MODEL BUSINESS PLANS

FOR OFF‑FARM ACTIVITIES

Feed the Future Ethiopia Livelihoods for Resilience – Oromia |
Food for Peace Development Food Security Activity
CONTENTS
Opportunities for small off-farm businesses............................................................................................................................................... 1
Challenges facing small off-farm businesses................................................................................................................................................. 2
1. Model business plan for food catering shops....................................................................................................................................... 4
2. Model business plan for retail shops...................................................................................................................................................... 6
3. Model business plan for baltina agro-processing................................................................................................................................. 8
4. Model business plan for animal-drawn carts...................................................................................................................................... 10
5. Model business plan for woodwork..................................................................................................................................................... 12
6. Model business plan for construction.................................................................................................................................................. 14
7. Model business plan for sisal rope production ................................................................................................................................. 16
8. Model business plan for hairdressing................................................................................................................................................... 18
9. Model business plan for bakeries.......................................................................................................................................................... 20
10. Model business plan for weaving........................................................................................................................................................... 22

ACRONYMS

CRS Catholic Relief Services

DFSA Development Food Security Activity
FGD focus group discussion
FTC farmer training center
GoE Government of Ethiopia
KII key informant interview
LRO Feed the Future Ethiopia Livelihoods for Resilience – Oromia
MSE micro and small enterprise
NGO nongovernmental organization
SWOT strengths, weaknesses, opportunities and threats
TVET technical and vocational education and training
TVETC technical and vocational education and training college

Cover photo: Ethiopian women selling dried chili peppers. Photo: Oscar Espinosa/iStock
MODEL BUSINESS PLANS FOR
SELECTED OFF-FARM ACTIVITIES

These model business plans provide a simple cost–benefit analysis that shows new entrants
what investing in a new off-farm small business entails. The SWOT analysis—covering strengths,
weaknesses, opportunities and threats—distills the main findings of the value chain analysis that
are pertinent to small business operators. The financial analyses (costs, revenue, gross profit and
gross margin) are based on the information gathered from business operators and local government
experts through focus group discussions and key informant interviews.

A note on gross margin

The gross margin—total sales revenue minus costs, divided by total sales revenue, expressed as
a percentage—is a measure of the stability and profitability of a business. A robust small business
should have an annual gross margin above 20 percent.

OPPORTUNITIES FOR SMALL OFF-FARM BUSINESSES

Increased urbanization
Increased urbanization, expansion of peri-urban
settlements and rural-urban migration is boosting demand
for goods and services.

Behavior change
Greater urbanization and connectivity mean people take part in activities that are aspirational
(personal care, fashion). More rural people are buying prepared food and consumer goods.
They are also substituting modern items for traditional ones.

Government expansion
Expansion of government institutions (schools, clinics, etc) into rural areas is
increasing demand for construction and woodwork (for facilities and staff homes),
and is bringing employees who become consumers of local goods and services.

Government focus
The manufacturing and construction sectors have received special
government attention in terms of training, provision of premises and credit access.
The focus is slowly expanding beyond urban areas.

Increased income
Increased income, mainly of daily laborers and
farmers, is boosting demand for prepared food,
consumer goods and services.

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 1

 CHALLENGES FACING SMALL OFF-FARM BUSINESSES
Retail shop

Input price and availability

Prices of some inputs rise or fluctuate,
while there are critical shortages of others.
These include sugar, cooking oil, flour, Food catering shop
tools, machinery and parts, construction
materials and animal feed. Lack of foreign
exchange limits import options.
Bakery

Baltina agro-processing
Poor market linkages
Limited or no linkages to individual
or institutional customers
in larger markets.
Construction
Corruption
Corrupt bidding processes
restrict access.
$
Woodwork

Hairdresser
Lack of infrastructure
Limited or no access to electricity
and water limits type and scale of
business that can be operated.
Weaving
Competition
Competition from motorized
transportation such as motorbikes
and Bajaj three‑wheelers. Sisal rope production

Poor roads
Poor roads result in breakdowns and accidents
that damage carts and injure animals. Animal-drawn carts

Animal exploitation
The hours the animals work and the loads they
carry may be beyond their capacity.
Poor hygiene and sanitation Challenges common to most*
Limited food safety knowledge. small off-farm businesses
Food is exposed to dust, sunlight, * L ack of premises does not apply to animal-drawn carts and construction.

flies and germs. There is limited Lack of credit access

water for washing hands and
Limited initial and working capital due to
utensils.
lack of access to credit from formal financial
institutions due to lack of collateral.

Lack of skills
Lack of technical, financial literacy
and entrepreneurial skills limits scope
and quality of business.

Drought Lack of training and technical support

Poor rainfall can result in Lack of timely and appropriate support,
failure of the pepper crops, as such as training in technical skills, and basic
well as limited wheat supply. business and marketing skills.
Lack of technology
Limited awareness
Lack of technology prevents
businesses improving product Low level of awareness among
quality and producing more rural youth of the possibility of
efficiently. self-employment.

Cultural constraints
A belief that women and girls should be
Seasonality
confined to household chores limits
Availability of work fluctuates their participation in businesses.
according to the seasons.
Lack of access to premises
Limited availability and prohibitive cost
of premises limit establishment and
expansion of businesses.

Climate-related shocks
? Shocks that reduce harvests affect almost
all activities either directly or indirectly.
Health problems Directly because certain raw materials/
Juice from sisal leaves is a skin ingredients may not be available (supply),
irritant and causes itching. and indirectly because farmers—one of the
main consumer groups—have less disposable
Lack of land income to spend (demand).
Lack of land available for
large-scale sisal production.

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 3

MODEL BUSINESS PLAN
1. FOOD CATERING SHOP

Overview: In small towns, peri-urban areas and villages, diverse food catering businesses
are on the increase due to rural-urban migration and the expansion of
government facilities (such as schools, TVET institutions, farmers’ training
centers, health centers, etc.), whose employees increase the demand for food
and other consumer goods.

Operators: Youth (male and female) in jointly owned small businesses, and women individually.

(Potential) customers: Government employees (agricultural extension workers, health extension

workers, teachers, etc.), daily laborers (mainly migrants), farmers from rural
areas on market days, other inhabitants of towns and villages, commuters, etc.

SWOT analysis of food catering shop

Strengths
• Demand for local food and beverages is less
seasonal than before.
• Government institutions, like the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc., can provide technical support.
Opportunities
• Increasing level of urbanization boosts demand for
processed agricultural outputs and cooked foods.
• Income, mainly of daily laborers and farmers, has been
increasing, boosting demand for prepared foods.
• Cultural and behavioral changes: Rural inhabitants have
started buying prepared foods.
Weaknesses
• Lack of financial literacy and entrepreneurial skills.
• Poor hygiene and sanitation.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Prices of some inputs rise sharply or fluctuate,
while there are critical shortages of others, such
as cooking oil and sugar.
• Low level of awareness among rural youth of
the possibility of self-employment. Instead they
migrate to urban centers to seek employment in
the formal sector.
• Lack of timely and appropriate support, such
as trainings in food preparation, hygiene and
sanitation, basic business skills and marketing, etc.
Threats
• Drought and other natural shocks both reduce
raw materials supply (grain, vegetables, etc.) and
decrease demand by reducing the income of farmers
who then cannot afford to buy prepared foods.
• Cultural constraints: Among most rural
communities, there is still a belief that women
and girls should be confined to household chores,
limiting their participation in small businesses.

4 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for food catering shop
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials cost (grains, vegetables, spices, consumer goods, etc.) 8,614
Labor costs (including opportunity cost) 3,682
Others costs (rent, transportation, water, milling) 697
Total costs 12,993
Total revenue 16,147
Gross profit 3,154
Average startup cost 10,447

Gross margin 19.5%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 5

MODEL BUSINESS PLAN
2. RETAIL SHOP

Overview: 
In small towns, peri-urban areas and villages, retail shops supply a variety of
consumer goods to the rural population, mainly those who cannot access larger
markets due to distance, poor infrastructure and the absence of appropriate
transportation services. E.g., pregnant women, children and the elderly.

Operators: 
Youth (male and female) mainly in joint small businesses, and young men or
women in individually owned businesses.

(Potential) customers: 
Government employees, daily laborers (mainly migrants), farmers from
rural areas on market days, other inhabitants of towns and villages,
commuters, etc.

SWOT analysis of retail shop

Strengths
• Year-round demand for consumer goods.
• Government institutions such as the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide technical support and
training.
Opportunities
• Increasing level of urbanization boosts demand for
consumer goods.
• Income (mainly that of daily laborers and farmers)
has been increasing, resulting in increased demand
for consumer goods.
• Substitution of traditional commodities with
modern commodities (e.g. oil instead of butter,
modern plastic or steel kitchen utensils instead of
traditional ones).
Weaknesses
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Input-related challenges: Prices of some inputs
rise sharply or fluctuate, while there are critical
shortages of others, such as cooking oil and sugar.
• Low level of awareness among rural youth of
the possibility of self-employment. Instead they
migrate to urban centers to seek employment in
the formal sector.
• Lack of timely and appropriate support, such as
trainings in basic business and marketing skills, etc.
Threats
• Drought and other natural shocks affect demand
by reducing the income of farmers who then
cannot afford to buy consumer goods.
• Cultural constraints: Among most rural
communities, there is still a belief that women
and girls should be confined to household chores,
which limits their participation in businesses.

6 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for retail shop
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials cost (sugar, coffee, biscuits, salt, candy, spices, etc.) 10,161
Labor costs (including opportunity cost) 1,101
Others costs (rent, transportation, water) 405
Total costs 11,667
Total revenue 12,581
Gross profit 914
Average startup cost 7,807

Gross margin 7.3%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 7

MODEL BUSINESS PLAN
3. BALTINA AGRO-PROCESSING

Overview: In the rural, peri-urban and urban areas of Arsi Negele, Boset, Shala and
Siraro, raw peppers are processed into a variety of food items known
collectively as baltina.

Operators: 
Women and girls retail to customers on market days.

(Potential) customers: Farmers mainly on market days, urban inhabitants, hotels and food catering shops.

SWOT analysis of baltina agro-processing

Strengths
• High demand, as baltina is consumed by every
household in both rural and urban areas.
• Government institutions such as the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide training and technical
support.
• Huge production of raw pepper ensuring the
availability of raw materials for agro-processing.
Opportunities
• Increasing level of urbanization boosts demand for
processed agricultural products like baltina.
• Income, mainly of daily laborers and farmers, has
been increasing, boosting demand for processed
agricultural outputs.
• Cultural and behavioral changes: Rural inhabitants
have started buying processed farm products.
Weaknesses
• Lack of financial literacy and entrepreneurial skills.
• Weak processing capacity of local producers, as a
result of a lack of technical skills and appropriate
processing technology.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Limited or no market linkages with potential
customers such as individual urban consumers and
institutions like hotels, hospitals, universities, etc.
• Low level of awareness among rural youth of
the possibility of self-employment. Instead they
migrate to urban centers to seek employment in
the formal sector.
• Lack of timely and appropriate support such
as training in food preparation, hygiene and
sanitation, basic business and marketing skills, etc.
Threats
• Drought and other natural shocks result in
reduction or failure of pepper production.
• Disease and pests.
• Critical shortage of water.
• Cultural constraints: Among most rural
communities, there is still a belief that women
and girls should be confined to household chores,
which limits their participation in businesses.

8 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for baltina agro-processing
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs (raw pepper, spices, barley, beans/peas, etc.) 2,940
Labor costs (including opportunity cost) 585
Others costs (rent, transportation, water, milling) 347
Total costs 3,872
Total revenue 5,158
Gross profit 1,286
Average startup cost 6,375

Gross margin 24.9%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 9

MODEL BUSINESS PLAN
4. ANIMAL-DRAWN CARTS

Overview: The topography of the Rift Valley is suitable for animal-drawn carts. They
transport people and goods from rural areas to urban centers, mainly on
market days. The carts are also used to transport crops during harvest, as
well as farm inputs and water.

Operators: Males (youth and adult) as the activities require some physical strength.
Sometimes women operate donkey carts to fetch water as these are
relatively small compared to horse carts.

(Potential) customers: Local inhabitants who want to visit urban centers, transport goods to
market in urban areas, or take their harvest from farm to home.

SWOT analysis of animal-drawn carts

Strengths
• Topography is suitable for cart transport.
• Lowlands are suitable for rearing donkeys.
Opportunities
• Some demand: Owing to increased rural-to-urban
migration, the increased mobility of people creates
a demand for animal-drawn carts, particularly
where the rural road network is unsuitable for
Bajaj three-wheeler transport.
• Increasing business activities: In rural villages,
peri‑urban and urban areas, there has been
continuous expansion of business activities that
require various transport services.
Weaknesses
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Input-related challenges: The price of animal feed
has been increasing.
• Low level of awareness among rural youth of
the possibility of self-employment. Instead they
migrate to urban centers to seek employment in
the formal sector.
• Lack of timely and appropriate support such as
training in basic business skills and animal care, etc.
Threats
• Stiff competition from Bajaj three-wheelers and
motorbike transport services.
• Poor road conditions.
• Exploitative use of animals by owners.

10 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for animal-drawn carts
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Cost of animal feed 920
Labor costs (including opportunity cost) 1,375
Others costs (repair, horseshoes, medication, etc.) 206
Total costs 2,501
Total revenue 2,675
Gross profit 174
Average startup cost 13,825

Gross margin 6.5%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 11

MODEL BUSINESS PLAN
5. WOODWORK

Overview: Woodwork businesses require electricity and hence are located in large
towns like Ziway, Arsi Negele, Shashamane, Aje, Dera, etc. The special
skills needed are acquired through training or long experience. The
businesses are skills-intensive and the operators need physical strength.

Operators: Educated and/or experienced men and youth (male, as the activities require
some physical strength). Owners can be youth, men and women.

(Potential) customers: Government institutions, inhabitants of towns and villages.

SWOT analysis of woodwork

Strengths
• Increased demand for furniture due to
construction boom.
• Government institutions such as the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide training and technical
support.
Opportunities
• Increasing urbanization boosts demand for
furniture.
• Government priority sector: The manufacturing
and construction sectors have received special
government attention in terms of trainings,
provision of premises and credit.
• Demand for furniture created by expanding
government institutions such as schools, health
centers, etc. But market linkage is needed to take
advantage of this opportunity.
Weaknesses
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Input-related challenges: Prices of several inputs
are increasing and there are shortages of some
inputs as most are imported.
• Low level of awareness among rural youth of
the possibility of self-employment. Instead they
migrate to urban centers to seek employment in
the formal sector.
• Lack of timely and appropriate support such as
trainings in record keeping, business skills, etc.
Threats
• Critical shortage of foreign currency to import
inputs and spare parts.

12 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for woodwork
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs (wood, paint, nails, varnish, etc.) 28,000
Labor costs (including opportunity cost) 15,000
Others costs (transportation, electricity, rent, etc.) 1,550
Total costs 44,550
Total revenue 60,000
Gross profit 15,450
Average startup cost 29,500

Gross margin 25.8%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 13

MODEL BUSINESS PLAN
6. CONSTRUCTION

Overview: Construction activities include masonry, carpentry, painting, electrical

installation, sanitary installation, etc. Operators undertake house
construction in the private or government sectors in urban, peri-urban
areas and villages.

Operators: Youth (mostly male) who are graduates of TVETCs or universities, or

individuals with previous experience in the sector.

(Potential) customers: Private individuals and government institutions (schools, health centers,
homes for teachers, health and agricultural extension workers, etc.)

SWOT analysis of construction

Strengths Weaknesses
• Growing demand for house and office • Seasonality of jobs.
construction. • Lack of financial literacy and entrepreneurial skills.
• Government institutions such as the Federal Urban • Lack of access to credit from formal financial
Job Creation and Food Security Agency, TVETCs, institutions due to lack of collateral.
FTCs, etc. that can provide technical support.
• Lack of timely and appropriate support, such as
trainings in technical and basic business skills.
Opportunities Threats
• Increasing level of urbanization boosts demand for • Corruption and nepotism distorts the market.
furniture.
• Government priority sector: The manufacturing
and construction sectors have received special
government attention in terms of trainings,
provision of premises and credit.
• Demand by government institutions such as
schools, health centers, etc. for furniture is
creating additional demand for the products. But
market linkage is needed to take advantage of this
opportunity

14 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for construction
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs
0
(construction materials are generally bought by the customer)
Labor costs (including opportunity cost) 30,800
Total costs 30,800
Total revenue 40,000
Gross profit 9,200
Average startup cost (for tools) 6,660

Gross margin 23%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 15

MODEL BUSINESS PLAN
7. SISAL ROPE PRODUCTION

Overview: In East Hararghe, women collect wild sisal leaves using traditional hand
tools, and separate the fibers from the leaves to make rope.
Operators: Women and girls who collect sisal leaves and produce ropes to sell to
traders in local markets.

(Potential) customers: Khat traders in Aweday, Haramaya, Harar, Dire Dawa, etc.

SWOT analysis of local food catering

Strengths
• Better demand and prices for sisal products and
fibers in factories and urban centers.
• Government institutions such as the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide training and technical
support.
Opportunities
• High potential for sisal production in East
Hararghe Zone due to favorable agro-ecological
conditions.
Weaknesses
• Lack of appropriate support, such as technical
training, and assistance in commercializing the
activity.
• Health-related problems: The liquid from the
leaves irritates the skin and causes itching.
• Absence of appropriate technology for fiber
extraction.
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
Threats
• Lack of land for large-scale commercialization of
sisal production.

16 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for sisal rope production
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs
0
(sisal grows wild and is available for the women to pick)
Labor costs (mainly opportunity cost) 400
Total revenue 510
Gross profit 110
Average startup cost (with existing practices). None, as sisal grows
wild, and the tools used are general agricultural tools already 0
available in the home

Gross margin 21.6%

MODEL BUSINESS PLAN
8. HAIRDRESSING

Overview: In urban centers with access to electric power, hairdressers for both
men and women are key small-scale businesses. In rural areas and small
towns without electricity, due to the high demand for personal care, some
entrepreneurs have bought small generators to run hairdressing businesses.

Operators: Educated and/or experienced women and youth (male and female).

(Potential) customers: Youth (male and female) and women and men living nearby or those who
come to town on market days.

SWOT analysis of hair dressing

Strengths
• Growing demand for personal care.
• Government institutions like the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide training and technical
support.
Opportunities
• Increasing level of urbanization boosts demand for
personal care.
• Income, mainly of daily laborers and farmers, has
been increasing, resulting in increased demand for
personal care services.
Weaknesses
• Limited availability of working premises or
expensive rents in urban and peri-urban centers,
which limit expansion of hairdressing shops.
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Low level of awareness among rural youth of
the possibility of self-employment. Instead they
migrate to urban centers to seek employment in
the formal sector.
• Lack of timely and appropriate support, such as
training in hairdressing and basic business skills.
Threats
• Lack of infrastructure like electricity and water.

18 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for hairdressing
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs (cosmetics, lubricants, benzene, etc.) 1,465
Labor costs (including opportunity cost) 775
Others costs (rent, water, etc.) 279
Total costs 2,519
Total revenue 3,060
Gross profit 541
Average startup cost 6,385

Gross margin 17.7%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 19

MODEL BUSINESS PLAN
9. BAKERY

Overview: In small towns, peri-urban areas and villages of Dire Dawa, Deder and Malka
Balo, there are growing numbers of small and medium-sized bakery businesses
due to rural-urban migration and the expansion of government centers, whose
workers have increased demand for baked goods. Increasing numbers of tea
houses and small food catering shops have also boosted demand.

Operators: Mostly better-off adult men, as women and youth cannot raise the required
initial capital.

(Potential) customers: Households (for home consumption); shops (for retailing); cafes,
restaurants and tea houses (for bread to sell with tea).

SWOT analysis of bakery

Strengths
• Demand for baked goods has been increasing and
has become less seasonal.
• Government institutions like the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide technical support.
Opportunities
• Increased level of urbanization boosts demand for
processed agricultural outputs and cooked foods.
• Income, mainly of daily laborers and farmers, has
been increasing, resulting in increased demand for
prepared foods.
• Cultural and behavioral changes: Rural inhabitants
have started buying more prepared foods including
bread.
Weaknesses
• Shortage of working premises is a challenge, mainly
in large towns.
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Input-related challenges: There are sometimes
shortages of some inputs, such as wheat flour
• Lack of timely and appropriate support such
as trainings in food preparation, hygiene and
sanitation, basic business skills and marketing, etc.
Threats
• Drought and other natural shocks reduce the
wheat supply.
• Shortage of foreign currency limits wheat imports.

20 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for bakery
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs (wheat flour, salt, etc.) 11,550
Labor costs (including opportunity cost) 6,166
Others costs (rent, transportation, electricity, water, etc.) 2,466
Total costs 20,182
Total revenue 26,966
Gross profit 6,784
Average startup cost 21,666

Gross margin 25.2%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 21

MODEL BUSINESS PLAN
10. WEAVING

Overview: Weavers are found in most villages and peri-urban areas of Deder and
Malka Balo of East Hararghe Zone. They use traditional equipment, which
they make themselves or buy from markets.

Operators: Weaving businesses are owned and operated by men who learnt the skills
from their fathers. Weavers are considered to be of a lower social status
and are relatively poor, with limited land for agricultural activities.

(Potential) customers: For better-designed, better-quality clothes, everyone in villages and urban
centers. But currently only elderly men and women in rural areas.

SWOT analysis of weaving

Strengths
• Increased demand and better prices for
good‑quality, well-designed traditional clothes.
• Government institutions such as the Federal Urban
Job Creation and Food Security Agency, TVETCs,
FTCs, etc. that can provide technical support
Opportunities
• Increasing urbanization boosts demand for
better‑designed traditional clothes.
• Income, mainly of daily laborers and farmers, has
been increasing, resulting in increased demand.
Weaknesses
• Lack of financial literacy and entrepreneurial skills.
• Lack of access to credit from formal financial
institutions due to lack of collateral.
• Lack of timely and appropriate support such as
trainings in technical and business skills, etc.
• Lack of technology to increase quality and quantity
of cloth.
Threats
• Drought and other natural shocks reduce the
income of farmers and hence their demand for
clothing.

22 MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES

Model financial flow for weaving
Average monthly costs, revenue, gross profit and gross margin
Items Amount (in Birr)
Raw materials costs (thread, etc) 3,200
Labor costs (including opportunity cost) 2,600
Others costs (rent, transportation, water, etc.) 1,400
Total costs 7,200
Total revenue 8,000
Gross profit 800
Average startup cost 1,500

Gross margin 10%

MODEL BUSINESS PL ANS FOR OFF‑FARM AC TIVITIES 23