BIGASAN NI

BUDAY
Business Plan
Executive Summary
The mission of Bigasan ni Buday Rice Trading is to provide rice with high quality and
affordable prices to all types of consumers.
 
We Want Bigasan ni Buday to be the main choice of people (masa) in Valencia City. Good
treatment of our customers will be part of our success. We believe that customers’
satisfaction will translate into success because selling rice is both merchandising and service.

There are so many rice retailers and traders in Valencia City, but there are only twelve rice
mills that supply rice, and sometimes supply becomes a problem, especially during the
offseason of rice(palay), but Bigasan ni Buday Rice Trading will procure rice from Actub
Rice, thus supply is not a problem. With the good reputation of Actub Rice providing high-
quality rice, Bigasan ni Buday will also set itself apart through its commitment to high
product quality, not only in terms of rice but also through offering friendly and high-quality
service.
Executive Summary
The most important thing for us is to ensure financial success for Bigasan ni Buday Rice Trading. We believe
we can achieve this by offering excellent quality rice to our customers and maintaining a high quality of
service. Based on the size of our market and our defined market, our projected sales for the first year of
operation are PHP 5,535,285 (2499 sacks of rice) to get a 10.49% return on investment which is based on
PHP 5,319,810.85 breakeven sales for 1 year.
 
In the first three years of operation, the main goals of Bigasan ni Buday Rice Trading will be:
 To launch a rice store within the Market in Valencia City, Bukidnon.
 To maintain a reputation in providing excellent rice and high-quality service.
 To keep the business’s average sales of PHP 300,000 per month.
 To pay the loan within two years from the start of operation.
 To achieve over 5% profit for the first two years and increase it to 10% from the third year.
The main strategy of the business is to lay the foundation in the first year of operation through strong
marketing and advertising. In the second year, the main focus is to pay the loan. And on the next years, the
business will continue to expand and create strong customer relations through the rewards program.
SECTION 1 The Business
Business Description

The business will be a partnership owned by the authors in the City of Golden
Harvest Valencia, Bukidnon. It will provide a different variety of rice for the
public that is affordable and high quality. The business will sell rice to every
type of customer. We will sell 1 kilo to 1 sack of rice depending on how much
the customer will buy. We will also provide free carry to customers buying more
than 1 sack of rice. We will transport their rice within the market premises so it’ll
be convenient for them.
 
The store’s location will be within the public market of Valencia City, a public
market suitable for old and new businesses. It will be a good location for starting
a new rice trading business because a lot of people come to the area every day.
Product and Service

The main product of Bigasan ni Buday Rice Trading will be rice with different
varieties like 160, Valencia Rice, Angelica, 128, and more. The rice that we will
sell can be bought by customers at any amount. They can buy one kilo of rice to
1 sack of rice depending on their preferences. Thus, we will not limit the volume
of rice that our customers can buy. The rice can also be bought in ten kilos, 25
kilos, and 50 kilos bags/sacks.
 
We will also offer premium rice like brown rice, and red rice.
Market Description
Valencia City, known as the ‘City of Golden Harvest’, has an estimated 10,000 hectares of
land planted with rice, which is a quarter of the 40,000-hectare rice production area of
Bukidnon, with an average yield of more than 5 tons per hectare. Only 4,000 of the total
216,546 people in Valencia City own a rice farm. Even with an excessive supply of rice,
there’s also a huge number of buyers and consumers of it.

Based on our understanding, the market can be divided into three types, these are
Regular Consumers, Resellers, and Food and Beverage Processing Industries.
Market Description
Regular consumers – Are the most dominant in the market, they constitute everyone that buys rice
for consumption. The average amount of rice they buy is around 1kg to 1 sack.

Resellers – Part of the market are the ones who buy rice to sell it back again. Examples of this are
small stores in towns and barangays like sari-sari stores and mini grocery stores. The average
amount of rice they buy is around 1 sack to 10 sacks.

Food and Beverage service/manufacturing industry – They are the ones that buy rice and convert it
to food or beverages and/or pack the rice and brand it as theirs. The best example of these is fast-
food chains like Jollibee, Mang Inasal, Eateries, Gaisano, Robinsons, etc. The average amount of
rice they buy is more than 10 sacks, this could reach up to hundreds of sacks of rice to thousands of
sacks.
Industries.
Market Description
Regular consumers – Are the most dominant in the market, they constitute everyone that buys rice for
consumption. The average amount of rice they buy is around 1kg to 1 sack.

Resellers – Part of the market are the ones who buy rice to sell it back again. Examples of this are small stores
in towns and barangays like sari-sari stores and mini grocery stores. The average amount of rice they buy is
around 1 sack to 10 sacks.

Food and Beverage service/manufacturing industry – They are the ones that buy rice and convert it to food or
beverages and/or pack the rice and brand it as theirs. The best example of these is fast-food chains like Jollibee,
Mang Inasal, Eateries, Gaisano, Robinsons, etc. The average amount of rice they buy is more than 10 sacks, this
could reach up to hundreds of sacks of rice to thousands of sacks.
Industries.

Our main goal at the start is to focus on the regular consumers and resellers. Getting a share of these markets
will ensure progress in our business, and in the future, we will try to get a share in the Food and Beverage
service/manufacturing industry market.
Location of Business
The store’s location will be within the Valencia City Public Market. It is the best place to
have a rice store because it’s convenient for people and the volume of people that go there
every day is huge.
 
Choosing the public market of Valencia was the best option because aside from having a
large volume of people, the location is also within the center of the city and it means that
transportation is not a problem for us.
 
It’ll also be convenient for our employees to carry customers’ rice because the road is
outside the market.
Competition

Starting a rice-selling business is not that easy. Although rice demand is very
high, there are so many rice sellers in Valencia City. They vary from small stores
to medium stores, and big stores.
 
We will classify our competitors into small, medium, and big stores for
simplicity.
 
Competition
Small stores – Most of the stores in the competition are composed of them. Sari-sari stores are the best
example of this. We consider them as our indirect competitors because they get a fair share of the market,
especially regular consumers. Instead of going to the city’s public market, they can easily buy rice from
stores near them, their main disadvantage is the lack of variety in their rice. They usually sell 2-3 varieties
of rice.
 
Medium Stores – Medium stores are where our business belongs. Medium stores sell almost all varieties
of rice. Medium stores are usually found in the central part of the city and/or at the intersection of
barangays and towns. Most medium stores are also resellers. They don’t produce rice themselves. They
just buy rice from a miller and then sell it back to the market adding some mark up to the price.
 
Big stores – Big stores are our toughest competitor. Usually, big stores have their rice mills, thus supply is
not a problem for them. They always have an ample supply of rice and they also put up their sub-stores
that compete with medium stores. Mall supermarkets are also classified as big stores. Big stores are well
established in the market and they are well known to people.
Management
The store will be managed by Doris F. Bernasol, one of the owners. She is studying
Bachelor of Science in Business Administration thus; she has the capability in managing a
business. She has already experienced the rice-selling environment before because she used
to be the in-charge of her sister’s store, the Actub Rice which is considered one of the
biggest rice millers in Valencia City.
 
She will function as the general manager; she will take charge of the inventory count which
will be done every day before closing the store to compute the cost of goods sold for the
day. She will also take charge of the payroll for the employees. She will receive a salary
that is 350/ day.
 
Personnel
The store will have two personnels, one cashier, and one helper at the start. The cashier will be responsible
for collecting payments from the customers and providing receipts if requested by the customers. The
cashier must be fast, and accurate in his/her job. The cashier must also have at least 1 year of experience
related to the said position.
One helper will be responsible for serving the customers, weighing their orders, and helping them carry
their orders.
 
If there are many customers, the cashier will be helping the helper in serving the customer, and Doris as
the manager will take over in the cash register.
 
The helper will have a salary of 300 per day and the cashier will have a salary of 320 per day.
 
At the end of the day, the manager will conduct an inventory count with the help of all personnel to
identify the cost of goods sold for the day.
 
The business will have 6 days a week of operation and a day for a day off.
Section 2 Financial Data
Assumptions
• For simplicity, the average selling price per sack is PHP 2,215

• The average cost of goods sold is PHP 2,004 or 90.47 percent

• Purchase return, discount & allowances is 1%.

• Sales return, discount, and allowance is 1%.

• We expect a sales level that is barely at breakeven in the first 5 months.

• Estimated sale for the first year is 2499 sacks of rice, monthly sales are
expected to be around 182-240 sacks of rice. For the second year, sales are
expected to be 2824 sacks of rice, quarterly sales are around 650-750 sacks. For
the third year, sales are expected to be 3107 sacks, and quarterly sales are
around 750-800 sacks.

• Income tax rate is 10% which is based on the partnership tax rate in the
Philippines.

• All sales are on a cash basis.

Source and Application of Funding
Source of Funds: In PHP

Owner's Equity   100,000.00

Bank Loan   100,000.00

Total Funds   200,000.00

Application of Funds:    
Start-up cost:    

License and permits 30,000.00  

Renovation and improvements 15,000.00  

Tarpaulin 1,500.00  

Total start-up cost   46,500.00

Equipment   23,300.00
Furniture and Fixtures (chairs and tables)   7,500.00

Inventory   58,650.00

Supplies    
Plastic bags 500.00  
Twine 150.00  
Total Supplies   650.00
Prepaid Rent for 2 months   20,000.00
Securities Deposit (rent deposit)   10,000.00
     
Working Capital   33,400.00
     
Total   200,000.00
     
Capital Equipment List

Item Amount Exptd. Life Cost Total Cost Depreciation

      In PHP

Eight-Sys electronic cash register 1 pc. 5 years 10,500.00 10,500.00 2,100.00

World Standard weighing scale 1 pc. 5 years 3,000.00 3,000.00 600.00

Metal scooper 1 pc. 5 years 500.00 500.00 100.00

Wooden rice storage box 1 set 5 years 8,000.00 8,000.00 1,600.00

Yale bras padlocks 2 pc. 5 years 500.00 1,000.00 200.00

Metal trolley/carrier 1 pc. 5 years 300.00 300.00 60.00

Total Equipment       23,300.00 4,660.00

           

Furniture and Fixture 1 set 5 years 7,500.00 7,500.00 1,500.00

Total         6,160.00
Breakeven Analysis

Monthly Basis            

Sales mix %
VARIABLE COSTS Cost/sack Cost/kilo SP/kilo Cost Ratio CM Ratio

Valencia White Rice 2,100.00 42.00 47.00 89.36% 10.64% 22.45

Valencia Red Rice 2,300.00 46.00 51.00 90.20% 9.80% 20.68

7 Tonner Rice 1,880.00 37.60 41.00 91.71% 8.29% 17.49

160 Rice 1,840.00 36.80 40.50 90.86% 9.14% 19.28

Denorado Rice 1,900.00 38.00 42.00 90.47% 9.53% 20.11

Total
10,020.00 200.40 221.50 453% 47.40% 100.00

Weighted Average Contribution margin

2,004.00 40.08 44.30 0.9052 9.5%  

Sales returns, discounts & allow.

        1.0%  

Net Contribution Margin         8.5%  

Breakeven Analysis
In PHP          
FIXED COSTS

Salaries:    
    Monthly Weekly

Manager (350 x 6 days x 4 weeks) 8,400.00  

Breakeven sales 443,317.57 110,829.39

Cashier (320 x 6 days x 4 weeks) 7,680.00  

Breakeven sacks 200.14 50.04

Helper (300 x 6days x 4 weeks) 7,200.00  

       

Marketing 500.00  
    Yearly  

Rent 10,000.00  
Breakeven sales 5,319,810.85  

Supplies expense 300.00  

Breakeven sacks 2,401.72  

Utilities 2,000.00          

Interest expense 1,000.00          

Depreciation 513.33          

Total 37,593.33          
Initial Balance Sheet

Bigasan ni Buday Rice Trading      

ASSETS     LIABILITES  
Current Asset     Current Liabilites  

Cash 33,400.00   Accounts Payable -

Inventory 58,650.00   Total Current Liabilities  

Supplies 650.00   Non-current Liabilites  

Prepaid rent 20,000.00   Loans Payable 100,000.00

Securities Deposit 10,000.00   Total Non-current Liaibilities 100,000.00

Total Current Assets 122,700.00   TOTAL LIABILITIES 100,000.00

Non-Current Asset        

Equipment 23,300.00   OWNER'S EQUITY  

Less: Accumulated Depreciation - Equipment -   Capital 53,500.00

Furniture and Fixtures 7,500.00   Retained Earnings -

Less: Accumulated Depreciation - Furniture and fixtures -   Total Owner's Equity 53,500.00

Total Non-current Assets 30,800.00      

TOTAL ASSETS 153,500.00   TOTAL LIABILITIES AND EQUITY 153500

Income Projections
  Year 1 Year 2 Year 3
REVENUE      
Estimated Unit Sales 2,499.00 2,824.00 3,107.00
Estimated Sales 5,535,285.00 6,255,160.00 6,882,005.00
Less Sales Returns & Discounts (55,352.85) (62,551.60) (68,820.05)
Service Revenue - - -
Other Revenue - - -
Net Sales 5,479,932.15 6,192,608.40 6,813,184.95
Cost of Goods Sold 5,007,996.00 5,659,296.00 6,226,428.00
Gross Profit 471,936.15 533,312.40 586,756.95
 

EXPENSES

Salaries & Wages 279,360.00 279,360.00 279,360.00

Marketing expense 6,000.00 6,000.00 6,000.00

Rent expense 120,000.00 120,000.00 120,000.00

Supplies 3,600.00 3,600.00 3,600.00

Utility expense 24,000.00 24,000.00 24,000.00

Depreciation expense 6,159.96 6,159.96 6,159.96

Interest expense 12,000.00 12,000.00 3,000.00

Total Expenses 451,119.96 451,119.96 442,119.96
Income Before Taxes 20,816.19 82,192.44 144,636.99
Income Tax Expense 2,081.62 12,328.87 21,695.55

 
NET INCOME
18,734.57 69,863.57 122,941.44
Financial Position Summary
Bigasan ni Buday Rice Trading Beg., Year 1 Ending, Year 1 Ending, Year 2 Ending, Year 3
ASSETS        
Current Asset        
Cash 33,400.00 192,087.53 231,822.57 346,661.97
Inventory 58,650.00 60,153.00 55,143.00 98,028.60
Supplies 650.00 650.00 650.00 650.00
Prepaid rent 20,000.00 - - -
Securities Deposit 10,000.00 10,000.00 10,000.00 10,000.00
Total Current Assets 122,700.00 262,890.53 297,615.57 455,340.57
Non-Current Asset
Equipment 23,300.00 23,300.00 23,300.00 23,300.00
Less: Accumulated Depreciation - (4,660.00) (9,320.00) (13,979.88)
Furniture and Fixtures 7,500.00 7,500.00 7,500.00 7,500.00

Less: Accumulated Depreciation - (1,500.00) (3,000.00) (4,500.00)

Total Non-current Assets 30,800.00 24,640.00 18,480.00 12,320.12
TOTAL ASSETS 153,500.00 287,530.53 316,095.57 467,660.69
 
LIABILITIES
Current Liabilities
Accounts Payable - 115,296.00 123,997.50 202,621.10
Total Current Liabilities - 115,296.00 123,997.50 202,621.10
Non-current Liabilities
Loans Payable 100,000.00 100,000.00 50,000.00 -
Total Non-current Liabilities 100,000.00 100,000.00 50,000.00 -
TOTAL LIABILITIES 100,000.00 215,296.00 173,997.50 202,621.10
 
OWNER'S EQUITY
Partners' Equity 53,500.00 53,500.00 53,500.00 53,500.00
Retained Earnings 18,734.57 88,598.15 211,539.59
Total Owner's Equity 53,500.00 72,234.57 142,098.15 265,039.59

TOTAL LIABILITIES AND OWNER'S EQUITY 153,500.00 287,530.57 316,095.65 467,660.69

         
Financial Position Summary
Bigasan ni Buday      

Cash Flow Statement      

[In PHP]      
  1st Year 2nd Year 3rd Year
Operating Cash Flow
Net Earnings 18,734.57 69,863.57 122,941.44
Plus: Depreciation & Amortization 6,159.96 6,159.96 6,159.96

(Increase)/Decrease in Accounts receivable - - -

(Increase)/Decrease in Prepaid Rent 20,000.00 - -
(Increase)/Decrease in Inventory (1,503.00) 5,010.00 (42,885.60)

Increase/(Decrease) in Accounts Payable 115,296.00 8,701.50 78,623.60

 
Cash from Operations 158,687.53 89,735.03 164,839.40
 
Investing Cash Flow
Investments in Property & Equipment - - -
Cash from Investing - - -
 
Financing Cash Flow
Issuance (repayment) of debt - (50,000.00) (50,000.00)
Issuance (repayment) of equity - - -
Cash from Financing - (50,000.00) (50,000.00)
 
Net Increase (decrease) in Cash 158,687.53 39,735.03 114,839.40
Opening Cash Balance 33,400.00 192,087.53 231,822.57
Closing Cash Balance 192,087.53 231,822.57 346,661.97