BUSINESS PLAN

COURSE NAME TECHNOPRENUER

COURSE CODE HIT220

SUPERVISOR MR MAKOMBE

GROUP MEMBERS
TAPIWA J MUDHARA H190292B
EVELYN M TARUME H190840N
ALICIA MUTSAURI H190820Z
CALISTA MUZOFA H190107W
TAPIWA B KALITAWO H190263G
HAILEY MAGUMA H190311R
PORTIA KATAMBARARE H190183G
TABLE OF CONTENTS

CHAPTER 1: BUSINESS DESCRIPTION .................................................................... Error! Bookmark not defined.

1.0. EXECUTIVE SUMMARY ..................................................................................Error! Bookmark not defined.
1.1. BUSINESS OWNERSHIP ..................................................................................Error! Bookmark not defined.
1.2. INDUSTRY ANALYSIS ......................................................................................Error! Bookmark not defined.
1.3. IDEA CONCEPTION.........................................................................................Error! Bookmark not defined.
1.4. VISION ...........................................................................................................Error! Bookmark not defined.
1.5. MISSION STATEMENT ....................................................................................Error! Bookmark not defined.
1.6. VALUES ..........................................................................................................Error! Bookmark not defined.
1.7. OBJECTIVES....................................................................................................Error! Bookmark not defined.
1.8. PRODUCT DESCRIPTION ................................................................................Error! Bookmark not defined.
1.9. SUMMARY TABLE ..........................................................................................Error! Bookmark not defined.
CHAPTER 2-MANAGEMENT AND ORGANISATION ................................................ Error! Bookmark not defined.
1.0. INTRODUCTION .............................................................................................Error! Bookmark not defined.
2.1. LEGAL STRUCTURE.........................................................................................Error! Bookmark not defined.
2.2. SHAREHOLDING STRUCTURE .........................................................................Error! Bookmark not defined.
2.3. DESCRIPTION OF KEY PERSONNEL.................................................................Error! Bookmark not defined.
2.4. ORGANISATIONAL STRUCTURE .....................................................................Error! Bookmark not defined.
2.5. HUMAN RESOURCE REQUIREMENTS ............................................................Error! Bookmark not defined.
2.6. PROFESSIONAL SUPPORT ..............................................................................Error! Bookmark not defined.
CHAPTER 3: MARKET DESCRIPTION ..................................................................... Error! Bookmark not defined.
3.1. INTRODUCTION .............................................................................................Error! Bookmark not defined.
3.2. HISTORY AND LIKELY FUTURE TRENDS ..........................................................Error! Bookmark not defined.
3.3. FUTURE OF CHATBOT DEVELOPMENT ..........................................................Error! Bookmark not defined.
3.4. MARKET COMPOSITION ................................................................................Error! Bookmark not defined.
3.5. MARKET SIZE .................................................................................................Error! Bookmark not defined.
3.6. CUSTOMER PROFILE ......................................................................................Error! Bookmark not defined.
3.7. ANALYSIS OF TARGET MARKET......................................................................Error! Bookmark not defined.
3.8. COMPETITOR ANALYSIS.................................................................................Error! Bookmark not defined.
3.9. SWOT ANALYSIS FOR MACH-TP.....................................................................Error! Bookmark not defined.
3.10. MARKETING STRATEGIES.............................................................................Error! Bookmark not defined.
3.11. MARKETING MIX .........................................................................................Error! Bookmark not defined.
3.12. MARKETING FINANCIAL SUMMARY TABLE .................................................Error! Bookmark not defined.
CHAPTER 4 OPERATIONAL OR PRODUCTION PLAN .............................................. Error! Bookmark not defined.
4.0. INTRODUCTION .............................................................................................Error! Bookmark not defined.
4.1 OPERATIONAL PRODUCTION OBJECTIVES ......................................................Error! Bookmark not defined.
4.2. LOCATION AND HOURS OF BUSINESS ...........................................................Error! Bookmark not defined.
 4.3. FACILITIES ......................................................................................................Error! Bookmark not defined.
4.4. LEGAL ENVIRONMENT ...................................................................................Error! Bookmark not defined.
4.5. PERSONNEL ...................................................................................................Error! Bookmark not defined.
4.6. OPERATIONAL PROCESSES ............................................................................Error! Bookmark not defined.
4.7. CAPITAL .........................................................................................................Error! Bookmark not defined.
4.8. OPERATIONAL BUDGET FOR YEAR 1 .............................................................Error! Bookmark not defined.
CHAPTER 5: FINANCIAL PLAN ............................................................................... Error! Bookmark not defined.
5.0. INTRODUCTION .............................................................................................Error! Bookmark not defined.
5.1. FINANCIAL OBJECTIVES .................................................................................Error! Bookmark not defined.
5.2. ASSUMPTIONS ...............................................................................................Error! Bookmark not defined.
5.3. SOURCES OF FUNDS ......................................................................................Error! Bookmark not defined.
5.4. FINANCIAL STSTEMENTS ...............................................................................Error! Bookmark not defined.
5.5. RATIO ANALYSIS ............................................................................................Error! Bookmark not defined.
5.6. BREAK-EVEN POINT ANALYSIS .......................................................................Error! Bookmark not defined.
CHAPTER 1: BUSINESS DESCRIPTION

1.0.EXECUTIVE SUMMARY

This business plan will show how a total investment of only $15 000 could yield cumulative
net profits in excess of $64 000 over a three-year period, and average monthly sales of $18,867,
while maintaining adequate levels of liquidity. The purpose of this plan is to secure additional
funding from the investors and a bank ($5 000 investment, and $10,000 five-year term business
loan), to cover the start-up costs.

MACH-TP Pvt Ltd. is a start-up business owned by seven technopreneurs, dedicated to

providing AI-Chatbots mainly to the educational sector, in a manner that generates fair and
equitable returns for present and future owners, and superior value to our customers. The
company’s main target market is the tertiary, primary and secondary school within the
educational sector; this includes all universities and colleges in Zimbabwe.

With the technology advancing on a daily basis, the world is changing, making learning and
information enquiries a bit easier. For the past years, institutions have been investing in large
sums of money in traditional customer service platforms; thus, hiring a number of people
responsible for addressing queries posed by their stakeholders. However, this has been creating
a lot of inconveniences in getting information from these institutions. Thus, the increase in
demand for chatbot systems that can easily address users’ queries and at the same time reducing
the cost of operation for these institutions. In addition to that, due to the COVID-19 pandemic,
physical interactions have been limited to some extent, thus, the need for a system that is
capable of helping people even without having to visit the physical location for help.

Currently, institutions have not yet implemented such system and also the big players already
in the market (Cassava Smartech, Wilsofs and WeDev), have been reluctant to explore that
segment of the market, leaving out a very big market gap that is yet to be filled. With a vision
of becoming the leading global information technology company trusted by its customers for
service excellence, caring for its employees and collaborating with our customers to deliver
innovative and value driven AI based Chatbots by year 2025. MACH-TP will deliver
innovative, value driven quality and user-friendly AI chatbots that will give 24/7 virtual
assistance and attend to user queries. That will make our clients’ business more profitable, and
competitive, leading to the global success of the company.
1.1. BUSINESS OWNERSHIP

MACH-TP is a Private Limited Company founded by seven members, namely Mr Mudhara,

Miss Katambarare, Miss Tarume, Miss Muzofa, Miss Kalitawo, Miss Mutsauri and Miss
Maguma. The shareholders intend to keep full ownership of the company sharing the
ownership equally as shareholders and take our investments as long-term debt. MACHTP is
not yet registered. The organisation is going to be registered at M&J Consultants in Harare on
the 1st of August 2021.

1.2. INDUSTRY ANALYSIS

Industry analysis is a critical part of understanding a company’s market position. In order to

fully analyse the industry MACH-TP will be operating in Porters’ Five Forces framework was
used. Thus, analysing, the intensity of competitive rivalry, bargaining power of suppliers,
bargaining power of buyers, threat of substitutes, threat of new entrants. According to Porter,
“the collective strength of these forces determines the ultimate profit potential of an industry.”

Intensity of Competitive Rivalry

The company has direct competitors like WebDev, Cassava and TechZim the list is further
added by two new players Wilsoft and e-Solutions. Besides these there are many small
companies like Icono Global, Afrosoft Holdings and Sangana Africa which affect the business
directly, also putting into jeopardy the competitive advantage of the company. However, there
have not yet explored the educational sector, which is the one MACH-TP is intended to serve.
Thus, lessening the intensity of competition in the industry.

Bargaining power of suppliers

In this industry, the main suppliers are those network and telecoms companies. Currently in
Zimbabwe, the list of internet service providers is quite small, having only four key players;
Liquid Telecoms, POWERTEL, Telone and Zol. This leaves these suppliers with relatively
high bargaining power over the business. However, four is not that small, thus there is always
an alternative option, considering reluctance from any of the suppliers

Bargaining Power of Buyers

The customer base is quite large, considering the company is targeting the whole of the
educational sector. In Zimbabwe, there are about 19 universities, 13 teachers’ colleges and 10
Polytechnic Colleges. Not to mention the list of primary and secondary schools. According to
Zimfacts, (2019), there are about 2 424 secondary school in 2014. Thus, a very large customer
base that is yet to be explored by the company. With this large base, the business is able to
return full control of the business operations, thus customers’ bargaining powers will be kept
at its lowest.

Threat of Substitutes

The only substitute to the company’s chatbots is a call centre / a customer service platform
with live agencies. However, it is quite expensive to have a call centre as compared to a chatbot.
Thus, having less threat to the company’s operations.

Threat of New Entrants

With the new dispensation, Zimbabwe is now largely a free market economy, with the
government only being involved in strategic industries only. Thus, allow any company to enter
the market any time. This means that, there are high threats of new entrants in the industry.

1.3. IDEA CONCEPTION

MACH-TP is an IT firm that is involved in development of AI Powered Chatbots. This is idea

came about after the shareholders of the company realized that students were failing to get
assistance 24/7, and the only way they could get assistance was if they visited the schools
physically which was very daunting as assistance could still not be offered then. Regardless of
the fact that many chatbots exist in the market. MACH-TP was able to implement AI as well
as support both voice and text, making this chatbot unique, as many chatbots support one or
the other functionality, never both. The MACH-TP chatbot also has an admin panel that makes
it possible for a non-programmer to enter in responses, which is a feature that is not found in
many chatbots. The motive behind developing this system is to provide 24/7 support, reduce
running cost and attend to user queries.

1.4. VISION

To be the leading global information technology company trusted by its customers for service
excellence, caring for its employees and collaborating with our customers to deliver innovative
and value driven AI based Chatbots by year 2025.

1.5. MISSION STATEMENT

To deliver innovative, value driven quality and user-friendly AI chatbots that will give 24/7
virtual assistance and attend to user queries. That will make our clients’ business more
profitable, and competitive, leading to the global success of MACH-TP.

1.6. VALUES

• Be an ambassador: We are proud to be problem solvers. We like the people we work

with co-workers, managers, clients – and genuinely enjoy helping one another succeed.
• Enjoy the journey: We make sure our team feels appreciated and valued. We take the
time to stop and acknowledge where we came from so that we don’t miss how
impressive the climb is.
• Get it done: Clients trust us to build things that work and we take that seriously. Our
team will overcome obstacles, find solutions and deliver exceptional results.
• Evolve and adapt: The people that work here are smart, and smart people know you
can always get better. Mistakes are even ok as long as you learn something from them.
We believe your time at MACH-TP should make you better.
• Do the right thing: Our teams act with integrity and honesty, and focus on putting
ourselves in the shoes of others.

1.7. OBJECTIVES

• To develop a solid client base which can generate revenue of at least $100 000 within
the first year of operating
• To achieve net profitability of at least 25% on revenue by ensuring maximum client
satisfaction with services provided within the first year of operation
• To gain a market share of 10% in the first year of operation.
• To conduct business workshops or train short course in order to educate the community
on the use of computers by 2022

1.8. PRODUCT DESCRIPTION

MACH-TP focuses on the production of AI based chatbots that are able to respond to the most
frequently asked questions as well as give response and feedback to customers when needed.
This chatbot is created to be used especially in institutions but however can be customized for
the business or a certain individual.
The chatbot are developed in a way that makes it easy for users to use. Simply you type in your
query and a response will be given instantly. It also has a speech to text function that allows
for the user to speak their query directly into the chatbot and receive their response.

One of the major advantages of using the AI powered chatbot is that it is able to give assistance
and response 24/7. Especially now as a result of several restrictions that have been implemented
to maintain social distancing and avoid physical interactions, having an AI powered chatbot
will be a great benefit to both users and individual companies.

An AI powered chatbot does not get tired and frustrated therefore great customer service is
always guaranteed. Unlike physical interaction whereby an agent can easily get frustrated and
be rude or unwelcoming. Making use of an AI powered chatbot will help in identifying the
queries that users have the most and help the business in making sure that its operations are
focused towards the needs of the customers.

Regardless of many other chatbots existent in the industry, one of the unique features is that it
is able to recognize speech and any sort of informal language. Therefore, the chatbot is able to
recognize text regardless of the syntax in which it is typed.

1.9. SUMMARY TABLE

SUMMARY TABLE
COST Estimated amount (USD)
Registration cost; license & permits 1 080

CHAPTER 2-MANAGEMENT AND ORGANISATION

2.0.INTRODUCTION

This chapter aims at giving a detailed description and analysis of the individuals or groups of
people who will be responsible for pushing the company toward meeting its goals. This
involves management, professional support, human resources and description of key personnel.
The chapter also aims at showing the structure of the organization, thus clearly defining the
roles and responsibilities of individuals in the organization.

2.1. LEGAL STRUCTURE

MACH-TP Private Limited Company is a newly established company. The company is set to
be registered in August 2021 under the provision of private limited company section in the
company act of Zimbabwe. Initially the company will have only one branch in the CBD of
Harare and this will also act as the headquarters even in the event of it expanding to other cities
or countries. As of the name, MACH-TP, it was driven from the initials of the core founders
of this company and through the thorough research that we did, this name has never been used
before and it is culture/race neutral, thus it has no meaning in any culture. It is our vision to be
one of the leading tech company, thus the name will also be a registered trademark so as to
prevent infringements. In order to reduce confusion, the company has a friendly domain name
on the website, derived from the company’s name; https://www.mach-tp.com/. MACH-TP
does not intent to remain operating nationally but internationally, hence the use of a .com
domain in place of /. co.zw/.

2.2. SHAREHOLDING STRUCTURE

Since MACH-TP is operating as a private company, there is an issue of share in the company.
The idea is to have start up authorized ordinary share capital of 5000 at $1.00 each and this is
distributed among the seven shareholders of the company.

SHAREHOLDER % OWNED VALUE TOTAL SHARES

AND VALUE
Evelyn Tarume 21.05 1 052.50 1 052.50
Tapiwa Kalitawo 15.79 789.50 789.50
Portia Katambarare 10.53 526.50 526.50
Heilly Maguma 15.79 789.50 789.50
Tapiwa Mudhara 10.52 526.00 526.00
Calista Muzofa 15.79 789.50 789.50
Alicia Mutsauri 10.53 526.50 526.50
TOTAL 100 5 000 5 000

2.3. DESCRIPTION OF KEY PERSONNEL

Currently the key personnel in the company consist of all the management positions retained
by the seven shareholders and also the employees of the company. Among the top management
there is the president/CEO, vice president, production manager, finance director, Operations
Director, Marketing Director and Human Resources Director.

Title: CEO
Name of the title holder: Evelyn Tarume.

Duties and responsibilities: primary responsibilities include making major corporate decisions
and managing the overall operations of the company, also acting as the main point of
communication between the board of directors.

Title: Deputy CEO

Name of the title holder: Alicia Mutsauri.

Duties and responsibilities: Prepare reports for the CEO and the board, identifying issues,
apparent problems, opportunities and service gaps. Also assists with CEO duties when CEO is
absent.

Title: Finance Director

Name of the title holder: Portia Katambarare

Duties and responsibilities: overseeing all financial activities and reporting, budgeting,
disbursing funds to departments and managing risk. Is also responsible for developing a
financial strategy, conducting feasibility studies and monitoring expenditure.

Title: Production Manager

Name of the title holder: Tapiwa Mudhara

Duties and responsibilities: overseeing the day-to-day administrative and operational functions
of the business helps in setting strategic goals and is responsible for the flow of operations
information to the chief executive and the board.

Title: Human Resources Director

Name of the title holder: Calista Muzofa

Duties and responsibilities: supervise and provide consultation to management on strategic

staffing plans, compensation, benefits, training and development, budget, and labour relations,

Title: Marketing Director

Name of the title holder: Hailey Maguma

Duties and responsibilities: chatbots sourcing, sales and marketing. Responsible for MACH-
TP marketing and communications strategies as well as overall branding and image.
2.4. ORGANISATIONAL STRUCTURE

2.5. HUMAN RESOURCE REQUIREMENTS

For the time being, since the company is just a start-up, it is only interested in few employees
in each of the departments that makes up the organisational structure of the company. Thus,
inclusive of the top management, the company will have 16 full time employees. Also,
exceptional employees will be rewarded for their job well done. Mainly the company will
employ people from different universities who are familiar with programming world under the
production department. Much emphasis will be put on those who would have attained a first-
class degree in information technology programs and also with work experience from other
organisations or projects. Main qualifications that are required are being able to code and
program mainly using PHP, Java, Python, HTML and CSS. Employees should have at least 3
years working experience in this respective field and must be able to work under pressure,
individuals must also be able to adapt well and be capable of working as a team. The employees
are responsible mainly for the development of chatbots as well as customising them in order to
suit customer requirements. Renumeration is offered on monthly basis each employee earning
around $500 USD mainly depending with their position, employees are also awarded a bonus
at the end of each financial period, however it is not mandatory. Other employees earn weekly
especially for overtime.

2.6. PROFESSIONAL SUPPORT

ACCOUNTANTS: Simply Business Accounting firm. They located in 4th street Harare
Zimbabwe. They offer professional service, has over 20 employees and has very good traceable
references. It provides accounting services to over 10 SME enterprises and their fees are quite
favourable considering the fact that they offer services to businesses that are not established
much as of yet, making it the idle firm for MACH-TP as it is a growing company. They are
responsible for all accounting solutions, payroll and HR solutions and financial advice of the
company.

BANK: Stanbic bank. It operates as a registered Commercial Bank in Zimbabwe. The

Standard Bank Group is the leading banking and financial services group in Africa, providing
a broad range of Corporate and Investment Banking, Personal and Business banking products
and services. It provides loans, financial advice, investments and business banking to the
company. The company chose Stanbic bank because it has an innovation hub in Harare which
is designed with the goal of empowering, nurturing entrepreneurship and innovativeness in
SMEs and this suits the profile of MACH-TP.

LAWYERS: Wilmot and Bennet Legal practitioners. It is a full-service law firm,

consolidated in two offices in Harare and Kwekwe. With reckonable success, Wilmot and
Bennett has provided services to financial institutions, industrial and commercial corporates,
local authorities, financial institutions, government entities as well as individuals. They provide
legal support to the company. MACH-TP chose Wilmot and bennet legal practitioners as they
have a traceable reference and over 900 trusted clients and 98% won cases. The firm continues
to be driven by a work force that is dedicated to efficient service delivery, client care and
achieving best results. Consequently, the firm has succeeded in bringing together experience
extending over five decades and quality legal expertise.

CONSULTANTS: Talarius data analytics and consultancy. Fast growing and dynamic data
analysis company, with fresh ideas and just the right answers to key data analysis, modelling
and management reporting questions. In issues to do with management training and business
consultancy as well as data analytics services they are the company’s heroes. Their vision is to
transform the information landscape and help organisations to harness and understand the
information that is pertinent to good decision making; and essentially information that will feed
strategic direction. This transforms an organisation’s decision making to one based on sound
analysis, this is one of the reasons why MACH-TP chose Talarius data analytics and
consultancy.

DEVELOPERS: MACH-TP already has a group of developers who are also founders of the
company, however there is need to hire more developers in order for top management to focus
on more pressing issues concerning the business. They are responsible for the development,
deployment and maintenance of the chatbots. Developers must be able to work under pressure,
with skill and diligence. Must also be able to meet deadlines bust still providing exceptional
work, and 3+ years of experience in development or anything that is chatbot related.

2.7. MANAGEMENT AND ORGANISATION BUDGET FOR YEAR 1

COST Estimated amount (USD)
Rent and Rates 3 250
Marketing 4 050
Payroll 9 600
Utilities 2 400
Professional consultants 1 920
Insurance 4 296
TOTAL 25 516

CHAPTER 3: MARKET DESCRIPTION

3.1. INTRODUCTION

This chapter aims at analysing and describing the chatbot market in relation to MACH-TP,
showing clearly ways in which MACH-TP can penetrate and dominate with the market, as well
as the SWOT analysis which is vital for the success of every business.

3.2. HISTORY AND LIKELY FUTURE TRENDS

History of Chatbots

Artificial intelligence (AI) has influenced how people engage in their everyday activities by
designing and evaluating advanced applications and devices, called intelligent agents, which
can perform various functions.

The first Chabot was called ELIZA and it was constructed in 1966. ELIZA simulated a
psychotherapist’s operation, returning the user’s sentences in the interrogative
form Weizenbaum (1966). Artificial Intelligence was firstly used in the domain of the chat bots
with the construction of Jabberwocky in 1988 (Jabberwocky, 2019). Another step forward in
the history of chat bots was the creation, in 1995, of ALICE (Artificial Linguistic Internet
Computer Entity), the first online Chabot inspired by ELIZA (Wallace, 2009). Siri was
developed by Apple in 2010, pioneered the way for personal assistants. In 2011, a Chabot
called Watson (Watson Assistant |IBM Cloud, 2020) was created by IBM. Google Now
(Google now, 2020), developed in 2012, was initially used to give information to the user
taking into account the time of day, location, and preferences Microsoft designed Cortana, a
personal assistant developed in 2014 (Personal Digital Assistant—Cortana Home Assistant—
Microsoft, 2019). The same year, Amazon introduced Alexa, which is built into devices for
home automation and entertainment and making in this way the Internet of Things (IoT) more
accessible to humans.

3.3. FUTURE OF CHATBOT DEVELOPMENT

As per Gartner, “Artificial Intelligence (AI) will be a mainstream customer experience

investment in the next couple of years”. 47% of organizations will use chat bots for customer
care and 40% will deploy virtual assistants. AI is vital for enabling machine learning and the
flexible interpretation of automated business communications. Going further, chat bots are
predicted to move from simple user-based queries to more advanced predictive analytics-based
real time conversations.

Key chatbots statistics

With the Chabot trends making headway, more and more industries innovative applications to
automate their business processes. They are being adopted by multiple business verticals to
deliver excellent customer service and a delightful experience.

Undoubtedly, bots will be transforming the way businesses communicate with their customers
& prospects. The deployment of bot solutions will extend its horizons in the near future. The
number one Chabot is to address customers promptly, having a bot platform can help to achieve
key business metrics like average resolution time and first contact resolution.
Chat bots will have a really big impact in our future

3.4. MARKET COMPOSITION

There is a significant development in the Natural language processing field, which made the
interactions between computer and human languages more streamlined. The entire Ecosystem
of the chatbot comprises various cross-linking features that help in optimum usage of the
application. With the spread of the coronavirus pandemic, various institutions, universities and
schools have seen the need initialize and adapt to more virtual and technology as compared to
physical. Therefore, the initialization of the full fledge implementation of chatbots and
conversational AI tools will enhance communication and interaction in the crisis. Amid the
pandemic, schools face challenges in sustaining and are willing to try new technological
avenues such as voice-based assistants and chatbots. This has increased the value of the chatbot
in the current market and also increased the market size for the chatbot industry.

The factors contributing to the growth of the chatbot market includes growth in need for 24/7
customer support at a lower operational cost, increase in focus on customer engagement
through various channels and advancements in technology coupled with rising customer
demand for self-service operations.

3.5. MARKET SIZE

The chatbot market value is expected to increase by at least 30% especially in the 5 coming
years. The adoption of chatbot solutions is considerable and is projected to grow at a good pace
in the coming years. One of the factors contributing to the growth of the chatbot market is the
advance of technologies, such as analytics, AI, and cloud, which enable various industries to
organize their operations. while the demand for chatbot solutions and services is expected to
increase due to the increasing demand for enhancing customer experience and building a
personalized relationship with prospects.

The recent growth trends of the chatbot have been high and this is because a chatbot will
address mission-critical processes, improve operations, and differentiate customer viewing
experiences. The reduction in operational costs, better customer experiences, resolution of
customer queries, enhanced visibility into processes and operations, and improved real-time
decision-making are key business and operational priorities that are expected to drive the
adoption of chat bots.

3.6. CUSTOMER PROFILE

The target customers are going to be stakeholders to the Universities main focus being on
students, that is, those enrolled and those seeking to be enrolled in the institutions. This group
is less likely to have any traits of techno-phobia therefore will make it easier for us to market
our Chabot to them. In terms of demography, MACH-TP is targeting on marketing to potential
customers all over Zimbabwe and other interested countries.

3.7. ANALYSIS OF TARGET MARKET

MACH-TP saw a very huge gap between universities and stakeholders (students being the main
focus) in terms of communication, proper assistance can only be provided when interacting
physically and this has become a problem especially now that there is an increase in technology
advancement, and people are adopting more to technology than they do to physical interaction.
Focusing mainly on students, they are failing to get assistance and help in time every time they
are in contact with their respective universities. With this in mind, the main people that have
enquiries at universities are high school students that want to visit the university or students
that are already learning at the university. Therefore, the main target market for the MACH-TP
Chabot is high school students that are planning to leave for university.

The target market in saturated by millennia’s that range from16-25 years and therefore, we
have made it a point to make the Chabot to be convenient, appealing and easy to use putting
into consideration this variable. MACH-TP did not focus much on gender when they were
analysing the target market this is because this product is not restricted to a certain gender,
however MACH-TP made sure that the Chabot will be accommodating for all genders, and
tried not to impose as if there was gender stereotyping in any way hidden or clear.

The targeted market of millennials has adapted to technology very well more than any other
age group currently. These people prefer technology as to physical interactions, they have
shown a great interest in technology and have adapted well to the technological changes that
everyone is currently facing. Therefore, the demand for the Chabot is estimated at $10 000.
More and more people are opting for technology leading to a rapid increase of the Chabot
market size.

In the past, people preferred physical interactions as to technology, this is because technology
was out looked and there was a negative attitude towards it. People believed that physical
interaction would be effective than making use of technology. As a result, not many
institutions, business or people saw the need of implementing a Chabot. Also, the customers in
respective industries saw no need to interact with a Chabot. However, change of times and the
rise of the COVID-19 pandemic has led people to have a change of opinion. This is because
now physical interaction has to be reduced and people are now diverting towards the use of
technology. With this MACH-TP predicts that the future trends of the market are an increase
in the demand of chat bots as they reduce costs, provide top notch services, and limit physical
interaction. Even after COVID-19 has submerged, once people are used to a certain way of life
it has hard to let it go and technology is becoming the new norm.

3.8. COMPETITOR ANALYSIS

The company has direct competitors like WebDev, Cassava Smartech and Wilsofts the list is
further added by two new players e-Solutions. Besides these there are many small companies
like Icono Global, Afrosoft Holdings and Sangana Africa which affect the business directly,
also putting into jeopardy the competitive advantage of the company.
COMPETITOR ANALYSIS TABLE
Cassava Webdev Wilsoft
Direct Competitors
Company Profile Cassava Smartech is a subsidiary Webdev (Pvt) Ltd is a Wilsoft is a digital marketing
of Econet, that specialises mainly web hosting, online agency specializing in web
in software engineering marketing, e- design & development, Mobile
Company
commerce, online apps, Search engine
Highlights payments and web Optimisation & animation.
development company,
Key competitive Is part of Econet, which means it It has been in the Use of recent technolgy
has more resources and an market for about 15
Advantage
established brand years.
Target Market e-commerce companies and Large corporations due Individuals and small businesses
partly, the educational sector to their prices
Market
Market Share 10% 15% 5%
Information
Marketing Strategy Use the brand name Econet Use Facebook ads, Word of mouth and Facebook
(which is already established) to word of mouth and ads
market their products google ads to market
Products & Software development Website and software Website and software
development development
Services
Pricing Product $2 000 for a software or chatbot $1 500 for a chatbot $900 for a chatbot

Distribution Information Direct channels (online) Direct channels Direct channels (online)
(online)
Channel
Strength High skilled developers and Experienced Low premiums that attract
already established brand developers and customers
established brand
SWOT
Weakness It is affected by Econet; thus, if Failing to keep up to Still small, and not yet
analysis Econet performs bad in the market, date with the new established its brand name
its reputation will also be affected market trend
Opportunities Can easily reach the whole world Can control the large Capable of reaching a high
if Econet markets it well piece of the market market share due to its recent
share if it upgrades its technologies
technology
Threats Failure of the parent company Can lose its customer Can be easily crushed by the big
might also mean the end of the base due to many firms firms that are already in the
company entering the market market
with advanced systems
3.9. SWOT ANALYSIS FOR MACH-TP

Strengths
• User friendly
• Instant response
• 24/7 available
• Cuts down operational cots
• Integration with other technologies
• New and direct way of
communicating with customer
Weaknesses
• High initial costs
• Lack of awareness among end users
regarding the usefulness of Chabot
• End users still depend on traditional
methods

Opportunities Threats
• Potential to reach millions of • Market entry of competitors
people • Potential use for unethical activities
• One-to-one communication on • Lack of experience and
personal device understanding
• Always- available customer • Privacy concerns
services and support

3.10. MARKETING STRATEGIES

Marketing objectives

• To obtain 20% market share at the year-end 2022

• To become the industry leader by 2030 by dominating the larger part of the market,
through measuring the company’s market share and market size.

3.11. MARKETING MIX

Promotion

The advertising is going to be done on social media handles and the adverts that we are going
to make inform of ads will include demonstrations on how to use the system. The promotional
strategies will be centred on direct targeting of clients with informative and persuasive
technique. Newsletters and brochures will be printed with all essential information about the
firm and the nature of services it provides, also explaining the type of organization targeted,
prices and why clients need this service. These will be posted to target firms and the printing
and distribution will be promotional expenditure. Where appropriate, targeted client firms will
be visited by members of staff to further explain the service and seek for new clients and also
assist in enquiring on their specific consulting needs. Discounted prices will be available for
loyal clients or clients which engage during a specific period of time.

The promotions the company is going to offer includes offering free after sale services like free
teaching of the customers on how to use the system and also offer free backup settings. These
promotions are not the same as those used by our competitors as our competitors use personal
selling. Promotions are aimed at raising at least 20% of the sales which will generate
approximately 20% of profit proportionally.

Place

MACH-TP’s services are mainly based online, thus it is more of an online company to the
customers than a physical one. Thus, a direct distribution strategy (online) through the payment
platform on the website, will be used to distribute the services and product of the company to
its customers. As a company that will be managed by well experienced management, it
understands that having an online distribution and facilities is not enough. Thus, there will be
also a physical office which will be in the CBD of Harare.

Price

As the company is entering a market that already has other key players, it will charge relatively
low prices. Much emphasis will be put on the production cost. Thus, the prices of the chatbot
will be production costs plus a mark-up of 42.9% that is a margin of 30%. However, this mark-
up may change in relation to the production costs the company would have incurred in that
financial period. Initial the price of a chatbot is pegged $ 1500 with the assumption of the
company incurring total costs of $650.

Product

MACH-TP is to develop AI based chat bots that will be used in the educational sector, mainly
the tertiary as no university has implemented this system as of yet. However, MACH -TP is
not limited to the educational sector only as these chatbots can be customized to suit companies
and separate individual’s needs. One of the major features of this AI powered Chabot is speech
recognition and Natural language understanding, this helps the Chabot to understand whatever
query the user enters regardless of the structure of the query. This feature is quite amazing
because most chat bots fail to understand queries unless the user types exactly what was
programmed into the system. This is a great opportunity since most business and institutions
have resorted to online operations and implementing this would be a great opportunity for the
business. The estimated price of the Chabot is around $500 which can be paid in full or in
instalments as per agreed.

People

The MACH-TP employees will be divided into 4 segments, system development segment,
system advertising, and system selling and system maintenance. This segmentation is done to
keep everyone within the system busy and also adding value to the system as each and every
employee in each department is well trained for job. The advertising team will be trained on
how to communicate and advertise the system; the selling team will be trained on how to
negotiate with the customers whereas the maintenance team will be trained on how to let the
system keep pace with the changing technology so as to keep on satisfying the customer.

3.12. MARKETING FINANCIAL SUMMARY TABLE

COST Estimated amount (USD)
Payroll 1 000
Advertising 550
Free trials 250
Newsletter 100
Discounts 600
Research and Development expenses 1 550
TOTAL 4 050

CHAPTER 4 OPERATIONAL OR PRODUCTION PLAN

4.0. INTRODUCTION

Below is a detailed plan used to provide a clear picture of how a team, section or department
will contribute to the achievement of the MACH-TP's strategic goals. It contains summary of
the company’s daily activities required for its successful running.

4.1 OPERATIONAL PRODUCTION OBJECTIVES

• To develop at least 20 different chatbots in the first year of operation.

 • Increased Value Stream Productivity in a space of 6 months by making sure that at least
half of the targeted number of chatbots to be developed within the year (20) are
developed
• Pass ISO/IEC 9126 quality evaluation within the first month of operation.

4.2. LOCATION AND HOURS OF BUSINESS

Being physically located in the CBD of Harare, Zimbabwe, MACH-TP intends to operate
Monday to Friday from 9 am to 5 pm. MACH-TP will be operational year-round. With the help
of our online virtual assistant, the website managed by the chatbot will be open 24/7 together
with the virtual information desk.

4.3. FACILITIES

In the first year of operation, the same facilities used as a head office will the used for the
production purposes. Thus, we will have sections for programmers in that same floor. There is
also need for strong internet connection, and electricity. However, during the course of
operations, there will be dedicated servers and these will be placed in a separate rented facility
in the CBD of Harare.

4.4. LEGAL ENVIRONMENT

company logo

Licensing and bounding requirements

There are certain requirements that MACH-TP firm should have in order to be able to obtain a
license from the registrar of companies

• Completed Application forms

• Memorandum and Articles of association
 • Certificate of incorporation.

The company is not registered yet because of the payable fee required to register and license
the company legally. Personnel in the company are required to submit essential documentation
as a means to confirm their legal status and their qualifications.

Insurance Coverage

MACH-TP as a company might face risks in its operation which can challenge the profitability
of the organization. To cover the firm from potential losses, MACH-TP will get professional
indemnity insurance from Old Mutual. This is a kind of insurance that will cover the company
from losses which can be realized. Old Mutual is ideal for MACH-TP as it has plans that cater
for SME hence making it affordable. It will be also offering financial planning and advice
leading to effective goal setting and employee insurance for MACH-TP.

Product Protection and Copyrighting

MACH-TP Company needs a total of $4 000 in order to obtain a patent grant for service. The
patent will help with protecting the idea of the company. There is need to register the product
as a copyright as well. MACH-TP staff and shareholders are going to sign NDAs and Non-
compete agreements, to protect our products from being replicated and used in competition.

4.5. PERSONNEL

Number of employees

Upon initiation MACH-TP will employ 16 employees inclusive of the 7 founding agents.
These will form the governing board and the technical team. Which will be responsible for
maintenance of the Chatbot.

Type of labor.

All the workers are expected to be skilled and to have some IT background as this will allow
the team to work better and more efficiently and effectively. If all employees are technically
skilled then there will be more balance in the team as they will be all understanding the ground
of the work they do and are therefore be able to cover for each other when need be.

Salaries and wages.

On average the highest earning which will be for the CEO will be $800usd (first year) for each
month and the lowest will be $200 (first year) for the technical support team. These are just
basic salaries when starting the company however, these may increase as the business grows.
There will also be bonuses given out where the team manages to get a high number of
customers. Pay structures will be awarded on a grade basis with the highest-grade being Z
which is for the CEO and the lowest being G. Grades are lifted or upgraded according to
performance and deliverance.

4.6. OPERATIONAL PROCESSES

Maintanance: working on
Objective setting : the senior
valnurabilities found by customer
software engineer will define the
and making updates in form of
objectives of the project
Patches
Duration : 1 week
Duration: 2 weeks

Requirements specification: the Verification: this is when the

software development team software development team
states what is needed to tests the system to find bugs and
complete the project valnurabilities on the system.
Duration : 3 days Duration: 2 weeks

Coding or programming: this is

Design phase: the software
when the software development
development team designs the
team creates the system thus
interface of the system
write the code for the system
Duration: 4 days
Duration: 4 weeks

4.7. CAPITAL

CAPITAL REQUIREMENTS QUANTITY

Tables 12
Chairs 12
Computers 5
Internet Unlimited WIFI for a month
Building to rent Paying monthly

The table above shows the capital requirements of MACH-TP during its operation. The
furniture and computers were supplied by TV sales and Home, MACH-TP chose TV sales and
Home as it offers affordable quality furniture as well as quality electronic gadgets. It also offers
a 24-month warranty hence it is possible to return the product in the event that it does not meet
MACH-TP expectations. TV sales and home also offers credit sales with low interest hence
making it favorable to purchase from there in the event that MACH-TP does not have enough
money. Total costs at TV sales and Home amounted to $100 000RTGS

Internet service for MACH-TP is provided by ZOL Zimbabwe, which is Zimbabwe’s leading
internet service provider. Which offers a range of affordable high-quality internet? ZOL
provides Fiber, VSAT and wireless internet, giving MACH-TP a wide range to choose from

4.8. OPERATIONAL BUDGET FOR YEAR 1

COST Estimated amount (USD)

Intellectual Property 4 000

Operational Production Costs 650/unit
Discounts 600
Payroll 9 600
Furniture 3 500
Computers 2 400
Internet 1 200
Building to rent 3 250
TOTAL 25 200

CHAPTER 5: FINANCIAL PLAN

5.0. INTRODUCTION

MACH-TP is a public limited company formed by seven technopreneurs after the completion
of their technopreneurship studies at Harare Institute of Technology. The company’s equity
comprises of the $5 000 from the seven owners, who are also the only major shareholders so
far and $10 000 loan from Banc ABC bank. MACH-TP specialises in designing and developing
AI-Chatbots; mainly in the educational sector. The chatbot is currently priced at US$1 500.

5.1. FINANCIAL OBJECTIVES

• To achieve Gross Margin of 30% on yearly basis

 • To realise profits of $100 000 in the first year of operation
• To achieve return on investment of more than 40% per annum

5.2. ASSUMPTIONS

• The company financial period starts on the 1st of August and ends on the 31st of July.
• Total production cost of the chatbot is assumed at $650 in the first-year operation and
will decrease by 5% in the second year and third year.
• Variable cost assumed at 70% of the total cost.
• Total units to sold assumed at 100 in the first year, 200 in the second year and 240 in
the third year.
• Fixed cost will change in relation to the production levels.
• Patents for the chatbots are expected to be valued at $4000.
• Tax to be assumed at 4% on profits.
• Market value of share assumed to be at $20.73 in the first year, $22.04 in second year
and $23.50 in the third year.
• Dividends payment is forecasted to be $5000 which is paid at the end of the year and is
expected to increase by 10%.
• Rent and Rates assumed at $250 per month.
• Business License and Permits are assumed to be paid quarterly at a rate of $270.
• Professional support costs are assumed to be paid monthly at a rate of $160.
• Depreciation
o Equipment 10%
o Office furniture and fittings 5%
o Vehicles 10%.

5.3. SOURCES OF FUNDS

Equity - Share Capital US$ 5 000

Debt – Banc ABC bank loan US$ 10 000

EQUITY + DEBT US$ 15 000

5.4. FINANCIAL STSTEMENTS

MONTHLY PROJECTED CASHFLOWS FOR YEAR 1 (1 AUGUST 2021 – 31 JULY 2022)

August September October November December January February March April May June July TOTAL

Opening balance 5 462 6 339 7 211 7 843 8 775 9 702 10 604 11 771 12 933 13 970 15 272

Cash Inflows

Equity + Debt 15 000 15 000

Sales Revenue 15 000 15 100 15 200 15 300 15 400 15 500 15 600 15 700 15 800 15 900 16 000 16 100 186 600

Other Income

TOTAL INFLOWS 30 000 15 100 15 200 15 300 15 400 15 500 15 600 15 700 15 800 15 900 16 000 16 100 201 600

CASH OUTFLOWS

Advertising Expenses 500 500 500 500 500 500 250 250 250 100 100 100 4 050

Suppliers 10 570 10 675 10 780 10 850 10 920 11 025 11 130 11 235 11 340 11 445 11 550 11 655 133 175

Wages and Salaries 800 800 800 800 800 800 800 800 800 800 800 800 9 600
Office Fittings 3 500 3 500

Transport 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 1 050 12 600

Office Stationery 110 110 11 110 110 110 110 110 110 110 110 110 1 320

Computers 2 400 2 400

Electricity 100 100 100 100 100 100 100 100 100 100 100 100 1 200

Telephone Expenses 120 120 120 120 120 120 120 120 120 120 120 120 1 440

Interest on loan 500 500

Insurance 358 358 358 358 358 358 358 358 358 358 358 358 4 296

Internet – Wi-Fi 100 100 100 100 100 100 100 100 100 100 100 100 1 200

Rent and Rates 500 250 250 250 250 250 250 250 250 250 250 250 3 250

Professional Support 160 160 160 160 160 160 160 160 160 160 160 160 1 920

Business Licences and

Permits 270 270 270 270 1 080

Dividends Payment 5000.00 5000.00

Patents 4 000 4 000

TOTAL OUTFLOWS 24 538 14 223 14 328 14 668 14 468 14 573 14 698 14 533 14 638 14 863 14 698 20 303 190 531

Closing Balance 5 462 6 339 7 211 7 843 8 775 9 702 10 604 11 771 12 933 13 970 15 272 11 069
PROJECTED STATEMENT OF INCOME FOR MACH-TP PVT LTD

1 AUG 2021 – 31 JULY 2022 1 AUG 2022 – 31 JULY 2023 1 AUG 2023 – 31 JULY 2024

Sales Revenue 186 600 223 920 268 704

Cost of Sales (130 620) (156 744) (188 092.80)

Gross Profit 55 980 67 176 80 611.20

OPERATING EXPENSES

Advertising Expenses 4 050 4 050 4 050

Wages and Salaries 9 600 10 080 10 584

Transport 1 2600 13 230 13 891.50

Office stationery 1 320 1 452 1 597.20

Electricity 1 200 1 260 1 323.00

Telephone expenses 1 440 1 584 1 742.40

Insurance 4 296 4 726 5 198.16

Internet - Wi-Fi 1 200 1 200 1 200

Rent and Rates 3 250 3 250 3 250

Professional Support 1 920 1 920 1 920

Business licence and permits 1 080 1 080 1 080

Amortization of Patents 200 200

Depreciation - Office Fittings 175 175

Depreciation - Vehicles 2 000

Depreciation - Computers 240 240

TOTAL OPERATING EXPENSES 42 456 44 946.60 48 951.26

Net Income before interest & tax 14 024 22 729.40 32 159.94

Interest on loan (500) (500) (500)

Net Income before tax 13 524 22 229.40 31 659.94

Taxation (4% on profit) (540.96) (889.18) (1 266.40)

INCOME FOR THE YEAR 12 983.04 21 340.22 30 393.54

5.6. STATEMENT OF CHANGES IN EQUITY FOR MACH-TP LTD

1 AUG 2021 – 31 JULY 2022 1 AUG 2022 – 31 JULY 2023 1 AUG 2023 – 31 JULY 2024

Share Retained Share Retained Share Retained

Capital Profit Capital Profit Capital Profit

Balance at 1 August 5 000 5 000 7 983.04 5 000 23 823.26

Total income for the period 12 983.04 21 340.22 30 393.54

Dividends Paid (5 000) (5 500) (6 050)

Balance at 31 July 5 000 7 983.04 5 000 23 823.26 5 000 48 166.81

5.7. STATEMENT OF FINANCIAL POSITION FOR MACH-TP PVT LTD

1 AUG 2021 – 31 JULY 2022 1 AUG 2022 – 31 JULY 2023 1 AUG 2023 – 31 JULY 2024

COST ACC DPN NBV COST ACC DPN NBV COST ACC DPN NBV

Non-Current Assets

Tangible Assets

Office Fittings 3 500 3 500 3 500 (175) 3 325 3 500 (350) 3 150

Vehicles 20 000 20 000 20 000 (2 000) 18 000

Computers 2 400 2400 2 400 (240) 2160 2 400 (480) 1 920

5 900 5 900 25 900 415 25485 25 900 2 830 23 070

Intangibles Assets

Patents 4 000 4 000 4 000 200 3 800 4 000 400 3 600

Total
Non-Current Assets 9900 29 285 26 670

Current Assets

Inventory 2 555 3 066 3 679

Bank 11 069 7 361.44 34 084.21

Total Current Assets 13 624 10 427.44 37 763.21

TOTAL ASSETS 23 524 39 712.44 64 433.21

EQUITY

Ordinary Shares of $1 each 5 000 5 000 5 000

Retained Profit 7 983.04 23 823.26 48 166.81

 12 983.04 28 823.26 53 166.81

Current Liabilities

Tax 540.96 889.18 1 266.40

Long term Liabilities

5% Loan Payable (5 years) 10 000 10 000 10 000

10 540.96 10 889.18 11 266.40

23 524.00 39 712.44 64 433.21

5.8. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED

Year 1 Year 2 Year 3

Cash Flow from Operating Activities

Profit before interest and tax 14 024 22 729.40 32 159.94

Adjustments for Depreciation 415 2 415

Adjustments for Amortisation 200 200.00

Operating profit before working capital

changes 14024 23 344.40 34 774.94

Inventory Increase (2 555) (511) (613)

Interest paid (500) (500) (500)

Income tax paid (540.96) (889.18)

Net Cash from Operating Activities (3 055) (1551.96) (2002.18)

Cash Flow from Investing Activities

Purchase of intangible Assets 4 000

Purchase of tangible Assets 5 900 20 000

Net Cash used in Investing Activities (9 900) (20 000)

Cash Flow from Financing Activities

Proceeds from Issue of Shares 5 000

Proceeds from Borrowings 10 000

Dividends Paid (5 000) (5 500) (6 050)

Net Cash from Financing Activities 10 000 (5 500) (6 050)

Net Increase in Cash & Cash Equivalents 11 069 (3 707.56) 26722.76

Cash and Cash equivalents at 1 January 11069.00 7361.44

Cash & Cash Equivalents at 31 July 11069.00 7361.44 34084.20

5.5. RATIO ANALYSIS

Liquidity Position of the business

Current Assets
Current Ratio =
Current Liabilities

Year 1 Year 2 Year 3

13 624 10 427.44 37 763.21
= = =
540.96 889.18 1 266.40
= 25.18485655: 1 = 11.7270294:1 = 29.81933828:1
= 25.18: 1 = 11.73:1 = 29.82:1
The above current ratios are very high in all the years, showing that the current assets value is
way more than the current debts the company has. Thus, giving the company the ability to
cover its short-term debts easily. Theories may say that the company is not efficiently using its
short-term financing facilities due to a very high current ratio, but however in this case, it is
the absence of short-term obligations.

Liquid Assets
Quick Ratio =
Current Liabilities
Year 1 Year 2 Year 3
13 624 − 2 555 10 427.44 − 3 066 37 763.21 − 3 679
= = =
540.96 889.18 1 266.40
= 20.46177167:1 = 8.278908657:1 = 26.914253:1
= 20.46:1 = 8.28:1 = 26.91:1
The above ratios are very high, indicating that the company’s liquidity position is very high.
Thus, having more of currents assets that can be easily converted into cash. the 3rd year has the
highest ratio, showing that the company will become more liquid as it grows.

Profitability of the business

𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭
𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐑𝐚𝐭𝐢𝐨 = x 100
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬

Year 1 Year 2 Year 3

55 980 67 176 80 611.20
= 186600 x 100 = 223920 x 100 = x 100
268704

= 30% = 30% = 30%

This means that for every $1 of revenue the company will return $0.30 while $0.70 is attributed
to the cost of goods sold. In this industry 30% is a high gross profit ratio, thus the company has
more cash to pay for indirect and other costs such as interest and one-time expenses.

𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐛𝐞𝐟𝐨𝐫𝐞 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 & 𝐭𝐚𝐱

𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐝 = x 100
𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐝

Year 1 Year 2 Year 3

14 024 22 729.40 32 159.94
= = =
(23 524 − 540.96) (39712.44 − 889.18) (64 433.21 − 1266.40)
= 61.01% = 58.55% = 50.91%
In all the years, ROCE is very high; indicating that a large chunk of funds is being returned as
investment in the company, thus maximising shareholder value. The percentage is decreasing
as the business grows so as to meet the standard industry rate of 10 %. However, the company
does not intent to drop to that, but at least maintain a 40% - 45% ROCE.

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐚𝐟𝐭𝐞𝐫 𝐭𝐚𝐱 𝐚𝐧𝐝 𝐩𝐫𝐞𝐟 𝐬𝐡𝐚𝐫𝐞𝐬

𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞 𝐑𝐚𝐭𝐢𝐨 = 𝑿 𝟏𝟎𝟎
𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐄𝐪𝐮𝐢𝐭𝐲 𝐒𝐡𝐚𝐫𝐞

Year 1 Year 2 Year 3

12 983.04 21 340.22 30 393.54
= = =
5 000 5 000 5 000

= $2.60 = $4.27 = $6.08

The above indicate that, the company will make $2.60 earnings on one of its 5000 shares in
year 1, in year 2; $4.27 and $6.08 in year 3. Thus, the showing a great change from year 1 to
year 3. This means the company is becoming more and more profitable as it grows.

𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝 𝐏𝐞𝐫 𝐒𝐡𝐚𝐫𝐞

𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝 𝐲𝐢𝐞𝐥𝐝 = 𝐌𝐚𝐫𝐤𝐞𝐭 𝐕𝐚𝐥𝐮𝐞 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞 x 100

Year 1 Year 2 Year 3

1 1.1 1.21
= 20.73 x 100 = 22.04 x 100 = 23.50 x 100

= 4.82% = 4.99% = 5.15%

This indicates that, in year 1, investors will return $0.0482, $0.0499 in year 2 and $0.051 in
year 3 for every $1 they invest in the company. Considering the standard percentage to be from
2% to 6%, this shows that it is must favourable to invest in the business. Not only that but the
percentage is increasing year by year.
Long-term solvency of the business

𝐄𝐱𝐭𝐞𝐫𝐧𝐚𝐥 𝐄𝐪𝐮𝐢𝐭𝐢𝐞𝐬
𝐃𝐞𝐛𝐭 − 𝐄𝐪𝐮𝐢𝐭𝐲 𝐑𝐚𝐭𝐢𝐨 =
𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐄𝐪𝐮𝐢𝐭𝐢𝐞𝐬

Year 1 Year 2 Year 3

10 000 10 000 10 000
= = =
5 000 5 000 5 000
= 2:1 = 2:1 = 2:1
The above ratio indicates that, the company 2 times external equity than the internal equity.
Thus, the business is muchly financed through external funds. Considering, the average to be
ranging from 1.5 to 2, the above ratios are not bad as the business is fully utilizing its ability to
get external funds more effectively.

𝐋𝐨𝐧𝐠 − 𝐭𝐞𝐫𝐦 𝐥𝐨𝐚𝐧𝐬 + 𝐝𝐞𝐛𝐞𝐧𝐭𝐮𝐫𝐞𝐬 + 𝐩𝐫𝐞𝐟 𝐬𝐡𝐚𝐫𝐞𝐬

𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐆𝐞𝐚𝐫𝐢𝐧𝐠 𝐑𝐚𝐭𝐢𝐨 =
𝐄𝐪𝐮𝐢𝐭𝐲 𝐬𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 ′ 𝒇𝒖𝒏𝒅

Year 1 Year 2 Year 3

10 000 10 000 10 000
= 𝑋 100 = 𝑋 100 = 𝑋 100
5000 5000 5000
= 20% = 20% = 20%
The capital gearing ratio is a bit low in all the 3 years. This is a as a result of the 10 000 loan
which is yet to be paid fully. However, considering the business being a start-up, it is not a bad
percentage to start with.
5.6. BREAK-EVEN POINT ANALYSIS

The break-even point for MACH-TP

Fixed Costs
Break − Even Point (units) =
(Revenue per unit − Variable cost per unit)

Year 1 Year 2 Year 3

($195 𝑥 100𝑢𝑛𝑖𝑡𝑠) ($185.25 𝑥 200𝑢𝑛𝑖𝑡𝑠) ($175.99 𝑥 240𝑢𝑛𝑖𝑡𝑠)

= = =
($1 500 − $455) ($1 500 − $432.25) ($1 500 − $410.64)
= 18.66028708 = 34.69913369 = 38.77285746
= 19 units = 35 units = 39 units

The above means that in the financial period; 1 August 2021 to 31 July 2022; the business will
only need to produce 19 units for it to be able to cover up all its total costs, 35 units in the
second year and 39 units in the third year. This is quite favourable, since less than half of the
predicted units to be produced is needed for the business to cover up its costs. Thus, proving to
be much easy for the business to make profit with few units.