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BUSINESS PLAN

Smart-Tiles
Centre

SMART-TILE CENTRE
BUSINESS PLAN

Company Information
Issued Date:..........................
Legal Name: PHILILE-THINA TRADING
Trading Name: Smart-Tile Centre
CK Number: 2003/011889/23
CONTACT PERSON:
Mrs. Tsakani Baloyi
Cell:
PHYSICAL ADDRESS:
112 ORIONBUILDING
BESTERSTREET
NELSPRUIT
1200

BANK DETAILS:
Name of Bank:
Account Number:
Account Type: Cheque Account

Confidentility
The information contained in this business plan is confidential and property to Smart-Tile Centre and is
intended only for the persons to whom it is transmitted by the Company or its representatives. Any
reproduction of this document, in whole or in part, or the divulgence of any of its contents without the
prior written consent of the Company, is prohibited.

Business Plan Copy No: _____________

The undersigned reader acknowledges that the information provided by member of Smart-Tile
Centre in this business plan is confidential; therefore, reader agrees not to disclose it without the
express written permission of the Mrs Tsakani Baloyia member of Smart-Tile Centre.
It is acknowledged by reader that information to be furnished in this business plan is in all respects
confidential in nature, other than information which is in the public domain through other means
and that any disclosure or use of same by reader may cause serious harm or damage to SmartTile Centre.

_________________________

______________________________

Signature

Name:
____________________
Date

Why was this Business Plan Written?

1. To obtain the loan financing of an amount of R 3 496 250 from any

financial institutions.

2. To give the owner who wants to start the business a much better idea of whether the owner
should really get involved in this type of business at all, through determining the
commercial, technical and financial viability.
3. To serve as a useful guide for the business to check continuously how the business is gettingon in achieving its goals

4. To serve as an operational plan document for Smart Tile Centre.

5. To serve as a very good document for outsiders, like banks or suppliers of credit, to see
whether they are interested in getting involved in the affairs of the business or not.

In a nutshell This business plan is a road map that tells business owner where to
go, and allows the owner to check if the team is on the right road.

Table of Contents
Section 1
EXECUTIVE SUMMARY
1.1

Brief Description of the Business..7

1.2

Mission.........7

1.3

Short term Objectives........7

1.4

Keys to success.......8

1.5

Financial Summary.........8

1.6

Business's Contributions to the Economy.....8

1.7

Purpose of Required Fund ..9


Section 2
MARKETING PLAN

2.1

Research Overview .....10

2.2

Market Research and Analysis10

2.3

Research Findings Summary..11

2.4

Decision-Making/ Conclusion and recommendation ..12

Section 3
MARKETING PLAN
3.1

Description of the Product and services....13

3.2

Competition...14

3.3

Competitive Advantage .....14

3.4

Location..14

3.5

Market Area14

3.6

Targeted Customers.15

3.7

The Industry Overview.....16

3.8

Market Share.....16

3.9

Selling Price..16

3.10

Sales Forecast...16

3.11

Marketing Strategy16

3.12

Marketing Budget..17
Section 3
MANUFACTURING PLAN

4.1

Production Process ..18

4.2

Fixed Required Capital 18

4.3

Life of Fixed Capital..19

4.4

Cost of Stock and Raw Materials ..19

4.5

Labour.......19

4.6

Overhead Expenses.......20
Section 4
ORGANISATION & MANAGEMENT PLAN

5.1

Form of Business.21

5.2

Organisational Structure.21

5.3

Pre-Operating Activities..........22

5.4

Pre-Operating Expenses ....24

5.5

Administrative Expenses.....24

Section 5
FINANCIAL PLAN
6.1

Capital Required....25

6.2

Financing Plan and Grant Requirement.....26

6.3

Profit and Loss Statement............26

6.4

3 Years Projected Income Statements ......27

6.5

3 Years Cash Flow Statement..27

6.6

12 Projected Monthly Cash Flow Statement ..28

6.7

Loan Repayment plan ......30

6.8

Balance Sheet........31

6.9

Break-even Point (BEP) ....32

6.10

Return on Investment (ROI)..33

6.11

Exit Plan...33

Section 1
EXECUTIVE SUMMARY

1.1

Brief Description of the Business


Smart-Tile Centre is an independent start-up business which will import and distribute
different types of floor and wall tiles of different colour and style of high quality around
Thulamela and Malamulele municipal area, at a lower price still making a healthy profit
margins.
The industrial survey conducted indicated that, the demand of Tiles products is higher
than the supply in South Africa (majority of products are imported from other countries,
such India, Chain and etc). The decision was made by Smart-Tile Centre management
team to increase its product lines by focusing on what customer wants.
Smart-Tile Centre is owned and managed by Mrs Tsakani Baloyi, who is well motivated
and experienced, having been managing a Construction Companies for more than 15
years to date. During this period the owner has discovered the high Gap of demand of
Tiles in South Africa. The owner decided to conduct a market research to start Tile
Centre and capitalized in this business.
The customers survey conducted indicated that customers are willing to purchase from
Smart Tile Centre if we can able to provide Tiles of high quality, unique, with beautiful
theme and style. Smart-Tile Centre is position it itself to capitalize on this opportunity
and demand.

1.2

Mission
Its mission is to provide top-quality Tile of different theme, with ongoing new designs.

1.4

Keys to success

Provide a different modernized product which is currently on demands.

To establish strong relations with both suppliers and buyers. These relationships
will help Smart-Tile Centre grow and evolve in this industry.

To provide top-quality Tile items, with ongoing new design at lower price.

To have enough stock at all times.

Advertising on the Radio

Building a partnership with majority of Construction companies to receive a


repeat business.

1.5

Financial Summary
The summary of financial statement indicate that business will make profit right from
the first year and indicated that the business will have sufficient cash to continuously
operate. The rate of return indicated that business will get back what has be invested
by 1year 8month. The table below is a brief summary of financial projections.

1.6

Business's Contributions to the Local Economy


Smart-Tile Centre will contribute to local economy through hiring 12 historical
disadvantage employees.
Increase competition and reduce monopoly, this will results in a price dropping some
competitors when people realize that our price have high gap.

1.7

Purpose of Required Fund


The main purpose of this business plan is to obtain fund and operate Smart-Tile Centre
business. The total amount of R 3 727 837 and it will be finance as is indicated in the
table below.

The table below show the breakdown of loan required and its uses:

Section 2
MARKET RESEARCH

2.1 Research Overview


This report aims to provide Smart-Tile Centre a five years business plan and forecast
with an Investigation of possibilities to pursue a profitable enterprise in selling modernized Tile
items to the potential customers
This report is the product of intensive investigation within the Tile and building hardware
business Industry, and exploration of Smart-Tile Centre's organizational capabilities.
In addition, the project included an investigation of the factory's operations and conditions
such as processes, environment, HR aspects, and Quality Control in order to develop
a proper Business Plan.
2.2 Market Research and Analysis
The market analysis for Smart-Tile Centre; it included analyses of the industry, customers,
targeted market segments, competitors, and prices. The study also included an estimation of
market size for Smart-Tile Centres current and future products, as well as estimated market
share, growth, and forecasted sales in the next five years.
Methodology:
Various methods of market research were used to find out information about the target
markets and their needs, competitors survey, market trends, and customer priorities and
buying decision bases.
In specific, consultants methodology included the following:
Primary and Secondary research
Consultants field research included the following:

1. Market Survey
A survey of based on the suppliers interview was conducted with the following market
segments: types Tiles and suppliers, constructions and Decoration companies, individuals
who install tiles and customers around who have

started with put the structure of the

business.
The first step, we determined exactly what market exists and the problems and constraints
on that market. We gathered information on the volumes traded, its type, product traded, its
numbers, style and quality of tiles, its size, how it is transported to the markets, how it is stored
in the market before sale, the number of potential specialty markets (Construction, New home
Builder, Decorations companies), who is supplying what, to whom. The list is seemingly
endless
The second step, we determined what the markets want. We have examined prices. We are
going to purchase more than 10 types of tiles with more than 20 styles and more than 8 size
which will satisfy most of our targeted as the majority of competitors around only supply two
types of floor and wall tiles. This may indicate a large income elasticity to which an increase in
supply is indicated to the benefit of all participants in the marketing chain.
The third steps (Customer survey) we have examined the service the customers require.
This relates to types, styles and size, its price and system of delivery.
For the fourth step, As a potential competitor to the market we currently know

our

competitors and customers expectations or needs, what competition is there, what margins
are available, who are the main participants in the market (wholesalers, manufacturer,
imported goods, non-imported goods middle men etc).
Finally, the market research seemingly completed, the information was analyzed with a view to
finding a niche, which the supplier can fill. We believe that market research is one of the most
stages. We will continue to keep an eye on the market and change our practices to keep
ahead of the competition. Our research and analysis will never stop. We have a strong believe
that a successful market is built on the information.

2.3 Research Findings Summary

Research indicated that, in Thohoyandou there few companies that deals with tiles,
Majority of wall tiles, which are currently used in wall for mall and business Centre, which
are the tiles majority of individuals customers needs and they are only purchase in JHB

which is 500km away..


Tile Industries The biggest industries in South Africa construction, this business of South
Africa is a developing countries. House is basic needs for everyone. The demand for

house will never rest.


It cheap to purchase than to produce Tiles in South Africa because of high cost equipment
cost and skills required to produce.

2.4 Decision-Making/ Conclusion and recommendation

We will be very profitable to purchase and distributes 10 types of Tiles with different

colour to all size especial the biggest size for wall.


We will have a small panel van vehicles for delivering of bulk purchases
It may be cheaper to buy and use company vehicles to transport Tile pots to market

rather than to hire outside company vehicle.


It is also well to remember that if we does not have enough stock available in the store

to meet the market requirement, the order may go to a supplier who have stock.
Implementation will require the services / skills and business partners. This will be a
government grant, bank, finance company, transport company, materials and
equipment supplier.

Section 3
MARKETING PLAN

3.1

Description of Products and Services

Smart-Tile Centre will purchase and distribute floor and wall tiles of all size from small to
biggest of different theme and other complementary products, such as grout, cement, and
more. And other will be ordered as per customers needs who want to match their House
Decorations with Tiles.

3.2

Competitors
The competitors survey conducted by
the owner indicated that, the Smart Tile
Centre will compete with companies
around Thohoyandou, which are CTM,
Pine Tile Centre and hardware. The
research indicate that CTM and Pine
Tile are only two who specialize with tile
but they sell few varieties.
Our indirect competitors are hardware, they sometimes have tiles for bathroom, but
they only sell two types or one.
Due to few competitors, the prices of Tiles around Thohoyandou and Malamulele and
South Africa as hole are priced at a high price.

3.2

Competitive Advantage

Our prices will be lower than competitors price.

We will sell more than 10 types of different kids.

We will also sell sets of Themes of tiles.

Located next to building hardware, customer who are building are our targeted
major customers.

3.4

Obtaining products at lower price straight to manufacturing.

Location
The business is located at Shayandima Industrial Area Thohyandou, Municipality
Vhembe District, and Limpopo Province, South Africa.

This location has been selected because of the following reasons: It is close to the
Building hardware which does not sell Tiles. Close to the main road. Advantage of
getting customers who come to buy construction Materials.

3.5

Market Area
Although the business is located in Shayandima it will cover Thulamela, Malamulele
and Makhado Municipal area.
According to the market survey conducted by the owner, Vhembe district is high
developing area, with many construction projects and many developing area. At
Thohoyandou there is also one of the biggest Mall (Thavhani Mall with more than 200
shops) it has been started already, which will be through next year. This people are
also our main customers, because they are interested with the types of tiles we are
Due to the standards of living in our targeted Area , No one in this area is building a
house without floor Tiles. We will capitalized in this opportunities.

3.6

Targeted Customers

The Companys targeted customers are all building construction companies within
Vhembe district, recieves tender from government and universties. The survey
conducted indicated that the are two major projects in this area, university is building
6000 rooms of students and many building , the contractors will be contacted, and we
believe that we will enter into an agreement to supply them.
The other main projet is Thavhani mall with more than 200 shops. They will need the
types of tiles we are going to provide and currently the competitors around do not have
those types and sizes.
The main group of competitors are individuals who are currently building and improving
thier home. Due to the standard of living more than 95% of houses build this days have

floor tiles. About 40% of the houses which were build without Tiles are busy improving
by installing tiles.

3.7

The Industry Overview


The market outlook for construction in Limpopo province and elsewhere is booming.
South Africa is one of top countries that are developing. The Vhembe district is developing in term of infrastructure and. The development will never stop. Construc-tion is
one of the biggest business in Vhembe and South Africa as a whole. Majority of the
richest in South Africa are construction companies. This industry will continue to grow
forever due to the Houses is basic needs.

3.8

Market Share
The research indicated that there are few competitors in our targeted market area, who
dont provide majority of Tiles needed for big business such Mall and university hostel.
Due to our competitive advantage we believe that we will be selling to 15 people at an
average per R 3,500 per person for 26 day per month opening during holidays and
Sundays. This assumption is the low ball approach system, because our business will
still be new.

3.9

Selling Price
Our prices will be below the competitors price. Our research indicate that although we
will sell much cheaper we will still marking more than 50% profit.

3.10

Sales Forecast
The forecast below is based on the market share (step 3.8 x 3.9) multiply by price.

3.11

Marketing Strategy
Products Smart-Tile Centre will focus on providing high-quality products of more
than 10 types and different theme and style to customers.
Price Our price will be lower that the competitors price (Import from China
Manufacturing).
Place we will distribute our product through retailers who are easily accessible.

Sales and Promotion Strategy


Promotions will be mainly alliance-based strategy; direct contact from SmartTile Centre marketing and sales manager with the support of well-trained sales
team or marketing consultant will be responsible to outreach potential customers
to establish these short and long term relationships as follows:
Discounts on prices can be used to boost demand. However it is only encouraged on
specific products that can bear discounted prices.
Smart-Tile Centre can use public advertising, but it will not be considered as a main
marketing communication plan, this may include:
Advertising Street signs "Billboards"
Internet banners
Leaflets and brochures
Local Radio

3.12

Marketing Budget
Our marketing budget will be consist of travelling cost, to business customers, stores
roads show sales, which can be done three times every year. The monthly budget will
be budgeted for the catalogue, brochure and business cards promotional materials.

Section 4
OPERATIONAL PLAN

4.1

Operational Plan
The store will be open 7 days a week, from 8:AM to 5:Pm. The store will rent a free
space that has already secured from LIDA

4.2

Fixed Equipment

4.3

Life of Fixed Capital and Depreciation


The lifespan of the fixed assets are as follows. This is based on supplier information.
Our depreciation will be on a straight line method.

4.4 Cost of Stock and Raw Materials (Rand Value)


Tile pots is manufactured from different kinds of materials, where Tile occupies about
95 or 100% of the total weight of product we will purchase.

The increase is estimated at 10% in all products and Services for the entire years.
4.5

Labour
Direct Labour

Indirect Labour

Total Labour Costs

4.6

= R 48 000

Overhead Expenses
Overhead costs are monthly indirect cost of the business. The table below shows the
breakdown of categories of expenses.

ORGANOGRAM - UAKONISA BUSINESS CONSULTING (PTY) LTD


Form of Business
The business has been established and registered as Private Company. The
business is owned and Managed by historical disadvantage female Ms. Mulaudzi
Phathutshedzo with 100% shares.

Managing Director
(Ms Mulaudzi
Phathutshedzo)

Marketing Manager

Financial Manager
(Ms.

Phathutshedzo
Mulaudzi)

Operational
Manager
(Ms.

Phathutshedzo
Mulaudzi)

Office Assistant
(Mr. Mulalo Muthala
Ray)

(Ms.

Phathutshedzo
Mulaudzi)

2.

Applying for a fund and approval

3.

Contacting suppliers

4.

Hiring labour

2 days

5.

Purchasing Stock

30 days

8 weeks

1 week

The owners aim to implement their operations approximately two months after the loan
application, or six weeks after release of his loan.

Table 5.3
Pre-

Gantt chart

Operating Activities
Timetable (in weeks)
Activities

1. Preparing the Business Plan


2. Applying/Approval of loan
3. Hiring Labour
4. Purchasing stock

10

11

12

13

14

15

16

5.4

Pre-Operating Cost

5.5

Administrative Expenses
The owners want to keep their cost as low as possible in order to be competitive.
The only cost they will incur is the cost of communicating with suppliers during
ordering stock or raw materials and during the need for repairs.

The increase is estimated at 10% in all products and services for the entire
years.

Section 6
FINANCIAL PLAN

6.1

Capital Requirement (Business Cost)

6.2

Financing Plan and Grant Requirement

6.3

Profit and Loss Statement (one year)

6.4

5 YEARS PROJECTED INCOME STATEMENTS

6.5

PROJECTED CASH FLOW STATEMENT FOR 5 YAERS (Rand)

6.6 PROJECTED MONTHLY CASH FLOW

STATEMENT (RAND)

Excludes depreciation expenses and amortization of pre-operating expenses which are non-cash items.*Not equal to due to rounding.

6.7

5 YEARS PROJECTED BALANCE SHEET

6.8

Loan Repayment plan

6.9

Break-even Point (BEP)

The break-even point can be calculated as follows

6.10

What is the return on investment (ROI)?

6.11 Exit Strategy

In business planning, much is based on anticipation the business exit strategy has been
decided after careful considerations just like any other aspect of the business. Should
the partners wish to sell their equity; the growth of the business will make the following
exit strategy possible.
Return capital to financers / investors through dividend or borrowed funds for a
management buyout or seek financial partners for the exchange of shares (investor
companies, private investors). It is asked that the shareholders retain their capital
investment for a minimum period of 5 years after the business launch.

Smart-Tiles Distributors