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BUSINESS PLAN

MVELEDZANDIVHO MULTI-PURPOSE
CO-OPERATIVE LIMITED

Supported by: Small Enterprise Development Agency

MVELEDZANDIVHO MULTI-PURPOSE COOPERATIVE LIMITED


BUSINESS PLAN

Company Information
Issued Date:..........................
Legal Name: Mveledzandivho Multi-Purpose Co-Operative Limited
Trading Name: Mveledzandivho Multi-Purpose Co-Operative Limited

CK Number: 2012/017322/24
CONTACT PERSON:
Mrs Lorraine Mashudu Khangale
Cell:
POSTAL ADDRESS:
P.O Box 1
Mukula
0978
BANK DETAILS:
Name of Bank:
Account Number:
Account Type: Cheque Account

Confidential Agreement

The information contained in this business plan is confidential and proprietary to


Mveledzandivho Multi-Purpose Co-Operative Limited and is intended only for the
persons to whom it is transmitted by the Company or its representatives. Any
reproduction of this document, in whole or in part, or the divulgence of any of its
contents without the prior written consent of the Company, is prohibited.

Business Plan Copy No: _____________

The undersigned reader acknowledges that the information provided by member


of Mveledzandivho Multi-Purpose Co-Operative Limited in this business plan is
confidential; therefore, reader agrees not to disclose it without the express written
permission of the Lorraine Khangale Mashudu a member of Mveledzandivho MultiPurpose Co-Operative Limited.
It is acknowledged by reader that information to be furnished in this business plan
is in all respects confidential in nature, other than information which is in the public
domain through other means and that any disclosure or use of same by reader
may cause serious harm or damage to Mveledzandivho Multi-Purpose CoOperative Limited.

_________________________

______________________________

Signature

Name:
____________________

Why was this Business Plan Written?

1. To obtain the grant financing of an amount of R350, 000 from any

financial institutions.

2. To give the owner who wants to start the clothing production business a much better idea of
whether the owner should really get involved in this type of business at all, through
determining the commercial, technical and financial viability.
3. To serve as a useful guide for the business to check continuously how the business is gettingon in achieving its goals

4. To serve as an operational plan document for Mveledzandivho Multi-Purpose Co-Operative


Limited.

5. To serve as a very good document for outsiders, like banks or suppliers of credit, to see
whether they are interested in getting involved in the affairs of the business or not.

In a nutshell This business plan is a road map that tells business owner where to
go, and allows the owner to check if the team is on the right road.

MVELEDZANDIVHO MULTI-PURPOSE COOPERATIVE LIMITED


Table of Contents
EXECUTIVE SUMMARY
1.

Brief Description of the Business.7

2.

Keys to success..9

3.

Financial Summary.....9

4.

Business's Contributions to the Economy..9

5.

Purpose of Required Fund ...9

Section 1
MARKETING PLAN
1.1

Description of the Product and services.10

1.2

Reasons for choosing this Traditional Clothing as product .......10

1.3

Competition.10

1.4

Competitive Advantage ...10

1.5

Location..11

1.6

Market Area11

1.7

Targeted Customers.12

1.8

The Industry Overview...12

1.9

Total Demand.12

1.10

Market Share...12

1.11

Selling Price12

1.12

Sales Forecast...12

1.13

Marketing Strategy14

1.14

Marketing Budget..14

Section 2
MANUFACTURING PLAN

2.1

Fixed Required Capital 15

2.3

Life of Fixed Capital..16

2.4

Cost of Stock and Raw Materials ..16

2.5

Labour.....17

2.6

Overhead Expenses....17

Section 3
ORGANISATION & MANAGEMENT PLAN
3.1

Form of Business.18

3.2

Organisational Structure.18

3.3

Pre-Operating Activities and Gantt chart..19

3.5

Pre-Operating Expenses.....21

3.6

Administrative Expenses21

Section 4
FINANCIAL PLAN
4.1

Capital Required....22

4.2

Financing Plan and Grant Requirement.....23

4.3

Security for Grant .23

4.4

Profit and Loss Statement............24

4.5

Cash Flow Statement....25

4.6

Balance Sheet....28

4.7

Break-even Point (BEP) ...29

4.8

Return on Investment (ROI).30

4.9

Exit Plan...30

EXECUTIVE
SUMMARY
1.

Brief Description of the Business


Mveledzandivho Multi-Purpose Co-Operative Limited is an independent existing
traditional clothing manufacturing. The business were started in 2007,I t was started as
a community project for combining individual sewing around the village. Its purpose
was for job creation in Mukula village a poverty stricken area. It were started with abou
23 people, but due lack infrastructure, equipment, materials to produce stock other
people have left during the period. Nine dedicated people remaing in the business
since started. They are currently operating in one small African house made of soil and
grass, but they still have hope that one day they will get help and grow their business.
In 2012 the members decided legalise their business and register it as co-operative.
The main objective of the business plan is to obtain fund to improve the business so
that it can make profit and reduce poverty. When fund is obtained the directors plan
increase its products line range by focusing on different products range than only on
the traditional. The new products range will be School Uniform, hospital uniform,
cleaners uniforms or gowns, services workers work-suite, safety and protective clothing
including embroidery services. With this products range management believe that this
business will make a good profit.
With this new products the business has targeted the following, schools, electrical,
cleaning, construction companies, hospitals, university, and security companies with
uniform and protective clothing. The business has targeted this type of customers
because they purchase their products in bulk and also as it was mention in the
president state address speech that government must purchase their products from
local business. This is one of the opportunity.
Mveledzandivho Multi-Purpose Co-Operative Limited is managed by highly motivated,
well qualified and experienced managers. The management team has experience in
clothing manufacturing having working in this type of business for more than 10 years.
The survey has indicated that there are few companies that manufacture the type of
products we want to manufacture around Thulamela municipality. The products such as
protective clothing, school uniform and hospital gown are essential to most institution
and this products is used 5 days in a week, this means that it need to be replaced
every time. As an essential products means that the demand of this products will never
stops. We are positioning our company to capitalise in this opportunity

2.

Keys to success

3.

Providing products which are on demand.


To keep our cost lower than all local suppliers by producing in high volume and
make use of members of co-operatives.
To use every means available to satisfy our customers.

Personal visit to all school in our targeted market area.

Financial Summary
The table below is a brief summary of the profit and Loss statement.

4.

Business's Contributions to the Local Economy


Mveledzandivho Multi-Purpose Co-Operative Limited will contribute to local economy
through providing source of income of 9 individuals or families. It will also result in
healthy competition by forcing existing small individual to also join forces and to
improve their product and services quality. This will empower woman and encourage
other women to start their business.

5.

Purpose of Required Fund


To improve this business a total amount of R 415,816 is needed and the owners have
proposed to finance this capital requirement by a grant of R349,879 or 84% and the
balance R 65,937 or 16% will be financed by owners. This grant amount will be used
as follow:

Section 1
MARKETING PLAN
1.1

Description of Products and Services


Mveledzandivho Multi-Purpose Co-Operative Limited will produce the following
products school uniform, protective clothing, services workers clothing , doctors and
nurses gowns, work-suit for cleaners, contractors and general workers. Below is the
type of picture showing

Our products are quality made from a high quality materials, our advantage is that we
also going to do embroidery of company name on the garment. This products are
chosen because they are in demand or requirement, are weared 5 days a work. This

products is purchased most by companies or institution which purchased in bulk. The


advantage is that price can be higher rather than selling to individuals.

1.2

Competitors
Mveledzandivho Multi-Purpose Co-Operative Limited is facing competition from,
Chrystal Garments, its factory location is in Shandima industrial and it has two retail
store in Thohoyandou town. The company produce school uniform, t-shirts and general
workers work-suits. The company is own by Philippians.
The indirect competitors is clothing shop around Thohoyandou town who buys and sell
uniform and general workers suite and gowns to customers who come and buy in the
store.

1.4

Competitive Advantage
Mveledzandivho Multi-Purpose Co-Operative Limited will distinguishes itself from its
competitor
Our advantage is that we are bluck new BEE act requirement give preferences to
bluck own companies.
Competitors does not provide safety clothing we provide and safety is one mandatory
according the labour act in most job.
Our marketing strategy is that we will do personal visit to all started institutions and
companies.
Because of few competitors their prices are high we will price our price slightly below
the competitorss price.
Offer a bulk discount
By keeping the overhead low, the business will be able to channel the profits back
into operations thus avoiding high debt ratios or lost sales opportunities.
Consideration will also be given to attending trade shows around the country.

1.5

Location
The business will is located at Mukula Village found in Thulamela Municipality, Vhembe
District, and Limpopo Province, South Africa. This location has been selected because
of the following reasons: it is far from its competitors and closer to its targeted
customers and also near to the owners homes.

1.6

Market Area

10

Mveledzandivho Multi-Purpose Co-Operative Limited plans to initially supply its


products in Vhembe District and with future plans to supply the whole country and other
country during the road shows. This area has been chosen because is highly populated
with about 40 traditional weeding and parties during weekend and is under-served with
African traditional clothing with only two known manufacture. This area has been
selected because of few competitors. This is a well developing area with a high
population growth about 17% growth every year
Although the factory has located in Mukula village it will the who Vhembe district. E.g
Hospital, universities, colleges, municipalities we will visit all hospital procurement to
be listed in a database in the whole area. Targeted customers such as school we have
targeted area such as : Mukula and surrounding villages schools.

1.7

Targeted Customers
The business main targeted customers is schools by supplying uniform and embroidery
of emblem on the uniform. Other majority of school in our area they need such
embroidery. As we will be local and cheaper than their supplier at same time providing
high quality I believe that they prefer us.
The other customers will be cleaning companies, constructions, electrical companies,
municipality, university and mining companies who need work-suit with their emblem.
This people they use work-suit as uniform for all their general workers.
The other Customer group are our current customers who are currently purchasing a
traditional clothing Minwena from us. This people purchase when they are attending
traditional wedding ceremony and other during thier clud called Tshisevhesevhe were
they will be dancing traditional songs wearing traditional clothing.

1.8

The Industry Overview


The market outlook for our products in Limpopo Province and elsewhere is positive.
This type of product is used almost every day from Monday to Friday. Protective and
safety clothing is mandatory in majority of work such as mining, electrical, construction
and cleaning. School uniform is also mandatory in all South African public schools. With
this reason this industries will remain strong forever. The demand will always increase
due to the population growth

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1.9

Total Demand
The market survey indicated that they are the demand of school uniform. Competitors
visited said that they sometime reject orders of people due to the high load of work. The
survey also indicates that half of our targeted market prefers traditional clothing and
they are failing to get them because of shortage of manufacturing companies.

1.10

Market Share
Because the demand for African and traditional clothing is higher than supply , and
competitors are few, and current manufacturing can only cover less than 15 percentage
of potential customers and our competitors does no specialise with products made from
specialise materials, and our products are surveyed to be a customers preference. As
the demand for African and traditional clothing are far above the ground we believe that
every single one of our product produced will be purchased in full and our capacity is
12 items per day.
The research indicates that there is high a necessity for extra, African and traditional
clothing production companies in Vhembe District area and South Africa as a whole.

1.11

Selling Price
Our prices are based on the cost plus margin and combining with what the customers
are willing to pay method. This cost take inconsideration all material, overheads cost,
direct labour cost and other production cost. Our production cost increase per size and
type of products but it is still very low. Our average price considering both strategies is
R520 per items. This is a price the customers survey indicated that is still very cheap
and they are willing to pay this price.

1.12

Sales Forecast
If the production capacity is 12 items per day and the price is R520 per item then, the
daily sales will be R 6,240 per day R149,760 (R6,240x24days) per month.

1.13

Marketing Strategy

12

Mveledzandivho Multi-Purpose Co-Operative Limited will have very modest cost to


promote and advertise its product it will rely mostly on word of mouth promotion by
satisfying customer and street display and promotions such as:
Catalogue Sales. List your products with an existing catalog sales firm. We will
describe our product in full the features and its quality.
Fair sales. Arrange for a compartment at trade shows, large flea markets and
community fairs. We will take a good selection of our merchandise, business cards,
brochures, and order forms and set up an attractive display. Although the objective will
vary with the type of activity. The general idea is to retail, make contacts, gain
recognition, and to take wholesale orders.

1.14

Marketing Budget
Our marketing budget will be consist of travelling cost, to business customers, stores
roads show sales, which can be done three times every year. The monthly budget will
be budgeted for the catalogue, brochure and business cards which we have arranged
with SEDA to assist us with promotional materials.

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Section 2
MANUFACTURING PLAN
2.1

Fixed Assets Required

14

2.3

Life of Fixed Capital and Depreciation


The lifespan of the fixed assets are as follows; this is based on supplier information.
Our depreciation will be on a straight line method.

The annual depreciation cost, assuming no scrap value, will therefore be:

15

2.4 Cost of Stock and Raw Materials (Rand Value)

The increase is estimated at 10% in all products and Services for the entire years.

2.5

Labour
Direct Labour

2.6

Overhead Expenses
Overhead costs are monthly indirect cost of the business. The table below shows the
breakdown of categories of expenses.

Section 2
MANAGEMENT PLAN

16

3.1

Form of Business
The business has been formed and registered as co-operative; the following
represent the director Mashudu Khangale Lorraine, Ndidzulafhi Eunice Mudau,
Tondani Mavis Tshinyani, Virginia Netshivhera and Takalani Florance Mulaudzi. The
Legal name of the business is Mveledzandivho Multi-Purpose Co-Operative Limited
and the business will the same name. The Management team is highly motivated,
experienced and well qualified. The team is strongly positioned to take advantage of
this opportunity.

3.2

Organisational Structure
Mashudu Lorraine Khangale will serve as the General Manager (Chair Person) and
will be responsible for the day-to-day running of the business.
Ndidzulafhi Eunice Mudau as the Finance Manager and be responsible for the
evaluation of data pertaining to costs in order to plan budgets, evaluate financial
reporting systems, accounting and collection procedures, and investment activities, and
make recommendations for changes to procedures, operating systems, budgets, and
other financial control functions, and also to prepare operational and risk reports for
management analysis.
Virginia Netshifhera as the Manufacturing/ Production Manager who will be
responsible for overseeing the manufacturing process, drawing up a manufacturing
schedule, ensuring that the manufacturing is cost effective, coordinate, set up and
implement standard operating procedure for all manufacturing operations, drafting a
timescale for the job, reviewing the performance of subordinates, working with
managers to implement the companys policies and goals and
Ndidzulafhi Eunice Mudau as the Marketing Manager and will be responsible of
studying competitors' products and services, exploring ways of improving existing
products and services, and increasing profitability, and identifying target markets and
developing strategies to communicate with them. Two of the experienced firm workers
will be sewers assistant.

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Table

3.2

Organisation

Chart

General Manager
(Mashudu Lorraine
Khangale)

Bookkeeper
secretary
(Outsourced)

Financial Manager
(Ndidzulafhi Eunice
Mudau)

3.3

Production
Manager
(Virginia Netshifhera
Shonisani)

Marketing Manager
(Ndidzulafhi Eunice
Mudau)

Pre-Operating Activities
Owners have listed down the following activities to be undertaken before they can
operate the business:
1.

Preparing the business plan

4 weeks

2.

Applying for a grant and approval

8 weeks

3.

Contacting equipment suppliers

1 week

4.

Hiring labour

2 days

5.

Installing the equipment

2 days

6.

Purchasing raw materials

2 days

The owner aims to implement her operation approximately two months after the grant
application, or six weeks after release of his grant.
These pre-operating activities with their corresponding timetable appear in Table 3.4 in
a Gantt chart.

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Table 3.4

Gantt chart

MVELEDZANDIVHO MULTI-PURPOSE CO-OPERATIVE LIMITED


Pre-Operating Activities
Timetable (in weeks)
Activities
1. Preparing the Business Plan
2. Applying/Approval of Grant
3. Contacting Equipment Suppliers
4. Hiring Labour
5. Installing the Equipment
6. Purchasing Raw Material

10

11

12

13

14

15

16

17

18

3.4

Pre-Operating Expenses
These costs are as follows:

3.5

Administrative Expenses
The owner wants to keep their cost as low as possible in order to be competitive.
The only cost they will incurre is the cost of communicating with supplier during
ordering stock or raw materials and during the need of repair.

The increase is estimated at 10% in all products and services for the entire years.

Section 4
FINANCIAL PLAN
4.1

Capital Requirement (Business Cost)

4.2 Financing Plan and Grant Requirement

4.4 Profit and Loss Statement (one year)

3 YEARS PROJECTED INCOME STATEMENTS

4.5 PROJECTED CASH FLOW STATEMENT FOR 3 YAERS (Rand)

PROJECTED MONTHLY CASH FLOW STATEMENT (RAND)

Excludes depreciation expenses and amortisation of pre-operating expenses which are non-cash items.*

Not equal to due to rounding.

4.6

3 YEARS PROJECTED BALANCE SHEET

4.7

Break-even Point (BEP)

The break-even point can be calculated as follows

4.8

What is the return on investment (ROI)?

4.9 Exit Strategy


In business planning, much is based on anticipation the business exit strategy has been
decided after careful considerations just like any other aspect of the business. Should
the partners wish to sell their equity; the growth of the business will make the following
exit strategy possible:
Return capital to financers / investors through dividend or borrowed funds for a
management buyout or seek financial partners for the exchange of shares (investor
companies, private investors). It is asked that the shareholders retain their capital
investment for a minimum period of 3 years after the business launch

Business Plan
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