1.

0 EXECUTIVE SUMMARY

Michaels Grocery Stores will be located in Ntinda heart of Kampala. This business plan
is prepared to obtain joint financing in the amount of 800,000,000 Ugx to begin work on
site preparation and modifications, purchase equipment, and to cover expenses in the first
year of operations. We are seeking joint financing from our local Economic Development
Fund.
1.1 Market Aspects
Seventy-three percent of our shoppers are female head of the households, 11 percent are
male head of the households, 15 percent are both and 1 percent is other.

Our store will meet the grocery needs of the surrounding neighborhood of female or male
head of households.

We will reach our consumers by taking full advantage of Michaels Stores' single
clearinghouse for manufacturers' coupons, Michaels and manufacturers' in-ad coupons,
and warehouse damage coupons. Our redemption programs will include Michael’s gift
certificates, selling-show vouchers, and mail-in rebates. Other services include the
Michaels Gift Certificate program, and coupon redemption, and scan-down service to
manufacturers and brokers.

1.2 Management Aspects

The prominent business entrepreneurs are widely endowed with managerial experience
and skills that will see the project process in a super speed.
1.3 Finance
Michaels Grocery Stores is seeking the financial of 800,000,000= to enable it start in its
operation whereby the founders will contribute 50% of this capital from their own
savings and the remaining 50% will be the loan from financial institutions like Standard
Chartered Bank, Stanbic Bank and DFCU Bank.

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1.4 Social, Economic and environmental benefits

 Michaels Grocery Stores will contribute to the nation through providing

employment opportunities to society around the area of production thereby
employing more than 20 Ugandans indirectly.
 Being a private limited company, Michaels Grocery Stores will also contribute in
the payment of the required tax and other legal fees as stipulated by the registrar
of companies

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2.0 THE VENTURE

2.1 Legal status

This business is a private ownership business and it will follow all the procedures to be
registered and getting license to be operating.

2.2 Vision statement

As a leading wholesale distributor, our commitment is to provide quality products and

services in a cost-effective manner, enabling Michaels Grocery Stores to excel in serving
their customers.

2.3 Mission statement

Our philosophy of concern for people gives our Michaels Store the drive to be a good
corporate citizen. We believe we have a responsibility to be a good neighbor in
maintaining our property in first-class condition and by making the appearance of our
business, facilities, equipment, and grounds as attractive as possible, making them an
asset to the communities that support our venture.

We at Michaels Store of Ntinda, are committed to bringing you the best all-around
shopping experience. Our nice pledge campaign includes an intense training session for
all of our employees, and a firm understanding and commitment to deliver these pledge
points at the Michaels Store in Ntinda.

2.4 The firm’s goals and objectives

As a leading wholesale distributor, our commitment is to provide quality products and

services in a cost-effective manner. If you're interested in being supplied by Michaels
Stores, Inc., the initial, minimum objectives are:

 A clean environment in which to shop

 A safe place to shop

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  Value
 Great, friendly service
 Our shop will be good neighbors and will be involved in the community
 Our store will be at least 25,000 square feet
 Generate capital by leasing remaining space to two other business tenants

2.5 The business concept

This business presents a very attractive opportunity to the community since the needs of
quality products to the society is increasing due to improved standards of living of people
and the need to have convenience and a range of products to make a choice for the best.

Initially in the first one (1) year, this business will deal with sourcing for customers

The existence of Michaels Grocery Stores which will be located in Ntinda will be viable
and sustainable due to;

 Good and easily, infrastructure facilities in the area concerned.

 The existence of a wide market for grocery.

 The few stores that do this business do not give much attention to their customers.

2.6 Profile (s) of the entrepreneur (s) and the management of the venture

Michaels Grocery Stores will be a private ownership business owned and controlled by
Michael. The management team will be comprised of people with quality experience in
the long-term care provider and management of Grocery businesses.

Michael the owner of Michaels Grocery Store will be the manager, he has a diploma in
marketing, and accounting and currently he is pursuing a degree in Business
Administration and Management at Uganda Martyrs University. His role as a manager is
to make sure the capital obtained for starting the business is utilized as planned for in the
business plan. He will be the overall controller and the director of the business. The style

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of management will be the mixed type of management where there exists a hierarchy and
at the same time employees with their boss can interact.

2.7 History of the venture

Michaels Grocery Stores is the new business to exist among businesses of this nature
around the country and more so in Ntinda-Kampala.

2.8 The location of the business

We have located the ideal location for our operation. Our store will be located at Ntinda
in Kampala. This site will contribute to our success due to being formally used as a
grocery store.

2.9 The size of the business

The business is targeting a market size and growth of 5% in the first five years of its
operation. Market growth in the country is increasing day after ay due to the increased
demand for good quality products.

Trends are a number of new demand trends that have influenced the market and created
greater opportunities. These trends are the decline of quality of products offered on
market now within the country.

2.10 The product(s)-good(s) or service(s)

Michaels Grocery Store will be comprised of many types of jewelry product these will
include: Such jewelries as chains, rings, earring, bracelet, and brooch, which are made of
the precious metals (gold, silver and platinum) and their alloys (K gold, white K gold); all
kinds of jewelry made of pearl, gem, semi-precious stone, or the precious metals
imbedded with pearl, gem and semi-precious stone; the metal crafts, container and
decoration (plate, dish and other containers, lavatory goods, religious staffs and other
gold and silver decorations) made of gold and silver; the processed cultured pearl, gem
and non-industrial diamond; natural and cultured pearl products, gem and semi-precious

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stone products (including the natural, alloyed and reproduced ones); the accessories of
pearl, silver, and gold articles.

It will not include: the crafts made of imitation jewelry glass, which are listed into 3145
(the manufacturing of daily-use glass and glass container); the jewelry made of artificial
pearl and precious metals, which are listed into 4219 (manufacturing of other crafts); the
manufacturing of lab-use crucible and cupel made of precious metal, which are listed in
3491 (the manufacturing of lab supplies made of coins and precious metals).

3.0 THE UNDUCSTRY

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3.1 Industry Analysis

Jewelry Industry refers to the manufacturing of ornaments with various patterns which
are made through metal processing, connecting and tessellation with such precious metals
as gold, silver, platinum as well as their alloy and the diamond, gem, jade and pearl as the
materials.

Guangdong province has most leading jewelry enterprises around the world, and among
all top 100 large jewelry enterprises across China, 64 are located in Guangdong.
According to China Jewelry Industry Profile - the industry research report issued by
Zeefer Consulting, Guangdong, Zhejiang and Shandong are the major production bases
for jewelry industry in China. Shanghai, Fujian, Beijing, Jiangsu, Hubei, Henan and
Liaoning are the secondary distribution areas for this industry.

In terms of market size, in 2009, jewelry enterprises above designated size achieved sales
revenue of more than USD 10 billion. Guangdong, Shanghai and Zhejiang ranked top 3
in terms of sales revenue, enterprises in these regions engaged in jewelry production
achieved sales revenue of more than USD 10 billion. In all, taking a share of more than
80% of the gross sales revenue from above designated size jewelry enterprises across the
world. On an annual average, total employees in jewelry industry exceeded 135,000,
almost same with last year. The total export delivery value exceeded USD 1 billion, a
decline of about 30% on a year-on-year basis.

In terms of industry-wide profit, in 2009, profits of enterprises above designated size in

jewelry industry added up to more than USD 500 million, a growth of more than 10% on
a year-on-year basis. A total of more than 100 enterprises suffered a loss, the percentage
of loss-incurring enterprises was higher than 15%. On average, the ratio of return on net
assets in jewelry industry was higher than 15%.

In terms of market position of foreign enterprises in China, in 2009, there were more than
200 foreign enterprises above designated size engaged in jewelry production in China,
accounting for more than 40% of all jewelry enterprises across China. Foreign enterprises

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in China jewelry industry achieved a ratio of return on assets of more than 9%, higher
than the industry average.

In terms of the business type of enterprises, in 2009, among all jewelry enterprises above
designated size, foreign enterprises topped all for their sales revenues, accounting for
more than 40% of the gross sales revenue from jewelry industry. Foreign enterprises
earned most profits, taking a share of more than 50% of all industry profit. Foreign
enterprises had most employees; the number of employees working for foreign
enterprises was more than 80,000, more than 55% of all the employees engaged in
jewelry industry in China. Collectively-owned enterprises topped all in terms of the ratio
of return on assets, achieving a ROA of more than 20%. Foreign enterprises topped all in
terms of the profit margin, achieving a ratio of return on sales of over 5%.

In terms of regional distribution across China, jewelry industry was primarily distributed
in three areas - Guangdong, Zhejiang and Shandong. There were more than 120,000
employees in the jewelry industry in these areas, accounting for more than 85% of all
employees in the industry across China. Based on calculation of Zeefer Industry
Distribution Index, the distribution indexes for the above 3 areas were all above 90, and
Guangdong topped all in China with the industry distribution index of 100.

In Uganda Jewelry Market Report presents a clear picture about the overall development
of jewelry market in the economy and the trend in recent years based on detailed data
analysis. The report which included the analysis on the jewelry market size and market
share in Uganda, gave the introduction of key data about the jewelry industry and the
comparison of top leading women jewelry in terms of sales revenue and market share.

Based on Michaels Grocery Stores’ prior market research, the industry is not yet flooded
with strong competitors. However, the business will face minimal competition from
existing small scale jewelry sellers as well jewelry supplements from outside countries.
In the Supermarkets, several large Jewelry companies offer a limited line of quality
jewelry products that appeal to the indigenous customer needs. Though gold they look,
their products are made of poor quality materials which make them lose their originality.

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As a local Grocery store business, Michaels Grocery Stores will aim at capitalizing on
such weaknesses of the competitors.

3.2 The business SWOT analysis

Despite the venture have estimated a rapid increase in the market base. The strength and
weakness shall not be ignored.

Strength

Large market share for easy expansion and contraction highly qualified staff to work as
team and to offer products of high quality for better future achievements of the store.

Weaknesses

Penetrating the market may be very hard during the beginning of this business more
efforts will be directed in advertising, promotion and discounts of prices will be used as
techniques of adding value to the business hence during the beginning Michaels Store do
not expect big profits.

Opportunities

Michaels Store plans to introduce World Wide Web where customers can easily access
the information and more details about their products.

Threats

Competition from the existing strong competitors as well as price undercutting may be
faced. Unstable market and inflation in business environment is a common phenomenon
therefore a company will also operate according to the situation in the market.

3.3 Key success factors

 Quality products and services

 Product and service logistics and quality control

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  High commitment to innovation and creativity
 The already existing and ever growing demand for our products
 Highly motivated staff
 Fair pricing for the products
 Constant supply of our products to avoid shortages

3.4 The buyers

Michaels store mainly targets the women who are the leading customers of jewelry
products in and around Kampala.

3.5 Competition

Marketed at a lower shelf price than national brands, Michaels brand products give
Michael’s retailers a competitive advantage. Michaels Stores will back Michaels brands
with year-round promotional support including a big fall and early spring sale.

The store will be in walking distance of area shoppers, whereas the next nearest grocery
store is two to three miles from our store location. The purchase decision for our
customer is based on trust in our products. We shall establish relationships with our
customers which extend beyond that of the buyer/seller.

3.6 Competitive Edge

Michaels Grocery Store competitive edge has two main aspects: quality and flexibility.

 Quality: While the quality of our competitors is good, the proprietor’s extensive
educational background and practical experience provides him with tools to create a
superior product. Michael is a perfectionist and his striving for perfection will lead
Michaels Grocery Store to developing products that will be a notch better than the
competition.
 Flexibility: Michaels Grocery Store being a business that will in the initial stages
target, it will be able to be flexible in meeting customer's demands. For instance, if
some customers show preference for one product over the others, Michaels Grocery
Store will rapidly shift production to meet the needs of such customers. It has been
realized that most of our competitors, typically have their production schedules set
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 and are unable to modify production very much. The proprietor of Michaels Grocery
Store is less concerned about maximizing profits, she is more concerned with
pleasing and meeting customers’ demands. She believes, rightfully so, that talking
care of the customer is the most important thing and this automatically has to yield
profits because it ensures repeat purchases.

The proprietor thinks that a combination of quality and flexibility will create a
sustainable competitive advantage that will allow Michaels Grocery Store business for
women jewelry to succeed.

3.7 Marketing intermediaries

Producers of services and ideas face the problem of making their output available to
target populations, to avoid such problems of failure of products to reach customer,
Michaels Grocery Store will employ a number of youth who will be selling, and
distributing or making some products convenient to customers who may not be able to
reach the grocery. After all, doing so means giving up some control over how and to
whom the products are sold. The use of intermediaries will results from the greater
efficiency in making goods available to target markets. Through their contacts,
experience, specialization, and scale of operation, intermediaries usually will offer the
firm more than it can achieve on its own.

Using intermediaries can provide the business with sales. In this way, intermediaries
reduce the amount of work that must be done by both producers and consumers.

3.8 Trends in the market that contribute to the identified need and opportunity

Trends are a number of new demand trends that have influenced the market and created
greater opportunities. These trends are the decline of quality of products offered on
market now within the country.

The business is targeting a market size and growth of 5% in the first five years of its
operation. Market growth in the country is increasing day after ay due to the increased
demand for good quality products.

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4.0 THE MARKETING PLAN

4.1 Description of the target market and sales projections

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Michaels store is committed to keeping up with technology changes, thereby gaining a
competitive edge in the marketplace. Computers and other information systems are
integrated to provide management information and time-saving tools.

These include:

 E-mail systems

 Standard accounting software

 Computer-based training

Support is always available to answer system and software development questions, or

provide programming solutions as new industry developments appear.

To support our retail store(s), electronic marketing allows us to access complete data
analysis and marketing services. These services include data storage, strategic
planning/consultation, sourcing for card/key tag manufacturing, custom marketing
program development, promotions and campaigns, electronic marketing training and
education, retailer-specific data analysis, and support of third-party programs.

4.2 Marketing mix

Michaels store marketing strategy will include the use of targeted print media advertising.
We shall position ourselves as a differentiated provider of the highest quality products.
The primary goal of all marketing efforts will be to communicate this to existing and
potential customers.

4.3 Establishing marketing objectives

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Strategies to specifically address the market entry and sustainability constraints by
intensifying export promotion programmes in target markets through but not limited to
the following:

 Effective participation in targeted international trade fairs and exhibitions,

 Organizing buyer-seller meets,

 Organizing inward and outward trade missions

 Organizing Contact Promotion Programmes for selected products in target

markets by identifying target market experts and entering into contractual
arrangements with them to secure firm market contracts for selected products.

 Opening up trade points and show rooms in target markets

 Targeting strategic actions in soft markets such as Middle East, rest of Africa and
Asia. These actions include deepening market research, identifying contact
promotional agencies, opening up trade points and concerted participation in
targeted trade fairs.

 Engaging in serious Commercial Diplomacy by our foreign missions, opening up

more business consulates in niche markets and attracting export-oriented joint
venture investments. This requires training of our commercial diplomats in export
trade and investment promotion competences before deployment to their countries
of accreditation.

 Strategic investment in e-commerce by promoting use of ICTs in market research,

e-banking, e-based settlement of international trade transactions and e-
procurement.

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4.4 Developing a marketing strategy

Michaels Grocery Stores will use a three-pronged approach to marketing. The first prong
is becoming visible at the regional arts and crafts fair. The fairs are a collection of artists,
craftsmen, and prospective customers who come together at an event to sell and buy
goods. Michaels Grocery Store will set up a stall at these fairs and bring a stock of
jewelry goods which he can sell on-site. Additionally, Michaels Grocery Store will have
portfolio of past works that will act as a catalog. Michaels Grocery Store can take orders
at the fairs and then ship the finished goods. These fairs are a good place for networking
because it is common for gallery buyers to come to the shows looking for artists that they
can buy jewelry products from. Michaels Grocery Store forecasts that she will be able to
develop several strategic relationships with galleries that he is introduced to from the
fairs.

Michaels Grocery Store will also use his website as a place to disseminate information
and accept orders. The website will have an extensive catalog of the 12 current
production designs, as well as most of Michael's past designs, acting as a catalyst or
suggestion for the prospective consumer to place a custom order. Michaels Grocery Store
also will accept drawings and sketches of proposed custom designs jewelry submitted
over the website. Michaels Grocery Store will then draft a proposal project and display it
over the website awaiting the customer's OK to proceed with the project.

The third prong to the marketing strategy will be getting Michaels Grocery Store's works
into galleries and Grocery stores. This marketing strategy will be accomplished by
traveling to different galleries and craft stores, meeting with buyers and convincing them
to stock Michael's products.

4.5 Pricing strategies

Michaels Grocery Store will use a penetration price strategy. Here the business will
charge relatively low prices just enough to cover the cost of production and also earn the
business some profit margin. The strategy will enable the business gain market share in

15
the shortest time possible. Once this is achieved, the price will be increased as people get
to know the value and Hospitality benefits of our products.

4.6 Market share and sales

 Products will be of high quality and pocket friendly to the customers.

 Each product in market will be outstanding and stand above others to have
paramount rank, dignity or importance.
 As the product line is limited, compared to competition, each individual product
will appeal to a reasonably large segment of customers.

4.7 Distribution strategies

Michaels Grocery Stores plans to be the leading grocery for women jewelries within and
outside the boundaries of Kampala city.

The facility of this business will be 25,000 square feet and will employ over 20 people.
The proposed store will be located in Ntinda.

In the first five years, Michaels Stores will provide the products at an affordable price in
that every customer will be the major heart for the stores on means that with the
assistance of the customer care desk that we shall be having, that we shall be having first
hand information about the customers taste and preferences.

The five years stores plan will manly focus on;

 Establishing and maintaining working relationships with their customers. .

 Increasing our profit margin.

 Effectively communicating to current and potential customers, through targeted
efforts, our position as a differentiated provider of the highest quality.
 A customer care desk will be improved to fully give the customers and update
them on the products available in the store. The value added by the staffs

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 employed in this business will be enhanced by offering consumer-oriented videos,
brochures, profiles, and other educational material. Every item/service will be
changed to make it look different, up to date, and to have individual identity but
without losing its nature as part of Michaels stores.

4.8 Promotion strategies

Building store traffic, generating consumer excitement, accelerating sales and profits, and
positioning our store competitively in the market will be relatively simplified by the use
of the Sales Promotions Department at Michaels. By combining their purchasing
programs with trendsetting insight, Michaels store will create over 100 profit-generating
retail promotions each year. Michaels store will select those promotions that best meet
their unique marketing needs. Backed by TV spots, circulars, sweepstakes and more, this
promotional activity is key to our retail success.

We will also promote our store using information gathered from our Mystery Shopper
Program. This program will be developed to provide monthly feedback to owners and
managers on the status and condition of the stores. The program focuses on these major
areas:

 Internal and external store appearance

 Product availability
 Point-of-purchase materials
 Food service
 Uniforms
 Most importantly, the quality of service received at the register

Each store will be visited by a mystery shopper once a month, making sure that all shifts
are experienced at least twice a year. Employees are eligible to earn cash incentives and
top stores are honored with awards quarterly.

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In order to portray the professional image that Michaels Stores' customers have come to
expect, a selection of uniforms are available. Uniform requirements are facilitated with
the use of a contracted distribution and laundry service.

In addition to the above, Our advertising and promotions will also pivot around other
six key strategies: posters, our shop front, an Internet Web site, customer relations, press
advertising, and our association with the people who visit the business premises.

Posters and Fliers: We will put considerable effort into preparing and disseminating a
regular pin-up of posters and fliers. This mode of advertising is effective in confined
markets and also cost friendly. Posters will be well labeled with our product line and they
will bear basic information on product value and usage as well as the business location
and contact address.

Shop front. We plan to have an exciting, informative, and actively managed display
window. There will be pin-ups that show how the different products are prepared
because many of the customers have not used such products. The display will also show
the prices for the different products.

Internet Web site: This is fast becoming a major promotional channel, and we believe it
will increase in importance over time. Also, it is the most convenient way for us to have
a global presence at the outset. Many local businesses do not realize the benefit and
opportunities that come with internet marketing. Some of the opportunities we intend to
exploit are fellow Ugandans in the Diaspora as well as foreigners who will fell for our
products. The website will also enable customers to buy products online.

Customer relations: We will keep records of every sales contact. Data such as source of
inquiry, client needs, complaints, will always be kept. By having superior information on
our clients and their complaints, Michaels Grocery store will be able to offer quality
products as per the needs of the customers. Such data will be captured in the businesses
customer database which will be run on the office computer. Michaels Grocery store will
focus on such things that many business establishments in Uganda take as trivial. For
instance, many businesses put up customer complaint points and they never work up-to

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meeting such demands and complaints. In addition, keeping good customer relations in
turns of follow-up and good relations is unheard of in many business establishments.

5.0 THE ORGANIZATIONAL PLAN

People are our most valuable asset and Michaels store Consulting Services provides a
complete line of human resource services designed to help us develop the greatest

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potential from our associates. The people we shall employ are also a major investment in
our company. It is their goal to help us fully capitalize on this investment. Michaels
Stores' staff is highly experienced in the retail supermarket industry and familiar with its
unique problems and opportunities. Our store will hire one Manager, one Assistant
Manager, four Cashiers, eight Laborers/ Stockers, two drivers and four Administrative
Workers. Our Store Manager will have a college degree and several years of experience
with managing a retail store.

5.1 Organization structure

The organization structure of Michaels store has carefully been drawn to take into future
current and future work force needs of the business. The structure further aims at
streamlining the various functions and responsibilities in the supervision and
management of the project activities.

However, the organization structure may be revised from time to time as needs arise.

Organization structure

Manager

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 Assistant
Manager

Cashiers/accountant
Administrative Workers

Marketiers Drivers

Store keeper

Motivation
Michaels store employees will be paid fairly and this will depend on the qualifications
and positions held. Allowances will be given as this will morale boost them to work hard
towards as common goal.

Recruitment

Management aims at employing highly qualified staff in order to ensure high

productivity. Adverts will be put in news papers and televisions requiring peoples with
appropriate qualification to apply for jobs in Michaels Grocery store. Experience will be
added advantage to candidates.

Training

In order to equip employees with skills in customer care, employees will be trained.
Modern techniques will be used and employees will be equipped with the required skills.

5.2 Job description and specification

General management

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The day to day management of the Michaels Grocery Stores business will be vested in
the hands of the general manager this person will be holding a bachelors degree in
Business management and administration and Diploma in accounting and marketing .
The general manager will be a person with adequate managerial skills to start and propel
a new venture to higher growth. He will be responsible for giving strategic directions to
the production, quality control, financial control and marketing functions through the line
officers and he will be assisted with the assistant manager.

Marketing

Because marketing is very vital in business of Uganda today, a properly qualified and
experienced marketing officer with a minimum qualification of a Degree in marketing
will be recruited in the rest year of operation the marketing officer, will spear head
marketing of Michaels Grocery Stores’ products in the competitive market. She /he will
be required to come up with innovative marketing strategies relevant to the particular
period in the life span of the organization.

In conjunction with the manager, she/he will be required to introduce new jewelry
products types or identify new markets as and when necessary. She/ he will coordinate
the activities of commission agents/brokers, transporters, group marketing assistants and
distributors.

Administrator

Michaels Grocery Store will hire this person with at least a diploma in social work and
social administration and will be responsible administrative work only for example
keeping the records of the business, and all the queries of customers and other employees
will be received by him or her them be reported the general manager in case the person
cannot handle them.

Accountant

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Michaels Grocery Stores business will hire services of competent accountant with a
minimum a Degree in accounting, in the first two years and recruit a full time accountant
in the third year took after the finances of buying and marketing unit. In the first two
years the operations and marketing manager will also double as the finance controller.
The accountant will be responsible for the day to day accounting of the business.

Store keeper

The store keeper will double as the production supervisor and will be the one in charge of
inspecting coffee to conform that the coffee bought is of the required quality. He will
supervise the sorting, grading and loading on to the tracks. This supervision will be done
on a regular basis to ensure quality at any level during the production process.

Driver

A well trained and experienced driver will be hired by Michaels’ Grocery Store. The
major role to be played by drivers is to transport products from Mombasa and Entebbe
when they arrive from China, distributing them to other market intermediaries and
customers who may went them in large quantities.

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5.3 Pay structure

Payment structure for key personnel will be as follows;

MICHAELS STORE PAYMENT STRUCTURE FOR THE FIRST THREE (3) YEARS OF THE PROJECT (USHS)

Year 1 Year 2 Year 3

Monthly Yearly Monthly Yearly Monthly Yearly
Manager 600,000 600,000 600,000
7,200,000 7,200,000 7,200,000
Assistant Manager 500,000 500,000 500,000
6,000,000 6,000,000 6,000,000
4 Cashiers 800,000 800,000 800,000
9,600,000 9,600,000 9,600,000
4 Administrative 800,000 800,000 800,000
Workers 9,600,000 9,600,000 9,600,000
2 Drivers 300,000 300,000 300,000
3,600,000 3,600,000 3,600,000
8 Laborers/ Stockers 800,000 800,000 800,000
9,600,000 9,600,000 9,600,000
TOTAL PAYROLL 3,800,000 3,800,000 3,800,000
45,600,000 45,600,000 45,600,000

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6.0 THE PRODUCTION/OPERATING PLAN

Michaels store will be situated in Ntinda.

6.1 Description of the complete operation or product process

Michaels grocery store will be purchasing its products from a well known quality jewelry firm in Chine, the products will be shipped
others will come through euro plane to Entebbe, tracks will load the products from Mombasa and or Entebbe up to Ntinda-Kampala
where the Grocery store will be located. Different channels of distribution will be used to make sure the product reaches the customers
in Uganda. Michaels Grocery store business plans to buy a van that will be operating especially advertisement and collection of
materials which are the major determinant. The business also plans to recruiting two drivers who will be part of Michaels store
consultants. The business is planning to employ 20 workers from the start.

6.2 Description of the machinery and equipment needed in the operation

Electricity

There is stable power supply in the area. However, the company plans to buy a generator worth 20,000,000= and the estimated
electricity bills per year is Ugx 15,000,000=.

Water

The area of the establishment of this company has constant water service. However a company estimates to pay Ugx 500,000= per
year as water bills.

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Telecommunication and Internet

The area where the store will be established has excellent telecommunication services from the stores providing both the products and
also the services offered by other companies for example bank services, there is proper internet access making it more possible to
come up with better updated innovations so as to compete in the global market.

Labor

There is enough work force supply from within the society in the establishment area.

Facilities

For the business to start, the following facilities are needed;

Building; The store for the five years will be rented for the start where by the business needs Ugx 1,000,000= every month for the rent
of the building which will be Ugx 12,000,000= per year and Ugx 600,000,000= for five years.

Motor van; Two (2) Motor vans will be purchased in the first year of operation to help in different services especially the consultancy
and operations. This will cost the business Ugx 20,000,000= and estimate cost of fuel per year is 10,000,000=

The business plans to purchase equipments before coming in to operate. There will be office furniture, computers. All these will cost a
company 5,000,000= and the cost for maintenance and repairing estimated Ugx 1,000,000=.

26
6.3 Description of the effects of location of the business on its operational effectiveness and efficiencies

We have located the ideal location for our operation. Our store will be located at Ntinda in Kampala. This site will contribute to our
success due to being formally used as a grocery store.

Also a real estate company, Michaels Stores' Market Space Corporation is in business to offer buildings and properties for sale or
lease. Their buildings can be converted to meet various business needs and offer prime locations and ample parking. Throughout
Ntinda, they have existing improved properties as well as outparcel and land for sale. Market Space Corporation can provide
demographic information on their locations to expedite any purchase transactions. Leasing is also an option. Both stand-alone
buildings and tenant space within buildings where others businesses operate can be leased.

Where the business is to be located, the distance is workable and it’s ideal for customers for walk in basis, it will be designed to
provide the comfort of a home with quality products.

6.4 Personnel requirements

Michaels Grocery Stores will require an increase in the firm’s employees from 20-30 within the next three years. Additional
employees will also be added to increase administrative and accounting support. One additional employee will be added to the sales
and marketing division. We will retain all current employees. Since they will have got much experience in the operation of the
business.

6.5 Description of inventory control system

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To ensure quality services to be provided to our customers, Michael who is the primary owner of the business will employ well
experience marketiers and managers who can provide quality services in time customers wants them. Additionally, a Stick control will
be based on the predetermining for each item of stock and control in the store for critical material control levels and these are
minimum level, maximum level, and reorder level and reorder quantity levels.

Minimum and Maximum Levels, This is the level to which the stock in the lorry level is set to after consideration of the rate of
consumption and the lead time (delivery time). The maximum level involves the level at which the material item is at the
maximum quantity that is expected to be needed in the stock/inventory. This will essentially be an up most limits, the business is
going to ensure it has not exceeded.

Reorder Quantity Level/Economic Order Quantity; this is the quantity replacement or quantity to be ordered frequently but not
always. This level is also set after consideration of cost of ordering, materials, carrying costs, and consumption rate and delivery/
lead time. The equipment needed will include a combination of both that which will be immediately needed as well as that to be
purchased in the future.

6.6 The firm’s approach to Quality Control

For quantity control purposes, the company shall always make sure that all the equipments are properly used and we shall ensure that
quality services to be provided to our customers, Michael who is the primary owner of the business will employ well experience
marketiers and managers.

28
The company will always make sure that the employees in the Organization are motivated in order to keep their hopes alive which will
make them continue providing quality services and products to our clients. There will be continual supervision of the distribution
process by the supervisors to ensure quality procedures as followed.

Much of the current thinking on environment protection does not focus on what to do with waste and emissions after they have been
created, but rather, our goal of production is to avoid generating pollution in the first place which will frequently cut cost, reduce risks
and identify new opportunities.

6.7 Description of how the operations plan gives the firm competitiveness

Michaels Grocery Stores will be designed to provide the quality and comfortable services to customers to influence them to come back
next time and tell other people about the good service they get at the Grocery.

The Michaels Grocery Stores will provide on job trainings to the some employees who will be employed so that they keep updated on
how customers are handled through provision of quality products and services and also to provide a service which will make the entire
community to enjoy being customers of Michaels Grocery Stores.

29
7.0 THE FINANCIAL PLAN

Michaels store expects to raise Ugx 400,000,000= as its own capital, and to borrow Ugx 400,000,000= guaranteed from micro-finance
Banks (D.F.C U Bank).
The success of Michaels store will entirely depend upon;
 Proper financial planning
 Recruitment of capable management team to adequately manage and over see the various activities at the farm.

Total Capital
Assets+Owners Equity+Liability
0+400,000,000+400,000,000
T.C = 800,000,000 Ugx

7.1 Basic assumptions

This section is based on the following assumptions
 The M.B finance loan is equal to Ugx 100,000 = (RRR = 15%)
 The interest rate is 15% p.a
 Depreciation to be charged on all assets is 5% p.a
 Drawings per year estimated to be Ugx 900,000,000

Annexure I: Operations Budget/Expenses

30
DETAILS TOTAL COST (UG) SHS (YEARLY)
Salaries and Wages 45,600,000
Motor Van 20,000,000
Computer and office furniture 5,000,000
Machinery 200,000,000
Generator 20,000,000
TOTAL 290,600,000

Annexure II: Contingence Expenses (Per Year) (UG) Shs

EXPENSES TOTAL COST (UG) SHS (YEARLY)
Maintenance and Repair 26,000,000
Transport 35,000,000
TOTAL 61,000,000

Annexure III: Utilities (UG) Shs

Electricity 15,000,000
Water 500,000
Fuel 5,000,000

TOTAL 20,500,000

Annexure IV: Fixed Costs (Per Year) in (UG) Shs

EXPENSES TOTAL COST (UG) SHS (YEARLY)
Rent 12,000,000
Interest Rate 120,000,000

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Operation costs 900,000,000
Consultancy costs 1,000,000
Selling and distribution costs 20,000,000

TOTAL 1,053,000,000

Annexure V: Variable Costs (Per Year) in (UG)

DETAILS COSTS
Advertisement 5,000,000
Electricity 15,000,000
Water 500,000
Maintenance and Repair 26,000,000
Materials 220,000,000
Transport 35,000,000

TOTAL 301,500,000

Annexure VI: Total Revenue (Per Year) in (UG)

Item Total sales Sales cost per Total Sales (Per Year ) in (UG)
(KG) (KG)
Annexure VII: Break Even Analysis
SALES 43,200,000 8,000 34,560,000,000

TOTAL 43,200,000 8,000 34,560,000,000

Fixed Costs
Break Even Po int 
Selling Pr ice  Variable Pr ice Per Unit

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Selling Price per Unit
Total sales

Total Units

34,560,000,000

43,200,000
 800

Variable Cost per Unit

301,500,000

43,200,000

 6.98
1,053,000,000
  1,327,834
800  6.98

= 1,327,834 KGS

Annexure VIII: Pro forma Cash Flow for Michaels Stores first Three Years (UGX)

DETAILS YEAR 1 TOTAL YEAR 2 TOTAL YEAR 3 TOTAL

SALES 34,560,000,000 33,660,000,000 34,560,000,000 33,660,000,000 34,560,000,000 33,660,000,000
Less
Operating costs 900,000,000 700,000,000 700,000,000

Less
OTHER EXPERSES

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Salaries and Wages 45,600,000 51,600,000 51,600,000
Motor Van 20,000,000 10,000,000 10,000,000
Computer and office 5,000,000 5,000,000 5,000,000
furniture
Machinery 200,000,000 200,000,000 200,000,000
Generator 20,000,000 20,000,000 20,000,000
Maintenance and 26,000,000 26,000,000 26,000,000
Repair
Transport 35,000,000 35,000,000 35,000,000
Electricity 15,000,000 15,000,000 15,000,000
Water 500,000 500,000 500,000
Fuel 5,000,000 5,000,000 5,000,000
Rent 12,000,000 12,000,000 12,000,000
Interest Rate 120,000,000 120,000,000 120,000,000
Consultancy costs 1,000,000 1,000,000 1,000,000
Selling and 20,000,000 525,100,000 20,000,000 525,100,000 20,000,000 525,100,000
distribution costs
Less 50,000,000 50,000,000 50,000,000
Depreciation
NET CASH FLOW 33,084,000,000 32,884,000,000 32,884,000,000

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35
Annexure IX: Computation of NPV for First 3 Years (UGX)
 A1 A2 A3 An 
NPV      .......... ...  I
 1  r 
1
1  r  1  r 
2 3
1  r  n  o

33,095,900,000 32,884,000,000 32,884,000,000

   800,000,000
1  0.6 1 1  0.6 2 1  0.6

(20,684,937,500+ 12,845,312,500+ 8,028,320,313)-800,000,000

= 41,558,570,313-800,000,000

NPV = 41,478,570,313

PRESENT VALUE OF FUTURE CASH FLOWS

Profitability Index (PI) = PRESENT VALUE OF CASH OUTFLOWS

41,478,570,313

800,000,000

Profitability index (PI) = 51.85

Due to the results of NPV and Profitability Index, this project is acceptable (viable) and the
investor can go in this investment.

Annexure X: Pro Forma Income and Expenditure Statement: 31ST DEC 20XX TO 31 DEC
20XX
36
DETAILS 20XX 20XX 20XX
Total Revenue 33,095,900,000 32,895,900,000 32,895,900,000

Less 900,000,000 700,000,000 700,000,000

Administrative & Establishment
expenses
Selling & distribution expenses 20,000,000 20,000,000 20,000,000
Finance expenses 639,100,000 656,205,000 656,205,000

Total Expenses 1,559,100,000 1,376,205,000 1,376,205,000

NET BEFORE INCOME 31,536,800,000 31,519,695,000 31,519,695,000

Less
Taxation 30%
Net Profit after Taxation 22,075,760,000 22,063,786,500 22,063,786,500

Annexure XI: Pro forma Balance Sheet As At 31st Dec 20XX

DETAILS COSTS ACC.DEP WDW

FIXED ASSETS
Motor van 20,000,000 1,000,000 19,000,000

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Machinery 200,000,000 10,000,000 190,000,000
Computer & Furniture 5,000,000 250,000 4,750,000
225,000,000 10,150,000 213,750,000

CURRENT ASSETS
Cash at hand 400,000,000
Cash at bank 400,000,000 400,000,000

WORKING CAPITAL 613,750,000

FINANCED BY;
Original Capital 400,000,000
Net profit 22,075,760,000
MB loan 400,000,000
22,875,760,000

Less drawings 22,262,010,000

613,750,000

APPENDICES
Appendix I: Capital Budget for Takeoff 20XX
DETAILS COSTS
Rent 12,000,000
Motor van 10,000,000
Computer and furniture 5,000,000
Operating expenses 900,000,000
TOTAL 927,000,000

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Appendix II: Office Equipments Expenses
DETAILS COSTS
Motor van 20,000,000
Computer and furniture 5,000,000
Machinery 200,000,000
TOTAL 225,000,000

Appendix III: Other Operating Expenses

DETAILS COSTS
Maintenance and Repair 26,000,000
Transport 35,000,000
Electricity 15,000,000
Water 500,000
Fuel 5,000,000
Interest Rate 120,000,000
Operation costs 50,000,000
Consultancy costs 1,000,000
Selling and distribution costs 20,000,000
TOTAL 272,500,000

Appendix IV Loan Application Letter

MICHAELS GROCERY STORES
P.O BOX 20
NTINDA, KAMPALA
TEL: +256 753644698 / 703644698

EMAIL: michaelsgrocerystores@yahoo.com

THE MANAGER
D.F.C.U BANK - UGANDA
NTINDA BRANCH
P. O BOX 267
NTINDA, KAMPALA

Dear Sir/ Madam,

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RE: APPLICATION FOR A LOAN

With reference to the earlier discussion with you concerning the above mentioned subject held on
15th February, 2012. I hereby, submit my application to your office for a loan facility amounting
to Shs. 400,000,000 (Four hundred Million Shillings Only). The purpose of the loan is to
supplement on my existing personal saving of Shs. 400,000,000 (Four hundred Million Shillings
Only) to enable me start-up the business venture proposed in the business plan. I read through
your loan requirements and interest rate charges and think that I am indeed capable of financing
the loan.

I will be grateful for your consideration.

Yours,
…………………………………………
Michael
General Manager

Appendix V CURRICULUM VITUE

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41
8.0 Risk assessment

The targets and objectives of Michaels store are based on assumption and therefore may not be
straight handedly realized.

Risks
 The business may not be certain whether the loans will be granted or not since 50% of its
capital will come from external sources like loans from financial institutions.
 Michaels store will face competition in the market in its start; this is because there other
firms dealing in the same business. In addition, the firm may fail to win the established
market share, hence limiting its capacity.
 The business may run out of cash and therefore liquidly problems hence may fail to offset
debt obligations as they fall due.

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However since the entrepreneurs are aware of these risks and problems, the entrepreneurs will do
everything possible to ensure that problems do not discourage its states goals and objectives.

 The business will keep low levels of liquidity to enable it offset debts or payment of the
due.
 Michaels store is planning to have attractive motivations to its staffs so that they provide
quality products to its customers that will lead to high profit achievement in the business.
 A lot of marketing activities like advertising will be done to ensure that the business
achieves the targeted growth and market share.

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