1

“DELICATE HERBS” BODY SOAP

A Feasibility Study

Presented to

The Faculty of College of Business and Accountancy

University of Nueva Caceres

Naga City

In Partial Fulfilment

Of the Requirements for the Degree of

BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION MAJOR IN

MARKETING MANAGEMENT

Bolalin, Apple Ann

Delos Santos, Divine

October 2018
 2

EXECUTIVE SUMMARY

Name and Location of the Business

Name. The business will be undertaken under the trade

name “Skin Bliss” and will market its product under the

brand name “Delicate Herbs”.

Location. The principal place of business for the first

three years at least, shall be at Dayangdang St., Naga City,

Camarines Sur. This will also be the production site and

main marketing base during the said period.

Description of the Product

“Delicate Herbs” is home-made body bath soap with

three skin-care ingredients. One is Clove, which has anti-

fungal and antiseptic properties that help in treating

wounds and other infections caused by fungus. Another is

Camomile which repairs and purifies the skin, is a proven

hypoallergenic and has anti-inflammatory components. The

third is Mint, which not only has a cooling effect on the

skin but also rehydrates the blood as it boosts blood

circulation, thus retarding skin ageing.

 3

Highlight of the Proposed Product

It will be the only bath soap in the market with

medicinal, rejuvenating and refreshing components all in one

soap. The competition does not have all these properties in

one soap.

“Delicate Herbs” - a truly skin care soap.

Major Assumption

1. There would be a ten percent (10%) increase in sales

volume every year.

2. The soap could be sold for as high as one hundred

pesos a piece by its third year in the market.

Summary of Results of the Study

The study shows that the bathing soap project of the

proponents is viable. The product can be manufactured

without complicated machineries or equipment. It does not

need huge capital. The study showed that it can be sold as a

profit. The project does not need complicated management

operation. In short, the project is feasible.

Market Feasibility. The survey showed that majority of

the respondents are receptive to the product and they are

willing to buy it. The proposed product can be priced

 4

competitively. The proposed bathing soap has an edge over

its competition because of the skin care properties it

possesses which are derived from the three ingredients that

go into its prosecution. Properties not 5 (I’m not sure)

possessed by its competitors. These constitute a big factor

in assuring its market acceptability.

Management Feasibility. Operation of the business can

be handled with a minimum of manpower at least for the first

three years. It does not need complicated corporate

organization. It can be run in a single proprietorship.

However, the project will be run in partnership of the

proponents with each other. They will distribute among

themselves the main activities of the business- production

marketing, financial management, other administrative

activities and over-all management.

The business will be started on December 2020 to give

the proponents sufficient time to comply with all the legal

requirements to operate the business within the pale of the

laws. The proponents will also be guided by the Vision,

Mission and objectives that they have set for the business.
 5

Technical Feasibility. The production process contains

of five (5) steps (1) Purchase of raw materials, (2)

Processing of each ingredient (3) Blending and mixing the

ingredients in their proper proportions (4) Processing into

final form and (5) Packaging the finished product.

Production shall be on weekdays. The equipment used shall be

sanitized before every use, to ensure hygienic products. The

project is doable.

Financial Feasibility. The project does not need huge

capital. The proponents themselves will contribute to the

initial capital needed to launch the business. The proceeds

from sales will provide additional capital for subsequent

production and operational needs. The Financial Survey and

Analysis show that the business will yield an acceptable

return on investment and margin of profit.

Socio-Economic Feasibility. The market acceptability of

the product as mentioned earlier, makes it socially

feasible. This is reinforced by the fact that the product is

environment-friendly. Moreover, the business will generate

employment not only for the proponents but also for those

who they will hire in connection with the business. Sales

 6

will also generate revenue for the government in terms of

taxes and license and registration fees.

 7

Chapter I

MARKETING STUDY

This Chapter includes discussion of the Product

Description, Market Description, Target Market, Demand

Analysis, Marketing Plan and also its estimated Projected

Sales Volumes for Three years.

Product Description

“Delicate Herbs” Soap is a home-made soap to be sold in

the market. As its name suggests, this soap contains

extracts of three herbs - Clove, Camomile and Mint.

Clove has anti-fungal and antiseptic properties that

help in treating wounds and other infection caused by

fungus. It can also address other skin problems like warts,

acne and saggy skin.

Camomile has anti-oxidant properties that repairs and

purifies the skin. It also has an aromatic scent that has a

soothing effect which can relieve stress.

Mint has anti-bacterial properties and contains

salicylic acid that cause dark spots to fade and helps

brighten complexion. Aside from its cooling effect, Mint

 8

rehydrates as it boosts blood circulation which keeps the

skin well-nourished and slows down skin ageing.

Market Description

People are becoming health conscious nowadays thus a

lot of people are meticulous in choosing good quality

products when it comes to their skin care especially with

bath soap. Many prefer to use herbal soap because it has

properties that prevent and can treat a variety of skin

problems and more affordable than conventional medicine,

essential oil products are easier to obtain than

prescription medications and they hold beneficial

properties.

This proposed business will take into consideration the

health of people and help them avoid skin problems such as

allergies, fungi, dead skin, rashes and other skin diseases.

Target Market

The Target Market of Delicate Herbs is mostly female,

ages 13-28, high school, college student and employees. The

secondary targets are males.

 9

Demand Analysis

The demand analysis is the important task of

identifying the needs and wants of the consumers; of

determining if they are willing to buy the product or

service; and of identifying the potential customers and

buyers who have the capability to purchase the product. A

survey was conducted to find out their needs and wants and

identify the buying behavior of the consumer.

Table 1 shows the percentage of respondents based on

their gender whose interested in the product. Table 1 shows

that thirty (30) or sixty percent (60%) of the respondents

were females, who were interested in using the product.

Table 1

Respondents’ Gender Preferring Delicate Herbs

Gender No. of Respondents Percentage

Female 30 60%
Male 20 40%
Total 50 100%
Table 2 shows the respondent’s age brackets indicating

for Column 1 the Respondent’s classification; Column 2 shows

 10

the age brackets, and Column 3 indicates the number of

respondents who answered the survey and Column 4 shows the

percentage of respondents in each classification.

Of the respondents surveyed, thirty-four (34) or sixty-

eight percent (68%) of the respondents who preferred

“Delicate Herbs” fall within the age range from 17 to 22

years old, and the remaining thirty-two percent (32%) is

within the 12-16 years old and 23-30 years old ranges.
 11

Table 2

Age of the Respondents

Number of

respondents
Users Age Percentage
High School 12-16 8 16%

College Student 17-22 34 68%

Working/Employee 23-30 8 16%

s
Total 50 100%

Table 3 shows that all respondents are not familiar

with the product because this product is not currently

available in the market. Although there are competitors who

offer similar products, each product serves a singular

purpose. Respondents were asked if they would buy “Delicate

Herbs”. Forty-two (42) respondents or ninety percent (90%)

answered “Yes” while eight (8) or ten percent (10%) answered

“No” this can be gleaned on Table 3 on this page.

 12

Table 3

Would you buy ‘Delicate Herbs’ Body Soap

Parameters No. of Respondents Percentage

Yes 42 90%

No 8 10%

Total 50 100%
 13

Table 4 shows that twenty-five (25) or fifty percent

(50%) of the respondents preferred the moisturizing property

of the soap. ‘Skin Rejuvenation’ ranked second, having been

preferred by only seven (7) or fifteen percent (15%) of the

respondents. All the other properties of the soap, together

ranked third, having been preferred by only three (3) or ten

percent (10%) of the respondents.

 14

Table 4

Preference of Respondents as to Benefits Offered by Delicate

Herbs

Benefits No. of Respondents Percentage

Anti-Bacterial 15 25%

Skin Rejuvenation 7 15%

Moisturizes Skin 25 50%

Others 3 10%

Total 50 100%

Respondents were made to choose from four factors that

would probably affect their decision to buy a brand of soap.

Of fifty (50) respondents, twenty-five (25) or fifty percent

(50%) chose ‘Quality’ while ‘Brand’ came in second in rank,

being preferred only by sixteen (16) or twenty-five percent

(25%) of respondents. ‘Price’ was chosen by only eight (8)

or twenty percent (20%) of respondents while ‘Material Used’

ranked last, being chosen by only one (1) or five percent

(5%) of respondents. These date are shown in Table 5, on

page 14.
 15

Table 5.

Factors that Affect Respondent’s buying decision

No. of Respondents Percentage

Price 8 20%
Brand 16 25%
Quality 25 50%
Materials Used 1 5%
Total 50 100%

Respondents were made to choose from three (3) price

ranges for the soap. Of fifty (50) respondents, twenty-eight

(28) or sixty-five percent (65%) of respondents chose the

50PHP-80PHP Price range while seventeen (17) or twenty-five

(25%) chose the 25PHP-50PHP price range. Only five (5) or

ten percent (10%) chose the 80PHP-100PHP price range. Please

see table 6 for these data.

 16

Table 6

Respondents Preferred Price Range of Soap

No. of Respondents Percentage

25-50 Per Soap 17 25%

50-80 Per Soap 28 65%

80-120 Per Soap 5 10%

Total 50 100%

Respondents were asked as to how frequently they

purchase soap. Of fifty (50) respondents, thirty-four (34)

or seventy percent (70%) bought soap once every two weeks,

while nine (9) or twenty percent (20%) bought once a month.

Only six (6) of the respondents bought once a week and this

represents ten percent (10%) of respondents. Please see

table 7, Page 20.

 17

Table 7

Frequency of Respondents Soap Purchase

Frequency No. of Respondents Percentage

Once a week 6 10%
Once Every two

weeks 34 70%
Once a month 9 20%
Total 50 100%

Respondents were asked to choose between home-made soap

(organic) and chemical based soap. Of fifty (50)

respondents, forty-two (42) or ninety percent (90%)

preferred organic or home-made soap while eight (8) or ten

percent (10%) preferred chemical based soap, as there can be

gleaned from table 8, page 22.

 18

Table 8

Preference of Respondents as to Process of Soap Production

Process No. of Respondents Percentage

of Production
Organic Soap

(Home Made) 42 90%

Chemical Based 8 10%
Total 50 100%

Respondents were made to select the shape of the soap

they preferred. Of fifty (50) respondents twenty-two (22) or

forty-five percent (45%) preferred round shape. Fifteen (15)

or thirty percent (30%) preferred rectangular shape and only

thirteen (13) or twenty-five percent (25%) preferred other

shape.
 19

Table 9

Preference as to Soap Shape

Shape No. of Respondents Percentage

Rectangle 15 30%
Round 22 45%
Other shape 13 25%
Total 50 100%
 20

Marketing Plan

 Market Penetration

Currently being actively marketed in the market are

competing brands like the Glycolic Acid soap, AHA Soap,

Apple Clove and Lather Clove Soap which significantly grab

the lion’s share of the soap market. Using therefore the

penetration price marketing which entails lowering

significantly the introductory price in order to create a

favourable pricing advantage viz the other competitors.

The group will avail of all possible media of marketing

such as online selling, traditional house to house, school

to school and subdivision to subdivision with added

strategy of allowing the general consumers to try and test

the product using the product sampling approach.

The preferred price by the respondents for ‘Delicate

Herbs’ based on the survey ranges from 50Php to 80Php per

piece as earlier discussed. Below are the comparative

prices of different soap producers.

 Price

The preferred price by the respondents for ‘Delicate

Herbs’ based on the survey ranges from 50Php to 80Php per

 21

piece as earlier discussed. Below are the comparative

prices of different soap producers.

Company Lather Glycolic AHA Soap Apple Delicate

/ Clove Soap Acid Soap Clove Herbs

Product

Price P85.00 P80.00 P80.00 P70.00 P65.00

Delicate Herbs will sell at P65.00 based on the survey

result. The proponents based the price on the cost of

production of production and mark-up to assure the proponent

of profit. Some of the materials will be bought in Naga City

in big quantities. The actual cost of production per unit

costs P25.00.

 Place

The organization must distribute the product to the

user at the right place and at the right time. This product

of Delicate Herbs will be located at Dayangdang St. Naga

City near the Colgante bridge. It is accessible by all kinds

 22

of vehicles from all points of the city through major

thoroughfares, it is near center of the city, the market and

the suppliers.

 Promotion

In order to penetrate the market, the following type of

promotions will be used:

Social Media – The product will be advertised through

social media mediums such as Facebook, Instagram, YouTube

and Twitter.

Sponsorships and seminar – the product may also be a

part of sponsorship by giving products or gifts packs

pageants events and seminars.

Consignment – bulk delivery of products to be displayed

by another business establishment through a contract.

 23

Projected Sales Volume*

Year Projected Sales Volume

Year 1 4,600
Year 2 4,700
Year 3 4,800

Table 11 Shows the projected sales volume for 3 years.

The projected sales volume for every year has a 10% increase

a shown on table.
 24

Chapter II

MANAGEMENT STUDY

This chapter contains a detailed discussion of the

organization and flow of authority in the business of

Delicate Herbs. This chapter will also include a detailed

presentation of the Pre-Operating Period, Vision and

Mission, Objectives, the type of the Business Organization,

Hiring and Training, Organizational Chart, Job Description,

and Recruitment process will likewise be further discussed.

Finally, the duties and responsibilities, worker’s

qualification and salaries and compensation will be treated.

Pre- Operating Period

The proponents themselves will manage the various

aspect of the proposed business. They will contribute

capital from their respective personal savings. The

proponents will also take charge in complying with all the

requirements of different government agencies such as

Department of Trade and Industry (DTI), Local Government

(LGU). Bureau of Internal Revenue (BIR) and Social Security

System (SSS).
 25

THE VISION, MISSION AND OBJECTIVES(VMO)

VISION

To help create a world where beauty is enhanced and the

enjoyment of everyone’s best experiences can be extended,

celebrated and shared with others.

MISSION

To instill confidence in every Bikolano youth, to

provide livelihood and employment, to develop world class

products using indigenous raw materials and to carve a

marketing niche for its wide array of health and wellness

products.

OBJECTIVES

We want our customer to be satisfied with our products.

To achieve this, we shall persistently endeavour:

 To promote healthy and beautiful living.

 To provide people a bathing soap with quality and

affordability.

 To love our product and to develop the habit of washing

your body at the end of the day using our product.

 To compete and dominate the market.

 26

SWOT Analysis

Delicate herbs have its strength, weaknesses and

opportunity for the improvement of the business. It will

also be confronted with threats. There is a need therefore

to analyse and evaluate various factors in the environment

that could affect the business so as to formulate an

integrated plan and strategy that could have the business

dominate the market.

 27

Table 12. SWOT ANALYSIS

STRENGTHS: OPPORTUNITIES
 Cheaper price  Continued expansion for
online sales
 Organic raw materials
 Ability to develop
additional stores
 Development of
wholesale distribution
relationship
 We help the economy or
environment
WEAKNESS THREATS
 Competitors can offer  Changes in regulations
similar product can impact the business
quickly(imitation)  Competitors selling
 Do not doing enough to similar products
promote our work  Increases in price
 Need to organize inputs can upward
exhibitions of our work pricing
 Too modest
 Need to find more
avenues to promote our
product
 Be more responsible
financially

Hiring and Training

In every business, it is important that employees must

undergo training, to equip them with the necessary skills

and knowledge needed for the business. Attending seminars,

workshops and team buildings enhance the employee’s

capabilities to perform well on the job.

 28

Form of Business Organization

Our Company “Skin Essentials” or” Skin Bliss” will be

organized as partnership, managed by business partners:

Apple Ann Bolalin, Kristel Parde, Mark Frederick Panis,

Divine Delos Santos and Dexter Vargas.

 29

ORGANIZATIONAL CHART

PARTNERS

MARKETING FINANCE OPERATION

SALES PRODUCTION
ASSOCIATES CASHIERs
STAFF

Figure 1

Figure 1 shows the organizational chart of the

business. The Organizational structure clearly shows the

jobs to be performed by the skilled workers in the

Marketing, Finance and operation phases of the business and

which the manager will administer. The Manger trains the

workers based on his/her own experiences or from the rules

 30

of the organization and help them to become better

performers. It is vital for the business organization to

have qualified and sufficient number of manpower so that the

business can operate properly and efficiently. Employing a

person who is perfectly fit for the job will help the

business to be productive and perform well in its every

activity. In a way, the manager will be the role model of

his/ her subordinates.

JOB DESCRIPTION

The Skin bliss or Skin Essential team is composed of 1

manager and 3 department heads each of them has his/ her own

duties and responsibilities to be able to achieve the

organization’s objectives and goals. Each of the partners

will not be given a monthly compensation. However, the

profit that the business will earn will be divided among the

partners according to the percentage of their capital

contribution and as agree upon in writing.

 31

Table 13

Job Description of the Various Position in the Company.

POSITION DUTIES AND RESPONSIBILITIES

MANAGER  Handles the problems and uncertainties in
the organization or with the customers.
 Provide information, supervision, training
and instruction - keep records of the
training
 Ensure provision of and access to workplace
facilities
 Emergency response plans
 Personal protective equipment
 Accident and incidents recorded and
investigated
FINANCE &  Planning and controlling change.
OPEARTING  Managing quality assurance programmes.
HEAD  Researching newtechnologies and alternative
methods of efficiency.
 Setting and reviewing budgets and managing
cost.
 Overseeing inventory, distribution of goods
and facility layout.
SALES  Greeting customers.
ASSOCIATIO  Operating cash registers.
N  Increasing in store sales.
 Maintaining sales floor appearance.
 Cross-selling products.
 Directing customers to merchandise.
CASHIER  Greet customers as they enter the
establishment
 Scan and verify prices on products
 Take payment in exchange for products
 Balance cash registers at the end of each
shift
 Count and sort coins and wrap currency
appropriately
 Manage product returns and exchanges
 Assist with stocking shelves and rotating
items
 32

 Offer customers with carryout services

 Check daily cash accounts
 Report and sort irregular transactions
 Perform a wide range of suggestive selling
tasks
 Listen to customers’ grievances and offer to
resolve their problems
 Assist in demonstrating products when
necessary
 Handle receipts and coupons
 Generate cash and transaction reports
 33

TABLE 14

VARIOUS POSITIONS FOR HIRING

POSITION QUALIFICATION DUTIES/RESPONSIBILITIES COMPENSATION

Production Must Responsible for the Php
Staff possess production, 280/day
good moral packaging, labelling
character of the product and
and should maintenance of the
be Hard production floor.
working

Mothers and
College
Students

Production

SALARIES AND COMPENSATION

All employees will receive their salaries every 15th

and 30th day of the month. As mandated by the government,

the business will provide for the SSS, Pag-ibig and Phil

health contributions of the employees, as well as 13 th month

pay.

TABLE 16

SALARIES FOR THE STATED POSITIONS

POSITION SALARY PER DAY

CASHIER P 250.00
BOOKKEEPER P 320.00
PRODUCTION STAFF P 280.00
 34

RECRUITMENT PROCESS

The company will hire employees. Applicants will be

required to submit resumes, police clearance and academic

(awards) which will rescue as initial basis for determining

their qualifications. Once qualified and accepted, thEy

shall be made I undergo training. Naturally, those who

either do not quality or who fail to submit the required

documents, will be rejected.

 35

CHAPTER III

TECHNICAL STUDY

This chapter includes a description of the product and

its composition, how the product is to be produced and where

and when to produce it. It also includes a discussion of the

Tools and Equipment needed. The chapter will also describe

the Location Site, Plant Layout, Quality Control and Waste

Disposal.

PRODUCT DESCRIPTION

The product is a home-made organic bathing soaps to be

introduced into the market under the brand name “Delicate

Herbs”. This soap will have three herbal ingredients with

medicinal properties – Clove, Camomile and Mint.

The business intends to present the benefits of

“Delicate Herbs” through interaction with our prospective

customers.

Delicate Herbs will be available in every stall or

beauty store in Naga City. “Delicate Herbs” is a product

that will give contentment beyond people’s expectation.

36
37
 38

Figure 2. Packaged

PRODUCTION SCHEDULE

The production of Delicate Herbs will be done from

Monday to Friday from 8:00 am to 5:00 pm at Solid Street,

Dayangdang, Naga City.

There will be 3 or more workers in making Delicate

Herbs which will take about 4 to 5 hours to complete and it

will take 2 to 3 days for the soap to tighten. The maximum

number that can be produced will be 100 soap in one day.

The daily production of Delicate Herbs will be based on

the market demand and on the need of the store such as for

display or other factors that will affect sales.

 39

MATERIALS NEEDED

MATERIALS IMAGE UNIT UNIT COST TOTAL COST

3 40 P120.00

SOAP CHIPS

1 120 P120.00

CHAMOMILE

1 90 P90.00

MINT
 40

1 10 P10.00

CLOVE

Figure 3. Raw Materials Needed will their Images, Quality

moody sad and this Unit Cost

 41

TOOLS AND EQUIPMENT REQUIREMENT

TOOLS IMAGE UNIT UNIT TOTAL

COST COST
Stainless 1 - -

steel

mixing

bowl

Clear 1 - -

Glass bowl

Spoon 4 - -

Pitcher 1 - -
 42

Leche Plan 6 12 P72.00

Molder

Figure 3.

List and Images of Tools and Equipment Needed with the

Quantity

LOCATION SITE
 43

Figure 3

Figure 4. Photograph of the Principal ……

 44

The principal place of business and the production site

will be in a compound located at Corregidor, Solid St.

Dayangdang, Naga City. See figure 5 for a photograph of the

production area.

QUALITY CONTROL

The business will ensure that its product is produced

to be affordable and the consumer will be satisfied by its

benefits. Production inspection will be regularly made and

any error found will be immediately take actions for further

improvement.

WASTE DISPOSAL

All waste and trash left over by the production of the

soap, as well as by-wastes generated by the operation and

activities per the day, shall be deposited in appropriate

trash bins with biodegradable wastes segregated from non-

biodegradable waste. Segregated trash shall be in place at

the proper location for scheduled pick by LGU garbage trash.

Management will make sure the warehouse is clean and

the tools are in their proper places before leaving.

 45

The business will provide 2 trash bags for the

warehouse to segregate biodegradable and non-biodegradable

for the worker and other people passing by to prevent them

from throwing trash in the floor.

All trash bags will be put outside the shop before it

closes for pick up by city garbage trucks. The shop will

then be clean when morning comes. By doing this, the worker

in the morning will be able to freely work in the shop with

no hindrances.
 46

CHAPTER IV

FINANCIAL STUDY

This chapter presents the financial assumptions and

projections of Delicate Herbs business. This includes the

total project cost, initial capital requirement, source of

capital, and financial analyses.

Assumptions

1. Salaries expense will increase by 1% annually.

2. Utilities expense will increase by 2% annually.

3. Advertising expense will increase by 10% and 15% for

second year and third year, respectively.

4. Delicate Herbs selling price is assumed to increase 5%.

5. Licenses and fees are assumed to increase by 15%

annually.
 47

TOTAL PROJECT COT

a. Production Cost

 Direct materials per month

Quantity
Description Unit Cost Total Cost
Needed
Chamomile oil 25 ₱ 120.00 ₱ 3,000.00

Mint Oil 25 ₱ 95.00 ₱ 2,375.00

Clove 20 ₱ 10.00 ₱ 200.00

Soap Chips 25 ₱ 40.00 ₱ 1,000.00

Packaging 25 ₱ 10.00 ₱ 250.00

Total ₱ 6,825.00

 Direct Labor Inputs per month

Description Quantity Unit Cost/hr Total Cost

2 Production
5,008 hrs.* ₱ 30.00** ₱ 12,520.00
Staffs

Total ₱ 12,520.00

*Quantity = 16 hours’ x 313 days = 5,008 hours

**Unit cost/hr. = ₱ 240.00 ÷ 8 hrs. = ₱ 30.00

 Overhead Inputs per month

 48

Description Quantity Unit Cost Total Cost

Small Llanera 25 ₱ 10.00 ₱ 250.00

Total ₱ 250.00

b. Capital Expenditure

Particulars Quantity Unit Cost Total Cost

Equipment
30 ₱ 15.00 ₱ 450.00
(Strainer)
Equipment
30 ₱ 10.00 ₱ 300.00
(Grater)
Equipment

(Electric 30 ₱ 1,750.00 ₱ 52,500.00

Mixer)
Total ₱ 53,250.00

c. Operating Expenses

Particulars Total Cost

Salaries and Wages ₱ 100,000.00

Licenses and Fees ₱ 1,500.00

Utilities Expense

(Electricity, Water, ₱ 22,800.00

Internet and Miscellaneous)

Rent Expense ₱ 54,000.00

Advertising Expense ₱ 2,000.00

 49

Depreciation ₱ 1,000.00

Total ₱ 181,300.00
 50

d. Summary of Project Cost (per three months)

Cost of Production ₱ 78,380.00

Capital Expenditure ₱ 15,750.00

Operating Expenses ₱ 45,325.00

Total ₱ 139,485.00
 51

Total Project Cost

To help the proponents of the business to allocate the

finances needed, it is important to estimate the total cost

of the proposed business.

Licenses and fees were secured before the business

started. These were paid and acquired from the Bureau of

Internal Revenue, Department of Trade and Industry, and

other fees paid for Local Government Unit fees. Salaries

expense, utilities expenses, rent expense, advertising

expense, and depreciation expense were also incurred.

For the business to be known by public, a ₱ 2,000.00

is needed for the advertising which includes printed and

broadcast media. This includes the business location,

product’s features and specification, price, and other

essentially related information.

Raw materials can be acquired from online shops and

herbal shops within the country and also in Naga City.

Equipment such as strainer, grater, and electric mixers can

also be acquired from the stores such as Anjena Trading,

Boning’s Trading, Master Square, etc. Electric mixers can be

also ordered online. The total project cost of the business

to commence is ₱ 162,200.00 for the first three months of

operations.
 52

Capital Requirement

Partners Ratio Invested Amount

Dexter Vargas 20% ₱ 15,000.00

Divine Grace Delos Santos 20% ₱ 15,000.00

Apple Bolalin 20% ₱ 15,000.00

Mark Frederick Panes 20% ₱ 15,000.00

Kristel Parde 20% ₱ 15,000.00

Total 100% ₱ 75,000.00

The Delicate Herbs will start with the amount of

₱75,000.00 as their capital. This will cover all direct and

indirect Labor, direct, indirect, and overhead costs,

capital expenditures, and operating expenses. Each partners

will equally share the initial capital of ₱ 15,000.00 as

their contribution.

Source of Capital

The beginning costs of the Delicate Herbs business will

be funded by the investments of the proponents. Each will

invest ₱ 15,000.00, thereby having a beginning capital of ₱

75,000.00.
 53

Financial Statements

These are the projected financial analyses for the

initial years of operation Delicate Herbs by Skin bliss

business.

Notes to Financial Performance

Year 1 Produced Sold Sales Inv. End

Body Bar 4,600 4,585 x ₱ ₱320,950.00 15 x ₱

70.00 70.00
Total 4,600 4,685 ₱320,950.00 ₱1,050.00

1. No beginning inventory for the first year of operation.

2. The cost of goods manufactured is ₱ 117,570.00.

Year 2 Beginning Produced Sold Sales Inv. End

Body Bar 15 4,700 4,700 ₱345,450.0 25 x

x ₱ 0 ₱1,873.50

73.50
Total 15 4,700 4,688 ₱345,450.0 ₱ 1,873.50

0
 54

Projected Income Statement

Delicate Herbs Body Soap

Statement of Financial Performance

Year 1 Year 2 Year 3

Sales ₱ 320,950.00 ₱ 345,450.00 ₱ 369,600.00

Less: Cost of Goods
₱ 53,400.00 ₱ 53,400.00 ₱ 53,400.00
Sold
Selling and Admin.
₱ 1,000.00 ₱ 1,000.00 ₱ 1,000.00
Exp.
Contribution Margin ₱ 266,500.00 ₱ 290,050.00 ₱ 315,200.00
Less: Fixed Costs

Salaries Expense ₱ 100,000.00 ₱ 101,000.00 ₱ 102,010.00

Rent Expense ₱ 54,000.00 ₱ 54,000.00 ₱ 54,000.00

Utilities Expense ₱ 22,800.00 ₱ 23,256.00 ₱ 23,721.00

Net Profit ₱ 89,750.00 ₱ 112,794.00 ₱ 135,919.00
For the years ended 2018-2020
 55

1. The ending inventory of first year will be the beginning

inventory of the second year.

2. The cost of goods manufactured is ₱ 115,585.00.

Year 3 Beginning Produced Sold Sales Inv. End

Body Bar 25 4,800 4,806 ₱369,600.00 19 x

x ₱ ₱77.00

77.00
Total 25 4,800 4,806 ₱369,600.00 ₱1,463.00

1. The ending inventory of second year will be the beginning

inventory of the third year.

2. The cost of goods manufactured is ₱ 113,964.50.

 56

Projected Balance Sheet

Delicate HerbsBusiness

Statement of Financial Position

For the years ended 2018-2020

Year 1 Year 2 Year 3

Current Assets:

Cash ₱216,400.00 ₱216,387.00 ₱239,355.25

Inventory ₱1,050.00 ₱1,873.00 ₱1,463.00

Non-Current Assets:

Equipment ₱53,520.00 ₱53,520.00 ₱53,520.00

Total Assets ₱270,970.00 ₱271,460.00 ₱294,338.00
Liabilities and

Equity:

Current Liabilities 0 0 0

Owner’s Equity ₱270,970.00 ₱271,460.00 ₱294,338.00

Total Liabilities and
₱270,970.00 ₱271,460.00 ₱294,388.00
Equity

Notes to Financial Position:

1. The business starts with the cash initial investment of ₱

75,000.00.
 57

2. The capital investment of the business will be the area of

which business will conduct the daily operation.

Year 1 Year 2 Year 3

Cash flow from

Operating

Activities:
₱320,950.00 ₱344,568.00 ₱369,600.00
Cash

received from
(₱1,500.00) (₱1,725.00) (₱1,983.75)
customers

Payment to

Licenses (₱100,000.00) (₱101,000.00) (₱102,010.00)

Payment to (₱2,000.00) (₱2,200.00) (₱2,530.00)

employees

Payment to (₱22,800.00) (₱23,256.00) (₱23,721.00)

Adv. Expense

Payment to

Utilities
Total ₱262,725.00 ₱216,387.00 ₱239,355.25
Cash flow from

Investing

Activities - -

Payment to
(₱53,250.00)
Equipment
Cash Flow from - -

Financing
 58

Activities

Proceeds of ₱75,000.00

the Owner

Cash Balance ₱216,400.00 ₱216,387.00 ₱239,355.25

 59

Financial Ratios, Analyses and Interpretation

A. Return on Sales

The net profit ratios of the three consecutive years of

operation of Delicate Herbs Business were as follows: 28%,

33%, and 37%, for 2018, 2019, and 2020, respectively. As the

business operates progress, the ratio of the return on sales

is increasing. The percentage implied that there is a medium-

high profit percentage per year, though, it involves high

risk, yet the higher the percentage, the better.

Formula Year 1 Year 2 Year 3

Net Income ₱ 89,750.00 ₱ 112,794.00 ₱ 135,919.00

ROS=
Net Sales ₱ 320,950.00 ₱ 345,450.00 ₱ 369,600.00

28% 33% 37%

B. Return on Investment

For the business work as a going concern, the business

profits shall satisfactorily earn for the return on the

owner’s return. It was equated by the ratio of net income

per year over the project cost of the business. For the

first year, it has 25%, 66% for second year, and 74% for the

third year of operation.

Formula Year 1 Year 2 Year 3

 60

Net Income ₱ 89,750.00 ₱ 112,794.00 ₱ 135,919.00

ROI=
Project Cost ₱ 278,970.00 ₱ 284,549.00 ₱ 290,239.00

32% 40% 47%

C. Return on Equity

The business’ profitability is an essential concern to

determine if the business is performing with the investment.

Return on equity is measured by the dividing the amount of net

income by the owner’s equity. The following are the ratios of

return of equity for the three consecutive years of operation:

33%, for the first year; 42%, for the second year, and; 46%,

for the third year.

Formula Year 1 Year 2 Year 3

Net Income ₱ 89,750.00 ₱ 112,794.00 ₱ 135,919.00

ROE=
Owne r ' s Equity ₱ 270,970.00 ₱ 271,460.00 ₱ 294,338.25

33% 42% 46%

Payback Period
 61

Payback period (PBP) determines the time for the annual

net cash flow of the business in operation will return the

invested assets such as cash, inventory, equipment, etc. This

is a way to determine how risky a proposed business is. This

indicates that the shorter the payback period, the better

because there is a low probability of risks. To compute for

the payback period, get the ratio of the initial investment

over the annual net cash flow (which is assumed to be the same

every year).

For the Delicate Herbs business, it is expected that

within 1.05 year will be repaid, with ₱ 270,970.00 as the

initial investment and ₱ 216,400.00 as the annual net cash

flow.

Initial Investment ₱ 270,970.00

PBP= =
Annual Net Cash Flow ₱ 216,400.00

=1.25 year
 62

Chapter V

SOCIO – ECONOMIC DESIRABILITY

This chapter on the socio-economic implicate of the

proposed business, discusses the social impact of the

business, its economic contribution and the income benefits it

can provide and its environmental contribution.

Economy Benefits

The proposed business enterprise will generate

sustainable profit through the years thus translating to

immense domino effect to employment and job Generation in the

locality even as the enterprise will contribute to the well

being of the society by turning capital into materials

production and the latter liquidating itself into more fluid

source of capitalization and entrepreneurial activities.

Environmental Benefits

With the end in mind of protecting the environment at the

same time harnessing the immense wealth and benefits of

natural resources for the good of mankind, the enterprise will

balance harmoniously the scale between human consumption and

ecological sustainability by adhering to the reuse, reduce and

recycle in terms of waste management and saving today’s

limited resources to benefit the future generations of

consumers.
 63

Consumer Benefits

The consumers and the general public will stand to

ultimately benefit from the proposed business with the immense

technology and high value and quality manufacturing and

marketing processes utilized in order to give the consuming

public the best for their money’s worth.