Noble Ketchup Manufacturing Company Business Plan

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Executive Summary

Noble Ketchup Manufacturing Company, which is a partnership business specializing in the manufacture of ketchup sauce in UAE. The business is co-owned by Parmenas and Cynthia. The company’s objectives include improvement of inventory turnover by at least 12% in the first year of operation, and to maintain high quality products at affordable prices. It also aims at increasing the percentage sales by 20% in two years of operation. The company is located is a densely populated area, which will give is a competitive advantage over its competitor since it will have less expenses in marketing. In addition, the owners have reliable experience to ensure that the products are consumed in the whole of UAE.

Noble Ketchup focuses a cash balance of $ 6,982,000 every year, and a total sales of $18,000,000 in the first year. At the end of the first year, the company hopes to improve its inventory by 12%, alongside an increase in the percentage sales by 20% in two years of operation.

Business Overview

History of the Company

Noble Ketchup Manufacturing Company (NKMC) will be started in 2016 to focus on the development, manufacturing and marketing of highly cost effective tomato ketchup. It will be located in the Alqurm region in United Arab Emirates (UAE) and at a strategic place where it will be in a position to serve a large population. This business will be a partnership, and it is expected to be profitable since any time taken in consultation will be shortened and the partners can make prompt decisions. It is a manufacturing company, thus will operate throughout to ensure constant production of goods, with employees reporting to work in shifts.

The founder of Noble Ketchup Manufacturing Company is Parmenas Kisel, who has a master’s degree in business administration and a bachelor’s degree in hospitality and hotel management. With the founder’s competence in operations, the business is expected to gain a competitive edge above its competitors due to its strategic location, as well as the quality of products to be produced. The company will carry out training and development programmes from time to time to ensure that its employees are up to date with any developments in the industry. With such training, both the employer and the employees will gain the relevant knowledge to improve on the quality of goods and the service provision of the company. The company is thus likely to succeed with various benefits going to the partners, hence enabling them to plan for future expansion and growth. However, success will also be determined by the agreements made between suppliers, distributors, and customers and the company, as well as the strategies set in place for implementations.

Company’s Mission and Vision

Noble Ketchup Manufacturing Company is a manufacturing company that will use agricultural products and believes that there is a great power in processing of local farm products to manufacture products for local and international consumption. The mission of the company is to make the production of tomatoes a profitable and sustainable business for farmers in UAE. This company will give customers the perfect product at a very reasonable and cost friendly price. It will focus on creating a suitable atmosphere for expression and promotion of creativity by different stakeholders. The vision of the company is to be the leading manufacturer of ketchup in UAE, commanding the largest market share.

Key Initiatives and Objectives

Some of the key initiatives of the company include the improvement of inventory turnover by at least 12% in twenty four months of operation and to maintain high quality products at affordable prices. It also aims at increasing the percentage sales by 20% in two years of operation. In addition, the organization has a plan to modernize the entire production line and expand its production to cater for three extra products. Lastly, it aims at reducing its debts, retain some earnings and provide some benefits such as profit sharing, dental plan, and medical plans to all its employees.

Ownership and Management

The business will be owned and managed by Parmenas Kisel and Cynthia Mulley. Parmenas has a master’s degree in business administration and a bachelor’s degree in hospitality and hotel management, while Cynthia masters’ degree in human resource management, and a diploma in food sciences.

Location and Facilities

The company chose Alqurm region as its geographical location due to the availability of different nationalities such as Arabs and Asians among others who live in the region. Although there are various differences among these people such as on language, tradition, and cultures, they all use common tomato products in their meals. It will help in the satisfaction of customer needs through the provision of excellent, high quality, and cost effective products (Ancarani 33). The design of the company will help to attract and retain loyal customers who will help in its profitability.


Description of Products

The main products of Noble Ketchup Manufacturing Company will be ketchup sauce. The company will use vinegar and tomatoes from local farmers to make the ketchup for both local and international consumption. NKMC has an objective of selling unique and high quality products for purposes of remaining competitive in the market. The quality of products available for sale will help it in building a good reputation in the market. NKMC will focus on the sale of ketchup for both retailers and wholesalers in the region. It will work hard to ensure customers’ confidence, reliability, and loyalty. It will further ensure its clients are assured of satisfactory delivery service, while ensuring job security to its employees. With such assurance, the retailers and wholesale business owners will also be in a position to serve their customers well and offer ensure brand reliability and efficiency.

Achievement of the Services provided by the Company

The company plans to get several benefits through the provision of its services to customers. The quick services to be provided by the company during the first year of operation are expected to develop a strong customer base. The organization plans to gain customer service efficiency through training its employees, both new and the existing. Such training will help to provide the necessary knowledge and skills for purposes of developing the career further. In addition, NKMC will start operating based on the fact that customers have a strong value for prompt feedback as it helps in demonstration of professionalism in the organization. Due to the fact that conflicts may be beneficial or detrimental, the company will come up with conflict management and resolution strategies. Such strategies help in the identification of problems and taking corrective actions on issues affecting customers that may reduce the sales of the company. Lastly, a record of the Do’s and Don’ts of the company is very important as it directs employees during their service provision to the customers.

Future products

NKMC has the intention of starting a full line of tomato products to meet the needs of the people in the manufacturing industry. In connection with that, there will be an automation of some manufacturing operations to reduce the amount of labor needed in the starting the business. It thus expects to get more customers by the end of its first year in operation due to the coverage of a wide range of products after its expansion. Since the company’s marketing strategies encourage creativity and innovation, the management has a key concern on the future development of its products. As a result, the management will invest a lot of money and time in research and development to establish the changing customer needs and preferences. Such research is also significant as it helps them in tracking their competitor developments as well as any slight advancement in technology.

Comparative Advantages of the Company

The company will rely greatly on technology and the system of activity-based costing in the place of time-based system. With such a system, it will be able to retain competitive prices in the market and get high profits. The efficiency of the system and the technology used will offer the company different benefits such as design capability, low cost, and high speed (Tapp and Hughes 296). In the long-run, these advantages will help in the definition of Noble Ketchup Manufacturing Company as the leader in the industry. The products offered are also prevented from replication by competitors, ensuring that the product will always be unique in the market. This uniqueness will give the company a lot of favor to remain at top in the market. The company thus aims at satisfying the needs of individuals who seek the healthiest and freshest ketchup they can ever get in the market. The company will further use a unique packaging for easy recognition by customers. These strategies are suitable selling point that will ensure that all customers who visit the company for ant product are satisfied and come back for more (Smith 6).

Market, Sales Analysis Strategy & Plan

NKMC will focus only on the use of internal sales personnel with the relevant qualifications and extensive knowledge on product training. They will work towards the satisfaction of the needs of the customers. During the first year in operation, the vice president of the marketing team and the chief executive officer of the company will work hand in hand. This team-working will help the company to ensure successful establishment of customer trust and loyalty. The personnel in the sales department may also work in groups and ensure establishment of good relationship with customers. They will be compensated with standard base salaries and rewarded with quarterly bonuses that will act as motivation tools. They will further be expected to submit reports on a weekly basis about the already established customer contacts and their plans on how to attend to their needs. It will be a requirement for the team to provide objectives twice every year to be reviewed together with their actual budgets.

For quality service provision, the sales personnel will be expected to ensure professionalism in their approach of situations and in appearance. These should be the guiding principles for the NKMC sales force. Thorough knowledge of the needs of customers, NKMC products, and the products of their competitors will be strengthened through the use of sales meetings.


Competencies are the strengths of an organization that give it a competitive advantage above its competitors (Golfetto and Gibbert 904). Any organization needs to identify its key competencies such as internal strengths. In this case, there will be a need for the company to invest on those capabilities that customers give value. NKMC will rely on innovation as one of its competencies that will make it prosper and become bigger than old companies. This is because innovation helps companies in coming up with new ideas on how to develop their product, as well as sell it for maximum profitability (Tapp and Hughes 284). Since the company has quality as one of its goals, it will use its qualified employees and the management to increase its performance and reliability. High quality products may just be a breakthrough for the company to take over market leadership. However, this may come after incorporating quality in all manufacturing stages because the customers expect any new company to offer better quality products that existing ones. If the company earns a good reputation from its customers due to quality products and excellent services, it will be in a position to enjoy customer loyalty and competitiveness in the market.

NKMC will ensure efficiency, as well as the ability to make savings in terms of time and money as its success measure. The company will not risk losing some of its customers to competitors but will always work towards attracting new customers. NKMC will further enter into neglected markets where competitors have not yet reached. This will be through the use of strategic flexibility since the changing customer needs may even be hard for multi-national companies to fulfill. Therefore, for the company to get a competitive advantage, it will integrate its capabilities with its core competencies for all the stakeholders to benefit.

Customers/ Demographics

NKMC is located in a highly populated area. This will ensure that the company serves a large number of customers. UAE has the largest market for tomatoes and tomato products. In addition, the region is the biggest dealer of food products and the company may benefit since the ketchup is used in foods. The population further increases due to high numbers of tourists and business people who visit it. The region further is suitable for the business due to its well-developed infrastructure, strong business orientation, and large trade zones. For these reasons, the area attracts many people. As such, the main customers of NKMC will be tourists, hotel owners, and locals. In the future, the company will focus on export trade to cover international markets that have showed an increasing demand of spicy tomato sauce. The consumption of packaged food in UAE is estimated at above 45.5%, which translates to about $3.9 billion annually.


Geography plays a significant role in a company’s sales forecast. It helps the concerned company to segment the potential market. In the case of NKMC, geography and the business location complement one another. In this case, the climate in the UAE may sometimes be hot thus the marketing team may use other criteria such as market size or density. In addition, such climatic conditions are favorable for the production of tomatoes. This ensures that there is constant supply of tomatoes to the company for the manufacture of ketchup.


Market segmentation is important in that it gives organizations reliable demographic data that can be used to predict the buying patterns of customers. The company will target customers ranging between 2-60 years so that it can cover a wide part of the population of the area. Such a range contains children, teenagers, parents, and grandparents. It also focuses on the middle income group that earns an annual average salary of $50,000 and above. The product to be manufactured is not specific on any gender or ethnic group, and thus it can universally be used by all members of the population.

The marketing team will have special interest on market segmentation based on family life cycle. The company will focus on both the young and the aged. Such a target group ensures that the company’s advertisements are non-discriminative as they attract all sorts of people in the region.

Psycho graphic /Behavioral Factor

Psycho graphic segmentation of a marketing team is based on the human condition. This involves issues such as personal characteristics, motivations, attitudes, values, and lifestyle. Such conditions are all internal and they play a significant role in determining the buying behavior of consumers and may be a powerful way of breaking the market. It helps the marketing team in understanding why specific people behave in a certain way. The team looks at customers from how they understand them and their characteristics. The company’s marketing team will need to identify which specific customers may enjoy its product and ensure constant supply to them. Any advertisements for the company will be catchy and convincing.

Market Strategy

NKMC recognizes the fact that marketing is a very significant aspect in any business operation. It will thus be engaged in the formulation and implementation of a well-designed marketing plan that will help in ensuring success through market penetration. Whenever needed, the company will outsource the services of public relations from another organization before engaging an internal team in charge of sales and marketing. Once it is able to hire its own sales and marketing team, it will then reassess the usefulness of outsourcing. In addition to the conveyance of the company’s potential customers on its quality services, it will put in place future plans including competitive prices alongside effective customer service. Some of the future plans include leading in integration of technology in the manufacture of its products.

The company’s marketing plan will include publicity campaigns that help in the introduction of the company to outsiders. In addition, it will launch various advertising campaigns in the manufacturing industry that help in gaining attracting more customers to use the company’s products. The company will also have an additional marketing plan that will focus on trade shows involving skills in manufacturing and marketing, as well as the materials that can be used for product promotion. Noble Ketchup Manufacturing Company will target spreading information about its products to the community by engaging in community events. Such events will include charity activities that indicate the level of the company’s corporate social responsibility. Above all, the company will engage the services of students through internships that help them to promote careers and develop skills in manufacturing.

Target Market

The target market of NKMC is the middle income group of families, retired middle and upper income groups and the young urban professionals. These groups are always on the move looking for products that are well processed and which can easily and quickly serve their needs as they lack extra time to keep searching for them. The group is literate and usually part of the major population in the region’s urban areas. Such groups will further form part of the target market because they are health-conscious and like fresh and quality products as NKMC will offer.

There are various other ketchup manufacturers in the region serving a huge population. The population is however changing at a rate of 1-2% annually. With the start of NKMC, there will be a decrease in congestion of customers at some points in purchase of ketchup products. The company will attract several customers through the use of technology to thoroughly market the company’s products. In addition, the company’s strategy of fast delivery of orders at customers’ destination will be a competitive advantage.

Analysis of Competitive Position

NKMC intends to gain a big market share of about 20% during the first year of operation. It will further introduce other products later that will help it in penetrating the market further. To attain the market share and a competitive position above its competitors, the company is planning to use modernized facilities that ensure production of quality goods and establishment and retention of quality reputation of the company. All the product distributors will be given a written marketing piece on the company’s product line. The company has a plan of expanding to international markets in its fifth year of operation. To be socially responsible, it plans to start by donating half of its net profit obtained to various projects in the community. Such activities will help it in gaining a good momentum and quick growth and expand its operations.

Pricing Strategy

The company will ensure that ketchup is affordable to all customers by setting a relatively customer-friendly price. Such a strategy will ensure that the company attract new customers, maintain the existing ones, as well as be competitive in the face of its competitors. In addition, it will increase the customers’ ability and willingness to purchase more products since they are made from the local products. Market research by Ancarani (33) indicated that customers are always willing to purchase goods sold to them at affordable prices as they indicate the sensitivity of the company to its customers. In addition, such a pricing strategy assures the customers that they are not being exploited by the company. The selected pricing by the company will enable it to position the brand at a highly competitive position in the market, thereby increasing the profit margins of the company.

Promotion Strategy

For product promotion, NKMC will outsource the services of a design specialist. The specialist will put flyers on the boards of within the region, as well as place different ads in the social media, and other media. The company also will rely in word of mouth to pass information to family members, friends and workmates. According to Gremler, Gwinner and Brown (45), word of mouth is a very effective way of product promotion since in most cases people recommend a given product based on experience. For simplicity of understanding, samples will be provided to the interested parties through the different outlets.

Part of the promotion strategy will include circulating newsletters about the company’s product include various ways of using it. The distribution of the newsletters will be through mailing list and through farmers markets. In addition, the company will join social media platforms such as a Facebook, and create a fan page that will increase customer interaction with the company. Such interaction helps consumers to communicate their needs and preferences that can be satisfied by the company. The company will further print hats and shirts to be won by friends and families, as well as create a website to provide information about the product. The website will be maintained well to ensure that customer get constant information about the company’s product descriptions, as well as the information on how to satisfy customer needs.

The company will design eye-catching and simple business cards that match with the company’s tagline and logo. Brand recognition strategy will be employed to ensure product’s popularity among users. Many customers will be in a position to make inquiries online about products, as well as place orders online. The availability of online platforms for the company will give the customers the opportunity to track sales and delivery schedule. Such a system ensures promptness in the satisfaction of customer needs thereby attracting more customers.

Management & Staffing

Organizational Structure

Organizational structure refers to the hierarchical arrangement of individuals in an organization. It aims at providing clarification about the chain of command that should be followed in an organization to avoid confusion. NKMC will adopt the matrix organization structure. In this structure, the executive management is at the top with various operational units or departments below him/her (Owens 61). The chief executive officer will be in charge of choosing strategies of the organization in consultation with board members and employee representatives. He/she will also receive operational feedback, both positive and negative and provide some the course of action. Among the departments, there will be the manufacturing unit which is the heart of the plant. The work of the production supervisor will be to manage employees in that department and ensure that all operations are in accordance with the company’s strategies.

The company will have a procurement unit that will be in charge of assembling the product. The unit will be in charge of buying raw materials and storing them until their need arises. Employees in this department will be reporting to the plant manager and will ensure constant supply of raw materials to the manufacturing line. Quality assurance is also very significant and the company will engage in such operations to ensure that the operations of the company are evaluated constantly. In case of any problems, the quality assurance personnel will consult the executive management for directions on how to implement corrective actions. The manufacturing workers are the bottom-line individuals who are very essential in the implementation of the firm’s strategies. The workers will be well-trained and motivated to avoid failure of the firm and to promote the success.

Management Team

An executive staff will be in charge of the company’s management. The management team will be in charge of the day to day operations of the company. Considering the fact that the company is still young, it will not be possible to appoint more staff during the first year of operation. However, the company will appoint more staff to fill crucial areas of the organization. This can be attributed to the fact that during the first year of operation, the company will face challenges filling all the positions due to financial and other related constraints. Though there may be several candidates willing to join it for a start, it will take time before the company stabilizes and takes in the candidates if they have the relevant qualifications and experience. For a start of the manufacturing business, the best strategy to be implemented by the company may be hiring the production and management staff.


Noble Ketchup Manufacturing Company will need 5 staff in the initial period of operations. In the second year of operation, the company will recruit five more employees to help in the daily operations of the company since the company will have expanded its operations.

Financing Plan

Description of Initial Budgets and Financial Needs

NKMC will need a considerable amount of money to fund some of the essential activities during its start-up. For example, the company will have to acquire a premises, store, operating equipment, manufacturing plant, furniture, vehicles to enhance distribution. The company will depend on partners’ contribution and loans to get the start-up capital. These expenses are highlighted in appendixes 1 below.

Appendix 1: Start-up Capital

Manufacturing plant $489,000,000
Furniture $500,000
Motor vehicles $422,000,000
Stores $1,000,000
Premise $1,100,000
Operating equipment $4,200,000
Other expenses $82,200,000
Total $ 1,000,000,000

Sources of capital

Partners’ contribution $100,000,000
Loans and grants $900,000,000

Appendix 2: Sales budget

Month Sales in Units Price per unit Revenue
January 100 $10,000 $1,000,000
Feb 150 $10,000 $1,500,000
Mar 200 $10,000 $2,000,000
Apr 250 $10,000 $2,500,000
May 300 $10,000 $3,000,000
June 400 $10,000 $4,000,000
Total 1,400 $14,000,000

Appendix 3: Collection budget

Cash collection rules for NKMC:

60% Cash; 60% on credit:

  1. 25% in the month of sale
  2. 20% in the month following sale
  3. 15% after two months
  4. 10% bad debts
Jan Feb Mar
$600,000 $900,000 $1,200,000
Jan Credit $120,000 $90,000 $60,000
Feb credit $450, 000 $135, 000
Mar credit $240,000
Total collection $720,000 $1,440,000 $1,635,000

Appendix 4: Production Budget

The production budget for NKMC is showed in the table below. The ending inventory will include 30% of the next month’s sales

Jan Feb March April May
Units sale 100 150 200 250 300
Add: Ending Inventory 45 60 75 90
Total production required 145 210 275 340
Less: Beginning inventory 0 145 210 275
Total production required 145 65 65 65

Appendix 5: Material budget

Based on the production budget above, the material budget is showed below.

Materials (tomatoes) required per unit production=2000grams

Price per gram=$2,000

Ending inventory at the end of each month= 50% of the production’s needs

Jan Feb Mar Apr
Production required 145 65 65 65
Material per unit $2,000 $2,000 $2,000 $20,000
Total material $290,000 $130,000 $130,000 $1,300,000
Add: Ending Inventory 65,000 65,000 520,000
Total Material Needed 355,000 195,000 650,000
Less: Beginning Inventory 145,000 65,000 65,000
Total Material Required 210,000 130,000 585,000
Price per material unit $2,000 $2,000 $2,000
Cost of Material Purchased $420,000,000 $260,000,000 $1,170,000,000

Appendix 6: Material disbursement budget

Payment of any material bought: 20% of the month of purchase, 30% in the following month, and remainder in 4 months

Accounts payable: 0

Jan Feb Mar
Total material purchased $420,000,000 $260,000,000 $1,170,000,000
January Payment $84,000,000 $126,000,000
February Payment $52,000,000 $78,000,000
March Payment $234,000,000
Add: Accounts Payable 0
Total Material Disbursed $84,000,000 $178,000,000 $312,000,000

Appendix 7: Manufacturing Overhead budget

Jan Feb March
Total Labor Hours Worked 3,480 1,560 1,560
Variable MOH $25 $25 $ 25
Total Variable MOH $ 87,000 $39,000 $ 39,000
Add: Fixed MOH $ 40,000 $40,000 $ 40,000
Gross MOH Cost $ 127,000 $79,000 $ 79,000
Less: Noncash Costs $ 20,000 $20,000 $ 20,000
Total MOH Cost $ 107,000 $59,000 $ 59,000

Appendix 8: Cash budget

Jan Feb Mar
Beginning Cash Balance $ – $6,892,000 $6,892,000
Cash From Sales $720,000 $1,440,000 $1,635,000
Total Cash Receipt $ 720,000 $8,332,000 $8,527,000
Purchase of Materials $84,000,000 $178,000,000 $312,000,000
Labor Cost $174,000 $78,000 $78,000
MOH Cost $107,000 $59,000 $59,000
Operating Expenses $ 85,721,000 $194,801,000 $329,191,000
Machine Purchase $ 40,000 $30,000 $-
Interest $ – $9,000,000 $9,000,000
Total Expenses $170,042,000 $381,968,000 $650,328,000
Total Deficiency/Efficiency -$ 169,322,000 -$373,636,000 -$641,801,000
Borrowing From Bank $900,000,000 $- $-
Ending Cash Balance $6,892,000 $6,892,000 $6,892,000

Appendix 9: Depreciation of Assets

Description Year 1 Year 2 Year 3
Equipment Orig. Value Revenue Depr. Revenue Depr. Revenue Depr.
Furniture $4,200,000 $4,180,000 $20,000 $4,160,000 $20,000 $4,140,000 $20,000
Automobile $500,000 $495,000 $5,000 $490,000 $5,000 $485,000 $5,000
Total Depreciation $422,000 $421,975,000 $25,000 $421,950,000 $25,000 $421,925,000 $25,000
Equipment $50,000 $50,000 $50,000

Appendix 10: Labor budget

January February March
Production Required 145 65 65
Direct Labor per unit 24 24 24
Total Labor Hours Worked 3,480 1,560 1,560
Guaranteed Hours 2,000 2,000 2,000
Direct Labor Hours Paid 3,480 1,560 1,560
Cost per Labor Hour 50 50 50
Total Labor Cost $174,000 $78,000 $78,000

Appendix 11: Operating expenses budget

January February March Average Year 1 Year 2 Year 3
Salaries & Wages $200,000 $200,000 $200,000 $200,000 $2,400,000 $2,448,000 $2,521,440
Advertising $5,000 $5,000 $5,000 $5,000 $60,000 $61,200 $62,424
Insurance $2,000 $12,000 $12,000 $8,667 $104,000 $106,080 $108,202
Sales Commission $10,000 $15,000 $20,000 $15,000 $180,000 $183,600 $187,272
Fuel $20,000 $20,000 $20,000 $20,000 $240,000 $244,800 $249,696
Office Rent $10,000 $10,000 $10,000 $10,000 $120,000 $122,400 $124,848
Miscellaneous $20,000 $20,000 $20,000 $20,000 $240,000 $244,800 $249,696
Registration and Licensing $10,000 $10,000 $10,000 $10,000 $120,000 $122,400 $124,848
Office Utilities $10,000 $10,000 $10,000 $10,000 $120,000 $122,400 $124,848
Total Operating Expenses $287,000 $292,000 $297,000 $292,000 $3,504,000 $3,574,080 $3,645,562

Appendix 12: Income Statement budget

Income: Year 1 Year 2 Year 3
Service Fee Revenue $18,000,000 $36,000,000 $72,000,000
Less: Cost of Services $180,000 $183,600 $182,272
Gross Profit $17,820,000 $35,816,400 $71,817,728
Operating Expenses $540,000 $600,000 $650,000
Depreciation $50,000 $50,000 $50,000
Bank Interest $9,000,000 $6,750,000 $5,113,125
Total Expenses $9,590,000 $7,400,000 $5,813,125
Net Profit* $8,230,000 $28,416,400 $66,004,603

Appendix 13: Owner’s Equity

Year 1 Year 2 Year 3
Cash Flow Balance $15,462,000 $141,044,493,640 $422,675,362,288
Cash Contribution $1,000,000 $140,091,385,240 $421,684,665,615
Profit for the year $8,230,000 $28,416,400 $66,004,673
Balance $24,692,000 $924,692,000 $924,692,000
Cash Flow Balance $15,462,000 $141,044,493,640 $422,675,362,288

Appendix 14: Balance Sheet

Year 1 Year 2 Year 3
Current Assets
Cash in hand $6,892,000 $6,892,000 $6,892,000
Subtotal $6,892,000 $6,892,000 $6,892,000
Non-Current Assets
Manufacturing plant $489,000,000 $489,000,000 $489,000,000
Furniture $500,000 $500,000 $500,000
Motor vehicles $422,000,000 $422,000,000 $422,000,000
Stores $1,000,000 $1,000,000 $1,000,000
Premise $1,100,000 $1,100,000 $1,100,000
Operating equipment $4,200,000 $4,200,000 $4,200,000
Subtotal $917,800,000 $917,800,000 $917,800,000
Total Assets $924,692,000 $924,692,000 $924,692,000
Bank Loan $900,000,000 $- $-
Owner’s Equity $24,692,000 $924,692,000 $924,692,000
Total Liabilities $924,692,000 $924,692,000 $924,692,000

Description of Projected Annual Cash Flow Statement

Year 1 Year 2 Year 3
Cash IN
Opening Balance $- $15,462,000 $141,044,493,640
Owner’s Equity – Cash $100,000,000 $ 100,000,000 $ 100,000,000
Bank Loan $ 900,000,000 $ – $ –
Cash from Sales $18,000,000 $141,000,000,000 $282,000,000,000
Income from Commission $180,000 $30,000,000 $60,000,000
Subtotal $1,018,180,000 $141,145,462,000 $423,204,493,640
Cash OUT
Initial Capital Expenses:
Furniture $500,000 $25,000,000 $25,000,000
Manufacturing Plant $489,000,000 $489,000,000 $489,000,000
Automobile $422,000,000 $422,000,000 $422,000,000
Premise $1,100,000 $- $2,200,000
stores $1,000,000 $- $2,000,000
Interest $900,000 $6,750,000 $5,113,125
other expenses $82,200,000 $82,200,000 $82,200,000
Operating Equipment $4,200,000 $8,400,000 $8,400,000
Cost of Goods Sold $1,818,000 $3,618,360 $7,218,227
Subtotal $1,002,718,000 $100,968,360 $529,131,352
Balance $15,462,000 $141,044,493,640 $422,675,362,288

Description of projected sales revenue

Month Sales in Units Revenue
January 100 $1,000,000
Feb 150 $1,500,000
Mar 200 $2,000,000
Apr 250 $2,500,000
May 300 $3,000,000
June 400 $4,000,000
Total 1,400 $14,000,000

Cost of sales

The quantity of sales in the second year is projected to be doubled the quantity sold in the first year, and half the sales in the third year of operation. The cost of goods is estimated to be 10% of the total annual sales.

Operating expenses

The company will have several expenses to take care of during its operations such as salaries and wages, advertising, insurance, sales commission, fuel, office rent, registration and licensing, office utilities, and any other miscellaneous needs.

Manufacturing overhead

NKMC will have a variable manufacturing overhead rate of $25, and a fixed manufacturing overhead: $40,000. However, the fixed manufacturing overhead will include $20,000 of noncash costs.


Each unit of production requires 24hours of direct labor. All employees are paid $50 per hour. As such, the direct labor workforce will be paid for a minimum of 2000hours per month for the next three.

Description of Income Statement

The company hopes to get income from its services to the customers. The accrued income will be used to pay the cost of services, as well as the total operating expenses of the company. The income from service fee revenue is projected to double from year 1 henceforth.

Description of projected Balance Sheet

The balance sheet is prepared for three years, taking into consideration the current assets, non-current assets and the total liabilities. Every year, a cash balance of $6,892,000 is retained as the opening balance for the following year, with the business expected to operate at total amount of $924,692,000 annually.


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