CPU BUSINESS AND INFORMATION TECHNOLOGY COLLEGE

Department of Business Management

TEKUS BAKERY

(A Business plan for the creation of TEKUS BAKERY)

Prepared by: ID NO

1. Abel Amare---------------------------------------------------------DRBM/1334/11

2. Aster Getenet ------------------------------------------------------DRBM/125/11

3. Dawit Teshome----------------------------------------------------DRBM/2052/11

4. Gossaye Sisay-----------------------------------------------------DRBM/507/11

5. Ruth Abera--------------------------------------------------------DRBM/1775/11

6. Temesgen Abate--------------------------------------------------DRBM/371/11

7. Yonatan Teshome------------------------------------------------DRBM/1308/11

Address: 0924037504/0900010655
E-mail: Tekusdbb@gmail.com
Table of Contents

1
1. Executive Summary -------------------------------------------------------------------------------------- 2
2. SWOT Analysis ---------------------------------------------------------------------------- 4
3. General Business Description --------------------------------------------------------------5
3.1 Mission , Vision ,Objective -----------------------------------------------------------5
3.2 Forms Of Ownership ------------------------------------------------------------------ 5
3.3 Address of The proposed headquarter ---------------------------------------------6
3.4 Funding requirement -----------------------------------------------------------------6
3.5 Brief description of the product -----------------------------------------------------7
3.6 Key features off the product ---------------------------------------------------------8
3.7 Competitive advantage -------------------------------------------------------------- 8
3.8 product range ------------------------------------------------------------------------- 9
3.9 patent and trademark -----------------------------------------------------------------9
3.10 Growth potential ----------------------------------------------------------------9

4. Sales Plan

4.1 Marketing plan -------------------------------------------------------------------------- 9

4.2 Market segmentation ------------------------------------------------------------------11

4.3 Positioning strategy --------------------------------------------------------------------11

4.4 Marketing mix strategy ---------------------------------------------------------------11

5. Operational plan -----------------------------------------------------------------------------12

5.1 plant location-----------------------------------------------------------------------------12
5.2 plan for material requirement , inventory management an quality control--13
5.3 budget for operational plan -----------------------------------------------------------14
6. organizational plan --------------------------------------------------------------------------15
6.1 Organizational chart -------------------------------------------------------------------15
6.2 Responsibilities amongst people in the organization Types of Motivation – 16
6.3 Details about Manpower plan --------------------------------------------------------18
6.4 Bakery rule and Regulation ----------------------------------------------------------18
6.5 Budget for Organizational plan -----------------------------------------------------19
7. Financial plan ---------------------------------------------------------------------------------20
7.1 income statement -----------------------------------------------------------------------20
7.2 break even point-------------------------------------------------------------------------21
7.3 profit and loss statement --------------------------------------------------------------22
7.4 balance sheet-----------------------------------------------------------------------------24
7.5 Cash Flow --------------------------------------------------------------------------------25
7.6 Business ratio----------------------------------------------------------------------------26
8. Risk Analysis----------------------------------------------------------------------------------26
9. Exit strategy----------------------------------------------------------------------------------- 27
10. Appendix --------------------------------------------------------------------------------------28

2
 1. EXCUTIVE SUMMARY

The business is established as partnership venture. The partners background is a Business Management
final year students initiated to do a business and named their business as “Tekus bakery”.
Business Overview
Over the last few years, the awareness of a high quality baked goods is on the rise. Good bread is a rare
combination of nutrition, convenience and luxury. Todays consumer has less time to create a wholesome,
handmade bread but would a appreciate the nutritional and sensory benefits it provides.
Tekus Bakery, located at 4kilo is going to be a new, upscale bakery focusing on providing freshly baked,
organic, healthy and/or premium bread products using modern production technique. Our product line will
fit nicely with health trend and will provide the highest quality bread in the market. We will also provide a
fast door-to-door delivery to create convenience for our customers.
We believe we are coming into the bakery business at a optimal time. There aren’t many bakery shops near
our intended area, the only competition tekus bakery predicts to have in its bakery sections are SHEGER
bakery and selam bakery. Which neither have the standard nor the doorway service - giving us a big break
in the industry.
While Tekus Bakery have a potential for high growth, the first three years will be spent establishing company
financial stability and increasing market share.
Customer Focus
At the moment Tekus bakery will primarily serve the residents around balcha Wolde condominium site. In
the future, Our market target wil increase drastically as our customer demand and financial capability
increases.

We, Tekus bakery value having a great customer service, keeping up with a technology to remain as
competitive and as customer friendly as possible.

2. ENVIRONMENTAL ANALYSIS/SITUATIONAL ANALYSIS/SWOT ANALYSIS

Internal (resource and capabilities) & external (micro and macro) environment
Opportunities Threat

3
  There is no other bread delivery company
in this market
 There are High consumption of breads but
the supply is very low in our market place.
 There is high time consumption for
purchase of product.
Strength
 We bring the product to our customer’s
gateway.
 We sell the same product with the same
quality and better location.
 There is a little variation in the price from
other organization’s with the same
product.
 There are organizations that are already in
this market selling the same product.
 There is high change in the price of raw
materials in the country.
 Since we are new arrival startup, there
will be financial issues
 Knowledge of laws and regulation from the
government.
Weakness
 We don’t provide a variety of the product;
we only sell one type.
 We only work in specific / limited location.


3. GENERAL BUSINESS DESCRIPTION

3.1 Mission
 making of job opportunities to unemployed young society.
 Provide basic need which is bread with persisted quality and price.
 Making people’s life easier by reducing the time they spent to buy bread.

Vision
o we seek to see our organization continually providing the best quality bread with customer’s choice
and become peoples’ first choice bakery company.

Objective
The overall objective of this business is to offer a product at a competitive price to meet the demand of our
intended market

4
1. provides quality of product to the customers
2. Attract the customer and expansion in short period of time
3. Create a customer satisfaction on our delivery service

3.2 Forms of ownership

Tekus bakery is a partnership with 7 partners. Each member has Bachelors Degree of Business
Management with no prior experience in this sector.
 6 members of the organization contributed Equal financial resources in cash and 1 of
the member contributed additional resource which is a house that lands in 20m2.
 Every member has distinctive responsibility with equal risk share and liability.
 6 members will have 13.7% of share from the profit and one member that contributed
the house for the bakery store will have 14.3% of share.

3.3 Address of the proposed headquarter

Tekus bakery is located in the area where the breads are produced. It is around 4kilo,
behind Ras Amba Hotel. The area contains our main office with the bakery store. it lands
on 172.223 square feet. It is contributed by one of our members that will be added in the
amount of share he gets.

3.4. Funding requirement (Debt equity ratio)

We have estimated total start-up costs of 338,591 birr. The numbers in the start-up and the start-up funding
descriptions are meant to reflect these estimates. The company’s capital will be 70,000br; each member
contributed 14.2%. Biniam, as co-owner will provide the bakery house of the start-up. Approximately
268,591 birr additional funding is needed. The purpose of this business plan is to secure financing for that
amount. The funds provided will be used to buy equipment, and to cover part of the start-up expenses. This
additional financing is needed to cover the start-up costs; the company plans to receive a five-year term
commercial loan facility which will meet the cash flow requirements. The borrowed funds will be used

5
exclusively to buy equipment, based on the list that will be made available to the lending institution. The loan
could be repaid in equal monthly installments over a five-year period. Our cash-flow analysis demonstrates
the company's ability to repay the loan and meet the interest payment obligations, while maintaining
adequate liquidity and generating positive cash flow and sufficient cash reserves for unforeseen future
events. For conservative purposes, the annual interest rate has been estimated at 8 percent. The actual
interest rate and the borrowing terms will be negotiated with the participating institution.

3.5 A brief description of the product (goods and or services)

Tekus bakery will offer fresh standardized breads to specific community. According to Ethiopian food and
Drug minster, Breads are the foods produced by baking mixed yeast-leavened dough prepared from one or
more of the farinaceous ingredients; Flour, bromated flour, phosphate flour, or a combination of two or
more of these. The potassium bromates in any bromated flour used and the monocalcium phosphate in any
phosphate flour used are deemed to be additional optional ingredients in the bread. All ingredients in any
flour, bromated flour, or phosphated flour used are deemed to be optional ingredients of the bread prepared
therefrom. Other than the flour, salt , water and the like ingredients are used and then processed to make
the end product which is bread. It meets the standard quality outlined. One piece of bread is 100g. when
delivering the bread, we take orders for future delivery or adds up the number at the time of delivery
because we always keep plain items on hand. We take orders by phone, or at the time of destination.

3.6 Key features of the product

 Door to door serving of customers

 Deliver Fresh product
 High utilization of Time
 There continuous service with much integrity

3.7 The advantages that the product holds over and above substitute product

6
 Tekus bakery is the only business company that delivers breads to customers at their door gate. For
the time on our market target is 4kilo condominium site and currently no other organizations producing
the same product are providing that. Not only the delivery but also either customer’s quality assurance is
at question or there is shortage of supply, or it takes time to get the product. Tekus Bakery solves and
addresses all these difficulties.

In addition to this, other bakery products like biscuits and homemade breads are not relevant and reliable
because our customers are divers types of family members; includes families with children, spouses,
bachelors, families with maid and families with elders. Buying biscuits every day is costly and may not
include the elders. It has much amount of sugar which is not appropriate for health. Homemade breads
might be good but still it takes time and skill to bake which makes it hard to get every day. It is also not
appropriate for bachelors.

3.8. The product range

As a startup, we are planning to serve our customers by providing one type of bread. But with time , we
have a plan to include different breads with variety of flavors and customer’s recommendation.

3.9. Patents and Trademarks

Patents :- We are in a process to be granted a patent with our business idea from MIST (Ministry of
innovation ,science and technology) with the right or title for of period 2 years to exclude others from
making use of our innovation.

Trademarks:- we gave our business organization as “Tekus Bakery “ with slogan statement of “we serve
Fresh Every day!”.

7
3.10. Growth potential of the business

we planned to expand the business by addressing many customers in other areas. Especially people living
around condominium and environments with greater number of population.

Other than geographical expansion, we planned to take orders from customers as demand. The bakery will
also start to produce breads with different versions on variety of flavors and types including slice breads,
barley breads, grissini breads and cookies.

4. SALES AND MARKETING PLAN

4.1 Marketing Plan
By the year the bakery starts production, we only address the people around balch Wolde condominium
site. As our production life grows, we will try to reach out other entities of the community which are not
habitants of the site. Since there are also other condos around 4kilo, they can also be a target to our
product. So

Sales plan (Projected sales forecasting)

The first few months will be slower as a result of being a new arrival. A steady growth cycle will occur as
the months pass. profitability is projected to occur during the half of the first year. The increasing sales
forecast suggest an important potential growth. Our projected sales are actually net sales, which consist
of the gross proceeds from total sales. The projected average monthly sales are approximately 168,000
birr. Considering price of 5birr per bread , for average consumption of 8 breads per household. Tekus
bakery will need to sell on average 1120 breads each day (168,000 birr average monthly sales , 5 birr per
bread for 30 day of a month) . using baking machine and other equipment we will be able to produce 1300
breads per day, with 5 working hours per day .

8
Direct cost of sales
Basic bread

4.2 Market segmentation, targeting, and positioning strategies

Market Segmentation and Targeting strategy

Our key customers are Balcha Wolde chelot site condominium habitants. In this site there are around 27
blocks each consisting 4 floors with 5 houses in a floor, in total there are 540 households in this site. We
targeted at least to address 140 habitants. In this living compound most of the habitants are families
having children and in our country Ethiopia, eating bread in breakfast is a culture and in a houses with
children, bread consumption is little more than those without children.

4.3 Positioning Strategies

We will offer bread with reasonable price sustaining customer’s comfort and quality standard. For the
families living in a condominium, it can be hard to get bread as wanted because of unbalanced demand and
supply. Some of the habitants also need bread with the best quality. Having this in mind , Tekus Bakery
offers the best solution maintaining this quality.
4.4 Marketing mix strategies

9
 Product :- Tekus bakery provides a basic and timely product which is delivered to customers door
gate which safeguards buyers comfort from being exhausting previous buying system.
Price:- the price put for 1 unit of bread is just 5birr only. Regarding the current economy of the
country, it is appropriate pricing that preserves quality and enough supply. The breads will be delivered by
white plastic bags. The payment will be made monthly after the total consumption each household used.
Promotion :- our employees and the delivery track are our promoting factors since they will have
our brands printed on them. But at our growth state we planned to use plastic bags with our band name
and also use small communal billboards.
Place :- the products will be produced at our main office located at 4kilo , Behind Ras Amba. After
the breads are baked, they will be placed at the delivery Track within the bread’s plastic box. when arrived
at the condominium site, which is very near to the production area , keeping freshness and crispness, the
delivery guys will distribute the breads at each customers door gate.
People: - our employees will have uniform in which the bakery’s name with its services and Address
written on. Every time the employees come to the bakery, their physical and emotional appearance will be
monitored and we make sure they reach out to customers with tidy and consciousness.
5.OPERATIONAL PLAN
5.1 Plant location
As described before, our office is located around 4kilo which also includes the production bakery store. As
a matter of fact, one of our member which contributed the store that were a living compound. Before be
dive into the market, we analyzed which part of the community we will be addressing and also, the distance
that we will be getting our raw materials. We intended to get the raw materials from mesrak food complex
located around welo sefer; flour, salt and yeast will be the major ingredients. It is relatively the nearest
food complex around us.
So we decided to plant our location near to our market since our target customers are habitants of Balcha
Chelot Wolde condominium site, it’s around 1.50 kilo meter from our production store. It doesn’t take 5
minutes to reach the customers.
5.2. Plan for material requirement, inventory management, and quality control.
Materials required for the Unit Price Specification
start up
1. Rental Van 1 6000 / month (including the gas ) The van will have --------
carrying capacity. and gas

10
 consumption is included with
rental payment.
2. White Plastic bag 4200 pc per month 0.75 cent/ pc Every bag will carry minimum
of 1 and maximum of 8 breads.
3. Baking machine 1 70, 000 birr The machine will have 16 trays,
each trays having 30 breads.
4. Dough Mixer 1 20 ,000 birr The mixer will have 50 kg of
dough at a time .
5. Ingredients (flour , 34 quintal flour , 318 108,800birr, 3400 birr , 680birr,240 All the ingredients meet the
yeast , salt, oil) per pack of yeast, 68 kg birr standard qualities of food
month salt complex.
6. Plastic box 17 pc 80 br per plastic box The bags are welcoming and
outgoing for palatable
7. Safety materials 1 pc 2000 br Prevention from danger and
unexpected scenarios.( fire
extinguisher , medical kit..)
8. Cash register 1 pc 100,000 br For the better facility of tax
machine system .

Inventory Management and Quality Control

our management is expected to use resources wisely, operate profitably, pay debts, and abide by laws and
regulations. Our management philosophy is based on team work, responsibility, and mutual respect. People
who work on other bakeries around Tekus bakery, would want to be part of our team because we operate
in an environment that encourages creativity, diversity, growth, and performance. Each member will have
a specific tasks having bachelor’s degrees in business management with good management and hospitality.
Our products are going to be produced due to the standard rules and proclamations on the preparation of
bakery products set by the government. The operation manager will be mainly responsible to the quality
assurance of our products. He /she ensures the right amounts of ingredients are used, the right and clean
equipment for the production are used, proper usage of heat, qualified employees are in their duties and
the like regarding the production, product development and customer service.
5.3 Budget for operational plan

Payroll
All employees will be hired to start only 5 hours a day. There will be 8 employees; 4 of them will be working in the bakery
production while the other 4 will be responsible for the delivery of the products. The main baker will be paid 3000 birr and
the other 3 assistance bakers will be paid 2000 birr. The driver will be paid 3000 birr and the 3 delivery guys will be paid
1500 birr each. pay for a total expenditure of 16,500 birr per month .

11
Rent
The bakery will have van that the breads will be delivered to customers. It will have rental with 6000 birr per month. The
rental service covers the gas consumption.

Utilities
Electric bills, water and telephone consumption for the bakery store, pays 5200 birr for electricity, 200 birr for water and
120 birr for telephone.
The bread oven will run 45 minute and the dough mixer will take an average of 10-minute maximum per day. The office
telephone will only be used to take orders and feedback and comments from callers.
A total figure of 5520 birr per month is a reasonable estimated monthly average.

Taxes
The company has budgeted 41,114.04 birr a month on tax.

General Supplies
General supplies will consist mainly of flour, salt, yeast and oil which cost 32 birr per kilo gram, 10 birr per kilo gram, 5 birr
per pack and 120 birr per liter. plastic Bag material, which affects the quality of the crust in storage, will cost 0.75 per bag.
Cleaning and maintenance supplies will total no more than 50 birr per month. The bakery has budgeted 117,820 birr per
month as a conservative figure.

Miscellaneous
The bakery has budgeted 120 birr per month to cover miscellaneous expenses.

12
 6.ORGANIZATIONAL PLAN

6.1 Organizational chart

Sales &
Marketing
Operation management Finance & Admin

Customer
Production & service
product
development HRM Accou & fin

6.2. Responsibilities and duties amongst people in the organization

Departmental position Responsibilities & duties
Sales and marketing  Persists in sales even in the face of failure
 Demonstrates products and services as deemed necessary by
clients and management
 Finds ways to sell products in the face of a down market
 Researches client base to find new types of customers and
sells to them accordingly
 Creates a plan for gaining customers and then retaining them
based on warranties or guarantees
 Analyzes and creates a plan for engaging the target market
 Analyzes the competition to create a plan for engagement
 Makes product appeal to the target market
 Motivate other departmental employees in the art of selling
 Makes sure that all departmental employee meet quota during
a given period
 Sets up booths at trade shows and demonstrates the quality or
uses of a product

13
  Demonstrates superior time management skills and meets
sales deadlines

Operation management o Ensures the processes by which goods and services are
produced
o Make sure the quality of goods or services
o Make sure the quantity of goods or services (the capacity of
operations)
o Ensure the stock of materials (inventory) needed to produce
goods or services

Finance & Admin  Processing of sales invoice

 Providing financial information and deducing the
repercussions for business performance and funding needs
 Prepare monthly accounting reconciliations
 To ensure the financial rules of the company that employs
them
 To prepare accounts for payments received and purchases
made by the organization
 Controls day to day incomes and expenditures
 Directing the preparation of financial reports summarizing
and estimating the organization’s financial position such as
income statements, balance sheets and analyses of future
earnings and income
 To improve the financial controls within the organization
 To draw up the organization’s monthly budgets based on the
necessities of the business

Customer service  Resolve customer complaints via phone, email, mail, or

social media.
 Use telephones to reach out to customers
 Greet customers warmly and ascertain problem or reason
for calling.
 Cancel or upgrade users.
 Assist with placement of orders
 Advise on company information.
 Take payment information and other pertinent information
such as addresses and phone numbers.
 Place or cancel orders.

14
  Attempt to persuade customer to reconsider cancellation in
collaboration of sales & marketing department.
HRM  Recruitment & selection of employees when needed.
 Performance management and monitoring.
 Develop facilities for Learning & development.
 Succession planning.
 Compensation and benefits for the ones who
performed great.
 Employee database management

6.3 Details about manpower plan (HRM planning)

we planned to hire 8 employees in total. Since the bakery at this stage is a startup, we process in simple
and clear way. There will be 4 employees in the production process who are the bakers. One of the baker
will be the main baker having 3 assistance bakers. They all are certified with cook and bakery; the main
baker having more experience.
The other 4 remaining will be working most of the time on the delivery process. 3 of them will be mainly
responsible for delivering the breads to customers’ door gate from the van. The last remaining employee
will be the driver who will take the breads from the bakery store to the market.
6.4 Bakery’s rule and regulation
The bakery will have strict organizational laws and regulations for the image and also quality sustenance
of the company. The followings are some of the rules and regulations: -
 To be punctual :- time is the most essential and a
“ MUST” to obey when it comes to Tekus Bakers because we need to get to our customers on time,
fresh. Hence Freshness is our quality.
 Tidy and cleanness: - since we are related with food production personal hygiene protection is
unquestionable.
 Proper use of bakery’s equipment as own: - when joining our organization, as much as we care
for them, they need to do the same and this is also their responsibility.
 Respecting each other: - we don’t want anyone to come to the work place feeling disrespected
so everyone has to respect each other.
6.5 Budget for organizational plan
Tekus Bakery Organizational Budget

15
Income Sources
Total Sales 168,000 br

Total Revenue 168,000 br

Total Expenses 146,069 br

Excess Revenue over Expenses 21,931 br

Expense Categories: per month

Flour 108,800br
Salt 680 br

Yeast 3400 br

Oil 240 br
Wage 16,500 br
Utilities 5532 br
Plastic bag 4200 br

Car Rental 6000 br

Miscellaneous 150 br
Interest 567 br

Total expenses 146,069 br

7. FINANCIAL PLAN

16
7.1 Income and expenditure statement
Tekus Bakery’s
Income Statement
for the year ending Nehase 30 ,2014
Revenue 2,016,000 br
Expense:
Flour 1,305,000 br
Salt 8160 br
Yeast 40,800 br
Oil 1680 br
Employee wage 198,000 br
Utilities 68,932 br
Car rental 72,000 br
Miscellaneous 1800 br
Interest 6804 br
Plastic bag 37,800 br
Total expense 1,740,976 br

Earnings before tax 275,024 br

Tax 40,101.3 br
Net earning 234,922.7 br

7.2 Breakeven point

For our break-even analysis, we assume operating costs of approximately 139,470 br per month, which
include payroll, utilities, car rent and other fixed costs. We need to sell about 1120 breads for minimum
33,600 birr per month to break even, based on our assumptions. Since our normal operating capacity is
1300 breads per day and the average projected sales of 168,000birr per month, or 1120 per day. we believe
that our company is likely to easily reach and maintain profitability. Tekus bakery is expected to break even
in the third month of operations.

Break-even Analysis
Monthly Units Break-even 1120

17
Monthly Revenue Break-even 33,600 br

Assumptions:

Average Per-Unit revenue 2.09 br

Average Per-Unit Variable Cost 4.1 br

Estimated Monthly Fixed Cost 12,833 br

sales

Total revenue

Total cost

Variable cost

Fixed cost

Units sold
7.3 Profit and loss statement
we expect to be profitable in the first year of operations, with profit increasing over the next four years, as
we establish and increase our customer base. The following table and charts show the projected profit and
loss for four years.

18
 FY 2014 FY2015 FY 2016

Sales 2,016,000 br 3,600,000 br 5,040,000 br

Direct costs of goods 1,666,722 br 2,788,214.7br 3,829,848, br

other production expenses 72,000 br 84,000 br 108,000 br

Costs of goods sold 1,738,722br 2,872,214.7 br 3,937,848br

gross margin 277,278 br 727,785.3 br 1,102,152 br

Gross margin % 13.7 % 20 % 21 %

Expenses
Flour 1,305,600 br 2,331,428.4 br 3,264,000 br
Salt 8160 br 14,400 br 20,400 br
Yeast 40,800 br 72,000 br 100,800 br
Oil 1880 br 5088 br 7200 br
Employee wage 198,000 br 222,000 br 258,000 br
Utilities 68,132 br 72,132 br 96,132 br
Car rental 72,000 br 84,000 br 108,000 br
Miscellaneous 1800 br 1800 br 1800 br
Interest 567 br 567 br 567 br
Plastic bag 37,800 br 69,120 br 94,500 br
Operating expense 1,715,607 br 2,872,535br 3,771,849 br

Profit before tax 300,393 br 727,465 br 1,268,152 br

Tax incurred 45,058.95 br 109,119.7 190,222.65 br
br

Net profit 255,334br 618,345 Br 1,077,929.35 br

Net profit/sale 12% 17% 21%

19
 7.4 Balance sheet

FY 2014
Asset

Current asset

Cash 70,000 br

Investment 178,591 br

Inventory 90,000 br

Total asset 338,591 br

Liabilities & capital

Loan payable 178,592 br

Total liability 178,592 br

Total capital 70,000 br

Total liability & capital 338,591 br

We expect a healthy growth in net worth and a healthy financial position. We do not project any real trouble meeting our debt obligations,
as long as we achieve our specific objectives.

20
 7.5 Cash flows

Tekus Bakery’s
Statement of Cash Flow
Year Ended Nehase 30, 2014
Cash flow from revenue 2,016,000 br
Cash flow for expenditure
Operating expense
Flour 1,305,600 br
Salt 8160 br

Yeast 40,800 br
Oil 1880 br
Employee wage 198,000 br
Utilities 68,132 br

Car rental 72,000 br

Miscellaneous 1800 br
Interest 567 br
Plastic bag 37,800 br

Cash paid for tax 41,144.0 br

Net cash flow 255, 334 br

our main concern will be to have sufficient cash on hand to meet our payment obligations, and be prepared
for unexpected needs of cash. Our conservative projections indicate that our business is able to generate
positive cash flows and sufficient cash reserves. In addition to normal cash inflows and outflows, we will
focus on establishing sufficient cash reserves for contingencies. This is a good way to control the cash flow
risk. In addition, excess cash, as projected, should not remain idle, especially during periods of high interest
rates. Management will consider investing idle funds in time deposits or certificates of deposit at banks, in
government securities such as Treasury notes, or in other trading securities (cash equivalents). The
following table and chart show the projected cash flow for four years.

21
Funds flow
We have estimated total start-up costs of 338,591 br. The company capital will be 70,000 birr. 0ne member
will provide the bakery store of start-up. Each member will have a share of 14.2% and one will have 14.3.
7.8 Business ratios
Liquidity ratios :- our cash flow indicate a good debt-paying ability, the effectiveness of customer credit
policies, and a number of days needed to collect receivables, to sell inventory, and to pay account payable
that is consistent with best business practices in our industry.
Profitability ratios: - indicate a good profitability of operations, efficient use of assets to produce sales,
a good earning power of the assets, and a good profitability of stockholders' investments.
Cash flow adequacy ratios: - our cash flow yield, cash flow to sales, cash flow to assets, and net cash
flow indicate a good ability to generate operating cash flows in relation to net income, a good ability of sales
and assets to generate operating cash flows, and positive cash flow after providing for commitments.
8. RISKS Analysis
Company management is responsible for constantly evaluating risks and taking corrective actions to
provide adequate prevention, control and risk reserves. We have identified several risks that are associated
with our business project. There are many possible classifications of risks, but for the purposes of this
plan, we have chosen to group them as follows:
a) External Risks (These risks come from outside the company and are more difficult to prevent
and control.)
 Competition and buying patterns change
 Suppliers
 Technology
 Currency
 Inflation
b) Internal Risks (These risks come from inside the company and can be better prevented or
controlled)
 Personnel
 Cash flow deficiency
 Business continuity
 Management

22
 9.EXIT STRATEGY
organization’s dissolution
Our purpose is to provide the best alternatives to protect stakeholder’s interest, while maintaining the
potential growth of our company, the liquidity, and the profitability of future operations. Typically, the
concern of the shareholders is that they will become locked into a company that might show no sign of
either going public or going bankrupt. To overcome this potential threat, we are open to discuss with several
exit alternatives, and include the best provisions in the agreements that are expected be reached by the
time of the incorporation.
There are several options that could be discussed while considering alternative methods to turn liquid
securities into readily tradable securities or cash. These options include, but are not limited to:
 Liquidation
Closing the bakery and selling off its assets and also distributing some to related shareholder.
When closing and selling we will sell the machines and other tangible assets so that they will
generate money. By paying off our debt taking the funds out instead of re investing them .
 Selling the business in the open market
Buying an already established business can be attractive since there will be less risk than
new entry. There will also be established customer base.
 Sell to another market
Some competitor or similar business may want to acquire our bakery. Our business has
good customer relation strategy and other business companies may want to continue with this
sector with less responsibility.

The creditor institution will expect 474,026 br with 27,087 br annual interest. We will be paying our debt at
steady rate every month. since the annual interest rate is 8%, when calculated monthly it becomes not
hard to pay. Every member will have its contribution’s paid back with percentage of
10.APPENDIX:
Founders of the business

1. Mr. Abel Amare BA in business management

2. Ms Aster Getenet BA in business management
3. Mr Dawit Teshome BA in business management
23
4. Mr Gossaye….. BA in business management
5. Ms Ruth Abera BA in business management
6. Mr Temesgen Abate BA in business management
7. Mr Yonatan Teshome BA in business management

24