WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

Course Title : Entrepreneurship

 BUSINESS PLAN DESALE AND HIS PARTNER’S FURNITURE ENTERPRISE
 ETHIOPIAN. SNNP.WOLAITA SODO wadu
 EMAIL ADRESS Desaledegu69@gmail.com
 Telephone 251966457261
name id no

1. DESALE DEGU ………………………………………………………………………………………………………UGR/51147/13

2. ZEKARIAS BEDIASO............………………….......…………………………………………………………………....UGR/51144/13

3. MELAKU MEJA...................…………………………....…………………………………………………….……..…UGR /51189/13

4. SINDU GASHAW ....…………………..............….…………………………………………………………….……..UGR/51236/13

5. ALEHEGN MRNAL…….……………………………..……………………………………………………….…………UGR/55577/13

6. DIDA ABDIKAR…………………………………………………………………………………………………………..UGR/51165/13

7. GEBRE MICKAEL………………………………………………………………………..………………………………UGR/51215/13

8. ZENABU TSEGAYE ……………………..……………………………………………………………….…..……….….RU/0556/12

9. MOTI GENATI …………………………………………………………………………………………….……………..UGR/51124/13

10.ASMA RAMETO…………………………………………………………………………………………………………..RU/0131/12

11. KELIYA ALMECH…………………………….…………………………………………………………………………RU/0556/12

12MILIO …………………………………………………………………………………………UGR/…/13

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 Table of Contents

1. Name and Address ofThe business..............................................................................................2

2. executive summmary.................................................................................................................6
3. Nature of Business.......................................................................................................................7
3.1 Financial Requirements.............................................................................................................7
3.2. Confidentiality of the Report....................................................................................................7
3.3. Vision........................................................................................................................................8
3.4 MISSION...................................................................................................................................8
3.5 Objectives..................................................................................................................................8
3.5.1 Short term objective................................................................................................................8
3.5.2 Long term objective................................................................................................................9
3.6 Key personnel............................................................................................................................9
3.7 Values........................................................................................................................................9
4. Market Research and Analysis....................................................................................................9
4.1 Future outlook and trends........................................................................................................10
4.2 Analyses of competitors..........................................................................................................10
4.3 market segment.......................................................................................................................10
5. Manufacturing or Operation......................................................................................................11
5.1 products....................................................................................................................................11
5.2. Method of Selection Site........................................................................................................11
5.3 Size of the business.................................................................................................................11
5.4. Background of Entrepreneur(s)..............................................................................................11
5.5. Location of the business........................................................................................................12

5.6. SWOT Analysis......................................................................................................................12

5.6.1.Strength of the business........................................................................................................12
5.6.2.Weakness of the business.....................................................................................................12
5.6.3.Opportunity of the business..................................................................................................12
5.6.4.Treat of the business.............................................................................................................12
5.7. Suitability for the market........................................................................................................13

6. PRODUCTION PLAN..............................................................................................................13
6.1 Physical plant...........................................................................................................................13
6.2 Equipment and machinery.......................................................................................................13

7. MARKETING PLAN................................................................................................................13
7.1 Pricing......................................................................................................................................13
7.2 Promotion strategy...................................................................................................................14
7.3 Distribution mechanism...........................................................................................................14

8.Organizational plan.....................................................................................................................14

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8.1 Form of ownership...................................................................................................................14
8.2Authority of ownership.............................................................................................................14
8.3 Organization stricture………………………………………………………………………...14

9. Financial plan.............................................................................................................................15
9.1. Different kinds of Expense.....................................................................................................15
9.2 Total sale in number and birr...................................................................................................16
9.3 Financial statement..................................................................................................................17
9.3.1 Income Statement.................................................................................................................17
9.3.4 statement of cash flow..........................................................................................................21

10. RISK ASSESEMENT.............................................................................................................21

11.Exit Strategy.............................................................................................................................21
12. APPENDIXES.........................................................................................................................21

2. executive summmary
desale and his partners furniture enterprise shall be established as a private limited enterprise in
wolaita sodo town, in SNNP Region, The capital required to start business shall be acquired
through bank loan and partners contribution. desale and his partners furniture company shall
have a capital of birr 300,000 birr starting a business, this money are used for purchasing raw

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 material and other related things. The money will be paid within 3 year up to interest. This
Enterprise open 6 job opportunity. Our enterprise used different mechanisms to sell the product
like by using promotional method, publicity and magazine etc. We gather a huge amount of
profit by supply a furniture for market and community…etc. it’s good for our enterprise to run in
the right way by gathering sufficient profit our enterprise used a market penetration strategies for
expanding our shares in the market. Generally, our enterprise will contribute a social, economical
and political benefit for the nation. In the part of organizational hierarchy our enterprise will run
by 5 main persons those are: General Manager, Operation and Marketing Manager, Financial
Manager, Human Resource Manager, Reception Officer. By using those persons we are
expanding our network indifferent part of our nation. desale and his partners enterprise will
distributed or supply furniture for different parts. The main reason behind preparing this business
plan is the unavailability of alternative furniture supply in town, low quality of product and the
amount of product that customer gate low in content due to limited availability of the furniture.
By considering the current market gap and the demand of the people we incite to establish the
furniture in the town. More of the market gap we try to create the job opportunity and we try to
run our business. Generally the main objective of the enterprise is to provide quality product
and to satisfy the needs of our customers.

3. Nature of Business
To creating job opportunity and reduce poverty in our country through building and expanding of
a micro and small business institution. Since micro and small business institution are contribute
for our social, economical, political and technological development of a nation. So, giving a
much attention for micro and small business institution by government in the form of supporting
finance, by giving appropriate work place and by technology are enhanced our nation by one
step. Standing from this concept to interested to open our business enterprise.desale and his
partners furniture will be run as a partnership. Or launching business it requires (30*20) square
land, and it will offer different kinds of office and house materials according to the customer
specification. Some of the product that we will offer is table, cupboard, buffae, bed, and chairs
etc. In order to be more profitable we will segment our products in to different forms. That is;
Segment aimed for by furniture, Offering decorated house furniture. The Company shall produce
high quality furniture for different purpose.

3.1 Financial Requirements

Desaleand his partner’s furniture have initial capital of 300,000 birr, from the initial capital 60%
is generated from government loan and the rest is from parents share. The profit and loss share
agreement is equally. In order to gate normal profit from it, we made a sufficient environmental
and industrial analysis, analysis of internal strength and weakness and marketing opportunities.
Our furniture shall consist of the following facilities;
 Row material room
 Production and product room
 Residence room

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 3.2. Confidentiality of the Report
This document is confidential and proprietary. It may not be circulates or disclosed whole or part
without the written permission of the partners. No representation or guarantees shall made or
implied. Plans and projects will subject to change. All stated amounts will approximate and
estimated. When an entrepreneur has a plan to start a new business they need to have a
confidence about the effort to achieve the objective of the business unless and otherwise It is
difficult to think to achieve the business mission and goal. Desale and his partners furniture starts
its business within a full confidence of the group or partners how to achieve the goal. The
partners are fully confident to accept the consequence at the end.

3.3. Vision
The visions of the enterprise were:
 Producing and supplying comfortable and quality products to fill customers want.
 To be one of the leading enterprise in the production of furniture product in the town.
 To survive in the market.
 To increase qualified personal in the furniture production.
 To increase the income of the employee and employer.

3.4 MISSION
To startup and run a furniture enterprise in wolaita sodo town and providing quality furniture
products for local business people or to other customers. To offer the products to local customer
within reasonable price than the competitors settle. The main mission of this enterprise is
produce the quality product, increase the income of the employee and to decrease unemployment
level.

3.5 Objectives
desale and his partners furniture enterprise objectives are to produce quality product at
reasonable price and delivery the product to the customer at the right time. In addition to this to
improve the life standard of the community is the main objectives and also to produce new
furniture product design and style in order to penetrate in to the market to protect the
environment by replacing the timber product by other material like plastic, glass, metal ,etc

3.5.1 Short term objective

Our short term objective is to find and convert suitable premises that are (30*20) place for
starting the business with adequate seat, storage for inputs and outputs, machinery room and
related service areas. To increase our forecasted sales by intensively advertising and promotion,
by the product itself (producing quality product and service) for the customer

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 3.5.2 Long term objective
This is to be able to employee a full time members of the staff to build up reliable and organized
team working in our business, and encourage the business partner to focus on the day to day
problems, activities to meet customer need and wants. This helps as to expand the business
further and made real relationship with loyal customers. After five or six years we would like to
purchase the other premise in different area and set up the furniture

3.6 Key personnel

This business is could be run out by desale ,sindu, melaku, alehegn, moti, asma,dida, zekarias
we conduct a market survey how furniture business is operated from similar business and
different marketing opportunities and threats around our premises. So we are well equipping how
to plan the business, operate, design, promote and how to compute and provide quality product
than our competitors.

3.7 Values
 We are punctual and honest
 Team work is our principle
 Delivery of the product to our customer at the right time

3.8. Key success factors

1. It uses various types of promotional, or inducement mechanism to attract other customers
2. Continuous monitoring of our service and expense.
3. It is by society for society! Provide affordable cost with high quality.
4. By reducing expenditure cost of transportation for the customers.
5. Satisfying customer interests by providing quality products
6. The presence of good market price due to the weakness of competitor in the area.
7. There are many customers, because there is no other provider that gives this products.
8. It gives service for long hour.

4. Market Research and Analysis

Prior to start any business conducting environmental analysis is very important for the smooth
running of the business. Making both internal and external analysis helps the entrepreneur to
forecast the business trends. It is obvious that environment influence the business in many ways.
Some of the environmental factors are;-

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  Economic factor (cost of business, cash flow, profit potential and related activities)
 Marketing factor (demand and market share analysis)
 Governmental factor (rule of regulation)
 Technical factor (production capacity of the firm)
 Competition and suppliers etc.

4.1 Future outlook and trends

When the business is initially started it is not for ever as it is. Our future outlook and trends are
creating an extra ordinary business in our country by making our product and service more
standardized and the business have also planned to expand our business in to large investment.

4.2 Analyses of competitors

Currently many competitors who produce furniture products in our locality .They produce beds,
chair, table, and different office equipment. But, they offer their product with high price the
machine they utility not latest and their premises is not consider the customer. After having the
above, we try to offer a better product that the customer will prefer than the competitor’s
product. The major strength of our competitor is that they have strong business network, they are
not new for the market.

4.3 market segment

The market for our business is ;
: large potential wolaita sodo tawon
: sodo zurie
: wadu

5. Manufacturing or Operation
5.1 products
The primary products of business shall be :
 Office equipment
 House furniture.

5.2. Method of Selection Site

We are selected our site by observing different things. These are:-
o The places are comfortable for work.
o The raw materials are available in anytime.

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 o The place are located in center so it’s easy to sale our products.
o The societies (community) are used huge amount of furniture for differen
purpose.
o The places are enable our business easily distributes for our customer.

5.3 Size of the business

Desale and his partners furniture has to be 6 employees, The total estimated amount of money to
start up the business activities is about 300,000 birr. As the business starter our area of coverage
may be limited, but for the furniture we will expand and transform it to large size business firm.

5.4. Background of Entrepreneur(s)

The company founded by 12 entrepreneurs’ of them are studied in University Of wolaita
sodoeven if we have not experience we will gather information from others and training
managerial experience from it's life.

5.5. Location of the business

Our business is found in the souther part of Ethiopia which is in SNNP regional state in the
wolaita sodo Town it is 405km far from Addis Ababa. For specify our business are located in the
inside in riftvaliy of SNNP national regional state

5.6 SWOT analysis

5.6.1. Strength of the business

 Availability of supply logging ;
 since all the founders will be university graduates.
 Clearly stated business plan.
 Sub division of management; marketing manager, operation manager, human
resource manager.

5.6.2. Weakness of the business

 Lack of experience in furniture product
 Lack of knowledge to do the business. (i.e. Absence of member of experianced person ).

5.6.3. Opportunity of the business

 The expansion of our product creates huge potential market.
 There is favorable environment and good conducive legal frame work for entrepreneurs.
 Establishment of microfinance institutions will create good funding source.

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 5.6.4. Treat of the business
 Weather condition; we are uncertain about weather condition.
 Existence of Competitors.
 Consumer demand change
 Business tax such as VAT
 After wards among the member
 Political Condition

5.7. Suitability for the market

After we conduct a mini survey concerned with the suitable place that is easily accessible both
by the customer and supplier that decreases transportation cost, input cost, and miscellaneous
expense.

6. PRODUCTION PLAN
Without operation plan, the business is dead by itself. The plan of action is necessary for a
smooth running of a given business. The production staff should have friendly welcoming
helpful attitude, they can boost gains by asking the right questions at the right time, it can be
achieved through training and selection.

6.1 Physical plants desale and his partner’s furniture shall consist the following
facilities;
 Row material room
 Production and product room
 Residence room

6.2 Equipment and machinery

To start the furniture the following equipment must needed
No Description Qty Unit price/birr Total price/birr
1 Drill 1 3000 3,000 birr
2 Rotor 3 4000 12,000
3 Gig so 2 2000 4,000
4 Sunglo 1 2500 2,500
5 Total 23,500

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 7. MARKETING PLAN
7.1 Pricing
Our business shall use low cost leadership strategy to introduce its products to easily establish
itself in market. The tentative prices of selected products are presented below.
 Bed = 5,000birr
 Sofa = 15,000birr
 Wood table = 1,000birr
 Glass table = 2,000birr
 Bufea = 2,000birr
 Chair = 700birr

7.2 Promotion strategy

It is obvious that the business firm in a given industry should be advertised to attract the attention
of customers in the targeted market. Accordingly, we shall advertise our product through sale
promotion, publicity, local papers and magazines.

7.3 Distribution mechanism

Our products could be dispersed in to different local areas around our premises. We shall
distribute our product to the targeted market through vehicles like carts & cars. After we expand
our business, the mode of channel of distribution will be automatically changed.

8. Organizational plan
8.1 Form of ownership
desale and his partners furniture is a partnership for organization and the owners of the
organization are the manager of the business and they have the responsibility for the overall
operation of the business.

8.2 Authority of ownership

The owners of the furniture have authority on their business and the power to control the
business. The owners have an authority over the business overall affairs like The owner have the
right to increase or decrease the pricing by considering so many factors like competitor,
demanded etc…The owner have the right to control any risk

8.3 Organization structure

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 Desale and his partners furniture depend on an organized division responsibility to run an
efficient and diversified enterprises. The main decision and responsibility will be given to the
manager. He will focus on maintaining high quality and cohesive business entity. A furniture
expert will be in charge of the operation and all the worker will report to the expert.
Organizational chart of desale and his partners Furniture Company
.

General-manager

Desale

HR-manager- Productionmanager Financial- manager Account offi ce Marketer

Manager manager
melaku zekarias dida asma
sindu

9. Financial plan
When a business is initially launched, it may need a high amount of money. This is because of
most of field equipment is purchased during this time. In order to run out our business with
enough finance, we try to get from different alternatives.
From our initial capital (300,000), 60% of it is from loans and the rest is from parents share:
Loan= 300,000*60/100______________________ debit =180,000
Equity =300,000*40/100_____________________credit =120,000

9.1. Different kinds of Expense

Different kinds of expense for 1st year /end/
Licensing expense _________________________5,000 birr
Advertising expense________________________20,000 birr
Rent expense_____________________________60,000 birr
Salary expense ___________________________8000birr/month

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 Transportation expense ____________________3,500 birr
Depreciation expense _____________________750birr
Utilities expense _________________________24,500birr
Supplies expense _________________________6,000 birr
Miscellaneous expense _____________________2,000 birr
Total expense __________________________129,750
Fixed asset =birr 22,500(machinery) + 8000(land) = 30,500 birr
Accumulated depreciation will be 1500 for 1st year
Different kinds of expense for the 2nd year /end/
Licensing expense_________________________6000birr
Advertising expense________________________20,000birr
Rent expense_____________________________75,000birr
Salary expense___________________________9,000birr/month
Transportation expense____________________4,500birr
Depreciation expense_____________________1000birr
Utilities expense_________________________24,250birr
Supplies expense_________________________9,000birr
Miscellaneous expense_____________________1000birr
Total expense__________________________137,750
Fixed asset = birr 23,000 (machinery) + 8000 (land) =31,000birr
Accumulated depreciation will be 2000 for 2nd year

9.2 Total sale in number and birr

Projected 1st year total sale

Products Unit price Whole
Bed 25 5000birr 125,000
Sofa 16 15,000 240,000
Wood table 80 1000 80,000

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 Glass table 36 2000 72,000
Bufa 44 2000 88,000
Chair 500 700 350000
Total sale 955,000birr

Projected sales for the 2nd year

Products Unit Price Whole
Bed 30 5000 birr 150,000
Sofa 20 15,000 300,000
Wood table 80 1000 80,000
Glass table 40 2000 80,000
Bufa 50 2000 100,000
Chair 500 700 350,000
Total sale 1,060,000 birr

9.3 Financial statement

9.3.1 Income Statement
A, Income Statement For the 1st year

Desale and his partners furniture Income statement For 1st year
Sales__________________________________955,000birr
Less cost of goods sold________________350,000
Gross profit___________________________605,000 birr
Rent expense___________________________60,000
Licensing expense_______________________5000
Advertising expense_____________________20,000
Salary expense__________________________80,000
Transportation expense__________________3500

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 Depreciation expense___________________750
Utility expense___________________________24,500
Supplies expense_________________________6000
Miscellaneous expense-__________________2000
Total________ ____________201,750
EBIT_____________________________________403,250
Less income tax (35%)____________________141,137.5
Net income_____________________________262,112.5Birrr

B .projected Income Statement For the 2nd year

desale and his partners furniture Income statement For 2nd year
Sales____________________________1,060,000birr
Less cost of goods sold____________360,000
Gross profit___________________________700,000birr
Rent expense___________________________75,000
Licensing expense_______________________6000
Advertising expense_____________________20,000
Salary expense__________________________1,080,000
Transportation expense__________________4500
Depreciation expense___________________1000
Utility expense___________________________24,250
Supplies expense_________________________9000
Miscellaneous expense-__________________1000
Total____________________247,750
EBIT_____________________________________452,250
Less income tax (35%)___________________158,287.5
Net income_____________________________293,962.5Birr

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 9.3.2 Break-Even Analysis

A. Break-Even Analysis For the 1st year

Total sales on average-------------------------------birr 955,000

Total cost---------------------------…..-------------birr 350,000
Gross profit (GP) ------------------------------------------------------birr 605,000
Gross profit margin (GPM) =GP / SALES*100= 605,000/ 955,000*100=63.35%

B. Projected Break even Analysis for year2

Total sales on average------------------------------------1,060,000
Total cost---------------------------------------------------360,000
Gross profit (GP)----------------------------------------------------------700,000
Gross profit margin GPM=700,000/1,060,000*100=66%

9.3.3 balance sheet

A. balance sheet for 1st year
desale and his partners furniture
Balance sheet For the 1st year
Assets
Current assets
Cash ______________________________________________17,000
Long term asset
Equipment ________________________________________22,500
Land ______________________________________________8000
Less depreciation /acc/_______________________ 1,500
Total ________________________________________________46,000

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 Liability
Account payable____________________________________10,000
Total ________________________________________________10,000birr
Owner capital
Retained earnings__________________________________32,202
Capital stock ______________________________________3,798
Total liability & capital _______________________________46,000birr

B. Projected Balance Sheet For the 2nd Year

desale and his partners furniture
Balance sheet For the 2nd year
Assets
Current assets
Cash______________________________________________20,000
Long term asset
Equipment________________________________________23,000
Land______________________________________________8000
Less depreciation /acc/_______________________2000
Total________________________________________________53,000
Liability
Account payable____________________________________15,000
Total________________________________________________15,000birr
Owner capital
Retained earnings__________________________________32,200
Capital stock______________________________________5,800
Total liability & capital_______________________________53,000birr

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 9.3.4statement of cash flow

A. Statement of cash flow for 1st year

Cash budget total
Beginning cash balance……………………………………………..200,000
Cash collection from customers……………………………………..955,000
Total cash available for need………………………………………..1,155,000
Operating expense………………………..………………………551,750
Total cash needed…………….………………………..551,750
Cash excess- deficit……………………………………………….603,250

B. Projected Statement of cash flow for the 2nd year

Cash budget total
Beginning cash balance………………………………………………………603,250
Cash collection from customers…………………………………………1,060,000
Total cash available for need………………………………………………….1,663,250
Operating expense…………………………………..607,750
Total cash needed………………………………………607750
Cash excess- deficit………………………………………………………………..1,055,500

10. RISK ASSESEMENT

Risk is uncertainty that faces every business. Normally no good business without risk, but the
degree of risk is different from one business with other one. As there is many competitors
throughout the country, our furniture may face the risk of gaining good market, scarcity of row
material, quality problem and loss of customer loyalty.

17
 11.Exit Strategy
By any means our business may fail. The failure is may occur due to the external factors. Before
our business fail we made audit in each month. In the audit If there is a threat we try to balance
it. If it is impossible we try to out from the business according to our agreement when we start
the business. We should exit from the business before we lost the, original business.

12. APPENDIXES
The idea of this plan were the product of the partner and other related persons like peers, and
community’s. The key success of the business were in team work, Tolerance, Punctuality, etc.
The partner also have much more idea to expand the business to other region. To expand quality
furniture product in the country and also to apply the principle of import substitution and export
promotion.

WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

Course Title : Entrepreneurship

 BUSINESS PLAN DESALE AND HIS PARTNER’S FURNITURE ENTERPRISE
 ETHIOPIAN. SNNP.WOLAITA SODO wadu
 EMAIL ADRESS Desaledegu69@gmail.com
 Telephone 251966457261
name id no

2. DESALE DEGU ………………………………………………………………………………………………………UGR/51147/13

2. ZEKARIAS BEDIASO............………………….......…………………………………………………………………....UGR/51144/13

3. MELAKU MEJA...................…………………………....…………………………………………………….……..…UGR /51189/13

18
 4. SINDU GASHAW ....…………………..............….…………………………………………………………….……..UGR/51236/13

5. ALEHEGN MRNAL…….……………………………..……………………………………………………….…………UGR/55577/13

6. DIDA ABDIKAR…………………………………………………………………………………………………………..UGR/51165/13

7. GEBRE MICKAEL………………………………………………………………………..………………………………UGR/51215/13

8. ZENABU TSEGAYE ……………………..……………………………………………………………….…..……….….RU/0556/12

9. MOTI GENATI …………………………………………………………………………………………….……………..UGR/51124/13

10.ASMA RAMETO…………………………………………………………………………………………………………..RU/0131/12

11. KELIYA ALMECH…………………………….…………………………………………………………………………RU/0556/12

12MILIO …………………………………………………………………………………………UGR/…/13

Table of Contents

1. Name and Address ofThe business..............................................................................................2

2. executive summmary.................................................................................................................6
3. Nature of Business.......................................................................................................................7
3.1 Financial Requirements.............................................................................................................7
3.2. Confidentiality of the Report....................................................................................................7
3.3. Vision........................................................................................................................................8
3.4 MISSION...................................................................................................................................8
3.5 Objectives..................................................................................................................................8
3.5.1 Short term objective................................................................................................................8
3.5.2 Long term objective................................................................................................................9
3.6 Key personnel............................................................................................................................9
3.7 Values........................................................................................................................................9
4. Market Research and Analysis....................................................................................................9
4.1 Future outlook and trends........................................................................................................10
4.2 Analyses of competitors..........................................................................................................10
4.3 market segment.......................................................................................................................10
5. Manufacturing or Operation......................................................................................................11
5.1 products....................................................................................................................................11
5.2. Method of Selection Site........................................................................................................11
5.3 Size of the business.................................................................................................................11
5.4. Background of Entrepreneur(s)..............................................................................................11
5.5. Location of the business........................................................................................................12

19
5.6. SWOT Analysis......................................................................................................................12
5.6.1.Strength of the business........................................................................................................12
5.6.2.Weakness of the business.....................................................................................................12
5.6.3.Opportunity of the business..................................................................................................12
5.6.4.Treat of the business.............................................................................................................12
5.7. Suitability for the market........................................................................................................13

6. PRODUCTION PLAN..............................................................................................................13
6.1 Physical plant...........................................................................................................................13
6.2 Equipment and machinery.......................................................................................................13

7. MARKETING PLAN................................................................................................................13
7.1 Pricing......................................................................................................................................13
7.2 Promotion strategy...................................................................................................................14
7.3 Distribution mechanism...........................................................................................................14

8.Organizational plan.....................................................................................................................14
8.1 Form of ownership...................................................................................................................14
8.2Authority of ownership.............................................................................................................14
8.3 Organization stricture………………………………………………………………………...14

9. Financial plan.............................................................................................................................15
9.1. Different kinds of Expense.....................................................................................................15
9.2 Total sale in number and birr...................................................................................................16
9.3 Financial statement..................................................................................................................17
9.3.1 Income Statement.................................................................................................................17
9.3.4 statement of cash flow..........................................................................................................21

10. RISK ASSESEMENT.............................................................................................................21

11.Exit Strategy.............................................................................................................................21
12. APPENDIXES.........................................................................................................................21

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 2. executive summmary
desale and his partners furniture enterprise shall be established as a private limited enterprise in
wolaita sodo town, in SNNP Region, The capital required to start business shall be acquired
through bank loan and partners contribution. desale and his partners furniture company shall
have a capital of birr 300,000 birr starting a business, this money are used for purchasing raw
material and other related things. The money will be paid within 3 year up to interest. This
Enterprise open 6 job opportunity. Our enterprise used different mechanisms to sell the product
like by using promotional method, publicity and magazine etc. We gather a huge amount of
profit by supply a furniture for market and community…etc. it’s good for our enterprise to run in
the right way by gathering sufficient profit our enterprise used a market penetration strategies for
expanding our shares in the market. Generally, our enterprise will contribute a social, economical
and political benefit for the nation. In the part of organizational hierarchy our enterprise will run
by 5 main persons those are: General Manager, Operation and Marketing Manager, Financial
Manager, Human Resource Manager, Reception Officer. By using those persons we are
expanding our network indifferent part of our nation. desale and his partners enterprise will
distributed or supply furniture for different parts. The main reason behind preparing this business
plan is the unavailability of alternative furniture supply in town, low quality of product and the
amount of product that customer gate low in content due to limited availability of the furniture.
By considering the current market gap and the demand of the people we incite to establish the
furniture in the town. More of the market gap we try to create the job opportunity and we try to
run our business. Generally the main objective of the enterprise is to provide quality product
and to satisfy the needs of our customers.

3. Nature of Business
To creating job opportunity and reduce poverty in our country through building and expanding of
a micro and small business institution. Since micro and small business institution are contribute
for our social, economical, political and technological development of a nation. So, giving a
much attention for micro and small business institution by government in the form of supporting
finance, by giving appropriate work place and by technology are enhanced our nation by one
step. Standing from this concept to interested to open our business enterprise.desale and his
partners furniture will be run as a partnership. Or launching business it requires (30*20) square
land, and it will offer different kinds of office and house materials according to the customer

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 specification. Some of the product that we will offer is table, cupboard, buffae, bed, and chairs
etc. In order to be more profitable we will segment our products in to different forms. That is;
Segment aimed for by furniture, Offering decorated house furniture. The Company shall produce
high quality furniture for different purpose.

3.1 Financial Requirements

Desaleand his partner’s furniture have initial capital of 300,000 birr, from the initial capital 60%
is generated from government loan and the rest is from parents share. The profit and loss share
agreement is equally. In order to gate normal profit from it, we made a sufficient environmental
and industrial analysis, analysis of internal strength and weakness and marketing opportunities.
Our furniture shall consist of the following facilities;
 Row material room
 Production and product room
 Residence room

3.2. Confidentiality of the Report

This document is confidential and proprietary. It may not be circulates or disclosed whole or part
without the written permission of the partners. No representation or guarantees shall made or
implied. Plans and projects will subject to change. All stated amounts will approximate and
estimated. When an entrepreneur has a plan to start a new business they need to have a
confidence about the effort to achieve the objective of the business unless and otherwise It is
difficult to think to achieve the business mission and goal. Desale and his partners furniture starts
its business within a full confidence of the group or partners how to achieve the goal. The
partners are fully confident to accept the consequence at the end.

3.3. Vision
The visions of the enterprise were:
 Producing and supplying comfortable and quality products to fill customers want.
 To be one of the leading enterprise in the production of furniture product in the town.
 To survive in the market.
 To increase qualified personal in the furniture production.
 To increase the income of the employee and employer.

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 3.4 MISSION
To startup and run a furniture enterprise in wolaita sodo town and providing quality furniture
products for local business people or to other customers. To offer the products to local customer
within reasonable price than the competitors settle. The main mission of this enterprise is
produce the quality product, increase the income of the employee and to decrease unemployment
level.

3.5 Objectives
desale and his partners furniture enterprise objectives are to produce quality product at
reasonable price and delivery the product to the customer at the right time. In addition to this to
improve the life standard of the community is the main objectives and also to produce new
furniture product design and style in order to penetrate in to the market to protect the
environment by replacing the timber product by other material like plastic, glass, metal ,etc

3.5.1 Short term objective

Our short term objective is to find and convert suitable premises that are (30*20) place for
starting the business with adequate seat, storage for inputs and outputs, machinery room and
related service areas. To increase our forecasted sales by intensively advertising and promotion,
by the product itself (producing quality product and service) for the customer

3.5.2 Long term objective

This is to be able to employee a full time members of the staff to build up reliable and organized
team working in our business, and encourage the business partner to focus on the day to day
problems, activities to meet customer need and wants. This helps as to expand the business
further and made real relationship with loyal customers. After five or six years we would like to
purchase the other premise in different area and set up the furniture

3.6 Key personnel

This business is could be run out by desale ,sindu, melaku, alehegn, moti, asma,dida, zekarias
we conduct a market survey how furniture business is operated from similar business and
different marketing opportunities and threats around our premises. So we are well equipping how
to plan the business, operate, design, promote and how to compute and provide quality product
than our competitors.

3.7 Values
 We are punctual and honest
 Team work is our principle
 Delivery of the product to our customer at the right time

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 3.8. Key success factors
1. It uses various types of promotional, or inducement mechanism to attract other customers
2. Continuous monitoring of our service and expense.
3. It is by society for society! Provide affordable cost with high quality.
4. By reducing expenditure cost of transportation for the customers.
5. Satisfying customer interests by providing quality products
6. The presence of good market price due to the weakness of competitor in the area.
7. There are many customers, because there is no other provider that gives this products.
8. It gives service for long hour.

4. Market Research and Analysis

Prior to start any business conducting environmental analysis is very important for the smooth
running of the business. Making both internal and external analysis helps the entrepreneur to
forecast the business trends. It is obvious that environment influence the business in many ways.
Some of the environmental factors are;-
 Economic factor (cost of business, cash flow, profit potential and related activities)
 Marketing factor (demand and market share analysis)
 Governmental factor (rule of regulation)
 Technical factor (production capacity of the firm)
 Competition and suppliers etc.

4.1 Future outlook and trends

When the business is initially started it is not for ever as it is. Our future outlook and trends are
creating an extra ordinary business in our country by making our product and service more
standardized and the business have also planned to expand our business in to large investment.

4.2 Analyses of competitors

Currently many competitors who produce furniture products in our locality .They produce beds,
chair, table, and different office equipment. But, they offer their product with high price the
machine they utility not latest and their premises is not consider the customer. After having the
above, we try to offer a better product that the customer will prefer than the competitor’s
product. The major strength of our competitor is that they have strong business network, they are
not new for the market.

4.3 market segment

The market for our business is ;

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 : large potential wolaita sodo tawon
: sodo zurie
: wadu

5. Manufacturing or Operation
5.1 products
The primary products of business shall be :
 Office equipment
 House furniture.

5.2. Method of Selection Site

We are selected our site by observing different things. These are:-
o The places are comfortable for work.
o The raw materials are available in anytime.
o The place are located in center so it’s easy to sale our products.
o The societies (community) are used huge amount of furniture for differen
purpose.
o The places are enable our business easily distributes for our customer.

5.3 Size of the business

Desale and his partners furniture has to be 6 employees, The total estimated amount of money to
start up the business activities is about 300,000 birr. As the business starter our area of coverage
may be limited, but for the furniture we will expand and transform it to large size business firm.

5.4. Background of Entrepreneur(s)

The company founded by 12 entrepreneurs’ of them are studied in University Of wolaita
sodoeven if we have not experience we will gather information from others and training
managerial experience from it's life.

5.5. Location of the business

Our business is found in the souther part of Ethiopia which is in SNNP regional state in the
wolaita sodo Town it is 405km far from Addis Ababa. For specify our business are located in the
inside in riftvaliy of SNNP national regional state

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 5.6 SWOT analysis

5.6.1. Strength of the business

 Availability of supply logging ;
 since all the founders will be university graduates.
 Clearly stated business plan.
 Sub division of management; marketing manager, operation manager, human
resource manager.

5.6.2. Weakness of the business

 Lack of experience in furniture product
 Lack of knowledge to do the business. (i.e. Absence of member of experianced person ).

5.6.3. Opportunity of the business

 The expansion of our product creates huge potential market.
 There is favorable environment and good conducive legal frame work for entrepreneurs.
 Establishment of microfinance institutions will create good funding source.

5.6.4. Treat of the business

 Weather condition; we are uncertain about weather condition.
 Existence of Competitors.
 Consumer demand change
 Business tax such as VAT
 After wards among the member
 Political Condition

5.7. Suitability for the market

After we conduct a mini survey concerned with the suitable place that is easily accessible both
by the customer and supplier that decreases transportation cost, input cost, and miscellaneous
expense.

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 6. PRODUCTION PLAN
Without operation plan, the business is dead by itself. The plan of action is necessary for a
smooth running of a given business. The production staff should have friendly welcoming
helpful attitude, they can boost gains by asking the right questions at the right time, it can be
achieved through training and selection.

6.1 Physical plants desale and his partner’s furniture shall consist the following
facilities;
 Row material room
 Production and product room
 Residence room

6.2 Equipment and machinery

To start the furniture the following equipment must needed
No Description Qty Unit price/birr Total price/birr
1 Drill 1 3000 3,000 birr
2 Rotor 3 4000 12,000
3 Gig so 2 2000 4,000
4 Sunglo 1 2500 2,500
5 Total 23,500

7. MARKETING PLAN
7.1 Pricing
Our business shall use low cost leadership strategy to introduce its products to easily establish
itself in market. The tentative prices of selected products are presented below.
 Bed = 5,000birr
 Sofa = 15,000birr
 Wood table = 1,000birr
 Glass table = 2,000birr
 Bufea = 2,000birr
 Chair = 700birr

7.2 Promotion strategy

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It is obvious that the business firm in a given industry should be advertised to attract the attention
of customers in the targeted market. Accordingly, we shall advertise our product through sale
promotion, publicity, local papers and magazines.

7.3 Distribution mechanism

Our products could be dispersed in to different local areas around our premises. We shall
distribute our product to the targeted market through vehicles like carts & cars. After we expand
our business, the mode of channel of distribution will be automatically changed.

8. Organizational plan
8.1 Form of ownership
desale and his partners furniture is a partnership for organization and the owners of the
organization are the manager of the business and they have the responsibility for the overall
operation of the business.

8.2 Authority of ownership

The owners of the furniture have authority on their business and the power to control the
business. The owners have an authority over the business overall affairs like The owner have the
right to increase or decrease the pricing by considering so many factors like competitor,
demanded etc…The owner have the right to control any risk

8.3 Organization structure

Desale and his partners furniture depend on an organized division responsibility to run an
efficient and diversified enterprises. The main decision and responsibility will be given to the
manager. He will focus on maintaining high quality and cohesive business entity. A furniture
expert will be in charge of the operation and all the worker will report to the expert.
Organizational chart of desale and his partners Furniture Company
.

General-manager

Desale

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HR-manager- Productionmanager Financial- manager Account office Marketer
Manager manager
melaku zekarias dida asma
sindu

9. Financial plan
When a business is initially launched, it may need a high amount of money. This is because of
most of field equipment is purchased during this time. In order to run out our business with
enough finance, we try to get from different alternatives.
From our initial capital (300,000), 60% of it is from loans and the rest is from parents share:
Loan= 300,000*60/100______________________ debit =180,000
Equity =300,000*40/100_____________________credit =120,000

9.1. Different kinds of Expense

Different kinds of expense for 1st year /end/
Licensing expense _________________________5,000 birr
Advertising expense________________________20,000 birr
Rent expense_____________________________60,000 birr
Salary expense ___________________________8000birr/month
Transportation expense ____________________3,500 birr
Depreciation expense _____________________750birr
Utilities expense _________________________24,500birr
Supplies expense _________________________6,000 birr
Miscellaneous expense _____________________2,000 birr
Total expense __________________________129,750
Fixed asset =birr 22,500(machinery) + 8000(land) = 30,500 birr
Accumulated depreciation will be 1500 for 1st year
Different kinds of expense for the 2nd year /end/

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 Licensing expense_________________________6000birr
Advertising expense________________________20,000birr
Rent expense_____________________________75,000birr
Salary expense___________________________9,000birr/month
Transportation expense____________________4,500birr
Depreciation expense_____________________1000birr
Utilities expense_________________________24,250birr
Supplies expense_________________________9,000birr
Miscellaneous expense_____________________1000birr
Total expense__________________________137,750
Fixed asset = birr 23,000 (machinery) + 8000 (land) =31,000birr
Accumulated depreciation will be 2000 for 2nd year

9.2 Total sale in number and birr

Projected 1st year total sale

Products Unit price Whole
Bed 25 5000birr 125,000
Sofa 16 15,000 240,000
Wood table 80 1000 80,000
Glass table 36 2000 72,000
Bufa 44 2000 88,000
Chair 500 700 350000
Total sale 955,000birr

Projected sales for the 2nd year

Products Unit Price Whole

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 Bed 30 5000 birr 150,000
Sofa 20 15,000 300,000
Wood table 80 1000 80,000
Glass table 40 2000 80,000
Bufa 50 2000 100,000
Chair 500 700 350,000
Total sale 1,060,000 birr

9.3 Financial statement

9.3.1 Income Statement
A, Income Statement For the 1st year

Desale and his partners furniture Income statement For 1st year
Sales__________________________________955,000birr
Less cost of goods sold________________350,000
Gross profit___________________________605,000 birr
Rent expense___________________________60,000
Licensing expense_______________________5000
Advertising expense_____________________20,000
Salary expense__________________________80,000
Transportation expense__________________3500
Depreciation expense___________________750
Utility expense___________________________24,500
Supplies expense_________________________6000
Miscellaneous expense-__________________2000
Total________ ____________201,750
EBIT_____________________________________403,250
Less income tax (35%)____________________141,137.5
Net income_____________________________262,112.5Birrr

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 B .projected Income Statement For the 2nd year
desale and his partners furniture Income statement For 2nd year
Sales____________________________1,060,000birr
Less cost of goods sold____________360,000
Gross profit___________________________700,000birr
Rent expense___________________________75,000
Licensing expense_______________________6000
Advertising expense_____________________20,000
Salary expense__________________________1,080,000
Transportation expense__________________4500
Depreciation expense___________________1000
Utility expense___________________________24,250
Supplies expense_________________________9000
Miscellaneous expense-__________________1000
Total____________________247,750
EBIT_____________________________________452,250
Less income tax (35%)___________________158,287.5
Net income_____________________________293,962.5Birr

9.3.2 Break-Even Analysis

A. Break-Even Analysis For the 1st year

Total sales on average-------------------------------birr 955,000

Total cost---------------------------…..-------------birr 350,000
Gross profit (GP) ------------------------------------------------------birr 605,000
Gross profit margin (GPM) =GP / SALES*100= 605,000/ 955,000*100=63.35%

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 B. Projected Break even Analysis for year2
Total sales on average------------------------------------1,060,000
Total cost---------------------------------------------------360,000
Gross profit (GP)----------------------------------------------------------700,000
Gross profit margin GPM=700,000/1,060,000*100=66%

9.3.3 balance sheet

A. balance sheet for 1st year
desale and his partners furniture
Balance sheet For the 1st year
Assets
Current assets
Cash ______________________________________________17,000
Long term asset
Equipment ________________________________________22,500
Land ______________________________________________8000
Less depreciation /acc/_______________________ 1,500
Total ________________________________________________46,000
Liability
Account payable____________________________________10,000
Total ________________________________________________10,000birr
Owner capital
Retained earnings__________________________________32,202
Capital stock ______________________________________3,798
Total liability & capital _______________________________46,000birr

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 B. Projected Balance Sheet For the 2nd Year
desale and his partners furniture
Balance sheet For the 2nd year
Assets
Current assets
Cash______________________________________________20,000
Long term asset
Equipment________________________________________23,000
Land______________________________________________8000
Less depreciation /acc/_______________________2000
Total________________________________________________53,000
Liability
Account payable____________________________________15,000
Total________________________________________________15,000birr
Owner capital
Retained earnings__________________________________32,200
Capital stock______________________________________5,800
Total liability & capital_______________________________53,000birr

9.3.4statement of cash flow

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 A. Statement of cash flow for 1st year
Cash budget total
Beginning cash balance……………………………………………..200,000
Cash collection from customers……………………………………..955,000
Total cash available for need………………………………………..1,155,000
Operating expense………………………..………………………551,750
Total cash needed…………….………………………..551,750
Cash excess- deficit……………………………………………….603,250

B. Projected Statement of cash flow for the 2nd year

Cash budget total
Beginning cash balance………………………………………………………603,250
Cash collection from customers…………………………………………1,060,000
Total cash available for need………………………………………………….1,663,250
Operating expense…………………………………..607,750
Total cash needed………………………………………607750
Cash excess- deficit………………………………………………………………..1,055,500

10. RISK ASSESEMENT

Risk is uncertainty that faces every business. Normally no good business without risk, but the
degree of risk is different from one business with other one. As there is many competitors
throughout the country, our furniture may face the risk of gaining good market, scarcity of row
material, quality problem and loss of customer loyalty.

11.Exit Strategy
By any means our business may fail. The failure is may occur due to the external factors. Before
our business fail we made audit in each month. In the audit If there is a threat we try to balance
it. If it is impossible we try to out from the business according to our agreement when we start
the business. We should exit from the business before we lost the, original business.

12. APPENDIXES
The idea of this plan were the product of the partner and other related persons like peers, and
community’s. The key success of the business were in team work, Tolerance, Punctuality, etc.
The partner also have much more idea to expand the business to other region. To expand quality
furniture product in the country and also to apply the principle of import substitution and export
promotion.

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