compliant to operate within the land. The factory act will ensure for occupational health and safety of the workers and ensure they are provided with personal protective equipment’s while at work (United States., and Stern, et al. 1990).

4.0 FINANCIAL FEASIBILITY

This is to cover all the investments required for the proposed business and analysis to determine the viability and technical feasibility of the business (Walter, Katsuni’s & Carosio, 2009).

A proposed capitalization of $1,000,000 is required for the running of Quantum Spinners Limited. This is to be financed by owner’s equity of $ 400,000 and a bank loan of $60,000 as the source of capital.The pre-operational requirement costs required for the start of Quantum Spinners Limited sums to an amount of $51,200, and the business expects to generate a total profit of $ 652,386 in the first quarter of its operation. The business is expected to break even at $2,486,000, $2,983,200, and $3,578,480 for the first three years of its operation respectively. The return on equity for the first three years is approximated to be at 48.3%, 62.36%, and 56.71% respectively. Return of investments is to be at 65.2%, 74.38%, and 85.4% for the first three consequent years of its operation.

4.1 Pre-Operational Costs

DESCRIPTION

AMOUNT ($)

Transport

Market research

Registration

License and permit

Installation

Photocopying

TOTAL COST

4.2 Working Capital Requirement (Year 1)

DESCRIPTIONS

AMOUNT ($)

Stock of raw materials

Stock of finished goods

TOTAL WORKING CAPITAL

$800,000

4.3 Proforma Income Statement (Appendix)

4.5 Break Even Analysis

4.5.1 Total Contribution Margin

Contribution margin = sales – total variable costs

Year 1=3,950,000-294,414

= $3,655,586

Year 2 = Contribution margin

= 4,740,000 — 402,551

=$ 4,337,449

Year 3 = Contribution margin

= 5,688,000 — 532,156

= $ 5,155,844

4.5.2 Contribution Margin percentage

Contribution Margin% = Contribution Margin X 100%

For the 1st Year = 3,655,586 x100%

3,950,000

For the 2nd Year =4,337,499 x 100%

4,740,000

For, the 3rd Year = 5,155,844 x 100%

5,688,000

Total fixed costs

DESCRIPTIONS

1,354,200

1,354,200

1,354,200

Insurance

Interests on loans

TOTAL COSTS

1,539,200

1,539,200

1,539,200

Total fixed sales are:

YEAR 1 = $1,539,200

YEAR 2 = $1,539,200

YEAR 3 = $1,539,200

4.6 Break-even levels

Break-even levels = Fixed costs

Contribution margin %

Year 1 = 1,539,200

=1,539,200 x 100

= $1,664,000

Year 2 = 1,539,200

= 1,539,200 x 100

= $1,682,185

Year 3 = 1,539,200

= 1,539,200 x 100

= $1,698,896

4.7 Break-even revenue

Break even revenue = Total sale – Cost of sales

Year 1 = $3,950,000 – $1,464,000

= $2,486,000

Year 2 = $4,740,000 – $1,756,800

=$ 2,983,200

Year 3 = $5,688,000 – $2,108,160,

= $ 3,578,840

4.7.1 Contribution Ratio %

Contribution Ratio % = Contribution x 100

Total sales

Year 1 = 2,486,000 x 100

3,950,000

Year 2 = 2,983,200 x 100

4,740,000

Year 3 = 3,578,840 x 100

5,688,000

4.7.2 Break even turn over

Break even turn over = Fixed costs

Contribution ratio %

Year 1 = 1,539,200

= 1,539,200 x 100

= $ 2,445,504

Year 2 = 1,539,200

= 1,539,200 x 100

= $ 2,445,504

Year 3 = 1,539,200

= 1,539,200 x 100

= $ 2,430,388

4.8 Break Even Units

Break Even units = Contribution margin

Fixed Costs

Year 1 = 3,655,586

1,539,200

Year 2 = 4,337,449

1,539,200

Year 3 = 5,155,844

1,539,200

4.9 Desired Financing

AMOUNT ($)

Pre-operational costs

Working capital

Fixed assets

TOTAL DESIRED FINANCING

1,000,000

Capitalization

AMOUNT ($)

Total Investments

1,000,000

Owners contribution

Borrowed funds

4.10 Profitability

Gross profit percentage

Gross profit percentage = Gross profit x 100

Year 1 = 2,486,000 x 100

3,950,000

Year 2 = 2,983,200 x 100

4,740,000

Year 3 = 3,578,840 x 100

5,688,000

4.11 Return on equity

Return on equity = Net profit after tax x 100

Owner’s equity

Year1 = 652,386 x 100

1,350,000

Year 2 =1,041,499 x 100

1,670,000

Year 3 = 1,507,484 x 100

2,658,000

4.12 Return on Investments

Return on investment = Net profit after tax x 100

Total investments

Year 1 = 652,386 x 100

1,000,000

Year 2 = 1,041,000 x 100

1,400,000

Year 3 = 2,586,000 x 100

3,028,000

5.0 HUMAN RESOURCE FEASIBILITY

5.1 Organization Structure

The following is the organization structure for Quantum Spinners Limited.

(Date)

MANAGER/DIRECTOR

(Date) 1

(Date) 2

ASSISTANT

(Date) 3(Date) 4

(Date) 5(Date) 6(Date) 7(Date) 8(Date) 9(Date) 10(Date) 11(Date) 12(Date) 13(Date) 14

Sales representatives

Supplies/ procurement officer

Accountant and secretaries.

Production team

(Date) 15

Artisans/ women

(Date) 16(Date) 17(Date) 18(Date) 19(Date) 20

(Date) 21(Date) 22(Date) 23(Date) 24

Security guard

Cleaners

Each personnel/ staff will have various responsibilities and roles allocated to them. Team leaders will closely supervise production team at various lines of production. The management team will decide on salaries and allowances after monitoring the market trend, and further calculations made on the company income level. Quantum Spinners Limited will be well equipped regarding man power, for which will consider planning of the required number to ensure every operation is in order. The human resource department is mandated to ensure every personnel has attained the required qualification to the production of the goods. In the business, overhead type of organization structure is to be used. Recruiting, training and promotion of employees is to be done by the business manager.

5.2 Management Team and Qualifications

Responsibilities

  • Planning for the business on both long-term and short-term ventures.

  • Setting / implementing the business policies.

  • Making top decisions of the business.

  • Recruiting new staff and allocating job stations.

  • Mounding good public and industrial relationship.

  • Formulating the salary scales.

Qualifications

  • A diploma holder in business management.

  • Experience of at least two years.

ASSISTANT MANAGER (1)

Qualifications

  • Should have at least a diploma in business administration.

  • Should have a relevant experience in a recognized firm for two years.

Responsibilities

  • Assess the competence of the junior workers.

  • Ensure that workers adhere to the line of the duty.

  • Supervising the production process.

  • He is to do all the duties delegated to him by the manager.

ACCOUNTANT (1)

Qualifications

Should have at least a certificate in any accounting courses.

  • Keep the business accounts records.

  • Issue stock

  • Keep other business records.

SECRETARY. (1)

Qualifications

  • Knowledgeable in office organization and management

  • Academic qualification and computer literate.

  • Good communication skills.

  • Should be quick, competent and careful in undertaking business duties.

  • Undertaking typing services.

  • Filing business documents.

  • Receiving and answering business calls.

  • Correspondence services

PURCHASES / SUPPLIES OFFICER (1)

Qualifications

  • Should have at least a certificate in supplies management.

  • Should have a minimum experience of one year in the purchases and supplies department in a well-recognized firm.

  • Should be a responsible, efficient and trust worth person.

Responsibilities

  • Taking control and management of the store.

  • Keeping business records for purchases and supplies.

  • Ordering for the supply of raw materials.

  • Stock control.

CRAFTSMEN / WOMEN (10)

Qualifications

  • Should have at least a certificate in the relevant field.

  • Should have at least two years working experience.

  • Should be self-motivating and hard working.

  • Taking measurements, marking and cutting the materials.

  • Product quality check and assurance.

  • Parking the already made clothes.

  • Undertaking minor and major repairs brought to them by the customers.

CLEANERS (3)

Qualifications

  • Should be medically fit.

  • Should be hard working.

  • General cleanliness

  • Gardening

  • Loading and offloading the products / raw materials.

SALE PERSONS (4)

Qualifications

  • Should have at least a certificate in sales and marketing.

  • Must have at least two years working experience from a recognized firm.

  • Should be able to communicate fluently in English.

  • Should be trust worth.

  • Sale of products.

  • Bridging the gap between the customers and the business.

  • Receiving cash sales.

  • Conduct sales promotions and advertisement of products.

DRIVERS (2)

Qualifications

  • Have clean driving license.

  • At least three-year experience in driving.

  • Good communicate skills

Responsibilities

  • Transporting raw materials to the business premises.

  • Transporting products to the distribution areas.

  • Carrying staff to and from the premises when need arises e.g. when attending a vocational training seminar.

  • Sometimes assisting in sales promotions.

SECURITY GUARDS (3)

Qualifications

  • Should be medically fit.

  • Should be between 30 – 45 years of age.

  • Should have five years’ experience in a recognized firm.

  • Open the gate for the right person and at the right time.

  • Ensure security in the business premises.

  • Providing security to products on transit (escort)

  • Ensure that no body goes out with the business property without permission.

CASUALS (11)

These are temporary employees on hire. They will be hired only during peak seasons when sales are high. His or her qualifications will depend on the work available per day (8 hours).

5.3 Training and Capacity Building

The staff will be sponsored to seminars that will ensure their skills are upgraded to meet the consumers’ expectations.

5.4 Promotions

Factors considered for the promotion qualification will be done according to education level, discipline, efficiency at work and qualification to fill the position described. Motivating the employees will come through rewards on best performance, vacations and salary increments.

5.5 Company Growth Strategy

With only a few competitors, which have monopolized the market and hence pressurized customers by increasing the prices, the business will be selling its products at reasonable prices. The growth strategy considers the fact that;

  • Professionalism and management skills.

  • Reliable sources for acquiring raw materials.

  • Intensive marketing around institutions as fast hand customers.

5.6 Conclusion

Clothing is one of the basic human wants that need to be met. Quantum Spinners Limited is an art of state industry that, when established will try to meet this critical human want by producing quality and fashionable clothes to the students of Australia and later spreading wings to other parts of the world after a full establishment. The industry can capture the market by supplying affordable clothing to every age and class of school going person (Burns, Bryant & Mullet, 2011). It is my great hope that the industry meets all the set objectives and succeeds in meeting the market demand for clothes and uniforms.

5.7 References

Abrams, R. M. (2003). The successful business plan: Secrets & Strategies. Palo Alto, Calif: The Planning Shop.

Burns, L. D., Bryant, N. O., & Mullet, K. K. (2011). The business of Fashion: Designing, manufacturing, and marketing. New York, New York: Fairchild Books; London, England: Bloomsbury

Cebeci, U. (July 01, 2009). Fuzzy AHP-based decision support system for selecting ERP systems in the textile industry by using a balanced scorecard. Expert Systems with Applications, 36, 5, 8900-8909.

Covello, J. A., & Hazelgren, B. J. (2006). The complete book of business plans Simple steps to writing powerful business plans. Naperville, Ill: Sourcebooks.

Divita, L. R., Cassill, N. L., & Ludwig, D. A. (January 01, 2012). Strategic Partnerships in the U.S. Textile and Apparel Industry.

Lee, J. (2011). The right-brain business plan: A creative, visual map for success. Novato, Calif: New World Library.

Maiyo, R. C., & Imo, B. E. (February 01, 2012). The Kenyan textile industry in a liberalized economy: an analysis of performance and challenges. Journal of Emerging Trends in Economics and Management Sciences, 3, 1, 111-115.

Pinson, L. (2008). Anatomy of a business plan: A step-by-step guide to building the business and securing your company’s future. Tustin, CA: Out of Your Mind & into the Marketplace.

Singletary, E. P., & Winchester, S. C. J. (January 01, 1998). Beyond Mass Production: Strategic Management Models for Competitive Manufacturing Transformation in the US Textile Industry. Journal of the Textile Institute, 89, 1, 4-15.

Taslak, S. (March 19, 2004). Factors are restricting the success of strategic decisions: Evidence from the Turkish textile industry. European Business Review, 16, 2, 152-164.

Appendix

  1. Dec, Year 1.stProforma income statement for the year ending 31

AMOUNT ($)

Cost of goods

Gross profit

5,688,000

2,108,160

3,578,840

Expenses

Telephone

Advertising

Stationery

Transport

Insurance

Interests on loans

1,354,200

Net profit before tax

1,794,624

NET PROFIT AFTER TAX

$1,507,484

Projected cash flow (year 1)

YEAR THREE

1ST QUARTER

2ND QUARTER

4TH QUARTER

Beginning balance

Add cash sales

CASH RECEIPTS

1,816,199

2,622,400

4,693,719

2,126,976

2,946,880

5,380,000

2,385,000

3,336,256

6,088,626

2,538,228

4,803,500

7,782,578

CASH PAYMENTS

Purchases

Creditors

Telephone

Transport

Stationery

Interests

Advertising

Depreciation

1,368,576

———

1,642,300

———

1,970,750

2,365,000

1,045,212

———

TOTAL CASH PAYMENTS

2,566,741

2,994,992

3,550,398

4,180,194

NET CASH FLOW

2,126,976

2,385,000

2,538,288

3,602,384

ACCUMULATED CASH FLOW

$10,254,653

$12,639,661

$15,177,889

$18,780,273

3. Proforma Balance Sheet

Proforma balance sheet as at 31st Dec, Year 1

DESCRIPTIONS

AMOUNT ($)

Current assets

Stock of finished goods

Stock of raw materials

Total Current Assets

1,568,000

Fixed assets

Machinery and equipment

Furniture

Fittings

Office equipment

Total Fixed Assets

1,960,000

TOTAL ASSETS

$3,528,000

LIABILITIES

Current liabilities

Creditors

Long-term liabilities

Bank loans – American Bank

Owner’s equity

2,658,000

TOTAL LIABILITIES AND EQUITY

3,528,000

TOTAL FINANCED BY

$3,528,000

LIABILITIES

Current liabilities

Creditors

Long-term liabilities

Bank loans – American Bank

Owner’s equity

2,658,000

TOTAL LIABILITIES AND EQUITY

3,528,000

TOTAL FINANCED BY

$3,528,000

Production Facilities and Capacity

EQUIPMENT

QUANTITY

UNIT COST (KSH)

TOTAL COST ($)

Sewing machines

Over lock machines

Knitting machines

Iron boxes

Ironing tables

Tape measures

Knitting needles.

Sewing needles

Thimbles

Pairs of scissors

GRAND TOTAL

Raw materials required per month

description

specification

quantity

unit cost ($)

total cost ($)

Tailoring materials

Polyester

Lining ply

400 meters

200 meters

200 meters

100 meters

Knitting straps

100 rolls

100 rolls

Sewing straps

Mixed colors

100 rolls

GRAND TOTAL

$ 122,000