Business plan for production of soap

BAHIR DAR UNIVERSTY

BAHIR DAR INSTITUTE OF TECHNOLOGY (BIT)
FACULITY OF CHEMICAL AND FOOD ENGINEERING
DEPARTMENT OF CHEMICAL ENGINEERING
Entrepreneurship Project
Project title: CHORA SOAP
Prepared by ID NUMBER
1. Efrata Tesfaye BDU130413MKL
2.Faiza Seid BDU MKL
3.Eyob Becho

Submitted to:
Submission Date: 11/08/2022

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Business plan for production of soap

TABLE OF CONTENTS

i.Analysis of the current situation................................................................................................................4

1.Identification of the business...................................................................................................................4
 INTRODUCTION............................................................................................................................4
 Name...........................................................................................................................................5
 Legal identity...............................................................................................................................5
 Location.......................................................................................................................................5
 Professional advisors...................................................................................................................6
2.The key people.........................................................................................................................................6
 Existing management..................................................................................................................6
 Future requirement.....................................................................................................................7
3.The nature of the business.......................................................................................................................7
 Product........................................................................................................................................7
 Market plan &customer...............................................................................................................8
 Competitive Analysis....................................................................................................................9
ii.Future Direction......................................................................................................................................10
i.starategic influence-SWOT Analysis.........................................................................................................10
1.opportunties &Threats in the business environment.....................................................................10
2.stength&weakness.........................................................................................................................11
ii strategic direction...................................................................................................................................12
1.objective.........................................................................................................................................12
III. IMPLEMENTATION OF AIM...................................................................................................................13
Personal Plan.....................................................................................................................................13
2. Marketing plan...............................................................................................................................13
Promotion Strategy...........................................................................................................................14
Sales Strategy....................................................................................................................................15
3. Money: financial analysis......................................................................................................................15
 Financial Plan.............................................................................................................................15

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Business plan for production of soap

Break Even Analysis...........................................................................................................................17

Cash flow year balance......................................................................................................................19

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Business plan for production of soap

i.Analysis of the current situation

1.Identification of the business

 INTRODUCTION
Our soap is prepared from fat (Mora) and sodium hydro oxide &various row materials are
sodium hydro oxide, potassium hydro oxide and fat. Starting a soap business is one of those rare
home business opportunities that actually can work. We really can easily start a soap making
business and make some extra income. There really is a huge market for natural soaps. We think
any people like handmade soap and like to buy it from the maket.
The target market gives Our business an advantage. Due to the large population of Ethiopia and
the surrounding towns, our business will be able to take conduct a large amount of sales. The
average people in Ethiopia makes around 90,000,000. Aimed respectively at day care facilities
decision maker, students and society who uses this facilities we will create a push factor by
effectively convincing the decision level managers within organization that our product provides
an ideal solution to the hand washing compliance.we will begin the paln at the beginning of
2016.

Technology
The technology of our fading dyes will be pivotal in the success of our company.  The
interactions between fading dyes and antibacterial or anti-microbial bases suitable for use in
restaurants or hospitals are more complicated than the interactions with the glycerin or lotion
soaps utilized in the CHILD assure line. As soon as cash flow permits, projected to be in 2016
will employ a professional chemist with experience developing dye products to further the
research into technological innovations that may produce antibacterial and anti-microbial
versions of the soap to address additional markets

Company form

The company will be denominated as soap Information Service. In the future operation it will
be also used to not only for hand washing hand but also used as for washing the all part of our
body.

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Business plan for production of soap

Philosophy

Our philosophy is to provide the customers to keep their health and beauty by manufacturing
different kinds and size of soaps, and also it used for washing their closes and other materials.

 Name
This business is required to establish a general partnership. The name of the business is CHORA
SOAP

Name of partners qualification

1.Efrata Tesfaye Chemical engineer
2.Faiza Seid Chemical engineer
3.Eyob Becho Chemical engineer

 Legal identity
No Name % of Total amount in birr
contribution
1 Efrata Tesfaye 15% 30,000.00
2 Faiyza Seid 15% 30,000.00
3 Eyob Becho 15% 30,000.00
4 micro financing 55% 110,000.00
Total Beginning capital 500,000.00

 Location
Our production area location will be lebu, Addis Ababa, we will rent a house in this location and we
will start business. The size of this house is not large. It is just like a micro enterprise, though it will
grow to large partnership enterprise in the future. This site area is chosen that it has easy access and
supply to the fundamental utilities and other facility such as supply to electric power, water, telephone
lines, transportation, market access and labor.

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Business plan for production of soap

 Professional advisors
For the purposes of financial planning, we combined the Sales Associate's
compensation into an aggregate forecast

2. The key people

 Existing management
General Manager: Eyob becho

 Controls of general activities of the production of soap

 Communicate with external organizations, gather information and discriminate it to the

partners as well as key workers of the business.

Finance Section: faiza seid

 Controls and check financial flow of the partners.

 Controls the salesman.

 Act as G/Manager when the Manager is not available.

General Service: Efrata tesfaye

Controls all the employees in the production of the soap

 Act as a purchaser when the purchaser is not available.

Skill &knowledge

1. Problem solving

2. Acute Decision Making

3. Teamwork and collaboration

4. Leadership

5. Adaptability and curiosity

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Business plan for production of soap

 Future requirement

Additional soap products, manufactured to comply with regulatory minimums for strength
and effectiveness in their respective target markets will be developed to address restaurants
and hospitals. These soaps will be trademarked under the names FOOD assure and
HEALTH assure, respectively.

Perhaps the most promising future market opportunity for fading dye soap is the retail
market. This product line will include soaps using the same or similar dye colors as the day
care to encourage children to wash their hands more often at home. This will be a top
priority when the company develops the financial resources enough to mount a national
advertising campaign and distribution system. A complete line of fading dye
products could potentially be developed, including floor, counter and body cleaning
products that use fading dyes to indicate places on a surface that may not have been
cleaned.

3. The nature of the business

 Product
Production process and development

Our soap is prepared from fat (Mora) and sodium hydro oxide .varies row materials are sodium
hydro oxide, potassium hydro oxide and fat. Starting a soap business is one of those rare home
business opportunities that actually can work. We really can easily start a soap making business
and make some extra income. There really is a huge market for natural soaps. We think any
people like handmade soap and like to buy it from the maker. Commercial soaps are usually
drying and many are actually synthetic detergents. Our kitchen crafted soap can work better. It
has a special, moisturizing luxury feel. . Plus you have the option of customizing it with different
ingredients especially scents in literally infinite variety. Making soap is an easy and fun hobby.
Once you start making soap as a hobby, you really have made most of the investment required to
start a soap business. You really can easily start a soap making business and make some extra

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Business plan for production of soap

income. There are so many work at home business ideas that are just scams. Making and selling
handmade soap as a business is no scam. Soap making is not a get rich quick scheme either.
People like handmade soap and like to buy it from the maket. Make sure you know what really
good soap looks like, smells like and feels like. Do some product research by trying to find the
really good soap out there? Find what you really like. Buy and try a lot of soap. Know what
you're trying to produce.
Product
We have two basic product lines: CHILD assure, intended for day care facilities, and an
antimicrobial-based product for hospitals (HEALTH assure) and restaurants (FOOD assure) - the
antibacterial products are not yet in development. The various product lines, competitors and
future product possibilities for SAFE assure

 Market plan &customer

 Marketing strategy
For our initial target market of day care facilities, the company will implement to parallel
marketing efforts,

Aimed respectively at day care facilities decision maker, students and society who uses this
facilities we will create a push factor by effectively convincing the decision level managers
within organization that our product provides an ideal solution to the hand washing compliance.

 Competitive Analysis
When we starts up as a business, there will be competitors who we will have to compete against.
Some competitors Beauty Supply will challenge our company when we first start up. We also
have to worry about big name companies that sell online natural soap products. There are various
other small companies that will challenge our business. Though all of these companies challenge
our business in some way, there is still an opportunity for our to gain ground. Our big name
competitors serve to their customer's well-known brands and they themselves are well known
companies. With starting up, each of these businesses offers something that we might not be able
to offer. For a fact we know that businesses. They offer rewards cards and due to the newness of
our business that will be something that we won’t be able to offer at this time.
The small soap stores that we compete with will have the benefits of that they are able to offer

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Business plan for production of soap

their customers cheaper products with cheaper prices. This is we due to the fact that they are
small local business and they are also competing with the big name brands. With these
competitors trying to conquer the market and become the best, our company will compete with
these companies and even though they may offer something that we can’t offer, we can always
find a way to offer something that will catch the eyes of the customers.
Our business will compete with these big name brands by offering our customers the service of
giving out customer appreciation gift bags. When a customer buys a product and eventually signs
up for an award card, our business will award points to our customers. With these points, the
customers will be able to buy sample products that will eventually be coming out in the
upcoming season.
With our service there are multiple ways for people to receive incentives from the reward of
buying. This is kind of what GameStop does with its business as it offers a great rewards system
where you’re able to buy items or to have certain amounts of discounts. We will offer an easy
access to our website and what is great about the internet and owning a website, we can make
money off of advertising. Our website will also offer support for the customer with reviews on
the natural soap that they are looking for and that our website will give reviews on the products
that we are selling. In this case, if someone is buying the wild lavender scented soap, the person
will be able to look at reviews about the products and they can vote on how many stars they want
to give the product (0-5).
This solves the problem of people feeling sketchy about buying the soap product online and
allows them to see what other people think about the product. Our website will also have a direct
link to Face book and Twitter. This connection will allow customers to see other people’s
reviews and they will be able to see the support that our business has when they see the likes and
amount of friends or followers. This plan of offering our customers support when buying will
help our compete with our competitors. This will also distinguish our from both the small and
big name brands. Like all big name brands, they had to start out small. Though small and
unknown, they kept going and eventually made it even though they faced big name brands. This
is the success that we will try to create for our business and will do this by competing with our
competitors both the small and big name companies.

ii.Future Direction

i.starategic influence-SWOT Analysis

1.opportunties &Threats in the business environment

Opportunities
 Increasing demand in the local market
 Free import duties in principal market

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Business plan for production of soap

Risk Assessment
we concur that home made soap exposed to different risk, from those risk-

 Lack of technology

 Lack of finance

 customer unsatisfaction

 Lack of capital

 uncertain things

 competitors action

To compete with competitors by using cheaper price from our competitor and advertisement that
is appealing and since they might know our market strategies they could easily copy ours and
add yours.

Threats
Threats for the production of soap should be aware of include:
A) slow recovery process of the economy from the current crisis
B) changes in the business environment that might reduce our sales
C) higher taxes in the future
D) tight credit times, higher interest rate

E)Increasing cost of raw material due to the current global economic and financial crisis

F)Uncertainty of the global market for the products due to global environment issue

2.stength&weakness
Strengths
our strengths will be implemented into the business. Some of our strengths include;
A)The ability to absorb knowledge, make quick changes when needed, being able to talk to
people, being smart and having a lot of knowledge and just wanting to help people with what

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Business plan for production of soap

they need.
B) location
c) excellent quality of soap
D) energy-efficientsoap preparation equipment and technology
E) clear vision of the market needs: we know the customers' needs, we are familiar with the latest
technology, and we can offer the soap that would bring the two
together

Weaknesses
Though we have many an abundance of strengths,we also have an abundance of weaknesses that
will affect the company, but with our will, I will overcome them. Some of our weaknesses are

A) We have a lack of knowledge of the soap business, limited amount of funds and I’m going up
against big companies that also sell natural soaps.

B) cost factor associated with keeping state-of the equipment and technology

C) start-up challenges

D) limited operating capacity during peak sales periods

ii strategic direction

1.objective
Genral objective

The genral objective is to produce (Mora) soap with better quality of natural soap.

Specific objective

 to create value for customer and shareholder by continually improving and reducing
preventable illness through the use of our soap.

 Quality is the major key in this business because customers tuned to natural product

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Business plan for production of soap

due to their disappointment with chemical product or synthetic product. Distributors

would be tasting the quality of the product at each batch.So we ll produce our soap
with the best quality

 Patient protection to defend our time sensitive dye and product concept from
competitor.

 Complimentary relationship with organization interested in increasing hand washing

compliance.

 Achieve the seals goal of at least 100,000 during first year of operation.
Achieve regular customer base of natural shop during the first year operation, Increase
the product by 40% during the second year of operation.

III. IMPLEMENTATION OF AIM

 Management of resources
Personal Plan

In order to free up enough capital to continue operations and possible expansion, our executive
team will not receive more than a living wage salary until the product is well into the black. We
understand that as a new product we will need technical support and legal advice; this will be
currently outsourced to various consultants.
All sales for the first year of operation will be closed by the executive management team.
Starting from the second year, we will employ a Sales Associate who will handle sales
transactions. His/her compensation will be a combination of fixed salary and commission on
sales. For the purposes of financial planning, we combined the Sales Associate's compensation
into an aggregate forecast.

Organization structure
Two of our strengths are the low cost structure and flexible personnel needs. Sales people with
experience relevant to each new respective target market can be attained as need dictates, but the
initial management team consists of the founders themselves, with little operational support

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Business plan for production of soap

2. Marketing plan
a).Competitive edge
• Location: chora soap will be produced in the location of lebu . It is a thirty minute drive from
the center of Addis ababa.
• Lower operating cost and reasonable prices: Since the production of chora soap policy is to
purchase latest equipment and technology, and will be operating with ateam of five multi-skilled
employe it will be able to offer reasonable prices for a high qulity soap, but it will be impossible
to compete on price only.
• Excellent products and services, timely delivery, and convenience

b) Marketing objectives

This project is valuable to day care manager who need effective control solution to ensure
frequent child and child care workers hand washing to keep the environment clear and to
minimize preventable illness no other product on the market serves the hand washing compliance
aspect work place safety with such an affordable, conclusive evidence where every time and
employee washes his, or her hands for only a marginally.Higher cost than traditional shop, and
significantly less than gloves or other hand washing compliance system.

c) Marketing methods

Pricing strategy

The value of our product will not be attractive to extremely price sensitive
customers. The market for soap is generally inelastic, but our product offers
significant differentiating benefits over current soaps that justify the price
difference.
Promotion Strategy

One of the most important aspects of a successful launch is positive publicity for our product.
We will develop an awareness campaign to promote our product through several avenues. Our
management team will fiercely pursue positive public perception through
government endorsements promoting the benefits of our products. We will also attempt to
capitalize on the novelty of the solutions provided by our product by actively seeking local news

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Business plan for production of soap

and media coverage to help spread awareness. Buzz will be developed in social hubs by
distributing samples to parties with potential interest. Parental support of the product will be
garnered through free trials, demonstrations, and direct mailings to the day care parent roster
lists, parent groups and PTA's.

At washing stations in client facilities we will spread awareness with stickers targeted towards
children, showing them the process of washing to turn their hands different colors and
emphasizing how fun it can be. Pamphlets will be sent to the family homes through the day care
roster mailing lists, to calm fears regarding a new product in their child's environment, explain
the benefits and encourage the parents to respond and build feedback for the benefits of the
product to further increase implementation.

Some of the government programs of interest are the various compliance and workplace hygiene
programs supported and funded by the Center for Disease Control (CDC), the Food and Drug
Administration (FDA) and the National Center for Disease Control (NDIC). Programs such as
the Health Protection Research Initiative implemented by the CDC demonstrate an invested
interest by government programs in increasing the overall health of Americans.

Sales Strategy

Sales strategy will initially address within and outside university managers with ordering
authority for the establishments in that area. The prospective clients will be supplied with a
professional product information packet and moved into the sales funnel to begin closing
prospect, followed up with a direct mail brochure and a phone call. There will be no initial direct
compensation or commission for closed sales. Proceeds from sales will be invested back into
developing and expanding the business. As the industry begins to increase its initial sales force,
commission-based incentive programs will be implements.

3. Money: financial analysis

 Financial Plan
Based on market research, we expect the business to begin growing at 45% per month for the
first 12 months, then at a yearly rate of 90% for the next two years. Due to our low initial
investment costs of 500,000, we can maintain the operations of the business with the cash will

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 Business plan for production of soap

have from start up.  In addition, we will almost immediately have a positive cash flow, allowing
us the flexibility to cover any unforeseen expenses.

✓ Financial projection

Sales

● We have assumed no payroll expense for the startup period.

● 100% of sales will be made on credit, the industry standard. Although we do plan to sell
some of our product (mostly for product promotion purposes) to the government agencies
who usually demand substantially longer payment terms, our major target group will
remain commercial entities. As such, we assume, on average, a 45-day collection
schedule.
● Customers will pay for all relevant shipping charges.
● To be flexible in meeting the customer demand, we plan to maintain a minimal stock of
product at a rented warehouse and dispatch it from there. The rest of the product we
expect to be shipped from the outsourced producer's site.

● Once we make the decision to address additional market segments, we will begin
increasing our marketing and sales expenses to represent the expected increase in costs
associated with developing packaging, advertisements, additional promotions, and
creating awareness of our products in the differing markets.

General Assumption
2016(%) 2017(%) 2018(%)
Plan month 1 2 3
Current Interest rate 45.00 % 45.00 % 45.00 %
Long-term interest rate 30.00% 30.00% 30.00%

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 Business plan for production of soap

Tax rate 5.00% 5.00% 5.00%

Other 20.00% 20.00% 20.00%

Key Financial Indicators

● Sales - Our sales are projected to grow at a consistent rate of 90% yearly, and we believe
this accurately reflects the realistic growth our product would be capable of attaining if
we can properly utilize existing channels of distribution and gain social acceptance.
● Gross Margin - As we grow, become more efficient, and gain economies of scale we
begin to see a slight growth in our margins.
● Operating Expenses - In 2017 and 2018 we see an increase in the number of operating
expenses that we will incur. We begin incurring larger costs involving advertising,
promotion, marketing, and payroll expenses.
● Inventory Turnover - We will begin operations with a preliminary purchase of 50,000/
38,000 gallons of soap. Our preliminary forecast suggests that for us to be flexible in
meeting customer demand we will need to maintain a minimal inventory stock at a rented
warehouse. We estimate that, on average, we will keep two weeks’ worth of inventory on
hand.
● Collection days - We will collect our accounts receivable on an average of 45 days. In
2016 and 2017 we will have the cash to cover unexpected costs or expenses so that
we may decide to allow a longer collection period.

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Business plan for production of soap

Break Even Analysis

When opening our business, we will have to determine a break even. In our business the top
product will be nail polish. With the main three scents being honey, lavender and mango Shea,
our business will have to ultimately have to sale 500 units of this product. When determining our
breakeven point, we will also have to determine how our customers will react to the pricing and
to other competitors.
When determining our price we will focus on penetration, loss leader and competitive pricing.
With penetrating pricing, we will be able to sell our products cheaper than other stores and this
allows our business to enter the market. This will also allow our business to start in the market
on a plus. With loss leader, this will allow we to offer coupons and other incentivizes to
customers when they buy a product. What this does for our is that it allows our to have regular
prices but they will attract customers. With competitive pricing, we will price our products on
what our competition is pricing its products. This allows we to attract their customers and other
customers.
our business will have 7,500 to spend on the products that we will be selling and this is our
breakeven point as we will have to make this much to ensure that any money earned after that is
profit. When buying the products, we will save 1,500 as backup in case a product starts to sell
really quickly. What this does is provide a backup plan but makes it easier to hit our breakeven
point.

Break Even Point 1= 3,000/ (9-2) =429 products need to be sold to hit breakeven point Unit

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Business plan for production of soap

Contribution Margin= 7,500-1,800.

The following fixed costs reflect the relative costs for selling and distributing our product within
the greater Portland metro area, and do not reflect the fixed costs necessary to expenditure.
The profit and loss forecast (2016-2018)
2016 2017 2018

value % Value % Value %

Sales turnover 250000 100 350000 100 370000 100

Overhead expenses
Personal(labor) 8000 22.8 8500 22.9
Server monthly fee 50000 20
Head office rent 5000 14.2 5000 14.2
Server machine 1000 2.8
room rent
Office material 1000 2.8 3000 0.8
Social expenses 50000 20 7000 20 7500 21.4
Telephone, 10000 4 1000 2.8 10000 2.8
internet…
Marketing cost
Market research 7000 2.8 5000 1.4 3000 0.8
Media advert 8000 3.2 6000 1.7 5000 1.3
Internet promo 7000 2.8 5000 1.4 3000 0.8
Personal promo 7000 2.8 5000 1.4 2000 0.5
Fliers 5000 2 5000 1.4 2000 0.5
Total expense 394000 398000 420000
Net profit 362500 302000 320000
Tax of profit (15%) 54375 45300 48000
Year deficit 308125 256700 272000

Cash flow year balance

Overall, our business is expected to generate sufficient cash flows. Our cash balance will, among
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Business plan for production of soap

other things, depend on the level of inventory we'll decided to keep at a rented warehouse. At the
moment, our projections in this respect are preliminary and we expect to fine-tune them as the
demand for our products grows.

We expect to secure a 50,000 line of credit in year 3 to finance our receivables, listed as "New
Current Borrowing" in the table below.

In year 5 of operations, we will begin looking at our ability to begin paying back our initial
investors the 250,000. Although the terms of the additionally sought investment are yet to be
agreed upon, we belief that our investors will provide us with a buffer of some years before
expecting a return on their investment, allowing us the capital and time to expand and grow at an
appropriate or desired rate. Nevertheless, for planning purposes, we have made provisions to
start paying out a modest dividend from the third year of our operations. Currently, we set
dividend payments to be equal to 5% of net profits.

cash flow year balance 2016-2018(table)

2016 2017 2018
Cash flow
Sales Turnover 250,000 350,000 370,000
Total Cash Flow 250,000 350,000 370,000
In
Cash flow out
Overhead
expenses
Personal labor 8,000 8,500
Server monthly 50,000
fee
Head office rent 5,000 5,000
Server machine 1,000
room rent

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Office material 1,000 3000

Social expenses 50,000 70,000 70,500
Telephone ,interne 10000 10000 1000
t…
Advertising 8,000 11,000 11,000
Marketing cost
Marketing 7000 5000 300
research
Media 8000 6000 500
advertisement
Internet promotion 7000 5000 300
Personal 7000 5000 200
promotion
Filers 5000 3000 200
Total cash flow 22,400 34,000 36,300
out
Deficit 2,600 1000 700

Cash flow (2016)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash flow in
Sales turn 4000 7000 9000 10000 14000 1900 25000 30000 30000 3600 3600 3000
over 0
Total cash 4000 7000 9000 10000 14000 19000 25000 30000 30000 3600 36000 3000
flow in 0
Cash flow
out
Personal
(labor)

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 Business plan for production of soap

Server 2500 4000 4000 4500 4500 4500 4500 4500 4500 4500 4500 4500
monthly fee
Head office
rent
Server
machine
room rent
Office
material
Social 2000 4000 4500 4500 5000 5000 5000 5000 5000 5000 5000
expense
Telephon,int 600 700 800 900 1000 1000 1000 1000 1000 1000 1000
ernet
Investments
Market 250 150 150 150
research
Media 100 900 800 800 700 700 600 500 500 500 500 500
advertisemen
t
Internet 1200 650 650 650 650 605 550 550 550 300 300 300
promotion
Personal 1100 1000 800 700 700 600 400 400 400 300 300 300
promotion
Fliers 700 500 500 500 500 500 500 500 200 200 200 200
9000 1115 1295 795 1245 1295 1255 1245 1215 1180 1180 1190

Total cash
flow out

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