Small River Pty Limited

Business Plan
WATER PURIFICATION SHOP (REVERSE OSMOSIS)

05 March 2017
Application Summary

Name of Business Small River (Pty) Ltd

Type of Business Private Limited Company
Nature of Business Water Purification
Industry Sector Retail
Business Registration
Number
Registration Date
Business Location Lobatse, Botswana
Business Stage in Life Cycle Startup
Business Ownership 100 % by Atlang
Potential Number of 2
Employees
Funding Requirements Small River (Pty) Ltd is seeking P157, 109.40 in total to
finance its capital expenditure working capital requirements.
Proposed Security Required assets will be used as collateral
Contact Person
Phone Number
Purpose of the business plan

This business plan serves as an application and motivation document to pursue funding for the
acquisition of water purification system and finance the working capital requirements of Small
River (Pty) Ltd. The business plan provides a detailed account of the industry, market and
competition analysis, SWOT analysis, implementation plan, operational plan and a detailed
financial plan.
1 BUSINESS OVERVIEW

1.1 Company Name

Small River Pty Limited

1.2 Brief description of business

The proposed business is a water purification shop (reverse osmosis) specialising on packaging
and selling 500ml, 1 litre, 5 litres bottled water and water refills..

1.3 Business Location

Physical Address: Lobatse

Postal Address: P O Box M526 Kanye
Email:
Contact Number:

1.5 Market evidence / research undertaken

 Personal interviews
 Questionnaires
 Friends / Peers / Relatives
 Secondary Information

1.6 Target Market

The target markets are broken into three main areas:

 TM1:Individuals
 TM2: Companies/Businesses
 TM3: Events(weddings, conferences and products Launches )
1.7 The Project Proposal

This proposal is intended to show the viability of a water purification business based in Lobatse
and request for loan funding to the tune of P 157,109.40 from Citizen Entrepreneur Development
Agency (CEDA) repayable in 5 years, the purpose of which is to finance capital equipment and
working capital.

1.8 Values

- Quality Service; I will make sure that our clients get the best customer service by
training staff timorously.
- Equality; We will treat all our customers equally
- Right Attitude ; We will train our staff and make sure that they are motivated at all times

1.9 Objectives

The two overall objectives of starting this venture are:

a. To make profit Contribution to the economy, by way of employment.
b. To meet the local demand for bottled water.

1.9.1 Short term

The project will produce best quality bottled water to the market and will be able to make profit
the in first financial year by bottle water sales every day.

1.9.2 Long term

a) Due to high demands of water we intend to expand our project in a manner it will suit our
customers by producing tons of litres of bottled water.
2. PROJECT CAPITAL COSTS
This is a new project which intends to start production immediately after obtaining funding. The
loan is to be repaid over 5 years. Below is the breakdown of the project capital requirements.

Table 1: Project Capital Expenditure

Table 1 Project Capital Expenditure

Equipment Unit Price Qty Total (Bwp)

RO 200L/hr 25,000.00 1.00 25,000.00
MISC001-SAND FILTER AUTOMATIC 4,788.00 1.00 4,788.00
MISC001-CARBON FILTER AUTOMATIC 7,980.00 1.00 7,980.00
SOFTNER 25L AUTOMATIC 11,172.00 1.00 11,172.00
PUMP 3.5 BARS RAW WATER 5,500.00 1.00 5,500.00
PUMP 3.5 BARE CLEAN WATER 5,500.00 1.00 5,500.00
UV 25W STERILIZER 1360 LPH 2,550.00 1.00 2,550.00
STAINLESS STEEL TANKS 500L 4,788.00 1.00 4,788.00
INSTALLATION with parts and fittings 7,000.00 1.00 7,000.00
Installation water pumps 5,000.00 1.00 5,000.00
Beverages display Fridge 5,000.00 2.00 10,000.00
Total Cost for Equipment 89,278.00

Working Capital Duration Amount

500ml bottle 3 months 4,800.00
1.5 LITRE BOTTLE 3 months 8,100.00
5 LITRE BOTTLE 3 months 8,250.00
BLUE BOTTLE CAPS 3 months 2,250.00
rent 3 months 4,500.00
Salaries, Wages and Labour 3 months 8,100.00
Advertising once 10,000.00
Packaging 3 months 5,250.00
water 3 months 6,000.00
Insurance 1 year 1,500.00
electricity 3 months 1,500.00
Total for Working Capital 60,350.00

COSTS 149,628.00
Contingency @ 5% 7,481.40
TOTAL COST 157,109.40
 Capital Cost
180,000.00

160,000.00

140,000.00

120,000.00
Amount(BWP)

100,000.00

80,000.00

60,000.00

40,000.00

20,000.00

0.00
Equipment Working Capital Capital Contingency Total Costs

Capital Costs

Equipment
Working capital
Capital Contingency
2.2 Proposed Security

The machinery and equipment for the business will be security

2.3 Security to be provided (B)

Description Original cost in Pula Open Market/ Book value

Immovable property –plot

Machinery & Equipment 89,278.00
Motor Vehicles
Other

3 ORGANISATIONAL AND MANAGEMENT STRUCTURES

Managing Director
Atlang

Shop Assistant × 1

a. Management Structure
Table 3.1: Management Structure

NAME POSITION SHARE SALARY QUALIFICATIONS

Manager 100% P1,500.00

TBA Shop Assistant nil P1,200.00

b. Job Profile
Manager
 Strategic Planning
 Marketing, Records keeping and administration
 Operations supervision
 Liaising with suppliers and customers
Labourers
 Operational duties
 Cleaning
 Any other duties

4 OPERATIONAL PLAN

4.1 Location of the business

The water purification shop is situated at Kanye, where Water Utilities services are easily
available for this project.

4.2 Source, Cost and Quality of Raw Material

The equipment will be purchased locally.

Table 4.3 Monthly Costs for bottle water production

Item/Activity Quantity Unit price (BWP) Total Amount (BWP)

500ml bottle 2000 1.60 3,200.00
1000ml bottle 1000 2.70 2,700.00
5000ml bottle 1000 5.50 5,500.00
Bottle caps 4000 0.30 1,200.00
12,600.00

4.4 Production Plan Description

This feasibility has been developed for a water purification plant with a capacity of 1000 litres
per day. The product mix consists of water bottles of 0.5 litres, 1.5 litres and 5 litres.

4.4.1 Process flow

The first step for setting up a water purification plant is the analysis of source of water. After the
chemical analysis, the specifications of the purification plant are set. In the purification plant,
source water is stored in the feed water tank, passes through the sand filter for preliminary water
filtration. Water then passes through the dosing pump-I where chlorine is added to kill the germs
in the water. After the chlorination, water passes through carbon filter. It helps in the
maintenance of proper odour and taste of the water. It also removes chlorine from water. Water
is then passes from dosing pump-II, where Sodium Meta Bisulphate is added. It helps in
dechlorination of water. Water is filtered next and passes through dosing pump-III, where anti
scallant is added. It prevents scaling of membrane from calcium, magnesium and biological
growth. Water then passes through reverse osmosis module. This stage of the process makes
water clear from all the contaminations and minute particles. Water then passes through dosing
pump-IV, where minerals are added for taste development. After this stage, water undergoes
Ultra Violet treatment to avoid any contamination from bacteria and other micro-organisms.
Water then passes through automatic washing, filling and capping plant. Here water is filled into
bottles. After filling bottles are taken into the warehouse or shipped to the retailers. The complete
process flow diagram is as under.

Production flow chart:

4.4.1 Production Plan Chart

Table: 5

Month Monthly Production in Units

January 4000
February 4000
March 4000
April 4000
May 4000
June 4000
July 4000
August 4000
September 4000
October 4000
November 4000
December 4000
4.5 Technical Support

On equipment and the operations of the shop, we shall get support from water utilities and the
equipment supplier. On product quality we shall get support from BOBS who shall regularly
monitor our product quality and production system standards.

5. THE MARKET PLAN

5.1 Description of the Market

The trend in the water purification industry is that the target market keeps expanding, people and
organizations are now seeing the need for them to drink purified water to reduce health risks.
Since last year people have been cautious of the fact that running water from the tap have been
questionable because it sometimes comes out very white or tastes bad. Individuals and
companies now do not only want purified water but need it. Our market is everyone within our
area.

5.2 Our Target Market

Below is a list of the people and organizations that we have specifically market our products and
services to;
 Individuals
 Distributors
 Research and Development Companies
 The Government and Private Sector
 Hotels
 Sports Activities
 Retails

5.3 Value Preposition

This project will benefit a citizen who has a passion to run and own a business and also create
employment for other people. The project will also give service to businesses that have been
having problems with the local supplies.
5.3 Key Customers and Demand Levels

Choppies 50 000 liters monthly

Spar 50 000 liters monthly

5.4 Market Statistics

The market for water bottle is huge in the country since these products are used almost daily by
individuals, restaurants and fast food outlets, hotels/lodges, hospitals and government institution.
Below are the quantities of the product which were produced locally and imported between 2009
and 2013.

Item Import (litres) Locally Produced (litres)

Bottled water 82 746 852 20 000 500

5.5 Projected Volumes of purified water bottles monthly

Item Unit Price(BWP) Quantity Total Revenue(BWP)

500ml Bottle 3.50 2000 7,000.00
Water re-fill 6.00/5 litres 500 6,000.00
1 Litre Bottle 6.50 1000 6,500.00
5 Litre Bottle 16.50 1000 16,500.00
36,000.00

5.6 Pricing

Products will be priced as follows:

500ml bottle of water = P 3.50
1litre bottle of water = P 6.50
5 litre bottle of water = 16.00
5 litre bottle water re fill = P6.00
5.7 Sales Objectives

Sales will be conducted in everyday bases.

Below is a monthly sales revenue table:
Item Unit Price(BWP) Quantity Total Revenue(BWP)
500ml Bottle 2.50 2000 5,000.00
Water re-fill 6.00/5 litres 1000 6,000.00
1 Litre Bottle 4.50 1000 4,500.00
5 Litre Bottle 9.50 1000 9,500.00
25,000.00

5.9 Marketing Strategies & Distribution Channels

The project will make direct contacts with customers. Customers will be visited to establish their
needs and agreements will be reached on what they would like to get and the delivery dates. This
will be with a view to build long term relationship with customers as this is necessary for any
business to be sustainable. Products will be delivered directly to the market free of charge.

5.10 Current Producers

Choppies
Aqua
Metsi
Source
O3

5.11 Competitive Edge

Component Project Advantage

Packaging The packaging will be of high quality, rigid plastic bottles
Consistent supply will be sold every day as it will be produced at a fast moving pace
Better quality High Intensive Labour will be used to take care of the production
6. RISK, INTERNAL & EXTERNAL ANALYSIS

6.1. Internal Analysis

a. The project is closer to the target market and part of the management has hands on
experience in this type of business.
b. The project is a new comer in the market
c. The project will market itself aggressively and focus on good customer relations to
penetrate the market.

6.2 External Analysis

d. Globalization which is on the negotiation is the main threat as well as main opportunity.

6.3 Opportunity

We will be able to compete and export to other Southern African countries freely

6.4 Threat

With O3 and other local brands as the main producers it will be hard to compete in the market.
 Appendix A
Financial Plan

Item Assumption
Business days per week 7 days
Working days per month 30 days
Capital expenditure (CAPEX) P 89,278.00
Working capital requirements P 60,350.00
Security Assets of the business will be used as
collateral

Interest rate 5%
Period of Debt 5 Years
Expected yearly growth rate in revenue 5%
Inflation rate 5%
Tax Rate 15%
Depreciation 20%

CASH FLOW
Actual Year 1 Year 2 Year 3 Year 4 Year 5
Gross Collections 145,625.00 170,000.00 200,000.00 225,550.00 260,000.00

Interest in - - - - -
Shareholders Loans
Interest Income - - - - -

Increase in Bank - - - - -
Loans
Total Inflow 145,625.00 170,000.00 200,000.00 225,550.00 260,000.00

Payments to 51,775.00 65,000.00 70,000.00 76,000.00 81,500.00

creditors/stock
Purchase
Sales Tax and - - - - -
Customs duty
Total expenses paid 24,600.00 27,500.00 30,000.00 34,500.00 39,000.00

Net Cash Inflow 145,625.00 165,000.00 190,900.00 196,000.00 200,500.00

Before Financing
Loan Repayments 36,000.00 36,000.00 36,000.00 36,000.00 36,000.00
Interest on - - - - -
Overdraft

Taxation Paid - - - - -

Asserts Purchases - - - - -

Net Cash Inflow 109,625.00 129,000.00 154,900.00 160,000.00 164,500.00

After Financing
Balance B/fwd. 10,101.00 13,330.00 15,250.00 20,500.00 27,500.00

Balance C/fwd. 13,000.00 16,500.00 19,000.00 21,000.00 25,000.00

Projected
Actual Year 1 Year 2 Year 3 Year 4 Year 5
TRADING RESULTS
Total Sales 121,025.00 125,500.00 131,000.00 136,000.00 144,550.00

Stock on hand
beginning of
period
Total purchases 24,600.00 30,000.00 32,000.00 35,000.00 39,000.00

Stock at hand end 11,000.00 13,000.00 17,000.00 21,000.00 25,000.00

of period
Gross Profit 96,425.00 95,500.00 99,000.00 101,000.00 105,550.00

Total expenses 14,500.00 14,500.00 14,500.00 14,500.00 14,500.00

Depreciation 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00

Loan repayments 36,000.00 36,000.00 36,000.00 36,000.00 36,000.00

Tax paid
Net Profit 24,600.00 27,500.00 30,000.00 34,400.00 37,000.00

Assumptions
Sale unit 10,500.00 11,900.00 13,000.00 16,000.00 18,500.00

Sales price 50 50 50 50 50

Variable costs 145,625.00 148,430.00 151,000.00 153,000.00 156,500.00

Overhead 4,200.00 6,500.00 8,000.00 12,300.00 15,500.00

expenses
Depreciation used 10% 10% 10% 10% 10%

Tax rates used - - - - -

Other assumptions - - - - -

Projected
Actual Year 1 Year 2 Year 3 Year 4 Year 5
BALANCE SHEET
Fixed Assets 16,000.00 18,400.00 22,280.00 27,590.00 31,380.00
Less 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Accumulated
Depreciation
Net Fixed Assets 14,000.00 16,400.00 20,280.00 25,590.00 21,380.00

INVESTMENTS - - - - -

Current Assets
Stock 11,000.00 15,600.00 19,480.00 23,220.00 27,340.00
Debtors 25,000.00 29,220.00 33,440.00 37,390.00 41,260.00
Cash At Bank 61,290.00 65,520.00 69,990.00 72,400.00 76,260.00
Total Current 25,290.00 110,340.00 122,910.00 133,010.00 144,860.00
Assets
CURRENT
LIABILITIES
Creditors - - - - -
Taxation
Loans-Current 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Position
Bank Overdraft - - - - -
Total Current 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Liabilities
Net Current 28,290.00 107,340.00 119,910.00 130,010.00 141,860.00
Assets
Total Net Assets 32,290.00 115,230.00 128,141.00 134,260.00 159,120.00

CAPITAL
EMPLOYED
Equity
Share Capital - - - - -
Retained - - - - -
Earnings
Capital Reserve - - - - -
Shareholders - - - - -
Loans
Shareholders 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00
Interest
Grants

Long Term
Liabilities
Loans - - - - -
Deferred Tax - - - - -
Total Capital 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00
Employed