Production of Beauty Lotions and Creams General Information: Beauty lotion and creams can be easily produced in a small factory located within an industrial estate in the urban or semi-urban area. Beauty shops, salons, spa parlors and general goods retailers are important customers for this business. The product end user though will include a diverse group of people. Basic literacy is necessary. A training in or knowledge of process technology will provide added advantage. The training can be obtained from either a university or a technical institute. Apart from these, the business owner needs to be self motivated and able to communicate and manage relationships very well. Business Idea 14 Production of Beauty Lotions and Creams Beauty lotions and creams are used by a diverse group of people and the use of the product grows even as the population grows. It is therefore, possible to envisage that this business has the potentials to grow and develop into a global brand in the cosmetics industry. Products and Services: Beauty lotions and creams are the main product. It is possible to produce different types of this. The differentiation could be in color and or fragrance. This business will begin with one type/brand. The lotion will be made and packed in bottles for the market. Total Cost: N5,000,000 to N10,000,000 including 3 years rent, incorporation of business, cost of machinery and equipment, cost of materials and labor at startup. Summary of startup cost Startup Requirements Cost 3 years rent Business incorporation, legal and agency fees Insurance Other Costs 900,000 350,000 450,000 1,000,000 Total startup expenses 2,700,000 Startup Assets Cash required at startup for recurrent expenses (1 year forecast) Startup inventory/stock (6 months supplies) Cost of other assets required at startup (furniture, equipment) 1,550,000 1,700,000 1,950,000 Total Assets 5,200,000 Total Requirements 7,900,000 Company Ownership: Two ownership models have been recommended for this type and size of business. Anyone of the two (sole-proprietorship or partnership) can be used. Sole-proprietorship: The sole-proprietorship is that business where the owner is also the manager of the business. It is appropriate for this business in the case of an individual who has the basic education and either acquired skills or has keen interest in this field of business. Partnership: The partnership arrangement involves 2 to 4 persons (we do not recommend more than 4) who bring together different needed technical and management skills into running a business. This arrangement is usually resorted to when none of them has the right mix of technical and management skills to run the business successfully. Market Analysis: The estimated minimum output and sales target in the first three years of the business are presented here. The business owner can and is in fact expected to surpass these targets. Potential Customers Year Output/Sales Target (bottles) Offices Households Hotels 1 2 3 7,500 14,000 21,000 Strategy and Implementation Summary: SWOT Analysis of Business Idea Strengths Huge demand Simplicity of idea Low direct completion from producers of the same product Easy to acquire technical and management skills Weaknesses Requires extensive marketing drive to establish the new brand Factory should be located within an industrial estate Opportunities Large and growing population Funding Agencies both private and public is prepared to facilitate access to capital Local Govt. is creating enabling environment for medium scale businesses Threats Down turn in economy Possible entrance of a large scale producer of similar product Competitive Advantage: This may derive from one, a combination of some or all of the following factors: High (world class) product quality Good marketing and relationship management Good pricing Market Strategy: The market Strategy should be pursued aggressively. The business should use existing distribution channels, the wholesalers and retailers, to sell the product. Major end users like the beauty shops and parlors, should be approached directly to market the product. Advertisement on bill boards and in the broadcast media will also project the product. Finally, as a marketing strategy, the product should be beautifully packaged to make it very attractive to customers. Sales Strategy: A simple strategy is advocated. This should ensure prompt payment and delivery of products, eliminate delays concluding sales deals and encourage customers to contribute to transact business. The business owner-manager will be directly involved in sales and personal selling in the first three years of the business. Important Milestones: 4 weeks – develop business plan; 8 weeks – register business name; 16 weeks – buy equipment, materials and startup; 20 weeks – first products reach the market. Number of Employees required at startup: 10 to 15 persons including the business owner-manager. Personnel Plan Yr. 1 Yr. 2 Yr.3 Business Owner-manager (CEO) 4 Production staff including 1 store keeper 4 Admin. Staff including 1 Quality control, 1 Account, 2 Sales Security/Cleaner 480,000 864,000 864,000 240,000 600,000 1,200,000 1,200,000 360,000 840,000 1,440,000 1,440,000 480,000 Total Payroll 2,664,000 3,660,000 4,560,000 Startup Funding and Investment Plan Startup Sources of Fund Amount (N) Business Owner Local Govt. Additional investment required (from financial institutions and other investors) 50,000 4,500,000 3,350,000 Total Funding 7,900,000 Important Assumptions Additional funding requirement (from Local Govt., financial institutions and other investors) will be realized High product quality Effective marketing and relationship management The business will develop customers from the beauty care providers (beauty shops, Beauty parlors, spas, etc) in its first year of operation. Revenue Projection Year Output (bottles) Unit Price (N) Total Revenue (N’000) 1 2 3 7,500 14,000 21,000 480 480 480 3,600 6,720 10,080
Posted on: Thu, 20 Jun 2013 19:15:51 +0000
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