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SAMPLE_BUSINESS_PLAN_FOR_COSMETICS_BUSIN.pdf

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1
TABLE OF CONTENTS
EXECUTIVE SUMMARY........................................................................................
2
PRODUCT PLAN ..............................................................................................................
3
9.10 TYPES AND SOURCES OF STARTUP CAPITAL .................................................................................
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  1. 1. 1 TABLE OF CONTENTS EXECUTIVE SUMMARY..................................................................................................................................4 CHAPTER ONE ...............................................................................................................................................6 1.0. BUSINESS IDEA..................................................................................................................................6 1.1. Name of the business........................................................................................................................6 1.2. Produce the following products ......................................................................................................6 1.3. Provide the following services..........................................................................................................6 1.4. The customers will be ......................................................................................................................6 1.5. The business will sell in the following way .....................................................................................7 1.6. The business will satisfy the following needs of the customers ....................................................7 1.10. SWOT ANALYSIS ..............................................................................................................................7 1.11. Strengths of the cosmetic enterprise .............................................................................................7 1.12. Weaknesses.....................................................................................................................................8 1.13. Opportunities. ................................................................................................................................8 1.14. Threats............................................................................................................................................8 1.10. VISION, MISSION, GOALS, AND OBJECTIVES..................................................................................9 1.11. Vision statement ............................................................................................................................9 1.12. Mission statement..........................................................................................................................9 1.13. Goals ...............................................................................................................................................9 1.14. Objectives.......................................................................................................................................9 1.10. BUSINESS STRATEGY ....................................................................................................................10 1.11. Communication strategy..............................................................................................................10 1.12. Competitive strategy....................................................................................................................10 1.13. Marketing strategy.......................................................................................................................10 1.14. Human resource management strategy......................................................................................10 1.15. Supplier relationship strategy......................................................................................................11 CHAPTER TWO ............................................................................................................................................12 THE MARKETING PLAN...........................................................................................................................12 2.11 Market research.............................................................................................................................12 2.12. competitors ...................................................................................................................................12 2.13 Assessment of competitor’s strengths and weaknesses ..............................................................12
  2. 2. 2 PRODUCT PLAN ......................................................................................................................................14 2.10. PRODUCT PLAN FORM ..................................................................................................................15 2.20. PRICE..............................................................................................................................................16 2.21. PRODUCT PRICE FORM..................................................................................................................16 2.30. PLACE.............................................................................................................................................18 2.31. The marketing plan (place) form ..................................................................................................18 2.30. PROMOTION..................................................................................................................................19 2.40. promotion section of this business plan (form)...........................................................................19 CHAPTER THREE..........................................................................................................................................21 3.10. FORM OF BUSINESS.......................................................................................................................21 3.11. The form for business ...................................................................................................................21 CHAPTER FOUR ...........................................................................................................................................22 4.10. STAFF .............................................................................................................................................22 4.11. Staff form.......................................................................................................................................22 CHAPTER FIVE .............................................................................................................................................24 5.10. LEGAL RESPONSIBILITIES AND INSURANCE..................................................................................24 5.11. Legal responsibilities and insurance form....................................................................................24 CHAPTER SIX................................................................................................................................................26 6.10. PRODUCT COSTING .......................................................................................................................26 6.11. Calculate direct material...............................................................................................................26 6.11. Calculate indirect costs. ................................................................................................................29 CHAPTER SEVEN..........................................................................................................................................31 7.10. FINANCIAL PLANNING...................................................................................................................31 7.11. A SALES AND COSTS PLAN. ...........................................................................................................31 7.11. CASH FLOW PLAN..........................................................................................................................32 CHAPTER EIGHT...........................................................................................................................................33 8.10. REQUIRED STARTUP CAPITAL .......................................................................................................33 8.11. What capital investment do i need?.............................................................................................33 8.11. Decide on which equipment I need..............................................................................................34 8.12. What working capital do i need....................................................................................................34 8.13 Startup capital form .......................................................................................................................35 CHAPTER NINE ............................................................................................................................................36
  3. 3. 3 9.10 TYPES AND SOURCES OF STARTUP CAPITAL .................................................................................36 9.10. Source of capital form...................................................................................................................36
  4. 4. 4 EXECUTIVE SUMMARY This plan is to set up a cosmetic shop in the name of " Briox Cosmetics Enterprise ", which will be located in Easy View Arcade Garage street Mbarara. The cosmetic shop will be a sole proprietorship owned by Akampurira Brian. I will use startup capital of 52,380,000 Uganda shillings. UGX 34,380,000 will be owners’ equity and the remaining UGX 18,000,000 will be a bank loan which will be secured from centenary bank at 10% interest rate. The key personnel at the cosmetic Enterprise will include Senior manager, buying inputs and overall supervisory work, operations and production staff, sales and marketing staff, skin therapy and hairdressing staff, record keeping and accounting, stock control and direct selling staff The key objective of the cosmetic shop will be to provide fresh quality cosmetics to our clients to enable them improve their general skin beauty, to obtain maximum customer satisfaction through continued quality production, to obtain continuous production and supply of our products to the customers, to create customer loyalty to our products such that they become well pronounced in the customer minds. To achieve our objective, the cosmetic shop will employ strategies such as: Offering quality, body skin lotions, oils and herbal cosmetics that help fight the skin diseases made from fresh fruit and vegetable which are nutritious through adequate research and proper mixture of the lotions, oils and herbal ointments to meet the standard skin contents and characteristics of customers in the market through advertisement by use of sign posts, direct selling and radio stations, offering special incentive to our regular clients, offering our cosmetics at relatively lower prices for market penetration, creating a conducive environment for our clients, employing people who understand the meaning of customer care and meaning of quality by giving them samples for use as a way of expanding our markets especially among the young children, youth and women. All this encompasses our strategies that include, communication strategy, supplier relationship strategy, marketing strategy, competitive strategy and human resource strategy. The vision of the cosmetic shop will be ‘To be the leading suppliers of quality, fresh and health skin booting cosmetics product’
  5. 5. 5 Our mission will be, dedicated at improving the skin health and body look and appearance of our client. "We seek to become the recognized leader in our targeted local and international market for carrying a diverse line of in demand cosmetics including perfumes, makeup, and other accessories that will have a competitive edge towards customer satisfaction and retention at attractive prices. Our major customers will be corporate employees, students, market vendors, tourists and retailers who will be consuming a range of our products including; Perfumes 1st class, Lemon body lotion, Hair relaxer cream, Avocadoes body cream smoother and Hair glow. Our forms/ ways of distribution will include, through Retailers, distributors and wholesalers who will buy and sell in bulk to our final customers which we cannot sell to directly we shall also sell directly to the customers because we have a high customer traffic at our main outlet in Mbarara. We shall as well be using a van that will be leased to distribute to our customers who order in large quantities. In terms of our legal responsibilities, the following taxes apply to our business, sales tax, employees’ income tax, national social security fund and Mbarara Municipal Council Tax and other licenses like trading license, and Uganda National Bureau of Standards license. We shall as well need to the insurance for our business and also carry out other social responsibilities like corporate social responsibility, being environmentally friendly, and ensuring cleanliness of Mbarara town. Our products are costed and priced after comparison with our major competitor’s prices and costing information acquired through market research. We have as well carried out cash flow estimates to ensure that our business does not run out of cash. Our startup capital has been allocated to what we intend to start our business with that is renting building for two months, buying machines for mixing the inputs, Machines, leasing van, buying furniture and fittings, massage equipment, cloths and uniforms and other necessary things to start with including the employee salaries for the first two months. This plan will be effective on 1st January 2018 and that is when my business will begin in Mbarara Easy View Arcade.
  6. 6. 6 CHAPTER ONE 1.0. BUSINESS IDEA 1.1. Name of the business Briox Cosmetics Enterprise 1.2. Produce the following products Briox Cosmetics Enterprise will provide different kinds of cosmetic products ranging from body lotion to hair relaxers with potentials of using local fruits, both rare and common fruits as key primary ingredients in the production of body oils and lotions. This will be intended to improve the general skin health as well as boosting the beauty skin of our clients especially ladies. Among the fruits we will use to extract include grapes, Chew cumber, palm fruits, avocadoes, lemons, oranges, among others to produce body lotions that moisturizes and smoothens the skin for healthy attractive look of the boy and hair. Our business will also provide moisturizing creams, body lotions, hair lotions of various types and varieties to our esteemed customers. Our product will be offered to the young, the youth and the old, who will need to improve their general health and skin beauty. 1.3. Provide the following services We will also offer the cosmetic products to our esteemed customers while providing consultancy advise inform of skills for mixing and using the oils for their own benefit We will provide free consultancy services about lotion use, making and maintenance and caring for the skin especially mostly by the ladies and young girls who our major customers and advise them on maintaining a healthy balanced diet which include fruits and vegetables. 1.4. The customers will be Other businesses that deal in cosmetics, retail shops, supermarkets all over the country, in foreign countries in East Africa like Kenya, Rwanda, Tanzania, and Burundi and other customers will be buying from our company directly and from our mobile distributors and they will be both the young children, men and mostly women.
  7. 7. 7 1.5. The business will sell in the following way Distribute to our national and international distribution centers, supermarkets, retail outlets, our agents all over the countries in East African regions and some customers will buy directly from our company main outlet in Mbarara. 1.6. The business will satisfy the following needs of the customers Briox cosmetics will offer reliable cosmetics, lotions, and jerrys intended to improve the general skin health as well as boosting the beauty skin of our clients especially ladies, skin treatment, cure skin rashes, and ensure all time beauty of our clients. 1.10. SWOT ANALYSIS The Cosmetics industry is one of the growing industry in the country with a number of industries Unisex beauty cosmetics with many branches, and other small businesses which have joined the industry. Despite the increase in the Cosmetics industries, customer’s demands are not fully met due to the increasingly growing population and poor delivery of the cosmetics to the customers, Briox cosmetics Enterprise is therefore aiming at filling this gap. The industry has shown a great interest for investment. The industry has earned great reputation due to the increased differences in customer requirements like skin colors, hair styles by different hair cosmetics and customer general beauty. 1.11. Strengths of the cosmetic enterprise  Availability of startup capital,  Ability to make cosmetic products from local available fruits  Strategic location in the Easy View Complex which has a high enough space.  High level of customer care that we shall portray  We shall operate on a daily basis 24 hours to meet our customer needs which will ensure constant supply.  We shall do skin therapy to our special customers based on appointments at an affordable price which will gain fame amongst corporate women.  High quality and exceptional packaging material which are environmental friendly that we shall offer.  Operating from the cleanest environment  Offering free training and consultancy services to our customers.
  8. 8. 8 1.12. Weaknesses  Limited nature inputs like fruits and vegetables to our business.  Low supply of skilled labour that will assist in mixing the right quantities for the inputs  Low levels of knowledge about the cosmetic business  Low capital inputs to start up with in establishing the plant and expanding the business operations to other regions.  Do not have enough record keeping mechanism.  Inadequate experience in the market due to few months of operation than our competitors  Few workers in company which delays production 1.13. Opportunities.  Briox Cosmetics Enterprises is growing and new cosmetics dealers are setting up which will increase the market base.  The competitors of Briox Cosmetics Enterprises do not know about the new emerging ideas in the global markets like new product development techniques to suit customer demand.  The competitors of Briox Cosmetics Enterprises do not know how to efficiently manage their supply chain and distribution channels like Unisex group of companies.  Financial boost from banks for service expansion and facility improvement. 1.14. Threats  The customers are used to buying from already established cosmetic industries like Movit and Samona who can easily adopt to rapidly changing techniques of production and global competition which is hard to adopt to for us  Constant changes in customer demands which impact on our level of satisfaction to our customers and changing economic environment. Evaluate my business idea Number of strength………………………………………………09 Number of weaknesses………………………………………….07 Are there more strengths than weaknesses? Yes No Number of opportunities………………………………………….03
  9. 9. 9 Number of threats………………………………………………...02 Are there more opportunities than threats? Yes No I therefore decide to continue with my business idea since there are more strength and opportunities than the weaknesses and threats. 1.10. VISION, MISSION, GOALS, AND OBJECTIVES 1.11. Vision statement The vision of the cosmetic shop will be ‘To be the leading suppliers of quality, fresh and health skin booting cosmetics product’ 1.12. Mission statement It will be, dedicated at improving the skin health and body look and appearance of our client. "We seek to become the recognized leader in our targeted local and international market for carrying a diverse line of in demand cosmetics including perfumes, makeup, and other accessories that will have a competitive edge towards customer satisfaction and retention at attractive prices. 1.13. Goals  To be leading supplier of quality, fresh and health skin beautifying cosmetics  To expand to the other markets across East Africa.  To exploit opportunities in the market including the gaps left out by already established firms like Movit and Samona. 1.14. Objectives The Enterprise is dedicated to achieving maximum customer satisfaction at the lowest possible cost and therefore has the following objectives.  To obtain maximum customer satisfaction through continued quality production  To obtain continuous production and supply of our products to the customers  To create customer loyalty to our products such that they become well pronounced in the customer minds.  To efficiently publicize our products to create awareness among the customers
  10. 10. 10  To provide high quality products to the clients through use of quality and standard in puts that is natural inputs.  To use our experience to operate at lowest costs possible.  To establish a strong and reputable relationship with the stakeholders of the Enterprise.  To come up with new products in the Cosmetics industry. 1.10. BUSINESS STRATEGY This will include the communication strategy, marketing strategy, supplier relationship strategy, promotion strategy, Human resource management strategy and competitive strategy. 1.11. Communication strategy One of the most important aspects of a successful launch is a positive publicity for our cosmetics products. We will develop awareness campaigns to promote our product through several avenues. Our management team will fiercely have pursued positive perception through societal endorsement promoting the benefits of our product by actively seeking local news and media coverage to help on awareness. 1.12. Competitive strategy Position of the business in the heart of Mbarara and the whole of Uganda and also being near the high market area makes the product easily accessible by our customers. An aggressive advertising campaign will be undertaken so that we create much awareness of our product than our competitors through our highly skilled management team and employees that will be highly in contact with our customers. 1.13. Marketing strategy Briox Cosmetics Enterprises plans to communicate through outdoor advertising and television advertising to generate sales. This will be spearheaded by our marketing team to manage the marketing campaign. The key message associated with our products is high quality beautifying cosmetics and skin care. 1.14. Human resource management strategy. Briox cosmetics Enterprises will start up with its experienced members in various fields that are useful in the business to form competent team of trustworthy staff for efficiency and effective
  11. 11. 11 operations and goal oriented. Provision of favorable working conditions to maintain a high degree of personal development and satisfaction of both employees and employers and ensuring that our employees are constantly trained where need arises. 1.15. Supplier relationship strategy. Briox Cosmetics Enterprises will ensure a close working relationship with our suppliers and where necessary undertake supplier development programmes that is providing improved varieties of agricultural inputs for example grapes, Chew cumber, palm fruits, avocadoes and lemons and tools that will ensure constant supply of our core inputs.
  12. 12. 12 CHAPTER TWO THE MARKETING PLAN 2.11 Market research Briox Cosmetics Enterprise intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. This will be achieved through market research on our customers, competitors, competitor suppliers, their products and their pricing. 2.12. competitors Our major competitors are KK shop, Dan cosmetics and Baby Face Organic that sell the same cosmetics. Below is the analysis of our major competitors’ strength and weaknesses. 2.13 Assessment of competitor’s strengths and weaknesses Competitors name Strengths Weaknesses KK shop cosmetic dealers  Extensive research  Huge capital investment  More experience in this business  Customer loyalty  High prices for their products  High costs of operation  Weak skills (leadership, interpersonal, communication, teamwork)  Limited work experience. Dan cosmetics  Has many customers who buy in bulk  High advertising rates  Strategic location  Creative and innovative management  Limited financial resources for startup.  Lack of own premises to capitalize the concentrate all activities in one place.  Limited marketing expertise.  Poor sanitation Baby Face Organic  Low operating costs  Wide distributional channels  Dedicated, competent and flexible work force  Un reliable supply  Un experienced staff  High Labor intensive operations  Limited product and service lines.  Un motivated staff
  13. 13. 13 The results of the market research are summarized below. I used the information gathered from the potential customers and came up with the following information MARKET RESEARCH Product Customers Needs and preference of customers Competitors Perfumes 1st class Corporate employees they need unique scent that is packed in luxurious containers and can last long when used. Must be available in time and in recognizable supermarkets and shopping malls Low quality perfumes that are not unique Does not always have knowledge of the latest products Inconsistent supply and so shortages in the market Lemon body lotion Students Wide range of differently colored and flavored lotions offered at relatively low prices. Different sizes and shapes. High prices and limited varieties not consistently supplied. Low quality and unattractive colours and shapes.  Emphasis is on high quality and quantities
  14. 14. 14 Hair relaxer cream Market vendors Hair softeners with reliable supply in all corners of the country availed to all vendors in time. Unreliable supply and un defined distribution channels that affects constant supply. Avocadoes body cream smoother Tourists High quality products availed in recognized shopping centers and malls High level of skin moisturizing and smoothening. Low quality lotions with less moisturizing content Hair glow Retailers Reliable supply at the right time and place in right quantities. Delays in supply and un coordinated supply chain and distribution channels. PRODUCT PLAN We will specialize majorly in cosmetic products and manufacturing of locally made cosmetic products to treat the skin illness such as fungal diseases using locally produced vegetables and fruits as ingredients in the manufacture of these cosmetics We will offer free consultancy services to our clients, free cold water, and warm water for washing our hands. We will employ people who are easily accessible, customer oriented, efficient and effective. We will provide customized services like skin therapy and hair dressing to our most esteemed customers during the weekends when we are not very busy so as to meet their demands and needs by being agile.
  15. 15. 15 2.10. PRODUCT PLAN FORM Products, services or range of products offered Perfumes 1st class Lemon body lotion Hair relaxer cream Avocadoes body cream smoother Hair glow Skin Therapy consultancy and customer advise Hair dressing Quality High quality for corporate customers Basic quality to keep prices relatively low Basic quality to create customer loyalty High quality for the tourists and the rich Basic quality N/A N/A N/A Color Purple, blue, green, orange Yellow, blue, green and blown Green, yellow and blue Green Green and blue N/A N/A N/A Size Large 600ml, medium 450ml and small 150ml Large 500ml, medium 350ml and small 50ml Large 600ml, medium 450ml and small 150ml Large 500ml, medium 350ml and small 50ml Large 600ml, medium 450ml and small 150ml N/A N/A N/A Packaging Metallic containers Plastic containers and tubes Plastic containers and tubes Plastic containers and tubes Plastic containers and tubes N/A N/A N/A Smell N/A N/A N/A N/A N/A N/A N/A N/A
  16. 16. 16 2.20. PRICE The different sizes of our products will be charged different prices and my basis of pricing will be based on the total costs incurred, competitors’ prices and how much my customers are willing to pay. I have studied the prices of Baby Face Organic who are my major competitor and I think that selling at lower prices will be one of the most important ways of competing them. A low price is important especially for students, market vendors and retailers. I know that customers are willing to pay for my products in different sizes and shapes. I have studied the costs of production, distribution and marketing for each product that is for Perfumes 1st class all sizes averagely UGX 4,500, Lemon body lotion all sizes averagely UGX 4,000, Hair relaxer cream all sizes averagely UGX 3,500, Avocadoes body cream smoother all sizes averagely UGX 45,00 and hair glow UGX 4,000. With these prices in mind, I will fill in the price section of the business plan. 2.21. PRODUCT PRICE FORM Products, services or range of products offered Perfumes 1st class Lemon body lotion Hair relaxer cream Avocadoes body cream smoother Hair glow Costs 4,500 4,000 3,500 4,500 4,000 How much customers are willing to pay 35,000- lowest 40000- highest (corporate employees and tourists). 10,000-lowest 12000-highest (students and low income earners) 9,000-lowest, 10000-highest (market vendors and retailors) 21,000-lowest, 25000-highest (tourists and corporate employees) 10,000- lowest, 12000-highest (retailors and market vendors) Price 38000 (cooperate employees), 39000 (tourists) 9000(students) 11000(low income earners) 10000(market vendors and retailers) 25000(tourists) 20000(corporate employees) 11000(market vendors and retailors)
  17. 17. 17 Reason for setting this price Relatively high price will help us recover the costs incurred in production. Low price will enable us get a wide market from the low income earners and the students, Relatively low price will ensure a high demand from our intermediaries who can sale at a profit High price is in relation to the high quality of the products produced. Relatively low price will ensure a high demand from our intermediaries who can sale at a profit Discounts will be given to the following customers No discount will be given No discount will be given vendors and retailers that buy in large quantities No discount will be given vendors and retailers that buy in large quantities Reason for giving discounts N/A N/A Discount will be given to the vendors and retailers that buy in large quantities N/A Discount will be given to the vendors and retailers that buy in large quantities Credit will be given to the following customers vendors No credit will be given Vendors and retailors Vendors and retailors Vendors retailors Reason for giving credit To increase vendor loyalty to our products N/A To create a wider market. To make vendors stop selling our competitor products. To create a wider market.
  18. 18. 18 2.30. PLACE Our location is in Mbarara, Easy View Arcade, Garage Street. The location is very good since they a lot of hair dressers in this arcade hence full of women who potential customers for the cosmetic products because they want to look good and. The place is chosen due to a boom of commercial activities, an expected client base from students, tourists, corporate women employees, and the large population is women as compared to men. The cosmetic shop will have adequate lighting. 2.31. The marketing plan (place) form Location. we plan to rent a place in Mbarara, Easy View Arcade, Garage Street. It is located opposite Agip Motel near bus park garage street. The location is chosen because of the following reasons. It is ideal because there is a high customer traffic Enough packing space for the clients/ individual customers. Clean environment and closeness to the main road that is Mbarara- Masaka road. Method of distribution Individuals retailer wholesalers distributors The ways of distribution are chosen because of the following reasons. Retailers, distributors and wholesalers, will buy and sell in bulk to our final customers which we cannot sell to directly Individuals, will be used because we have a high customer traffic and so we shall sell to them directly at our main outlet in Mbarara. Distributors, will help to deliver our products to all our customers all over the country and even outside countries in East Africa in the right time and place.
  19. 19. 19 2.30. PROMOTION We intend to invest heavily in advertisement of our products through the use of signposts, face book, use of radios such as; Galaxy, Vision radio, which have a wider coverage. We also intend to use a highly skilled marketing manager to market our products; for example; in Kampala town universities, offices and other local areas around. We intend to also visit personally our general stores and major wholesalers of our products and use other few methods of promotion. The objectives of promotion are;  To create awareness of our products to our customers  To persuade the customers to prefer our products to those of our competitors  Communicate to the potential customers about where our products can be found.  Create a good initial image of our products in the society and our potential customers. 2.40. promotion section of this business plan (form) Type of advertising Details Costs A sign on the building The sign will say “Briox Cosmetics Enterprises” showing the product that we offer such that customers can know that there is a cosmetics in the building 50,000 (fifty thousand shillings) Personal letters We will send personal letters to our vendors, wholesalers and selected retailors. We will introduce the letter that “Briox Cosmetics Enterprises” 60,000 (sixty thousand shillings) Direct selling We shall sell our product directly to our customers and share with them information about our products and why they should use them. No costs
  20. 20. 20 Radio adverts We shall run radio adverts on vision radio in Mbarara and Galaxy FM in Kampala that will help in persuading the customers and at the same time serve to inform them where they can find our products 200,000 (two hundred thousand shillings) Free delivery We shall deliver our products freely to our wholesalers and retailers selected N/A Sponsoring public shows These will be the ones where the target customers will be converged in large numbers for example music shows. The costs will depend on the type of show Stickers We shall be giving free stickers to our daily customers containing the information about our products and where they can be found. 60,000 (sixty thousand shillings)
  21. 21. 21 CHAPTER THREE 3.10. FORM OF BUSINESS 3.11. The form for business The business will operate as;  A Sole proprietorship The reasons for choosing this business are;  Low cost involved in starting the business  Easy registration process of the business  Simplicity in starting the business  Increased level of control over the business  Easy decision making in the business  Easy taxation criteria that is business profits The owner of the business will be Name: AKAMPURIRA BRIAN Description of skills:  Business manager and high selling skills  Marketing skills and customer care skills  Sales promotion skills  Motivational skills  Leadership and management skills Relevant experience  Experienced with mixing appropriate chemicals and natural fruits in making the cosmetics and perfumes acquired from the three years working with Baby Face Organic.  Experience in managing business that is a retail shop already owned in previous years.  Experience in working with and through people (leadership) and motivational experience to the employees.
  22. 22. 22 CHAPTER FOUR 4.10. STAFF I do not know much about running my own business but I plan to work hard and study to learn all in need to know. According to my staff plan, I will be responsible for buying inputs and assume the senior management role. The business will be small so I will need more few employees to assist in some functions as follows. The operations staff will be responsible for manufacturing and mixing the inputs to produce the cosmetics and all our products and will include three employees with the relative skills as will be described and one of the three will assume the role of being a supervisor of production and operations. Sales and marketing. I will need one employee who will be responsible for marketing the products and selling at our main out let in Mbarara to our direct customers and will be responsible for customer service. Two more employees responsible for offering additional services to our customers that is skin therapy and hair dressing. Two more family members will be employed and will assume the roles of stock control, and selling to the market vendors, retailers and distributors and record keeping role respectively. 4.11. Staff form Task Required skills and experience Performed by Monthly pay Senior manager, buying inputs and overall supervisory work Business management and leadership skills. Akampurira Brian UGX 1000000 Operations and production staff Skills in mixing different inputs and making perfumes and cosmetic products Three fulltime employees Each UGX 350000 Sales and marketing Skills in customer care and marketing and sales One fulltime employee UGX 400000
  23. 23. 23 Skin therapy and hairdressing Skills in massage/ rubbing, and hairdressing and women Two fulltime employees UGX 300000 Record keeping and accounting Skills in fundamentals of accounting and record keeping One family member UGX 350000 Stock control, selling to market vendors, retailers and distributors Skills in supply chain management and personal selling skills One family member UGX 350000
  24. 24. 24 CHAPTER FIVE 5.10. LEGAL RESPONSIBILITIES AND INSURANCE. I have contacted a number of government agencies including, the regional tax office, Mbarara Municipal council, Ministry of Labour and the National Environmental Authority and I have found out the legal requirements that apply to my business. I have also contacted the insurance company that is ICA insurance company to find out the costs of insurance for my business. 5.11. Legal responsibilities and insurance form LEGAL RESPONSIBILITIES AND INSURANCE The following taxes apply to the business Sales tax Employees income tax National Social Security Fund (NSSF) Mbarara Municipal Council Tax The following regulations apply to the employees Working hour Sick leave Employee insurance The business will need the following licenses and permits cost Mbarara municipal council trading license worth …………………. UGX 100,000 Uganda National Bureau of Standards license worth………………. UGX 200,000 Shop license worth…………………………………………………...UGX 50,000 The business will have the following insurance cost
  25. 25. 25 Insurance for the stock and equipment……………………………. UGX 360000 per year Medical insurance…………………………………………………...UGX 100,000 per year Other responsibilities of the business Corporate social responsibility Environmental friendliness through proper waste disposal Mbarara town cleanliness through reduced waste disposal
  26. 26. 26 CHAPTER SIX 6.10. PRODUCT COSTING 6.11. Calculate direct material These are the materials used in production that will become part of the final product. These include the following. Grapes, Chew Cumber, Palm Fruits, Avocadoes, Lemons, Oranges, and Others. These will be included in column one of my form Column two will include the buying costs of one unit of each raw material, column three will include the quantities needed for each of the raw materials, column four will include the cost per item that is the multiplication of buying cost with quantity needed, and finally we shall get the total direct material cost. Product costing form for Briox cosmetics Enterprises Products: cosmetics products Raw materials Buying costs Quantity per item (kgs) costs (UGX) Grapes 30 5 150 Chew Cumber 20 4 80 Palm Fruits 30 3 90 Avocadoes 20 3 60 Lemons 30 2 60 Oranges 20 3 60 Total direct costs per item 500 Calculate Direct labour Briox Cosmetics Enterprises will have nine employees, three of whom will be in production full time, one in marketing, Mr. Akampurira Brian as the manager, an accountant, sales and marketing assistant and stock control personnel.
  27. 27. 27 I fill in the labour costs form and I use the information to calculate the direct labour costs for one cosmetics item. Labour costs form for Briox cosmetics Enterprises Direct labour costs Indirect labour costs Employee Total working hours per month Total monthly pay Hours in production per month Pay for time in production Hours not in production per month Pay for time not in production Brian manager 220 1,000,000 ………. ………. 220 1,000,000 Operations staff (3 employees) 660 1,050,000 660 1,050,000 ……….. ………. Sales and marketing 220 400,000 ……….. ……….. 220 400,000 Skin therapy and hairdressing(2 employees) 440 600,000 440 600,000 ……….. ……….. Record keeping and accounting 220 350,000 ……… ……….. 220 350,000 Stock control, and selling 220 350,000 ……….. ………. 220 350,000 Total 1100 1,650,000 880 2,100,000
  28. 28. 28 Direct labour cost per hour= total pay for time in production total hours in production per month =1,650,000/1100 Direct labour cost per hour =1500 shillings per hour Calculate direct labour costs per item We estimate that it takes 5 minutes to make each bottle of lemon body lotion or Hair relaxer cream or Avocadoes body cream smoother or Hair glow.  Our production personnel know that it takes 5 minutes to make a bottle of the cosmetic product which is 0.083 hours  The direct labour cost per hour is 1500 shillings Therefore, by multiplying 0.083hours and 1500 shillings, I calculate that the direct labour costs for one bottle of cosmetics is 124.5 shillings. This is how I fill in the product costing form. Direct labour costs per item Activity Time per item in minutes Mixing the materials 2min Preparing for making the product 3min Making the product (putting the materials in the machines) 1min Total minutes 5min or 0.083 hours * 1500 124.5 Direct labour cost per item
  29. 29. 29 6.11. Calculate indirect costs. Indirect costs are the other costs that I have for running my business. They are summarized below in the indirect costs form Indirect costs form for Briox cosmetics Enterprises Indirect costs per month Cost (UGX) Electricity and water 200,000 Rent 300,000 Insurance 30,000 Interest on loan 150,000 Indirect labour 2,100,000 Miscellaneous 200,000 Depreciation 40,000 Distribution and marketing costs 300,000 Advertising and sales promotion costs 200,000 Total indirect costs 3,520,000 Note 1. Insurance costs per month= 360,000/12 months =UGX 30,000 per month 2. Interest on loan= 10%*18,000,000 =1,800,000/12 =UGX 150,000
  30. 30. 30 3. Depreciation I will buy machinery worth 4,800,000 shillings, and I expect to use the machinery for 10 years. Depreciation per year will be= 4,800,000/10years =480,000 shillings Therefore, depreciation cost per month will be= 480,000/12 months =40,000 shillings Calculate the indirect costs per item. Indirect costs per item=total indirect costs per month (from indirect cost form) Total hours in production per month (from labour costs form) = 3,520,000 1100 hours Indirect costs per item =3,200 shillings Calculate total costs per item Total cost per item= direct material +direct labour + indirect costs. It is shown in the form below. Total cost form Type of cost Amount (cost per item) Direct material 500 Direct labour 124.5 Indirect costs 3200 Total cost per item 3,824.5 shillings
  31. 31. 31 CHAPTER SEVEN 7.10. FINANCIAL PLANNING We shall follow the following steps to plan and monitor the financial situation of Briox cosmetics enterprise. 1. We Make a sales and costs plan 2. We make a cash flow plan 3. Compare records with both plans every month 4. And we shall take action if anything goes wrong 7.11. A SALES AND COSTS PLAN. A costs and sales plan shows the sales, costs and profits my business is likely to have each month and it is made annually. I have forecasted my sales and costs for the first year in business and I have been helped by my productions team to develop the forecasts. Sales and costs plan 2018 (00) Details Jan Feb Mar Apr. May June July Aug Sept Oct Nov Dec Total Sales 2000 2500 4000 4000 7000 10000 10000 10000 10000 15000 20000 20000 114,500 Direct material costs 1000 1500 2000 2000 3000 4200 4200 4200 4200 4800 5000 5000 36,900 Direct labour costs 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24,000 Gross profit (1000) (1000) 0 0 2000 3800 3800 3800 3800 8200 13000 13000 49,400
  32. 32. 32 Indirect cost 2500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 19,000 Net profit (3500) (2500) (1500) (1500) 500 2300 2300 2300 2300 6700 11500 11500 30,400 7.11. CASH FLOW PLAN To make sure that I do not run out of cash, when I start up by cosmetics enterprise, I make a cash flow plan for the first 12 months and below is a sample for the first seven months. CASH FLOW PLAN (000) Jan Feb March April may June July Aug. Cash at the start of the month 7300 23700 19700 12400 11100 7800 25000 26500 Cash in from sales 2000 2500 4000 4000 7000 10000 10000 10000 Any other cash in 7000 5000 …… …… …….. ……. ……. …….. Total cash in 16300 31200 23700 16400 18100 17800 35000 36500 Cash out for direct material costs 1000 1500 2000 2000 3000 4200 4200 4200 Cash out for direct labour costs 2000 2000 2000 2000 2000 2000 2000 2000 Cash out for indirect costs 2500 1500 1500 1500 1500 1500 1500 1500 Cash out for planned investment in equip 8000 …… …… …… …… …… …… …… Loan repayment …… …… 150 150 150 150 150 150 Any other cash out 200 …… …… …… …… …… …… …… Total cash out 13700 5000 5650 5650 6650 7850 7850 7850 Cash at the end of the month 2600 26200 18050 10750 11450 9950 27150 28650
  33. 33. 33 CHAPTER EIGHT 8.10. REQUIRED STARTUP CAPITAL This chapter will include the investments that I need which include equipment, Business premises, and the working capital that I need which will cover stock of raw materials and finished goods, promotion, wages, rent, insurance and other costs. 8.11. What capital investment do i need? The capital investment that I will need will be business premises and the equipment. The business premises will be rented so there is no need to invest in that. The whole floor on Easy View complex will be rented and rent for the first two months will be paid in cash. Decide which premises I need for my business I will Construct my own premises buy premises rent premises work at home Because  Renting premises needs less capital investment than buying and building premises.  It is more flexible because it enables me change location in case of unfavorable factors  Saves time spent in looking for the best location to construct my premises.
  34. 34. 34 8.11. Decide on which equipment I need I will require machines for mixing inputs, one van, office furniture, and fittings Equipment How to obtain it Cost (UGX) Machines Buy 8,000,000 Van Lease (2 years) 5,000,000 Office furniture Buy 1,500,000 Fittings Buy 1,200,000 Total 15,700,000 8.12. What working capital do i need I will need working capital that will be used in paying for the expenses that I incur even before I start production. This working capital will be required to cover for the first two months since after two months I expect to have started having some reasonable sales. The working capital will cover;  Stock of raw materials  Promotion  Wages= monthly cost for wages × number of months before sales cover my costs  Rent= monthly rent × number of months before sales cover my costs  Leases  Insurance  Other costs= other cost per month × number of months before sales cover my costs
  35. 35. 35 I worked so hard to estimate how much startup capital I will need to start up Briox Cosmetics Enterprises. I have reviewed every amount in my business plan after talking to suppliers, landlords, and they think that it will take two months before sales fully cover the payments for costs. This is the estimates of how much startup capital I will need. 8.13 Startup capital form Required startup capital Investments  Business premises Renting of the building/floor………………………………...1,200,000  Equipment Machines Buy…………………...8,000,000 Van Lease (2 years) ………5,000,000 Office furniture Buy…………………...1500,000 Fittings Buy…………………...1,200,000 Massage equip Buy …………………...1,500,000 Driers Buy……………………1,600,000 Cloths and uniform Buy……………………2,000,000 Total equipment startup capital…………………………. 20,800,000  Working capital Stock of raw material……………………. 15,000,000 Promotion…………………………………1,000,000 Wages……………………………………. 7,500,000 Rent………………………………………. 600,000 Leasing……………………………………2,200,000 Insurance…………………………………. 80,000 Other costs………………………………...4,000,000 Total working capital………………………………………. 30,380,000 Total startup capital………………………………………….52,380,000
  36. 36. 36 CHAPTER NINE 9.10 TYPES AND SOURCES OF STARTUP CAPITAL Briox Cosmetics Enterprise will require an initial capital of 52,380,000 million shillings of which 34,380,000 shilling will be owners' equity and the remaining 18,000,000 will be a bank loan to be secured from centenary bank payable at a rate of 10% per years. This money will cater for rent, purchase of cosmetics purchase from the suppliers, employees, design and packaging of the cosmetics products, purchase and mixture of cosmetics products such as hair glow, relaxers, and herbal cosmetic research, shelves. Chair, bottles, tables and others. 9.10. Source of capital form source of startup capital required startup capital……………………………52,380,000 source of startup capital owner’s equity………………………………………34,380,000 bank loan……………………………………………. 18,000,000 total …………………………………………………. 52,380,000 collateral  personal guarantee by Akampurira Brian  machine

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