1.

0 EXECUTIVE SUMMARY

NAME OF BUSINESS:

SOOBII HOTELS

LOCATION OF HOTEL

EJISU ASHANTI REGION

BUSINESS ADDRESS:

P. O. BOX M 114

EJISU- ASHANTI.

TEL: 233 – 0249550242

OWNERSHIP:

The Company is owned by Amponsah and wife, all Ghanaians.

BUSINESS ACTIVITY:

The company is a start-up and it is aim at providing first class hospitality

industry to solve the acute hospitality problem outskirt Kumasi.

PROJECT PROPOSAL:

The proposal seeks to raise a loan facility of nine hundred thousand

Ghana Cedis (GH¢900,000.00) to put up an edifice for and acquisition

of equipments and logistics to start hospitality industry outside Kumasi.

FINANCIAL SECURITY

1
The fixed assets of the company and other landed properties will be used

to secure the loan.

OBJECTIVE

As a short-term objective it is our intention to provide quality hospitality

for the numerous potential customers in Kumasi outskirt. It is to

decorated and provides spacious space to customers such as those in

wedding spree party conferences and educational seminars.

To create conducive atmosphere for merry makers and entertainers such

as the musicians and dancers.

To make the place a recreational environment for holiday makers by

creating swimming pool and other recreations.

To let wireless connected to the televisions channels so that football

enthusiasts can have fan while at the place.

To operate restaurant and bar so that could guide the inners or the

customers to make choices on both local and international dishes.

SOCIO-ECONOMIC BENEFITS:

2
The company will offer employment opportunities to 20 people for a

short term period, training services for the employees and generate

income to the government by paying taxes. The Company also will

construct the road linking the facility and Ejisu township which would

boost traffic movement.

1.1 INTRODUCTION

This report has been prepared by the Management of SOOBII

Company limited. It is a private liability company which could

assist it to secure financial assistance from all financial institutions.

The couple also has two buildings and a provision store which

could be used as guarantors to secure loans from the financial

institutions.

1.2 MISSION STATEMENT

SOOBII Hotels intend to deliver the best of its services to its

customers for them to enjoy quality hospitality industry. This will

be done at a reduced rate as compared to other competitors rate

3
 to enable our customers enjoy our services. We hope to be

successful through our commitment as well as customer

satisfaction.

1.3 AIMS AND OBJECTIVES OF REPORT

i. To determine the total operating cost and revenue which will

accrue to the project?

ii. Assess the environmental impact of the project on the economy.

iii. Assess the socio-economic impact of the project on the

community, District, Regional and the National Economy.

iv. Make a recommendation to financial institutions for consideration.

v. To identify and provide any other relevant information relating to

the project which will enhance decision making of the project.

vi. To ascertain the total investment cost of the project and the mode

of financing it.

vii. To determine the economic, financial and technical feasibility of

the project.

2.0 COMPANY AND BUSINESS BACKGROUND

2.1 The Company

The SOOBII Hotels Company Limited is a private Limited

Liability company incorporated under Ghana’s Company Code

4
 1967 (Act 179) on 1st April 2011 with the registration number

SS/B/04/2011 and wish to commence business on 1st September

2012.

The hotel is to be established in Ejisu to provide secular hospitality

industry for the people in the community and in the outskirts of

Kumasi in general. SOOBII Hotel

The company is wholly owned by Amponsah Livingstone and the wife

Gladys Amponsah. The company has Eugene Amponsah,Esmond

Amponsah, Isreal Amponsah and Benard Amponsah as successors incase

of eventualities.

2.2 Current status

SOOBII Hotel is to be set-up in the outskirt of Kumasi in a

community close to Kumasi called Ejisu. All the legalities on the

establishment of hotel has been completed which include the

acquisition of the land, registration of hospitality company to

operate as part of the hotel delivery services in Ghana has been

completed.

SOOBII has been given the opportunity to operate as hotel to

provide essential services such as provision accommodation,

restaurant to be furnished with special, foreign local dishes,

conference rooms for trainings and seminars. It has been registered

5
 and has been the trade mark to abide by rules of tourist industry

which could sue and could be sued for wrong practice. It is also

accessible by road and other communication networks. Electricity

supply to the area is very vibrant but due to the recent national

energy crisis the company has thought it wise to purchase a

1000kwt to be used in case we experience power crises.

2.3 Project Objective

The company’s objective is to produce high quality quality

hospitality industry to meet the increasing demand for

accommodation in Kumasi and its suburbs especially during

special occasions. SOOBII hotel is to provide quality hospitality

services at affordable prices.

2.0 MANAGEMENT TEAM

3.1 Organizational Structure

The company has a Board of Directors comprising the promoters

and experienced individuals who provide us with an efficient

6
 leadership and service for the smooth and successful management

of the business.

The company has been structured into four (4) main departments,

namely

1. Public Relations officer.

2. Administrative Manager

3. Accountant

4. Research and Development

The company’s organizational chart is structured to reflect these

departments. The SOOBII hotel organizational chart is shown

below.

BOARD OF DIRECTORS

MANAGING DIRECTOR

SECRETARY

GENERAL MANAGER

7
Chief Marketing Manager chief Public Relations
Matron Accountant manager

Research & Clerks Accounts Administrative

Development officers officers
Officer

Labourers/Security

3.2.0 Functional Responsibilities

The Board of Directors

The board comprises the Chairman and other directors with the

sole responsibility of formulating corporate policies and the

objectives as well as yearly business goals. It is an overall policy-

making body of the company.

The Managing Director

8
The Managing Director is responsible for developing and

maintaining a suitable organizational structure and employing

competent executive personnel. He/s is equally responsible to the

Board of Directors for formulating company policies. He approves

divisional or departmental policies formulated by all other

departmental heads. He is responsible under the direct supervision

of the Board of Directors, attaining long-term growth. He is also

responsible for the day-to-day administration of the company.

Secretary

The secretary will provide administrative assistance to the

managing director and other departmental heads to carry out their

duties.

General Manager

The General Manager performs duties relating to the general

management of the company. It is also his/her responsibility to

ensure the proper management of all aspects of the company’s

activities for the realization of maximum profits consistent with

long range interest of the company’s employees and its corporate

customers. His/Her specific duties include the following. Guide

and assist the Managing Director in developing basic company

9
 objectives for both long-term and short-term operations. Take care

of issues such as financial management, information management,

human resource management, regulatory and legal issues and

general operations to support management, review for the purpose

of approving policies recommended by various departmental heads

to ensure that all members of the different departments are aware

of corporate objectives and perform their functions to accomplish

these objectives. The General Manager is responsible to the

Managing Director and all other departmental heads report to him.

The Public Relations Manager

The principal functions of the public relations manager are:

 Lease well with the company and the outside world.

 Ensure that the hospitality has good image outside.

 Maintain good communication flow in and outside the

hospitality.

Accountant

The accountant performs the following roles:

1. Responsible for keeping proper books of accounts

10
2. Credit and expenditure control

3. In charge of internal control of social amenities

4. Budgeting and budgetary control

5. Cash flow, profit and loss accounts.

6. Preparation of monthly and periodic and annual statements

The Marketing Manager

The marketing manager performs the following roles:

1. Ensure that the needs and demands of its target market are

provided at the right place and period

2. Promote and sell the company’s products and ensure the effective

distribution and pricing of the services.

3. Responsible for making the new services known to the public

4. Developing and implementing marketing plans and evaluating the

results.

5. To keep data of its valued customers

Research and Development Manager

The Principal function of the research and development manager is

to undertake effective research toward the growth and development

of the hotel. Researching into the things that can make the

services provided attractive to the potential customers.

11
 Researching and developing scientific methods that will make the

hospitality number one in the environs.

3.3 Manpower

The company’s total workforce is 20 of which 5 are in the

management level and 4 are middle level officers. The rest are the

low level employees of the various departments.

3.4 Résumé of Key Personnel

Amponsah Livingstone is the Managing Director and also the

chairman of the Board of Directors of SOOBII hotel Company

Limited. He attended Tema Secondary School at Tema where he

obtained his “O” Certificate. He continued to Labone Secondary

school for the “A” Level. He went to the University of Ghana to

read Business Administration and had better honours. He traveled

to Australia where he was trained as a hospitality research officer

and worked as a research assistant in “All nations hospitality” in

Australia from 2000 to 2006 developed an interest in hospitality

industry. Ms. Anning Lucy is the General Manager of the

company. She is a graduate from the University of Education,

Winneba, Kumasi with a Degree in Bachelor of Business

Administration (Management Option). She worked as an

12
Administrator in Komfo Anokye Teaching Hospital for four years

before resigning to take up the post as a general manager.

She also worked with the National Board for Small Scale

Industries (NBSSI) as Project Officer in charge of credit and

investment as well as a trainer in marketing for small-scale

business. She has also worked as Project Consultant for Boamah

Chamber of Commerce and Accountancy Services.

Ms Anning Lucy has over six years experience in management and

brought to bear her experiences in the operations of the company.

Attah Kofi Samuel is the Production Manager of the company. He

holds a degree in Business Administration from University of

Education Winneba, Kumasi. He has extensively undertaken a lot

of research into hospitality industry for the past six years. He has

also worked as Production Manager for Anita hotel

Kwame Nyame Domfeh is the Chief Accountant. He holds a

degree in Business Administration from Kwame Nkrumah

13
 University of Science and Technology,Kumasi. He has worked

City hotel for the past four years and has gained lot of experience

in the hotel industry

4.0 PRODUCT AND SERVICE

4.1 Service Description

The SOOBII Hotel Company Limited is into the provision of high

quality hospitality service. The service includes the provision of

accommodation of well furnished single and master bedrooms for

the potential customers. All the rooms are connected to the various

networks to access internet for information. The company also

makes provision for restaurant to provide special, foreign dishes to

all customers. The company makes provision for platform for

entertainments to the customers, these include swimming pool,

gymnastics, sports arena or centre for sports enthusiast to view both

local and international matches on television. There is provision of

conference rooms for seminars, wedding ceremonies, and other

educational programmes.

4.2 Marketing plan/ strategy

14
The market for the hotel business has been critically analyzed. It has

been discovered that a lot of conferences and other activities take

place in Kumasi and its suburbs which makes establishment of hotels

outside Kumasi necessary. Most of hotels establish in the area (Ejisu)

do not have well furnished master standard bedrooms, conference

rooms internet access, standard restaurant and other entertaining

centres to help customers and visitors hence the establishment of

SOOBII hotel in Ejisu to provide first class of these services.

With this the hotel or the company would be able to establish pricing

distribution and promotional strategies that would allow it to

profitable and competitive within the competitive environment. The

environment considering the market will make the business grow

about 20% annually and by five years the facility and the customer

would multiply by 100%.

The people in the community and Kumasi are football or sports

enthusiast and the company has put upon itself to expand the

sporting facilities such as the swimming gymnastics and watching

international matches such the UEFA championship, La Lega,

English premiership and others. The facilities would be increase to

meet the enthusiastic demand of these programmes. More of the

labtops technicians are going to be embarked on so as to meet the

increasing assurance of global village based on information

15
 assessment. The sophiscated equipment are going to installed to meet

the challenges in the various conference rooms so as to enable users

meet their challenges and reach out their goals.

4.3 The market.

The market for the service is very large but the targeted one needs

vibrant concentration of meeting the current needs that could satisfy

their interest such as sports, entertainment and educational seminars.

Even though the competitors get many customers to their business

but they lack modern gadgets and equipment such as internet, media

networks and gymnastic tool tools.

SOOBII hotel services have the notion to be abreast with time in

technology so as to sustain and increase the patronage services. The

government has also decided to build inland port in the Ejisu-Juaben

municipality which acts as catalyst to the hospitality industry. Thus

the visitors or strangers that may come to deposit and convey their

goods may need a well furnished and modernized hospitality

industry which SOOBII hotels is in for.

The target market for the SOOBII hospitality industry is targeting

NGOs that run serminars to use the well furnished hotel, sports

enthusiasts to watch international stars in for a furnished, gadget

master bedrooms which constitutes the young-adult which keeps on

increase all the time.

16
 With the segmentation of the target market on geography, the people

or the customers could easily move from their various localities and

from Kumasi could take it as advantage hence very good location for

the facility. On the customer attributes, the customers are going to

compare both their prices and the facilities to make their choices and

since SOOBII hospitality industry is having the edge to put modern

facilities and the gadgets to attract customers at the premium.

The service oriented, SOOBII hotel would make it a priority to

research into the hospitality industry to come out modern ways to

attract potential customers into the hotel.

4.4 The Market Share (Demand)

The facility is to be constructed to target conferences, serminars,

business executives, MCEs or DCEs and the like.

..

4.3 Quality control

An important aspect of hotel keeping is quality control. The

company has put in place measures to ensure that the standard of

the facilities would be modernized and maintained to meet the

17
 satisfaction of the customers. The company conforms to acceptable

standards. Its facilities and equipment compared to those of its

competitors in the hospitality industry are unique. In furtherance

of the above, the quality control unit is maintained services are

subjected to various examination and inspection to ensure that the

services are of high quality. Also quality materials are purchased

for the service rendered. Management of the company attaches a

lot of importance to service quality since the demand for the

service is elastic and competition on the market is intense.

5.0 MARKET AND COMPETITORS

5.1 Economy

Ghana’s population is about 24 million according to the last

official population census, which was recently carried out. Based

on the population growth rate of 2.4%, Ghana’s population will be

about 25 million by the close of the year. The population structure

contains a relatively well-educated and competent middle-income

class and there is a pool of both business executives and holiday

makers. The population is predominantly youthful (about 48%

below 18 years). The main stay of Ghana’s economy is agriculture,

which employs about 60% of the labour force. Agriculture

contributes approximately 40% of Ghana’s GDP (excluding net

18
 indirect taxes) with the remainder split between service (33%) and

industry (27%). Ghana’s fiscal policy in recent times has tended to

focus on creating an enabling macro environment for private

businesses, which are considered as the engine of growth.

Governments has put in place various other policies all of which

are aimed at restructuring the economy, promoting private sector

participation in the economy and encouraging foreign investors

which still need standard hospitality industry. In this regard,

various initiatives, programmes and /or organizations have been

established to encourage the establishment of standard hotels of

which SOOBII is one.

Latest economic indications show that Ghana’s revenue generation

capacity both locally and internationally has improved

commendably. This is possible because tourism is making

immense contribution of which hospitality industry is making the

greatest impact.

5.2 Golden Age of Business

The government has committed itself to establishing a new ‘Gold

Age’ for the private sector. The government therefore envisages an

19
 economy where the production and distribution of goods and

services will be principally the business of the private sector.

Government envisions private sector has the principal source of

economic growth, the generator of employment opportunities and

the creator of the resources for social progress.

5.3 The Hospitality Industry in Ghana.

In Ghana the hotel business are among those

6.0 SWOT ANALYSIS

6.1 Strengths

Managerial Competence

The management of the Hotel has the exquisite technical and

professional competence to run the business. Their long years of

experience combined with their training would impact positively

on the company. They are knowledgeable, experienced, and

capable to run the company successfully.

20
Quality of Service

The service of SOOBII Hotel will be quality and unique such that

any potential customer who need better service and conducive

environment to rest and relax would not leave Soobii hotel behind.

The facility has free access to internet, gymnastics and swimming

which make it unique in the competitive environment. The

establishment is also a two-Star hotel which may give the chance to

the middle income customers who like to enjoy modern facilities

but cannot afford the three-Star hotel to be lured to SOOBII hotel

for satisfaction. SOOBII hotel will be highly patronized because of

its high quality nature of service and competitive prices. It can be

used to patronize special, foreign and local dishes.

Location

The strategic location of SOOBII hotel and its easy accessibility by

road and other communication facilities are the strength of the

company. It also has a reliable supply of electricity and water.

21
6.2 WeaknessesThe establishment is found in well competitive

environment which continuous modernization of facilities and

recruitment of qualified personnel could help sustain the business. The

facility is also outside Kumasi and is problem.

6.3 Opportunities

6.3.1Ghana’s Industrial Policy

The Investment Act of 1994 has made provisions for exemptions

from certain obligations for establishments that are located outside

the capital cities. Some of these cover the company’s tax

obligations and other allowances. The government’s policy to

develop the hospitality sector into a giant opportunity for hotels to

spring up to boost tourist attraction.

6.3.2 Ghana’s Political Environment

The current political stability in the country augurs well for the

growth and development of the private sectorespecially tho

whowant to into the hospitality industry. The main focus of the

government is the private sector which is deemed as the main

engine of growth of the economy. SOOBII hotel is in a unique

22
 position to take advantage of the above opportunity to expand

production to meet the ever-increasing demand for well furnished

and modernized hotels.

6.4 Threats

6.4.1 Competition

The place is already engulfed with lodges and hotels and SOOBII

hotel needs to do intensive promotion bear the regular cost of

modernize the facilities to be ahead of customers’ satisfaction to

breakthrough.

7.2 Advertisement

To inform customers of the availability, desirability and the quality

hotel services, plan to utilize FM stations, the print media and TV

stations to advertise and promote its services available.

7.3 Product Development Strategy

The service strategy is focused on turning out quality end services,

which have significant customer appeal. The company has already

23
 adopted a very elaborate packaging strategy. SOOBII hotel

Company Limited is aware that effective packaging is the silent

salespersons.

7.4 Sales Administration

A well-motivated sales team will be recruited. A well managed

credit policy will also be instituted to assist with the sales efforts.

The total interface of the marketing mix namely, product, price,

promotion, distribution (place) and market research (probing) will

also be managed to ensure the total success of the project.

7.6 Pricing

Pricing can make the difference between success and failure for

SOOBII hotel services. The Company has fixed its prices, taking

cognizance of the customer, the company itself and competition.

The pricing of GH25 cedis per well furnished air condition room

and GH400 cedis per well furnished air conditioned master

bedroom per day. The customers that want to enjoy swimming and

gymnastics pay GH5 in addition for a day. The TV channels and

internet are enjoy free of charge.

24
 The prevailing prices of the so called three-Star hotels in the same

community ranges between GH80 and GH120 cedis while the one-

STAR and the lodges are between GH 12 andGH150 cedis.

7.7 The Export Market and Entry Strategy

There is a large market in the West African sub-region with

characteristics identical to those of Ghana and SOOBII hotel

should explore this market.

The ECOWAS protocol and other socio-economic and legal issues

relating to tourism should however guide SOOBII hotel in its

attempt to enter these markets. The hospitality industry is generally

sensitive to quality and value for money and SOOBII hotel should

brace up for the challenge. A quality assurance team will be put in

place to monitor the market and advice management. The company

will need to ensure that its services are competitive with other hotel

from parts of the world.

The strategy of entry into the hospitality industry should include

advertisement in foreign journals, participation in internationally

standard hotel services.

25
8.0 FINANCIAL REQUIREMENT

8.1 Required Finance

SOOBII hotel will require a capital investment of GH940,000 to

start it activities. We already have contributed GH¢650,000 in cash

to put up the three storey building as fixed assets require require

for the project. an additional GH¢300,000 from any Bank or

Financial Institution would be appreciated.

All funds need to be in place by 3rd June 2012. This will enable us

to procure all our equipments and the building materials for the

take off.

8.2 Risk Management

The problem of robbery and burglary which is becoming rampant

in the Ejisu-Juaben Munupacity. We shall therefore take adequate

security measures to prevent the incidence of these illegal events

from having a negative impact on the business.

Maximum measures will be put in place to safeguard any

unforeseen problems such water shortage power cut etc. The hotel

will insure comprehensively against fire.

26
8.3 Loan Repayment

It is estimated that the loan would be repaid within three years. One

year moratorium period has been given. The principal amount has

been capitalized.

8.4 Profitability

The projected trading profit and loss statement in appendices

indicate that the project is profitable. The estimates show that the

project will yield a net profit of GH¢ 9729.61 in the first year of

operation.

The cash flow analysis (appendix) reveals that the project will

yield enough cash to meet its debt servicing obligation and

continue operations without any problems. The payback method

calculation (appendix) gives the payback of the project as 25%.

This compared to the cost of capital of 21% and the banking rate of

between 21.5 and 22% per annum show that the returns from the

project are highly favorable.

8.5 Financial Security

The assets of the owners will be used to secure the loan.

27
8.6 Economic Benefits

The project creates employment for thirty five (35) Ghanaians. It

also contributes positively to the government revenue generation

efforts through the payment of taxes.

9.0 FINANCIAL INFORMATION

9.1 PROFIT AND LOSS ACCONT FORECAST FOR TWELVE

MONTHS FROM 1ST JANUARY TO 31ST DECEMBER 2009

28
PROFTIT AND LOSS EXPLANATORY NOTES

See enclosed profit and loss forecast

SALES: These assumed figures represent revenue from services to be

rendered for each month. It includes revenue from the hire of the

bedrooms and the conference rooms . A revenue of GH¢40472 will be

realized.

29
MATERIALS: This refers to the needed resources which enable the

hotel to begin its actual operation. It includes bed sheets TV sets and

Laptops .It is estimated to be GH¢7717 for the year. The hotel would

expand its services 5% yearly and this will cause the cost of materials to

increase gradually by the intended percentage every year.

LABOUR: The company would decide to pay an amount of GH¢2,000

labour employed for its actual service rendered. The above stated amount

will be paid monthly.

COST OF SALES: It cost the company GH¢10117 to produce

262990 eggs yearly.

GROSS PROFIT: Based on our enclosed figures, we anticipate our

annual gross profit will be GH¢30355 even though it started with a loss

during the first month of operation.

WAGES & SALARIES: This is the fixed monthly payment that would

be made to management for the services they render to the company.

This will be totaled GH¢3940. Payment for casual labour is also included

in this figure.

ELECTRICITY: The estimated charge for the use of power (electricity)

is GH¢320 per year. This is dependent on the production capacity.

POSTAGE: GH¢20 was charged as mailing expenses on behalf of the

company during the first period of operation. This includes the cost of

sending information to potential clients.

30
FUEL AND REPAIRS: Fuel and repairs works was estimated to be GH

¢2230.This expenses pertain to motor van and other fixtures of the

company.

INSURANCE: An average fixed rate of GH¢45.83 is charged monthly as

an insurance premium based on a business insurance policy with

Vanguard Insurance Company.

ADVERTISEMENT: The media through which our products are

advertised are paid GH¢1400 per year but the monthly payment for the

forecasted value is subject to the events of the particular month. It has

been noticed that during festivities such as Christmas, Easter, Ramadan

etc. people demand for our products rises therefore the need for

aggressive advertisement. This has resulted in the varying cost of

advertisement for some months during the year.

BANK CHARGES: An amount of GH¢86 has been charged to be paid

to our bankers for the services they provide for us for the first year.

PROFESSIONAL CHARGES: Lawyers and Auditors who were

employed to offer special services were paid GH¢1000.

TELEPHONE: GH¢900 has been estimated against the years profit as

expenses for the use of telephone in the various offices of the company.

INTEREST ON LOAN: 8.3% representing GH¢250 will be made on the

amount payable each year as monthly interest.

31
DEPRECIATION: An annual depreciation of 20% is always charged

against the firms assets. This is subject to management policy.

TOTAL OVERHEADS: Badak company ends its accounting period

with an overhead of GH¢18193.

NET PROFIT BEFORE TAXATION: This is arrived after taking total

overheads from the total gross profit for the period. The amount was GH

¢12162.

TAXATION: The rate of tax charged on company’s profit is20%

NET PROFIT AFTER TAXATION: A total of GH¢9729.61 was

realized.

CASH FLOW EXPLANATORY NOTES

See enclosed cash flow forecast

SALES RECEIPT: See profit and loss forecast.

CAPITAL INTRODUCED: This represents our initial investment taken

from our personal savings which will remain in the business for the

duration of our trading life.

LOAN: The amount needed to finance the company is GH¢ 30000. This

expected loan from the bank is payable within three (3) years

32
TOATAL RECEIPTS: An overall value of GH¢75472 consist of total

sales for the year, loan expected from the bank, and the capital

introduced.

MATERIALS: See profit and loss forecast.

SALARIES: This includes both payments made to management and

labuorers employed in our company.

RENT: See profit and loss forecast.

ELECTRICITY: See profit and loss forecast.

POSTAGE: See profit and loss forecast.

FUEL & REPAIRS: See profit and loss forecast.

INSURANCE: See profit and loss forecast.

ADVERTISEMENT: See profit and loss forecast.

INTEREST ON LOAN: See profit and loss forecast.

PROFESSIONAL CHARGES: See profit and loss forecast.

TELEPHONE: See profit and loss forecast.

BANK CHARGES: See profit and loss forecast.

LOAN REPAYMENT: The rate of the loan repayment is 33% yearly for

three years. Thus GH¢10000 is paid yearly.

CAPITAL ITEMS: Includes all the assets of the company acquired for

the purpose of its operations.

TOTAL PAYMENTS: Badak company limited expects its total

payments for the first year to be GH¢52492.

33
NET FLOW: This represents an amount expected after taking our total

payments from our total receipts. This will be GH¢22974.04

CASH BALANCE: We started the business with no opening balance

but the closing cash balance was anticipated to be a total of GH¢22974.04

9.2 Balance Sheet

Badak Farm Company limited business plan balance sheet forecast

for 12 months as at 31st December, 2009

APPENDIX 3

BADAK FARM COMPANY LIMITED

BUSINESS PLAN BALANCE SHEET

FORECAST FOR 12 MONTHS AS AT 31ST DECEMBER, 2009

34
FIXED ASSETS COST NET
Building 8088
Equipment 150
Motor van 8500
Furniture and fittings 1000 17738.0
Less 20% depreciation (3547.6)
14190.4
CURRENT ASSET
Raw Material 2498.31
Cash at Bank 22974.04
25472.35

CURRENT 4933.14 20539.21

LIBILITIES 34729.61
Creditors

FINANCED BY:
Capital Introduced 5000.00
Add Net Profit 9729.61
Bank Loan 20000.00
34729.61
BALANCE SHEET FORECAST EXPLANATORY NOTES

FIXED ASSETS: It is composed of the building, equipments, motor van

and furniture. The net worth is calculated by taking depreciation of 20%

from it, giving a balance of GH¢ 14190.4.

CURRENT ASSETS

RAW MATERIALS: Refers to the unused feed and veterinary drugs of

the business.

35
CASH AT BANK: See profit and loss forecast

TOTAL CURRENT ASSETS: These comprise of the short term unused

raw materials and cash at bank.

CURRENT LIABILITIES:

CREDITORS: It is the policy of the Badak Company to decrease

creditors after the first year but will continue to take advantage of credit

given by other companies providing services such as materials, telephone

and advertising.

TAX LIABILITY: This is calculated from the tax due on the business’

profits as illustrated in the profit and loss forecast. The amount

represented is the proposed which will be paid in the next accounting

period as required by Law.

ACCRUED EXPENSES: This includes some of the expenses captured

in the profit and loss account that were outstanding as at the end of the

first year forecast statement. The total has been shown in the balance

sheet.

TOTAL LIABILITIES

Our total liabilities are shown to include creditors and Tax.

36
WORKING CAPITAL: We have calculated the difference between

total liabilities and total current assets to be GH¢20539.21

FINANCED BY:

CAPITAL INTRODUCED: This will remain at GH¢5000 see our cash

flow forecast for more information.

NET PROFIT AFTER TAX: This will be GH¢9729.61 see our profit

and loss forecast.

LOAN: Having repaid GH¢10,000 of our GH¢30,000 bank loan we will

be left with GH¢20,000 at the end of the first year.

TOTAL CAPITAL: At the end of the first year of operation, we

anticipate having accumulated GH¢34729.61 in total capital/net assets.

BREAK EVEN ANALYSIS

Fixed Cost Variable Cost

Labour 2400 materials 7717

Wages and salaries 3912 electricity 320

Rent 1200 postage 20

Insurance 550 fuel and repairs 2230

37
Loan interest 3000 advertisement 1400

Bank charges 86

Professional charges 1000

Telephone 900

Wages 28

Notes

Wages for months of March and April fluctuates since production rises to

its peak and labour efforts are intensified. Thus the labour cost for march

and April has 326 fixed cost and 14 variable cost for the year.

B E P (units) = fixed cost

Sp –Vc
But Sp(units) = Sales_______ = 35072 = 0.1333
Qty. produced 262990

Vc(units) = variable cost U = 13701 = 0.0520

Qty produced 262990
B.E. P (units) = 11062___ = 11062 = 136.064 units
0.1333 – 0.0520 0.0813

Conversion to crates
B.E.P (Crates)
Since 1 crate of egg contains 30 eggs the

B.E.P (crates) B.E.P(units) = 136,064 = 4535 crates.

30 eggs 30

B.E.P (value) - Using crates = B.E.P(crates) x Sp / crate

= 4535 x ¢4
= 18140

38
10.0 CONCLUSION AND RECOMMENDATION

The main objective of Badak farms Company Limited is to grow

from a small scale poultry farming company to a medium size

company by the end of 2012. The products of the company are to

be introduced extensively to the Ghanaian market and possibly for

export.

The potential of the company as a fast growing egg production

company is enormous. Relying on good management and upon

receiving the required financial assistance coupled with proper

planning and cost control, the company is expected to achieve all

the targets set in this plan within the next five years.

All the analysis indicates that the company is financially viable. It

is technically feasible and socially beneficial. The financial

assistance indicates a strong case for the company to be financially

assisted. The assistance being requested would enable the company

expand its operations and produce to meet the demand of its

customers.

39
The company does not have any serious marketing problem since it

is yet to meet the demand of its customers. The products of the

business are unique and of good quality.

On the basis of the above, it is recommended that a loan of thirty

thousand Ghana cedis (GH¢30000) be granted to the company.

40
 APPENDICES 2

1. Profit and Loss Forecast for the first year ended 31st December,

2009

2. Cash Flow Statement forecast for twelve months ended 31st

December, 2009

3. Balance Sheet Forecast as at 31st December, 2009

41
42
43
44
45
46