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Business and marketing (AMA Computer University)

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THE COFFEE MELODY

A Feasibility Study
Presented to the Faculty of the College of Business Administration
AMA Computer College, South Superhighway
Makati City

In Partial Fulfillment of the Requirements for the Degree

Bachelor of Science in Business Administration

By

A, Sarita
Aniasco, Sarah Fatima M.
Caning, Amina
Estabillo, Regain Joy G.
Kaur, Rajbeer
Petete, Patricia

August 2021

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TABLE OF CONTENTS

PROJECT BACKGROUND AND HISTORY.....................................................................1

Introduction............................................................................................................................. 1
Name and Address of Project Promoter..................................................................................1
Profile of the Business............................................................................................................1
Products and Services............................................................................................................2
Short Term and Long Term Goals............................................................................................2
Target Market.......................................................................................................................... 2
Economic and Industrial Policies Supporting the Project.........................................................2

MANAGEMENT FEASIBILITY.........................................................................................3
Introduction............................................................................................................................. 3
Legal Structure of the Business..............................................................................................3
Organization Chart..................................................................................................................3
Job Descriptions, Duties and Responsibilities.........................................................................4
Employee Benefits.................................................................................................................. 4

MARKET FEASIBILITY....................................................................................................5
Introduction............................................................................................................................. 5
Demand Analysis.................................................................................................................... 5
Supply Analysis....................................................................................................................... 5
Sales Forecast........................................................................................................................ 5
Marketing Strategy..................................................................................................................6
Marketing Plan........................................................................................................................ 6

TECHNICAL FEASIBILITY...............................................................................................8
Introduction............................................................................................................................. 8
Physical Location.................................................................................................................... 8
Floor Plan (Layout)..................................................................................................................8
Description of Products and Services......................................................................................8
Technology Requirements.......................................................................................................9
Machines and Equipment........................................................................................................9
Production Process................................................................................................................. 9
Production Schedule............................................................................................................... 9
Inventory Schedule............................................................................................................... 10
Product Delivery.................................................................................................................... 10
Manpower Requirement........................................................................................................10
Project Timetable (Gantt Chart).............................................................................................10

FINANCIAL FEASIBILITY..............................................................................................12
Introduction........................................................................................................................... 12
Start-Up Costs...................................................................................................................... 12
Capital Requirement............................................................................................................. 14
Loan Repayment Schedule...................................................................................................14
Sales Forecast...................................................................................................................... 15
Cost of Sales......................................................................................................................... 15

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Operating Expense Forecast.................................................................................................15

Projected Income Statement.................................................................................................15
Statement of Financial Position.............................................................................................16
Cash Flow Statement............................................................................................................ 16
Financial Ratios.................................................................................................................... 16
Liquidity Ratios................................................................................................................. 16
Leverage Financial Ratios................................................................................................17
Efficiency Ratios............................................................................................................... 17
Profitability Ratios............................................................................................................. 18

SOCIO-ECONOMIC FEASIBILITY.................................................................................19
Introduction........................................................................................................................... 19
Contribution to the government.............................................................................................19
Contribution to the society.....................................................................................................19

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Chapter 1

PROJECT BACKGROUND AND HISTORY

Introduction

The Coffee Melody has this music vibes. Its ambiance is so calming and not like

other diner of its music theme. The researchers came up with this business because

many people are fond of foods and beverages. We would like to introduce our varities of

desserts and drinks that consumer would normally taste. We made this product

proposal for the purpose that we want to serve our value customers that give them a

delicious food and beverages that will enjoy not only for students but also for adults.

Nowadays, people wanted artisric plating for their Instagram feeds and modern music.

When they visit the Coffee Melody, they will love the ambiance of the place and music of

calming.

Name and Address of Project Promoter

ADDRESS
NAME
A, Sarita Fairview Quezon City
Estabillo, Regina Joy G. Caloocan City
Kaur, Rajbeer Fairview Quezon City
Petete, Patricia Caloocan City
Aniasco, Sarah Fatima M City of General Trias Cavite

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Profile of the Business

 The Coffee Melody

 Partnership
 The Coffee Melody is located at #500 Rosal st. longos, Malabon city. We dicided
in building our business near at residence because there’s not much competition
that’s a like our business.
 A, Sarita 1,000.000.00
Aniasco, Sarah Fatima M. 1,000,000.00
Estabillo, Regina Joy G. 1,000,000
Kaur, Rajbeer 1,000,000.00
Petete, Patrcia 1,000,000.00
 Our Vision is to be one of the famous cafés in the Philippines.
Our Mission is to have a good impression to our customers, to serve good quality
of foods and drinks, and to have good relationship towards each other and also
to our future employees.
 The Coffee Melody has this music vibes. Its ambiance is so calming and not like
any other diner because of its music theme. And our product we make sure we
can serve them a good quality

Products and Services

Hot Beverages

 Hot Cappuccino
 Hot Latte
 Hot Chocolate
 Coffee Melody Hot Brew Coffee
 Espresso
 Caramel Machiatto

Cold Beverages
 Iced Coffee
 Iced French Vanilla
 Coffee Melody Cold Brew
 Coffee Withh Milk
 Iced Café Amerikano
 Iced Flat White

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Frappe
 Strawberry Classic
 Choco Funk
 Blue Berry Blues
 Oreo Classic
 Cofee Melody Frappe

Foods
 Here comes the cupcake (Chocolate)
 Here comes the cupcake (Red Velvet)
 Here comes the cupcake (Vanilla)
 Carbonara
 The footlong (Cheese)
 The footlong (Veggie)
 The footlong (Bacon)
 Twist and fries
 Nacho Lane
 All you need is burger

Short Term and Long Term Goals

After three to six months, we alredy have regular customers that will visit our
coffee shop. We have positive reviews from people who have been visited our café
shop they like how we stick to our theme we stand our decision on hwo we want our
café to be. Six to twelve months we already know around Longos, Malabon City and
neigbhoring city. Our business is already known in social media and many netizens
have talked about it. Our product is popular not just because of its unique taste of
coffee. After one to three years, we already have several branches around NCR, more
and more people are enjoying and supporting our café they like its uniqueness and
nostalgic feeling of the calming music vibes slowly our business is growming nationwide
and become more popular that we already have many branches around the country
after two years. We also take part in helping to reduce the numbers of unemployed

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Target Market

Our target Market is for those who loves to eat and drink both male and female.
Our business is the right for students, workers and elders.

Economic and Industrial Policies Supporting the Project

Business Structures Organized under Philippine Laws

A partnership is formed when two or more individuals own the business. The Civil
Code of the Philippines treats a partnership as a juridical person, which means its legal
personality is separate from that of its business owners.
In a general partnership, business partners share unlimited liability for the debts
and obligation of the company. This business is under an equal partnership because
they share equal amount of their capital contribution.
This partnership has a capital that’s worth P5,000,000.00, and it is registered
under the Securities and Exchange Commission (SEC).

Taxes
This partnership is taxed just like corporations. The basic income taxes applied to
partnership include:
Corporate Income Tax
The owners will pay regular corporate income tax (RCIT) amounting to 30% on
net taxable income. The minimum corporate income tax (MCIT) equivalent to 2% of
gross income, which applies beginning on the fourth year of commercial operation.

Example: ₱ 300,000 (income) / .30 (corporate income tax) = ₱ 90,000

The Philippine New Industrial Policy

This business is aligned to the new Philippine industrial policy. The policy would
enable the country to maximize the trade and investment opportunities from the ASEAN
Economic Community (AEC) and address the challenges arising from it. It also aims to
create the proper environment and strengthen Philippine industries for them to become
globally competitive. Through the new industrial policy, the Philippine government aims
to promote domestic industries in both the local and global markets.

Comprehensive National Industrial Strategy

The Comprehensive National Industrial Strategy (CNIS) will link and integrate
manufacturing, agriculture, and services; address supply chain gaps; and deepen
industry participation in global value chains.
1. Be a globally competitive industry, strong domestic and global linkage
2. 3 Major Channels (Competition, Innovation and Productivity)

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3. Cluster-based industrial strategy to build a strong and competitive regional

economies
Chapter 2

MANAGEMENT FEASIBILITY

Introduction

In coffee Melody, we decided to make a partnership with this business and also
serve the customers ourselves for us to know how to handle the business properly. We
combine our capital and we ashare our ideas about without anyone meddling our
business. It is also a small step for the people like us to try to plan out the things that
are new to us. Also, for this kind of business, you need some amount of capital to start
the business and have very material you need. We are just starting so we want
everything, from managing to serving, to be our focus and to learn from it so that we’ll
know how the business works. What will be the common problems, its solution, and the
things that will happen in every decision. We want to start from the bottom to expand
our business ourselves and also for it to no to be that complicated from the start.

Legal Structure of the Business

Sole Proprietorship

 Simplest form of business refeers to a person who owns the business na

peronally responsible for its debts.
 Operate under the namen of ita owner.
 A popular business form due to its simplicity, ease of set-up, and nominal
cost.
 The owner remains personally liable for all the business debts.
 If the business runs into financial trouble. Creditors can bring law syits
aginst the bsiness owner. If successful, the owner will have to pay the
debts with his\her own money.

Advantage
 Owners can establish a sole proprietorship instantly, easily, and
expensively.
 Owners may freely mix business will be owned by the sole proprietorship.
 The income earned by the business will be owned by the sole proprietor.

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Partnership
 A legal form of business operation between two or more individuals who
share management and profit.
 Partnership comwe two varities: General Partnership and Limited
Partnerships.
In a general partnership, the partners manage the company and assume
responsibility for the partnership’s debts and other obligation. A limiter=d
partnership has both general and limited partners. The general partner
owned and operate the business aand assume liablity for the
partnership, while the limited partners serve as investors only, they have
no control over the company and are not subject to tha same liabilities as
he general partners.
 Keep in mind that partnerships are more expensive to estabilish than
sole proprietorships because they require more legeal accounting
services.
Disadvantage
 More people to share in the profit.
 General Partners have unlimited liability.
 Disagreements can occur.
 Partnership may be dissolved if partner dies.
Advantage
 A partnership doesn’t pay tax on its income but “passes through” any
profits or losses to the individual partners.
 Partners can combine expertise.
 Combine capital
 Spread work load.
 Share decision-making.
 Easier to raise funds (i.e, Loans, etc.)

Corporation
 A form of business operation that declares the business as a separate,
legal entity guided by a group of officers known as the board of directors.
Advantage
 A corporate structure is perhaps the most advantages way to star a
business because the coporation exists as a separate entity.
 Corporation are the right to exists by the state that issues their character.

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 In general, a corporation as all legal rights of an individual, except for the

right to vote and certain other limitations.
 Corporation maybe able araise additional funds by selling shares in
corporation.
 Corporations may deduct the cost of benefits.
 It provides to employees and officers.
 Some corporations maybe able to elect treatment as an S Coporation,
which exempts them from federal income tax other than tax on certain
aims and passive income.
Disadvantage
 Forming a corporation requires more time and money than forming other
business structure.
 Governmental agencies monitor corporations, which may result in added
paperwork.
 Corporate profits may be subject to higher overall taxes since the
government taxes profit at the corporate level and again at the individual
level, if such profits are distributed into the shareholders. Furthermore, a
coporation may not deduce from its business income may dividends it pays
to its shareholders.

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Organization Chart

Rajbeer Kaur
Owner

Sarita A
General Manager/
Owner

Regina Joy Estabillo Sarah Fatima Aniasco Patrica Petete

Manager/Owner Bookkeeper/Owner Kitchen Manager/Owner

Grace Gajes
Head Cook
Andrea Alvisor Shaina Manaloto
Assistant Manager Head Barista

Cris Ibarra Ariesa Domingo

Aly Almario Sic Santos Tina Lata Dishwasher
Jonah Pacala Cook
Cashier Server Barista Barista

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Figure x. Organizational Chart of XYZ Company

Job Descriptions, Duties and Responsibilities

Bookkeeper
 Always check the inventory every after shift

 Reports the income statement every week

 Responsible for the profit and capital of the café

General Manager
 Checks all departments every time

 Checks the proper attire of the employees

 Makes sure that everything in the café is organized

 Reports every day to the owner regarding of the employees’ performance at work

Manager
 Reports the performance of the employees under him/her to the general manager

 Helps in taking orders

 Ensuring that the employees are doing great in their assigned tasks

Assistant Manager
 Helps the manager in managing the employees

 Helps in taking orders

Kitchen Manager
 Leads the cooks on how to do and cook foods properly

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 Reports the performance of the employees under him/her to the general manager

 Cooks and bakes the foods.

 Responsible for maintaining the kitchen clean and organized.

Head Cook
 Responsible for maintaining the kitchen clean and organized.

 Cooked and bakes the foods.

 Guides the other cooks regarding in baking and cooking foods

 Ensure great presentation by dressing dishes before they are served.

Cook
 Cooked and bakes the foods.

 Ensure great presentation by dressing dishes before they are served.

 Responsible for maintaining the kitchen clean and organized.

Cashier
 Takes the order, pay and gives change to the customers.

 He/she is responsible for the loss of the business profit, then it will deduct to his/her
salary.

 Always check the cash drawers in every shifting to make sure that the amounts of
money are correct.

Head Barista
 Reports the performance of the employees under him/her to the general manager

 Ensuring that the baristas are doing the right thing in making beverages

 Helps in making beverages

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Barista
 Makes the beverages.

 He/she is also responsible for the correct amount of the coffee bean that he/she uses in
making the coffees.

 Check temperatures of freezers, refrigerators, or heating equipment to ensure proper

functioning.

Server
 Secure the needs and orders of the customers.

 Entertaining the customers.

 Wrong actions turns into consequences. The amount will be deduct on his/her salary.

 Cleans and organizes the tables and chairs

Dishwasher
 Maintain the cleanliness/orderliness of the utensils used by the customers.

 Store clean dishes, glasses and equipment appropriately.

 Set up workstation before meal preparation.

Employee Benefits

OverTime

Minimum wage is based on a work week of 40 hours or 8 hours per day. The daily
60minute mandatory lunch break is not included in the 8hour work day and is not
compensated. Overtime pay rates vary depending on when the overtime work takes place:
regular work day, holiday, rest day or night (between the hours of 10am to 6pm).

13 Month Pay

Each year, a 13 th month pay is given to all rank-and-file employees. By law, this
benefit must be paid before December 24th and is mandatory. Employees who have
resigned or have been severed from the company before the payment of the 13th month

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pay are still entitled to it in proportion to the length of time, they worked for duting that
year.

Maternity Leave

Whether married or not, each pregnant employee is entitled to a maternity leave

benefit of 60 days for a normal delivery or miscarriage, or 78days of a caesarean delivery,
for up to four pregnancies. To benefit from a maternity leave, it is required for the
employee to be register with the SSS and be employed at the time of the expected
delivery. Furthermore, the SSS must be notified by the employer and at least three
monthly contibutions must have been made to the SSS for that employee within then past
year.

Paternity Leave

All married male employees are entitled to a 7day paternity leave for the delivery
or miscarriage of his legitimate spouse with whom he must live, for up to four
pregnancies. The paternity leave is at cost of the employer and is not reimbursed by the
SSS.

Solo-Parent Leave

In addition to parental leaves at the time of a child’s biryh, the Filipino labour
code drew a special leave for solo-parent employees as described in the Solo Parents
Welfare,
Republic Act No. 8972. The employee must have been working for at least a year to be
entitled to a solo-parent leave, which allow him to 7 working days of leave in a year.

Separation

Following the labor code of the Philippines, articles 283 and 284 state that an
employww can claim separation pay if his contract is ended under authorized causes.
According to article 282 an employee terminated for just cause (neglect of duties, fraud,
crime…) is generally not entitled to separation pay.

Back pay or Last pay

Payment for work done in the past that was withheld at the time, or for work that
could have been done had the worker not been prevented from doing so. Lastpay all
remaining last salary is need to give to thr employee.

Minimum Wage

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The Wage Rationalization Act. Republic Act No. 6727, Sets the minimum rates
applicable per region, province and industry sector. The industry sectors are: non-
agricultural, agriculture (plantation and non-plantation), cottage and handcraft, retail and
service sectors, Minimum wage very depending on the number of employees and gross-
sale of an enterprise and its industry sector.

Social Security System

By law, private sector employees must be covered under the Social Security
System (SSS). Based on each employee’s gross monthly pay, both employer and
employee remit monthly contributions to the SSS, In turn, the SSS benefits cover
maternity retirement, sickness, disbality death and pension benfits.

Philhealth

For all employees covered by the SSS medical coverage is mandatory and
automatic. Both the employer and employee contribute equal monthly amounts to the
PhilHealth Insurance Corporation.

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Chapter 3

MARKET FEASIBILITY

Introduction
Guide (remove texts in red fonts when done): Write a short introduction on what the chapter is all about
and what are the sections being discussed.

Start writing here…

Demand Analysis
1. The Market
The target market in this business are the employees in different
companies around the area, the students in the universities nearby, and coffee lovers.

2. Business cycle
In the first, emerging stage, the business is expecting high customer
demand and a low supply of goods, therefore preparation for the budget of the supply
must be planned carefully. In the second, plateau stage, the supply of products meets
the market demand, since the budget for the supply is available, no problem will be
encountered. In the third, declining stage, the demand for the products is lagging. The
owners will do some promotions like giving discounts or offer some giveaways or a
“buy1 take1 promo.” If the demand of the product slows down, owners may add new
products that are less expensive.

3. The Product
The owners will create a product that suits the interest of the market. They will
also develop their products so that they can meet the needs of the consumers. They will
create coffee mugs with creative designs to make coffee experience more exciting.
They will also introduce new flavors and coffee mixes.

4. Advantages
The advantages which customers can get from the business are (1) great
ambiance – customers may enjoy the good vibes inside the shops, (2) health benefits
from (organic) coffee, and (3) freebies like ballpen, journal notebook, and free mugs.

5. Competitors
The owners must identify the competitors to obtain a higher profit margin by
knowing the products and services they also provide. It also helps the business to
improve its product and think of better ideas and make sure they get to have more
customers than their competitors.

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Supply Analysis
1. Products’ own price
Prices of the products were carefully studied to meet the purchasing power of the target market.
Hot beverages - ₱ 120 to ₱175
Cold beverages - ₱ 130 to ₱185
Cupcakes & Pasta - ₱ 55 to ₱100

2. Input prices
Prices may vary due to demand and supply of the product ingredients

3. Technology
The Coffee Melody team will be using social media technology in promoting the business. They
will be posting ads on Facebook, Instagram and on Youtube. This must be monitored carefully since
social media is the most powerful tool in promoting services and products nowadays.

4. Expectations of the market

Since the business isn’t new in the area, the target market may expect the following:
1. Good place for relaxation and meeting venue
2. Good service; honest and polite service crew
3. Good quality products at reasonable prices.

5. Number of producers present

There are three producers of the same product in location:
1. Starbucks
2. Tim Hortons
3. The Coffee Bean

Sales Forecast
Guide (remove texts in red fonts when done): Sales forecasting is the process of estimating future sales.
Accurate sales forecasts enable companies to make informed business decisions and predict short-term
and long-term performance. Companies can base their forecasts on past sales data, industry-wide
comparisons, and economic trends.

Start writing here…

Price Units sold Sales per Year 1

Products/Services
T G V per month Month Sales

390 (T) 46,800 (T)

Hot Capuccino 120 155 175 156 (G) 24,180(G)
130 (V) 30,625(V)
364 (T) 43,680 (T)
Hot Latte 120 155 175 130 (G) 20,150 (G)
26(V) 4,550 (V)
286 (T) 34,286 (T)
Hot Chocolate 120 155 175 182 (G) 28,210 (G)
48 (V) 8,400 (V)

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338 (T) 42,250 (T)

Coffee Melody Hot Brew 125 160 180 182 (G) 29,120 (G)
104 (V) 18,720 (V)
260 (T) 31,200(T)
Espresso 120 155 175 130 (G) 20,150 (G)
78 (V) 13,650 (V)
520 (T) 62,400 (T)
Caramel Machiatto 120 155 175 260 (G) 40,200 (G)
182 (V) 31,850 (V)
390 (T) 50,700 (T)
Iced Coffee 130 150 170 260 (G) 39,000 (G)
156 (V) 26,520 (V)
468 (T) 63,180 (T)
Iced French Vanilla 135 165 185 338 (G) 55,770 (G)
261 (V) 33,670 (V)
416 (T) 52,000 (T)
Coffee Melody Cold Brew 125 160 180 260 (G) 41,600 (G)
182 (V) 32,760 (V)
364 (T) 47,450 (T)
Coffee with Milk 130 150 170 260 (G) 39,000 (G)
130 (V) 22,100 (V)
520 (T) 70,200 (T)
Iced Café Amerikano 135 165 185 286 (G) 47,190 (G)
208 (V) 38,480 (V)
442(T) 59,670 (T)
Iced Flat White 135 165 185 364 (G) 60,060 (G)
234 (V) 43,290 (V)
130 (T) 10,400 (T)
80 100
Strawberry Classic 156 (G) 15,600 (G)
120
78 (V) 9,360 (V)
156 (T) 12,480 (T)
Choco Funk 80 100 120 130 (G) 13,000 (G)
10 (V) 1,200 (V)
8,320 (T)
104 (T)
13,000 (G)
Blue Berry Blues 80 100 120 130 (G)
12,480 (V)
104 (V)
182 (T) 14,560 (T)
Oreo Classic 80 100 120 156 (G) 15,600 (G)
130 (V) 15,600 (V)
130 (T) 10,400 (T)
Coffee Melody Frappe 80 100 120 182 (G) 18,200 (G)
130 (V) 15,600 (V)
Here comes the cupcake (Chocolate) 55 260 14,300
Here comes the cupcake (Red velvet) 60 286 17,160

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Here comes the cupcake (Vanilla) 50 312 16,600

29,120
364 (SOLO)
80 (Solo) (SOLO)
Carbonara 156 (4
300 (4 person) 46,800 (4
PERSON)
PERSON)
The footlong (Cheese) 60 234 14,040
The footlong (Veggie) 65 208 15,520
The footlong (Bacon) 70 286 20,020
Twist and Fries 90 338 30,420
Nacho Lane 100 390 39,000
All you need is Burger 80 260 20,800
TOTALS 92,229

Marketing Strategy
PRODUCT (or SERVICE)
a) Long-term product strategy
The Coffee Melody team will continuously improve its products and services by
(1) researching trends and (2) by giving importance to the customers’ feedback.
b) Features and benefits offered
The Coffee Melody will provide environment that is relaxing for the customers
especially for group meetings or group study lesson. One benefit of choosing the
coffee shop is getting a loyalty card that enables a customer to get a 5% discount
after purchasing 5 times worth 500 pesos.
c) Difference with the competitors
The Coffee Melody is proud to say that they have the best quality of coffee
products but at reasonable price. Compared to the competitors, the price is 50
pesos cheaper, but the taste is not compromised.

PRICING
The prices of the products can be found on page 14-16. The prices were based on the
expenses for every product and by checking the competitors’ products pricing.

POSITION
a) Physical store – the location of the store is located at the center of Manila. Foreigners
and travellers are around the vicinity. There are also numerous schools and universities
nearby.
b) E-markets - The Coffee Melody can also be found on online markets such as Grab food,
Food Panda and Lalafood where they can easily order.

PROMOTION
Mode of Promotion
a) Facebook Post – The Coffee Melody promotion staff consistently posts the products and
services offered. They also post discounts and freebies to persuade the customers in
coming to the shop.

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b) Instagram – The staff also post promotions and discounts in Instagram.

c) Leaflet – Some staff are giving leaflet to random people who pass by the store.
d) Youtube – The team also pays advertisements on different Youtube accounts since most
people are watching videos there.

Competitors are also promoting in various social media platforms and newspapers and so the
Coffee Melody is very eager to also promote its products anywhere.

Marketing Plan

Guide (remove texts in red fonts when done): Once you have defined your marketing mix, the next step is
to detail the specific activities that you will undertake to achieve your marketing objectives. As you
create these activities, keep referring back to your marketing mix – it will help you to assess which
activities are worth the time and effort to implement.

Start writing here

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Chapter 4
TECHNICAL FEASIBILITY

Introduction

Guide (remove texts in red fonts when done): A technical feasibility study assesses the details of how you
intend to deliver a product or service to customers. Think materials, labor, transportation, where your
business will be located, and the technology that will be necessary to bring all this together. It's the
logistical or tactical plan of how your business will produce, store, deliver, and track its products or
services.

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Physical Location

Guide (remove texts in red fonts when done): Business Location means the location organized to
implement specific business operations of the Company. Describe the location of the storefront or any
other purchased or rented facilities to conduct your business. You may include location map for better
understanding of the reader.

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Floor Plan (Layout)

Guide (remove texts in red fonts when done): Floor plans are scale drawings that show the relationship
between rooms, spaces and physical features viewed from above. They provide a way to visualize how
people will move through the space. Floor plans may also include details of fixtures like sinks, water
heaters, furnaces, etc.

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Description of Products and Services

Guide (remove texts in red fonts when done): What products and/or services do you sell?

Photo Product or service

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Price

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Product or service

Description
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of the
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Price

Photo Product or service

of the
product or service Description

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of the
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of the
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product or service Description

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Product or service

Description
Photo
of the
product or service

Price

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Technology Requirements

Guide (remove texts in red fonts when done): Every business needs at least some kind of technology to
operate. The technology component of your feasibility study should include discussions about telephone
answering systems, computer hardware and software, computer network and internet connection, multi-
function printer, and other office machines. Don't overlook items like cash registers and potentially the
ability to accept credit cards and process checks. You might need special devices to accommodate the
disabled, or teleconferencing equipment and facilities. Smartphones are almost a must for most
businesses, and you might need alarm or camera systems.

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Machines and Equipment

Guide (remove texts in red fonts when done): This refers to the machines and equipment necessary to
make the product or complete the service.

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Production Process

Guide (remove texts in red fonts when done): This is a step-by-step description of how the product is
made or the service completed.

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Production Materials

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Guide (remove texts in red fonts when done): This refers to the major materials that you will use to make
a product or complete a service. There are two types of production materials, direct materials and indirect
materials. Direct materials refer to the materials that become part of, or are directly related to the product
you make or service you offer. Indirect materials refer to some materials that are usually used in small
amounts to make a product or complete a service.

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Production Schedule

Guide (remove texts in red fonts when done): This gives in detail how the work is going to be spread out
in the next 12 months. This has to be made in order to ensure that the number of units to be sold or
services to be completed, based on the projected sales, are produced in time. Among others, the
schedule will show the status of production at any point during the production period; the specific periods
when production or service will start and when the product or service will be completed.

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Inventory Schedule

Guide (remove texts in red fonts when done): Inventory refers to the stock of materials, supplies, and
spares required for making the product or completing the service. The inventory record will keep you
informed of the date of purchase, quantity purchased, cost, date released for production, quantity issued,
and remaining balances. Keeping track of these items will ensure that you do not only have the materials
you need to make the product or complete the service on short notice but also to prevent you from
keeping obsolete or expired materials in your stock.

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Product Delivery

Guide (remove texts in red fonts when done): You can make the best product in the world, but if you don't
have a delivery strategy for getting it to your customers, you'll end up with a fully stocked warehouse and
no incoming revenue. Product delivery should be thoughtfully planned and executed and should fit into
your company's overall mission and marketing strategy.

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Manpower Requirement

Guide (remove texts in red fonts when done): This comes in the form of direct labor and indirect labor.
Direct labor refers to the people who are actually involved in making the product or completing the
service. In the soap business, this will be the mixer. Indirect labor refers to the people who perform tasks
that do not have anything to do directly with making the product or completing the service. They are the
production helpers, quality control inspector, supervisor, etc.

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Start writing here…

Project Timetable (Gantt Chart)

Guide (remove texts in red fonts when done): This is a list of all the activities you are to do prior to
launching the business and the timeframe for accomplishing them. Preparing the Gantt Chart is a useful
exercise that allows you to have a view of the pre-operating activities and their cost implications. These
activities include writing of the business plan, negotiation for financing, construction or improvement of the
building, acquisition of machinery and equipment, recruitment (and training, as applicable) of personnel,
registration of the business etc..

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Chapter 5
FINANCIAL FEASIBILITY

Introduction

Guidelines (remove when done): A financial feasibility study projects how much start-up capital is
needed, sources of capital, returns on investment, and other financial considerations. It looks at how
much cash is required, where it will come from, and how it will be spent.

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Start-Up Costs

Guidelines (remove when done): Startup costs are the expenses incurred during the process of creating a
new business. Pre-opening startup costs include a business plan, research expenses, borrowing costs,
and expenses for technology. Post-opening startup costs include advertising, promotion, and employee
expenses.

Start-Up Costs includes the following:

 Business Plan - A business plan forces consideration of the different startup costs.

 Research Expenses - Careful research of the industry and consumer makeup must be conducted
before starting a business. Some business owners choose to hire market research firms to aid
them in the assessment process, thus, the expense of hiring these experts must be included in
the business plan.

 Borrowing Costs - Starting up any kind of business requires an infusion of capital. For small
business owners, the most likely source of financing is debt in the form of a small business loan.
Like any other loan, business loans are accompanied by interest payments. These payments
must be planned for when starting a business, as the cost of default is very high.

 Insurance, License, and Permit Fees - Many businesses are expected to submit to health
inspections and authorizations to obtain certain business licenses and permits. Some businesses
might require basic licenses while others need industry-specific permits. Carrying insurance to
cover your employees, customers, business assets, and yourself can help protect your personal
assets from any liabilities that may arise.

 Technological Expenses - Technological expenses include the cost of a website, information

systems, and software, including accounting and payroll software, for a business. Some small

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business owners choose to outsource these functions to other companies to save on payroll and
benefits.

 Machines and Equipment - Proper office machines and equipment help businesses run like well-
oiled machines. Although each business may have specific equipment determined by industry,
there are universal technologies for all office spaces. Each item works together to ensure duties
can be performed in-house, which can save time and money. Examples are computers, printers,
copiers, faax machine, telephone systems

 Furniture and Fixtures Expenses - Furniture and fixtures are larger items of movable equipment
that are used to furnish an office. Examples are bookcases, chairs, desks, filing cabinets, and
tables.

 Advertising and Promotion - A new company or startup business is unlikely to succeed without
promoting itself. Promoting a business entails much more than placing ads in a local newspaper.
It also includes marketing—everything a company does to attract clients to the business.

 Pre-Employment Expenses - planning to hire employees must plan for wages, salaries, and
benefits. Failure to compensate employees adequately can end in low morale, mutiny, and bad
publicity, all of which can be disastrous to a company. Pre-employment expenses include
medical, training, and other related expenses.

Particular Amount
FOUNDING EXPENSES
Legal fees
Business permits, licenses and insurance fees
CAPITAL EXPENDITURES
Machines and Equipment
Furniture and Fixtures
Technological Expenses
PRE-OPERATING EXPENSES
Business/Market Research
Advance Rent
Advertising and Promotion
Pre-Employment Expenses
Other Pre-Operating Expenses
Total Start-Up Costs

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Start writing here…

Capital Requirement

Guidelines (remove when done): The capital requirement is the sum of funds that your company needs
to achieve its goals. Plainly speaking: How much money do you need until your business is up and
running? You can calculate the capital requirements by adding founding expenses, investments and start-
up costs together. By subtracting your equity capital from the capital requirements, you calculate how
much external capital you are going to need.

Particular Amount
Total Start-Up Costs
Add: Working fund equivalent to 3 months OPEX
Total Capital Requirement
Less: Owner’s Capital Contribution
Total Amount to be Financed

Loan Repayment Schedule

Guidelines (remove when done): When you take out a loan, you are required to pay it back to the lender
within a specified period of time. The repayment includes both the principal amount along with the
interest over a predefined number of monthly installments.

Simply put, the act of repaying the loan through a series of scheduled payments generally referred to as
EMIs that includes both the principal amount outstanding and the interest component is known as the
Repayment Schedule. It is also called an Amortization Table.

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Insert Loan Amortization Table here…

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Sales Forecast

Guidelines (remove when done): Sales forecasting is the process of estimating future sales. Accurate
sales forecasts enable companies to make informed business decisions and predict short-term and long-
term performance. Companies can base their forecasts on past sales data, industry-wide comparisons,
and economic trends. Newly founded companies have to base their forecasts on less-verified
information, such as market research and competitive intelligence to forecast their future business.

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Cost of Sales

Guidelines (remove when done): Cost of sales (also known as "cost of goods sold") refers to the cost
required to manufacture or purchase a product that is then sold to a customer.

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Operating Expense Forecast

Guidelines (remove when done): Operating expenses are incurred in the regular operations of business
and include rent, equipment, marketing, payroll, insurance, and funds allocated for research and
development. Operating expenses are necessary and mandatory for most businesses.

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Projected Income Statement

Guidelines (remove when done): An income statement, also known as a profit and loss statement, shows
your revenues, expenses and profit for a particular period. If you are developing these projections prior
to starting your business, this is where you will want to do the bulk of your forecasting.

The key sections of an income statement are:

1. Sales – This is the money you will earn from whatever goods or services you provide.
2. Cost of Sales – This represents the direct costs related to the manufacturing or purchasing of
goods which has been sold.
3. Gross Income – computed as Sales less Cost of Sales
4. Operating Expenses – Be sure to account for all of the expenses you will encounter, including
general and administrative costs such as accounting and legal fees, advertising, bank charges,
insurance, office rent, telecommunications, etc.
5. Net Income – computed as Gross income less Operating Expenses.

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Statement of Financial Position

Guidelines (remove when done): Statement of Financial Position or commonly known as the Balance
Sheet will present a picture of your business’ net worth at a particular time. It is a summary of all your
business’ financial data in three categories: assets, liabilities and equity.

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Cash Flow Statement

Guidelines (remove when done): A cash flow projection will demonstrate to a loan officer or investor
that you are a good credit risk and can pay back a loan if it’s granted. The three sections of a cash flow
projection are:

 Cash revenues – This is an overview of your estimated sales for a given time period. Be sure
that you only account for cash sales you will collect and not credit.
 Cash disbursements – Look through your ledger and list all of the cash expenditures that you
expect to pay that month.
 Reconciliation of cash revenues to cash disbursements – This one is pretty easy: you just
take the amount of cash disbursements and subtract it from your total cash revenue. If you
have a balance from the previous month, you’ll want to carry this amount over and add it to
your cash revenue total.

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Financial Ratios

Liquidity Ratios

Liquidity ratios are financial ratios that measure a company’s ability to repay both short- and long-term
obligations. Common liquidity ratios include the following:

The current ratio measures a company’s ability to pay off short-term liabilities with current assets:

Current ratio = Current assets / Current liabilities

The acid-test ratio measures a company’s ability to pay off short-term liabilities with quick assets:

Acid-test ratio = Current assets – Inventories / Current liabilities

The cash ratio measures a company’s ability to pay off short-term liabilities with cash and cash
equivalents:

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Cash ratio = Cash and Cash equivalents / Current Liabilities

The operating cash flow ratio is a measure of the number of times a company can pay off current
liabilities with the cash generated in a given period:

Operating cash flow ratio = Operating cash flow / Current liabilities

Leverage Financial Ratios

Leverage ratios measure the amount of capital that comes from debt. In other words, leverage financial
ratios are used to evaluate a company’s debt levels. Common leverage ratios include the following:

The debt ratio measures the relative amount of a company’s assets that are provided from debt:

Debt ratio = Total liabilities / Total assets

The debt to equity ratio calculates the weight of total debt and financial liabilities against shareholders’
equity:

Debt to equity ratio = Total liabilities / Shareholder’s equity

The interest coverage ratio shows how easily a company can pay its interest expenses:

Interest coverage ratio = Operating income / Interest expenses

The debt service coverage ratio reveals how easily a company can pay its debt obligations:

Debt service coverage ratio = Operating income / Total debt service

Efficiency Ratios

Efficiency ratios, also known as activity financial ratios, are used to measure how well a company is
utilizing its assets and resources. Common efficiency ratios include:

The asset turnover ratio measures a company’s ability to generate sales from assets:

Asset turnover ratio = Net sales / Average total assets

The inventory turnover ratio measures how many times a company’s inventory is sold and replaced over
a given period:

Inventory turnover ratio = Cost of goods sold / Average inventory

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The accounts receivable turnover ratio measures how many times a company can turn receivables into
cash over a given period:

Receivables turnover ratio = Net credit sales / Average accounts receivable

The days sales in inventory ratio measures the average number of days that a company holds on to
inventory before selling it to customers:

Days sales in inventory ratio = 365 days / Inventory turnover ratio

Profitability Ratios

Profitability ratios measure a company’s ability to generate income relative to revenue, balance sheet
assets, operating costs, and equity. Common profitability financial ratios include the following:

The gross margin ratio compares the gross profit of a company to its net sales to show how much profit
a company makes after paying its cost of goods sold:

Gross margin ratio = Gross profit / Net sales

The operating margin ratio compares the operating income of a company to its net sales to determine
operating efficiency:

Operating margin ratio = Operating income / Net sales

The return on assets ratio measures how efficiently a company is using its assets to generate profit:

Return on assets ratio = Net income / Total assets

The return on equity ratio measures how efficiently a company is using its equity to generate profit:

Return on equity ratio = Net income / Shareholder’s equity

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Chapter 6
SOCIO-ECONOMIC FEASIBILITY

Introduction

Guidelines (remove when done): The socio-economic study shows the contribution of the business to
the government and to the society. This area proves that the business existed not only for profit
purposes, but also for the improvement of the welfare of the people.

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Contribution to the government

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Contribution to the society

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APPENDIX A
Title

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APPENDIX B
Title

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APPENDIX C
Title

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APPENDIX D
Title

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APPENDIX E
Curriculum Vitae

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