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MAKERERE UNIVERSITY

MAKERERE UNIVERSITY BUSINESS SCHOOL

FACULTY OF ENTREPRENEURSHIP AND BUSINESS ADMINISTRATION


DEPARTMENT OF ENTREPRENEURSHIP

BUSINESS PLAN ON MAKING BAGS FROM BANANA FIBERS

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

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Executive summary

Banana Bags Uganda limited is a private limited company located in Kampala Uganda. Its long
term dream is to free the beloved country off polythene bags which has been a threat to the
natural environment through the provision of alternative packaging materials that is banana fiber
bags which will provide a long lasting and sustainable packaging solution to the country.

Like many other developing countries, Uganda has been struggling with the Garbage problem.
State of Environment Report of Uganda 2006/2007 estimated that over 800 tons of garbage is
generated in Kampala daily; 80 percent of which is partly plastics, polythene bags, tree cuttings,
glass, metals, paper, and construction and demolition debris. KCCA Report 2012, revealed that
wastes from polythene bags constitute an over whelming 20% of the total waste disposed in the
city. In 2009, the government imposed a ban on the use of polythene bags and emphasized the
need by entrepreneurs to introduce alternative packaging materials.

In response, we have introduced packaging bags made from banana fibers. The bags can be
produced using both rudimentary and advanced technology. Using fiber extraction technology,
we shall produce quality multipurpose bags for shopping, travel, events, among others. the
business targets shopping centres, craft shops and supermarkets in and around Kampala city, gift
shops and individuals who come with wedding, introduction and party orders, as well as tourists
and export market.

Our marketing strategy includes among others an effective communication using sales
promotion, advertising in the local media, and social network sites, creating and launching
company website for customers to know more about our activities, attractive reward system of
our stakeholders, good quality packages, building on our name”banana” to position our self and
above all charge fair prices to our clients.

The business competes for this market and industry with one Cottage enterprise located in Kireka
a suburb of Kampala city. However our competitive advantage is our Strategic alliance with
Uganda industrial research institute, Makerere University and Uganda handicrafts association for
technical assistance, research and market access, Government protection, adequate
entrepreneurial skills and knowledge we have acquired through formal and informal education
(socialization), presence of willing business advisors in our favor, and a variety of resources
under our possession.

The management team comprise of a team of young entrepreneurs who are determined to make a
breakthrough in business. They have been carefully selected from an array of professional
disciplines like entrepreneurship and small business management, fibre processing and
technology, biodegradable technology, marketing and business administration. The business
seeks UGX 20 million to finance its capital expenditures, pre-operating expenses, and working
capital; from which it will generate surplus of over UGX (millions); 99, 106, 117, 138, and 171
for the five years respectively.

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Company overview

1.1 Introduction

Banana Bags Uganda limited will be formed as a private limited company dealing in the
manufacture and distribution of bags made from banana fibres. The bags will act as a
replacement to the polythene bags which have proved to be environmentally unfriendly.

1.2 Opportunity

According to the state of Environment Report of Uganda 2006/2007, over 800 tons of garbage is
generated in Kampala daily. The report also shows that 80 percent of the garbage is partly
plastics, polythene bags, tree cuttings, glass, metals, paper, and construction and demolition
debris. According to KCCA Report 2012, wastes from ploythene bags constitute an over
whelming 20% of the total waste disposal in Uganda. Polythene bags can best be defined as a
non-biodegradable substance that is used by the majority of Ugandans as packing materials.
They are locally called “Kaveera”. Polythenes were introduced in Uganda in the 1970s as a
substitute to the paper bags and boxes which were initially used for packing especially the light
commodities. Despite the fact that they are cheap as well as light, they are hazardous to the
environment in the following ways;

They cause loss of soil fertility. Due to the careless disposal of the "buveeras" in the country, the
areas where they have been deposited in large quantities have lost soil fertility. Lots of land is
continually lost to this cause in that; when the polythene bags enter into the soil, they block
further passage of mineral salts and oxygen to the soil. These, if properly analyzed are the main
components that make up the soil fertility. When blocked soil is unable to yield crops properly
this can cause several problems to the peasant farmer and consumers. This is mainly because
they cannot rot and decompose and therefore cannot lead to the formation of good soils. The
polythene bags have also got an acidic combination which with time disturbs the
chemical formulas of the soils.

The poor disposal of the polythene bags can also lead to the spread of diseases. This has been
made very possible due to the large numbers of non-biodegradable polythene wastes that are
widely spread around the city streets and slum dumping sites. These waste materials act as a

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breeding place for the various disease carriers because the polythene bags can easily block the
sewerage and water pies causing water depression/pool. This acts as breeding grounds for the
deadly female anopheles mosquito that spreads malaria, they also rare germs like the cholera
germ which has led to the death of millions of people e.g. the break out of cholera in Kampala in
1997. They cannot also cause water logging since the water cannot percolate through them and
this can be a good breeding ground for some of the vectors which spread diseases.

They also cause blockage of water systems. Water is another sector that is highly important to
man but has been disturbed by these polythene waste materials and as an after effect; man is
affected in various ways that cannot be fully listed. Water systems like springs, ponds, rivers e.t.c
are blocked during continued damping of these polythene materials along the shore, the water
flow is affected and may be stopped causing floods, disease habitation and unpleasant scenery.

They also cause destruction of natural beauty. Unnecessary littering of the polythene bags on the
roadsides destroys the would-be beautiful scenery. If the buveera are carelessly thrown all over
the place, they make the environment very untidy and unpleasant to look at. This is the case in
some parts of the city. Refer to appendix 1 for sample pictures of the polythene situation in
selected slum areas of Kampala.

Poor soil aeration and drainage. This is because the polythene bags cannot allow the water to
pass through them so easily. As a result the soil is not well aerated and this is because they are
non-biodegradable and water cannot easily percolate through them.

Some of these bags have been used by a number of ignorant or careless people as mobile toilets
considering their light nature. These mobile toilets are then carelessly thrown away to unknown
areas which also make work of the concerned parties rather hard.

It causes death of domestic animals specially the cows and the goats after eating the polythene
bags. These clearly show that waste if mismanaged can be very dangerous to the environment.

As an alternative of having to suffer the unending plight of environmental downfall because of


the hazardous polythene bags, we are introducing and encouraging the use of banana fiber bags

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which is environmentally sustainable and friendly. They do not pollute the land, air and water;
they can be reused many times in their lifetime and doesn’t have any environmental effect at all.

1.3 Vision

A new environmentally friendly packaging experience in the region

1.4 Mission statement

The leading manufacturer and supplier of affordable and environmentally friendly banana fiber
packaging bags at affordable prices

1.5 Objectives

i. To introduce a state of the art banana fiber extraction technology in Uganda by 2020
ii. To promote the use of banana fiber bags instead of polythene bags by at least 50% by
2018
iii. To reward all stakeholders profitably within 2016

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Product/service description

2.0 Introduction

This section of the business plan covers the features and the benefits of the product or service.

2.1 Product/service features

Banana Bags Uganda Limited will offer bags which bear the following characteristics;

The product is quality bags made from banana fibers. The banana plant has long been a source of
fiber for high quality bags. Banana fiber is extracted from Banana tree bark. The trunk is
peeled. Brown-green skin is thrown away retaining the cleaner or white portion which will be
processed into knotted fibers. The fibers are extracted through hand extraction machine
composed of either serrated or non serrated knives. The peel is clamped between the wood plank
and knife and hand-pulled through, removing the resinous material. The extracted fibers are sun-
dried which whitens the fiber.

The products are highly 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.

Durability: the bags will be made from natural banana fibers processed using the best and most
advanced fiber extraction technology from India. Once made, the bags will be able to be used for
a very long period of time (depending on the frequency of use by the owner).

Alluring colors: the fibers will be designed in various colors using natural dyes. The bags will
hence be made from the well designed fibers for their attractive looks. These bags will be
available in various sizes, shapes and color combination's to meet the different preferences and
requirements of our clients.

The bags will serve a variety of uses. Options may be for shopping and hand bag. The bags will
have two branding options: Standardized branding- with company details (logo, brand name,

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symbols, catch word, contacts…) and, Customized branding, having information of the buying
companies/organizations for instance MUBS, Fresh cuts, Shoprite, and so on.

Weight: the bags will be very light for ease of portability and ease of movement from one place
to another in comfort. Handles will be attached to the bags for ease of lifting.

2.2 Product/service benefits

Banana fiber is Eco friendly and biodegradable comparing to all other synthetic fibers. Natural
fibers present important advantages such as low density, appropriate stiffness and mechanical
properties and high disposability and renewability. Moreover, they are recyclable and
biodegradable.

The bags will provide a lasting solution to packaging requirement of food items, stationary,
clothes, jewelry, simply tools and equipments, simple electronics, medicine, shoes, among others
instead of the environmentally unfriendly and unhealthy “buveras”

The product is of best quality that is appearance and durability. The bags look attractive and
cannot tear easily. In fact they can be reused for a number of times (if handled properly) good
services as in.

When fully adopted, the banana fiber bags will help Uganda reduce pollution from polythene
bags by over 20% of the overall total garbage pollution. When poorly dumped, the banana fiber
bags easily decompose and turn into a soil nutrient.

Most Ugandans especially the corporate class loves to be stylish and hold good looking bags.
The ladies love colored bags for shopping and travel, the men prefer to send gift in attractive
bags to their girlfriends, the youths prefer and feel great when carrying something for instance a
shopping bag that bring out our style “swag” in them; most of whom buy simple items like salt,
soap, bread, among others on almost a daily basis, and want those items packaged for them.

The Banana Bag has been a favorite for a summer bag large enough for all of your necessities
plus an interior and exterior pocket to keep your keys and mobile phone handy, fully lined with
satin and top zipper keeps everything inside. The strap is adjustable so you can wear it as you
like! 

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Market and industry analysis

3.0 Introduction

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

3.1 Market size and growth

The business is competing for banana fiber bags market. Bananas and plantains constitute a
major staple food crop for millions of people in developing countries. In most tropical countries,
green (unripe) bananas used for cooking represent the main cultivars. Bananas are cooked in
ways that are similar to potatoes. Both can be fried, boiled, baked, or chipped and have similar
taste and texture when served.

Bananas are a common feature in many parts of Uganda. The banana fiber is a widely used
product in making coarse woven fabrics like sacks, ropes, twigs, sand bags, tents, webbings,
canvas, screens, kit bags, tool bags, luggage, gunny bags and covers.  The fiber is extracted from
the stem of banana. This is a key component in a potentially lucrative business. 

According to FAO 2011, Uganda was the second largest producer of banana crop after India with
around 8% of the worldwide crop of 145.4 million metric tons. Despite Uganda being the second
producer of bananas in the world after India, it’s the 70th in terms of the business because
Ugandans simply eat the fruits and throw away the rest as waste yet they can be used to make
new paper and other paper products, such as paper bags, cards, envelopes, folders. According to
Uganda Industrial Research Institute, more than 1,000 tonnes of banana stems are abandoned
after utilizing the fruits mostly in western and central Uganda while tens of thousands of waste
paper are burnt into ashes every year.

Meanwhile the market for handicrafts is on the increase. The global market for home accessories
was estimated to be at least $100 billion in 2006 according to the study. The U.S. is the largest
importer of the home accessories and was valued at $67 billion, the second largest market is the
E.U. collectively followed by Japan, china and Hong Kong.

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3.2 Target market
The business’s primary targets are shopping centres, craft shops and supermarkets in and around
Kampala city, gift shops and to individuals who come with wedding, introduction and party
orders. Its secondary targets are tourists visiting the country and the export market.
3.3 Industry structure

Arts and crafts industry in Uganda is still young and growing at a very fast rate. Uganda has a
wide array of handicraft products ranging from basketry, mats, ceramics, beads, pottery, hand
textiles and woven products, toys, jewellery, bags, ornaments, leather products, batiks and wood
craft among others.

I used Michael Porter’s Five Forces model in analyzing the industry structure. The model uses
five competitive forces that determine industry profitability and attractiveness. These are existing
rivalry/ competition, power of buyers, substitutes, suppliers, and threat of new entrants.
Rivalry within the industry

Handicrafts production in Uganda is cultural, traditional and predominantly a cottage industry,


engaged in by rural youth of both gender but largely by women folk, to supplement household
incomes. The tradition has been to hand over craftsmanship and skills from generation to
generation.

The producers of handicrafts products from banana fibers can be categorized into two; Individual
producers: these are local individuals who produce products like mats, caps, bags and others
from unprocessed banana sheaths. Most of the products they produce are used for home use and
little is sold and, private companies: these are registered businesses which produce quality
products from banana fibers. The most pronounced among such companies is cottage enterprise
in Kireka which makes paper bags and fabrics from banana fibers.

Some of their products can be traced in some supermarkets, craft shops, gift shops and market
centres in and around Kampala city and villages.

The industry is not well supplied and has limited competition because all the industries are still
small and production capacity is small scale.

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Threat of new entrants

The threat of new entrants is fairly high at the production level because of the low technology
requirements, and low investment capital requirement. Commercial production in the sector
however requires high capital requirements due to high technology needed to maintain
operations all year round to satisfy the ever increasing market for banana fiber bags and other
products.

Threat of substitutes
The industry has fairly large number of substitutes. Banana fiber bags falls in the packaging
industry; which is already stocked with a number of packaging materials both biodegradable and
non biodegradable like polythene bags, envelopes, paper bags, plastics, boxes among others. its
good however to note that the government is promoting the production of biodegradable
packaging products which are environmentally friendly.

Bargaining power of customers

Customers are the main reason for a business’s existence. Customers for banana fiber bags can
be categorized as a) local buyers who are available in gift shops, craft shops, supermarkets and
shopping/market centres in and around Kampala and other major towns in the country. These
form the largest market for these products. B) Regional and international market. Rwanda
imposed and enforced its total ban on the use of polythene bags below 32 microns. This has
given a ready market for products that are substitute to polythene bags and banana fiber bags are
not exclusion. Tourists from some of the foreign countries regularly visit the country and are
prey to beautiful products like these bags. The EU, USA, and others have been recognized as net
importers of handicrafts products from Uganda. These markets however demand for high quality
products that lasts the taste of time, sold at fair prices.

Bargaining power of suppliers

The main raw material in making banana fiber products is the banana fiber itself. Banana fiber is
extracted from banana sheaths. Many farmers’ in Uganda most especially in the west and central
Uganda usually abandon an estimated 1000 tonnes of banana stems after eating the fruits per
annum. When approached, they sell each stem at 1000/=. Processing these stems require fiber

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extraction technology which is readily available in Kampala as well as countries like India, china
and Japan. The advanced multipurpose technology costs between 20m-30m shs. The industry
also requires natural dies for basic designs, which dies are also naturally available in several
shops in Kampala city. More details of inputs and suppliers are described in section six of this
business plan.

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Competitor analysis

4.0 Introduction

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

4.1 Competitive environment

The level of competition in this sector is minimal. There are few producers of products from
banana fibers with only small producers in the villages who make products from dried banana
sheaths. There is only one industrial producer of paper bags, bags and other products from
banana fibers in Uganda. Imported products of similar nature are not so rampant but the
competition from substitutes like paper bags and polythene bags is so rampant.

4.2 Competitor profile

Due to unique industry of banana fiber products we shall compare our attributes to one producer
who measures up to our nature of operation. This is as shown in the competitor profile matrix
below;

Competitor profile matrix


ATTRIBUTES Banana bags Uganda ltd Cottage enterprise Kireka
Quality 5 5
Colour 5 5
Product use 5 3
Product range 3 3
Branding 5 4
Weight 5 5
Handling 5 2
Future prospects 5 5
Tech support 5 5
Location 5 2
Pricing 5 4
Distribution channels 5 5
Marketing strategy 4 5
Target market 4 3
Company size 2 5
Financial resources 3 5
Strength 5 5
Weakness 2 3
Strategic alliances 4 5
Key management 5 5
Operations 4 4

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Market share 2 5
4.3 SWOT analysis
Strengths

Research on fiber technology: I have done some good research in using the various fibre to
produce bio-degradable products, Adequate skills of our team: the production manager holds a
Bachelor of Science in Wood Science and Technology from Makerere University and a master’s
of science in forestry, majoring in fibre processing. He has also under gone training in processing
fibre into paper in India in 2008 and another one in processing banana fibres into textiles in 2009
in Japan and, Reliable suppliers of banana stems from Ntinda, Namugongo, Kyambogo estates
and Mukono. We shall establish production facilities for extracting fibers in banana production
regions so that we transport processed fibers to our workshop in Kampala for producing finished
products. We shall also embark on designing models where farmers from upcountry areas will be
taught how to extract the fibre from banana stems and he buys them in kilograms.

The main Weakness is Failure to meet huge orders because our production capacity is still low.
We shall start operation on small scale and this may limit us from meeting the increasing market
demand.

Opportunities however include; The encouragement of the development of bio-degradable


technology after Makerere announced plans to burn used examination scripts every two years
due to lack of storage facilities. It’s a common practice by most institutions in the country to
burn used scripts.

Uganda Industrial Research Institute is in charge of the pilot paper plant to train and equip young
entrepreneurs with the technology of fibre processing for making paper and bags. And
Government also proposed to ban the use of polythene bags (Kaveera) motivating him further to
manufacture bio-degradable packaging materials. “If the Government ban on plastic bags is
enforced, this will help create a market for paper bags, promote rural enterprises and employ
rural youth and women.”

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4.4 Competitive advantage

The business derives its Competitive advantage as shown in the competitive advantage matrix
below;

Main Their strengths over my business Their weaknesses My competitive


competitor over my business advantage over
competitor
Cottage Started operations in 2010 with a Production capacity Strategic alliance with
enterprise small scale biodegradable is low leaving vast Uganda industrial
kireka technology producing paper bags. market unsupplied. research institute,
the company is located in a Makerere university
suburb of Kampala city and and Uganda
supplier supermarkets and gift handicrafts
shops association for
technical assistance.

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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

The business is targeting final consumers of its products. These consumers shall be got in
supermarkets, gift shops, and craft shops and through export. Banana bags Uganda is here to
provide an alternative packaging solution to all packaging problems that have been created by
the hazardous polythene bags. These bags are multipurpose and can be used for carrying or
packaging anything; drinks, food, jewellery, used as a hand bag, or shopping bags. These
customers buying decision is characterized by bulk purchases. Supermarkets and gift shops buy
in bulk and sell in small quantities to buyers. The exporters buy in bulk and distributes to several
countries. Consumer behavior to these market segments is largely influenced by the products
distinctive features, which can be utilitarian, aesthetic, creative, cultural attachments, decorative,
functional, religiously and socially symbolic and significant.

5.2 Product/service strategy

The business will initially offer bags as its major brand. In the next five years, it will introduce
other products from banana fibers like paper bags, and fabrics. In response to needs of clients,
these products will be designed to follow the quality specifications preferred by our clients. We
shall differentiate our products from those of competitors by the branding. Our products will be
wrapped with a special sticker which will bear all the product details, designed attractively to
capture customer’s attention.

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5.3 Pricing strategy

The business intends to use introductory low price in order to get customers to use. These prices
will however depend on the costs of production, prices of competitors, value and quality of the
product.

Sample of the business’s price list is as shown in the table below;


Item (size) Description Price (shs)
Small 1 piece 2000
Medium 1 piece 3000
Large 1 piece 4000
Prices of homecare paper products compared to those of competitors are as shown below;
Product categories Kireka products Banana bags products
Small 5,000 3000
Medium 9,000 4000
Large 15,000 5000

The evidence that the target market will accept my offer is that many people like to get more at
low costs, they like bargaining for price reductions and low prices is what I am bringing to them
as compared to other paper bag makers
5.4 Positioning

As an alternative of having to suffer the unending plight of environmental downfall because of


the hazardous polythene bags, we are introducing and encouraging the use of banana fiber bags
which is environmentally sustainable and friendly. They do not pollute the land, air and water;
they can be reused many times in their lifetime and doesn’t have any environmental effect at all.
A long lasting and sustainable solution to all packaging needs the future of biodegradable
industry in Uganda that will produce quality fiber bags. The business name is banana bags
Uganda limited because we want to be associated with banana for easy identity. The Banana Bag
has been a favorite for a summer bag large enough for all of your necessities plus an interior and
exterior pocket to keep your keys and mobile phone handy; fully lined with satin and top zipper
keeps everything inside. The strap is adjustable so you can wear it as you like! 

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5.5 Communication strategy

We intend to inform our target market about the availability of our products or services by;

i. Designing and hosting a company website. This will be the avenue where all necessary
information about our operations and benefits will be communicated to our clients; it’s
also where online orders shall be handled. This is intended to capture both local and
international clients. We shall complement this with email, and social media.
ii. Mass advertising using free or cheap media like inviting “the entrepreneur team” of NTV
Uganda to record and air our story in, “the pakasa magazine” of the new vision news
paper, among others.
iii. Word of mouth, where our satisfied clients pass on the information to their friends,
relatives and colleagues.
iv. Outdoor advertising, where we shall print company tags and pin them on the company
vehicles and on vehicles of interested clients.
v. On starting operations, we shall have a launch of the company where we shall invite a
number of media houses, celebrities, and personalities just to get the attention of many
towards our services.
vi. The visual identity of our company will be shown with a unique logo, a brand name, a
tagline ‘’man’s natural friends’’

5.6 Channel strategy

We shall deal directly with our customers through personal selling, using our salesmen and the
company website. We also intend to also involve agents/wholesalers and retailers who will link
us to both local and the outside market. We are currently entering negotiations with many
organizations engaged in handicraft promotion activities albeit in a very fragmented and
disjointed manner. Such organizations include, Uganda Export Promotion Board, Uganda
Women Entrepreneurs Limited (UWEAL), AGOA Office, Uganda Small Scale Industries
Association (USSIA), National Organization of Women Associations in Uganda (NOWAU),
National Arts and Crafts Association of Uganda (NACAU), Private Sector Foundation Uganda
(PSFU), UNIDO and many others.

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5.7 Sales strategy

We shall sell our products through personal selling, wholesalers and through our website. The
company will have a sales team that will not only look for clients but also close deals. The sales
team will be recruited on merit from recognized institutions of learning using head hunting, they
will be given the best training on sales. They will earn salaries, commissions and allowances.
The sales force will be supported by giving them all the necessary facilitations to enable
successful completion of their activities for example transport, fuel, food, and refreshments for
instance during events, exhibitions, attending an interview or talk shows.

5.8 Revenue model

The business’s revenue model is based on the plant’s production capacity of 150 finished bags
per day, 6 days a week and 24 days a month.

The annual revenue model for business is as shown below

Banana Bags Uganda Limited


Sales projections
(Amount in UGX)
Price indicators Year 1 Year 2 Year 3 Year 4 Year 5
Annual price growth rate 5% 8% 13% 18%
Small size bags 2,000 2,100 2,268 2,563 3,024
Medium size bags 3,000 3,150 3,402 3,844 4,536
Volume indicators Year 1 Year 2 Year 3 Year 4 Year 5
Annual volume growth rate 2% 3% 4% 5%
Small size bags 19,800 20,196 20,802 21,634 22,716
Medium size bags 19,800 20,196 20,802 21,634 22,716
Annual Sales Year 1 Year 2 Year 3 Year 4 Year 5
Small size bags 39,600,000 42,411,600 47,178,664 55,444,366 68,695,569
Medium size bags 59,400,000 63,617,400 70,767,996 83,166,549 103,043,354
Total sales 99,000,000 106,029,000 117,946,660 138,610,914 171,738,923

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Operations plan

6.0 Introduction

This section of the business plan covers the input factors, production process, quality control,
record keeping and procedures and billing and collection processes and procedures.

6.1 Input factors

Commercial production of bags from banana fibers requires a number of inputs for example raw
materials, machinery tolls and equipments, and premises. This is as discussed below;

Raw materials

The business needs banana stems/sheaths. The list of suppliers of the above raw material is
shown in the table below;

Raw materials and suppliers

Raw materials Suppliers


Banana stems Farmers in Masaka, Mbarara, etc
Natural dies Shops in Nasser road Kampala
Banana fiber Cottage enterprise Kireka

Equipments

The business requires a banana fiber extractor which is as described below;

Machinery is developed by German technology, with 1 H.P. single phase motor, Easy to
Mobilize (Portable), Ladies can operate, less maintenance, and safe to operate, User friendly &
Economic. Clean work atmosphere, Fifty times increase in fibre production compared to manual
process, Superior quality fibre in terms of length, softness and colour.

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Picture of the machinery is shown below in different sides;

Other equipments include a paper/fiber cutter, operating tables, seats, casting nets, etc.

Premises

The business requires a 15 x 10 special room is enough for one unit (Includes storing of raw
material and finished products)

6.2 Production/service delivery process

It starts with the Extraction of fibers. Banana fibres are extracted from banana stems. When
extraction machine is used, the banana stems are split into single sheaths, placed into the roller
tray of the machine and squeezed to remove the liquids and remain with the fibre. After
collecting the raw materials, extract the fibre from fresh peeled banana stalks to remove excess
moisture, then treat the sorted and cleaned fibre by cooking it. The cooked fibre is then washed
with water and then pulped or beaten using a Hollander and bleached with simple additives.
Products are then formed using casting nets, dried and smoothened before it is designed and
folded to produce various paper products such as packaging bags and cards among others.

According to Godfrey Atuheire from the National industrial research institute, the process of
extracting banana fibres begins with rubbing the banana stem against wood. After this, the fibres
are boiled in water with ash for about one hour to remove impurities. This is followed with

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blending, and a wire mesh is used to drain away the water. The last step is drying, and then
product development takes place.

Mr Joab Bajunnue a proprietor of biodegradable technology in Uganda says that The steps to get
banana fiber are as follows: The process involves splitting of the banana pseudo-stem into strips,
Place the strips into an open drum to be washed, The strips should then be left to dry, Using a
combination of traditional and modern techniques, the fiber can be converted into various utility
and artistic items, To effectively run a business based on banana fibers one needs a constant
supply of banana stems from which to extract the fibers, artists to craft artworks or utility items.
The splitting of the bananas can be done manually.

The project is estimated to produces at least 100 packaging bags per day on small scale.

6.3 Quality control

Use of affordable but high quality raw materials (banana stems), obtained locally here in
Uganda. These raw materials will be processed using advanced machinery i.e. the banana fiber
extractor shown in the picture above from India, Regular repair and maintenance of production
machinery, tools and equipments through servicing, greasing, repair, replacement of worn out
parts.

Employ relatively cheap but highly skilled and experienced team of workers with hands on skills
training in fiber extraction and exposure to fiber extraction technology from India and Japan. The
extracted fibers shall be carefully blended with natural dies for attractive looks.

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.

Proper handling and storage of raw materials (banana fibers) and finished products (fiber bags)
in a well aerated/ventilated and moisture free rooms and packages, and Recycling of damaged
products to make better ones.

21
We shall continue carrying out research on the best fiber extraction technology in the world and
the recent trends in biodegradable technology, bench mark our close rivals and copy and apply
tactics to survive.

6.4 Record keeping and procedures

The business will acquire simple accounting software for small businesses which will be put in
place to ensure that records are maintained systematically and are up to date and accurate; with
integrity and confidence of clients and suppliers upheld at all times. In addition, this software
will take care and make extracts/reports of daily, weekly, monthly and annual records of
invoices, inventory, receipts, time worked, bank statements, expenses, cash flows, financial
statements like balance sheet, comprehensive income among others. These records will be
entered on daily basis by the respective persons concerned but will be maintained by the officer
in charge of records.

The procedures shall be as follows;

i. Records of employees including personal details, academic qualifications, trainings,


performance appraisals etc are collected and stored in the directors office. Those of
clients that is location and address, kind of relationship with the business, debt if any
etc collected and stored in clients folder. Confidentiality of these records is adhered to
at all times. The records shall be held for a period of up to years of the business
legislation.
ii. Client information is saved in the Client Management System that is accessible to
accounts Staff only. This system is designed to manage client’s records from entry to
exit in and out of the organization.
iii. Client records and company sales leads are collected by the Director of Sales and
Marketing and stored and managed in Microsoft’s Access Database.
iv. Extracts of financial statements, source documents and other records shall be made on
monthly basis.
v. All records on the company’s record management systems are backed up monthly.

22
vi. The business will review its record management systems on an ongoing basis through
staff meetings to determine if any adjustments to the collection, maintenance and
management of accurate records need to be made.
vii. Meeting minutes and action points will be recorded and accessible to all staff on the
server. Once changes have been implemented relevant staff will be notified and any
necessary staff training provided.

6.5 Billing and collection policies and procedures

It’s the policy of banana bags Uganda limited to accurately manage money coming into the
company as a result of sales activity by invoicing all customers and to keep accurate and timely
accounts receivable records.

The business’s billing procedure addresses three tasks in the billing process, which involve
collecting the information needed to construct an invoice, creating invoices, and issuing them to
customers.

The company will set up accounts for customers to structure payments and address the question
of whether to issue credit and to whom, collect the money from customers who have made
purchases, and reconcile invoicing and funds received.

Managing Invoicing: The business will speed up collection by issuing invoices as soon as the
sale is complete. this will be done as soon as the customer makes orders for products.

Managing Credit: Customers that receive credit must have accounts for which the company has
performed a credit check and which it monitors for prompt payment. Customers eligible for
credit shall be those who have been dealing with the business for long and are trust worthy and
reliable.

Collecting Receivables: The Company will collect receivables in 30 days (standard). it will also
offer discounts or incentives for earlier payment, with Regular reminders to customers with
overdue accounts.

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Management plan

7.0 Introduction

This section of the business plan covers Ownership, Top management, Staff
structure/organization chart and Reward structure.

7.1 Ownership

The business will be owned and managed by Kenneth………………… who will be responsible
for its operations and general management.

7.2 Top management

The management team comprise of a team of young entrepreneurs who are determined to make a
breakthrough in business. They have been carefully selected from an array of professional
disciplines like entrepreneurship and small business management, fibre processing and
technology, biodegradable technology, marketing and business administration. The company has
got itself an advisor from the National Industrial research institute who is well equipped with
fibre processing technology.

The management team can be broken down as shown below;

1. Director: This will be Mr. Kennneth ………………….. who is a graduate of


entrepreneurship and small business management of Makerere university business school.
His duties will include among others; Mobilization of resources (land, labour, capital, and
time), General management (planning, organizing, coordinating, controlling, staffing and
motivation), Financial management, and management of entry, stay and exit of human
resources, representation of the company in talk shows, interviews, and publicity. He
boasts of entrepreneurial skills like business management and development, financial
management, marketing, creativity and innovation, to mention but a few.
2. Production manager: this person will hold a bachelor of science in wood science and
technology with bias on fiber processing. His duties will be to extraction of fiber,
application of additives, making final products and research on fiber trends. He will take

24
care of quality and standardization. He will be assisted by two managers’ one in charge of
banana fiber extraction and the other in charge of fiber products manufacturing.
3. Advisor: the company will outsource the services of Mr. Geoffrey Atuheire of National
Industrial research institute who is well equipped with fibre processing technology. He
has made trips and trained in fiber processing from India and Japan. He works to help
young people who want to create jobs.

7.3 Staff structure/organization chart

The company’s organization chart is as shown below;

Director

Finance/Acc
Production Marketing
ounts
manager manager
manager

Banana fiber Fiber


procesing products Sales team
manager manager

7.4 Reward structure

The business’s reward structure will comprise of both cash and non cash rewards. Cash rewards:
the permanent employees will earn monthly salaries, paid directly in their respective bank
accounts. The temporary employees will earn wages paid to them basing on the terms and
conditions of work. Non cash rewards: the employees will enjoy a large array of benefits like
social security fund, allowances (overtime, transport, and lunch), trainings, promotions, bonuses,
recognitions for merit, further education in respective areas of the business future, among other
benefits that management deems necessary. Refer to appendix 8 for the reward structure for
banana bags Uganda employees.

25
Financial plan

8.0 Introduction

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

8.1 Investment requirements

The business requires 20 million Uganda shillings to start on a small scale. This will be enough
to enable the business kick start its operations and provide for fixed capital requirements, pre-
operating expenses and working capital. Refer to appendix 3 for details of initial investment cost.

8.2 Financing plan

The above initial investment cost will be financed by personal savings, friends and family,
donated motor vehicle, and as shown in appendix 3, note 6.

8.3 Financial assumptions and projections

8.3.1 Financial Assumptions

1. Revenue forecasts
The company will embark on the production of small sized bags sold at 2000/= factory
price. Volume projection is 150 bags per day, working for 24 days a month. Refer to
appendix 5 for more details.
2. Indirect costs
These includes costs for materials, labour and major indirect expenses. For example Rent,
Audit and legal, Administrative staff, Equipment rental, Fuel for transport and delivery,
Maintenance, Generator, Security, Telephone, Bill expense, Apportion of sales cost,
Business travel expenditure, staff salaries, General and Administrative Costs (G&A),
Transport and Conveyance Expenses, Internet and Data Cards, Postage and Courier
Expenditure, Repair Expenditure and Security Expenditure. Refer to appendix 6 for
details of some of the expenditures.

26
3. Direct costs like Project staff, Consultants, Project supplies, Publications, Travel, Labor,
Raw materials, Directors Salary shown in expenditure schedule in appendix 6.

4. Capital expenditures
For the business to operationalize, it needs a number of fixed assets like banana fiber
extractor, paper cutter, motor vehicle for delivery and transportation, and Computer,
hardware and software, and a premise. See details in appendix 4.

5. Working capital
The business will need stock adequate stock of goods/inventory, take care of debtors and
creditors. This is as shown in appendix 9.

8.3.2 Financial Projections

1. Income statement

The business registers an annual net profit of more than 24 million Uganda shillings which
grow steadily to over 155 million within five years. Refer to appendix 10 for details.

2. Balance sheet

The business recorded a sound financial position as shown by more asset values than the
liabilities. Refer to appendix 12 for more on the above statement.

3. Cash flow statement

The business cash flows is positive with 75 million ugx in year one stretching to over 459
million ugx in five years time. For more details, refer to appendix 11.

4. Break-even analysis

The business net present values reveal a whooping 524 million Uganda shillings with an IRR
of over 466%. This shows that the business is worth giving a chance. Refer to appendix 13
for the net present value computation.

27
8.4 Financial sustainability strategy

Collaboration/partnership: The formation of networks with similar or partner companies


facilitates knowledge sharing and propels innovation.

Innovation & Technology: This introverted method of sustainable corporate practices focuses on
a company's ability to change its products and services towards less waste production and
sustainable best practices.

Sustainability Reporting: Periodic reporting of company performance in relation to goals. These


goals are often incorporated in to the corporate mission

Reinvesting profits into the business

Credit from financial institutions if no other option is available

8.5 Risk and opportunity

Any business is susceptible to a number of risks and banana bags Uganda limited is no
exception. In addition there may be various opportunities that may excel the ability to achieve
the business goals and objectives. The table below shows a matrix which represents the potential
risks that may affect the business as well as the opportunities which may work in favor of the
business.

8.5.1 Risk and opportunity matrix

Risk/opportunity Potential Prevention/capitalizing


impact
Risks
Fire outbreak which can Extreme Insure our assets and plant against fire with one
destroy our production insurance company in Uganda, such that we can be
machinery able to recover our status quo in case an incidence
of fire occurs.
Poor quality banana fibers Very high Testing banana plants to identify those with good
fiber quality
Limited funds for expansion Solicit for soft loans from friends and money
lenders
Competition from rival firms High Produce quality products that lasts the taste of time,

28
and substitute products and sell our products at competitively low prices
that leaves room for us to get profits.
Pilferage low Regular supervision of our staff to ensure they do
not steal from the business, and punish those caught
in the act.
High Taxes, rent and rates Extreme We shall request for tax holiday and any other
incentives from the government.
Unforeseen costs like for High Avoid unnecessary costs if possible and only spend
research and development, on vital ventures and opportunities/needs
costs of production and staff
welfare
High Integrate forward into the industry to bring on
Unreliable suppliers and board local producers of banana for reliable supply.
distributors Create our own distribution channels to reach the
market
Opportunities
Availability of fiber Very high Acquire this technology and use it to produce
extraction technology which quality
can be imported from India.
National industrial research Very high Partner with them in research and demonstrations
institute for technical support and lobby for technical assistance
to small scale industries
Avenues for young Very high Expose ourselves and our activities to them for us
entrepreneurs like young to feature in their programs. In that we shall get to
achievers awards, Pakasa be known by others.
magazine, Ntv entrepreneur,
etc.
Government policy of ban Very high Provide an alternative to all packaging needs
using polythene bags
Promoters of handicrafts Very high Partner with them to export our products to outside
exports like Uganda export markets.
promotions board

Development plan

29
9.0 Introduction

This section of the business plan covers the implementation plan and time frame.

9.1 The implementation plan

Using a work breakdown structure, the action plan for the implementation of the business
activities is shown in the table below;

Banana bags Uganda limited implementation plan

Activity Duration Person responsible


Ordering fiber processing technology 1 month Director
Renovation of premises by painting walls and 2 weeks Production manager and assistants
ceiling
Getting all furniture for the business 2 weeks Production assistants
Installation of machinery, tools, equipments and 1 week Production assistants
furniture
Installation of utilities like water, electricity, 1 week Production assistants
internet, etc.
Registration of the business 1 month Director
Creation of company website 1 month Marketing manager
Creation and distribution of flyers, notices, 3 months Marketing manager
business cards and posters
Buying all supplies eg. Banana fibers 2 months Production assistants
Scheduling work for staff One Director & production manager
month
Test production 1 month Production manager
Commercialization and launch of the business 1 month Production manager, director and
marketing manager

9.2 Time frame

The implementation plan converted into a Gantt chart is as shown below;

30
9.2.1 Gantt Chart

Milestones (January to June 2015)


Tasks Responsibility
Ordering fiber processing Director
technology
Renovation of premises by Production manager
painting walls and ceiling and assistants
Getting all furniture for the Production assistants
business
Installation of machinery, tools, Production assistants
equipments and furniture
Installation of utilities like water, Production assistants
electricity, internet, etc.
Registration of the business Director
Creation of company website Marketing manager
Creation and distribution of Marketing manager
flyers, notices, business cards
and posters
Buying all supplies eg. Banana Production assistants
fibers
Scheduling work for staff Director &
production manager
Test production Production manager
& assistants
Commercialization and launch of Production manager,
the business director and
marketing manager
Jan Feb Mar Ap May Jun
r

Appendices

Appendix 1: Garbage problem in Kampala caused by the uncontrolled disposal of polythene bags
31
Polythene bags in Naguru polythene bags in Gaba

Polythene pile around Kalerwe

Appendix 2: alternative packaging solution introduced by Banana bags Uganda

32
33
Appendix 3: Financial assumptions

Banana Bags Uganda Limited


Financial assumptions
Note 1
Number of operational days in a year 264
Number of months in a year 12
Corporation Tax 30%
Discount Factor 30%
Note 2 Capacity indicators
Capacity (Volume in units) per day
Small size bags 75
Medium size bags 75
Note 3 Depreciation policy
Buildings 5.0% sln
Machinery & Equipment 7% sln
Motor Vehicles 5% sln
Furniture, Fixtures 3% sln
Computers 5% sln
Note 4 Working capital requirements
Inventory purchases 0 days
Debtors - 1 months' revenue 1 month
Creditors 1 month's expenses (Excluding salaries) 1 month
Note 5 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%
Note 6 Financing
Personal savings 50.00%
Friends & family 10.00%
Donated computer 3.00%
Donated car 25.00%
fundraising 12.00%
Total 100%

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Appendix 4: Initial investment cost

Banana Bags Uganda Limited


Initial Investment (start up costs)
(Amount in UGX)
Investment Item Amount
Fixed Assets: Year 0
Land & Building (underutilised)
Land & site development 500,000
Total Land & building 500,000
Machinery & Equipment:
Fiber Processing Equipments 1,000,000
Machinery 10,000,000
Total Machinery & Equipment 11,000,000
Motor Vehicles:
Transportation/delivery van 5,000,000
Total Motor Vehicles 5,000,000
Furniture & Fittings (donated)
Furniture & fittings 300,000
Total Furniture, fittings & others 300,000
Computers (donated) 600,000 600,000
Pre- Operating Expenses
Plant layout 200,000
Legal costs 300,000
General expenses 100,000
Total pre- operating expenses 600,000
Working Capital 2,000,000
Total Investment cost 20,000,000
Financing structure
Personal savings 50.00% 10,000,000
Friends & family 10.00% 2,000,000
Donated computer 3.00% 600,000
Donated car 25.00% 5,000,000
fundraising 12.00% 2,400,000
Total 20,000,000

35
Appendix 5: Sales projections

Banana Bags Uganda Limited


Sales projections
(Amount in UGX)
Price indicators Year 1 Year 2 Year 3 Year 4 Year 5
Annual price growth rate 5% 8% 13% 18%
Small size bags 2,000 2,100 2,268 2,563 3,024
Medium size bags 3,000 3,150 3,402 3,844 4,536
Volume indicators Year 1 Year 2 Year 3 Year 4 Year 5
Annual volume growth rate 2% 3% 4% 5%
Small size bags 19,800 20,196 20,802 21,634 22,716
Medium size bags 19,800 20,196 20,802 21,634 22,716
Annual Sales Year 1 Year 2 Year 3 Year 4 Year 5
Small size bags 39,600,000 42,411,600 47,178,664 55,444,366 68,695,569
Medium size bags 59,400,000 63,617,400 70,767,996 83,166,549 103,043,354
Total sales 99,000,000 106,029,000 117,946,660 138,610,914 171,738,923

Appendix 6: Expenditure schedule

Banana Bags Uganda Limited


General Expenditure projections
(Amount in UGX)
% of sales
General expenses revenue Year 1 Year 2 Year 3 Year 4 Year 5
Power & lighting 1.20% 1,188,000 1,272,348 1,415,360 1,663,331 2,060,867
Water 2.50% 2,475,000 2,650,725 2,948,666 3,465,273 4,293,473
Airtime, telephone bills 2.30% 2,277,000 2,438,667 2,712,773 3,188,051 3,949,995
Transportation 3.00% 2,970,000 3,180,870 3,538,400 4,158,327 5,152,168
Admin Expenses 4.00% 3,960,000 4,241,160 4,717,866 5,544,437 6,869,557
Business Promotion (advertising, etc) 1.80% 1,782,000 1,908,522 2,123,040 2,494,996 3,091,301
Maintenance & Repairs 3.70% 3,663,000 3,923,073 4,364,026 5,128,604 6,354,340
Cleaning 2.00% 1,980,000 2,120,580 2,358,933 2,772,218 3,434,778
Total General expenses 20,295,000 21,735,945 24,179,065 28,415,237 35,206,479

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Appendix 7: Depreciation schedule

Banana Bags Uganda Limited


Depreciation schedule
(Amount in UGX)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Building
Opening cost 500,000 500,000 500,000 500,000 500,000 500,000
Additions -
Depreciation 5%
Net Book Value 500,000 500,000 500,000 500,000 500,000 500,000
MACHINERY AND EQUIPMENT
Opening cost 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000
Additions
Depreciation 7% 770,000 770,000 770,000 770,000 770,000
Accumulated Depreciation 770,000 1,540,000 2,310,000 3,080,000 3,850,000
Net Book Value 11,000,000 10,230,000 9,460,000 8,690,000 7,920,000 7,150,000
MOTOR VEHICLES
Opening cost 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Additions
Depreciation 5% 250,000 250,000 250,000 250,000 250,000
Accumulated Depreciation 250,000 500,000 750,000 1,000,000 1,250,000
Net Book Value 5,000,000 4,750,000 4,500,000 4,250,000 4,000,000 3,750,000
FURNITURE
Opening cost 300,000 300,000 300,000 300,000 300,000 300,000
Additions
Depreciation 3% 9,000 9,000 9,000 9,000 9,000
Accumulated Depreciation
Net Book Value 300,000 300,000 300,000 300,000 300,000 300,000
Computers
Opening cost 600,000 600,000 600,000 600,000 600,000 600,000
Additions
Depreciation 5% 30,000 30,000 30,000 30,000 30,000
Accumulated Depreciation 30,000 60,000 90,000 120,000 150,000
Net Book Value 600,000 570,000 540,000 510,000 480,000 450,000
TOTALs
Opening cost 17,400,000 17,400,000 17,400,000 17,400,000 17,400,000 17,400,000
Total Additions - - - - - -
Total Depreciation - 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000
Total Accumulated Depr - 1,050,000 2,100,000 3,150,000 4,200,000 5,250,000
Total Net Book Value 17,400,000 16,350,000 15,300,000 14,250,000 13,200,000 12,150,000

37
Appendix 8: Salaries projections

Banana Bags Uganda Limited


Salaries projections
(Amount in UGX)
Number of staff Year 1 Year 2 Year 3 Year 4 Year 5
Category Terms
Drirector Full time 1 1 1 1 1
Production Manager Full time 1 1 1 1 1
Production Assistant Full time 4 4 5 6 8
Marketing Manager Full time 1 1 1 1 1
Driver Full time 1 1 1 1 1
Sales representative Volunteers 2 3 4 5 6
Total 10 11 13 15 18
Salary rate per month Year 1 Year 2 Year 3 Year 4 Year 5
Annual increase in rate per year 5% 6% 7% 8%
Drirector 1,200,000 1,260,000 1,335,600 1,429,092 1,543,419
Production Manager 800,000 840,000 890,400 952,728 1,028,946
Production Assistant 400,000 420,000 445,200 476,364 514,473
Marketing Manager 550,000 577,500 612,150 655,001 707,401
Driver 400,000 420,000 445,200 476,364 514,473
Annual salary amount
Drirector 14,400,000 15,120,000 16,027,200 17,149,104 18,521,032
Production Manager 9,600,000 10,080,000 10,684,800 11,432,736 12,347,355
Production Assistant 19,200,000 20,160,000 26,712,000 34,298,208 49,389,420
Marketing Manager 26,400,000 27,720,000 36,729,000 47,160,036 67,910,452
Driver 4,800,000 5,040,000 5,342,400 5,716,368 6,173,677
Total annual salary 43,200,000 45,360,000 53,424,000 62,880,048 80,257,807

Appendix 9: Working capital schedule

38
Banana Bags Uganda Limited
Working capital schedule
(Amount in UGX)
Working capital requirements Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Inventory 16,000,000 20,000,000 30,000,000 45,000,000 70,000,000
Debtors - 1 months' revenue 8,250,000 8,835,750 9,828,888 11,550,910 14,311,577
Creditors 1 month's expenses (Excluding salaries) 20,295,000 21,735,945 24,179,065 28,415,237 35,206,479
Net Working Capital 2,000,000 3,955,000 7,099,805 15,649,823 28,135,672 49,105,098

Incremental Working Capital 2,000,000 1,955,000 3,144,805 8,550,018 12,485,849 20,969,426

Appendix 10: Income and expenditure schedule

Banana Bags Uganda Limited


Income and Expenditure Account
(Amount in UGX)
Year 1 Year 2 Year 3 Year 4 Year 5
INCOME
Total Sales 99,000,000 106,029,000 117,946,660 138,610,914 171,738,923
Other income eg Training & consultancy 1,000,000 1,500,000 2,000,000 2,500,000

Less: EXPENDITURE
Salaries 43,200,000 45,360,000 53,424,000 62,880,048 80,257,807
Depreciation 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000
General expenses 20,295,000 21,735,945 24,179,065 28,415,237 35,206,479

Net profit before interest and tax 34,446,000 38,874,055 40,784,594 48,256,629 57,715,637
less: loan interest
Net profit before tax 34,446,000 38,874,055 40,784,594 48,256,629 57,715,637
less: tax 30% 10,333,800 11,662,217 12,235,378 14,476,989 17,314,691
Net profit (loss) after tax 24,112,200 27,211,839 28,549,216 33,779,640 40,400,946
Retained earnings 24,112,200 51,324,039 79,873,255 113,652,895 154,053,841

Appendix 11: Cash flow statement

39
Banana Bags Uganda Limited
Cashflow statement
(Amount in UGX)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Cash Inflows
Opening cash balance (1,200,000) 75,550,000 156,698,250 242,915,826 342,125,654
Personal savings 10,000,000
Friends & family 2,000,000
computer & fundraising 3,000,000
donated car 5,000,000 - 1,000,000 1,500,000 2,000,000
Sales 99,000,000 106,029,000 117,946,660 138,610,914 171,738,923
Total Inflows 20,000,000 97,800,000 181,579,000 275,644,910 383,026,741 515,864,577
Cash Outflows
Pre-operating Expenses 600,000
Capital Expenses 18,600,000
Working Capital 2,000,000 1,955,000 3,144,805 8,550,018 12,485,849 20,969,426
Operating expenses 20,295,000 21,735,945 24,179,065 28,415,237 35,206,479
Total Outflows 21,200,000 22,250,000 24,880,750 32,729,083 40,901,086 56,175,905
Closing cash balance (1,200,000) 75,550,000 156,698,250 242,915,826 342,125,654 459,688,672

Appendix 12: Balance sheet

Banana Bags Uganda Limited


Balance sheet
(Amount in UGX)
Year 1 Year 2 Year 3 Year 4 Year 5
ASSETS:
Non current assets
Net non current assets 16,350,000 15,300,000 14,250,000 13,200,000 12,150,000
Current assets
Inventory 16,000,000 20,000,000 30,000,000 45,000,000 70,000,000
Debtors 8,250,000 8,835,750 9,828,888 11,550,910 14,311,577
Cash 75,550,000 156,698,250 242,915,826 342,125,654 459,688,672
Total current assets 99,800,000 185,534,000 282,744,715 398,676,564 544,000,249
Total Assets 116,150,000 200,834,000 296,994,715 411,876,564 556,150,249
Equity and Liabilities
Equity & reserves
Capital 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Retained Reserves 24,112,200 51,324,039 79,873,255 113,652,895 154,053,841
Owners Equity 44,112,200 71,324,039 99,873,255 133,652,895 174,053,841
Current Liabilties
Accruals 51,742,800 107,774,016 172,942,395 249,808,432 346,889,929
Creditors 20,295,000 21,735,945 24,179,065 28,415,237 35,206,479
Total current liabilities 72,037,800 129,509,961 197,121,460 278,223,669 382,096,408
Total Equity & Liabilities 116,150,000 200,834,000 296,994,715 411,876,564 556,150,249

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Appendix 13: Net Present Value

Banana Bags Uganda Limited


Net Present Value computation

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5


Cashflows
Initial Investment 20,000,000
Net Cashflows 75,550,000 156,698,250 242,915,826 342,125,654 459,688,672
20,000,000 75,550,000 156,698,250 242,915,826 342,125,654 459,688,672
Discount factor 30% 1.000 0.769 0.592 0.455 0.350 0.269
Present Value 20,000,000 58,115,385 92,720,858 110,567,058 119,787,701 123,807,525

NPV 524,998,527
IRR 466%

41