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EXECUTIVE SUMMARY

The business
This business plan has been prepared for establishing a partnership
business venture to go by the name of STARCOM Photo Studio. The
owners of this business, to be operated as a partnership are:
1.
2.
3.
4.
5.

Muro Samwel
Katto Willy
Msasa Mlewa C
Makula Victor
Chagaka Kalimbia
The business will officially start its operations in January, 2012,

although currently some preparations are in progress. The location of the


proposed business is Savei near Mlimani City mall and Ardhi University
and it will operate from rented office. The major activity of STARCOM
photo studio is to provide quality photographic services that cater for the
demand of its customers and Tanzania at large.
Owners Background
The owners are prospective graduates of colleges of Engineering
and Technology (CoET) and college of Information and Communication
Technology (CoICT) of year 2011 with strong background knowledge in
engineering, project management and entrepreneurship.
Management/ Organization
The management team for the STARCOM photo studio will be having
one person who will be managing director and the rest will be assistance
managing director, marketing manager, cashier and technical assistance.
The partners have decided to run the business themselves as employees.
The duties will be handled depending on the agreed specializations.
Operations
The studio will do some of the initial operation activities such as
training program to partners, marketing survey, visiting suppliers, writing
business plans, and registering the business
covered by initial operating costs.
1

where by the cost will be

Financing and returns


The total amount of money required to start this business is Tanzanian
shilling 25 millions, to be used as follows:
i.

Fixed assets

TShs 940,000

ii.

Pre operational (setup) costs TShs 22,600,000

iii.

working capital

TShs 580,000

All the money will be raised through equal contribution by the partners.
The profit to revenue ratio in the first year is projected at 13.2%. The
return on equity ratio for the first year is projected at 34.52%.
Market
Our market will consider the target customers who are located at
Savei area which are Ardhi University and University of Dar es- Salaam
students together with other people who are leaving around the area. We
have selected these customers considering their demand and their
accessibility.
Suppliers
From the research we have done we have come up with the number
of suppliers who will be supplying us with different materials such as
machines, stationeries and other photo materials. In summary we have
MASUMINI, KONICA and BMTL.
Financial forecast
In our business, partners will contribute the capital of TShs 25
million out of which each partner will contribute TShs 5million. This capital
will enable us to do the projects which are in the business and to buy
some of the fixed assets and other pre operation expenses.
Technology used
The technology we are going to use is advanced one using experts
who will be assisted by our technical assistance and other consultancy.
Also the tools we are going to use will also be advanced one and modern.
Such tool includes computers, cameras, and lighters, printing machines,
soft wares and editing soft wares.

Feasibility
Overall review conducted by the partners has revealed that the
business is viable and profitably implementable.
ACKNOWLEGEMET
We are so grateful to all who have assisted us in one way or another in the preparation of our
business plan. Your valuable assistance and contributions have made this project a success.
We feel deep sense of gratitude to:
-

Almighty God who gives us daily strength and courage.

To our lecturer Prof. B.A.T. Kundy for his guidance, cooperation and support he gave
since the very start of this project. May the Almighty God bless you professor.

To our families for their daily love, prayers, encouragements and support.

BUSINESS DESCRIPTION
1.1. The Owners/partners
The business will be registered under business registration licensing
authority as a partnership with five partners as mentioned below; Muro
Samwel, Katto Willy, Msasa Mlewa C, Kalimbia Chagaka and Makula Victor.
1.2. Business Mission
To provide quality photographic services that caters for the demand
of its customers and Tanzania at large.
1.3.

Business Vision
To become an upright and an extraordinary photo studio that is

responsive to its esteemed customers.


1.4.

General objective
To satisfy the needs of our customers through provision of quality

and modern service/products


1.5. Specific objectives
To bring a positive change to the society through use of

technical advancement
To acquire a reasonable market share
To become a number one photo studio against our
competitors

1.6. Products/services
The business will offer the following products; Photos services, Video
shooting, Printing t-shirts, cups and plates, Producing calendars and
business cards.
1.7. Location
STARCOM photo studio will be allocated at Savei area in Dar es
Salaam .The choice of this location is due to reasons of easy proximity to
customers, i.e. the area is surrounded by the two universities, Ardhi and
University of Dar es salaam as well as other residents. Our principle

customers will be the students from the mentioned universities and other
people surrounding the area.
1.8.

Key Success Factors In the Market

According to our market assessment we are going to consider the


following factors as our key successful factors

Multi-business
Quality products
Good customer service
Mobile service
Constant supply of power
Working hours
Professionals/experts
Advanced facilities and equipment

2. MARKET SEGMENT SUMMARY


In relation to our business idea of Photo studio named STARCOM
Photo Studio, Survey area stands a better location since it is surrounded
by the two big universities that is ARDHI UNIVERSITY AND UNIVERSITY OF
DAR ES SALAAM. These two universities are composed of population of
our interest i.e. youths who are up-to-date with fashion. Considering that
there are few photo studios nearby which are located at Mlimani city,
Savei, Mwenge, Lufungira, Ubungo and individual photographers at both
universities campus and Mabibo whose services do not adequately meet
the customers satisfaction.
2.1. Target Market
The following are important characteristics of our customers.
Age
Mostly ,the age we are targeting first is the student who are at the
age of 19-30 but also all the rest ages depending that our products can be
used to all type of age.
Education
Our market strategy will also be set basing on the higher education
level since they are our target customers and that is why we have located
our business near the two big universities so as we can reach them but
also the rest education level groups.
Life style
Students are fond to parties and different events such as
graduations, birthday parties, concerts, bashes and different organisations
parties, this means their life style is an opportunity to our business since
we can offer them service accordingly.
2.2. Customer analysis
STARCOM photo studio customer can be divided into the following
categories;

First Class: These are customers that will come for large size photos,

video shooting.
Second Class: these are the customer that will come for printing

either Tshirts or cups, calendar procesing and Id printing.


Third Class : These are customers that will come for Passport size

and customers of our goods like frames.


2.3. Market size
The size of the market is significant since we see that the demand
for this service is extensive. We experience a lot of people going to town
also running to Mlimani city and make long queues.
2.4. Market share
We expect to capture a market share of about 15% of the total
market by end of 2013.
2.5. Market trend and growth
In the industry there are other businesses that provide the same
services and products, but still the services are not well provided, the
increase in enrollment of students to the universities, every year
registration, travel documents that needs passports sizes, population
growth that lead to increase in events as graduation,weddings and
birthdays that need memories hence trend show that there is a need of
increase of these services and products.

Table 1. Demand estimate and projections for three years sales


forecast

s/No
passport
size

Unit
pieces

forecasted sales for the year 2012 to 2014


2012
2013
month
month
unit
ly
Yearly(T
ly
Yearly(TZ
price
units
ZS)
units
S)
15,000,00
2,500
300
9,000,000 500
0

Size 4*2

pieces

1,000

600

Size 4*6

pieces

4,000

450

Size 6*10
printing
business
card

pieces

6,000

pieces

Printing of
Utensils
Printing
Tshirts
Calenda
Video
Shooting

750

150

7,200,000
21,600,00
0
10,800,00
0

300

9,000,000
26,400,00
0
21,600,00
0

1,000

100

1,200,000

150

1,800,000

Dozen

30,000

30

10,800,00
0

40

Dozen
pieces

60,000
5,000
300,00
0

7.5
5

Film

Total

5,400,000
300,000
28,800,00
0
95,100,0
00

550

20
10
20

14,400,00
0
14,400,00
0
600,000
72,000,00
0
175,200,
000

2014
month
ly
units

850

500

Yearly(TZ
S)
21,000,00
0
10,200,00
0
31,200,00
0
36,000,00
0

250

3,000,000

700

650

50
50
20
35

18,000,00
0
36,000,00
0
1,200,000
126,000,0
00
282,600,
000

2.6. Competitive Analysis


Boom photo studio face the following immediate competitors. These
includes

Mlimani city photopoint


Mwenge photostudio
GRM photo studio
Photographers around campus area
Ubungo
8

Mabibo
Survey

2.7. Key strengths of competitors


Major competitor
The photo studio located at MLIMANI CITY which is known as PHOTO
POINT is such a big one, so far it is advanced and it uses high technology
and produces quality products, it has also positioned itself in the market
since it came with different products which enabled it to have a higher
competitive advantage.
Weakness
The weakness of this major competitor is that it is not multi
functional; since it leaves behind other related activities which could be
possibly done in the same units such as printing t-shirts, printing business
cards and video shooting.
Other Group of Competitors
The strength of other small competitors is that they manage to
capture those customers who seek for a quick service and those who
cannot go far for such services despite of their low quality, especially
those located at both campus and these tend to be threat to the studio
because we are competing for the same customers.
Weaknesses
These small photo studios are not technologically advanced and also
they dont have the experts who can produce quality products. Not only
that, but also they are single business compared to STARCOM studio who
will be having multi-business.
9

Competition trend
In this type of business there will be stiff competition depending that
everyone is working on his/her weaknesses and grabbing the good
opportunities out there. Also the technological advancement is still
penetrating and everyone is aware of that. Not only that but also number
of people/expert is increasing who will also increase the competition level.

3. MARKET STRATEGY

3.1. Price
The photo studio is going to consider the following factors before
charging products which are degree of competitive pressure, seasonal
changes in demand, prevailing economic condition, the marker buying
power and the amount of promotion done. One of the strategies is, the
photo studio will not use sales on credit. Also price will be fixed in a
certain period but will change due to factors like inflation and others
mentioned above.
3.2.

Promotion
The STARCOM PHOTO STUDIO will advertise by supplying bronchus

and posters across the universities and around the area especially at the
beginning of our business and as we grow we will expand our promotion to
a boarder scope. We are going to offer discount to our customers as follow
i.e. fist 50 customers will be given discounts in price of 500 in the
passport size photos. We will be charging the discounts rates accosting to
the demand situation.
There will also be some after sale services like calling our
customers, asking them how our products helped them, and other
necessary feedback.

10

3.3. Sales and distribution


At the inception stage, we are going to use personal sales tactic, but
as the business expands we shall use other tactics like the use of agents.
The photo studio will use Personnel strategies whereby on video shooting.
It will go for its customer depends on the need. STARCOM photo studio will
be located at Savei near the two universities.
The photo studio will make sure it reaches our customers on time
and at different areas. We will also make sure that we can give the
services to different people at different areas especially to kind of
businesses which involve movements i.e. video shooting and photo
services in different events and occasions

4. OPERATIONAL PLAN

4.1. LOCATION
STARCOM photo studio will be allocated at Savei area in Dar es
Salaam .The choice of this location is due to reasons of easy proximity to
customers.ie the area is surrounded by the two universities, Ardhi and
University of Dar es salaam. Availability of Raw materials is also another
factors that influenced the location. It will be easier for us to obtain raw
materials from potential suppliers in areas like Posta and Kariakoo. The
area is also surrounded by well developed infrastructure a system that
makes it easily accessible.
4.2. PRODUCT/ SERVICE DESIGN AN DEVELOPMENT
The products STARCOM photo studio is going to offer are photo
services, video shooting, printing of cups and t-shirts, and business
cards .we shall purchase the unprinted t-shirts (Manga) from Kariakoo,
other customers may come with their own unprinted t-shirts. We shall also
purchase printing materials, and hard papers for business cards and

11

photos from Mwenge and Kariakoo. The service is not new as there are
other providers in the market so we shall be making modifications to
ensure quality and updated services.
4.3. FACILITIES AND CAPACITY
We intend to rent a place at Survey. Several purchase have to be
made such as

facilities and equipment as computer, cameras, video

shooting, tables, chairs , printer and installation of air condition. Also


various operating costs will be incurred namely; administration cost and
marketing cost both fixed and variable cost.
4.4. LEGAL ENVIRONMENT (REGULATIONS AND LICENCING)
Licensing and Permits.
As per the Tanzania requirements, we are going to obtain a business
license and register our business. We shall also incur Business Registration
fee amounting to TShs 50000 and it will take almost a month to register
our business.
Regulations also require obtaining a Tax Identification Number from
TRA and we are going to incur a cost of TShs 65000 to obtain this .we shall
incur costs for licensing of about TShs 40000 and it will take almost one
week to obtain this.

Insurance Coverage

We shall also insure our business against theft; fire and allied perils and
we are to contact the insurance company first as payment will base on the
agreed amount of premium to be paid .it will take us a month to
accomplish this.

Health, workplace or environmental regulations.

To comply with Tanzania Environmental regulations, we are going to


ensure environmental conservation surrounding our area of operations by
placing Dustbins around to prevent littering. So we expect to incur costs of
about 25000/= for this.
12

During the whole exercise of service provision, the following factors are
likely to affect the process; High amount of taxes i.e. income tax, city levy,
and property withholding tax.
4.5.

BUSINESS CONSUMABLES /INVENTORY

STARCOM Photo Studio is going to use the following types of inventory in


its operations;

T-shirts Materials

Our t-shirts suppliers will be MANGA .We have chosen these supplier
considering their t-shirt quality and accessibility. MANGA are located at
ARUSHA.

Photo equipments

Photo equipments like minilab machine, card reader, digital carrier,


photo paper, colour film, paper processor, paper magazine, mini lab lens,
dark room equipment and photo finishing machine are going to be
supplied by KONICA WHOLESALE in Tanzania.

Stationeries

All other stationeries materials such as papers, pen, pencil and others
will be provided by MASUMIN PRINTING and STATIONERIES.

Computer desktop and printing machines


Our main supplier to provide us with computers, printing machines

and other machines is Business Machine Tanzania Limited (BMTL).


We have considering the quality of their product and accessibility as well.
BMTL are located at KIJITONYAMA which will very near to our office.
NB: For the time being we have not entered in any contract with suppliers.
4.6.

SUPPLIERS AND CONTRACTS EXISTED

13

As we are entering into the business for the first time, there are no
any contracts that have been existed with suppliers but from the market
assessment we did we were able to come up with best and potential
suppliers. We are going to establish a very good relationship with these
suppliers by paying them timely according to the term of our agreements.
These suppliers will be MANGA, MASUMIN, BMTL and KONICA.
4.7. PRODUCTION ACTIVITIES
4.7.1.
Manpower requirements
Partners will provide manpower as the business is not yet in a
position to employ other people. But as the business keeps growing, it will
be in a good position to increase man power.
4.7.2.Manpower costs

The partners will be paid in terms of monthly salaries together with


interest on capital.
4.7.3.Production plan

Preliminary production costs


4.7.4.Production overheads

The production overheads per month (initially) include:


i]

Rent 300,000/= per month meaning TShs 3,600,000/= per year.

ii]

Electricity: TShs 40,000/= per month Meaning TShs 480,000/= per


year

iii]

Advertisements 1,190,000/=

iv]

Administration 500,000/=

These costs, added with manpower costs of 8,400,000/= will make the
total costs for the month, excluding depreciation of furniture and
equipment to be 14,170,000/=
5. QUALITY CONTROL

The planning is to control the qualities in different ways are as follows,

By having advanced equipment used in business operation.


14

Also by having software that are used in the editing and different
process of making snaps.

By hire competent staffs in the industry.

Provides training/knowledge to the staffs

Also by making on going research to the customer about the quality


and what they demand, therefore business can maintain and control
the quality.

Also by looking what is provided by the competitor, which can help


the business to understand the changes in the market.

6. CUSTOMER SERVICE SUPPORT

STARCOM photo studio is going to provide the best customer services


by offering the quality photo services at affordable price, offering some
seasonal discounts, Mobile services and best customer approach.
7. LEVEL OF TECHNOLOGY USED

The business will invest in latest technology of computers such as


laptops or desktop flat screen computers with up graded soft wares,
digital cameras, latest t-shirt printing machines and video shooting
cameras.

8. STARCOM PHOTO STUDIO MANAGEMENT AND ORGANISATON PLAN

15

STARCOM photo studio is a partnership form of business organization.


The choice of our organization i.e. partnership has considered the
following;

Our capabilities

Given that we are recently graduates, we thought that we can perform


better in a partnership than other forms of organization.

The size of investment

Since our investment is small has also influence us to form the


partnership because it will be easier to run than other forms of
organization.

Financial and management control

We have considered the expertise among ourselves as partners and


also the management will be easier because of areas of specialization
which will enable us in easily management.

Protection of confidential information

Partnership form of business, the law does not require partnership


form of business to disclose their financial statements to the public.
8.1.

The key personnel

The partnership consists of five partners, run by one overall


managing director. According to the nature of the business the managing
director will need assistance from other functional managers who are
marketing manager, cashier and technical assistance

16

ORGANISATION CHART

MANAGING
DIRECTOR
ASSISTANCE
MANAGING
DIRECTOR
MARKETING
MANAGER

8.2.

CASHIER

TECHNICAL
MANAGER

Their position and responsibilities

Managing directors duties


He is responsible for the overall managing of STARCOM photo studio.
He oversees all activities performed within the studio and the three
administrative staffs who are reporting to him.
Assistance management director
He will be responsible for assisting the managing director in running
day to day activities and other operation activities such us material
management ad supplies and receiving the reports from the other
managers before taking them to managing director.
Marketing manager
This person will be responsible for all advertisements and promotion
activities, public relation and publicity. Also he will be responsible in
customer services and maintaining good relation with customers.
Cashier
17

He is person entrusted for all cash management within the studio.


All payments are made to him and at the end of the day he will be
reporting to managing director.
Technical Manager

He is the person behind all technical issues.

Handles the studios system, making sure that it is at optimal


performance.

Cases of system multi functioning are addressed to and handled by


him.

8.3.

PRE OPERATING ACTIVITIES PERFORMED.

Some of pre operating activities to be attended are;

Training program

We had been attending different trainings and seminars about business


management and entrepreneurship.

Business plan

Market survey

Visiting machinery and raw materials suppliers

Registering the business

18

8.4.

PRE OPERATING EXPENSES

The expenses incurred include Workers trainings, market survey, and


travel to source suppliers of raw materials. Fixed assets to be acquired
include cameras, furniture, computers and printers.
Table 2: ITEMS AND THEIR PRICES
Total Per year
Assets/item/expenses

Pieces

(TShs '000')

Computers

2,500

video shooting camera

1,200

Cameras

800,

Printing Machine

4,500

Furniture

5,000

Air conditioner

1,600
15,600,000

Sub Total
Other requirements
Initial

administration

and

marketing expenses
other

6,000

miscellaneous

expenses

1,000

Sub Total

7,000

Total

22,600

19

9. FINANCIAL PLAN
9.1. SOURCES OF THE FUND OF THE VENTURE
First the source of the fund that a venture expect will come from
commercial banks, where we will show our collateral to the banks that will
help us to access the loans from the banks. Were our collateral we had is
including the partnership farm plus cars of the partners members.
Other source of fund we expect from the business angels, were we
will send our business proposal to this people who are willing to support
our venture. Also these angels include members of families and non
families member, which we expect they can help us in starting our
business.
Another source of fund we expect is that from friends and the family
member, where we try to corporate with these people by showing them
our business idea and our business plan.
Another source of fund is the venture capitals, where we try to
recognize the presences of these venture capitals for their support to our
business. We have prepared a nice income statement and the balance
sheet that we believe that we can convince them to support our business.
9.2.

How the funds are going to be used

First some amount of money will be used on purchasing of the


equipment used in the business, there are different number of
purchase which are as follows;

Purchasing of the working machines used in the business where by


we plan to purchase the advanced machines to

operate the

business, such machines are the advanced cameras, camera stands,


also computers for editing of picture and installation of programs,
advanced lights etc

Also the plan is to purchase furniture used in the business for our
customer and the staffs relax waiting for the work to be
20

accomplished, also other furniture are used in snapping room as the


background.

Also the plan is to purchase the wall-paper as the background in the


snapping room, the wall-paper will consist of different kind and
modern grounds which are more appreciated by the consumers.

Another plan on purchases is to purchase a decorator that will be


used in the business for decoration of the business environment,
which will help to have the good appearance and presentable
business to the customers.

Purchasing the cleaning materials that will assist the maintenance


of cleanliness.

Also another amount of funds will be used on payment of workers


that assist the operation of business for the first three month were
is the time to penetrate the market and time for the business to be
known in the market.

Also some amount of fund will be used on payment of rents, also


payment of utilities such as electricity bills, water bill for that first
three month before we come to make analysis of the operation for
that period.

21

9.3.

VENTURE PERFOMANCE
STARCOM PHOTO STUDIO

PROJECTED INCOME STATEMENTS FOR THE YEAR ENDED DEC, 2011,


2012 AND 2013

2011

2012

2013

Total Revenue

95,100,00
0

175,200,00
0

282,600,00
0

Cost of Sales

66,570,00
0

122,640,00
0

197,820,00
0

Gross Profit

28,530,0
00

52,560,00
0

84,780,00
0

Rent

3,600,000

3,600,000

3,600,000

Electricity

480,000

480,000

480,000

Salaries and Wages

8,400,000

12,000,000

14,400,000

Repair and Maintanance

400,000

400,000

400,000

Depreciation

1,440,000

1,440,000

1,440,000

Advertisement

1,190,000

595,000

400,000

Administration

500,000

700,000

1,000,000

Total Operating Expenses

16,010,00
0

19,215,000

21,720,000

Net Profit c/f

12,520,0
00

33,345,00
0

63,060,00
0

Operating Expenses

22

Appropriation of profit
Net Profit b/d

12,520,00
0

33,345,000

63,060,000

Total interest on Capital 5%

1,250,000

1,250,000

1,250,000

32,095,00
0

61,810,00
0

total
share
partners

of

profit

to 11,270,0
00

calculation for cost


of sales

2011
95,100,0
00

Sales
opening stock

0
72,702,0
00
72,702,0
00
6,132,00
0
66,570,0
00

add: purchases
cost
of
goods
available for sale
less: closing stock
cost of sales

managing director
marketing manager
Cashier
Technician
Total

monthl
y
250,00
0
200,00
0
100,00
0
150,00
0

year1
3,000,00
0
2,400,00
0
1,200,00
0
1,800,00
0
8,400,00
0

175200000
6,132,000
126,399,0
00
132,531,0
00

66,570,0
00
28,530,0
00

gross profit
remunerations
structure
Staffs

2012

Monthl
y
300,00
0
250,00
0
200,00
0
250,00
0

23

year2
3,600,00
0
3,000,00
0
2,400,00
0
3,000,00
0
12,000,0
00

9,891,000
122,640,0
00
52560000

monthly

year3

350,000

4,200,000

300,000

3,600,000

250,000

3,000,000

300,000

3,600,000
14,400,000

STARCOM PHOTO STUDIO


Balance sheet as at 31st December 2011, 2012 and 2013
2011
Non
current
asset

2012

2013

Cost

Acc.
Dep

Net
book
value

Acc.
Dep

Net
book
value

Acc.
dep

Net book
value

Computers
Cameras

2,500,000
800,000

250,000
40,000

2,250,00
0
760,000

500,000
80,000

2,000,00
0
720,000

750,000
120,000

1,750,000
680,000

Printing
Machine

4,500,000

450,000

4,050,00
0

900,000

3,600,00
0

1,350,0
00

3,150,000

Video
camera

1,200,000

120,000
500,000

360,000
1,500,0
00

1,600,000

80,000

160,000

960,000
4,000,00
0
1,440,00
0

840,000

5,000,000

1,080,00
0
4,500,00
0
1,520,00
0

240,000

1,360,000

15,600,00
0

1,440,
000

14,160,
000

2,880,
000

12,720,
000

4,320,
000

11,280,0
00

Furniture
Air
conditioner
Total
Non
current
Assets
Current
Assets

240,000
1,000,0
00

3,500,000

Stock

6,132,00
0

9,891,00
0

16,814,70
0

Cash at Bank

15,978,0
00

47,004,0
00

104,580,3
00

24

Total current
assets

22,110,
000

56,895,
000

121,395,
000

Total
Net
Assets

36,270,
000

69,615,
000

132,675,
000

25,000,0
00

25,000,0
00

25,000,00
0

11,270,0
00

44,615,0
00

107,675,0
00

36,270,
000

69,615,
000

132,675,
000

Financed
by:
Total partner
Capital
Total partner
Current
account
Total Equity

STARCOM PHOTO STUDIO CASHFLOW STATEMENT FOR 2012 (000'S)


FE
MRC APR
JUN JUL AU SEP OC

2013

2013

Beginning

JAN
80

B
10

H
186

L
MAY
166 150

E
18

Y
86

G
12

T
14

T
13

NOV
126

DEC
140

4700

1045

cash
Add;Recei

0
50

00
57

4
823

4
0
801 871

00
73

4
78

00
78

64
78

32
84

4
877

0
934

4
1050

80
1205

pt
Cash

80
58

53
67

8
101

6
9
968 102

28
91

93
87

90
90

69
93

54
97

1
100

3
107

00
1520

00
2250

available
Less;Paym

80
47

53
82

02
826

0
19
750 736

28
70

57
68

90
65

33
53

86
53

35
988

43
899

04
9800

80
1020

ents

50

12
-

89

30

80

43

75

00

Ending

11

14

183

217 285

20

19

25

39

44

174

5400

1230

cash

30

59

39

27

10

90

11

80

25

152

WORKINGS:
RECEIPTS (000'S)
MRC

JUN

JAN
635

FEB
600

APR
800

Sales
Curre

8775 0

nt

508

480

AU

SEP

NO

MAY E
885 700

JULY G
800 792

T
785

OCT V
785 900

DEC Tota
950

640

708

560

640

634

628

628

720

760

month 0
Prior

7020 0
131

0
120

0
132

0
105

0
120

0
118

0
177

0
117

0
135

month
Two

953

900

318

300

439

400

443

350

400

396

393

393

801

871

732

789

789

786

845

877

934

933

month
s
Back
Cash
receip

508

575

8238 6

26

CASH PAYMENTS (000'S)


MRC
FEB
705

Purchas

JAN
500

es
Current

0
375

9
529

month
prior

month
Expens
es
Cash

JUN

SEP

OC

NO

DE

MAY E
700 511

JULY G
500 617

T
400

T
450

V
967

C
605

6000 8
533

0
525

8
383

0
375

1
462

0
300

0
337

7
725

9
454

4
125

4500 9
150

0
178

9
175

0
128

8
125

0
154

5
100

8
112

4
241

0
166

1765 0

0
133

0
150

0
180

100

0
100

5
150

9
203

2000 668

702

800

836

708

683

658

934

987

988

899

9569

paymen 475

821

ts

APR
711

AU

750
8265 7

Notes and Explanations of Items in the Projected Financial Statements


a. Total Revenue
The first years anticipated income of TShs 95,100,000 and subsequent
next two years income is expected to increase at the rate of 1.7times as
observed from market assessment. STARCOM Photo Studio has projected a
sufficient increase in the revenue from the second to third year of
operation. Based on our financial commitment to sustain an effective and
efficient program, accompanied by favourable location and conducive
environment, the firm will offer the most unique and interesting services
to the customers.
b. Cost of sales and closing stock

27

total

This item is comprised of purchase of printing materials, cups, t shirt,


scissors etc. closing stock is estimated to be 5% of the next years
revenue also cost of sales will represent 70% of the revenue for the
current year.
c. Advertising
Advertising costs for the first year is based on the estimates on the
market assessment at a budget of TShs. 1,190,000. This figure will
decrease for the next two years as we are sure to capture a reasonable
market share and royal customers in our first year of operation and hence
no need of further extensive advertisement rather than just a reminder of
what we do and how unique.
d. Salaries and wages
Salaries and wages to all employees for the first year of operation is
estimated to be TShs. 8,400,000. The amount is expected to increase
basing on the performance of each employee and the operational
performance of the business.
e. Repairs and maintenance
Repairs and maintenance have been projected at TShs. 400,000 in the
first year and is expected to remain constant for the next two years. This
amount

includes

repairs

and

maintenance

of

computers,

printing

machines, updating softwares and furnitures.

f. Administration Expenses
This expense projection is based on estimates made by a prospecting
office supplies firm. TShs 500,000 is estimated for the first year and is
estimated for all administration costs like office stationery, office tea and
other office supplies. These costs are estimated to increase basing on the
market condition of the supplies.

28

g. Electricity
The monthly electricity bill of TShs. 40,000 is estimated based on the
experience obtained from using LUKU. Hence for the first year total
estimated electricity expenses will be TShs. 480,000 and this amount is
anticipated to remain fixed for the next two years.
h. Depreciation
STARCOM Photo Studio depreciates its fixed assets on a straight line
method to write up the cost/valuation of the assets over their estimated
useful lives. Newly acquired assets are depreciated for a full year
irrespective of the date of acquisition. The methods used rates used are
consistent.

Types of assets

rate p.a

Computers
Cameras
Printing machine
Video camera
Furniture
Air conditioner

10%
5%
10%
10%
10%
5%

i. Rent
Rent for the business premises is estimated to be TShs. 300,000 per
month hence total rent for the first year is estimated to be TShs.
3,600,000. This amount is estimated to remain fixed for the next two
years.
j. Interest on partners capital
Interest on capital to partners will be 5% for each of the partners
contributing capital.
k. Profit and Loss sharing ratios to partners

29

Profit or loss will be shared equally because partners contributed the same
amount of capital.
9.4.

BUSINESS / PROJECT EVALUATION

In the process of managing our business we are going to do several


investments. We have to do capital budgeting so that we can know which
investment will have quick return than the other investment in the period
of 3 years.
The following are some of the investment we are going to do in our
business
Photographing
Video shooting
Making identity cards and business cards
Printing t-shirts and other materials
The impact of some of these decisions might be felt within one year
and other investments the investment may be extended beyond one year.
From these investments we are going to do the capital budgeting
concerning the investments so that we shall be able to know how we are
going to get the returns from the investment.
The following methods of evaluation are going to be used; Payback method
Net present value (NPV) method
Internal Rate of Return (IRR) method
STARCOM photo studio will use the NET PRESENT VALUE (NPV) to evaluate
the business investment as follow;-

30

Net present value


This is the technique that helps to minimize some of the
shortcomings of payback method by recognizing the future cash flows
beyond the payback period. Allocated capital and return each year is as
follows

Project

initial
outlay

expected
return@
year

photographic

10,000,000.
00

5,000,000.0
0

video shooting

10,000,000.
00

4,500,000.0
0

5,000,000.0
0

2,500,000.0
0

Printing
interest rate 12%@year

Period
intial outlay

project one
1

3 Total

10,000,000.
00

Return

5,000,000.
00

5,000,000.
00

5,000,000.
00

Present value(r=12%)=CF/
(1+R)^N

4,464,285.
71

3,985,969.
39

3,558,901.
24

NPV=(PV-Initial outlay)
Period
intial outlay

2,009,156.
34
project Two
0
1

3 Total

10,000,000.
00

Return

4,500,000.
00

4,500,000.
00

4,500,000.
00

Present value(r=12%)=CF/
(1+R)^N

4,017,857.
14

3,587,372.
45

3,203,011.
12

NPV=(PV-Initial outlay)

12,009,15
4

808,240.7
1
31

10,808,24
1

project three
0
1

Period

3 Total

5,000,000.0
0

intial outlay
Return

2,500,000.
00

2,500,000.
00

2,500,000.
00

Present value(r=12%)=CF/
(1+R)^N

2,232,142.
86

1,992,984.
69

1,779,450.
62

NPV=(PV-Initial outlay)

1,004,578.
17

STARCOM will start to invest in project one which is Video shooting


because it has higher NPV than the rest and its payback is in 2years and
5mounths.

Then

it

will

be followed

three

which

is

printing

the

photographic
9.5.

EXPECTED RATIOS

The net profit margin for the first 2 years will be


Net profit % =

net profit
x 100%
revenue

Year 1 =

12520000
x 100% =13.2%
95100000
33345000

Year 2 == 175200000 x 100%

= 19%

The return on equity of the business for the first two years will
be
(REO) =

net profit
x 100%
owners equity
12520000

Year 1 = 36270000 x 100% =34.52%


Year 2

33345000

= 69615000 x 100% = 47.9%


32

6,004,578

The expected profitability for the first year will be from 13.2% to
19% and 22.3% which results from an increasing of operating profit in the
consecutive years. Return on Investment (ROI) will also be 34.52% for the
first year 47.9 % for the second year which show the capability of the firm
to pay back the investment of its sources of revenues within the three
years of operation.
b) Efficiency ratios
From the efficiency ratio, the ratio will show the capabilities of assets to
generate sales.

Total asset turnover=


Year 1 =

Year 2 =

9.6.

sales
total asset
95100000
36270000

= 2.62 times

17520000
69615000

= 2.52times

SENSITIVITY ANALYSIS (SA)

Our price set will be determined by the target customers


whom we are going to offer our services. If our prices will be
reflected by them as a fair price, we shall be able to make
more profit to our business due to increase in sales.

As we have overstated the materials costs and other costs the


market situation during the implementation will give us the
actual costs which will either serve some of the costs or
reduce the revenue.

CRITICAL RISK SEGMENT

Expected and potential risks which will affect the business are as
follows
33

Fluctuations in demands due to university holidays

Power cut off

Fluctuations in prices of materials

Unfavorable government regulations like increase in taxes

Rapid change in digital technology

Any unplanned future competition

How the risks are going to managed

Promotion especially persuasive advertising

Service redesign to make it different from our competitors

We shall buy a generator to overcome power cut off

Keep up to date to changes of government regulations that will


affect our business

Focus on devices that will take long time to be affected by rapid


changes in technology

Minimize overhead costs

9.7.

MILESTONE SCHEDULE AND CRITICAL RISK ASSESSMENT

The milestone schedule below will provide investor with the time table for
the various activities to be accomplished.
MILESTONE SCHEDULE
DATES 2012
January 1st

ACTIVITIES

RESPONSIBLE PERSON

All partners
Service design
Sales projection
Establishment
the management
team
Capital structure
Incorporation and
registration of
the business

34

February 15th

March 1st

December 31st to 31st


January 2013

February 1st

March 31st

Market planning
Completion of
service design
Purchases of
business asset
Purchasing of
business
merchandise
Hiring employees

All partners

Opening the
business
Promotion

All partners

Preparation of
book of account
and
determination of
taxable income
for tax purpose
Submission of
tax to the TRA

cashier

Evaluation of the
business
performance
diagnoses the
current and
future trend of
the market.

All partners

Cashier

10.
LIST OF APPENDICES
Appendix: CVs of the partners of the STARCOM PHOTO STUDIO.

35