PHARMACY

BUSINESS PLAN

FOR

TRANSBERT (PTY) LTD

ADDRESS: 14 Calvin Street, Johannesburg, South Africa

TELEPHONE NO: 0800 000 000 MOBILE NO : 0800 000 000

E – MAIL [email protected]

...................................................................................................................................................................................................

PREPARED AND PRESENTED BY

Managing Director

John Smith

MOBILE NO. 0800 000 000 : E – mail : [email protected]

IMPORTANT!!!!!!!!!!

Important sections to change before submission: COVER PAGE, COMPANY

STRUCTURE, MANAGEMENT PROFILES, FINANCIAL STATEMENTS,
EXECUTIVE PLAN AND COMPANY SUMMARY
Table of Contents
Executive Plan.................................................................................................................................4

Mission, Objectives and Keys to success........................................................................................5

Mission.........................................................................................................................................5

Vision...........................................................................................................................................5

Objectives.....................................................................................................................................5

Core Values..................................................................................................................................6

Keys to Success............................................................................................................................7

Company Summary.........................................................................................................................8

Business Description....................................................................................................................8

Potential Products........................................................................................................................8

Ownership....................................................................................................................................9

Company Structure....................................................................................................................10

Management Profiles.................................................................................................................12

Operational Strategy......................................................................................................................13

Marketing Strategies......................................................................................................................14

Sales Strategy.............................................................................................................................16

Market Analysis.............................................................................................................................17

Demand......................................................................................................................................18

Market segmentation..................................................................................................................18

Competition and Buying Patterns..............................................................................................19

Competitor Analysis..................................................................................................................19

Industry Analysis...........................................................................................................................21

Players in the Industry................................................................................................................21

SWOT Analysis.............................................................................................................................23

2
Financial Statements......................................................................................................................24

Funding Request........................................................................................................................24

Financing & Bank Loan Amortisation.......................................................................................25

Pro Forma Income Statement.....................................................................................................26

Assumptions...............................................................................................................................27

Revenue And Expenses..............................................................................................................29

Monthly Cash Flow Statement...................................................................................................30

Pro Forma Annual Cash Flow....................................................................................................36

Pro Forma Balance Sheet...........................................................................................................37

Break Even Analysis..................................................................................................................38

Payback Period Analysis............................................................................................................39

Financials Graphs.......................................................................................................................40

Risk and Mitigatory Measures.......................................................................................................42

3
Executive Plan
Our company is a pharmacy store that will be operating in Johannesburg. Our aim is to provide
our community with the best healthcare products and services whilst generating reasonable
returns for our stakeholders.

Employee welfare will be equally important to our success. We will hire the best people
available, plus we will train, motivate, and encourage them, and thereby retain the friendliest,
most efficient staff possible. With a combination of cutting edge, high quality, efficient
technology we will provide the best medicine, healthcare products and quality services to our
customers. .

Most important to us is our financial success and we believe this will be achieved by offering
superior customer service. We have created financial projections based on our experience and
knowledge of the area. With a start-up expenditure of R536 500, we can generate more than R4
million in sales by the end of the first year and produce good net profits.

We are requesting for a loan of R400 000 to fund some of our start-up costs.

4
Mission, Objectives and Keys to success

Mission
We aim to maintain integrity in everything we do, continue to grow and expand to meet the
demands of our customers, be competitive, surpass expectations, and develop long-lasting
relationships with suppliers and customers in order to sustain growth.

We strive to satisfy our customers through the highest quality of our products which will be
delivered with, individual pride, passion, and company spirit.

We aim to improve the profitability of our business by creating a vibrant environment to promote
productivity at the workplace, taking part in local community activities and complying with
government regulations. We are also committed to the development and welfare of our
employees.

Vision
To be a self-sufficient, innovative and sustainable pharmaceutical business in which customers
are able to choose from a wide range of fruits/vegetables at reasonable prices.

Objectives
We are committed to excel in each of the below listed key areas, in order to effectively and
efficiently operate our company, while delivering the best value for money to our clients.

Quality Products

We will ensure that our systems, processes, products and standards are appropriate to the task,
which will be delivered with quality and excellence.

Sales and Profits

Our objective is to provide quality healthcare products at competitive prices and make a
reasonable profit margin. We aim to deliver sustainable growth and maximize our shareholders

5
value, through high rate of turnover and increases in operating profits, accompanied by a strong
cash flow.

Increasing Customer Traffic

Customer traffic is important whether the customers visiting us are buying or not.

Building Customer Loyalty

We are committed to understand and meet the needs of our customers, while maintaining a
customer-focused culture, to deliver a high level of customer satisfaction. We strive to build a
loyal customer base.

Core Values

Community Consciousness

We will stay engaged by supporting the local community with events and causes that reflect our
mission and lead to positive change.

Respect for Employees

Diversity, equality, and ethical treatment of employees is of utmost importance to our business.
We value team spirit where everyone is important and their contribution is appreciated and
recognized.

Commitment and Accountability

We are passionate in what we do and are accountable to our stake holders.

Quality Service

Our customers will get the best of our dedicated and efficient services.

Professionalism

We strive for the best in whatever we do, by maintaining professional ethics and business
acumen.

6
Honesty and Integrity

All our dealings will be conducted within the framework of a strict and consistent moral and
ethical code no matter the circumstances or personal costs involved.

Team spirit

Our approach to serving our customers is focused on a cooperative effort by the members of our
team which result in the achievement of a shared vision and mission. We will create an
atmosphere where each person can work as a team member, with clear goals and high
standards that profit everyone.

Keys to Success

The keys to success are:

 Quality products and friendly service.

 Maintaining existing loyal customer base.
 Creating a positive relationship within the community.

 Control costs at all times, in all areas and implement a conservative approach to growth.

 Provide 100% satisfaction to our customers and maintaining the level of excellent
services.

 Promote good values of our company culture and business philosophy.

 Repeat business. Every customer who comes in once should want to return, and
recommend us. Word-of-mouth marketing will be our powerful ally.

 Hiring the best people available, training, motivating and encouraging them, and thereby
retaining the friendliest, most efficient staff possible.

 Commitment to maintain safety and hygiene as our number one priority and ensure
quality control throughout the value chain.

7
Company Summary

Business Description
Our company is a pharmacy business that will store, dispense or sell pharmaceutical products
based on patient’s prescription and over the counter orders. We understand that our role is crucial
when it comes to the healthcare sector and the wellbeing of our communities. As such, we aim to
provide affordable medicine, as well as quality healthcare to our customers.

Our operations will be carried out in Johannesburg and we will target all income groups. We will
not only offer prescription drugs to our customers but we will provide complimentary health
products such as hair and beauty products, hygiene products and other household gadgets in
addition to our main products and services.

Our business will be built upon a heritage of providing customers with quality products as well
as friendly, accountable services. We will strive to be a strong competitor on the Johannesburg
market and continue to go from strength to strength, building on ethos that always puts the
customer first.

Potential Products

Prescription and Over the counter Drugs

We will offer a wide range of prescription drugs and over the counter medicines to our
customers. We will provide all types of Liquid medicine, tablets, capsules, topical medicines,
suppositories, drops, inhalers and injections to name a few.

Personal Hygiene Products

In addition to drugs we will sell a variety of personal hygiene products such as feminine
products, footcare, lotions, perfumes, cologne, soap, shavers, and cleaning detergents to name a
few.

Diet and Nutrition

8
We will sell diet and nutrition products such as vitamins, minerals, herbal and non herbal
supplements in our pharmacy.

Beauty Products

Our pharmacy will also provide beauty products such as skincare lotions and creams, make up,
facial creams, nail care products as well as other cosmetics.

Convenience Foods

We will also sell snacks including chocolates, crisps, candy, and other treats.

Ownership
Our business is registered as a proprietary limited company, Transbert (Pty) Limited. Enterprise
Number: V2019888888

SHAREHOLDING

NAME SHAREHOLDING %

 John Smith 60

 Mary Jones 40

TOTAL 100

DIRECTORS’ NAMES AND RESIDENTIAL ADDRESSES

NAME RESIDENTIAL ADDRESS

 John Smith 14 Bridge Road, Suburb X , City Y

9
  Mary Smith 14 Maryfyn Road, Suburb X , City Y

Company Structure

Pharmacists

 Compounding and dispensing medications, as prescribed by physicians.

 Monitoring customers’ drug therapies, advising interventions, and informing customers
of any potential side effects.
 Instructing customers on how and when to take prescribed medications.
 Conducting health and wellness screenings.
 Providing immunizations, and other medical services, such as taking blood pressure,
temperature measurements, and checking blood sugar levels.
 Keeping accurate customer records.
 Ensuring a safe and clean working environment.
 Completing operational requirements of the pharmacy, including verifying order entries,
maintaining records of controlled substances, charges, and removing expired and/or
damaged drugs from the pharmacy’s inventory.
 Adhering to applicable legal rules, regulations, and procedures governing pharmaceutical
practice.
 Performing other administrative tasks when needed.

Pharmacy Technician

 Read and interpret physician's medication orders

 Prepare and package chemotherapy medications and other medications requiring special
handling in accordance with safety measures
 Aid in filling, processing, and dispensing medications
 Re-package and label medications
 Adhere to safety practices in order to ensure quality care for patients
 Help maintain the drug inventory through inventory control practices

10
  Provide customer service by answering phone calls in a prompt and courteous manner
 Triage requests and prioritize them
 Check for expiration dates on medications on a regular basis

Pharmacy Cashier

Pharmacy cashiers have a wide range of responsibilities, which can include:

 Counting pills and recording the number dispensed to ensure that the correct amount of
medication is dispensed to patients
 Packaging medications for patients before they are dispensed
 Performing inventory checks of all stock on hand, and ordering more supplies as needed
 Recording information about each transaction in an electronic logbook or on paper forms
as required by state law
 Providing customers with information about their prescriptions and any potential side
effects of their medication
 Reviewing insurance information to determine coverage for each prescription and
contacting patients if they do not have insurance coverage for a particular medication
 Receiving payment from customers for their prescriptions, and processing refunds if they
pay with cash
 Preparing items for sale, such as greeting customers, answering questions about products,
and ringing up purchases
 Processing payments for insurance claims, including filing claims electronically or
submitting them to an insurance company by mail

Management Profiles

John Smith – Pharmacist

 He has a professional pharmacist

 He is also a successful businessman in his own right.

11
PROFESSIONAL QUALIFICATIONS

 Bachelors Degree in Pharmacy

WORKING EXPERIENCE

ProHaven (Pty) Ltd, Operations Manager, 2007-2021

Synety (Pty) Ltd, Supervisor, 2002-2007

He has also run a small supermarket business for the past 10 years.

12
Operational Strategy
Source of Inputs

We will purchase our products from local manufacturers and import some from outside the
country.

Pricing of Products

We are going to aim for an average of 90% mark up for most of our products. This implies that if
we incur direct costs of R100 000, we should be able to get revenue of R190 000 from our sales.
This margin will allow our business to be profitable, and it’s realistic given the current trends in
the pharmaceutical industry in South Africa. However, the margin is just the average, meaning
that some products will have a higher margin while other products will have lower margins. In
pricing our products, we would also check what our competitors are charging in order to ensure
that our prices are in line with the market prices.

Management and Control

We will use a management software, that will help us automate certain operations, accounting
inventory, and regular tasks and schedules. This will enable us to manage pharmacy business
well, by stay up to date with placing orders, carry out our audits, and compile our financial
accounts easily and run our business efficiently. We will create and update a database that will
help us determine which products sell and if there is a need to change our inventory.

Hours of Operation

We will be open from Monday to Saturday, from 8AM to 6PM and on Sundays from 9am to
12pm. This arrangement is convenient to our customers as some of them may not find time to do
visit us during the weekdays but can always visit us during the weekends.

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Marketing Strategies
We realize that the success of our business will have to be achieved by doing more than serving
quality products and providing pleasant services. We will utilize a marketing plan to build
customer traffic. We will continually strive to win more customers by being proactive rather than
reactive in our marketing efforts and stay current with popular industry trends. Our marketing
strategy is based upon the marketing mix, which are the 4 p’s of marketing, which are product
(service), price, promotion, and place (distribution).

Product/Service

We will offer a wide variety of medicine, and other healthcare products and services to our
customers. We will provide the best service by listening to their needs and offering solutions to
their problems. We are focused on providing the best service with the highest level of
satisfaction.

Price

Our products will be moderately priced. While we are not striving to provide the lowest prices
for our products, we are aiming to be the value leader. The quality of our products will match the
prices we charge.

Promotion

Our pharmaceutical business will use various ways of promoting our products so as to gain more
customers and increase the general awareness of our company and the products we offer.

Word of Mouth

We believe that the best form of advertising is still "word-of-mouth." By providing an attractive
environment and quality products and services, we will be the talk of the town. Therefore, the
execution of our concept is the most critical element of our plan.

Community Involvement

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Our team will also be active in the local community and we plan on taking an active role by
participating, sponsoring, and donating to local churches, sports clubs, or teams in the market
area. We know that being part of our community is a big responsibility. We respect all
individuals regardless of age, race, gender, or religious beliefs. We will give back to the
community for our success belongs to them.

Fliers

We will use colorful, informative fliers to increase awareness of our business in the area we will
operate from. These fliers will be distributed to random people especially close to where we are
located. We hope to get potential customers from the distribution of fliers.

Newspapers

We will place adverts in the newspapers so that more people can be aware of our pharmacy.

Internet Marketing

Our company will have a dedicated website. It will be the virtual business card and portfolio for
the company, simple, contemporary, and well designed. The site will offer products,
prices, reviews, and events at our company. We will also have active social media accounts on
Facebook, Twitter, and LinkedIn. The internet is a very powerful marketing tool. We will also
advertise our products in trade publications, and relevant health blogs. These internet marketing
strategies will make more people aware of our products.

Place/Distribution

Our pharmacy will be located in Johannesburg where it can be easily accessed by both
individuals and firms that may need to purchase our products and services. We may locate it in
the townships, as our expectations are that there is high population which will result in high
traffic. This will easily help us to push volumes.

Other Strategies

Ongoing operational excellence

15
Our company will continually focus on improving the customer experience, the quality and skills
of its workforce, and the speed of service. Improving these areas will drive up revenue, reduce,
costs and enhances profitability.

Customer Database

We will have a customer database which we will continually update.

Sales Strategy
We will hire experts who have a good understanding of the health industry to help us develop
marketing strategies that will help us achieve our business goals. To stay in business, we must
make sure our sales values are greater than the cost of goods sold and the operating costs. Our
strategy is simple; we intend to succeed by giving our customers quality products at competitive
prices with excellent customer service, whether on their first visit or their hundredth visit.

Our marketing strategies are designed to get critics and new customers into our doors. We will
ensure that our sales strategies encourage customers to become repeat customers, plus invite all
their friends and acquaintances to buy from us as well.

Our company sales strategy will focus on consistently high-quality products, a wide range of
medicine, healthcare products and services. We can accomplish this by:

 Hiring employees who genuinely enjoy their jobs and appreciate our company unique
offerings

 Continually assess the quality of all aspects mentioned above, and immediately
addressing any problems

 Interacting with our customers personally, so they know that their feedback goes directly
to the owners.

16
Market Analysis
Overall, the health and pharmaceutical sector in South Africa is vitally important to national
wellbeing. The overall pharmacy retail market is expected to offer attractive growth due to a
general affordability trend towards self-medication and generic medicines as well as an increased
focus of the middle income consumer on health and wellness. Most retailers have been faced
with extremely tough economic conditions, and many retailers have meaningfully slowed down
their space expansion. While automation and technology advances in the medication dispensing
process have improved the pharmacist's dispensing efficiency, the overall work involved with
providing pharmaceutical care services has continued to grow as volume and complexity of
medications increase. There are still a lot of challenges especially when it comes to medicine
supply. This is a struggle not only in South Africa but all over the world. There is not sufficient
medicine since companies cannot produce fast enough. As pharmacists, we will ensure that there
is stock.

The country is saddled with a high disease burden - (HIV/AIDS, TB and rising non-
communicable disease like diabetes, cardiovascular disease, hypertension, and cancer). About
15% of the population can afford medical aid. The country is moving toward universal
healthcare in the shape of the National Health Insurance (NHI). Through NHI, the government
will likely become the main procurer of health goods and services, as well as investing in the
public healthcare system to improve infrastructure and access.

The market for innovator/patented drugs is estimated at around R20 billion, equating to 51
percent of pharmaceutical sales and around 58 percent of prescription drug sales. Growth in this
sector will be slower due to the associated high costs

Generic drugs, valued at about R15 billion, are likely to see strong growth, both in terms of
volume and spend, due to high demand and purchasing preferences but also because of increased
local production driven by government incentives and policies favoring local content.

Over the counter medicines represent the smallest segment of the market (R4.5 billion). This
segment is extremely competitive and much of it is driven by local production. South Africa
does not produce any Active Pharmaceutical Ingredients (APIs).

17
Demand
South Africa remains the largest pharmaceutical market in Sub-Saharan Africa. Its prescription
drug market is valued at approximately R40 billion, which equates to 88.7 percent of the total
market in value terms but will drop in value due to prevailing market conditions.

Should the National Health Insurance plan materialize, there could be rising demand for
prescription generic drugs, improved healthcare infrastructure and access, as well as increased
local pharmaceutical production of generics. There will continue to be emphasis placed on
HIV/AIDS and TB treatment but over the long-term focus will also shift towards rising chronic
disease burden – diabetes, cardiovascular disease, hypertension, and cancer treatments.

Market segmentation
Pediatric patients

We will target young families, the young working class who have young children and may need
prescription drugs for themselves or their children.

Acutely Ill Patients

We will provide medicine to acutely ill patients affected by various acute illnesses like flue,
diarrhea, headache, ear infections etc.

Chronically Ill Patients

We will also provide various prescription drugs and pharmaceutical services for patients who
suffer from chronic illnesses such as diabetes, anemia, arthritis and cancer.

Companies and Organisations

We will supply medicines to various companies and organisations who might want medicines for
their employees.

Individuals

We will supply medicines to individuals who want medicines and other health related products.

Gym Members

18
We will also target young and old gym members that make use of health supplements and other
nutritional products. Some of these can include college students, working professionals and
retired persons.

Women

We will also provide products and services specifically targeting women such as cosmetics, hair
products as well as other relevant beauty products. We will not limit these products to women
only, we will also offer such products that are required by men.

Competition and Buying Patterns

Customers consider a lot of factors when purchasing medicine or any other healthcare product.
Most people are naturally attracted to established brands such as Dischem and Clicks.
Customers, especially the low- and medium-income earners are price sensitive; thus, they will
consider the prices offered by various suppliers. Location is another important factor. Customers
tend to buy from pharmacies that are close and convenient to them. Also, customer care can
attract and drive customers away. Once a company has bad customer care, it will lose customers.
The quality of products is also crucial. High quality and less expensive commodities are
preferred by the average person especially due to the increase in the number of people who are
becoming health conscious. Customers also prefer to buy where there are promotions and special
offers. A little competition is healthy, but don’t let it cost you your business.

Competitor Analysis
Competitor Competitive Advantage Our Competitive Advantage
Large established  Internally financed  Competitive pricing
pharmacies  Have an established brand  Quality services
 Large market share  Minimise costs
 Economies of scale  Adaptable to market
 Competitive pricing changes
 Offer a wide range  Aggressive marketing to
products and services market our brand
Small to medium  Serve a smaller market  Develop a niche market
pharmacies share and expand our market

19
  Have an established brand share overtime
 Offer a limited range of
products and services.
Unregistered Informal  Cheap pricing
stores, such as spaza  Close to potential
shops customers
 Have a close relationship
with customers

If you are starting your own pharmaceutical business, you inevitably have to compete with large
national and regional firms. Your business may not have the same buying power with other
competitors but that doesn't mean you can't successfully compete on other factors. Establishing a
loyal client base means your business doesn't have to compete on price. You can consider
offering products that cannot be easily found in other pharmacies and provide superior customer
service.

Staff members should be knowledgeable when it comes to the types of products you offer, such
as the health benefits as well as any relevant information. Special orders should be
accommodated with minimal or no additional charges. Also ensure that your services are
excellent, and you set up an efficient online store, with various payment options that are secure.
Lastly, make sure that you take care of your employees and their welfare. Consider providing
good working conditions and commissions to freelance sales agents that you can recruit from
time to time.

20
Industry Analysis
The pharmaceutical industry provides vital services by providing medication to the South
African population. It is currently valued at about R45bn. There are about 276 companies
licensed by the Department of Health and the Medical Controls Council where local
manufacturing is dominated by local companies. Overall, the sector is dominated by
multinational pharmaceutical companies. Although a greater variety of products are available in
the private sector, the public health sector consumes the largest volume of pharmaceuticals.

Vaccines and ARVs for HIV infection account for more than 50% of total public health sector
expenditure on pharmaceuticals. While almost 70% of the pharmaceutical products that are used
are locally-produced, various active pharmaceutical ingredients and finished products are
imported. The sector is highly regulated and the development, production, marketing and sale of
pharmaceuticals are strictly controlled.

Retail pharmacy has undergone dramatic changes over the last decade. These changes seem to be
rapidly increasing as more and more pressure is being exerted on the retail pharmacy both
externally and internally. As such there has been a reduction in the number of retail pharmacies
during the last decade and the change in the types of pharmacy that currently exist. This has left
many pharmacies in a challenging position as their businesses become less profitable while
having to face increased competition and a dramatically changing environment. In order for a
retail pharmacy to survive it has to create value in the market place and it would appear that
traditional pharmacies are not adding as much value as they once did.

Players in the Industry

There are a lot of large and small pharmacies in South Africa. Most of these companies have a
large network and have many individual pharmacies all over the country. There are many more
small individual retail pharmacies in small towns and villages as well. Some of the leading
pharmacies in South Africa with a large market share include;

Dischem

21
Dis-Chem has been rated as the country's best pharmacy chain by Professional Management
Review, and has also been voted as one of the best pharmacies in the country. Dis-Chem is the
second largest retail pharmacy chain in South Africa, with 165 stores, plus 4 in Namibia and 1 in
Botswana. The retail pharmacy was founded in 1978 in Johannesburg, South Africa.

Clicks

Clicks is the largest pharmacy group in South Africa with over 300 stores nationwide. The retail
pharmacy was established in 1968 by Jack Goldin in Cape town. Clicks has been operating for
more than 50 years. With over 20% share of the retail pharmacy market Clicks has become one
of the largest retail pharmacies in the country.

Pick n Pay Pharmacy

Being one of the largest supermarkets in the country, Pick n Pay also operates retail pharmacies
in most of its supermarkets. You can obtain self-medication, vitamins and supplements, sports
nutrition supplements, medical services clinics and a dispensary. The pharmacy also processes
scripts for both acute and chronic medication. Pick n Pay pharmacies also have a large market
share and compete well with other retail pharmacy giants.

Medirite

MediRite Pharmacies, inside Shoprite and Checkers stores also meet the growing need for easily
accessible and affordable healthcare. Many of medirite pharmacies are located in supermarkets
serving previously disadvantaged areas where there are few medical practitioners and the Group
is proud to bring much-needed pharmaceutical services to these customers at low prices.

Small And Medium Sized Pharmacies

There are several other small to medium sized pharmacies throughout all parts of South Africa.

22
SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company,
and describes the opportunities and threats faced by our company.

STRENGTHS WEAKNESSES
 Top class pharmaceutical products and  Building a reputation from scratch
services: We will ensure that our products As a new pharmacy we will need to
will exceed our customers expectation. brand and market our company and
 Qualified Staff: We will hire talented products from scratch.
and competent staff  High Costs
 Competitive prices: We will charge Setting up a pharmacy can be costly.
affordable prices for our products and
services.

OPPORTUNITIES THREATS
 High demand for affordable medicine  Intense Competition
and healthcare products There are plenty of both new and
 Economic growth, which will lead to established pharmacies.
higher disposable incomes and greater  A pharmaceutical business is risky;
demand for our products and services There are health and safety concerns
 Market potential in online retail when it comes to the health industry.
shopping  Government mandates
Government rules and regulations may
slow us down
 Economic Instability
The South African economy is fragile.
Any economic downturn may threaten
the growth of our business

23
Financial Statements

Funding Request
Start-up Costs

Item Cost
Equipment & Shop Furniture 150,000.00
POS System And Computers 35,000.00
Initial stock/inventory 175,000.00
Salaries 74,500.00
Rentals 25,000.00
Utilities 7,500.00
Repairs and Maintenance 1,500.00
Marketing and Advertising 2,500.00
Transport/Fuel 7,500.00
Other Expenses 3,000.00
Insurance & Licenses 30,000.00
Website Design 5,000.00
Renovations and Interior Design 20,000.00

Startup Costs Total 536,500.00

24
Financing & Bank Loan Amortisation
Existing Business Fixed Assets Value
Land R0.00
Buildings R0.00
Equipment R0.00
Total R0.00

Sources of Capital Amount

Bank Loan R400,000.00
Owner's Equity Cash Injection R136,500.00
Total Startup Cash Capital R536,500.00
Existing Business Fixed Assets R0.00
Total Startup Capital R536,500.00

The table above shows that the total cash capital required to do this project
is R536,500. The owners of the business will contribute R136,500 of their own
funds into the business. We thus require a loan of R400,000.

Bank Loan
Amortization
Loan Amount 400,000.00
Repayment Term in 36
Months
Interest Rate 12%
(percentage)
Monthly Payment 13,285.72

The table above shows that we will be making a monthly repayment of

R13,285.72 for 36 months to repay the loan.

COLLATERAL / SECURITY

25
Title Deeds to a residential property valued over R1 million.

26
Pro Forma Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5

Sales 4,200,00 5,040,00 6,048,00 7,257,60 8,709,120.
0.00 0.00 0.00 0.00 00
Cost of goods sold 2,210,526. 2,652,631. 3,183,157. 3,819,789. 4,583,747.3
32 58 89 47 7
Gross Profit 1,989,47 2,387,36 2,864,84 3,437,81 4,125,372.
3.68 8.42 2.11 0.53 63
Operating
Expenses
Salaries 894,000.0 1,056,000. 1,056,000. 1,356,000. 1,428,000.0
0 00 00 00 0
Rentals 300,000.0 300,000.0 300,000.0 300,000.0 300,000.00
0 0 0 0
Utilities 90,000.00 108,000.0 129,600.0 155,520.0 186,624.00
0 0 0
Repairs and 18,000.00 21,600.00 25,920.00 31,104.00 37,324.80
Maintenance
Marketing and 30,000.00 36,000.00 43,200.00 51,840.00 62,208.00
Advertising
Transport/Fuel 90,000.00 108,000.0 129,600.0 155,520.0 186,624.00
0 0 0
Other Expenses 36,000.00 43,200.00 51,840.00 62,208.00 74,649.60
Insurance & 30,000.00 36,000.00 43,200.00 51,840.00 62,208.00
Licenses
Website Design 5,000.00 - - - -
Renovations and 20,000.00 - - - -
Interior Design
Total Operating 1,513,00 1,708,80 1,779,36 2,164,03 2,337,638.
Expenses 0.00 0.00 0.00 2.00 40
Depreciation 37,000.00 37,000.00 37,000.00 37,000.00 37,000.00
Interest Payment 41,662.47 26,726.76 9,896.84 - -
Net Profit Before 397,811. 614,841. 1,038,58 1,236,77 1,750,734.
Tax 22 66 5.27 8.53 23
Tax 111,387.1 172,155.6 290,803.8 346,297.9 490,205.58
4 6 8 9
Net Profit After 286,424. 442,686. 747,781. 890,480. 1,260,528.
Tax 08 00 39 54 65

27
Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Annual Increase in 0% 20% 20% 20% 20%
sales

Revenue Forecasts Year 1 Year 2 Year 3 Year 4 Year 5

Expected average R350,000 R420,000 R504,000. R604,800 R725,760.0
monthly revenue .00 .00 00 .00 0
Average Markup (%) 90% 90% 90% 90% 90%

SALARIE Year 1 Year 2

S
Position Numbe Monthl Total Positio Numbe Monthl Total
r of y Salary n r of y Salary
Employ Salary Employ Salary
ees ees
Cashiers 2 R6,000. R12,000. Cashier 3 R6,000. R18,000.0
and 00 00 s and 00 0
Assistant Assistan
s ts
Logistics 1 R7,500. R7,500.0 Logistic 2 R7,500. R15,000.0
Personell 00 0 s 00 0
Persone
ll
Pharmaci 2 R15,000 R30,000. Pharma 2 R15,000 R30,000.0
st .00 00 cist .00 0
Technicia Technici
n an
Pharmaci 1 R25,000 R25,000. Pharma 1 R25,000 R25,000.0
st .00 00 cist .00 0
Total R74,500 Total R88,000.
Monthly .00 Monthl 00

28
Salaries y
Salarie
s

Year 3 Year 4
Position Numbe Monthl Total Positio Numbe Monthl Total
r of y Salary n r of y Salary
Employ Salary Employ Salary
ees ees
Cashiers 3 R6,000. R18,000. Cashier 3 R6,000. R18,000.0
and 00 00 s and 00 0
Assistant Assistan
s ts
Logistics 2 R7,500. R15,000. Logistic 2 R7,500. R15,000.0
Personell 00 00 s 00 0
Persone
ll
Pharmaci 2 R15,000 R30,000. Pharma 2 R15,000 R30,000.0
st .00 00 cist .00 0
Technicia Technici
n an
Pharmaci 1 R25,000 R25,000. Pharma 2 R25,000 R50,000.0
st .00 00 cist .00 0
Total R88,000 Total R113,000
Monthly .00 Monthl .00
Salaries y
Salarie
s

Year 5
Position Numbe Monthl Total
r of y Salary
Employ Salary
ees
Cashiers 4 R6,000. R24,000.
and 00 00
Assistant

29
s
Logistics 2 R7,500. R15,000.
Personell 00 00
Pharmaci 2 R15,000 R30,000.
st .00 00
Technicia
n
Pharmaci 2 R25,000 R50,000.
st .00 00
Total R119,00
Monthly 0.00
Salaries

30
Revenue And Expenses

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue
4,200,000 5,040,000. 6,048,000 7,257,600. 8,709,120.
.00 00 .00 00 00

Average Monthly
Revenue 350,000.0 420,000.0 504,000.0 604,800.0 725,760.00
0 0 0 0
Average Monthly
Expenses 313,765.7 365,679.8 414,367.8 498,651.7 576,782.15
3 6 9 9

31
Monthly Cash Flow Statement
Year 1
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 TOTAL

CASH
INFLOWS
Equity
Capital 136,500 - - - - - - - - - - - 136,500

Loan Capital 400,000 - - - - - - - - - - - 400,000

Revenue 280,000 294,000 308,000 322,000 336,000 350,000 385,000 385,000 385,000 385,000 385,000 385,000 4,200,000

Total
Receipts 816,500 294,000 308,000 322,000 336,000 350,000 385,000 385,000 385,000 385,000 385,000 385,000 4,736,500

CASH
OUTFLOWS
Variable
Costs
Stock 147,368 154,737 162,105 169,474 176,842 184,211 202,632 202,632 202,632 202,632 202,632 202,632 2,210,526
Other
Outflows
Salaries 74,500 74,500 74,500 74,500 74,500 74,500 74,500 74,500 74,500 74,500 74,500 74,500 894,000

Rentals 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 300,000

Utilities 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 90,000
Repairs and
Maintenance 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Marketing
and
Advertising 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Transport/
Fuel 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 90,000
Other

32
Expenses 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Insurance &
Licenses 30,000 - - - - - - - - - - - 30,000
Website
Design 5,000 - - - - - - - - - - - 5,000
Renovations
and Interior
Design 20,000 - - - - - - - - - - - 20,000
Equipment &
Shop
Furniture 150,000 - - - - - - - - - - - 150,000
POS System
And
Computers 35,000 - - - - - - - - - - - 35,000

Dividend - - - - - - - - - - - 20,000 20,000

Loan
Repayment 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 159,429

Tax - - - - - - - - - - - 111,387 111,387

Total
Payments 522,154 289,523 296,891 304,259 311,628 318,996 337,417 337,417 337,417 337,417 337,417 468,804 4,199,342
SURPLUS /
(DEFICIT) 294,346 4,477 11,109 17,741 24,372 31,004 47,583 47,583 47,583 47,583 47,583 (83,804) 537,158
OPENING
BANK
BALANCE 294,346 298,823 309,932 327,673 352,045 383,049 430,632 478,214 525,797 573,380 620,962
CLOSING
BALANCE 294,346 298,823 309,932 327,673 352,045 383,049 430,632 478,214 525,797 573,380 620,962 537,158 537,158

Year 2
Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 TOTAL

CASH
INFLOWS
Revenue 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 5,040,000

33
Total
Receipts 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 420,000 5,040,000

CASH
OUTFLOWS
Variable
Costs
Stock 221,053 221,053 221,053 221,053 221,053 221,053 221,053 221,053 221,053 221,053 221,053 221,053 2,652,632
Other
Outflows
Salaries 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 1,056,000

Rentals 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 300,000

Utilities 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 108,000
Repairs and
Maintenance 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600
Marketing
and
Advertising 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Transport/
Fuel 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 108,000
Other
Expenses 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 43,200
Insurance &
Licenses 36,000 - - - - - - - - - - - 36,000

Dividend - - - - - - - - - - - 30,000 30,000

Loan
Repayment 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 159,429

Tax - - - - - - - - - - - 172,156 172,156

Total
Payments 409,738 373,738 373,738 373,738 373,738 373,738 373,738 373,738 373,738 373,738 373,738 575,894 4,723,016

SURPLUS / 10,262 46,262 46,262 46,262 46,262 46,262 46,262 46,262 46,262 46,262 46,262 (155,894) 316,984

34
(DEFICIT)
OPENING
BANK
BALANCE 537,158 547,420 593,681 639,943 686,204 732,466 778,728 824,989 871,251 917,513 963,774 1,010,036
CLOSING
BALANCE 547,420 593,681 639,943 686,204 732,466 778,728 824,989 871,251 917,513 963,774 1,010,036 854,142 854,142

Year 3
Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 TOTAL

CASH
INFLOWS
Revenue 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 6,048,000

Total
Receipts 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 504,000 6,048,000

CASH
OUTFLOWS
Variable
Costs
Stock 265,263 265,263 265,263 265,263 265,263 265,263 265,263 265,263 265,263 265,263 265,263 265,263 3,183,158
Other
Outflows
Salaries 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 1,056,000

Rentals 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 300,000

Utilities 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 129,600
Repairs and
Maintenance 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 2,160 25,920
Marketing
and
Advertising 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 43,200
Transport/
Fuel 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 10,800 129,600

35
Other
Expenses 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 51,840
Insurance &
Licenses 43,200 - - - - - - - - - - - 43,200

Dividend - - - - - - - - - - - 40,000 40,000

Loan
Repayment 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 13,286 159,429

Tax - - - - - - - - - - - 290,804 290,804

Total
Payments 466,429 423,229 423,229 423,229 423,229 423,229 423,229 423,229 423,229 423,229 423,229 754,033 5,452,750
SURPLUS /
(DEFICIT) 37,571 80,771 80,771 80,771 80,771 80,771 80,771 80,771 80,771 80,771 80,771 (250,033) 595,250
OPENING
BANK
BALANCE 854,142 891,713 972,484 1,053,255 1,134,026 1,214,798 1,295,569 1,376,340 1,457,111 1,537,882 1,618,653 1,699,424
CLOSING
BALANCE 891,713 972,484 1,053,255 1,134,026 1,214,798 1,295,569 1,376,340 1,457,111 1,537,882 1,618,653 1,699,424 1,449,391 1,449,391

Year 4 Year 5
TOTAL TOTAL

CASH
INFLOWS
Revenue 7,257,600 8,709,120

Total
Receipts 7,257,600 8,709,120

CASH
OUTFLOWS
Variable
Costs
Stock

36
 3,819,789 4,583,747
Other
Outflows
Salaries 1,356,000 1,428,000

Rentals 300,000 300,000

Utilities 155,520 186,624

Repairs and
Maintenance 31,104 37,325
Marketing
and
Advertising 51,840 62,208
Transport/
Fuel 155,520 186,624
Other
Expenses 62,208 74,650
Insurance &
Licenses 51,840 62,208

Dividend 50,000 60,000

Loan
Repayment - -

Tax 346,298 490,206

Total
Payments 6,380,119 7,471,591
SURPLUS /
(DEFICIT) 877,481 1,237,529
OPENING
BANK
BALANCE 1,449,391 2,326,872
CLOSING
BALANCE 2,326,872 3,564,401

37
Pro Forma Annual Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Opening Balance - 537,157.86 854,141.92 1,449,391.4 2,326,872.01
7

Sales 4,200,000.0 5,040,000.0 6,048,000.0 7,257,600.0 8,709,120.00

0 0 0 0
Subtotal Cash from 4,200,000.0 5,040,000.0 6,048,000.0 7,257,600.0 8,709,120.00
Operations 0 0 0 0

Additional Cash Received

Start-up Capital: Equity 136,500.00 - - - -
Bank Loan 400,000.00 - - - -
Subtotal Cash Received 536,500.00 - - - -

Cash Expenditures
Stock 2,210,526.3 2,652,631.5 3,183,157.8 3,819,789.4 4,583,747.37
2 8 9 7
Operating Expenses 1,513,000.0 1,708,800.0 1,779,360.0 2,164,032.0 2,337,638.40
0 0 0 0
Subtotal Spent on 3,723,526.3 4,361,431.5 4,962,517.8 5,983,821.4 6,921,385.77
Operations 2 8 9 7

Additional Cash Spent

Taxes 111,387.14 172,155.66 290,803.88 346,297.99 490,205.58
Purchase Buildings - - - - -
Purchase Land - - - - -
Purchase Equipment 185,000.00 - - - -
Loan Repayment 159,428.69 159,428.69 159,428.69 - -
Dividends 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00
Subtotal Additional Cash 475,815.83 361,584.35 490,232.56 396,297.99 550,205.58
Spent

Net Cash Flow 537,157.86 316,984.07 595,249.54 877,480.54 1,237,528.65

Cash Balance 537,157.86 854,141.92 1,449,391.4 2,326,872.0 3,564,400.65
7 1

38
Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Long Term Assets
Land - - - - -
Buildings - - - - -
Equipment 185,000.00 185,000.00 185,000.00 185,000.00 185,000.00
Accumulated Depreciation 37,000.00 74,000.00 111,000.00 148,000.00 185,000.00
Total Long Term Assets 148,000.00 111,000.00 74,000.00 37,000.00 -
Current Assets
Cash 537,157.86 854,141.92 1,449,391.47 2,326,872.01 3,564,400.65
Inventory - - - - -
Other Current Assets - - - - -
Total Current Assets 537,157.86 854,141.92 1,449,391.47 2,326,872.01 3,564,400.65
TOTAL ASSETS 685,157.86 965,141.92 1,523,391.47 2,363,872.01 3,564,400.65

EQUITY AND
LIABILITIES
Equity
Equity 402,924.08 815,610.07 1,523,391.47 2,363,872.01 3,564,400.65
Total Equity 402,924.08 815,610.07 1,523,391.47 2,363,872.01 3,564,400.65
Liabilities
Bank Loan 282,233.78 149,531.85 0.00 - -
Other Liabilities - - - - -
Total Liabilities 282,233.78 149,531.85 0.00 - -

TOTAL EQUITY AND 685,157.86 965,141.92 1,523,391.47 2,363,872.01 3,564,400.65

LIABILITIES

39
Break Even Analysis
Breakeven Analysis Value
Selling Price/Rand Sales 1.00
Variable Cost/Rand Sales 0.53
Annual Fixed Costs 1,554,662.47
Monthly Breakeven point 273,505

Break Even point is the monthly sales we need to make for us to cover all our costs (fixed and
variable costs) i.e to break even. The breakeven point is reached when revenue equals all
business costs.

40
Payback Period Analysis
Initial Year 1 Year 2 Year 3 Year 4 Year 5
Investment
Net Cash Flow (excluding
loan capital repayment & (536,500.00) 674,924.0 479,686.0 784,781.39 927,480.54 1,297,528.6
dividends) 8 0 5
Cumulative Net Cashflow
138,424.0 618,110.0 1,402,891.4 2,330,372.0 3,627,900.6
8 7 7 1 5
Positive Cashflow? TRUE TRUE TRUE TRUE TRUE

Payback Period (First 1

year positive)
Payback Period (Actual 0.79
Number of Years)

The payback period is the length of time required to recover the cost of an investment. The
payback period of a project is an important determinant of whether to undertake the project, as
longer payback periods are typically not desirable for investment positions.

Thus, it will take us almost 1 year to recover our initial investment.

41
Financials Graphs

Annual Revenue
8,709,120.00

7,257,600.00

6,048,000.00
5,040,000.00
4,200,000.00

Year 1 Year 2 Year 3 Year 4 Year 5

Monthly Revenue Vs expenses

Average Monthly Revenue Average Monthly Expenses

725,760.00

604,800.00
576,782.15
504,000.00 498,651.79
420,000.00 414,367.89
350,000.00 365,679.86
313,765.73

Year 1 Year 2 Year 3 Year 4 Year 5

42
 Net Profit After Tax

1,260,528.65

890,480.54

747,781.39

442,686.00

286,424.08

Year 1 Year 2 Year 3 Year 4 Year 5

43
Risk and Mitigatory Measures

Financial Risks

 Good Debtors Management

 Credit Arrangements with Suppliers
 Effective Cost Controls

Management Risks

 Sound Financial Management

 Management Board and functional Organogram
 Good planning – finance, marketing, operations
 Professionalism, everything must be on board

Business Risks

 Adequate funding
 Effective and accurately aligned marketing strategies
 Action plans – updates, follow ups and feedback
 Professional set up
 Networking with stakeholders – competitors and suppliers.
 Diversification

Security Risks

 Insurance for the store

 Security controls – checks and balances to minimise losses.

Market Risks

 Good marketing strategy

 Competitive pricing.
 Quality Products

44
Operational Risk

 Checks and balances to curb deficiencies in internal control systems

 Set high standards
 Research
 Control and risk self-assessment to detect errors and acts of frauds
 Self-training and development
 Regular internal and independent audits

Liquidity Risk

 Operate under a well-defined budget

 Loan capital
 Arrange credit with suppliers where necessary

Technology Risk

 Computerised Operations
 Technological research and updating
 Staff training and development

Legal / Compliance

 Comply with material rules, regulations and laws

 All agreements to be reviewed by the company’s lawyers

Corporate Governance

 Transparency
 Integrity
 Professionalism

45