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KPA1153 INNOVATION MANAGEMENT &

ENTREPRENEURSHIP

GROUP PROJECT PROPOSAL


(Entrepreneurial Case Study)

Prepared for:
DR. YAP CHUAI YAN

Prepared by:

Team Members Name: Student ID:


SHAMSULKAHAR BIN ABDUL SHUKOR KBB17025
SHEIKH MOHAMAD AMIR AIZAT BIN SH OTHMAN KBB17028
SITI NUWAIRANI BINTI ISMAIL KBB17022
NUR EMILIA BINTI ABDULLAH HARUN KBB17032
NOOR ATIKAH BINTI ROZEMI KBB17019
KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

EXECUTIVE SUMMARY

The purpose of this project is for the KPA1153 Innovation Management & Entrepreneurship
project team (namely OPTIMAL BUSINESS SOLUTION to expose with and study the
entrepreneurship real practice, to do business analysis and to provide suggestions on improving
the business operation and other possible areas that can give better return on investment and
business sustainability.

Looking at macro perspectives, the development of entrepreneurship, as both concept and activity,
has been growing in importance in Malaysia. According to a report by SME Corp Malaysia in
2016 in their website title `SME Are The Backbones Of The Economy’, 98.5% business
establishments in Malaysia are SMEs, cut across all sizes and sectors. From 907,065
establishments, 76.2% belongs to microenterprises and only 4.2% are from Pahang (Source:
Economic Census 2016, Department of Statistics Malaysia (DOSM).

INTRODUCTION

Further to the macro aspect of entrepreneurship in Malaysia, this proposal of the project is to have
a more explicit understanding at micro level of entrepreneurship, by engaging CYECAH
CYECAH ENTERPRISE (later will be referred as CYECAH), a food-processed base
entrepreneur (specifically black bilimbi sambal- dried chilly sauces) based in Kuantan, Pahang.

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

OPTIMAL BUSINESS SOLUTION Team chooses food processing entrepreneur because we


learned that the business opportunities are bright enough, considering several market drivers of
Malaysia’s food processing industry as listed below:
a. Positive business climate and government incentives encourage investment in
manufacturing both for domestic needs and export.

b. Changes in consumer lifestyles, rising per capita income, increasing urban population
raises demand for processed convenience foods.

c. Increasing awareness of international food provides opportunities for food manufacturers


to develop and introduce new food products.

d. Established infrastructure, including cold storage and port facilities allows companies to
establish supply chain.

e. Modern retail sector offers pathways to complete supply chain and venues to display and
market processed dry goods, and chilled and frozen goods, and perishables.

f. Global market penetration - Recent trend in using Online Marketing, make it easier for the
products to reach beyond local market.

Important components of the project are to learn the current CYECAH business operation, which
include raw material supplies, the process equipment, stock control, financing support, sales and
marketing mix activities including supply chain and branding, and business growth.

The project team members will further conduct analysis based on primary data information as well
as secondary data gathering. Primary data collection shall involve opinion or survey from the
public and relevant agencies in order to come out with more accurate and realistic suggestion.
Relevant agencies are those involve in the supply chain, packaging, food quality, financial or
equipment support. We will also conduct industrial analysis and competitor analysis.

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

BACKGROUND

Cyecah Cyecah Enterprise is a local based company that was registered with Suruhanjaya Syarikat
Malaysia (Ccommission of Malaysia) on 4th august 2015. the base is addressed at 137 baru 4 ½
jalan gambang 25150 kuantan Pahang. The company is focusing to be ‘sambal’-based products
manufacturer. the products will be marketed through stockists and agents, outlets and as souveniers
or door-gifts for the company’s events.

With the aim of providing an add-on of authentic food for each house in Malaysia, CYECAH
wants to spread the taste buds of Sambal Hitam Pahang which is willing to enticing for the whole
family members and help the housewife and working wife in hand over the food for family.

CYECAH is a small medium enterprise (SME) on sole proprietorship for serving food already
displayed in 7-Elevan, petrol station such Petronas and Shell and also through vendors. They also
provide orders for specific events. CYECAH had established the business around 2 years ago
(August 2015). They have one stockist in Kuantan, Pahang and have more than 30 agents in
Malaysia, most of them are housewives and working woman who are seeking for side income.

CYECAH aimed to have an improvement packaging quality system then they can market their
product in selected outlets. They also want to upgrade in attending workshop to get MALAYSIAN
HALAL STANDARD CERTIFICATE AND AUDITING for the food industry.

OPTIMAL BUSINESS SOLUTION’s project case study proposes the SWOT Analysis for
marketing analysis, market feasibility research to get the detail information about potential market
segment, customer demands, and their suggestions for future business opportunity.

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

OPTIMAL BUSINESS SOLUTION also proposes the uses of Business Model Canvas as business
model and Balanced Scorecard for the strategic and operational planning. We decided to use Mix
Marketing of 4P’s and 7P’s as a marketing strategy.

For the financial model we would conduct the Pro Forma Income Statement, Pro Forma Balance
Sheet and Pro Forma Cash Flow for the three consecutive years on the behalf of CYECAH. We
also carry out financial ratio analysis to measure the profitability and liquidity from financial
resource.

ORGANIZATION STRUCTURE

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

OPERATIONAL PLAN/ PRODUCTION STRATEGY


TYPE OF ACTIVITY DESCRIPTION
OPERATION • Planning and calculating the quantity of raw materials
tallying with order/ demand.
• Setting up the equipment

TRANSPORTATION • Buy and pickup raw materials from suppliers from one
point to another.
• Provide cash on delivery service to customer (Kuantan
residences

INSPECTION • Basic raw materials input


• Processing / work in process 1 - provide
• Processing/ work in process 2 - cooking
• Processing/ work in process 3 – packaging
• (inspection of quality and quantity of the service)

DELAY • Process delay in between providing raw materials,


cooking and packaging. Then, delay for one day after
packaging in order to transfer to agent to sell it and the
owner and partner place it in outlet.

STORAGE • Materials are stored in storage area in specific room


(room degree).

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

PROCESS SCHEDULE/ CAPACITY PLANNING

TIME OF PRODUCTION QUANTITY OF PRODUCTION

DAILY PRODUCTION 200 units of Sambal Hitam (3 or 4 times a week)

MONTHLY PRODUCTION 2400 – 3200 units

MATERIAL REQUIREMENT

MATERIAL REQUIREMENT

NO ITEM QUANTITY PRICE PER SUPPLIER TOTAL


REQUIRED UNIT AMOUNT
1 Stainless steel 2 RM550.00 RM1100.00
working table -
2 Stainless steel trolley 2 RM100.00 RM200.00
-
3 Blender heavy duty 2 RM284.60 RM569.20
-
4 Cooking stainless 2 M849.91 RM1699.82
steel heavy duty -

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

PRODUCTION SHEDULE/ CAPACITY PLANNING

PRODUCTION SCHEDULE PRODUCTION (UNITS)


2017 2018 2019 2020
JAN 1500 2000 2500 3000
FEB 1200 2200 2750 3300
MARCH 1050 2000 3000 4200
APRIL 1340 2200 3500 4500
MEI 2000 2500 3750 3500
JUNE 2200 3000 3000 3500
JULY 1000 2000 2500 3000
AUG 1100 2200 2750 3300
SEP 1400 2500 3125 3750
OCT 1500 2500 3125 3750
NOV 1200 2200 2750 3300
DIS 640 1500 1875 2250
TOTAL PRODUCTION 16130 26800 34625 41350
UNITS
GROWTH RATE 0.66 1.15 1.56
SALES (RM) 193,560 321,600 415,500 496,200

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PROCESS FLOW CHART

PROCESS COSTING FOR 200 PACKS

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

SWOT ANALYSIS

STRENGTH WEAKNESSES

• Strong cash flow • Manpower (there only have 3part time


• Got HALAL (Malaysia) and SIRIM worker) even they have strong cash
status and logo. flow, so there was lack of
• Value proposition management strategy in order to get
• Customer service and relationship the target sales.

• Unique texture and delicious and • Logistic; less equipment.


acceptable by all races and ages. • Transportation
• No MSG • Venue; Places to cook in large scales
• Vacuum packaging such as workshop.

OPPORTUNITY THREAT

• Business networking with Malaysian • Lack of marketing strategy as other


entrepreneurs company do.
• Make this product as Sambal Republic • Supplier of raw materials was not
and IKS product. enough.
• Cyecah Cyecah Entreprise will be one • Can’t control the bargain power
of the big companies in Malaysia. • Only 20% of Malaysian know the
existence of Sambal Cyecah Cyecah
• Lack of strategy in processing Sambal
into finished goods.

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

PESTLE ANALYSIS

Political Factor

Political factor can play a major role in promoting or demoting a business. Tax policy, control on
oil prices, and government stability, give high impact especially on the price of the raw materials,
thus it affect the cost of production. For the purpose of exporting the product overseas, Cyecah2
might face some restriction to export food product to some country, based on the country’s political
factor, laws and regulations.

Economic Factor

Malaysia currently facing economic recession which can change buying behavior of consumers.
Some might opt for cheaper food product, or homecooked, and some might go for smaller size
packaging of product. Cyecah2 needs to turn this problem to an opportunity by opening new job
opportunity by offering to be the agent of Sambal Hitam Cyecah2 for a side income, and by
introducing smaller packed Sambal Hitam.

Socio-cultural Factor

Consumer preferences, changing work pattern and lifestyle affects the demand for Sambal Hitam
Cyecah2. In different state in Malaysia, consumer preferences on the taste of Sambal Hitam is
different, especially in Kelantan and Terengganu, where the people tend to eat less spicy food.
This has become a challenge for Cyecah2 to penetrate the market in that places. However,
changing work pattern and lifestyle nowadays open an opportunity to sell Sambal Hitam as they
will go for instant and quick meal preparation.

Technological Factor

Technological factor has greatly bring change in business. The wide use of internet, especially
social media and online banking transactions brings in customers from all over the world.
Advertising and marketing, selling and buying, and money transfer can easily be done and is very
convenient.

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

Environmental Factor

Environmental factor might affect the production of Sambal Hitam Cyecah2 on the process of
acquiring the raw material. For example, bad weather and rainy season can decrease the production
of ‘belimbing buluh’ thus can cause increase in price, and later will give impact on the total profit
gained because the cost for the raw material has increased.

Legal Factor

In production of Sambal Hitam Cyecah2, it needs to follow the laws and regulations that has been
enforced in Malaysia. For example, in the production itself, Cyecah2 has to abide by the food
safety standard and regulation, as stated in Food Act 1983. The regulations under this act includes
Food Regulations 1985, which main focus is on food labelling requirement, and Food Hygiene
Regulation 2009, which provides an infrastructure to control the hygiene and safety of food sold
in the country to protect public health.

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BUSINESS CANVAS

Revenue Streams for year 2017

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KPA1153 I.M.E. GROUP PROJECT PROPOSAL by Optimal Business Solution

POSITIONING MAP

Quality axis: Prices axis:

-6 Lowest quality -6 Cheapest

0 Medium quality 0 Medium price

6 Highest quality 8 Expensive

Indication
1. Purple: Sambal Hitam Original Pahang 4. Blue: Sambal Hitam Cyecah-Cyecah
2. Green: Sambal Hitam Pahang Famous 5. Brown: Sambal Hitam Ori
3. Black: Sambal Hitam Little Pahang 6. Red: Sambal Pahang Zaty’s di hati

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ANSOFF MATRIX

Existing Products New Products


Existing Market Market Penetration Product Development
Sambal Hitam Pahang Sambal Ketuk – Currently produced
Cyecah2 Normal Size Packed Sambal Bilis Tempoyak – Currently
produced
Sambal Petai Tempoyak – Planning for
future

New Market Market Development Diversification


Sambal Hitam Pahang To sell, provide recipes, and demonstrate
Cyecah2 Individual/Small cooking of authentic Pahang cuisine
Packed

Market Penetration (Existing Market, Existing Product)

This strategy is aimed to increase market share within the existing industry by increasing the sale
of Sambal Hitam Pahang Cyecah2 Normal Size Packed. Market penetration is focusing on
increasing the number of agent by having them located in each state in Malaysia. Currently,
Cyecah2 already has their agent in every state except Penang, Perak, Terengganu, and Kelantan.

Product Development (Existing Market, New Product)

Cyecah2 needs to have product development to meet customer needs in the existing market and
set a new level higher than the current competitors for product of Sambal Hitam. New product
development that has been made is on the production of Sambal Ketuk and Sambal Bilis Tempoyak,
and Sambal Petai Tempoyak is planned to be produced in the near future.
Market Development (New Market, Existing Product)

Market development strategy is to find new target customers for the existing product, which is
Sambal Hitam. Previously, Cyecah2 only sells the product in normal size packaging which is
suitable when eating with family or small group and mainly target housewives. Now, the product
is also being produced in individual or small packaging, which is suitable for individual meal or
single person.

Related Diversification (New Market, New Product)

Besides focusing on selling of Sambal Hitam, Cyecah2 also diverse into the selling, provide
recipes, and demonstrate cooking of authentic Pahang cuisine. This can help the company to utilize
medium such as television and magazine to promote the brand of Cyecah2 to be known and
continue growing within the industry.
MARKET SURVEY

A market survey has been conducted from 8th December 2017 until 12th December 2017, and
number of respondents are 281.

Objectives of the survey are:


1. To have some understanding on the level of marketing of Cyecah Cyecah in the market,
2. To have some ideas of the flavours of choice by the market, in order to focus on the
favourite flavours.
3. To market the branding and products of Cyecah Cyecah
4. To extend the market to Malaysians who are studying or working abroad.

Methodology of the market survey:


1. The questions are set in the google form
2. The distribution of questions is done through online communication and social media like
WhatsApp application and Facebook groups’ postings, where the respondents are from
various part of Malaysia.

Below are the questions, objectives and outcome of the surveys:

Questions & Results Objectives and Analysis

This is the introduction and a brief about the


survey, stated on the top of the question page.

Full set of questions are attached in the


Attachment 1.
This is the upper part on the results page.

The result application shows the total respondents


as of 12th December 2017, 11.00 pm, are 281.

Demographic question, on the gender.

The obejctive of this question is to understand what


is the distribution of gender in answering the
questionaires.

The result shows that it is quite a fair distribution


of answers by male and female, there is no
dominant gender.

The list shown here is part of the total of 67


respondents who gave their contact numbers.

Objective of the question, is to send thank you note


to them and as an opening to ask for any order or
become agents if they are interested; in a way we
are helping Cyecah Cyecah Enterprise who have
given a very good cooperation in making this
Project a success.
The objective of this question is to understand
range of age of respondents.

Highest age range of respondents is from 41 to 50


years old. They are mostly parents, who need to
prepare meals for the family and do not have meals
outside, as frequent as the younger ones.

The objective of this question is understand the


marital status of respondents.

72% of the respondents are married, perhaps to


denote the interest of them who is concern with the
preparation of meals at home.

While those single are perhaps do not concern


much on the additional or a more `complete’
meals.
Objective of ths question is to understand income
bracket of respondents.

Nearly half of the respondents (47.7%) are those


monthly income RM3,000 or more. This is an
admirable percentage due to purchasing power.

For those monthly income below RM3,000,


purchasing power is strong if they are single.

As for 22.8% not working group, there might some


housewives whose monthly income of husbands
are more than RM3,000. Some might be small
entrepreneurs who might interested to become an
agent for Cyecah-Cyecah.

Objective of this question is to understand the


location of respondents, as it does somehow
contribute on the answers particularly for questions
7 and 9.

At the same time, it will serve as marketing


purposes to various locations in Malaysia. The
questionaires were sent also to some respondents
in Sabah and Sarawak.

Klang Valley, Johor Bahru and Penang are in one


group because those are metropolitan areas, some
of them might have no time or too tired to cook or
make sambal at home. So by get them aware of the
existence of instant sambal hitam, they might keen
to have stock in their kitchen.
Objective of this question is to undestand how
extensive is the marketing of Cyecah Cyecah.

35.6% is a good number indeed, if we learnt earlier


that only 24.6% of respondents are from Kuantan
and Pekan (and not all of them knows the product).

At the same time, this questionaires is able to


introduce or to market this product to 64.4% (181
respondent) who have not heard about the product.

Objective of this question is to understand


medium of marketing that is mostly effective, for
those who have heard about the product.

30.1% of respondent (or 62% of those who have


heard) knows about the product, is through their
friends, family etc ie direct contact or words of
mouth, followed by social media.

Objective of this question is to understand the rate


of respondent who would like to try tasting the
product.

73.7% answered Yes, which is a good market


penetration potential.

There is a great possibility that they will click the


Facebook link of Cyecah Cyecah Enterprise in
order to know more about the product or to make
order.
Objective of this question is to understand the
flavour of interest of the respondents.

38.4% responded that they prefer multi mixture-


hot flavour (hot, sweet, sour, salty), followed by
32.7% prefer sweet-hot mixture.

This question will assist Cyecah Cyecah


Enterprise to focus on the flavour of choice by
consumers, and this serve as `market innovation
& positioning’.

Objective of this question is to understand how


good is the respond on one of the main contributing
factors for purchasing of the product.

Cyecah Cyecah Enterprise can consider this


particular point (reason to purchase this product) in
her advertising copywriting.

She can also approach parents who have kids


studying overseas or who have spouse working
overseas as one group of effective target market.
FINANCIAL PLAN/STRATEGY/ANALYSIS

A financial plan is important for the overall success of Cyecah Cyecah Enterprise because it helps
to determine the size of investment that is the project implementation cost. Financial plan also
important for the owner company to identify and propose the relevant source of finance. Financial
plan can ensure that initial capital is sufficient. It appraises the viability of the project before actual
investment is committed. Financial plan is really important to guide the implementation of
business plans.

1.1 Financial Plan Description

NOTES :- Description
Type of Business
i) Food Service (Cyecah Cyecah Enterprise)
Schedule of Production
iii) Monthly Production

A. COMPANY ASSET PROPERTIES :-


1.0 Mixer Cooker (1 unit) =RM 3,800.00
2.0 Vacuum Machine (1 unit) =RM 4,800.00
3.0 Two Door Chiller Machine (1 unit) = RM 3,500.00
4.0 Onion Piller Machine (1 unit) = RM 2,900.00
Total Asset = RM 15,000
B. REVENUE/PROFIT INCOME :-
i. Total Sales Revenue in 2017 Production by year= 16,130 packs
Sales Profit by year =RM 193,560.00
Main Income (per month/year, etc) Sambal Hitam Pahang- 65% from total
ii.
65% from operation Revenue= RM 125,814
Side Income (per month/year, etc) Sambal Merah Bilis Tempoyak-20% from
iii.
from operation total Revenue= RM 38,712.00
Sambal Ketuk Metuk-16% from Revenue=
RM 30,969.60
C. EXPENSES :-
I. FIXED EXPENSES /CAPITAL :-
Depreciation of Machine and
i. Equiptment RM 2400.00
Manager Salaries
ii. RM1,800.00 x 2 person = RM 3,600.00
Advertising expenses
iii. RM300.00 per month
iv. Loan RM 10,000.00
v. Petrol/Travel Expenses RM 400.00 per month
Utilities Bill (electric, water, internet
vi. & etc. per month)
RM 200 per month
License and permits
vii. RM 70.00
VARIABLE EXPENSES/
II.
OPERATION OVERHEAD
i. Raw Materials RM 48290.00 (25% from revenue)
3 person (RM300-RM500 montly per person
ii. Labour Wages
by total operation hours)
~ RM 600 monthly
Packaging Materials (Printing, plastic
iii.
containers & etc.) RM 19,316.00 (10% from revenue)
Miscellaneous Expenses
vi. RM 1,859.00 (1% from revenue)
(maintenance,claim,donation, etc)

Note:

Depreciation of Asset = Expected Machine Lifespan is 5 year

Salvage Value =
The amount the machine is worth after 5 years of use = RM 15,000/5= RM 3000.00

Depreciation Cost of Asset = (RM15,000-3000)/5=RM2400.00 per year


1.2 Pro Forma Cash Flows Statement
1.2.1 Pro Forma Cash Flows Statement for current and three consecutive years.
1.2.2 Pro Forma Cash Flow Statement for year 2017.

MONTH 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
CASH INFLOWS
Cash $ 5,000.00 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 5,000.00
Bank Loan $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Cash Sales $ 18,000.00 $ 14,400.00 $ 12,600.00 $ 16,080.00 $ 24,000.00 $ 26,400.00 $ 12,000.00 $ 13,200.00 $ 16,800.00 $ 18,000.00 $ 14,400.00 $ 7,680.00 $ 193,560.00
Collection of Accounts Receivable $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
TOTAL CASH INFLOWS $ 23,000.00 $ 14,400.00 $ 12,600.00 $ 16,080.00 $ 24,000.00 $ 26,400.00 $ 12,000.00 $ 13,200.00 $ 16,800.00 $ 18,000.00 $ 14,400.00 $ 7,680.00 $ 198,560.00

CASH PAYMENTS
Manufacturing Expenses
Raw Materials $ 4,500.00 $ 3,600.00 $ 3,150.00 $ 4,020.00 $ 6,000.00 $ 6,600.00 $ 3,000.00 $ 3,300.00 $ 4,200.00 $ 4,500.00 $ 3,500.00 $ 1,920.00 $ 48,290.00
Packaging $ 1,800.00 $ 1,440.00 $ 1,260.00 $ 1,608.00 $ 2,400.00 $ 2,640.00 $ 1,200.00 $ 1,320.00 $ 1,680.00 $ 1,800.00 $ 1,400.00 $ 768.00 $ 19,316.00
Labor (wages and payroll) $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 600.00 $ 300.00 $ 6,900.00
Other $ 180.00 $ 144.00 $ 126.00 $ 160.80 $ 240.00 $ 264.00 $ 120.00 $ 132.00 $ 168.00 $ 180.00 $ 140.00 $ 76.80 $ 1,931.60
TOTAL $ 7,080.00 $ 5,784.00 $ 5,136.00 $ 6,388.80 $ 9,240.00 $ 10,104.00 $ 4,920.00 $ 5,352.00 $ 6,648.00 $ 7,080.00 $ 5,640.00 $ 3,064.80 $ 76,437.60
Operating Expenses
Advertising $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 3,600.00
Depreciation $ 2,400.00 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 2,400.00
Maintenance and Repairs $ 1,859.00 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,859.00
Office Supplies $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 $ 600.00
Payroll Expenses (EPF & SOCSO) $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 270.00 $ 3,240.00
Salaries and Wages $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 3,600.00 $ 43,200.00
Taxes and Licenses $ 70.00 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 70.00
Telephone $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 1,200.00
Travel $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 4,800.00
Utilities $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 2,400.00
Web Hosting and Domains $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Other $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 1,200.00
TOTAL $ 9,349.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 5,020.00 $ 64,569.00
NON-RECURRING EXPENSES
Furniture, Machine,Equipment and
Software $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Other $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
TOTAL $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
FINANCIAL EXPENSES
Interest Loan Repayments $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
OTHER EXPENSES
Deposit $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
TOTAL EXPENSES $ 16,429.00 $ 10,804.00 $ 10,156.00 $ 11,408.80 $ 14,260.00 $ 15,124.00 $ 9,940.00 $ 10,372.00 $ 11,668.00 $ 12,100.00 $ 10,660.00 $ 8,084.80 $ 141,006.60
Contingency Plan (5%) $ 768.90 $ 540.20 $ 507.80 $ 570.44 $ 713.00 $ 756.20 $ 497.00 $ 518.60 $ 583.40 $ 605.00 $ 533.00 $ 404.24 $ 6,997.78
TOTAL CASH OUTFLOWS $ 17,197.90 $ 11,344.20 $ 10,663.80 $ 11,979.24 $ 14,973.00 $ 15,880.20 $ 10,437.00 $ 10,890.60 $ 12,251.40 $ 12,705.00 $ 11,193.00 $ 8,489.04 $ 148,004.38
NET CASH FLOWS $ 5,802.10 $ 3,055.80 $ 1,936.20 $ 4,100.76 $ 9,027.00 $ 10,519.80 $ 1,563.00 $ 2,309.40 $ 4,548.60 $ 5,295.00 $ 3,207.00 $ (809.04) $ 50,555.62
OPENING BALANCE $ - $ 5,802.10 $ 8,857.90 $ 10,794.10 $ 14,894.86 $ 23,921.86 $ 34,441.66 $ 36,004.66 $ 38,314.06 $ 42,862.66 $ 48,157.66 $ 51,364.66 $ -
ENDING BALANCE $ 5,802.10 $ 8,857.90 $ 10,794.10 $ 14,894.86 $ 23,921.86 $ 34,441.66 $ 36,004.66 $ 38,314.06 $ 42,862.66 $ 48,157.66 $ 51,364.66 $ 50,555.62 $ 50,555.62
PRO FORMA CASH FLOW
GRAPH
NET CASH FLOWS TOTAL EXPENSES SALES
$600,000.00

$500,000.00 $496,200.00

$400,000.00 $415,500.00

$300,000.00 $321,600.00 $318,497.55


$274,972.95
$228,453.75
$200,000.00 $198,560.00
$177,702.45
$148,004.38 $140,527.05
$100,000.00 $93,146.25
$50,555.62
$-
2017 2018 2019 2020
Figure 1.0: Pro Forma Cash Flow Statement for three consecutive years.

Based on Figure 1.0, the net cash flow increase when total expenses and sales increase. We
suggest Cyecah Cyecah Enterprise to increase more their production units by the following years.
This can cause their total expenses increase when company has to increase their variable cost by
increasing their direct labor cost for manufacturing activities. Fixed cost such as utilities bill also
increase when company use more electrical energy and water supply. Besides that, fixed expense
like advertising also increase for the marketing purpose in order to increase the sales. Through our
financial projection, net cash flow in Cyecah Cyecah Enterprise will increase gradually for three
consecutive years because the total revenues are greater than total expenses.

Cyecah Cyecah Enterprise has a strong positive cash flow. Even though, positive net cash
flow is good for financial health but the excess of unused money does not good for business
development and production activities of company in long term. The balance from cash flow
should be invest in right manner. Thus, from our Pro Forma Cash Flow Statement we recommend
Cyecah Cyecah Enterprise to increase their budget expenses for direct labors, advertising, utilities
bill and web hosting and domains.
1.3 Pro Forma Income Statement for three consecutive years.

[SAMBAL HITAM PAHANG CYECAH CYECAH ENTERPRISE]

INCOME 2017 2018 2019 2020


Sales
Sales - Qtr 1 45,000 74,400 99,000 126,000
Sales - Qtr 2 66,480 92,400 123,000 138,000
Sales - Qtr 3 42,000 80,400 100,500 120,600
Sales - Qtr 4 40,080 74,400 93,000 111,600
Other 5,000 - -
Total Sales (TS) $ 198,560 $ 321,600 $ 415,500 $ 496,200

Cost of Goods
Beginning Inventory - - - -
Raw Materials 48,290 80,400 103,875 124,050
Packaging 19,316 32,160 41,550 49,620
Labor (wages and payroll) 6,900 18,000 24,000 26,400
Other 1,932 3,216 4,155 4,962
Less Ending Inventory - - - -
Total Cost of Goods Sold $ 76,438 $ 133,776 $ 173,580 $ 205,032

Gross Profit $ 122,122 $ 187,824 $ 241,920 $ 291,168

Non-Operating Income
Interest Income - - - -
Rental Income - - - -
Other - - - -
Total Non-Operating Income $ - $ - $ - $ -

Total INCOME $ 122,122 $ 187,824 $ 241,920 $ 291,168

EXPENSES
Operating Expenses
Advertising 3,600 10,000 20,000 30,000
Depreciation 2,400 2,400 2,400 2,400
Maintenance and Repairs 1,859 1,859 1,859 1,859
Office Supplies 600 600 600 600
Payroll Expenses 3,240 3,240 3,240 3,240
Salaries and Wages 43,200 43,200 43,200 43,200
Taxes and Licenses 70 - - -
Telephone 1,200 1,200 1,200 1,200
Travel 4,800 4,800 4,800 4,800
Utilities 2,400 4,800 4,800 4,800
Web Hosting and Domains - 500 1,000 1,000
Other 1,200 1,200 1,200 1,200
Total Operating Expenses $ 64,569 $ 73,799 $ 84,299 $ 94,299

Non-Recurring Expenses
Furniture, Equipment and Software - 10,000 4,000 4,000
Gifts Given - - - -
Other - - - -
Total Non-Recurring Expenses $ - $ 10,000 $ 4,000 $ 4,000

Contingency Plan (5%) $ 6,997.78 $ 10,878.75 $ 13,093.95 $ 15,166.55


Total EXPENSES $ 71,567 $ 94,678 $ 101,393 $ 113,466

Net Income Before Taxes $ 50,556 $ 93,146 $ 140,527 $ 177,702


Income Tax Expense - - -

NET INCOME $ 50,556 $ 93,146 $ 140,527 $ 177,702

Owner Distributions / Dividends


Adjustment to Retained Earnings $ 50,556 $ 93,146 $ 140,527 $ 177,702
PRO FORMA PROFIT AND LOSS
GRAPH
REVENUE PROFIT/LOSS

$496,200
$415,500
$321,600

$198,560
$177,702
$140,527
$93,146
$50,556

2017 2018 2019 2020

Figure 2.0: Pro Forma Income Statement for three consecutive years.

Based on Figure 2.0, Cyecah Cyecah Enterprise will gain profit no loss for three consecutive
years. This is because Cyecah Cyecah Enterprise decide to increase their quantity of product sold
for three consecutive years and this may affect their revenue to increase gradually for the
consecutive years.
1.4 Pro Forma Balance Sheet Statement for three consecutive years.

CYECAH CYECAH ENTERPRISE


PRO FORMA BALANCE SHEET STATEMENT FOR THREE CONSECUTIVE YEARS

YEAR 2017 2018 2019 2020


ASSETS
Fixed Assets:
Property, plant & equiptment:
Land and building $ - $ - $ - $ -
Machinery and equiptment $ 15,000.00 $ 12,000.00 $ 9,600.00 $ 7,680.00
Furniture & Fixtures $ - $ - $ - $ -
Others $ - $ - $ - $ -

Current Assets:
Cash In Hand $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00
Bank $ 35,555.62 $ 126,701.87 $ 269,628.92 $ 449,251.37
Account Receivable $ - $ - $ - $ -
Stock of Finished Goods $ - $ - $ - $ -
Total $ 40,555.62 $ 131,701.87 $ 274,628.92 $ 454,251.37
TOTAL ASSETS $ 55,555.62 $ 143,701.87 $ 284,228.92 $ 461,931.37

Owner's Equity:
Capital $ - $ - $ - $ -
Retained Earnings $ 50,555.62 $ 143,701.87 $ 284,228.92 $ 461,931.37
Total $ 50,555.62 $ 143,701.87 $ 284,228.92 $ 461,931.37

Long Term Liabilities:


Term Loan $ - $ - $ - $ -

Current Liabilities:
Account Payable $ - $ - $ - $ -
Accrued Wages $ - $ - $ - $ -
Revenue $ - $ - $ - $ -

TOTAL EQUITY & LIABILITIES $ 50,555.62 $ 143,701.87 $ 284,228.92 $ 461,931.37


Figure 3.0: Pro Forma Balance Sheet Graph for three consecutive years.

From Figure 3.0, the Owner’s Equity is increase for the following years. However, the
Total Asset reduce 20% for every year because of depreciation of asset value. Cyecah Cyecah
Enterprise does not have any Liabilities.

Working capital is a measure of both a company's efficiency and its short-term financial
health. From Pro Forma Balance Sheet Statement, we can calculate working capital.

Formula:

Working Capital = Current Assets - Current Liabilities

Based on our calculation, working capital in 2017 is $40,555.62; for 2018 is $131,701.87, and
increase gradually to $274,628.92 in 2019 and finally $454,251.37 for 2020. These shows that
financial position of Cyecah Cyecah Enterprise for short-term is steady and in good financial
health.
1.5 Financial Statement Analysis

Financial statement analysis is the process of reviewing and evaluating a company's financial
statements (such as the balance sheet or profit and loss statement), thereby gaining an
understanding of the financial health of the company and enabling more effective decision making.

Financial Ratio Analysis: 2017 2018 2019 2020


(A) Profitability Analysis
Return on Asset= 219.82% 130.70% 85.11% 63.03%
Net Income /Total Asset

Return on Equity= 241.56% 130.70% 85.11% 63.03%


Net Income/Owner Equity

Profit Margin= 28.94% 32.92% 33.82% 37.74%


Net Profit Before Tax/Sales

(B) Liquidity Analysis

Current Ratio= ∞ ∞ ∞ ∞
Current Asset/Current Liabilities

1.6 Break Even Analysis


Break-even analysis is useful in the determination of the level of production or in a
targeted desired sales mix. Break-even analysis looks at the level of fixed costs relative to the
profit earned by each additional unit produced and sold. Break-even analysis is used to calculate
break-even point (in units or dollars), so that company would not profit or loss.

Break Even Analysis: 2017 2018 2019 2020


Break-even point in Units:
Break-even point in units= 8,892 10,530 12,065 13,392
Fixed Cost/ Contribution Margin per Unit

Break-even point in Dollar:


$ $ $ $
Break-even point in dollars= 106,708.67 126,361.69 161,959.47 160,701.60
Fixed Cost/Contribution Margin Ratio
RECOMMENDATIONS

As highlighted in the analysis above, we would like to recommend Cyecah Cyecah Enterprise to:

1. Penetrate new market in other states by appointing agents for each state, as the demand is
seen there, as well as to market to Malaysians who are studying or working abroad, through their
parents or spouses.

2. Focus on the flavors of interest i.e. hot and sweet, and to add more choices like having
pineapple flavors.

3. To get the assistance of some government agencies who provide assistance in terms of
providing business equipment (like TERAJU) and packaging (SIRIM).

4. Invest more money for manufacturing products, man power, marketing, quality control and
other budgets for business development since the company has great capital balance.

CONCLUSION

We already propose to the owner of Cyecah Cyecah Enterprise on how to organize their structure
management of business in term of operation, strategic marketing and financial control and
planning. Cyecah Cyecah Enterprise has the great product and potential to sustain for long term
business. Their products can meet the international market demand and should be commercialize
into the global market. Thus, from our entrepreneurship project with Cyecah Cyecah Enterprise,
our consultation with them might really helpful for future strategic and planning actions.