Feasibility Study and Business Plan

(Cherlina’s Tindahan Natin-NFA Rice)

I. Introduction

Cherlina’s Tindahan Natin-NFA rice is a sari-sari store where main product is NFA
rice in a retail price and will be established in the proper barangay of Benolho, Albuera.
This business project is to be managed by Cherlina Ortega who is one of the registered
families in Benolho, Albuera, Leyte. Cherlina’s Tindahan Natin is part of the micro-
enterprise project of NorWeLeDePAI as loan in order to assist and obtain the needs of
the registered families. The shareholder will be provided with materials and grocery
items needed in the store. the amount of the materials and grocery items will be paid in a
given period of time (18 months). The existing store of the shareholder will be use and
develop as her counter part. To implement this business project the shareholder is
requesting an amount of Twenty One Thousand Nine Hundred Thirty pesos only
(Php 21930.00) as budget for the materials needed to develop and in improve the
existing store and to have an additional capital for the business. The shareholder
believed that provision of additional capital of her existing business may increase the
income as alternative livelihood for the benefits of her 6 children. the objective of the
project generally, aimed to boost the economic living of the family in a sustainable
manner as it can compensate inadequate income of the family by giving the opportunity
both spouses to earn a living. Specifically, it aimed to 1) Have larger stocks of
commodities in order to sustain and not to sold out enable to lessen the expenses of
purchasing going outside to the city; 2) Have an alternative livelihood and sustainable
source of income; 3) Increase the standard economic living of the family and 4) To
provide affordable prices to the residents in the community and nearby barangays
especially the registered families
II. Market Potential Assessment

Selling of products is to the individuals and households. There are about 700
residents within the proper of barangay where the store is located. Most of these
residents are regular customers of the store and some are seasonal since year 2003
begins operation of the store. Since in the beginning of the operation, there are about 35
regular customers spend sufficient quantity of the products of the store as they notice
that it has the good services compared to others.

The target customers populations in the barangay as belong to the poor sector of
the area are highly needed an affordable food products for their daily consumption. To
provide these target customers the shareholders will sell products that is affordable
according to their needs. Though there are 3 business stores that is not so large
dominated in the area that may compete and there are 9 small business stores in a
fragmented situation. These stores may not be compete based on the products and only
few will compete base on price alone as they have the same products but may differ on
the quality. Customers will choose good quality and affordable prices that the
shareholders can provide.

III. Operating Plan

 Facilities

In the operation of small business store does not necessarily need to have large
building as long as the materials are good quality it does not also need two or three
person to manage.

 Management

The shareholder will solely manage the store in day-to day operation. All daily
activities and operation is responsible by them. The assigned staff will supervise
monitoring and the reporting is responsible by the shareholder. The shareholder is
responsible in all accounts and maintenance is also accounted by them.

 Production Plan

The existing store of the shareholder is situated beside the national highway where
the passersby and customers are easily locate and buy their products. Suppliers are
of the products are the grocery stores in the city, merchandisers and the National
Food Authority in the City of Ormoc. The creditors are not allowed to commend of all
the products sell in the store because the shareholder had experienced of delinquent
creditors that result to fall down the production.

 Risk Assessment
o Unreliable sales forecasts

If this could happen, the shareholder will take advantage to sell demand
goods/products in which there are sufficient supply or will take a promotion.

o Raw materials shortages

 In times of shortage of supply like NFA rice as the main product the shareholder
will take rice to the rice mill or in the market (not commercial) in a wholesale
quantity.

IV. Technical and Operational Assessment

Materials:

Materials needed to operate a small business store is only; record book, ballpen,
pencil, calculator, plastic bag, cellophane, and quality materials such as; case for rice
weighing scale, bottle, gallon, sack and container.

Raw Materials Suppliers:

Potential suppliers of the raw materials are the suppliers of the product also.
Container of products such as oil, soy sauce, rice and sugar will be recycled

Facility:

Facilities for the store may be located in nearby municipalities and city. Renovation
of the store building will cost only about Php5,000.00 including the utilities
connected.

Managerial:

Signing of Memorandum of Agreement between the shareholder and

NorWeLeDePAI will be made before the release of commodities/grocery items to
formalize the contracts, terms and conditions and enable to follow the rules and
regulation prescribe by the SIMED committee as the presiding body of
NorWeLeDePAI sustainable projects. Regular monitoring will be conducted to
sustain the success of the business. Monthly reporting will be given by the
shareholder and will be reported during the BOT meeting. She will keep a record
book for the financial recordings and reporting. Operation of store business is
needed to have a well experienced in the recordings and management in order
sustain and maintain the operation.

V. Business Concept

Cherlina’s Tinadahan Natin is a small business store where the main product is
NFA rice by providing low prices to the residents who cannot afford to buy
commercial rice and other basic commodities. NFA rice has long been distributed in
the region and other areas to provide the poor sector affordable prices. This
business store is a franchise of the National Food Authority in Ormoc City where the
shareholder will sell in a retail price and not allowed to sell commercial rice. The
shareholder will manage alone and will pay the amortization within 18 months.
VI. Competitor Analysis

At this time there are 12 existing stores in the area one of which is grocery type store
and the other one is hardware. There is also a wholesale and others are the so-called
Sari-sari store. Competition is lesser because the stores are fragmented and selling
different products.

VII. Financial Assessment

 Total start-up costs needed to begin operations
o Renovation of Building = Php 5,000.00 (counter part)
o NFA rice (20 sacks) = Php 16,500.00
o Grocery Items = Php 5,430.00
o Legal costs (counter part)

Barangay Clearance/Permit = Php 70.00

CTC (Cedula) = Php 15.00

Mayor’s Permit = Php 100.00

BIR = Php 100.00

DTI = Php 150.00

NFA licensed & ID = Php 620.00

o Accounting costs

Transportation Expenses = Php 1,000.00

 Day-to-day operating costs involved (cash flow requirements of the business)

o Transportation expenses during purchasing (per week) = Php 188.00
o Electricity = Php 1.00
o Loan repayment = Php 49.75
o Revolving cash = Php 42.33
o Savings = Php 10.00
 Based on estimated demand business projected income.

Net Income per day = Php 125.00 (minimum)

 Pricing arrangements

Wholesale price from supplier;

NFA rice = Php 825.00 per sack

= Php 16.50 per kilo

 Retail price;

NFA rice = Php 900.00 per sack

= Php 18.00 per kilo

Grocery items

Wholesale price is added with an amount ranging from Php 2.00 – Php 7.00

 Based on estimated revenues and costs, the projected profit/loss of the business
over the first 18 months.

Projected net Income

Average daily net income = Php 120.00

Average monthly net income = Php 3,600.00

Estimated revenues for 18 months = Php 64,800.00

Projected loss

Purchasing expenses = Php 800.00/month X 18 = Php 14,400.00

Loan Repayment = Php 1,492.38/month X 18 = Php 26,862.84

Electricity = Php 30.00 per month X 18 =Php 540.00

Total = Php 41,802.84

Projected Profit for 18 months

Total Projected Income = Php 64,800.00

Total projected loss = Php 41,802.84

Total projected profit = Php 22,997.16

 Charges (mandatory savings)

Term of payment = 18 months

Counter part = Building materials
Proposed budget = P 21,930.00
Service charge (2% per Annum) =P 657.90
Interest rate (12% per Annum) = P 2,630.10
Savings (4% per Annum) = P 1,315.80
PLF (1% per Annum) =P 328.95
 Total Amortization = P 26862.75
Monthly amortization = P 1,492.38

VII. Financial Plan

 Financial Statements (monthly for at least 18 months)

Income forecasts – the daily gross income will be divided for the daily consumptions,
electricity, savings, and loan repayments.

Cash Flow Projections per month

Consumptions = Php 3,000.00
Electricity = Php 30.00
Transportation = Php 800.00
Revolving cash = Php 1,270.00
Loan Repayment = Php 1,492.38
Savings = Php 300.00
Breakeven analysis – the shareholders will return back the money invested by the
NorWeLeDePAI after 18 months of continuous operation. After 18 months of
operation if the shareholder is fully paid the amortization the income mayb
increase as they have no responsibility in paying the loan.

Prepared by: Noted by:

Ronualdo B. Valenzona Meldred C. Matol

CDS PC

Approved by: Approved for Funding by:

Ma. Teresa Madjus Mulaca G. Baldezanso

BOT President WVDF-Program Officer