Textile Business Plan

Production of Gray Cloth, a raw

material for textile processing
factories in Tz, using local
processed cotton yarn in Tanzania.
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Ihembe Textile is considering providing an upscale full-product service to
textile companies. The firm is aimed at offering customers a state of art
technology in the provision of raw materials.

The firms’ core business is to produce textile fabrics in form of Gray fabrics
which are raw materials for textile companies. Due to under capacity, the
company is underserving its customers who imports raw materials from
abroad due to unreliable availability domestically. This proves a tremendous
availability of customers for Ihembe Textiles products.

Facts
Legal status business
Formally registered
Year of establishment
2005

Sales (US$)
Two years ago: 100,000
Last year: 300,000
This year (forecast): 800,000
Year 2 (forecast): 1,000,000
Year 3 (forecast): 1,200,000
Net profit after tax (US$)
Two years ago: 10,000
Last year: 40,000
This year (forecast): 90,000
Year 2 (forecast): 100,000
Year 3 (forecast): 120,000
Total number of Employees
Two years ago: 12
Last year: 20
This year (forecast): 30
Year 2 (forecast): 50
Year 3 (forecast): 100

Finance needed
Finance needed for fixed assets (buying 700,000
of machines, buildings, ...)
Finance needed for working capital 0
(salaries, stock, rental, leasing,
transport, ...)
Total finance needed (US$) 700,000

How do you expect this to be

financed? Please note: the total amount mentioned here

should be equal to the total finance needed at the previous

question.
Own Contribution in cash 400,000
Loans (debt) 225,000
Shares in your company that you offer 0
to investors (equity)
Other sources 75,000
Total finance needed (US$) 700,000
The Business
What is your product/service?
The business is currently producing gray cloth which is sold to as a raw
materiasl for other textile companies for manufacture of Kitenge, Kanga, bed
sheets, Boutique and other garments. Due to under capacity, the company is
serving only two customers namely African Pride Textiles (Gray Fabrics) and
Adabu Associates Co Ltd ( Kikoy). The former’s requirement is over 250,000
meters per day and the later 5000pcs per week. The market for Ihembe
Textile is still virgin as most of these fabrics are imported from China and
India.

What customer need/problem do your products/services satisfy?

The business is currently producing under capacity. Other textile companies
like KTM, Urafiki Textiles, Lakhani and Nida Textiles are importing raw
materials from abroad due to unreliable availability domestically. This proves
a tremendous availability of customers for Ihembe Textiles products. Since
most of the gray fabric produced locally does not satisfy the market, textile
companies rely on imported yarn. Ihembe is focused to offer yarn at the
required quantity to these businesses.

How will you make the product/service?

Ihembe Textiles depends on raw polyester acrylic and cotton yarn from
suppliers. These materials are manufactured to finished products using the
weaving machines. The company has a total of 60 weaving machines which
will be running on a 12 hour shift basis with a capacity of 450 meters of Gray
fabrics per hour.
The production process is planned to run for 24 days per month and an
operational efficiency of 70% leaving a provision of change and machine
service.

Explain how you will sell your product/service (marketing strategy) and how
you will reach your customers (distribution strategy)?
Ihembe has been participating in Trade fairs through Small Industry
Development Organisation (SIDO). Together with participation in trade fairs
Ihembe will use of personal selling through the network of established small
medium enterprises and textile companies domestically. Other marketing
strategies will be though the use of Clusters, Tanzania Investment Centres,
Tanzania Chamber of Commerce and Industry. Use of calendars printed in
the cotton fabrics will be sent to our potential customers. Other
communication strategies will be use of print media, t-shirts and brochures.
Ihembe will print banners to use them whenever participates in trade fairs.

To whom are you selling, what is your market?

The primary target market for Ihembe are clothing manufacturing textiles
making gaments. African Pride Textile Mills is the current customer with a
total requirement of 250,000 meters per day to process khanga, kitenge,
bedsheets and kaniki.
The secondary target market for Ihembe is Petty Processors of Boutiques
located in Kitumbini area and other cultural and tourist sites in Dar Es
Salaam, Arusha, Bagamoyo, Zanzibar and neighbouring countries of Kenya
Uganda Rwanda and Burundi. Kikoy is now regarded as a cultural wear for
many African cultures. It can be weared in its own or converted into other
garments.

Describe your competitors?

The major internal competitors are all textile companies. Examples like
Namera Group, Urafiki Textiles, Millenium Textiles (Morogoro), Mohamed
Enterprises and Kiltex (Arusha), AtoZ Textiles (Arusha) and Sunflag
(Arusha). Countries along the Pacific rim such as China, Taiwan and South
Korea now account for more than 50 % of the world-wide export output of
fabrics. Apparel manufacture has also seen a significant move towards those
countries with reduced labour costs. Some of them are imported to our
country.

What makes your business different/better than your competitors

(competitive advantage)?
The uniqueness of the Ihembe is the strategy to involve other small
manufacturers of textiles by installing machines in their own premises or in a
jointly built area where they can earn returns in the whole process. This
caters for improved reliability of materials.
The involvement of the SMEs to manufacture does not need big capital
investment. An SMEs will only need 1 set of machined which contain 4
machines worth USD 10,000. The SME can make fabric with supply of yarn
from our company. Go four machines 600metres of fabrics is supplied per
day and make a net profit of USD 5C to USD 20C per meter. A return of
about 80% - 150% per year of total investment. The production area will
only cover 50 square meters.
What makes your business, your product or service innovative?
engaging small businesses to manufacture textiles

How will you ensure the growth of your business?

With a commited director, experienced staff and technology, this will ensure
growth of the business. Textile is a labour intensive business ranging from
lower skilled to experienced and skilled manpower. Ihembe will employ
Technicians who have background education and experience in the textile
industry.

The Entrepreneur & Management

Describe the entrepreneur & management
Motivation from this comes from the following:
• I own a small industry and I have an order of 250,000 metres per day.
Currently I can be able to manufacturer only 7,000 per day. I would like to
share the opportunity with other SMEs so as they can manufacture the same
and increase the production in my own firm.
• The involvement of the SMEs to manufacture it does not need a lot of
capital. An SMEs can only need 1 set of machined which contain 4 machines
worth 10mil. The SME can make fabric with supply of threads from our
company. Gor four machines 600metres of fabrics is supplied per day and
make a net profit of Tshs 50 to 200 per meter. A return of about 80% -
150% per year of total investment. The production will consist 50 square
meters

What specifically makes you and (if relevant) your management team most
qualified to build this business?
Motivation, experience in textile business as well as qualified staff.

How much time do/will you expect to spend per week in the business?
The director, Edgar Nkunda is a full time director who will spend more than
45 hours per week.

Development
How does your business improve the local living standards (social and
environmental)?
At the end of year three, the company will be having a total of 54 direct jobs
and over 400 indirect jobs. This will assist in improving the standard of living
of the community. The company will transfer technology to petty producers
through the system of engaging them in production at their small industries
to be established on their behalf. Textile mills are known to generate
effluent, which pollutes the environment. The nature of the by-products for
the business are not harmful to the environment. The challenge for the
company is to find ways of reducing noise pollution whereby all
manufacturing and processing activities will be done in house to reduce
noise. Workers will be supplied with ear plugs and other safety gears to
reduce exposure to the noise of machines.
Due to its accessibility, the city garbage collectors will be scheduled to collect
all litters