Makerere University Makerere University Business School

MAKERERE UNIVERSITY MAKERERE UNIVERSITY BUSINESS SCHOOL

FACULTY OF ENTREPRENEURSHIP AND BUSINESS ADMINISTRATION DEPARTMENT OF ENTREPRENEURSHIP

BUSINESS PLAN ON MAKING DECORATIVE FASHION & DESIGN PIECES FROM WASTE CLOTHING MATERIALS

A BSUINESS PLAN SUBMITTED TO MAKERERE UNIVERSITY BUSINESS SCHOOL IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF A BACHELORS DEGREE IN ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT OF MAKERERE UNIVERSTIY

i

Table of contents

Table of contents.........................................................................................................................................ii Executive summary.....................................................................................................................................v Company overview......................................................................................................................................1 1.0

Introduction.....................................................................................................................................1

1.1

Opportunity.....................................................................................................................................1

1.2

Vision..............................................................................................................................................2

1.3

Mission statement............................................................................................................................2

The plenty of choices of house dressing fashions made from waste materials from tailoring workshops and sold at relatively low prices..................................................................................................................2 1.4

Objectives........................................................................................................................................2

Product/service description..........................................................................................................................3 2.0

Introduction.....................................................................................................................................3

2.2

Product/service features...................................................................................................................3

2.3

Product/service benefits...................................................................................................................4

Table 1: Features and benefits.....................................................................................................................4 Market and industry analysis.......................................................................................................................5 3.0

Introduction.....................................................................................................................................5

3.1

Market size and growth...................................................................................................................5

3.2

Target market...................................................................................................................................5

3.3

Industry structure.............................................................................................................................6

3.3.1

Threat of new entrants.................................................................................................................6

3.3.2

Threat of substitute products or services......................................................................................7

3.3.3

Bargaining power of customers (buyers).....................................................................................7

3.3.4

Bargaining power of suppliers.....................................................................................................8

3.3.5

Intensity of competitive rivalry....................................................................................................8 There is limited rivalry within this industry. There are many companies concentrating on satisfying unique market segments with majority diverting towards clothing and textile sectors. This partly explains why there are a number of tailoring workshops for example around market centres. There are only two companies that make decorative fashions but not from waste materials. in addition,

ii

there are a number of similar products present in the country being imported from foreign countries. Some of these include house carpets, door mats and pillows, etc........................................................8 Competitor analysis.....................................................................................................................................9 4.0

Introduction.....................................................................................................................................9

4.1

Competitive environment................................................................................................................9

4.2

Competitor profile...........................................................................................................................9

4.3

Competitive advantage..................................................................................................................10

4.3.1

Competitive advantage matrix...................................................................................................10

Marketing plan..........................................................................................................................................12 5.0

Introduction...................................................................................................................................12

5.1

Target market strategy...................................................................................................................12

5.2

Product/service strategy.................................................................................................................12

5.3

Pricing strategy..............................................................................................................................13

5.4

Positioning.....................................................................................................................................14

5.5

Communication strategy................................................................................................................14

5.6

Channel strategy............................................................................................................................14

5.7

Sales strategy.................................................................................................................................15

5.8

Revenue model..............................................................................................................................15

Operations plan..........................................................................................................................................16 6.0

Introduction...................................................................................................................................16

This section of the business plan covers the Input factors, Production/service delivery process, Quality control, Record keeping and procedures and Billing and collection policies and procedures....................16 6.1

Input factors...................................................................................................................................16

6.1.1

Raw materials and suppliers......................................................................................................16

6.1.2

Equipments................................................................................................................................16

6.2

Production/service delivery process...............................................................................................17

6.3

Quality control...............................................................................................................................19

6.4

Record keeping and procedures.....................................................................................................21

6.5

Billing and collection policies and procedures...............................................................................21

Management plan......................................................................................................................................22 7.0

Introduction...................................................................................................................................22

7.1

Company organization...................................................................................................................22 iii

7.1.1

Staff structure/organization chart...............................................................................................22

7.1.2

Board of advisors.......................................................................................................................22

7.1.3

Company ownership..................................................................................................................23

7.2

Management team..........................................................................................................................23

7.3

Reward structure............................................................................................................................23

Financial plan............................................................................................................................................24 8.0

Introduction...................................................................................................................................24

8.1

Investment requirements................................................................................................................24

The initial investment cost of the business is Uganda shillings 15Milion to start on a small scale and provide for the fixed capital requirements, pre-operating expenses and working capital...........................24 8.2

Financing plan...............................................................................................................................24

8.3

Financial assumptions and projections...........................................................................................24

The business has made a number of assumptions and financial projections as shown below;...................24 8.3.1

Financial assumptions................................................................................................................24

8.3.2

Financial projections..................................................................................................................25

8.4

Financial sustainability strategy.....................................................................................................25

8.5

Risk and opportunity......................................................................................................................26

8.5.1

Risk and opportunity matrix......................................................................................................26

Development plan......................................................................................................................................28 9.0

Introduction...................................................................................................................................28

9.1

The implementation plan...............................................................................................................28

9.2

The Gantt chart..............................................................................................................................29

Appendices................................................................................................................................................30 Appendix 1: Legit Pieces Product Samples...............................................................................................30 Appendix 2: initial investment cost...........................................................................................................31 Appendix 3: initial investment cost...........................................................................................................32 Appendix 4: sales projections....................................................................................................................33 Appendix 5: depreciation schedule............................................................................................................34 Appendix 6: salaries projections................................................................................................................35 Appendix 7: general expenditures.............................................................................................................36 Appendix 8: working capital schedule.......................................................................................................36 Appendix 9: Income and Expenditure Account.........................................................................................37 iv

Appendix 10: income statement................................................................................................................37 Appendix 11: balance sheet.......................................................................................................................38 Appendix 12: Net Present Value...............................................................................................................38

Executive summary Legit pieces is a sole proprietorship business organization located in Luzira – a suburb of Kampala city. It is famous for its scintillating display of unrivaled fashion variety ranging from respectable door mats, house carpets, pillows, nice decorative clothe pieces, wall hangings, rags, and small bags made out of waste materials/clothe pieces from tailoring workshops. According to KCCA, Kampala city generates 800tons of waste per day, 73.8% of which comes from market centres. Tailoring is one of the major dominant economic activities in market centres. it was introduced in Uganda in the eighteenth century by the Europeans, Arabs and Asians and since then it has employed a number of people. In the markets of St. Balikudembe (Owino) market, Nakasero market, Wandegeya market, Nakawa market, Kalerwe market, Down town Kampala, Kasubi, Ntinda, Kitintale, Luzira, Nakulabye and Nabutiti; tailors make, repair, or alter clothing, after which they usually collect and dump the wasted materials that remain unused or cut from the clothing material.this provides an opportunity to recycle these wastes into something to save the environment from pollution. The initial products that will be made will include door mats, house carpets, pillows, nice decorative clothe pieces, wall hangings, rags, and small bags by collecting wastes, washing and drying the materials, sewing and weaving to make products, and embroidering the products according to its design or customer specification. At growth, the business will acquire an advanced textile machinery to introduce embroidery, sweater knitting and garment making to its existing products and services. v

The business targets residential household with its plenty of designs with abstracts to nature, art and illusionary designs carefully blended into harmonious designs that portray personality, style and tranquility. The business desires to be the market leader by offering quality customized products that fuses both African, Arabic and European designs. Our competitive advantage is derived from the most advanced technology in embroidery and fashion designs, producing products at the lowest cost in the industry because we do not buy our major raw material, and Access to highly trained and skilled personnel human resources who have been recruited from an array of professional educational disciplines like Entrepreneurship and small business management, Garment construction, Fine art, Basic design and marketing. They bring to the venture variety of skills in weaving, garment construction, sewing, and business management skills. The business seeks Ushs15Million to start on a small scale and be able to generate incremental revenues worth Ushs79Millions in first year of operation, Ushs91M, Ushs115M, Ushs160M and Ushs250Millions in the second, third, fourth and fifth year respectively.

vi

vii

Company overview 1.0

Introduction

Legit pieces is a sole proprietorship business organization. It is famous for its scintillating fashion designs. It may not match the trendy spots favored by Kampala's affluent, but it presents an unrivaled display of fashion variety ranging from respectable door mats, house carpets, pillows, nice decorative clothe pieces, wall hangings, rags, to small bags, among others. Many Ugandans will for ages come from far and near to Legit Pieces to fill their fashion prescriptions. Here, men, women and children will combine to quench the country's fashion thirst and increasing need for affordable fashions and designs made out of waste materials/clothe pieces from tailoring workshops. Legit Pieces is located in Luzira – a suburb of Kampala city, just along the port bell road. 1.1

Opportunity

The emergence of market centres around major strategic places in Kampala city has attracted a lot of economic activities, notable among them is tailoring. Kampala is the largest city and capital of Uganda. The city is divided into five boroughs that oversee local planning: Kampala Central Division, Kawempe Division, Makindye Division, Nakawa Division and Lubaga Division. Every division has its own markets and each market owns an army of tailors. The most important and crowded of such markets have been St. Balikudembe (Owino) market, Nakasero market, Wandegeya market, Nakawa market, Kalerwe market, Down town Kampala, Kasubi, Ntinda, Kitintale, Luzira, Nakulabye and Nabutiti market among many other markets. Tailoring was introduced in Uganda in the eighteenth century by the Europeans, Arabs and Asians and since then it has employed a number of people. Common thing with tailors in these markets is one; when they make, repair, or alter clothing, they usually collect and dump the wasted materials that remain unused or cut from the clothing material. Kampala city council authority charges them for waste disposal yet they could reuse these wastes to make various products. According to KCCA, Kampala city generates 800tons of waste per day, 73.8% of which comes from market centres with the rest being tree cuttings, glass, metals, and paper.

1

As an alternative of having to suffer the unending plight of environmental downfall because of the poor disposal of tailoring waste albeit other garbage wastes, I am introducing products made from recycling tailoring waste. All the waste generated, instead of being dumped will be used to make fashionable house decorative pieces. 1.2

Vision

An ample supplier of the country's house dressing demands. 1.3

Mission statement

The plenty of choices of house dressing fashions made from waste materials from tailoring workshops and sold at relatively low prices. 1.4

Objectives

i.

To establish a state of the art textile technology for all textile needs by 2020

ii.

To expand market share by 50% within 2016

iii.

To reduce waste from textile industry/garment making by 10% within 2015

iv.

To ensure sustained growth of 20% within a year

v.

To train 500 young men and women on garment making from wasted pieces so that they can create their own jobs within 5 years.

2

Product/service description 2.0

Introduction

This section of the business plan covers the product/service features and benefits. This is as described below; 2.2

Product/service features

The product is fashionable materials made from wastes collected from tailoring workshops. The initial products that will be made will include door mats, house carpets, pillows, nice decorative clothe pieces, wall hangings, rags, and small bags. At growth, the business plans to acquire an advanced textile machinery to introduce embroidery, sweater knitting and garment making to its existing products and services. The products will highly be appreciated for the impeccable finish and stylish look. The variegated designs, shapes and sizes will attract the attention of the fashion conscious youth. Further, we shall provide customized designs as per the specifications of our clients at a competitive market price. Example of such designs may include writings like ‘’welcome’’, ‘’I love you’’, ‘’home is best’’, drawings of animals etc. The products will be durable. They will be made from original materials using the best and most advanced textile technology transferred from China. Once made, the products will be used for a very long period of time (depending on the frequency of use and care by the owner). The products will have alluring and attractive colours. Each item will be made using a combination of colours, well aligned along or across stripes. There are plenty of designs with abstracts to nature, art and illusionary designs. These and more can be carefully blending into harmonious designs that portray personality, style and tranquility. The products will be branded to differentiate it from those of competitors. Two branding options standout that is Standardized branding- with company details (logo, brand name, symbols, catch word,

contacts…)

and,

Customized

branding,

having

information

companies/organizations/individuals well designed on the products.

3

of

the

buying

Our future services to be launched include; Training in the field of textiles and garment construction that encourages entrepreneurial activity. Extensive course portfolio is offered continuously. Advisory Services on business improvement can be obtained from skilled trainers and business owners, who are available for one-on-one consultation. Production Facility, which can be rented, allows entrepreneurs to manufacture their products utilizing state of the art equipment. Raw Materials sought after equipment and spare parts can accessed from a network of suppliers at competitive prices. Research Facility, including an extensive library of books and current periodicals, allows entrepreneurs to gain inspiration on new designs and current trends and Joint Retail and trade show participation allows for products exposure to wide ranging customers. Samples of the products can be found in appendix 1. 2.3

Product/service benefits

The benefits of the products are summarized in the features and benefits table below. Table 1: Features and benefits Features Variety products

Benefits of Variety of uses; ensuring that the whole house is well dressed up. door mats at the door, carpet in the rooms, pillows on beds, nice decorative clothe pieces covering tables and chairs, beautiful hangings on walls, rags, and small bags well designed. Best quality Durability and appearance. The materials will be woven carefully using the best technology to make attractive and durable products which can last the taste of time. Innovativeness Recycling waste. Instead of being left to get wasted, burnt or dumped, the wastes will be brought to best use making usable fashionable products for use. Branding Identification and differentiation. To standout among the crowd, one has to stand up. Our products hence have to be different from the current offer, for us to not only become known but to be recognized as a brand-the new face of entrepreneurs in the country. Low prices Ease of affordability. We do not want to make products and keep. Rather we want to make and sell now, sell more the next day and much more in future. Additional Every business starts with a hope of growing. Once it grows, customers also services increase numbers and needs. The business will therefore add to its existing business embroidery, knitting and garment making as well as trainings to meet the needs of customers.

4

Market and industry analysis 3.0

Introduction

This section of the business plan covers the market size and growth, target market and industry structure. 3.1

Market size and growth

The business is competing for the fashion and design market with emphasis on fashion accessories for homes like door mats, carpets, wall hangings, etc. The world is very receptive to designs and fashions from all over the world. It is the fastest growing industry with many young inspired designers and the legendary ones playing in one market to satisfy the client. There are fashion designs inspired by cultures from all over the world, lifestyle and the like. A fresh look to your home is simple way of portraying style and class and there is no better way to earn this plus than getting interior decoration. Interior designing is an art of using art pieces, prints and a variety of items to make rooms look elegant. Uganda provides a large market size for interior decorations. There are more than 30 large scale interior designers in Uganda with the most outstanding being Nina Interiors, Biplous (U) Ltd, Symbion Uganda Ltd, Decor Plus Ltd, butterfly creations, Esprit Interio ltd, C’Mona decorators, homes ltd, Habitat interiors limited, Interio complex, and Flex impressions among others. Uganda’s population is on the rise. According to the new vision article published on June 23 2013, Uganda’s total population has grown to 37.5 million, translating to about 7.5million households. This therefore provides a large market size for the house decorations. 3.2

Target market

The business’s primary target market is residential households. These customers need plenty of designs with abstracts to nature, art and illusionary designs, carefully blended into harmonious designs that portray personality, style and tranquility. The secondary target market is interior designers. They need unique designs of art pieces, prints and a variety of items to make rooms for their clients look elegant.

5

3.3

Industry structure

The fashion and design (decorative designs) industry has a number of players in different sub sectors. Some are in interior designing, textile and fashion, art and craft, and clothing and textiles. Using micheal porters five forces model, the attractiveness of this industry can be described as follows. Porter five forces analysis is a framework for industry analysis and business strategy development. It draws upon industrial organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. This analysis is associated with its principal innovator Michael E. Porter presently at Harvard University as of 2014.

3.3.1

Threat of new entrants

This industry can attract a lot of entrants. This is because it is very profitable. Every product made is sold, be it now or in future and the products are long lasting. There is freedom of entry and exit. Any firm can enter the industry, make profits or losses and exit easily. There is a low capital requirement for this industry. The materials that are used are almost free of charge because they are considered waste. If sold, they can be so cheap that just shs50,000 can buy as 6

much material as possible. They technology used to make the products is also relatively cheap with the most advanced costing not more than shs5million. There is however high switching costs because if a producer changes line of business, all customers will be lost. There is brand loyalty to established brands. Quality producers always make the best in terms of attracting and retaining more customers. 3.3.2

Threat of substitute products or services

There are many substitute products made locally by other entrepreneurs like Texda, etc, and those industrial products imported from countries like China. The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Door mats, pillows, wall hangings, carpets and others have been made by other companies like Stella atal, textile development agency, and others are imported. Standardization and uniqueness can therefore help young entrepreneurs to beat competition from such products. Making quality and standardized brands can help a business acquire brand recognition and loyalty, which cannot be easily affected by the presence of substitute products. 3.3.3

Bargaining power of customers (buyers)

This industry has many buyers of all age groups. A young boy in the village can decorate his grass thatched house with wall hangings, carpet and door mat; a school going child can grab a pillow; a hostel student at university and any other person can grab a few or more of the products that can be made using waste materials from textile workshops. These buyers can therefore be categorized into local buyers within Uganda and international buyers in case the product is imported. Products from Uganda is easily traded with neighbouring countries like south sudan, and quality hand made products are very attractive to foreigners/tourists who visit the country. These customers however demand for quality products, best customer service and cheap prices. They are very sensitive to prices and the presence of a cheap substitute can easily attract their attention. Their other major determinants of the market demand are the consumer preferences and the related manufacturing costs. A garment company being profitable depends on its operational efficiency plus the ability to make good business deals with the marketers of fashions including those that are in the whole sale or the retail cloth selling business. So as to effectively compete in this industry the business requires skilled as well as intensive labor so as to out compete larger companies in the industry. 7

3.3.4

Bargaining power of suppliers

The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm when there are few substitutes. This industry however has a lot of suppliers of not only machinery, but also labour and the raw materials. The raw materials (waste from textile workshops) for instance can be given out free of charge and in case it is sold, it can attract a very low price. There is a possibility of forward integration where the producing firms can bring textile workshops on board for quick and reliable supply of raw materials. 3.3.5

Intensity of competitive rivalry

There is limited rivalry within this industry. There are many companies concentrating on satisfying unique market segments with majority diverting towards clothing and textile sectors. This partly explains why there are a number of tailoring workshops for example around market centres. There are only two companies that make decorative fashions but not from waste materials. in addition, there are a number of similar products present in the country being imported from foreign countries. Some of these include house carpets, door mats and pillows, etc.

8

Competitor analysis 4.0

Introduction

This section of the business plan covers the competitive environment, competitor profile and competitive advantage. 4.1

Competitive environment

The fashion and design (decorative designs) industry has limited competition, with notable firms including; The Textile Development Agency (TEXDA) Stella Uganda Uganda Plot 9/11/13 Corporation Rise, Bukoto Off Green African Art & Fashion Studio. New Kiira road, at Radio Simba stage

P.O. Box 12259 Kampala (Uganda),

P.O. Box 6346, Kampala Uganda

Plot 474 Old Kiira Rd Kamwokya,

Tel: +256-414-505 958

Tel. +256-312-291655.

Mobile: +256-713-438 732

Mob: +256-772-468131.

email: [email protected] www.texdauganda.net

4.2

Competitor profile

The business has no direct competitors but a few indirect competitors that satisfy customer’s needs with similar products. They include Texda and stella Uganda. The competitor profile matrix below shows the comparison of our offer with those of the competitors.

4.2.1

Competitor profile matrix 9

Attributes

Legit Pieces

The Textile Development Agency (TEXDA)

Waste recycling Product range Standard & customized designs Quality (Durability) Attractiveness Future plans (product/service expansion, etc) Market size Location Prices Target market Distribution channels Management team Operation costs Strategic alliances Company size Profitability

5 5 5 5 5 5 3 5 4 2 3 5 2 4 1 5

3 5 5 5 5 4 5 5 5 5 3 5 5 4 4 5

4.3

Atal Stella Uganda Great African Art Studios 2 5 5 5 5 4 5 5 5 5 3 5 5 4 4 5

Competitive advantage

The business derives its competitive advantage as shown in the competitive advantage matrix shown below. 4.3.1

Competitive advantage matrix

Main

Their strengths over my

Their weaknesses over

My competitive advantage over

compe

business

my business

competitor

titors TEXD

They

A

highest

manufacture quality

the High costs of operations: New

technologies.

hand- they incur huge amounts introducing

the

most

We

are

advanced

woven fabrics, garments of cost in making the technogy that will enable us to make and

interior

designs. products

Their range of superb buy

because

raw

they large quanitities of products to

materials satisfy our target market.

products includes home expensively. decorative

items

like

Cost Leadership: our products are to 10

curtains,

tablecloths, They take too long to be created at the lowest cost in the

cushion covers, napkins make products. This is industry (we obtain raw materials and

placemats,

mention

a

few.

to because

they

use cheaply or free of charge), sold at

Of rudimentary methods of lower prices to generate larger sales

particular note is the production.

margin.

weaving of kikoy from

Differentiation: provide a variety of

long

products, services, or features to

strand

organic

Stella

cotton. They have Original and Limited

Studio

creative

s

products and artifacts and mass-market

pieces

of capacity.

have set up show room at product their

headquarters

Kamwokya-a

in cannot

consumers production Access to highly trained and skilled They

cannot personnel human resources. We a

because meet

Kampala demand.

a

new have recruited the best human they resource who will innovate and large introduce completely new or notably better products or services.

suburb.

Operational Effectiveness: quickest customer

service

distribution network

11

and

advanced

Marketing plan 5.0

Introduction

This section of the business plan covers the Target market strategy, Product/service strategy, Pricing strategy, Positioning, Communication strategy, Channel strategy, Sales strategy and Revenue model. 5.1

Target market strategy

We shall originally sell to individual households; everyone who wants to decorate their rooms or houses; after which we look for interior designers who may use our products to do their jobs. The product is catering to the fashion taste buds of the young, teenage and old generation. Thus, the target market would be based on the age group ranging from 14-45 years of age. These groups shall be low to middle bracket individuals who cannot afford the expensive industrial products imported into the country; most of whom live in Uganda. For long, our target customers have been waiting for new innovations different for what they have been buying. Something African, half western but blended in African cultural designs with stylish finish, looks and colours, something that is environmentally friendly. These customers make buying decisions basing on the nearness to the product outlet. We shall therefore increase the number of stores, where customers can come to the nearest outlet and shop. In future, we intend to include to our existing customer segment, knitting and garment construction for ladies, children and men. This is because they are a large buying segment of such offers. 5.2

Product/service strategy

What makes my works different from the rest of the signers is the simplicity of the designs that makes them attractive. I do hand prints on them which is my trademark and that will make my label "legit pieces" famous in Uganda for many years to come. All products have original African hand print, which makes them appealing to all types and class of people. Some of these products have a western style but with an African finish. I would like to open a one-stop center for art, fashion and interior designing in my capital city-Kampala where all customers can find all our products.

12

Our initial product offer will include; door mats, house carpets, pillows, nice decorative clothe pieces, wall hangings, rags and small bags. Within five years, we shall launch embroidery, knitting and garment making to young men and women because they are a large market for creative designs. 5.3

Pricing strategy

Our pricing strategy is introductory low price to get customers to use. We shall set at a price lower than the eventual market price, to attract new customers with the expectation that customers will switch to the new brand because of the lower price and raise the prices later once the market share is gained. As a result, our pricelist will be as follows; Product

Prices

Door mat

2000

Wall

Carpet

Rag

Pillow

Decorative

hanging

clothe

1000

pieces 1000

20000

500

2000

Small bags

2000

Our pricing strategy makes our products cheaper than those of competitors. The table below shows comparison of our prices and those of competitors Product

Door mat

Wall

Carpet

Rag

Pillow

Decorative

Small bags

hanging

clothe 2000 5000 5000 15000

Legit

2000

1000

30000

500

2000

pieces 1000

pieces Texda Atal Imported

4000 4500 7000+

3000 4000 5000

50000 50000 100000+

1000 1000 1000

5000 5000 10000+

5000+ 5000+ 10000+

13

5.4

Positioning

We are here to quench the country's fashion thirst and increasing need for affordable fashions and designs made out of waste materials/clothe pieces from tailoring workshops. We manufacture the highest quality hand-woven fabrics, garments and interior designs. Our range of superb products includes home decorative items like door mats, house carpets, pillows, wall hangings, table hangings and placemats, to mention a few. To see our fashion designs is to fall in love with them. Our designs, an explosion of colours, unique fabrics, prints and symbols are artistically and visually stimulating. If you want to look unique, fashionable and African, Legit pieces is the way to go. We want to be a recognizable figure on the Ugandan and international art and fashion scene. Our name is Legit because we shall be formally registered to operate in our line of business, and pieces represent the wasted pieces of clothes that we shall assemble using our advanced techniques, skills, creativity and innovation to make fashionable products. 5.5

Communication strategy

The goal of our communication strategy is to increase market share by 50% within a year of operation. The customers will be informed about the availability of our offer through the following means. Outdoor advertising using posters and vehicles, and cinema; we shall organize events like the fashion week and also participate in exhibitions and conferences. We shall struggle to build our brand name and make it known above the rest of competitors. 5.6

Channel strategy

Our products will reach the customers through personal selling and through distributors, wholesalers and retailers. We shall negotiate with Craft shops like Uganda crafts 200 limited, Afriart Gallery, Kampala Uganda, Aid child Gallery, Kampala Uganda, Banana Boat, Kampala Uganda, Classic African Art, Kampala, Uganda, Tulifanya Art Gallery, Kampala, Uganda, Kreations Unique Gifts N Baskets Kampala Uganda, Crafts Village - National Theatre Kampala Uganda, Banana boat among others to be our channel partners and or stock or display our products for customers who visit their premises. We shall also do personal selling at our workshop in Luzira where the customers will come on daily basis to do their shopping.

14

5.7

Sales strategy

We shall sell our products through personal selling by the company sales force. We shall generate leads through; creating a Web site that can capture leads. It will be easy to navigate and have information about your company and its products or services. We shall capture customer information through a form that asks them questions about their needs; promote our business on social network sites like facebook, twitter, skype, etc. Social networking sites are popular with many different types of people. These sites are where people go to connect with others. we shall create a page on these sites to promote our business. When a customer "friends" you or "becomes a fan," all of the people in their network can learn about the company; we shall also promote our business on news sites. We shall write a press release concerning our business and post it on news sites that allow linking to our website. We shall participate in trade shows and fashion shows to showcase our products to potential clients, advertise on local news papers, radio stations and billboards, encourage customer referrals to promote the word of mouth of satisfied clients and look for opportunities to speak at trade shows, conferences and industry events. The sales team will be recruited on merit, trained and compensated according to their efforts. 5.8

Revenue model

The business’s revenue model is shown below; LEGIT PIECES'

Sales projections (Amount in UGX) Price indicators Annual price growth rate Door Mats & Pillows Wall hangings & Decorative pieces Volume indicators Annual volume growth rate Door mats & Pillows Wall hangings & Decorative pieces Annual Sales Door mats & Pillows Wall hangings & Decorative pieces Total sales

Year 1 2,000 1,000 Year 1 26,400 26,400 Year 1 52,800,000 26,400,000 79,200,000

Year 2 Year 3 5% 10% 2,100 2,310 1,050 1,155 Year 2 Year 3 10% 15% 29,040 33,396 29,040 33,396 Year 2 Year 3 60,984,000 77,144,760 30,492,000 38,572,380 91,476,000 115,717,140

15

Year 4 Year 5 15% 20% 2,657 3,188 1,328 1,594 Year 4 Year 5 20% 30% 40,075 52,098 40,075 52,098 Year 4 Year 5 106,459,769 166,077,239 53,229,884 83,038,620 159,689,653 249,115,859

Operations plan 6.0

Introduction

This section of the business plan covers the Input factors, Production/service delivery process, Quality control, Record keeping and procedures and Billing and collection policies and procedures. 6.1

Input factors

The business requires a number of raw materials, equipments and machinery as well as suppliers of those items. This is as shown below. 6.1.1

Raw materials and suppliers

Raw materials Waste materials (clothe pieces) Natural fibres (cotton) Natural textiles (cotton) 6.1.2

Description All clothe waste from tailoring workshops Threads for weaving the fashion designs Quality varieties

Suppliers Market centres Nytil, etc Nytil picfare ltd, Nyanza textile industries ltd, pamba textiles ltd, etc.

Equipments

Equipments Embroidery machine Computer Sewing machine Weaving equipment

Description Computerized Dual core Computerized Full set

Suppliers Indian shops in Kampala Computer Giant, Computer World, etc. Several shops in Kampala Texda, etc.

Premises The business requires a small room that can accommodate the production unit, storage store which can double as show room, and administrative department.

16

6.2

Production/service delivery process

Our production process is continuous and includes the following. 1. Washing and drying raw materials. After the waste materials are collected from the workshops, they will be washed using soap and detergents to ensure they are clean, and dried both naturally through the sun or through a drying machine. 2. Sorting to varieties: after the materials are dry, they are sorted to identify those fit for certain products. For example, the very tiny/small pieces will be put in the category of those for making pillows. 3. Weaving & sewing: Weaving is a method of fabric production in which two distinct sets of yarns or threads are interlaced at right angles to form a fabric. Some products like the carpets, wall hangings and door mats will be woven. The weaving process involves; Winding threads on the warping board, removing the threads by chaining them for portability, the warp is spread and looped around the lease stick for “beaming on” to the loom. The lease stick is pulled around the beam by a hand crank. Warp threads are threaded through heddles and then through a reed used for beating, Beaming onto the back beam or wrapping onto the back beam, Threading through the heddles, Threads inserted in the reed, the weft is the fiber which passes through an open shed and across the warp by shuttle. The shed is open and closed by the lifting of harnesses, Shuttle with bobbin wrapped with weft threads, Foot treadles which operate the harnesses to go up or down, Harnesses are lifted by the treadles they are tied to and by how they are threaded to create patterns. Handlooms can have 4 to 24 harnesses. As the warp shed is closed, the beater pulls the weft thread into place, Harnesses rise which lifts threads and gives a "shed" for the shuttle to pass through, and the beater places the weft in position. The final woven product will bear the beautiful look as shown below.

17

Other products like wall hangings, small bags and cushion/pillow covers will be sown using the sewing machine. 4. Embroidering: the final sewed and woven products will the undergo embroidery to produce the very final products. The embroidery process is possible using an embroidery machine. Its process includes the following. i.

Artwork Stage: During this stage of the embroidery process, our artists go to work creating innovative custom designs to fit each client's needs. They size the artwork to fit the desired garment, and then the client is contacted to finalize the design size, colors, and overall appearance. Once finalized, the design is sent to the embroidery department.

ii.

Digitizing : The embroidery process begins with an idea or a piece of artwork. That artwork then has to be "digitized" which is the specialized process of converting 2 dimensional artwork into stitches or thread. Contrary to popular opinion, you cannot take a particular format of art such as a jpeg, tif, eps, bmp, and convert it to an embroidery tape. The digitizer has to actually recreate the artwork using stitches, meaning, the digitizer is programming the sewing machine to sew a specific design, in a specific color, with a specific type of stitch. This is the process known as digitizing. Also, because embroidery is 3 dimensional, some exciting effects can be included to "spruce up" a normally flat piece of artwork.

18

iii.

Production: Once the artwork has been digitized, it is then ready to be put into production. Production embroidery is a very hands on process. Before the sewing can begin, specific thread colors must be loaded by hand into the machines. A spool of thread for each color for each sewing head must be loaded. The machine itself is programmed by the operator to sew the design in a particular color sequence and a particular sewing speed. The garments must then be "hooped" individually, again by hand, and then loaded into the machine. Once the design has completed sewing, the garment is taken off the machine, un-hooped, and then sent to the next step in the production process and

iv.

Finishing: After the garments have been sewn, they go through the finishing process. During this step, the garments are inspected for quality, individually trimmed of excess backing material and excess threads, then folded and packaged ready for the end user.

The production process can be illustrated as shown below;

Washing &

Sorting

Weaving &

drying

Embroidery

sewing

Final product

Recycling

6.3

Quality control

Legit pieces intend to ensure that its products maintain the highest level of quality through the following; Use of affordable but high quality raw materials (waste materials) obtained locally in markets like Owino, Nakawa, etc. these materials will be cleaned, washed and sorted to make sure they are of good grades. We shall Use of advanced machinery for quality production. The company will acquire an embroidery machine which will be imported from India. This machine

19

Employ relatively cheap but highly skilled, knowledgeable, experienced and qualified team of young entrepreneurs with hands on skills training in fashion design, industrial fine art, basic designing, technical drawing, marketing and business administration. Regular supervision of the production process to ensure that all processes function properly, encouraging specialization and rotations of workers during the operations of the processes as and when needed, Inspection of finished products to ensure that every product is examined visually to fine detail before the product is sold into the external market. Inspectors will be provided with lists and descriptions of unacceptable product defects such as cracks or loose clothe finishes, etc. Ensure general cleanliness of the workplace by assigning tasks to cleaning officers to regular sweeping and dusting of the production place and furniture , washing hands off the dyes and pigments after each use, Regular repair and maintenance of production machinery, tools and equipments through servicing, greasing, repair and replacement of worn out parts… Making quality one of core values pinned along with other wall hangings where they can be read easily by the workers. To produce quality products, we shall base on one principle ‘’have we liked what we have made’’, ‘’would we buy it if we didn’t make it’’, etc. Proper handling and storage of raw materials and finished products in a well aerated/ventilated and moisture free rooms. Recycling of damaged products to make better ones and Benchmarking on competitors products so as to continue improving ours. Put in place the best customer service mechanism. We shall carryout customer acceptance sampling. Surveys and questionnaires will be used to obtain such feedback and also identify areas of improvement.

20

6.4

Record keeping and procedures

The Accountant will maintain and update the records. These may include records of employees, customers, suppliers, taxing authority, invoices, bank statements, taxes, receivables, payables, among others. The Accountant prepares the monthly financial statements and forwards it to the Executive Director for approval. This may take not more than two days. These will be prepared monthly and kept until the final year financial statement is extracted. Payroll is processed semimonthly and is run and distributed by the 19th and 4th of each month. The Executive Director forwards approved timesheets to the Accountant at the end of each period.

6.5

Billing and collection policies and procedures

Sales will be recorded as revenue in the period received or the period in which a pledge is received. Purchase requisitions may be generated by anyone in the office. The requisitions are turned in to the General Manager for approval and given to the office assistant for order placement. The approved purchase requisitions are given to the Accountant and filed in the open order file. When the goods or services are received, the Accountant pulls the purchase requisition and compares the order received to the packing slip and the purchase requisition for accuracy. The packing slip is attached to the purchase requisition and returned to the open order file until the invoice is received. Invoices are paid on the 1st and the 15th of each month. Prior to generating checks, a pre-check report is generated which lists all outstanding payables with the due dates and amounts. Late payments are not tolerated and incentives are given to entice early payments.

21

Management plan 7.0

Introduction

This section of the business plan covers the company organization and the management team. 7.1

Company organization

7.1.1

Staff structure/organization chart

ADVISORS

GENERAL MANAGER

PRODUCTION MANAGER

ACCOUNTS ASSISTANT

DESIGNERS

7.1.2

MARKETING MANAGER

SALES TEAM

Board of advisors

The company will hire two advisors who will be on its board. They will be distinguished persons with adequate experience, skills and knowledge on clothing and textiles to ensure that the project is carried out in a professional and ethical manner. The business owner is still head hunting these two persons. Their role will include among others; meet periodically to offer advice and direction to a company, to guide them on sensitive issues, assist research teams and other groups, offer useful suggestions based upon research and experience, Advise and assist the business in shaping its goals, strategies, and priorities and assessing its programs and progress in relation to established goals, priorities, and criteria.

22

7.1.3

Company ownership

The company will be owned by one person, the founder Ms. Rhonete Agasha. 7.2

Management team 1. Business owner/General Manager The business General Manager will be the owner of the business; Ms. Ronete……….. Her duties will include among others; 2. Production managers. a) Garment construction b) Fine artist/Basic design

7.3

Reward structure

The organization intends to put in place one of the best reward systems that will build a better employment deal, hold on to good employees and to reduce turnover. This will include Extrinsic rewards like Bonuses, Salary raise, Gifts, Promotion and Other kinds of tangible rewards, as well as intrinsic rewards like Information / feedback, Recognition, Trust, Relationship and Empowerment. The business’s salary structure is shown in appendix 6.

23

Financial plan 8.0

Introduction

This section of the business plan covers the Investment requirements, financing plan, financial assumptions and projections, financial sustainability strategy and Risk and opportunity. 8.1

Investment requirements

The initial investment cost of the business is Uganda shillings 15Milion to start on a small scale and provide for the fixed capital requirements, pre-operating expenses and working capital. 8.2

Financing plan

The investment requirements will be financed by personal savings and contributions from friends and family, sharing 60:40 contribution ratios respectively. 8.3

Financial assumptions and projections

The business has made a number of assumptions and financial projections as shown below; 8.3.1

Financial assumptions

General assumptions are shown in appendix 2. Capital expenditures: the company will acquire a number of fixed assets for its operations including among others machines, tools, and equipment. See appendix 3 for more details. Funding: the funds are from both equity sources. See appendix 3 for more on such sources of funds. Revenue forecasts: The revenue forecasts for the business will consider 265 working days, production target of 26,000 door mats and pillows as well as 26000 wall hangings and decorative pieces per year as shown in appendix 4. Depreciation plan: with the assets above, we intend to follow straight line depreciation policy and depreciation rates as follows; 20% for building, 20% for machinery and equipment, 25% for motor vehicle, 12% for furniture and 33% for computer. See appendix 5 for more details.

24

Salary: very attractive Salary projections have been designed to attract and retain quality human resources. See appendix 6. Other expenses: the company has extracted a list of other expenditures (indirect costs of materials, labor, and so on). See appendix 7. Working capital: the company’s extracts of inventory, accounts receivable, and accounts payable have also been shown in appendix 8. 8.3.2

Financial projections

Income & expenditure a/c: Our projections show a surplus for the next five years of business operation, growing at an annual rate of 5%. See appendix 9. Cash flows: The Company’s cash balances (cash at hand) are sound and promising. See appendix 10 for more information. Financial position: The projections show an annual financial strength of the company, which stretches throughout the five years and beyond. See appendix 11for more details. Break even analysis: the business breaks even in the fourth month of its operation. See appendix 12 for details. 8.4

Financial sustainability strategy

Setting revenue target: the business will set itself to generate at least shs100, 000 per day on sale of its products. This will enable it to take care of its expenses and remain with substantial amounts of profits. Reinvesting profits: the profits that will be accumulated will be reinvested in the business to expand branches, add units, repair and maintain the equipments, or even replace the worn out equipments. Expansion to diversify income: the business will diversify its sources of income by introducing activities like trainings on embroidery, designs and knitting. This is expected to generate a lot of money which can enable the business to survive for long.

25

Events: the business will organize events like community cleanups, charity runs, donation drives, etc which will attract sponsors. This can enable the business to earn some money. Request for subsidies from government: since we are helping to implement government programme of environmental conservation, we stand a chance of getting donations and subsidies like tax holidays, among others. 8.5

Risk and opportunity

Like any other business, Legit pieces is susceptible to a number of risks as well as quiet a handful of opportunities. This is shown in the risk and opportunity matrix below; 8.5.1

Risk and opportunity matrix

Risk/opportunity

Potential

Prevention/capitalizing

impact Risks Competition from imported products Extreme

Lobby for government support of the

from countries like china, India and

fashion industry designers. This can be

Kenya. Some of these products are

by restricting entry of products that are

second hand products which are so

locally available.

cheap. Customers belief that artistic designs High

We shall inform them that they are

made locally are expensive

buying something original and of

High taxes on young entrepreneurs and High

quality. Request the government to reduce taxes

their products, some of which do not

on fashion accessories that are not

consider the size of the business and the

available in Uganda yet they help in the

level of profitability

production. Also lobby for tax holidays

Artist’s rights were being violated by Extreme

and subsidies from the government. Suing company (ies) that used and

business people and because most artists

duplicated our works and sold them to

don't have money to pay lawyers. Equipment and machinery break down, High

the market without our permission. We shall purchase advanced machinery

due to over use, end of useful life, etc.

that have been tested for good results and 26

for

long

working

hours;

accompanied by a guarantee from High costs of operations like costs of High

manufacturers. Cut costs on areas that do not bring in

labour, staff welfare, transportation, fuel,

enough revenue and avoid unnecessary

advertising, etc. Failure to reach sales and revenue Low

costs unless it is so relevant. Revive our advertising strategies,

expectations

reduce

prices

and

stimulate

our

distribution mechanisms. Opportunities Indigenous knowledge on clothing and Extreme

Innovate our products basing on the

textile in Uganda. Clothing and textile is

already existing knowledge and blend it

something that has been practiced by

with the techniques of western world to

even our forefathers. Large number of interior designers, more High

make fashionable products. Partner with them to supply them with

than 30 in Uganda Presence of tertiary institutions offering Extreme

our products Solicit for technical and professional

courses

support so as to produce quality

on

textile

and

garment

production. Like Kyamb ogo university Government bodies trying to ensure High

products. Partner with them to conserve the

environmental sustainability

environment.

Availability of business experts from Extreme

NEMA, etc. Tap into their wealth of knowledge,

Makerere University Business School for

information and experience to succeed.

instance the entrepreneurship centre, and

Ask for opportunities to show case our

Department of Entrepreneurship.

products in events organized by them. S

This

include

Development plan 9.0

Introduction

This section of the business plan covers the implementation plan and the Gantt chart.

27

KCCA,

9.1

The implementation plan

The business’s action plan is broken down using the work breakdown structure as shown below; WORK BREAKDOWN STRUCTURE ACTIVITY TIME PERSONS RESPONSIBLE Feasibility study & analysis Business planning & documentation Ordering for machinery, tools and equipments Renovation of the premises Installation of machinery & equipments,

FRAME 2 months 1 month 1 month 1 month 1 month

General Manager General Manager General Manager Outsourced team Outsourced team

furniture, utilities, etc. Hiring human resource Training human resource Register the business Open and launch company website Look for potential distributors, wholesalers and

1 month 1 month 1 month 1 month 1 month

General Manager Outsourced team General Manager General Manager General Manager

retailers. Print & distribute advertising items like Continuous

General Manager

posters, fliers, business cards, etc. Sample production & customer feed back Full scale production Customer service, publicity, etc. Acquire a trademark

Production manager Production manager Sales force General Manager

9.2

1 month Continuous Continuous 1 month

The Gantt chart GANTT CHART

ACTIVITY Feasibility study and analysis Business plan Ordering for machinery, tools and equipments Renovation of the premises Installation of machinery & equipments, furniture, utilities, etc. Hiring human resource Training human resource Register the business Open and launch company website 28

MILESTONES (MONTHS)

Look for potential middlemen like retailers etc. Print & distribute advertising items like posters, etc. Sample production & customer feed back Full scale production Customer service, publicity, etc. Acquire a trademark

29

A

M Ju Ju A

S

O

N

D

pr

a

u

ep ct

o

e

il

y

g

t

v

c

n

l

Appendices Appendix 1: Legit Pieces Product Samples

30

31

Appendix 2: initial investment cost LEGIT PIECES' Financial Assumptions Note 1

Note 2

Note 3

Note 4

Note 5

Note 6

Number of operational days in a year 264 Number of months in a year 12 Corporation Tax 30% Discount Factor 30% Capacity indicators Capacity (Volume in units) per day/week, etc Door mats & Pillows 100 Wall hangings & Decorative Pieces 100 Depreciation policy Buildings 20.0% Machinery & Equipment 20% Motor Vehicles 25% Furniture, Fixtures 12% Computers 33% Working capital requirements Inventory purchases 0 Debtors - 1 months' revenue 1 Creditors 1 month's expenses (Excluding salaries) 1 Cost indicators % of revenue Power & lighting 1.20% Water 2.50% Airtime, telephone bills 2.30% Transportation 3.00% Admin Expenses 4.00% Business Promotion (advertising, etc) 1.80% Maintenance & Repairs 3.70% Cleaning 2.00% Financing Personal savings 50.00% Friends & family 30.00% Underutilised Assets 20.00% Total 100%

32

sln sln sln sln sln days month month

Appendix 3: initial investment cost

LEGIT PIECES'

Initial Investment (start up costs) (Amount in UGX) Investment Item Amount Fixed Assets: Year 0 Land & Building (underutilised) Land & site development 400,000 Total Land & building Machinery & Equipment: Equipment (Weaving, etc) 500,000 Machinery (Embroidery & Sewing)5,500,000 Total Machinery & Equipment Motor Vehicles: Delivery Van 5,000,000 Total Motor Vehicles Furniture & Fittings (donated) Furniture & fittings 500,000 Total Furniture, fittings & others Computers (donated) 500,000 Pre- Operating Expenses Plant layout 200,000 Legal costs 300,000 General expenses 100,000 Total pre- operating expenses Working Capital Total Investment cost Financing structure Personal savings 50.00% Friends & family 30.00% Underutilsed Assets 20.00% Total

33

400,000

6,000,000

5,000,000

500,000 500,000

600,000 2,000,000 15,000,000 7,500,000 4,500,000 3,000,000 15,000,000

Appendix 4: sales projections

LEGIT PIECES'

Sales projections (Amount in UGX) Price indicators Annual price growth rate Door Mats & Pillows Wall hangings & Decorative pieces Volume indicators Annual volume growth rate Door mats & Pillows Wall hangings & Decorative pieces Annual Sales Door mats & Pillows Wall hangings & Decorative pieces Total sales

Year 1 2,000 1,000 Year 1 26,400 26,400 Year 1 52,800,000 26,400,000 79,200,000

Year 2 Year 3 5% 10% 2,100 2,310 1,050 1,155 Year 2 Year 3 10% 15% 29,040 33,396 29,040 33,396 Year 2 Year 3 60,984,000 77,144,760 30,492,000 38,572,380 91,476,000 115,717,140

34

Year 4 Year 5 15% 20% 2,657 3,188 1,328 1,594 Year 4 Year 5 20% 30% 40,075 52,098 40,075 52,098 Year 4 Year 5 106,459,769 166,077,239 53,229,884 83,038,620 159,689,653 249,115,859

Appendix 5: depreciation schedule LEGIT PIECES'

Depreciation schedule (Amount in UGX) Year 0 Building Opening cost Additions Depreciation Net Book Value MACHINERY AND EQUIPMENT Opening cost Additions Depreciation Accumulated Depreciation Net Book Value MOTOR VEHICLES Opening cost Additions Depreciation Accumulated Depreciation Net Book Value FURNITURE Opening cost Additions Depreciation Accumulated Depreciation Net Book Value Computers Opening cost Additions Depreciation Accumulated Depreciation Net Book Value TOTALs Opening cost Total Additions Total Depreciation Total Accumulated Depr Total Net Book Value

Year 1

Year 2

Year 3

Year 4

Year 5

400,000 -

400,000

400,000

400,000

400,000

400,000

400,000

400,000

400,000

400,000

400,000

400,000

6,000,000

6,000,000

6,000,000

6,000,000

6,000,000

6,000,000

6,000,000

1,200,000 1,200,000 4,800,000

1,200,000 2,400,000 3,600,000

1,200,000 3,600,000 2,400,000

1,200,000 4,800,000 1,200,000

1,200,000 6,000,000 -

5,000,000

5,000,000

5,000,000

5,000,000

5,000,000

5,000,000

1,250,000 1,250,000 3,750,000

1,250,000 2,500,000 2,500,000

1,250,000 3,750,000 1,250,000

1,250,000 5,000,000 -

5,000,000 8,000,000 3,250,000 8,250,000 4,750,000

500,000

500,000

500,000

500,000

500,000

500,000

60,000

60,000

60,000

60,000

60,000

500,000

500,000

500,000

500,000

500,000

500,000

500,000

500,000

500,000

1,500,000

500,000

165,000 165,000 335,000

165,000 330,000 170,000

500,000 1,000,000 495,000 825,000 675,000

495,000 1,320,000 180,000

1,500,000 1,000,000 825,000 2,145,000 355,000

12,400,000 12,400,000

12,400,000 2,675,000 2,615,000 9,785,000

12,400,000 2,675,000 5,230,000 7,170,000

12,400,000 1,000,000 3,005,000 8,175,000 5,225,000

13,400,000 3,005,000 11,120,000 2,280,000

13,400,000 9,000,000 5,335,000 16,395,000 6,005,000

20%

20%

25%

12%

33%

35

Appendix 6: salaries projections LEGIT PIECES'

Salaries projections (Amount in UGX) Number of staff Category General Manager Production Manager Accounts Assistant Marketing Manager Designers & Driver Sales representative

Year 1

Salary rate per month Annual increase in rate per year General Manager Production Manager Accounts Assistant Marketing Manager Designers & Driver Annual salary amount

Year 1

General Manager Production Manager Accounts Assistant Marketing Manager Designers & Driver Total annual salary

Year 2

Year 3

Year 4 1 1 1 1 3 3 10 Year 4 7% 893,183 595,455 357,273 297,728 238,182

Year 5 8% 964,637 643,091 385,855 321,546 257,237

10,718,190 7,145,460 4,287,276 3,572,730 2,858,184 22,150,926

11,575,645 7,717,097 4,630,258 3,858,548 3,086,839 23,923,000

1 1 1 1 3 3 10

1 1 1 1 3 3 10

750,000 500,000 300,000 250,000 200,000

Year 2 5% 787,500 525,000 315,000 262,500 210,000

1 1 1 1 3 3 10 Year 3 6% 834,750 556,500 333,900 278,250 222,600

9,000,000 6,000,000 3,600,000 3,000,000 2,400,000 18,600,000

9,450,000 6,300,000 3,780,000 3,150,000 2,520,000 19,530,000

10,017,000 6,678,000 4,006,800 3,339,000 2,671,200 20,701,800

36

Year 5 1 1 1 1 4 5 13

Appendix 7: general expenditures LEGIT PIECES'

General Expenditure projections (Amount in UGX) General expenses Power & lighting Water Airtime, telephone bills Transportation Admin Expenses Business Promotion (advertising, etc) Maintenance & Repairs Cleaning Total General expenses

% of sales revenue Year 1 Year 2 Year 3 Year 4 Year 5 1.20% 950,400 1,097,712 1,388,606 1,916,276 2,989,390 2.50% 1,980,000 2,286,900 2,892,929 3,992,241 6,227,896 2.30% 1,821,600 2,103,948 2,661,494 3,672,862 5,729,665 3.00% 2,376,000 2,744,280 3,471,514 4,790,690 7,473,476 4.00% 3,168,000 3,659,040 4,628,686 6,387,586 9,964,634 1.80% 1,425,600 1,646,568 2,082,909 2,874,414 4,484,085 3.70% 2,930,400 3,384,612 4,281,534 5,908,517 9,217,287 2.00% 1,584,000 1,829,520 2,314,343 3,193,793 4,982,317 16,236,000 18,752,580 23,722,014 32,736,379 51,068,751

Appendix 8: working capital schedule

LEGIT PIECES'

Working capital schedule (Amount in UGX) Working capital requirements Year 0 Year 1 Year 2 Inventory 13,000,000 17,000,000 Debtors - 1 months' revenue 6,600,000 7,623,000 Creditors 1 month's expenses (Excluding salaries) 16,236,000 18,752,580 Net Working Capital 2,000,000 3,364,000 5,870,420 Incremental Working Capital

2,000,000

1,364,000

37

2,506,420

Year 3 23,000,000 9,643,095 23,722,014 8,921,081

Year 4 33,000,000 13,307,471 32,736,379 13,571,092

Year 5 50,000,000 20,759,655 51,068,751 19,690,904

3,050,661

4,650,011

6,119,812

Appendix 9: Income and Expenditure Account

LEGIT PIECES'

Income and Expenditure Account (Amount in UGX) INCOME Total Sales Other income (Training, etc Less: EXPENDITURE Salaries Depreciation General expenses Net profit before interest and tax Net profit before tax less: tax 30% Net profit (loss) after tax Retained earnings

Year 1

Year 2

Year 3

Year 4

Year 5

79,200,000 2,000,000

91,476,000 200,000

115,717,140 2,000,000

159,689,653 2,000,000

249,115,859 3,000,000

18,600,000 2,675,000 16,236,000 43,689,000 43,689,000 13,106,700 30,582,300 30,582,300

19,530,000 2,675,000 18,752,580 50,718,420 50,718,420 15,215,526 35,502,894 66,085,194

20,701,800 3,005,000 23,722,014 70,288,326 70,288,326 21,086,498 49,201,828 115,287,022

22,150,926 3,005,000 32,736,379 103,797,348 103,797,348 31,139,204 72,658,144 187,945,166

23,923,000 5,335,000 51,068,751 171,789,108 171,789,108 51,536,732 120,252,375 308,197,542

Appendix 10: income statement LEGIT PIECES'

Cashflow statement (Amount in UGX) Year 0 Cash Inflows Opening cash balance Personal savings Friends & family Underutilsed assets Sales Total Inflows Cash Outflows Pre-operating Expenses Capital Expenses Working Capital Operating expenses Loan repayments Total Outflows Closing cash balance

Year 1

Year 2

Year 3

Year 4

Year 5

(1,200,000)

60,400,000

132,617,000

221,761,465

346,064,728

79,200,000 78,000,000

2,000,000 91,476,000 153,876,000

200,000 115,717,140 248,534,140

2,000,000 159,689,653 383,451,118

2,000,000 249,115,859 597,180,587

1,364,000 16,236,000 17,600,000 60,400,000

2,506,420 18,752,580 21,259,000 132,617,000

3,050,661 23,722,014 26,772,675 221,761,465

4,650,011 32,736,379 37,386,390 346,064,728

6,119,812 51,068,751 57,188,563 539,992,025

7,500,000 4,500,000 3,000,000

15,000,000 600,000 13,600,000 2,000,000

16,200,000 (1,200,000)

38

Appendix 11: balance sheet LEGIT PIECES'

Balance sheet (Amount in UGX) ASSETS: Non current assets Net non current assets Current assets Inventory Debtors Cash Total current assets Total Assets Equity and Liabilities Equity & reserves Capital Retained Reserves Owners Equity Current Liabilties Accruals Creditors Total current liabilities Total Equity & Liabilities

Year 1

Year 2

Year 3

Year 4

Year 5

9,785,000

7,170,000

5,225,000

2,280,000

6,005,000

13,000,000 6,600,000 60,400,000 80,000,000 89,785,000

17,000,000 7,623,000 132,617,000 157,240,000 164,410,000

23,000,000 9,643,095 221,761,465 254,404,560 259,629,560

33,000,000 13,307,471 346,064,728 392,372,200 394,652,200

50,000,000 20,759,655 539,992,025 610,751,680 616,756,680

15,000,000 30,582,300 45,582,300

15,000,000 66,085,194 81,085,194

15,000,000 115,287,022 130,287,022

15,000,000 187,945,166 202,945,166

15,000,000 308,197,542 323,197,542

27,966,700 16,236,000 44,202,700 89,785,000

64,572,226 18,752,580 83,324,806 164,410,000

105,620,524 23,722,014 129,342,538 259,629,560

158,970,655 32,736,379 191,707,034 394,652,200

242,490,387 51,068,751 293,559,138 616,756,680

Appendix 12: Net Present Value

LEGIT PIECES'

Net Present Value computation Year 0 Cashflows Initial Investment Net Cashflows Discount factor Present Value NPV IRR

Year 1

Year 2

Year 3

Year 4

Year 5

60,400,000 60,400,000 0.769 46,461,538

132,617,000 132,617,000 0.592 78,471,598

221,761,465 221,761,465 0.455 100,938,309

346,064,728 346,064,728 0.350 121,166,881

539,992,025 539,992,025 0.269 145,435,552

15,000,000

30%

15,000,000 1.000 15,000,000 507,473,878 503%

39