1

INTRODUCTION

Objective of the Study

Before anybody would venture in any business undertaking, it is

appropriate to conduct a feasibility study in order to know the important things

to do and apply on the business. This study is aimed to:

1. Measure the competitiveness of the proposed business in the area.

2. Evaluate viability, significance, as well as the profitability of the

proposed business.

3. Meet the desired demand for massage services and provide

satisfaction to consumers.

4. Venture in an undertaking that has potential to thrive in the market.

Methodology

In order to complete our studies, the researchers accumulated

important data, through observations and interviews, to gather relevant

information of the existing businesses, the location of the proposed business

and also the supplier of water refilling equipment. All the data are analyzed

and interpreted to come up with a proposed business.

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Scope and Limitations of the Study

The study focused on the four important aspects of the Feasibility

Study namely: Marketing, Technical or Production, Organization and

Management aspect and Financial aspect of the business. The proponents

conducted a study in Brgy. Maniki, Kapalong, Davao del Norte in order to

gather data. All the data presented in this study are limited only up to the

information provided by the business establishments that were undergone

with the interview on how they operate this kind of business and to the

households in Kapalong. These were made as bases of identifying the

viability of the business.

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Chapter 2

EXECUTIVE SUMMARY

Brief Description of the Project

The proposed business with a trade name “OPPA-HE-KHA-PHA Co.“

that serves relax and satisfactory massage services to their customers. The

establishment will be located in Brgy. Maniki, Kapalong, Davao del Norte. It

will sustain the needs of people in Brgy. Maniki, Kapalong in terms of

providing a satisfactory massage service in the said place.

Brief Profile of the Proponents

NAME EDUCATIONAL ADDRESS

BACKGROUND

Dais, John Keneth IV-BS Accounting Tech. Prk. Dahlia, Visayan Village,
Tagum City

Hangad, Stephen IV-BS Accounting Tech. Erlynville Subd., Tagum City

Mabaso, Doreen Jean IV-BS Accounting Tech. Zone-2, Prk. Lemonsito,

Brgy. Mankilam, Tagum City

Manguilimotan, Janmark IV-BS Accounting Tech. Purok 1, Poblacion, Mawab

Sarigumba, Ana Mae IV-BS Accounting Tech. Purok 5, Brgy. Mamacao,

Kapalong Dvo.

Tomarong, Kimberly IV-BS Accounting Tech. 058 Prk. Sampaguita,

Mangga, Visayan Village,
Tagum City.
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Contribution to the Economy

Local Community

The proposed business contributes to the local economy bringing

growth and innovation to the resources and progress in the way of living of the

community in which the business is established. It can also encourage

opportunities to people who are unemployed in the location. When consumers

prioritize local small businesses, they essentially give money back to their

local municipal.

Employment Generation

Small businesses present new employment opportunities and serve in

giving equitable and just financial rewards to the employees and to help uplift

their economic and spiritual well-being and reward talents and skills.

It will nurture a working environment with which our employees can

attain personal and social fulfillment in their jobs and foster services to our

patron customers.

Government

Small businesses provide government the ability to respond and adapt

quickly to changing economic growth, hence, the proposed business will give

contribution to the government through payment of taxes and application of

business permit.
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Chapter 3

MARKETING PLAN

Description of the Products/Services

The proposed business which will be named “OPPA-HE-KHA-PHA

Co.“ offers body massage in different term of stroke services:

Comparison of the Product with its Competitors

Therefore, the proponents have confidence that the business can meet

the expectations of its prospect customers. Since this kind of business is not

prominent in the location, the existence of a massage relaxation services that

respond to needs of its customer, is an advantage to the proponents. Thus,

the viability of the proposed business is assured.

Location and Business Layout

The proposed business will be located at National Highway, KCAST

Building, Brgy. Maniki, Kapalong, Davao del Norte, in front of the R Minimart.

Therefore, there is a big advantage because of its accessibility of the location

and there are a lot of establishments nearby in which workers are in need of

relaxation. The location site of the proposed business is presented on Figure

1 and Figure 2 shows the business layout.

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MUNICIPAL KCAST BUILDING

TOWN
MARYKNOLL
SQUARE
Business site HIGH SCHOOL

TAGUM CITY National Highway STO. TOMAS

7 Eleven R Minimart

Figure 1. Vicinity Map

 7

Fire Exit
Room 1 Room 2 Room 3

Room for
Room 4 Room 5
Equipments

Room for
Attendant Cashier
Equipments

Room for
Equipments

Comfort Room

Entrance

Figure 2. Business Layout

Market Area

The area of operation of the proposed business will be at Barangay

Maniki, Kapalong, Davao del Norte.

Main Customers

The proposed business will serve satisfactory massage services to the

workers and residents in Brgy. Maniki which is also in the Central Barangay of

Kapalong.
 8

Total Demand

Historical Demand

The historical demand is computed based on the total number of

households at Brgy. Maniki, Kapalong from year 2014-2016. When the

interview was conducted, the proponents considered only 110 household

respondents and 62 of them responded positively and almost all or equivalent

of 56% would consider “OPPA-HE-KHA-PHA Co.” is their best choice

among the others. They are very much willing to pay the said amount to have

a satisfactory massage services. Based on the response of the respondents,

a household can consume once per month and it will be multiplied by 12

months to come up with 12 times of massage per year. Table 1 presents the

historical demand in which the data of the household population ranging from

the age 20-65 years old was gathered from office of the Municipality of

Kapalong.

Table 1

Historical demand

Year No. of Average No. Total Demand

household percentage of massage (total customers)

population client (56%) services per year

per month

2014 10,714 6,000 1 72,000

2015 11,112 6,223 1 74,676

2016 12,240 6,854 1 82,248

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Projected demand

Table 2 shows the projected demand for the next three (3) consecutive

years. The average increase is computed using the moving average method

that reflected on annex A.

Table 2

Projected Demand

Year Based year Ave. % Projected demand (No.

Increase of customers)

2017 82,248 7% 88,005

2018 88,005 7% 94,165

2019 94,165 7% 100,757

Total Supply

Historical Supply

The proposed business has one competitor with its area of operation.

Based on the interview and survey of the entity engaged on water refilling

services, table shows the total supply for the past three years.
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Table 3

Historical Supply

Competitor 2014 2015 2016

Just Relax Body Massage 5,040 6,720 8,400

Total 5,040 6,720 8,400

Projected Supply

Table 4 shows the projected supply for the next three (3) years. As
indicated in the table, it shows that the projected supply will increase by 7%
using the weighted average. Base on the historical supply. See Annex B.

Table 4

Projected Supply

Year Based year Ave. % Projected demand (No.

Increase of pieces)

2017 8,400 29% 10,836

2018 10,836 29% 13,978

2019 13,978 29% 18,032

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Table 5

Demand and Supply Analysis

Year Demand Supply Unsatisfied

Past

2014 72,000 5,040 66,960

2015 74,676 6,720 67,956

2016 82,248 8,400 73,848

Present

2017 88,005 10,836 77,169

2018 94,165 13,978 80,187

2019 100,757 18,032 82,725

Market share

In Table 6 is the market share of the proposed businesses. The market

share set by the proponents is based on the capacity of the proposed

business. The level of production business can cope up expenses and still

have a net operating income. Table 6 presents the market share for

unsatisfied demand and the equal to 20% as its production capacity.

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Table 6
Market Share

Year Unsatisfied Market share Production

Demand Capacity
2017 77,169 13% 10,080

2018 80,187 13% 10,424

2019 82,725 13% 10,754

Selling Price

Table 7 shows the selling price of the products to be sold by the

proposed business and the price is based on the usual price of massage

services in other places especially in Brgy. Maniki, Kapalong, Davao del

Norte. The proponents conducted an interview from an establishment and

gathered information to get the price of the product taking into consideration

the cost of production.

Table 7
Projected Selling Price

Particulars Historical Year 1 Year 2 Year 3

selling price
Whole Body Php 300.00 Php 300.00 Php 300.00 Php 300.00
Massage
Half Body Php 150.00 Php 150.00 Php 150.00 Php 150.00
Massage
Foot Php 100.00 Php 100.00 Php 100.00 Php 100.00
Massage
 13

Sales Forecast

Table 8, 9 and 10 shows the projected sales revenue for the year 1 up

to 3. To get the total sales, the selling price multiplied by the quantity service

at full body massage, half body massage and foot massage with a total of

P1,579,200.00 for year 1, P1,663,200.00 for year 2 and P 1,747,200.00 for

year 3.

Table 8
Sales Revenue
2017

Particulars Quantity Selling Price Total Sales

services
Whole Body 4,738 Php 300.00 Php 1,421,400.00
Massage (47%)

Half Body 3,528 Php 150.00 Php 529,200.00

Massage (35%)
Foot Massage Php 100.00 Php 181,400.00
(18%) 1,814

Total 10,080 Php 2,132,000.00

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Table 9
Sales Revenue
2018

Particulars Quantity Selling Price Total Sales

services
Whole Body 4,899 Php 300.00 Php 1,469,700.00
Massage (47%)

Half Body 3,648 Php 150.00 Php 547,200.00

Massage (35%)
Foot Massage Php 187,700.00
(18%) 1,877 Php 100.00

Total 10,424 Php2,204,600.00

Table 10
Sales Revenue
2019

Particulars Quantity Selling Price Total Sales

services
Whole Body 5,054 Php 300.00 Php 1,516,200.00
Massage

Half Body 3,764 Php 150.00 Php 564,600.00

Massage

Foot Massage Php 100.00 Php 193,600.00

1,936

Total 10,754 Php 2,274,400.00

 15

Summary of Sales

Table 11 shows the summary of sales of Massage services over the

three (3) succeeding years.

Table 11

Summary of Sales

Particular 2017 2018 2019

Whole body
Php 1,421,400.00 Php 1,469,700.00 Php 1,516,200.00
Massage

Half body
Php 529,200.00 Php 547,200.00 Php 564,600.00
Massage

Foot Massage Php 181,400.00 Php 187,700.00 Php 193,600.00

Total Php 2,132,000.00 Php2,204,600.00 Php 2,274,400.00

Marketing Strategy

Promotional Measurement and Marketing

The proposed business, which is, mainly appreciates to the households

who are tired and exhausted to their work. The massage establishment has its

nature-like music to relax customers in the massage service. The neat

appearance of the workers and the signage of the proposed business which is

“OPPA-HE-KHA-PHA Co.” makes the customers more interested in the

product/service. The flyers and signage costs are P3,000.00 in total.

 16

Promotional Expense

Table 12 shows the promotional strategy of its corresponding projected

years. The proponents based these from one of the employees of Alyssa’s

Printing Press which allocated P 3,000.00 for the flyers and signage. Flyers

are distributed prior to actual operation and during the launching.

Table 12

Promotional Expense

Particular Cost Amount

Flyers P1,500.00 P1,500.00

Signage P1,500.00 P1,500.00

Total P3,000.00

Pricing Strategy

The proponents based the price from the normal and usual price of the

massage relaxation business in other places. In addition, the proponents

assumed that there is no price increase since the prices of massage services

in the market is constant.

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Chapter 5

ORGANIZATIONAL AND MANAGEMENT ASPECT

Form of Business Enterprise

Sole proprietorship is the easiest way to form a business. And as a

newbie in the world of business it is more advisable to choose this kind of

business. It is where owner manages the business by his own knowledge and

skill. In supervising the employees, it is manageable because few persons are

needed in the business and is less complicated and controllable in terms of

profit and losses division.

Management Qualifications and Functions

Figure 5 shows the existing organizational structure of the business. As

indicated in the figure, the owner/manager will be the one responsible for

managing the business. The owner will directly supervise the workers under

the appointed job.

Management Function and Qualification

A business should have the knowledge and wisdom enough to run and

manage a business. This factor will become a competitive edge of a business

over the other competitors.

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Management Qualifications and Functions

Personnel Job Description Job Qualification

Manager/owner/cashier -In charge in all business -Must be a graduate of 4

operation. years in Business and

-Includes accepting Management course

money and other forms of -Must be analytical and

payments, giving change, knowledgeable in the

producing receipts, business

recording the number of

gallons refill in the tank.

- recording the orders to

deliver from customers

-Supervises the workers

Workers - responsible in filling or -18 to 30 years old

refilling the containers of -Must be at least High

the customers. School Graduate

- includes delivering the -Must have a pleasing

containers to the personality to the

customer if they ask to customers.

deliver it. -must be polite and

approachable, can take

pressure and complaints

from customers.
 19

Chapter 6

FINANCIAL PLAN

FINANCIAL ASPECT

Major Assumptions:

1. Market share is assumed to be constant at 7% for the next

three (3) consecutive years.

2. Projection is computed using the Moving Average method.

3. Promotional expense is assumed to incur only during the

first year of operation.

4. Depreciation is computed using the straight line method.

5. Utility is assumed to increase by 5% per year.

6. Store Supplies expense is assumed to increase by 5% per

annum.

7. Rent expense is assumed to increase by 5% per year.

8. Business permit is assumed to be P 3,500 in the initial

year and increased by about P 500 per year.

9. Distribution expense is assumed to be P 5,000 per year.

10. Drawing is assumed by 70% of the net income.

Total Projected Cost

The propose business needs a total capital requirement of

P1, 500,000.00 to start the business operation.

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Pre-operating Expense

Business Permit 10,000.00

Initial Fixed Capital Cost

Machineries and equipment 136,755.00

Initial Working Capital (1 month)

Direct Materials 32,460.67

Direct Labor 71,080.00

Operating Expenses

Salaries and Wages 15,500.00

Utility Expenses 5,800.00

Store Supplies 859.00

Rent Expense 5,000.00

Repairs and Maintenance 1666.67

Seminar and Transportation

Expense 5,833.33 284,684.67
Total 284,684.67
Add: Cash on Hand 15,315.33

Total Investment Cost 300,000.00

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OPPA-TEH-LAO-HWA CO.
Projected Income Statement
For the Year Ended December 31, Year 1-3
(Php)
Year 1 Year 2 Year 3
Sales Revenues:
Aqua water 1,067,430.00 1,263,675.00 1,465,040.00
Total Revenues 1,067,430.00 1,263,675.00 1,465,040.00
Less: Cost of Production
Direct Materials 255,800.00 433,260.00 512,575.00
Direct Labor 106,743.00 108,315.00 109,878.00
Overhead 216,574.00 220,170.00 260,455.00
Total Cost of Production 579,117.00 761,745.00 882,908.00
Gross Profit 488,313.00 501,930.00 582,132.00
Operating Expenses
Depreciation 30,000.00 30,000.00 30,000.00
Salaries and wages 72,000.00 75,600.00 79,380.00
Utilities Expense 60,000.00 63,000.00 66,150.00
Store Supplies Expense 3,308.00 3,473.00 3,647.00
Repairs and Maintenance10,000.00 10,500.00 11,025.00
Business Permit 3,500.00 4,000.00 4,500.00
Administrative cost 8,000.00 5,000.00 5,000.00
Total Operating Expenses 186,808.00 191,573.00 199,702.00
Net income 301,505.00 310,357.00 382,430.00

OPPA-TEH-LAO-HWA CO.
Projected Cash Flows
For the Year Ended December 31, Year 1-3
(Php)
Year 1 Year 2 Year 3
Cash Inflows
Sales Revenues:
Aqua water 1,067,430.00 1,263,675.00 1,465,040.00
Total 1,067,430.00 1,263,675.00 1,465,040.00
Cash Outflows:
Acquisition of Fixed Assets
Machineries and Equipment 664,000.00
Cost of products:
Direct Materials 255,800.00 433,260.00 512,575.00
Direct Labor 106,743.00 108,315.00 109,878.00
Overhead 142,324.00 145,920.00 186,205.00

Operating Expenses
Depreciation 30,000.00 30,000.00 30,000.00
Salaries and wages 72,000.00 75,600.00 79,380.00
Utilities Expense 60,000.00 63,000.00 66,150.00
Store Supplies Expense 3,308.00 3,473.00 3,647.00
Repairs and Maintenance 10,000.00 10,500.00 11,025.00
Business Permit 3,500.00 4,000.00 4,500.00
Administrative cost 8,000.00 5,000.00 5,000.00
 22

Drawing 211,053,50 217,250.00 267,701.00

Total Cash Outflows 1,566,728.50 1,096,318.00 1,276,061.00
Net Increase (Decrease) (499,298.50) 167,357.00 188,979.00
Add: Cash Balance, Beginning 750,000.00 250,701.50 418,058.50
Cash Balance, Ending 250,701.50 418,058.50 607,037.50

OPPA-TEH-LAO-HWA CO.
Projected Balance Sheet
As of December 31, Year 1-3
(Php)
Year 1 Year 2 Year 3
Assets
Current Asset:
Cash 250,701.5 418,058.50 607,037.50
Non-Current Assets
Property, plant and
Equipment 664,000.00 664,000.00 664,000.00
Total 664,000.00 664,000.00 664,000.00
Less: Accumulated
Depreciation 74,250.00 148,500.00 222,750.00
Net Book Value 589,750.00 515,500.00 441,250.00
Total Assets 840,451.50 933,558.50 1,048,287.50

Owner’s Equity
Capital Beginning 750,000.00 840,451.50 933,558.50
Add: Net Income 301,505.00 310,357.00 382,430.00

Total 1,051,505.00 1,150,808.50 1,315,988.50

Les: Drawing 211,053,50 217,250.00 267,701.00

Total Owner’s Equity 840,451.50 933,558.50 1,048,287.50

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FINANCIAL RATIO

Gross Profit Ratio

The Gross Profit Ratio is a determinant whether the proposed

business will be efficient in utilizing raw materials. In year 1 the Gross Profit

Ratio is 43% while in year 2 it decreases by 6% and constant in year 3.

Gross Profit Ratio

Year 1 Year 2 Year 3

Gross Profit 488,313.00 501,930.00 582,132.00

Divide: Revenue 1,067,430.00 1,263,675.00 1,465,040.00

46.% 40% 40%

Net Profit

The net profit ratio is used to measure the overall profitability

and hence it is very useful to proprietors. The Net Profit of the proposed

business is increasing per year.

Net Profit Ratio

Year 1 Year 2 Year 3

Net Income 301,505.00 310,357.00 382,430.00

Divide: Revenue 1,067,430.00 1,263,675.00 1,465,040.00

28% 25% 26%

Return on Investment
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The return on investment is a performance measure used to

evaluate the efficiency of an investment. In year 1 the Return on Investment is

36% while in year 2 is 35% and it decreases by 1% and in year 3 has 39%.

Return on Investment

Year1 Year 2 Year3

Net Income 301,505.00 310,357.00 382,430.00

Divided by: Average Total

Asset 840,451.50 887,005.50 990,923.00

Return on Investment 36% 35% 39%

Payback Period

The length of time required to recover the cost of an

investment. The payback period of a given investment or project is an

important determinant of whether to undertake the position or project, as long

payback periods are typically not desirable for investment positions.

Payback Period

Initial Investment P 750,000.00

Divided by: Net Cash Flow 250,701.50

PP 3
 25

Annex A

550,920-562,560=11,640/550,920=2%

562,560-574,440=11,880/562,560=2%
 26

Annex B

43,893-45,564=1,671/43,893=4%

45,564-50,128=4,564/50,128=9%

4%+9%=7%