BUSINESS PLAN 2023

BUSINESS PLAN
FOR
THE DOMESTIC TRADE OPERATIONS OF CONSTRUCTION MATERIALS

BUSINESS LINES: ………. MACHINERY RENTAL & MATERIAL SUPPLY

ADDRESS: ………….ADDIS ABABA CITY ADMINISTRATION,

NOVEMBER, 2023
ADDIS ABABA, ETHIOPIA

CONSTRUCTION MATERIAL SUPPLY Page 1

 BUSINESS PLAN 2023

TABLE OF CONTENTS

I. Executive Summery ………………………………………….…..3

II. Background Information ……………………………...………..5

III. Market Analysis..……………………………………………...…..8

IV. Production Plan &Technical Analysis……………………..13

V. Organization and Management ……………………………16

VI. Financial Analysis………………………………………………18

VII. Annexes…………………………………..……………………..….21

CONSTRUCTION MATERIAL SUPPLY Page 2

 BUSINESS PLAN 2023

I. EXECUTIVE SUMMARY
ABC Construction Material Retail Trade is legally established as a Sole Proprietorship with having the
main focus on supply of basic construction inputs. Hence, through the domestic trade business line; the
company has engaged in Wholesale and Retail operation of locally manufactured consumer goods, such as:
Cement and Cement Products along with other construction materials to surrounding community.

By considering the current fast and dynamic economic growth of Ethiopia especially in urban area,
ABC ABC has deeply understood and inspired to engage in what the market necessitates for equivalent
growth of most demanded consumable construction material supply. Accordingly, it has believed that
the sector should expand rapidly to support sustainability of the overall economic development. Hence,
considering such golden opportunities, the company has inspired to participate in the development
activities of the country by taking part on services delivery sector by making an investment on such kind
of profitable services with further expansion on supply of quality materials and widen the products
distribution capacity in the country through becoming the potential Agent.

Basically, the envisaged business has both Strategic objectives which encompass: Long-term, Medium
and Short-term plans, and Functional objectives such as: Operational, Marketing & Financial targets.
With these objectives, it is going to apply modern techniques to meet the demand of such broad market
for the business which can be segmented into several categories of consumers. The categories or market
segments encompass: Government Projects, Private Construction Companies, Real Estate developers,
Individual Property contractors, etc.

In this regard, as a future strategic plan by having Head Quarter Addressed in Addis Ababa City
Administration, Kolfe Keranio S/City; Wor.-03; the envisaged company has intended to expand its
market outreached throughout the country. Hence, currently the company has availed actual
warehouses within the mentioned vicinity. Furthermore, the company has a plan to arrange warehouse
facilities at different major cities of regional states. With these planned market destinations, the business
operations will take place at-least to satisfy the huge demand in the central market and surrounding.

Regarding investment funding requirement, the envisaged construction material retail trade service
business if 100% full capacity utilization applied in the service delivery process, the total investment of
the company including existing financial outlay is estimated to be reach ETB 73,719,805, which
intended to cover investment costs of major fixed assets like, building, machineries, vehicles, office
furniture & equipment and initial merchandize costs.

CONSTRUCTION MATERIAL SUPPLY Page 3

 BUSINESS PLAN 2023
Out of the total cost stated above, owner’s equity (Existing of ETB 64,350,000 + New W/Capital
Injection ETB 4,469,805) is accounted for ETB 68,819,805; whereas, the remaining ETB 4,900,000 will be
sought from external source as bank term loan to cover partial purchasing cost of inventory for re-sale.

According to projected annual net profit from sales of its products, the envisaged business will generate
a net profit after tax of ETB 2,848,626; ETB 3,074,099; ETB 3,283,443; ETB 6,096,222 and ETB
9,442,372; in the 1st, 2nd, 3rd, 4th & 5th years respectively. Net profit margin lies between 14% and 18.5%
even before attaining full capacity which is attractive.

The projected cash flow of the project shows that the project would generate positive net cash flows
throughout the operation years. The net cash flow generated by the project at initial investment year is
about ETB 1,841,865; ETB 5,482,074; ETB 6,037,888; ETB 6,670,110; ETB 10,016,377; and ETB
14,167,738; during Year-0; 1st, 2nd, 3rd, 4th and 5th years respectively.

Accordingly, the NPV and IRR Calculated on the projection are both attractive and acceptable with IRR
after Tax = 20%; IRR before Tax = 32% and NPV of ETB 13,474,308, respectively.

Finally, it has been found that the underlying business is reliable and has positive impacts on the overall
development of the country in many aspects. In this regard, the company with its initial production
capacity intended to move forward, so that;

 It creates employment opportunity for about 29 permanent employees;

 It generates income to the promoters and enhances self-employment;
 The business contributes its best role in the socio-economic development;
 It generates revenue to the government in the form of income tax;
 Have many multiplicative economic effects.

CONSTRUCTION MATERIAL SUPPLY Page 4

 BUSINESS PLAN 2023

II. COMPANY BREIF AND OWNERSHIP

2.1 ESTABLISHMENT DETAIL
 Registered Name: ……………ABC ABC

 Company Address:…...............Addis Ababa City; K/Keranio Sub-City; Wor.---

 Business Lines:….....................Building Contracting, Machinery Rental & Material Supply

 Business Status: …...…………Well Established and Operational

 TIN Certificate No.: ………….

 Com. Registration N.: ……………

 Trade License No.: …..……….

 Current Activity Plan: ………..Retail Trade of Construction Materials

 Legal Formation:……………...Sole Proprietorship

 Licensed By: ………...............Addis Ababa City Administration Trade Bureau.

 Registered Capital: …………..ETB 1,136,440.00

The envisaged company, ABC ABC Service Business is legally established as a Sole Proprietorship
with having the main focus on supply of in-demand construction inputs. Hence, through the domestic
trade business line; the company has engaged in Retail Trade operation of locally sourced consumer
goods, such as: Cement Products, Sand, Gravel and other construction materials to surrounding
community. By considering the current fast and dynamic economic growth of Ethiopia especially in
urban area, the company has deeply understood and inspired to engage in what the market necessitates
for equivalent growth of most demanded consumable construction material supply.

Accordingly, it has believed that the sector should expand rapidly to support sustainability of the overall
economic development. Hence, considering such golden opportunities, the company has inspired to
participate in the development activities of the country by taking part on services delivery sector by
making an investment on such kind of profitable services with further expansion on supply of quality
materials and widen the products distribution capacity in the country through becoming the potential Agent.

CONSTRUCTION MATERIAL SUPPLY Page 5

 BUSINESS PLAN 2023
Basically, the envisaged business has both Strategic objectives which encompass: Long-term, Medium
and Short-term plans, and Functional objectives such as: Operational, Marketing & Financial targets.
With these objectives, it is going to apply modern techniques to meet the demand of such broad market
for the business which can be segmented into several categories of consumers. The categories or market
segments encompass: Government Projects, Private Construction Companies, Real Estate developers,
Individual Property contractors. And hence, the founders have inspired to participate in more service
business operations by contributing additional funding partially from own equity contribution and
partially by searching for external sources like bank credit facility.

2.2 BUSINESS VISION

The vision of the Business is to be the leading supplier of most in demand Construction Machineries and
major construction inputs (i.e. Cement Products, Sand, Gravel and Aggregate) sourced through
Domestic supply chain.

2.3 MISSION STATEMENT

Mission Statement of the business under review is to have not only a great variety selection but includes:

 Efficient and superior service towards customer satisfaction as a paramount target.

 Community welfare and Participation are equally important to our success.
 Everyone is treated fairly and with the utmost respect at our Service delivery center.
 Employees will feel a part of the ultimate success that we intended to attain by quality
service delivery system.

2.4 BUSINESS OBJECTIVE

The current broad objectives of the company with this business plan is to raise working capital of ETB
4,900,000 in connection with the purchase of quality products from local suppliers while showcasing
the expected financials and operations over the next five years through the following specific objectives:

To Supply quality Cement products, sand, gravel and other Construction Materials using modern
marketing techniques;
To generate income for the company to further engaged in other development activities in the country.
To raise its capital for further business expansion through external financing opportunities,
To make the market outreach of its retail and wholesale trade through different regional states,

CONSTRUCTION MATERIAL SUPPLY Page 6

 BUSINESS PLAN 2023

2.5 RATIONAL OF THE BUSINESS

Construction Material supply is a product oriented business that finds its business relations with both the
private and the government organizations and also individual contractors. The company intends to
supply various construction input materials, like, Sand & Gravel of different sizes along with Cement
and Cement Products mainly to governmental and non-governmental operators whose demand is
increasing through time.

Currently, a dynamic of growing economic and social changes specially related to construction sector
are taking place in the country. Thus, the rationale behind this business as stated in the aforementioned
paragraph is the existence of a huge demand for the items to be supplied by the company particularly with
the development of the country, increase in population growth, expansion of infrastructures etc. For this
purpose bank loan is required and one of the local financial institution is hoped to provide working capital
loan for this viable business.

2.6 PRODUCTS COMPOSITION

Regarding the envisaged construction material supply business line, the key to success will be based on
un-reserved attention given to customers’ need. Hence, the service facilities are a complete and far nicer
than any else around that accompanied by:

 Exemplary personal service,

 All facilities differentiated from what competitors have in line with brand strategies
 Successful approaches that will generate high levels of sustainable business success.

In line with the strategies set-forth to reach the target market, the current marketable construction
material supply comprises: All type cement product, sand, gravel, aggregate and basic construction
inputs.

CONSTRUCTION MATERIAL SUPPLY Page 7

 BUSINESS PLAN 2023

III. MARKET ANALYSIS

IV. TECHNICAL ANALYSIS AND OPERATIONAL PLAN

V. ORGANIZATION AND MANPOWER PLAN
VI. FINANCIAL RSOUCE ANALYSIS
VII. ANNEXES TO THE STUDY

CONSTRUCTION MATERIAL SUPPLY Page 8