BUSINESS PLAN

March, 2020

0
 TABLE OF CONTENT

Content Page number

Executive Summary 2
Introduction 4
Our Services 7
Industry and Market Analysis 8
Competition 12
SWOT Analysis 14
Operations Plan 15
Sales and Marketing Plan 18
Management Plan 22
Financial Plan 24
Key Assumption 24
Cost Estimation and Projection 25
Financing 27
Revenue Model 28
Cashflow Analysis 28
Breakeven Analysis 30
Projected Income Statement 31
Projected Statement of Financial Position 32
Projected Cash Flow Statement 33
Ratio Analysis 34

1
EXECUTIVE SUMMARY
Fasaha Republic Ltd. Is set to be a private limited liability Company that will
wholly own the Fasaha Café Brand, the Company will be owned wholly by the
Proposed Shareholder (In line with the Shareholders agreement attached to this
document)

The Fasaha Republic Concept is built upon the blending African Creative Arts
and “Arewa” inspired cultural themes into unique experiences around build
around casual dining, coffee houses and event spaces. Located in the
U.Rimi/U.Sarki area of Kaduna Metropolis, the Fasaha Café will provide high
quality food, coffee-based products, literature and arts and cozy work spaces to
the thousands of residents, workers and visitors in the Kaduna Metropolitan
area.

We have identified our market segment and classified them into Business Person,
Couples, Households, Destination Customer, High-End Singles and tourists.
Through these market segment we intend to target 0.1% of the population Kaduna
metropolis estimated at about 2,434 persons.

We expect direct competition from Midway (formerly French Café), Habil Café,
9 Star Bistro, and Not Just Burgers. They are Fasaha Cafes closest competitors
(relative to location). Fasaha Cafes compete indirectly with Quick Service
Restaurants (QRS) (i.e. Ostrich Bakery, and Chicken Republic etc), Full-Service
Restaurant (FSR), Limited-Service Restaurants (LSR) and Small-Scale Service
operating units – restaurants that offer local delicacies at lower prices, local food
spots, hotels, and local tea/coffee beverage outfit popularly known as ‘Mai
Shayi’.

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We will maintain a highly experienced management team that will ensure full
realization of our goals and objectives. The team will be led by the General
manager, by a Chef, Accountant, and Bookstore Assistant.

To realise our goals, we are seeking an investment capital of N51,730,000. This

will enable us acquire asset and working capital requirements for start-up.

With these resources, we anticipate a revenue of about N273 million within five
years and we expect this to grow considerably into the future. In addition, we
will attain an operational profit of about N142 million within five years. As a
result, we are sure to attain breakeven in the first quarter of the fourth year of
operation.

Profitability Highlight

90,000,000

80,000,000

70,000,000

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

-
1 2 3 4 5
(10,000,000)

Revenue Operating Profit

3
INTRODUCTION

Business Overview
Fasaha Republic Ltd. Is set to be a private limited liability Company that will
wholly own the Fasaha Café Brand, the Company will be owned wholly by the
Proposed Shareholder (In line with the Shareholders agreement attached to this
document)

The Fasaha Republic Concept is built upon the blending African Creative Arts
and “Arewa” inspired cultural themes into unique experiences around build
around casual dining, coffee houses and event spaces. Located in the
U.Rimi/U.Sarki area of Kaduna Metropolis, the Fasaha Café will provide high
quality food, coffee-based products, literature and arts and cozy work spaces to
the thousands of residents, workers and visitors in the Kaduna Metropolitan
area.

The establishment will provide a "complete, high-quality" experience for those

searching for something that is rapidly becoming popular among the ever-
growing Kaduna market. Not only will patrons be able to dine on "comfort" food
based upon time honoured, nostalgic traditional recipe, they will also have the
option of enjoying their coffee and desserts in the patio area over a relaxed
game of Ludo with friends, or pouring over our extensive collection of
Afrocentric Literature and magazine offerings in the Bookstore. Patrons will also
have a trusted location to be introduced to exquisite works of art that tell our
cultural stories in our voice. And for those who wish to be productive in today’s
distance working environment, our shared working space provides the ideal
location for e-meetings, or other work-related activities needed by Patrons.

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The cafe's aim is simple. It will provide a completely sophisticated, sensual, yet
casual dining and/or coffeehouse experience for the many Kaduna residents
and visitors who frequent the city's casual dining spots and entertainment
venues. It will be an affordable venture for patrons, one that will encourage
them to return on many occasions. The menu will feature hearty fare of the type
that is frequently out of the reach of the typical young professional...out of reach
because time frequently prevents her/him from cooking hearty meals like those
featured on our menu. Finally, and quite significantly,

Vision
Our mission is to provide a much-needed space to explore and be a part of the
celebration of African inspired Creative arts and to develop and amplify “Arewa”
culturally inspired creativity to the world.

Mission
Our mission is to build and maintain a customer–oriented culture that will
encourage and nurture service excellence through cleanliness, quality and value
to meet the expectations, of our customers.

Objectives
▪ Attain a sales revenue approaching and surpassing N60, 000,000 by the end
of the first year.
▪ Targeting and maintaining a net profit of at least 60% by the second year.
▪ To cultivate monthly sales to reach N4,000,000 by the end of the fourth
month of operation, and N5,500,000 monthly by the end of the first year of
operation.
▪ Achieve an average of 30% return on investment yearly

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▪ Maintaining a healthy and adequate working capital to address our material
need and other obligations.

Our Critical Success Factor

The keys to success in this business are:
▪ Product quality: Food, coffee-based beverages, art and service spaces are
our products. They must be of the high quality and value.
▪ Service: Our patrons are paying to have a good time. Their experience will
suffer if service is not of the highest calibre. Each member of the staff will be
courteous, efficient, and attentive.
▪ Marketing: We will need to target our audience early and often. While the
business is located in a central and accessible location, many people in the
neighbourhood will need to be introduced to the Cafe.
▪ Management: We will need to have a firm grasp on food, beverage, and
labour costs. The dining/entertainment/coffeehouse experience must be
delivered in a fashion that will not only inspire repeat business, but
encourage word-of-mouth recommendations to others. Proper inventory,
employee management, and quality control is key.

The Value Proposition

We offer affordable and accessible menu items and entertainment as measured
by their inherently natural value, at an affordable price that will encourage
regular visits and repeat sales.

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OUR SERVICES

The Fasaha Café will offer the following:

▪ High quality food,

▪ Coffee-based products,
▪ Literature and arts and
▪ Work spaces

While the Cafe will initially focus upon the dining, coffeehouse, Bookstore, Co-
Working Space, Gallery and entertainment functions located on the immediate
grounds of the establishment, future expansion efforts will focus upon providing
full-scale event catering, theatre production space and other Cultural
development business opportunities that may arise.

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INDUSTRY AND MARKET ANALYSIS

Industry Analysis
In Nigeria the restaurant industry is made up of a combination of the Full-
Service Restaurant (FSR), Quick Service Restaurant (QSR) and the Limited-
Service Restaurants (LSR). The organised fast-food industry categorized under
the QSR is currently estimated at over N500 billion according to the Association
of Fast-Food Confectioners of Nigeria (AFFCON) and has grown at an annual
rate of 10% over the years, with an employment generation capacity of 500,000
people at the processing and retailing level.

Despite its growth rate, only a few QSRs thrive while many others struggle to
survive. Like many businesses in Nigeria, QSRs constantly face challenging
business situations. Many grapples with significant infrastructural deficiencies
and strive to master the changing dynamics within the fast-food market. While
some are subject to unfavourable industry regulations others are threatened by
stiff competition.

In the last couple of years, Mr Biggs and Tantalizers have had to raise bailout
funds to remain in business. With increasing levels of competition, stifling
business environment and evolving lifestyle and preferences of consumers, the
need for fast food restaurants to adapt, innovate and evolve in response to the
new realities of the 21st century, the QSR business has never been more critical.

While the other Full-Service Restaurants, mainly consisting of restaurants

serving local Nigerian dishes, is the largest channel in terms of value sales.
However, slow growth is expected in this channel as most Nigerians increasingly

8
opt for lower-priced Limited-Service Restaurants when seeking popular local
food options. Full-service restaurants, particularly other independent full-
service restaurants, are facing growing competition from Limited-Service
Restaurants offering Nigerian dishes at more affordable prices. Limited-Service
Restaurants thus have a stronger appeal for the low and middle income group
that cannot afford the more expensive menus offered by full-service restaurants.

However, the concept of a Café with an integrated approach of offerings fast

food, coffee-based products, literature and arts and work spaces – all in one -
is entirely new. Due to inadequate data available on this market trend, it will be
challenging determining the economic capacity of this trend. But from research
and data available most Bristol offers fast food and coffee-based products.

Market Analysis
Our market analysis identified the following key drivers as areas of opportunity
to service Fasaha Café customers:
▪ Consumers’ demand for a mixture of the of an integrated service offering is
on the rise; due to lifestyle and increasing work rate are two of the major
reasons why it is so. This trend is expected to increase in the coming years
as more people take on more challenging and demanding jobs.
▪ Family outings at is a common trend; In a fast-paced work environment
where parents work so hard with little time for the family, the need for family
outings has become more crucial. Spending quality time together as a family
has been known to foster bonding and unity among family members.
▪ Customers’ decision drivers on choosing outing location; customers prefer
quality of food, quality of service, cleanliness of the environment, and

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 ambience as key decision drivers.
▪ In addition to these decision drivers, the quality of frontline staff also
influenced the decision of customers. customer relationship management,
politeness and responsiveness are attractive values customers expect from
frontline staff.

Market Segmentation
Fasaha Café intends to cater to a wide customer base. We want everyone to feel
welcome and entertained. We have defined the following groups as targeted
segments that will contribute to our growth projections:

▪ The Business Person

▪ Couples
▪ Households
▪ The Destination Customer
▪ High-End Singles
▪ Tourists

These particular market segments are 25-50 years old, who have disposable
income, and are seeking upscale, trendy, and comfortable restaurant options.
These are the types of people who frequent our competitors in our ecosystem.
They are likely to spend more on experiences they perceive as unique,
cosmopolitan, and sophisticated. They are also the most open to trying
something new, foodwise, coffee-based products, and entertainment related
ideas or services.

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Target Market Size

We are primarily targeting 0.1% (i.e. 2,434) of the population of Kaduna

metropolis with an estimated population of 2,434,045 as at 2020, based on the
2006 population census annual growth rate of 3.18%. These estimated target
cuts across our market segment in Kaduna metropolis.

Factors Population Minimum Total Estimated

Estimated Daily Daily Value
Consumer Spend
N
N

Kaduna metropolis
Addressable (Based on 2016 2,434,045 2,000 4,868,090,000
Market population growth
rate of 3.18%)

Target Market in
Kaduna metropolis
Target is estimated at 2,434 2,000 4,868,000
Market 0.1% of the
population.

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COMPETITION

Direct and Indirect Competitors

Our direct competitors will come from Midway (formerly French Café), Habil
Café, 9 Star Bistro, and Not Just Burgers. They are Fasaha Cafes closest
competitors (relative to location).

And we expect to compete indirectly from Quick Service Restaurants (QRS) (i.e.
Ostrich Bakery, and Chicken Republic etc), Full-Service Restaurant (FSR),
Limited-Service Restaurants (LSR) and small-scale service operating units. They
include restaurants that offer local delicacies at lower prices, local food spots,
hotels, and local tea/coffee beverage outfit popularly known as ‘Mai Shayi’.

Competitive Comparison
Fasaha Café is a novel idea in its integrated approach to service sector offerings,
which provides one of the Cafes competitive advantages. However, Fasaha
Cafes closest competitors (relative to location) are Midway (formerly French
Café), Habil Café, 9 Star Bistro, and Not Just Burgers. Midway Restaurant
integrates a full-service restaurant and bakery services offering more
continental meal options at significantly higher prices than our target price
range. Habil Café offers a Breakfast Café Menu, at a small location capable of
seating no more than 20 customers at a time. 9 Star Bistro, is more of a fast-
food service restaurant than a bistro. None of these establishments features a
traditional coffeehouse atmosphere, or a bookstore, shared working space or
gallery locations. Relative to the location of these establishments, Fasaha Café
is set to be strategically located straddling a thriving business district and
upscale and developing residential areas. Our location would even allow patrons

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from all these other establishments to finish their visit there with a visit to Fasaha
Café.

Competitive Edge
Fasaha Café maintains a competitive edge in several significant areas:
▪ The facility's location puts it into close proximity to substantial populations
of affluent Kaduna Metro residents.
▪ The facility’s construction will easily allow for flexible
dining/coffeehouse/bookstore/gallery and entertainment options making it
attractive to numerous populations.
▪ Fasaha Café’s shareholders through their business and community activities,
maintain an active and substantial network of professionals, businesses and
target population individuals in and around the Kaduna Metropolitan area.

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SWOT ANALYSIS

The following SWOT analysis captures the key strengths and weaknesses within
the company, and describes the opportunities and threats facing Fasaha Café:

Strength
▪ Our strength lies in the experience of our team, we will have a team with
world class experience in the restaurant and hospitality industry.
▪ The Comfort of our facility with cozy dining space and an elegant decor will
create a lasting impression in the minds of our customers.

Weakness
▪ It might take some time for our business to gain wider acceptance in
ecosystem.

Opportunities
▪ Recent government policies focused at improving growth in the hospitality
industry will support our growth objectives.

Threats
▪ The existence of established Café businesses in Kaduna metropolis where
our target market exists.
▪ The activities of our indirect competitors.

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OPERATIONS PLAN

Registration, Licenses and Permit

Legal requirement Status Frequency of payment

Corporate Affairs Registration Work in Progress One off

Tax Identification Number Work in Progress One off

Insurance Policy Work in Progress Annual

Product Trade Mark Work in Progress One Off

Kaduna State Regulatory Fees Work in Progress Annual

& Permit

Location
Fasaha Café is located in Kaduna Metro. Our market has been carefully selected
and tested for the necessary demographics and retail traffic necessary to meet
the goals laid down for profitability. Based upon a successful demographic
model and a traffic count of more than 500 cars daily, the busy Midtown
commercial/residential location was chosen.

Operating Criteria
Fasaha Café will be opened 7 days a week requiring double shift. The Manager
will prepare the schedules. The schedules will be prepared in a manner that will
allow the ability to increase or decrease hourly labour according to the sales
volume in order maintains a consistent labour cost control.

Proper labelling and rotation techniques, accompanied by ample storage

facilities will ensure that high quality prepared food, coffee beverages and
drinks will be sufficiently available to meet the demands during peak business

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hours, weekends and celebration period. We will continuously be taking stock
of our inventory to ensure we don't run out of stock.

The manager and the chef will be responsible for ordering, receiving and
maintaining sufficient inventory to meet production demands. Ordering
schedules will be staggered with perishable items being ordered multiple times
per week to preserve freshness. The restaurant layout which includes kitchen,
dining, coffeehouse, Bookstore, Co-Working Space, Gallery and Entertainment
functions located on the immediate grounds of the establishment. Personnel
work schedules will be designed for efficiency and flexibility to accommodate
the fluctuation in customer traffic and peak meal periods.

Upon arrival customer will be greeted immediately with a warm welcome by the
Porter/Security and will be directed to the service line where the customer will
place an order from the varieties of the delicacies on the menu displayed on the
counter. Once the customer’s order is taken, the order will automatically be
printed when the food is served.

The kitchen preparation line has been designed to be operated by a minimum

Staff of 1 Line Cook and a maximum of 2 Cooks for a start. This design allows
line Staff to be adjusted to the business volume.

After each shift, all monies will be remitted to the manager at the end of each
shift. The closing shift will involve designated closing duties that will leave the
café clean and fully prepared for the next day.

Fasaha Café will serve a variety of local home-style Nigerian delicacies,

international delicacies, confectionery products and coffee-based products.
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The café will open 7 days a week with hours as follows:

Days Time
Monday 7:00am - 10:00pm

Tuesday 7:00am - 10:00pm

Wednesday 7:00am - 10:00pm

Thursday 7:00am - 10:00pm

Friday 7:00am - 10:00pm

Saturday 7:00am - 10:00pm

Sunday 10: 00am - 10:00pm

Note: The schedule is subject to review

Suppliers
Fasaha Café will buy from a select group of suppliers and distributors. Direct
Sales relationships will be established with fresh produce, meat, poultry and
seafood distributors based in Kaduna Negotiations are already underway to
establish direct relationships with high-end baked goods and confectionary
suppliers, publishing houses and creative arts managers and curators across the
country. The cafe will receive substantial discounts from artists and artisans
participating in the manufacture of signature pieces of dinnerware, furniture,
lighting, and sculpture to be featured at the Cafe.

Technology
The unique Brand logo for the Café will be trademarked upon completion and
this protected by federal trademark laws. All of our menu creations will not
necessarily have the same protections, however, when possible, popular "trade-
names" will be protected. The business of The Café is not dependent upon
process technology or patentable inventions.

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SALES AND MARKETING PLAN

Sales Strategy
The first category of our sales strategy is to establish and maintain a position
with our primary constituents:
▪ The upscale and upwardly mobile professional Kaduna Metro in town
resident. We will depend upon keeping these people happy with our Books,
food and beverage products and entertainment options.

▪ Our second strategy is to target sales to surrounding businesses (particularly

banks and government MDAs) for regular business lunch and dinner
entertaining.

▪ Our third strategy is to target businesses and individuals and social groups
(or facilitate the creation of such groups where possible) to create a “private
function/party” for their regular meetings – for example, Café Book Club,
Kaduna Art League, Kaduna Horticultural Society, etc.

▪ Our Fourth, will target tech-businesses and start-ups directly or through

meeting spaces like the Kaduna Business School, KADIPA etc.

Sales Forecast
Our sales forecast accounts for change in cost of prices, which is a reasonable
assumption for the last few years.

We are expecting to increase sales from N61,200,000 (Sixty One Million Two
Hundred Thousand Naira) at the end of 2021, to N67, 320,000 by the end of

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2022. The growth forecast is in line with the restaurants in the area and is tied
to the projected increase in population of the immediate area.

The combined sales figures (across all sale items for the restaurant and coffee
shop) presume an average of 0.6 "turns" per day for a 50 seat dining Capacity
with an average tab of N4000 and 15 walk in/order out with the same average
tab; 20 books sold per month with an average tab of N5, 000 and an average of
0.5 turns per day for the 10 seat co-working space with an average tab of N2,
500. The business will be open an average of 26 days per month.

The projections intentionally do not factor in increases in holiday traffic bump

and special events which may occur during the course of the year to reflect a
more modest approach to projections

Marketing Strategy
The most important element of our marketing strategy is the delivery of a
quality product. Our space, food, beverage, books, and entertainment products
must first sell themselves through word of mouth.

Next, the packaging of Fasaha Café and external messages have to fit our
positioning. We offer an upscale feel without a required "pinch" in your wallet.
We then communicate this through the free weekly media, radio advertising on
particular lifestyle-oriented shows.

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Sales Programs
Our specific sales programs:
▪ Special Event Sales: Develop opportunities to sell to companies for private
parties and special events. The specific responsibility is with the shareholders,
and business Manager.
▪ Creative Arts and Lifestyle Related Special Events: Develop relationships with
artists and managers in the area to feature artists rising in popularity,
through live performances, exhibitions, and events

Strategy and Implementation Summary

Fasaha Cafes strategy is based upon targeting and serving:
▪ The upscale and upwardly mobile professional Kaduna Metro in town
resident. This urban professional works long hours and has relatively little
time to cook at home. She/he has an active social life and spends a
substantial amount of disposable income maintaining it.
▪ The growing Expatriate community in Kaduna Metropolis
▪ The upscale and upwardly mobile Kaduna Metro in town resident who yearns
for creative art spaces similar to those available in Abuja & Lagos, that have
become less available given the dramatic decline of business travels and shift
in lifestyle occasioned by the COVID pandemic
▪ The growing young professionals, particularly tech-based start-up
employees and entrepreneurs that require a workspace without the need for
an office space
▪ The many downtown businesses which regularly use restaurant dining as a
function of conducting business.
▪ The tourist and convention populations cantered in Kaduna.

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Pricing Strategy
Our food, drinks, and entertainment options are priced to give us an attractive
margin while at the same time offering value to the consumer. We want repeat
business. We also want the experience to remain fresh. Therein lies why the
food, beverages, and musical/entertainment programming will be relatively
flexible.

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MANAGEMENT PLAN

Management Structure
Fasaha Café is owned by a limited liability corporation Fasaha Republic Ltd.
Including Joseph O. Ike and Partners/Shareholders. Mr. Ike will also operate as
general manager/managing partner. Crucial employees include an additional
manager who will assist in maintaining and reviewing operations of the
restaurant, Café, books and the entertainment venue/bar, and a chef who will
manage kitchen operations.

Additionally, an assistant manager/senior server and a sous-chef/line cook will

perform secondary management functions. Part-time personnel will be hired to
handle bartending, serving, and dishwashing functions.

Business Structure
Fasaha Café is owned by Fasaha Republic Ltd, with shareholders including
Joseph O. Ike who will also operate as general manager/managing partner.

An additional manager (to be hired) will assist in maintaining and reviewing

operations of the facility.

A chef (to be hired) will manage kitchen operations and be crucial to

maintaining food inventory stability and assistance in menu development.

An assistant manager/senior server (to be hired) who will be a salaried

employee, will provide regular table service as well as assistance to the manager
and the general manager.

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Additional personnel will be hired to handle bartending, serving, and
dishwashing functions.

The marketing, and accounting function will be handled by independent

contractors/consultants.

Personnel Plan
The personnel plan calls for hiring 11 full-time salaried employees at start-up.
Any additional hires will be part time and devoted to the expansion of any
catering function, as well as increased capacity/operation of a private party
function.

Employee salaries are as follows:

SN Designation Nos Gross Total

Salary N
N
1 Owner/General Manager

2 Asst Manager 1 80,000 80,000

3 Chef 1 35,000 35,000

4 Café Assistants 4 30,000 120,000

5 Bookstore Assistants 2 30,000 60,000

6 Cleaners 2 20,000 40,000

7 Security 2 20,000 40,000

Total 375,000

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FINANCIAL PLAN

Assumptions

Our financial forecast was made considering the underlisted assumptions:

S/N Description Value

1. Inflation rate (%) 17

2. Company tax rate (%) 20

3. Annual Revenue Growth Rate (%) 30

4. Annual Expenses Growth Rate (%) 15

5. Working Capital (in Days)

Receivable 1

Payable 7
Inventory 14

6. Depreciation Rate (%) 10%

7. Projected Investment Capital (N) 51,310,000

9. % of Asset to Investment Capital 38%

10. % Working Capital to Investment Capital 62%

11. Opening Inventory provision (in Months) 12

1. Opening working capital provision (in Months) 12

14. Monthly Sales Variance due to seasonal activities 100 – 120%

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Cost Estimations & Projections
The cost estimate below provides an overview of the projected start up cost
for asset and working capital:

Start-up Cost Chart

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0
Tangible Asset Direct Cost Operating Cost

Fixed Asset (Tangible asset)

S/N Particulars Amount

1. Building Construction Works 6,000,000

2 Building Renovation 10,000,000

3 Space Equipment/Materials 1,750,000

4 20 KVA Generator 500,000

5 Furnishing & Fittings 1,500,000

Total 19,750,000

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Working Capital
S/N Description Unit cost Frequency Duration Amount
(N) (N)

Direct Cost

1. Books & Art Supplies 500,000 4 12 months 2,000,000

2. Bistro/Café Consumables 1,000,000 6 12 months 6,000,000

Total (a) 8,000,000

Operating Cost

3. Rent 1,500,000 10 10 Years lease 15,000,000

4. Salaries & Wages 375,000 12 12 months 4,500,000

5. Utility Bill
PHCN 20,000 12
Water 5,000 12 12 months

Diesel 20,000 12
Cooking Gas 25,000 12 840,000

6. Repairs & Maintenance 20,000 12 12 months 240,000

7. Internet Subscription 50,000 12 12 months 600,000

8. Marketing & Promotion 200,000 6 12 months 1,200,000

9. Contingency 50,000 12 12 months 600,000

10. Fees & Permit 1,000,000 1 12 months 1,000,000

Total (b) 23,980,000

Grand Total (a+b) 31,980,000

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Total Cost of the Project

S/N Particulars Sub Total Total

N N
1. Fixed Asset

Tangible Asset 19,750,000 19,750,000

2. Working Capital

Direct Cost 8,000,000

Operating Expenses 23,980,000 31,980,000

3. Total Cost of the Project 51,730,000

Financing
This business will be financed by investors and owner’s contribution. The
investors contribution will be sourced from interested entities or individuals, and
these investments will be done based on agreeable terms by the parties
involved.

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Revenue Model

Fasaha Café will generate revenue from Café, Book Store, Bistro, Gallery, Events
and Co-Working Space

Revenue Model Chart

10% 16%

3%
20% café
Bookstore
Bistro
Gallery
31%
20% Events
Co Working Space

Cashflow Analysis

Fasaha Café expect its cashflow at positive region in its first year and this
position will continue into the second year and beyond. With a steady and
healthy growth in our revenue and efficient cost management measure, we
project an annual positive cashflow balances for the projected period of
operations.

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Our cash operating cycle, and each of the elements in the cycle, will be managed
to ensure that the investment in working capital is not excessive nor too small.
Fasaha Café will adopt an aggressive working capital policy by keeping our
working capital at a minimum, in order to increase our profitability and have
sufficient liquidity to meet our payment commitments as they fall due. We want
to finance growth mainly through cash flow. We recognize that this means we
will have to grow more slowly than we might like.

Cashflow Highlight
70000

60000

50000

40000
THOUSAND

30000

20000

10000

0
Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

-10000

-20000

-30000

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Breakeven Analysis

Fasaha Café project to reach breakeven in the first quarter of its fourth year of
operation and this will occur when the project pays back the total investment of
N51,730,000. To determine the payback period, we adopted the Payback
method of Investment Appraisal to ascertain our breakeven point considering
our yearly cash inflows and cumulative end of year cash position as shown in
the table below:

Year Cashflows Cumulative Cash

Position at the end of
the year
N N
0 (15,725,893) (51,730,000)
1 (3,915,000) (55,645,000)
2 18,414,000 (37,231,000)
3 28,238,850 (8,992,150)
4 41,344,253 32,352,103
5 58,755,222 91,107,324

The project payback period is thus:

3 + (8,992,150/41,344,253) X 12

3 + 2.61

3 years 3 months

The PBP is approximately 3 years 3 months

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Projected Income Statement

unit Year 1 Year 2 Year 3 Year 4 Year 5

'000 '000 '000 '000 '000

Revenue

Sales Revenue ₦ 30,240 39,312 51,106 66,437 86,368

Total Revenue ₦ 30,240 39,312 51,106 66,437 86,368

Direct Costs ₦ 8,000 9,200 10,580 12,167 13,992

Gross Profit ₦ 22,240 30,112 40,526 54,270 72,376

Salaries and Wages ₦ 4,500 4,725 4,961 5,209 5,470

Rent ₦ 15,000 - - - -

Utility Bill ₦ 840 966 1,111 1,278 1,469

Repairs & Maintenance ₦ 240 252 265 278 292

Marketing & Promotion ₦ 1,200 1,260 1,323 1,389 1,459

Contingency ₦ 600 660 726 799 878

Fees & Permit ₦ 1,000 1,000 1,000 1,000 1,000

Audit Fees ₦ 200 200 200 200 200

Internet Subscription ₦ 600 660 726 799 878

Depreciation ₦ 1,975 1,975 1,975 1,975 1,975

Operating Profit ₦ (3,915) 18,414 28,239 41,344 58,755

Interest Expense ₦ - - - - -

Profit Before Tax ₦ (3,915) 18,414 28,239 41,344 58,755

Taxation ₦ - 3,683 5,648 8,269 11,751

Profit After Tax/Net Income ₦ (3,915) 14,731 22,591 33,075 47,004

31
Projected Statement of Financial Position

unit Year 1 Year 2 Year 3 Year 4 Year 5

'000 '000 '000 '000 '000

Assets

Current Assets

Cash & cash equivalents ₦ 30,114 50,155 80,295 123,523 184,142

Accounts Receivable ₦ 83 108 140 182 237

Inventory ₦ 307 353 406 467 537

Total ₦ 30,504 50,615 80,841 124,172 184,916

Non-Current Assets

Property, Plant and Equipment ₦ 17,775 15,800 13,825 11,850 9,875

Total Assets ₦ 48,279 66,415 94,666 136,022 194,791

Liabilities and Equity

Liabilities

Accounts Payable ₦ 464 186 198 210 223

Tax Payable ₦

Total ₦ 464 186 198 210 223

Non-Current Liabilities

Long Term Loan ₦ - - - - -

Shareholder's Equity

Investment Capital ₦ 51,730 51,730 51,730 51,730 51,730

Retained Earning ₦ (3,915) 14,499 42,738 84,082 142,837

Total ₦ 47,815 66,229 94,468 135,812 194,567

Total Liabilities & Equity ₦ 48,279 66,415 94,666 136,022 194,791

32
Projected Cash flow Statement

unit Year 1 Year 2 Year 3 Year 4 Year 5

'000 '000 '000 '000 '000

Operating Activities

Net Earnings ₦ (3,915) 14,731 22,591 33,075 47,004

Plus: Taxation ₦ - 3,683 5,648 8,269 11,751

Plus: Interest Expense ₦ - - - - -

Plus: Depreciation ₦ 1,975 1,975 1,975 1,975 1,975

Minus: Changes in Working Capital ₦ 74 (348) (74) (91) (111)

Net Operating Cashflow ₦ (1,866) 20,041 30,140 43,229 60,619

Investing Activities

Purchase of CAPEX ₦ (19,750) - - - -

Net Investing Cashflow ₦ (19,750) - - - -

Financing Activities

Investment Capital ₦ 51,730 - - - -

Loan taken ₦ - - - - -

Loan repayment ₦ - - - - -

Loan interest ₦ - - - - -

Net Financing Cashflow ₦ 51,730 - - - -

Cash Generated During the Year ₦ 30,114 20,041 30,140 43,229 60,619

Cash at Beginning of Year ₦ 30,114 50,155 80,295 123,523

Cash at the End of Year ₦ 30,114 50,155 80,295 123,523 184,142

33
Ratio Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Financial Performance Ratio

Return on Capital Employed -8% 28% 30% 30% 30%

Return on Asset -8% 28% 30% 30% 30%

Profit/Sales Ratio -13% 47% 55% 62% 68%

Asset Turnover Ratio 0.6 times 0.6 times 0.5 times 0.5 times 0.4 times

Net Profit Margin -13% 37% 44% 50% 54%

Gross Profit Margin 74% 77% 79% 82% 84%

Working Capital Efficiency Ratio

Average Receivables Days 1 days 1 days 1 days 1 days 1 days

Average Time For Holding Inventory 14 days 14 days 14 days 14 days 14 days

Average Time to Pay Suppliers 21 days 7 days 7 days 6 days 6 days

Liquidity Ratio

Current Asset 66 times 271 times 409 times 591 times 828 times

Quick Ratio 65 times 270 times 407 times 589 times 826 times

Debt Ratio

Debt to Equity Ratio 0% 0% 0% 0% 0%

Gearing Ratio 0% 0% 0% 0% 0%

Interest Cover 0 times 0 times 0 times 0 times 0 times

Working Capital Cycle (In days) (In days) (In days) (In days) (In days)

Average Inventory Holding Period 14 14 14 14 14

Average Trade Receivable Collection Period 1 1 1 1 1

15 15 15 15 15

Average Time to Pay Suppliers (21) (7) (7) (6) (6)

Cash Operating Cycle (6) 8 8 9 9

34