UNIVERSITY OF NIGERIA, NSUKKA

FACULTY OF ARTS

DEPARTMENT OF MASS COMMUNICATION

 

 

BUSINESS PLAN FOR THE ESTABLISHMENT OF A KNITTING INDUSTRY

 

 

 

BY

 

JULITTY KNITTING SERVICES

 

A BUSINESS PLAN PREPARED AND SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENT OF THE COURSE CEDR 342 (ENTREPRENEURSHIP II)

 

PRESENTED BY

 

 

 

 

LECTURER:

 

 

 

 

JULY, 2017

 

TABLE OF CONTENTS

PART ONE

1.10 Executive summary      -       -       -       -       -       -       -       1

PART TWO

2.10 General Introduction             -       -       -       -       -       -       3

2.11 Background         -       -       -       -       -       -       -       -       3

2.12 Vision Statement  -       -       -       -       -       -       -       -       4

2.13 Mission Statement                -       -       -       -       -       -       -       4     

2.14 The Company      -       -       -       -       -       -       -       -       4

2.15 Product services offered        -       -       -       -       -       -       -       4

2.16 Legal Form and Ownership     -       -       -       -       -       -       4

2.17 Location of the Business                -       -       -       -       -       -       5

2.18 Business Strategy         -       -       -       -       -       -       -       5     

2.19 Key Success Factors     -       -       -       -       -       -       -       5

PART THREE

3.10 Nature, Location, Size & Attribute Analysis        -       -       -       7

3.11 Key Competitors and Competitive Advantage    -       -       -       7

3.12 SWOT Analysis     -       -       -       -       -       -       -       -       8

PART FOUR

4.10 Marketing Plan     -       -       -       -       -       -       -       -       9

4.11 Marketing Segmentation                -       -       -       -       -       -       9

4.12 Target Market                              -       -       -       -       -       9

4.13 Description of the Edge of product or product range of service    9

4.14 Market Positioning        Strategy    -       -       -       -       -       -       9

4.15 Marketing Mix Implementing Tools          -       -       -       -       10

4.16 Channel of Distribution          -       -       -       -       -       -       10

4.17 Start-up Promotion               -       -       -       -       -       -       10

4.18 Alliances     -       -       -       -       -       -       -       -       -       10

4.5 Service Delivery Strategy        -       -       -       -       -       -       -       10

PART: TECHNICAL ANALYSIS

5.00 Production Plan                    -       -       -       -       -       -       11

5.11 The Project                         -       -       -       -       -       -       11

5.12 Technology                          -       -       -       -       -       -       11

5.13 Quality Assurance and Standardization     -       -       -       -       10

5.14 Management and Organization       -       -       -       -       -       10

5.15 Management Team       -       -       -       -       -       -       -       10

5.16 Organizational Structure        -       -       -       -       -       -       -       12

5.17 Personnel Plan     -       -       -       -       -       -       -       -       12

5.18 External Support  -       -       -       -       -       -       -       -       13

5.6 Organization’s Values and Norms of the Farm     -       -       -       13

PART SIX

6.10 Legal, Regulation, Social and Environmental Issues    -       -       14    

6.11 Legal Issues -       -       -       -       -       -       -       -       -       14

6.12 Regulatory Issues -       -       -       -       -       -       -       -       14

6.13 Social Issues        -       -       -       -       -       -       -       -       14

6.14 Environmental Issues    -       -       -       -       -       -       -       14

PART SEVEN

7.10 Financial Plan       -       -       -       -       -       -       -       -       15

7.11 Project Cost -       -       -       -       -       -       -       -       -       15

7.12 Funding Plan and Statement   -       -       -       -       -       -       16

7.13 Funding Requirement    -       -       -       -       -       -       -       16

7.14 Projected Income Statement  -       -       -       -       -       -       17

7.15 Projected Cash Flows Statement     -       -       -       -       -       18

7.16 Projected Balance Sheet        -       -       -       -       -       -       -       19

7.17 Profitability Analysis      -       -       -       -       -       -       -       20

7.18 Break Even Point  -       -       -       -       -       -       -       -       21

PART EIGHT

8.10 Risk Analysis, Contingency Plan Exit Strategy    -       -       -       22

8.11 Risk Analysis        -       -       -       -       -       -       -       -       22

8.12 Contingency Plan  -       -       -       -       -       -       -       -       22

8.13 Exit Strategy       -       -       -       -       -       -       -       -       23

PART NINE

OTHER CONSIDERATIONS, CONCLUSION    

9.11 Economic Justification   -       -       -       -       -       -       -       24    

9.12 Commercial Viability     -       -       -       -       -       --      -       24

9.13 Conclusion/Recommendation  -       -       -       -       -       -       24

 

 

PART ONE

    1. EXECUTIVE SUMMARY
    2. The following report and recommendations relate to the proposal by Julitty Knitting Services to establish a knitting business precisely.
    3. Julitty Knitting Services is not yet legal binding.
    4. The proposed project will be located at No 10 Cap Street Emene, Enugu, Enugu State
    5. Tel.: 09037210675                       E-mail julityyknittingplc@gmail.com
    6. This business is mainly manufacturing business.
    7. A. The business entails the production of knitted bags, sweaters, stockings, among others.

B. The customers of this proposed business would be both men and women who use knitted bags, sweaters, stockings, among others.

C. Otegbulu Juliet Amara              Owner

 

1.17  This business is creating job for five people.

1.18 The proposed project is to be fully implemented with an investment of N950, 000 made up of N600, 000 fixed capital and N350,000 working capital.

 1.19 The start-up capital needed for this business is N950, 000. N300, 000 would be contributed by the owner and N600,000 collected from the bank as a loan.

1.110 The profitability indicators as extracted from the projections embodied in this plan are as follows

Indicators

Year 1

Year 2

Year 3

Turnover

2,697,000

2,966,700

3,263,370

Net operating profit

152,000

214,700

281,670

Return on equity or owner’s control

50.7

71.6

93.9

Return on total investment

16

22.6

29.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART TWO

2.10 GENERAL INTRODUCTION

2.11  Background

Knitting is a method by which yarn is manipulated to create a textile or fabric for use in many types of garments. Knitting creates multiple loops of yarn, called stitches, in a line or tube. Knitting has multiple active stitches on the needle at one time. Knitted fabric consists of a number of consecutive rows of interlocking loops. As each row progresses, a newly created loop is pulled through one or more loops from the prior row, placed on the gaining needle, and the loops from the prior row are then pulled off the other needle. Knitting may be done by hand or by using a machine. Different types of yarns (fibre type, texture, and twist), needle sizes, and stitch types may be used to achieve knitted fabrics with different properties (color, texture, weight, heat retention, look, water resistance, and/or integrity).

Like weaving, knitting is a technique for producing a two-dimensional fabric made from a one-dimensional yarn or thread. In weaving, threads are always straight, running parallel either lengthwise (warp threads) or crosswise (weft threads). By contrast, the yarn in knitted fabrics follows a meandering path (a course), forming symmetric loops (also called bights) symmetrically above and below the mean path of the yarn. These meandering loops can be easily stretched in different directions giving knit fabrics much more elasticity than woven fabrics. Depending on the yarn and knitting pattern, knitted garments can stretch as much as 500%. For this reason, knitting was initially developed for garments that must be elastic or stretch in response to the wearer's motions, such as socks, sweaters and hosiery.

2.12 Vision Statement

Our vision is to see a situation where this business is known to every part of the state in Nigeria and even outside. We want to produce knitted products large enough for exports. Our main purpose will be producing high quality knitted bags, sweaters and bags at a great value.

2.13  Mission Statement

          Our main goal is to be one of the most successful knit making firms in Nigeria and Africa at large.

2.14  The Company

        The name of this company is Julitty Knitting Services. It has not yet been registered as a company.

2.15  Products and Service Offered

The products of the business are going to bags, sweater, stockings, among others.

2.16  Legal Form and Ownership of the Enterprise

This business belongs to Otegbulu Juliet Amara . The business is yet to be registered.

 

 

2.17  Location of the Business

The business shall be located at No 10 Cap Street Emene, Enugu, Enugu State. This is because of the availability of some factors that can aid the growth of the business such as large market, cheap labour, cheap materials and power supply, cheap transportation and communication system.

2.18  Business Strategy

As well trained enterprenuers, we are going to employ the following strategies;

  1. Price penetration strategy
  2. A very good customer service
  3. We will deliver our goods to our customers, free of charge.

2.19  Key Success Factor

We will employ the following factors:

(i) We will be dedicated, focused and committed to the day to day running of the business.

(ii) Employment of skilled personnels to ensure qualitative and quantitative, effective and efficient production and delivery of goods and services

(iii) Bulk buying of necessary materials like knitting bags, point protector, row counters, stitch markers, tape measure, scissors, needle gauge,  among others.

  1. A functional generator to supplement and maintain constant power supply.
  2. Constant motivation of our workforce through incentives to ensure continued commitment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART THREE

THE MARKET

3.10  Nature, Location, size and Attribute Analysis

Bead making business is an extensive one. Bead products are in high demand because is of its great fashion importance among women. Since the business shall be located in Enugu, Enugu State, We are looking at a population of 1 million people because it’s an urban area. It’s going to be lucrative. The consumers’ taste about knitted fabrics is very high in this region so, selling these products won’t be a problem.

3.11  Key Competitors and Competitive Advantage

a. Direct Competition

Competitor

Strengths

Weakness

Other attributes

 

 

 

 

 

 

 

 

 

 

 

 

 

c. COMPETITION EDGE

A lot of factors are in favour of our firm. They are:                

 (i)    Availability of knitting materials at cheap rate

(ii)    Cheap labour

  1. Constant power supply
  2. Skillful and committed workforce.

3.12  Swot Analysis

A.      Strength

  1. BSC degree in management
  2. CBB/ED entrepreneurship trainee
  3. Skilled personnel
  4. High quality and low price.                                       

B.      Weaknesses

Our major weakness is that we are new in this knitting business. But we have undergone adequate monitoring, we seek to build a strong capacity to survive, grow and obtain our anticipated market share.

C.      Opportunities

In the long run, we seek to diversify into mega knitting which is in form of using sophisticated knitting machines with quality materials to attain fashionable styles in knit making.

D.      Threats

Our greatest treats are government policies and competition from existing knit making enterprises in the state. However we believe our strengths, passion and competitive edge would put us over.

 

 

 

 

PART FOUR

4.10 Marketing Plan

4.11  Marketing Segmentation

This product is targeted towards mainly the urban dwellers because of the location. This is because their taste for knitted fabrics is high. We shall also target the rural dwellers, especially the Royal sect of the rural settings.

4.12 Target Market

Our knitted products are targeted towards affluent elites especially classic men and women in Enugu and Enugu State at large. We also target Royal houses, chief, Kingmakers, among others.

4.13  Description of the Edge of Product or Product range of service

Products/Service

1

2

Denomination/Product line

Knitted Fabrics (bags, sweaters and stockings)

 

Specification (i.e size, colour and quality)

Big, medium, small; Blue, Pink, Purple, white, red, customized colour; Superior

 

Packaging

Attractive containers for packaging

 

After sales service

Delivery at door step   

 

 

4.14 Market Positioning Strategy

The business is going to offer a wide range of products and services with quality guaranteed. Our knitted fabrics are superior and they take cognizance of our consumers’ fashion taste needs as well. This strategy will make us stand out among our competitors because we would be the only one providing such vital services.

4.15  Marketing Mix Implementation Tools

Our branding we be so unique and draws the attention of consumers. Our price will also be affordable and goods delivered personally.

4.16  Channel of Distribution

Our chain of distribution shall be in two ways. First is as wholesalers and two as individuals. We shall sell to individuals and as time goes on, we sell in wholesale still maintaining the individual status.

The reason for using this chain of distribution is to meet customers individually by creating a cordial relationship with them and by selling in wholesale to meet up with competition and to increase sales.

4.17 Start-up Promotion

Julitty Knitting Services is a fairly new business hence there is need for awareness. This awareness would be done through radio jingles, pages on networking websites such as twitter, whatsapp and facebook, handbills, fliers, posters, banners and billboards will also be employed. Also it will be through church announcement, ceremonies, among others.

4.18 Alliances

“We don’t plan any form of alliance, until our business is established and grounded”.

 

PART 5

TECHNICAL ANALYSIS

5.00  Production Plan

5.11  The Project

The project is a medium scale business which will entails many hands in executing and achieving the enterprise’s goals. The business is also labour-intensive.

5.12  Technology

 “As starters, we are going to employ manual technology but as the business grows, We will mechanize the process.”

5.13  Quality Assurance and Standardization

Our business is going to observe all quality control measures as approved by government agency. Products shall be properly checked and certified before being delivered to the customers.

5.14  Management and Organizational Structure

        The key promoter is Otegbulu Juliet Amara

5.15  Management Team

The management team is made up of the owner who is also the manager, two production staff and two marketing staff.

 

 

 

5.16  Organisational Structure

 

Manager

          Production Staff

        Marketing Staff

 

 
 

 

 

 

 

 

 

 

5.17  The Personnel Plan (Staffing and Salary Structure)

 

Position

Salary

Yearly salary

1

Manager

N15,000

N180,000

2

Production staff 1

N10,000

N120,000

3

Production staff 11

N10,000

N120,000

4

Marketing staff 1

N8,000

N96,000

5

Marketing staff 11

N8,000

N96,000

 

 

 

5.18  External Support

We intend to have supports from the Entrepreneurship Development Center (EDC) who shall continue to guide this business unto growth.

5.19   Organization’s Values and Norms

  1. To strive to conduct the business within the ambit of government regulations.
  2. To strive to do the best for the customers
  3. To produce quality goods and services delivery that will generate value to the end users
  4. To see our employees as our most valuable assets
  5. To be socially and economically responsible to our community.

 

 

 

 

 

 

 

 

 

 

 

PART SIX

 6.10 LEGAL, REGULATORY, SOCIAL AND ENVIRONMENTAL ISSUES

6.11  Legal Issues

The business shall be called Julitty Knitting Services. It is yet to be registered under the Corporate Affairs Commission.

6.12 Regulatory Issues

There is no stringent regulation as regards to knit making in the country. However, if discovered, any regulatory policy that is hoped to help the business operation will be observed strictly.

6.13  Social Issues

Social issues of this project are as follows:

6.14  Environmental Issues

Proper environmental care will be ensured through constant disposal of waste generated from the production materials. This is to maintain a healthy atmosphere for the inhabitant of the immediate environment.

 

 

 

 

PART SEVEN

7.10 FINANCIAL PLAN

7.11 Project Cost

The proposed project is to be fully established with an investment of nine hundred and fifty thousand naira (N 950,000). The project is broken down into N600,000, fixed capital and N350,000, working capital.

BREAK DOWN OF FIXED CAPITAL

Rent                          N200,000

Vehicle                       N200,000

Furniture and fillings      N30,000

Generator set (1)           N50,000

G.P Tank (1)                 N100,000

Miscellaneous                N20,000

Total fixed capital          N600,000

BREAKDOWN OF WORKING CAPITAL

knitting Materials          N100,000 (on an interval purchase of 4 months)

Knitting Machine           N150,000

Petrol                                 N100,000

Total working capital      N350,000

Total project cost           N950,000

 

 

7.12 Funding Plan and Statement

THE TOTAL PROJECT COST IS PLANNED TO BE FUNDED AS FOLLOWS:

Owners contribution

N300,000

Loan capital

N650,000

Total N950,000

 

7.13 Funding Requirement

The funding requirement of this project is N650,000 since the promoter is committing N300,000

INTEREST AND LOAN REPAYMENT (AT 10% INTEREST)

Year

Principal

Repayment

Interest

Loan balance

1

600,000

200,000

60,000

N400,000

2

400,000

200,000

40,000

N200,000

3

200,000

200,000

20,000

-

 

DEPRECIATION       

S/N

Asset item

Cost

Sctap value

Life span

Amount

1

Vehicle

N200,000

N95,000

10

10,500

2

Generator

N50,000

N20,000

10

3000

3

G.P.Tank

N30,000

N10,000

10

2000

                                      N280,000                             

Total depreciation                                                    N15,000

7.14   Projected Income Statement

Turn over

2016

2017

2018

Less operating expenses

2,697,000

2,966,700

3,263,370

Knitting materials

N100,000

N110,000

N121,000

Knitting Machine

N150,000

N165,000

N181,500

Petrol

N100,000

N110,000

N 121,000

Salaries

N1,920,000

N2,112,000

N2,323,200

Rent

N200,000

N200,000

N200,000

Depreciation

N15,500

N15,500

 

N15,500

Interest on loan

N60,000

N40,000

N20,000

Total operating expenses

N2,545,000

N2,752,000

N2,981,700

Net operating profit

N152,000

N214,700

N281,670

 

 

 

 

 

                                     

7.15 Projected Cashflows Statement

CASH-INFLOWS

2016

2017

2018

Owner’s contribution

300,000

-

-

Loan from bank

650,000

-

-

Revenue (sales)

2,697,000

2,966,700

3,263,370

Total cash inflows (A)

3,647,000

2,966,700

3,263,370

CASH OUT FLOWS

 

 

 

Operating expenses (less depreciation & rents 2017 and 2018)

2,530,000

2,537,000

2,766,700

Loan repayment

200,000

200,000

200,000

Total cash outflow (b)

2,730,000

2,737,000

2,966,700

Net cash flows (A-B)

917,000

229,700

296,670

Opening CSH balance

-

917,000

1,008,700

Closing cash balance

917,000

1,008,700

1,109,570

 

 

7.16   Projected Balance Sheet

CAPITAL EMPLOYED

2016

N

2017

N

2018

N

Fixed asset

600,000

600,000

600,000

Less: depreciation

15,500

31,000

46,500

 

584500

569000

553500

Current assets

 

 

 

Balance at bank and in hand

917000

1,008,700

1,109,570

Prepayment (rent)

400,000

200,000

-

 

1,317,000

1,208,700

1,109,570

Less: creditor (bank loan)

400,000

200,000

-

FINANCED BY

 

 

 

Owner’s capital

300,000

300,000

300,000

Retained profit

617,000

708,700

809,570

Owner’s funds

917,000

1,008,700

1,109,570

 

 

 

7.17   Profitability Analysis

YEAR 1

(1) Owners contribution=operating profit x 100 =152,000 x100

                                      Owners capital                    300000

 

                                                                                =50.7%

 

(ii) Total investment = operatives profit x 100 =152,000 x100

 

 
 

 

                                       Total project cost                 950,000

 

                                                                                 =16%

 

YEAR 11

(i) Owner’s contribution   =214700 x 100                = 71.6%

 

                                         300,000

 

(ii) Total investment   =214700   x 100                   =22.6%

                                 950,000

YEAR 111

(i) Total investment   =281670 x100                      =93.9%

                                  300,000

 

(ii) Total investment =281670 x 100                       =29.7%

 

                                    950,000

 

Indicators

2016

2017

2018

Turnover

(N) 2,697,000

2,966,700

3,263,370

Net operating profit (N)

152,000

214,700

281,670

Return on equity

50.7

71.6

93.9

Return on total investment

16

22.6

29.7

 

 

7.18   Break Even Point

Formular of B.E.P =Fc

                           I-Vc

                                S

Where FC=fixed cost

VC=variable cost

S=sales/turnover/revenue

I =constant

 

FC

VC

Salary

1920 000

 

Rent

 

 

Loan interest

20,000

 

Depreciation

15,500

 

Fuel

 

100,000

Knitting machine

 

150,000

Knitting materials

 

100,000

Total

1,955,500

350000

 

Applying the formular. 1,955,500       = 1,955,500

                                  1-350000

                                     2,697000     1-0.130

 

                                                               = 1,955,500

                                 0.81

                                       =N224,770.1
PART EIGHT

8.10 Risk Analysis, Contingency Plan AND Exit Strategy

8.11 RISK ANALYSIS AND MITIGANTS

Below are risk analysis and mitigants peculiar to by business

S/N

1

IDENTIFIED RISK

Knitted fabrics could get torn while on transit

MITIGANTS             

One of our production officer is an expert who helps to package knitted fabrics well for transit

2

Motor/car accidents or fire accidents

The services of a driver who is also a mechanic will be employed. Fire extinguishers will be placed in many places in the farm.

3

Epileptic power supply

The services of a stand by generator is applauded

4

Competition

High quality products shall continuously be provided and good customer care must be maintained.

 

 

8.12 Contingency Plan

The following are our business contingency

  1. Price reduction: this will be used to stimulate demand.
  2. Quality discounts: this will motivate customers to buy in large quantities
  3. Demand stimulation effort showing awareness creation
  4. Forming strong customer bonds and customer relationship management (CRM)
  5. Effective customer care, satisfaction and retention

8.13 Exit Strategy

This business will generate enough cash flows to pay off the agency and interest as at when due to ensure a smooth exit of the investor from the business without resorting to litigation after this. The business will still have enough cash to continue its operations. The owner does not intend to exit rather; we will expand and diversify for long term survival and profitability.

 

PART NINE

9.10 Other Considerations, Conclusion and Recommendation

9.11 ECONOMIC JUSTIFICATION

This business is economically justifiable because it creates employment, wealth, leads to reduction in poverty and encourages value orientation and people’s empowerment. It also provides materials for local industries and as well support and thus help to improve fashion industries.

9.12 Commercial Viability

The result of our analysis shows that this project is commercially viable in the sense that it generates adequate cash flows and good profitability return or profit to pay off its indebtedness and still expand, diversify and achieve long term survival and profitability.

9.13 Conclusion and Recommendation

Based on the point of view of the analysis of our findings, the proposed project is found to be technically feasible, commercially viable, and economically desirable.

The project offers good investment benefit. We therefore, highly recommend it for funding and implementation.