DIEPSLOOT

BAKERY

ii

DIEPSLOOT BAKERY

Business Plan

Report Date 3

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1. EXECUTIVE SUMMARY

Diepsloot Word Center Church (DWCC) is a social entrepreneurial enterprise which seeks

poverty alleviation through the establishment of micro-enterprises. This proposal is for the

establishment of a bakery in Diepsloot. The hydroponics plant will sell its products through the

already established micro-enterprises in Diepsloot. Thus, not competing with these established

enterprises, but rather growing their profitability and improving their sustainability. This proposal

is drawn up in order to request funding for this venture.

The plan is for the establishment of four hydroponic tunnels on a property 5km outside Diepsloot.

The property has 3-phase power and borehole water. Leavy greens and indigenous leafy greens

will be grown within the tunnels. The tunnels will have a growing capacity of 60 000 plants. The

primary market will be the informal market of Diepsloot. Diepsloot has a population of 400 000

and is a big market for spinach and morogo. The venture will be supported by partnerships with

market, institutional and technical knowledge.

The venture requires the raising of funding of R 3, 383, 900. This includes funding for the

installation of infrastructure, equipment, stock and initial working capital. Upon receiving funding,

the tunnels need to be built and produce planted for a 52-week harvesting cycle. It is foreseen

that the first harvest will be for 10 165 vegetables whereupon, over a three-year period it will be

increased to the full capacity of 60 000 vegetables. The breakeven sales are budgeted to be

reached after 6 months with a monthly sale of R 225,799.

DWCC as a social entrepreneurial enterprise sees the proposed enterprise development as

having the following developmental impact:

• Social Impact

o Nutritious vegetables, improving nutritional choices available.

o Improving food security.

o Fresher produce.

o Assisting local feeding schemes

• Economic Impact

o Creating permanent jobs and associated micro-enterprises.

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o Creating a local income-producing enterprise.

o The shorter logistical channel, lower product loss and on day harvesting would

contribute to the profitability of the venture and local businesses by cutting

refrigeration costs, delivery costs and stock loss costs.

o Local vocational training.

• Environmental Impact

o Reduced water and electricity usage.

o Reduced pollution.

o Does not contribute to soil degradation.

o Production processes are fully recyclable.

o Eliminating the use of toxic pesticides, herbicides and other chemicals.

o Through the production of more plants and the reduced electricity usage together

with a shorter logistical chain; the venture contributes to a reduced carbon

footprint.

• Technological Impact

o The introduction of new smart farming technology shall increase the production

by almost triple as compared to traditional farming.

o Training the local community in the use of the technology, thus a knowledge

transfer. The project will actively seek to duplicate the use of the technology within

the community.

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2. COMPANY OVERVIEW

DWCC

Diepsloot Word Centre church was incorporated as a non-profit organization in 2012. Our

founding mission is the development of communities. In order to achieve this goal, we partner

with local businesses and corporates like Sasol, Telesure and Wimpy. We promote the cause of

desolate and underprivileged families. This is done through development programs which

promotes the plight of orphanages, child-headed-families, so-called lost youth and vulnerable

girls. Here we have pioneered family feeding schemes, mentoring and a sanitary towel

campaign. These campaigns seek to restore dignity, assistance, unveil life options, direction and

guidance. Food parcels are supplied to partnering schools in Diepsloot. Part of the feeding

programs attempts to keep the children in school while keeping them connected to their

community.

Legal Nature and Economic

Sector of Business

Name of organization: Diepsloot Word Centre Church

Structure: Non-Profit

NPO Registration Number: 118-076 NPO

PBO Registration Number: 9634608179

Economic sector: Community Development and Transformation. The proposed

project will be to establish a hydroponic tunnel in order to grow

leafy greens and vegetables. This would be agricultural activity

within the local community.

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Placement of Proposed Operations

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Purpose of the Organisation

DWCC is a social entrepreneurial venture which seeks poverty elevation through the creation

of micro-enterprises.

Legal and Regulatory Environment

DWCC is a duly registered Non-Profit Organisation Diepsloot Word Centre Church (118-076

NPO). The business is registered and compliant with required Income Tax, VAT, PAYE, UIF and

SDL compliances. Ethusa would need to comply with the following legislation:

• Businesses Act (1991)

• Foodstuffs, Cosmetics and Disinfectants Act of 1972

• Health Act (1977)

• Consumer Protection Act of 2008

• Occupational Health and Safety Act of 1993

• Labour Relations Act of 1995

• Various Tax Laws

• Companies Act of 2008

• Basic Conditions of Employment Act 1997

• Competition Act 1998

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3. BUSINESS DESCRIPTION

DWCC has secured a 2.3-hectare plot just outside Diepsloot township. The plot is ideal for the

development of micro-enterprise since it has three-phase power, borehole water and numerous

structures which can be converted in order to house entrepreneurial ventures. The premises is

situated on the N14 and R144 which allows easy access.

• Opportunity: Establish a bakery who will supply the already existing micro-bakeries, spaza

shops and hawkers.

• Product overview: The bakery will bake bread, cookies and produce pre-mixes for other

micro-bakeries.

• Key participants: The bakery will sell its baked goods through already established operations.

• Pricing: The baked goods produced will be targeted at the LSM 2-5 market and thus be

marketed as a value option.

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4. MARKET ANALYSIS

Diepsloot and the township economy

The living reality of Gauteng is that 80% of its population lives in the more than 65 townships,

which is located on the periphery of urban developed areas. As such Diepsloot is a new Gauteng

settlement, which was established in 1994. Diepsloot was formed when households from

Zevenfontein were resettled. By the time of the 2011 census, Diepsloot has grown to over a

geographical area of 12 km2, with a population of 138 329 and thus a high population density of

12 000 people per square kilometer. It has been estimated due to the national population growth

rate, the approaching urban sprawl of both Tshwane and Johannesburg and the targeted

development of the area has caused the population of Diepsloot to grow to 400 000. Diepsloot

was originally established on the far edge of Johannesburg, but now Midrand, Johannesburg

and Tshwane all now meet at the edge of Diepsloot. In line with the Growth and Development

Strategy Joburg 2040, Diepsloot forms a priority development node for the City of Johannesburg.

The plan includes additional housing, the upgrading of electricity supply, the increase in water

supply, the upgrading of drainage systems and finally the upgrading all the township’s roads.

Diepsloot will continue to grow due to the new road development connecting the Tshwane,

Johannesburg and the West Rand

communities which will cause a

westward expansion with the Lanseria

Airport City continuing to grow.

Most of the population is mostly

employed in blue-collar occupations.

Diepsloot residents experience low to

moderate living standards, 52.4% in the

LSM 1-3 category and 34.6% in the LSM

4-5 category. The Diepsloot community

relies heavily on public transport, mainly

on minibus taxi services. Housing is

made up of fully government-subsidized

housing (Extensions 4, 5, 6, 9, 10), brick

houses built by landowners (Extensions

2 and 7), partially government-

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subsidised houses (Extension

3/Tanganani) as well as shacks (the

biggest sections being Extensions 1, 12

and 13). A large proportion (45,5%) of

residents rent their property from a

landowner who has subdivided their

stand. There are formal and informal

traders operating within the market.

Diepsloot has two malls (Diepsloot Mall

and Bombonani Mall) and a third formal

retail space (Chuma Mall) is being built.

These malls are targeted at LSM 3-5

and their strategic placement close to

busy commuter hubs. The distribution of

products into the general township

market generally occurs by means of

general dealers (63.7 %), 36 % spaza

shops (36%) and hawkers/street

vendors (19 %). This represents

approximately 10% of retail trade sales

in South Africa.

Outside of busy commuter hubs within

township economies fewer opportunities

exists for the beneficiation of economies

of scale and profit margins will be

strained within peri-urban areas if

traditional channels of distribution are

used. This makes the use of informal

traders as a distribution channel to the

end-user economically viable. The

lower-income markets are different and

local knowledge is essential. Market-specific products that align with a market-specific

distribution channel needs innovative interaction with the specific community. That means that

the producer needs to have a product that is viewed as value for money by the lower-income

market. A distribution channel through informal traders will adapt to local needs and increase

buying power through the reduced cost of travelling. Targeting wholesalers that supply the

informal traders need to be done through correct packaging and distribution.

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Baked Goods Market

The baked goods market is

divided into bread and baked

confectionary. The bread

market includes white bread,

brown bread, whole-wheat

bread and specialty/artisan

breads. While confectionery

baked goods consist baked

goods like muffins, cakes,

pastries, biscuits, rusks and

other products like doughnuts.

Bread is the second is the

second most important staple

food in South Africa after

maize. According to the South

African Chamber 1082 million

loaves of bread were baked in 2016. In South Africa the per capita consumption of bread is 25.8

kg per person. The average size of bread bought is 700-gram loaves (73.2 % of bread sold),

although economic pressure moving the market towards 600-gram loaves. Maize products are

a subsidiary product for the wheat-based products like baked goods. South Africa is a net-

importer of wheat, drought and the weak rand directly impacts the input costs of the product.

The four major bakeries, Pioneer foods, Tiger Brands, Premier Foods and Foodcorp control an

estimated 70% of the domestic bread market which is valued at R22bn per annum and accounts

for 63.5% of all sales in the bakery sector. The biscuit market has annual sales of about R4.5bn

with sales of savoury biscuits reaching R1.5bn in 2016 and those of sweet biscuits, R3.1bn. A

growing segment is the sale of par-baked products that are partially baked at central facilities

and then flash frozen for distribution to stand-alone and in-house bakeries in retail stores.

In Diepsloot bread from the four major national bakeries are sold in the retail stores, while there

are only two bakeries (Checkers and Boxers) who are baking fresh bread every day. Both

bakeries don’t seem to cope with the current demand for freshly baked bread based upon

observations and antidotal evidence. The bread is sold as 600-gram loaves with Boxer selling it

for R 7.50 and Checkers selling it for R 7.99. Both suppliers do not offer delivery services of their

baked goods. Cookies from the big national bakeries are sold retail in Diepsloot as well as the

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smaller value bakeries. The

value market of cookies is

selling 4kg bulk packs at R 72

per pack. Lower LSM groups

eat biscuits that are generic

and largely commoditised

brands. Studies show that

these choices are influenced

more by affordability and not

necessary preference. A

misconception is that this

market is prepared to

purchase cheap and shoddy

products. In reality due to

lower income and buying

power the market seeks the

best quality at the most

reasonable price. This market

cannot afford wastage and

actively seeks the best

possible value for their money.

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Competitors

Porter’s Five Forces Analysis

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SWOT Analysis

• HigHigh set-up costs for SMME

• Maize as a substitute staple product

• Low disposable income

• Weak future economic growth

• Unreliable electricity supply

• High food inflation

• Competitive market

• Cumbersome legislative compliance

• A low skills environment

• Frequencies of deliveries

• Lack of customer business acumen

• Condition of structures to be used

• Dependency op Eskom supply

• Installed latent capacity

• Developing an underserviced market

• Grow micro-businesses

• Cost saving of bulk buying

• Establishing economies of scale through increased capacity

• Help distribution base with marketing

• Diversity of product

• Contribute to nutrition within community

• Weaknesses are opportunities to facilitate development

• Quality value product

• Staple food product

• Established support and knowledge base

• Leveraging local social network

• Close to and part of the local market

• Low overheads

• Low delivery, storage and refrigeration costs

• Provides social benefit to local community

Strength Opportunity

ThreatWeakness

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5. OPERATING PLAN

Proposed Site

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Production Capacity to be Installed

Bakery Floor Plan

Equipment Capacity per batch Dimensions Power Usage PressureElectrical 3 deck 9 tray oven 60 loaves 1650X800X1630 mm 25.2 Kw/h 400V/50Hz

Oven 3 Deck 9 Tray Gas 60 loaves 1380×900×1510+120 mm 0,9 Kg/ hr 2.8 Kpa

Double Door Proofer 80 loaves 1010 x 750 x 1540 mm 4.5 Kw/h 220 Volts 

25kg Dough Mixer 25kg Dough 490 x 740 x 855mm 0.5 kW/h 380V/50 Hz

Double Door Proofer

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Convert the building into a food producing structure

• Treat the floor in order to make sure it is suitably flat, durable and cleanable. The floor is

also to have a non-slip surface.

• Water needs to be connected for baking and cleaning purposes.

• Make sure the building is compliant with fire regulations.

• Ensure enough ventilation throughout the building.

• Plan plant layout in order to prevent cross-contamination.

• Certify safe power connections.

• Suitable connections to drainage.

• Have the building fumigated and verify that it is rodent and insect free.

Processes

Bread

1. Weighing of ingredients

The first step, which must also be

a continuous process is the

weighing of different ingredients

as per the formulation of the

recipe. Minor ingredients must be

weighed more precisely. Salt,

sugar, oxidizing agents and yeast

are to be added in a solution form.

The sequence of addition of

ingredients has a direct effect

upon the characteristics of the

dough. The calibration of the

scale of regular spot checks on

the correct scaling of the

ingredients are important. This

insures the correct dough

consistency, taste and

profitability.

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2. Mixing

The mixing of the flour and ingredients to form the dough involves the elements of hydration,

blending, and dough development. Hydration is important, since absorption rates differ from

batches of flour. Decent flour absorbs more water and therefore less flour is required. The

absorption rate for quality flour is 60 to 64% compare to the 54-55% of cheap flour. Dough

at optimum mixing must be elastic, silky and smooth. The correct dough temperature also

has an impact on the quality of the dough. Warmth lessen the amount of yeast to be used.

The dough temperature is greatly influenced by the water temperature. Required Dough

temperature is between 28 and 30 degrees Celsius.

3. Scaling and panning

Dough is weighed and separated for division in greased pans. The baking weight yield loss

should be considered when panning. For white bread it is 13 % loss during baking, thus 13

% more dough is needed for the required finished bread weight.

4. Proofing

Proofing refers to the dough resting period during fermentation. The dough finally proofed or

fermented in baking pan for desired dough height. It is generally carried out at 30-35ºC and

at 85% relative humidity. Proofing takes about 55-65 minutes. During proofing the dough

increases remarkably in volume. The dough expands by a factor of 3-4 during proofing.

Temperature, humidity and time influence proofing. Bread needs to be baked immediately

after proofing.

5. Baking

Bread is cooked when core temperature reaches 91oC at altitude. Cooking times vary

according to oven temperature:

• 180oC ~ 45 mins

• 230 - 250oC ~ 35 mins

6. Cooling

Bread must be de-panned immediately after being taken out of oven. Bread must cool to

room temperature, before bagging After baking, bread is cooled prior to packaging to

facilitate slicing and to prevent condensation of moisture in the wrapper.

7. Packaging

After the bread has cooled to room temperature, the bread must packaged.

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Cookie

1. Weighing of ingredients

The same first step as with

bread. Precision is in the

process, as well as correct

recording is important. It is an

important process in ensuring

dough consistency, taste and

profitability.

2. Mixing of ingredients

Cookie dough is short-dough

(fat added through oil or

margarine) and elastic dough.

Short-dough cookies are

typically high in fat and sugar,

and low in water. In cookie

production, we want to

minimize the amount of water

used in the dough for two

reasons. The more water we

put in the dough, the more energy we must use in the oven to take it out in order to achieve

our targeted finished moisture level of 2 or 3%. Secondly, the more water, the more the

cookie will spread, and this will cause problems in packaging. Elements which affect this step

is water temperature, mixing time, and the reuse of previous dough. The ideal temperature

for the dough is 20 degree Celsius.

3. Molding of the dough

The dough is laminated into sheets and shaped through either using a cutter or a molder. In

out process we will use a manual mold to form the cookies. The cookies will be placed on

trays for baking.

4. Baking

For a variety of soft doughs and cookies, a preference will be given for radiant heat, a longer

baking time at a lower temperature. The baking temperature is 170 degree Celsius, no longer

than 15 minutes.

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5. Cooling

The cookies are cooled to room temperature through natural cooling. Forced cooling can

influence the texture quality of the cookie.

6. Sorting

The biscuits are sorted in order to remove broken, burnt or incorrectly sized cookies.

7. Packaging

Package the cookies in to bulk and small packaging.

Formulation and ingredients

Record needs to be kept of all changes to formulations and accurate records needs to be kept

of the actual mixing quantities. This is necessary since any adjustments to formulations will

impact taste, yield and costs.

Basic Bread Formulation

Basic Cookie Formulation

Ingredient Baker’s Percent Weight

Flour 100 % 500

Water 61 % 305

Dry yeast 3 % 15

Salt 2 % 10

Sugar 8 % 40

Shortening 3 % 15

Ingredient Baker’s Percent Weight

Flour 100 % 500

Flavouring 15 % 75

Sugar 31 % 155

Shortening 35 % 175

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Basic Vetkoek Formulation

Basic Scone Formulation

Production capacity and product mix

Ingredient Baker’s Percent Weight

Flour 100 % 500

Water 61 % 305

Dry yeast 3 % 15

Salt 2 % 10

Sugar 8 % 40

Shortening 3 % 15

Ingredient Baker’s Percent Weight

Flour 100 % 500

Baking Powder 7.5 % 500

Salt 5 % 37.5

Eggs 25 % 25

Maas 63 % 126

Oil 25 % 312.5

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The product mix is 720 loaves of bread and 72 of 4kg bulk cookies (290 kg) a day. That would

be 3600 (2.160 tons) loaves of bread a week and 360 bulk cookies (1.450 tons). Monthly

production will then be 15 660 loaves (9.396 tons) and 6.307 tons of cookies (1 566 of bulk

packaging). Spare mixing capacity would be used to make to make vetkoek and scone premixes

which are to be sold to the micro-bakeries in Diepsloot. Eight batches of 20 liter (12.5 kg) of both

vetkoek and scone premixes will be made a day, 40 (500 kg) a week and 174 (2.175 tons) a

month. Based upon these optimum product mixes monthly production will be a total of 17.878

tons a month.

Job creation and enterprise development

The venture is aimed at assisting local existing micro-enterprises. The installed capacity will

create economies of scale for smaller local bakeries. This capacity will be rented-out to these

bakeries. DWCC will train and assist these enterprises in order to ensure their viability.

Ingredients will be bought in bulk by DWCC in order to secure volume discounts. Support will be

granted in the pricing and marketing of their baked goods products. Though the costing of the

project is based upon it being a sole operation, preference will be giving for future joint ventures

between DWCC and local businesses.

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Assessment DWCC has a structure which needs to be converted into a food processing structure. Baking

equipment will be installed, along with water, drainage and 3-phase power. As a bakery the

production process will have a well-defined production procedure and a specific product

formulation. The bakery at the start will only operate for 8 hours a day and five days a week.

Leaving the operation with a reasonable latent capacity which can be upscaled when the market

share and product mix grows. The industry has well established suppliers which gives DWCC

easy access to ingredients.

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6. MARKETING AND SALES PLAN

DWCC will sell into the local community of Diepsloot through its social network of established

SMME’s. DWCC will assist them in reaching further distribution channels and grow their market

share. The following outlets will be targeted:

• Spaza shops

• Hawkers

• Creches

• Schools

• Feeding schemes

• Weddings and funerals

DWCC would also grow their product offering from mainly scones and vetkoek to include bread,

cookies and special occasion baking offerings like birthday cakes. Seeking to diversify the

product offering to include more baked goods.

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Pricing and distribution strategy

The smaller volumes that are geographically dispersed makes traditional distribution channels

into lower income markets uneconomical. Poor roads, limited access to electricity and the

telecommunications networks restrains the growth of traditional retail distribution channels into

the lower income market. Each informal market is different and local knowledge is essential.

Market specific products that align with a market specific distribution channel needs innovative

interaction with the specific community. That means that the producer needs to have product

that is viewed as value for money by the lower income market. DWCC being within a 2km of

Diepsloot gives it a competitive advantage in delivery the product timeously and being more

responsive to the market. Smaller and more frequent deliveries to our distribution partners is a

competitive advantage. This cost saving can be passed on to SMME’s. Working through locally

established business concerns gives DWCC competitive market information and allows faster

modifications to product offerings in order to meet market demand.

In the current value market, DWCC has the opportunity to be competitive. With fresh bread

Checkers seems to price itself out of the market with a selling price of R 8.99 for White Bread,

white Boxers offering a more competitive price of R 7.50 for White Bread. At this pricing level it

allows DWCC to offer a whole sale discount. Cookies are sold at R 72 for 4kg by Wholesalers

of value biscuits. These bulk purchases are then repacked by hawkers and resold. DWCC will

offer a bulk offering which is price comparable, but includes already smaller (sellable) packaging

within such bulk offerings.

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7. FINANCIAL PLAN

Start-up Capital

Assets Amount Unit Price Total Cost

Fixed Assets Triple Deck Oven (electric) x 2 74,250.00R 148,500.00R 219,500.00R

Double Door Proofer x 1 20,000.00R 20,000.00R

Stainless Steel Double Sink x 1 6,800.00R 6,800.00R

Soap Dispensers x 4 750.00R 3,000.00R

Towel Dispensers x 2 350.00R 700.00R

Fire Extinguisher x 1 3,500.00R 3,500.00R

Signage x 8 250.00R 2,000.00R

Double Door Cooler x 1 35,000.00R 35,000.00R

Movable Assets Mixer x 2 9,920.00R 19,840.00R 52,801.10R

Stand x 2 1,948.05R 3,896.10R

Scale x 1 3,065.00R 3,065.00R

Sealer x 4 1,500.00R 6,000.00R

Label Printer x 1 5,500.00R 5,500.00R

Cooling Rack x 1 4,500.00R 4,500.00R

Pans, small utencils x 1 10,000.00R 10,000.00R

Building Renovations Instalattion x 1 7,500.00R 7,500.00R 79,150.00R

Shelving x 6 2,500.00R 15,000.00R

Solar Geyser x 1 25,000.00R 25,000.00R

Electrical Fitting x 1 10,500.00R 10,500.00R

Painting, plastering, floors x 1 8,500.00R 8,500.00R

Plumbing x 1 12,650.00R 12,650.00R

Office Equipment POS x 1 12,500.00R 12,500.00R 34,500.00R

Computer x 1 15,000.00R 15,000.00R

Printer x 1 2,500.00R 2,500.00R

Desk, chairs x 1 4,500.00R 4,500.00R

Delivery Van 1 Ton Van x 1 150,000.00R 150,000.00R 150,000.00R

Working Capital Monthly Expenses & stock x 3 255,736.15R 255,736.15R

791,687.25R

Start-up Capital

Total Start-up Capital

Report Date 29

Projected Sales

Report Date 30

Projected First-year Income Statement August September October November December January February March April May June July Annual Totals

Total Revenue R53,500 R66,750 R76,763 R87,702 R88,750 R88,750 R96,975 R105,990 R115,872 R126,707 R138,588 R151,617 R1,197,963.69

Total Cost of Goods Sold R23,780.00 R30,305.00 R34,850.75 R39,905.86 R40,545.00 R40,545.00 R44,404.50 R48,640.20 R53,289.23 R58,392.42 R63,994.64 R70,145.23 R548,797.83

Gross Margin R29,720.00 R36,445.00 R41,911.75 R47,796.01 R48,205.00 R48,205.00 R52,570.50 R57,349.80 R62,583.14 R68,314.74 R74,593.16 R81,471.76 R649,165.86

Payroll R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R25,916.80 R311,001.60

Operating Expenses

Advertising 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 R12,000

Tools 250 250 250 250 250 250 250 250 250 250 250 250 R3,000

Insurance 850 850 850 850 850 850 850 850 850 850 850 850 R10,200

Legal and Professional Services 55,750 450 450 450 450 450 450 450 450 450 450 450 R60,700

Banking 550 550 550 550 550 550 550 550 550 550 550 550 R6,600

Office Expense 350 350 350 350 350 350 350 350 350 350 350 350 R4,200

Rent or Lease -- Other Business Property 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 R42,000

Repairs and Maintenance 650 650 650 650 650 650 650 650 650 650 650 650 R7,800

Logistics 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 R38,400

Miscellaneous 450 450 450 450 450 450 450 450 450 450 450 450 R5,400

Total Operating Expenses R66,550 R11,250 R11,250 R11,250 R11,250 R11,250 R11,250 R11,250 R11,250 R11,250 R11,250 R11,250 R190,300

Income (Before Other Expenses) -R62,747 -R722 R4,745 R10,629 R11,038 R11,038 R15,404 R20,183 R25,416 R31,148 R37,426 R44,305 R147,864

Other Expenses

Depreciation 8,933 8,933 8,933 8,933 8,933 8,933 8,933 8,933 8,933 8,933 8,933 8,933 R107,190

Bad Debt Expense 535 668 768 877 888 888 970 1,060 1,159 1,267 1,386 1,516 R11,980

Total Other Expenses 9,468 9,600 9,700 9,810 9,820 9,820 9,902 9,992 10,091 10,200 10,318 10,449 R119,170

Net Income Before Income Tax -R72,214.32 -R10,321.82 -R4,955.19 R819.68 R1,218.18 R1,218.18 R5,501.43 R10,190.58 R15,325.10 R20,948.35 R27,107.96 R33,856.28 R28,694.40

Income Tax R0.00 R0.00 R0.00 R0.00 R0.00 R0.00 R0.00 R0.00 R0.00 R0.00 R0.00 R8,034.43 R8,034.43

Net Profit/Loss -R72,214.32 -R10,321.82 -R4,955.19 R819.68 R1,218.18 R1,218.18 R5,501.43 R10,190.58 R15,325.10 R20,948.35 R27,107.96 R25,821.84 R20,659.97

Report Date 31

Projected 3-year Income Statement

Revenue 2019 2020 2021

Bread 763,144 854,721 940,193

Cookies 160,996 180,316 198,347

Vetkoek 85,286 95,520 105,072

Scones 188,538 211,163 232,279

Total Revenue R1,197,964 R1,341,719 R1,475,891

Cost of Goods Sold

Bread 401,923 450,153 495,169

Cookies 48,299 54,095 59,504

Vetkoek 30,703 34,387 37,826

Scones 67,874 76,019 83,620

Total Cost of Goods Sold 548,798 614,654 676,119

Gross Margin 649,166 727,066 799,772

Payroll 311,002 327,818 345,560

Operating Expenses

Advertising 12,000 12,000 12,180

Tools 3,000 3,144 3,270

Insurance 10,200 10,690 11,117

Legal and Professional Services 60,700 63,614 66,158

Banking 6,600 6,917 7,193

Office Expense 4,200 4,402 4,578

Rent or Lease -- Other Business Property 42,000 44,016 45,777

Repairs and Maintenance 7,800 8,174 8,501

Logistics 38,400 40,243 41,853

Miscellaneous 5,400 5,659 5,886

Total Operating Expenses R190,300 R198,858 R206,513

Income (Before Other Expenses) R147,864 R200,389 R247,699

Other Expenses

Depreciation 107,190 107,190 107,190

Bad Debt Expense 11,980 13,417 14,759

Total Other Expenses R119,170 R120,607 R121,949

Net Income Before Income Tax R28,694 R79,782 R125,750

Income Tax R8,034 R26,096 R39,343

Net Income/Loss R20,660 R53,686 R86,408

Report Date 32

First-year Projected Cash Flow

August September October November December January February March April May June July Totals

Beginning Balance R846,687 R232,474 R227,108 R227,948 R234,253 R243,672 R253,379 R265,066 R281,180 R302,140 R328,408 R360,489

Cash Inflows

Cash Sales 37,985 47,393 54,501 62,268 63,013 63,013 68,852 75,253 82,269 89,962 98,397 107,648 R850,554.22

Accounts Receivable - 14,713 18,356 21,110 24,118 24,406 24,406 26,668 29,147 31,865 34,844 38,112 R287,745.34

Total Cash Inflows 37,985 62,105 72,858 83,378 87,131 87,419 93,259 101,921 111,417 121,827 133,242 145,760 R1,138,299.56

Cash Outflows

Investing Activities

New Fixed Asset Purchases 535,951 - - - - - - - - - - - R535,951

Additional Inventory - R0

Cost of Goods Sold 23,780 30,305 34,851 39,906 40,545 40,545 44,405 48,640 53,289 58,392 63,995 70,145 R548,798

Operating Activities

Operating Expenses 66,550 11,250 11,250 11,250 11,250 11,250 11,250 11,250 11,250 11,250 11,250 11,250 R190,300

Payroll 25,917 25,917 25,917 25,917 25,917 25,917 25,917 25,917 25,917 25,917 25,917 25,917 R311,002

Taxes - - - - - - - - - - - 8,034 R8,034

Total Cash Outflows R652,198 R67,472 R72,018 R77,073 R77,712 R77,712 R81,571 R85,807 R90,456 R95,559 R101,161 R115,346 R1,594,085

Net Cash Flows -R614,213 -R5,367 R840 R6,305 R9,419 R9,707 R11,687 R16,114 R20,961 R26,268 R32,080 R30,413 -R455,785

Operating Cash Balance R232,474 R227,108 R227,948 R234,253 R243,672 R253,379 R265,066 R281,180 R302,140 R328,408 R360,489 R390,902

Line of Credit Drawdown R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Ending Cash Balance R232,474 R227,108 R227,948 R234,253 R243,672 R253,379 R265,066 R281,180 R302,140 R328,408 R360,489 R390,902

Line of Credit Balance R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Report Date 33

Second-year Projected Cash Flow

Year 1 Totals August September October November December January February March April May June July Year 2 Totals

Beginning Balance R390,902 R404,616 R396,343 R395,021 R399,820 R408,106 R416,715 R427,541 R443,326 R464,438 R491,595 R525,262

Cash Inflows

Cash Sales R850,554 42,543 53,080 61,042 69,741 70,574 70,574 77,115 84,283 92,142 100,758 110,205 120,566 R952,621

Accounts Receivable R287,745 41,695 16,478 20,559 23,643 27,012 27,335 27,335 29,868 32,645 35,689 39,026 42,685 R363,969

Total Cash Inflows R1,138,300 R84,238 R69,558 R81,601 R93,383 R97,586 R97,909 R104,450 R114,152 R124,787 R136,446 R149,231 R163,251 R1,316,590

Cash Outflows

Investing Activities

New Fixed Asset Purchases R535,951 - - - - - - - - - - - - R0

Additional Inventory R0 R0

Cost of Goods Sold R548,798 26,634 33,942 39,033 44,695 45,410 45,410 49,733 54,477 59,684 65,400 71,674 78,563 R614,654

Operating Activities

Operating Expenses R190,300 16,572 16,572 16,572 16,572 16,572 16,572 16,572 16,572 16,572 16,572 16,572 16,572 R198,858

Payroll R311,002 27,318 27,318 27,318 27,318 27,318 27,318 27,318 27,318 27,318 27,318 27,318 27,318 R327,818

Taxes R8,034 - - - - - - - - 101 - - 25,995

Total Cash Outflows R1,594,085 R70,523 R77,831 R82,923 R88,584 R89,300 R89,300 R93,623 R98,367 R103,675 R109,289 R115,564 R148,447 R1,141,330

Net Cash Flows -R455,785 R13,715 -R8,274 -R1,322 R4,799 R8,286 R8,609 R10,827 R15,785 R21,112 R27,157 R33,667 R14,804 R175,260

Operating Cash Balance R404,616 R396,343 R395,021 R399,820 R408,106 R416,715 R427,541 R443,326 R464,438 R491,595 R525,262 R540,066

Line of Credit Drawdown R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Ending Cash Balance R404,616 R396,343 R395,021 R399,820 R408,106 R416,715 R427,541 R443,326 R464,438 R491,595 R525,262 R540,066

Line of Credit Balance R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Report Date 34

Third-year Projected Cash Flow Year 2 Totals August September October November December January February March April May June July Year 3 Totals

R540,066 R558,259 R551,430 R552,248 R559,800 R571,187 R582,930 R597,112 R616,748 R634,266 R666,411 R705,717

R952,621 46,798 58,388 67,146 76,715 77,631 77,631 84,826 92,712 101,356 110,833 121,226 132,622 R1,047,883

R363,969 46,698 18,126 22,615 26,007 29,713 30,069 30,069 32,855 35,909 39,258 42,928 46,954 R401,200

R1,316,590 93,496 76,513 89,761 102,722 107,345 107,700 114,894 125,567 137,265 150,091 164,154 179,576 R1,449,083

R0 - - - - - - - - - - - - R0

R0 R0

R614,654 29,297 37,336 42,936 49,164 49,951 49,951 54,706 59,925 65,652 71,939 78,841 86,419 R676,119

R198,858 17,209 17,209 17,209 17,209 17,209 17,209 17,209 17,209 17,209 17,209 17,209 17,209 206,513

R327,818 28,797 28,797 28,797 28,797 28,797 28,797 28,797 28,797 28,797 28,797 28,797 28,797 345,560

- - - - - - - - 8,089 - - 31,254 39,343

R1,141,330 R75,303 R83,342 R88,942 R95,170 R95,958 R95,958 R100,712 R105,931 R119,747 R117,946 R124,847 R163,679 R1,267,534

R175,260 R18,193 -R6,828 R818 R7,552 R11,387 R11,742 R14,182 R19,636 R17,518 R32,145 R39,306 R15,897 R181,549

R558,259 R551,430 R552,248 R559,800 R571,187 R582,930 R597,112 R616,748 R634,266 R666,411 R705,717 R721,615

R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

R558,259 R551,430 R552,248 R559,800 R571,187 R582,930 R597,112 R616,748 R634,266 R666,411 R705,717 R721,615

R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Report Date 35

Projected Balance Sheet

ASSETS 2019 2020 2021

Current Assets

Cash 390,902 540,066 721,615

Accounts Receivable 47,684 59,396 71,446

Inventory - - -

Prepaid Expenses - - -

Other Initial Costs - - -

Total Current Assets R438,586 R599,462 R793,060

Fixed Assets

Real Estate -- Land - - -

Real Estate -- Buildings - - -

Leasehold Improvements 79,150 79,150 79,150

Equipment 272,301 272,301 272,301

Furniture and Fixtures 34,500 34,500 34,500

Vehicles 150,000 150,000 150,000

Rental deposit - - -

Total Fixed Assets R535,951 R535,951 R535,951

(Less Accumulated Depreciation) R107,190 R214,380 R321,571

Total Assets R867,347 R921,033 R1,007,440

LIABILITIES & EQUITY

Liabilities

Total Liabilities R0 R0 R0

Equity

Common Stock 846,687 846,687 846,687

Retained Earnings 20,660 74,346 160,754

Dividends Dispersed/Owners Draw - - -

Total Equity R867,347 R921,033 R1,007,441

Total Liabilities and Equity R867,347 R921,033 R1,007,440

R0 R0 R0

Balanced! Balanced! Balanced!Balance sheet in or out of balance?

Report Date 36

Breakeven Analysis

Sensitivity Analysis

Gross Margin % of Sales 54%

Gross Margin 649,165.86R Payroll 311,001.60R Total Fixed Expenses 620,471.46R

Total Sales 1,197,963.69R Operating Expenses 309,469.86R Yearly Breakeven Amount 1,145,011.34R

Gross Margin/Total Sales 54% Operating + Payroll 620471.4569 Monthly Breakeven Amount 95417.61193

Gross Margin % of Sales Total Fixed Expenses Breakeven Sales in Rands (Annual)

15%

Decrease in Sales

10%

Decrease in Sales2019

10%

Increase in Sales

15%

Increase in Sales

Total Revenue 1,018,269.13R 1,078,167.32R 1,197,963.69R 1,317,760.06R 1,377,658.24R

Total Cost of Goods Sold 548,797.83R 548,797.83R 548,797.83R 548,797.83R 548,797.83R

Payroll 311,001.60R 311,001.60R 311,001.60R 311,001.60R 311,001.60R

Operating Expenses 190,300.00R 190,300.00R R 190,300.00 190,300.00R 190,300.00R

Other Expenses 119,169.86R 119,169.86R 119,169.86R 119,169.86R 119,169.86R

151,000.15-R 91,101.96-R 28,694.40R 148,490.77R 208,388.96R

15%

Decrease in Costs

10%

Decrease inCosts

2019 10%

Increase in Costs

15%

Increase in Costs

Total Revenue 1,197,963.69R 1,197,963.69R 1,197,963.69R 1,197,963.69R 1,197,963.69R

Total Cost of Goods Sold 466,478.15R 493,918.04R 548,797.83R 603,677.61R 631,117.50R

Payroll 264,351.36R 279,901.44R 311,001.60R 342,101.76R 357,651.84R

Operating Expenses 161,755.00R 171,270.00R R 190,300.00 209,330.00R 218,845.00R

Other Expenses 101,294.38R 107,252.87R 119,169.86R 131,086.84R 137,045.34R

204,084.80R 145,621.33R 28,694.40R 88,232.52-R 146,695.99-R

Report Date 37

8. PATH TO REALISATION

• Funding

o Funding for the project needs to be found. There are various funding models

available. For BEE points a potential funder could provide:

▪ Interest free loan

▪ Capital assistance

▪ Take equity, but with reduced voting rights and differed dividends.

o Grants from private or public entrepreneurial initiatives.

o Equity partner with similar values.

o Raise funds through donations.

• Establish marketing network and social distribution network.

• Refurbish building for food production.

• Secure and install equipment.

• Employ a workforce.

• Establish operations procedures.

Report Date 38

Instructions for Getting Started with Estimated Start-

Up Costs Determining a business' startup costs is critical to ensure enough cash is available to begin

business operations within the budgeted time frame as well as within the cost budget. Startup

costs typically fall within two categories: monthly costs and one-time costs. Monthly costs cover

costs that occur each month during the startup period, and one-time costs are costs that will be

incurred once during the startup period.

Steps for preparation:

• Step 1: Enter the company name and the date this estimate is being prepared.

• Step 2: Enter the number of months and the monthly cost for each cost item that is

recurring. For one-time costs only, skip the monthly costs. If there are cost items that have

both recurring and one-time amounts, enter those as well. The total cost will calculate

automatically in the far-right column.

• Step 3: Once all of the costs are entered, review the individual items and total amount to

see where the budget can be fine-tuned or move something out into the future when more

revenue is coming in.

Report Date 39

START-UP COSTS

Home-Based Agency Date

REVENUE JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD

Estimated Product Sales

Less Sales Returns & Discounts

Service Revenue

Other Revenue

Net Sales

Cost of Goods Sold

Gross Profit

EXPENSES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD

Salaries & Wages

Marketing/Advertising

Sales Commissions

Rent

Utilities

Website Expenses

Internet/Phone

Insurance

Travel

Legal/Accounting

Office Supplies

Interest Expense

Other 1

Total Expenses

Income Before Taxes

Income Tax Expense

NET INCOME

* In the service industry, Cost of Goods Sold is the monetized value of the time spent on the client.

Report Date 40

Instructions for Getting Started on Profit & Loss

Projections Completing projections for Profit and Loss of a new company is a good exercise to understand

and communicate when the company will begin to break even and see how sales and profits will

grow. The top portion of the model to the left, Revenue, is a good way to forecast sales, month

by month for the first year. The lower portion then applies estimated expenses for the same

period of time to derive the business' profitability.

Steps for preparation:

• Step 1: Enter the company name and the date this projection is being prepared.

• Step 2: For each month, beginning in January or whenever the start is estimated, enter

the expected sales to be. This could be for a single service or multiple services. Add lines

to this model for additional offerings. From this, subtract any product returns or discounts

that are to be tracked (these should be shown as negative numbers, for example, -10).

Below Net Sales, enter the Cost of Goods Sold. This refers to the monetized value of the

time spent on a particular client.

• Step 3: For each month, enter the estimated salaries, marketing, utilities, and other items

that are projected.

• Step 4: Once all of the costs have been entered, review the individual items and total

amount to see where projections can be fine-tuned or move something out into the future

when more revenue is coming in. The objective is to get to profitability and positive cash

flow as quickly as possible.