TABLE OF CONTENT

Title
Page
1 INTRODUCTION
1.1. Name and Address of the Industry 3
1.2. Nature of the company 5
1.3. Statement of Financial Need 6
1.4. Statement of Confidentiality of Report 6
1.5. The company with its service 6
1.6. OBJECTIVE 7
1.7. MISSION 7
1.8. KEY SUCCESS 7
2. EXCUTIVE SUMMERY 7
3. INDUSTRY ANALYIS 9
3.1. Future outlook and Trends 9
3.2. Market Segmentation 9
4. DESCRIPTION OF VENTURE 10
5. PRODUTION PLAN 12
6. MARKETING PLAN 13
6.1. Pricing 13
6.2. Distribution 13
6.3. Promotion 13
7. ORGANIZATIONAL PLAN 13
7.1. Form of ownership 13
7.2. Roles and Responsibility of Members of the Organization 14
8. ASSESMENT OF RISKS 14

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9. FINANCIAL PLAN 14
9.1. PRO-FORMA INCOME STATEMENT 15
9.1.1. Salary expense 16
9.1.2. Depreciation Expense 16
9.1.3. Miscellaneous Expense 16
Pro-forma income statement as of year 1 16
Pro-forma income statement of year 2 17
Pro-forma income statement of 3rd year 17
Cash flow statement for year 1 18
Cash flow statement for year 2 18
Cash flow statement for 3rd year 18
Operating Balance sheet 19
st
Pro-forma Balance Sheet at the end of 1 year 19
Pro-forma Balance sheet as the End of 2nd year 19
Pro-forma Balance sheet as the end of 3rd year 20
Break-Even Analysis for 1sr year 20
Breakeven Analysis for year 2 20
Breakeven Analysis for year 3 20
Conclusion---------------------------------------------------------------------------------------------------------------19

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1 INTRODUCTION

1.1 Name and Address of the Industry

The name of the enterprise is FAMILY cosmetics. The reason that I assigned this name
to the company is to show longevity of the business.

FAMILY cosmetics is located Metehara Haro kebele. This location is a great opportunity
to get different kinds of customer.

1.2Nature of the company

As the name of the company indicates the initial focuses on providing different types of
high quantity and quality cosmetics to the people who come from different area.FAMILY
cosmetics providing enterprise is established to overcome the challenges of the
environmental weather condition facing the society at large and students from different
area of the country. The company also strives to create awareness concerning the
usefulness of cosmetics product in our day to day life. The customer are coming to
purchase are either for whole sale, retail or consumption activities. Since the nature of
the company is not only providing cosmetics but also gives whole sale and retail service.

1.3 Statement of Financial Need

FAMILY cosmetics providing enterprise planned to construct and establish a company
with capital of 111520 birr. The business requires means of acquiring this initial capital
by borrowing from financial institution, personal capital and from close relatives.

1.4 Statement of Confidentiality of Report

The owner of FAMILY cosmetics spends money, time, resources, and experience also
different things from thinking up on preparing this business plan. Therefore the owners
would like to announce to all that this business plan which is the result of all partners
effort for this reason that should not be transferred or copied to another individual or
company. If anyone fails to does this owner have responsibility to the individual or the
company to bring them in front of the law. “All Rights are reserved”

It is believed that various kinds of business run in each and every aspect our country or

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other side of the world and this comes with interaction of countries with other countries
in all aspects of their socio-economic and cultural dogmatism with the beginning of
BEST cosmetics globalization. This may be because of comfort ability of various kinds
of environment which assist or help people to lead people to lead their life in a luxurious
manner and encourage beating standard of excellence in their life as well.

Due to this the members of this work plan owners expect something which help us to
reach or future or planned life.

To do this (to achieve our goal), now grouped with each other to propose business
project paper related to the thing which we want to specialized on.

The primary purpose of this business project is to provide qualitative and quantitative
amount of various types of a cosmetics at affordable price.

1.5The company with its service

The AYTEN cosmetics enterprises has special passion for its customers these are
helping the customer or users to swim in the cosmetics then to use the cosmetics more
frequently and keep smooth their body as much as possible.

1.6OBJECTIVE
 To maximize cosmetics supply in general and satisfy consumers consumption
requirement in particular

 To creating employment opportunity to the surrounding community

 To provide the customer with high quality and quantity cosmetics

1.7MISSION
 Utilizing available resources, and providing the society wit due service

 Adopting to the dynamic environment throughout the operation

 Providing affordable living standard to its workers

 Supplying high quality cosmetics suitable for bodies.

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 1.8KEY SUCCESS
 It uses different types of incentives (promotional), or inducement mechanism to
attract other customers

 Continuous auditing of our sales and adjusting our expenditure accordingly

 It stands for the welfare and common good of the society for instance, cost
minimization

2 EXCUTIVE SUMMERY
FAMILY cosmetics enterprise business will be run as partnership among me and my
sister.

The FAMILY cosmetics enterprise offer high quality and quantity cosmetics for users
and customers. The product of the business will be available for sale at home and also
sold to wholesalers and retailers who sells in other markets. The price set by the
business, is fair market price or it should not exploit customers or should not annoy
customers. So that customers are willing to pay. Cosmetics providing enterprises will
provide its product at market price by identifying and listing each type of cosmetics with

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their fair prices.

The activities included in this business are purchasing high quality and modernized
cosmetics and preparing store houses where cosmetics stored whenever there is
excess supply of cosmetics, auditing daily sales of business, etc.

The overall objective of the business is to provide high quality and quantity cosmetics in
order to get the expected profit and to satisfy the consumer and to achieve and exceed
sales forecasts to enable us to be operating at capacity, we would also have a claim to
create job opportunity, providing complementary and with cosmetics and plans to
expand the business in different area and also to expand the initial business in size.

In the first year the business forecast a profit of birr 22,028. The reason for obtaining
such positive gaining or profit can be mainly attributed to

 The profitability of the industry

 The presence of good market price

 Absence of strong competitors due to economies of scale

 Usage of few permanent workers

 Absence of payment for suppliers ( transportation cost)

In the second year and 3rd year we expect and predict that there will be increment of
profit due to further increases in sales. The overall objectives of the business are firstly
to achieve and exceed sales forecasts to enable the business to be operating at
capacity, so that the business extended the number of types of modern cosmetics that
enables the business to meet (supply) the market demand. We would also claim to be
able to employ to have in future and expanding the existing one.

The BEST business cosmetic providing enterprise will require loan of birr 30,000 to be
repaid over six years. The contribution made for the business is equal for each partner
and share of profits and loses also can be equally shared. With fund (debt) the business
will cover, house. (Store house), shelf, bulk containers advertising and selling costs.

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 3 INDUSTRY ANALYIS

3.1Future outlook and Trends

It is obvious that the environmental condition especially weather condition, its warm
content cold is high so that individual is in need of some cosmetic (body lotion), the
environment is protected, maintained and remain suitable for body from hotness so that
there will be expansion of the business at an alarming rate.

It is in this respect that our business provided a lot of opportunity is for the community
of the town and surrounding peoples by enabling them to use modern cosmetics and
simply adapt fresh man peoples and as well as gussets who are not familiar with the
cold water of the area.

3.2Market Segmentation
From the very beginning business enterprises, the market for cosmetics is not limited
local market. It has from both internal and external (from abroad), the local market
refers to all market with the national boundary while the foreign market refers to the
export of cosmetics to middle cost countries and to some extent to Europe, Asia, etc.

Cosmetics providing enterprises business in well organized, licensed by the name

cosmetic providing business, growth oriented, gradually involves in the production of
different services and when involved in new services by creating backward and forward
linkage.

As we have stated out previously, the competitors house lack of structure and
organization lead them into in efficient and have declining sales. They are also not well
organized and structured, no further expansion and shortage of materials that is they
depend in cease and need assistance of finance and qualified managers.

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 4 DESCRIPTION OF VENTURE
Cosmetics providing business enterprise provide each type of cosmetics from Sudans
and harer. It sells the product to consumers and other small industries which interested
in it. It also sells the product to service rendering firms such as Barberry and Beauty
Salons business.

The product of our business is industrial product. So, any firms who has the potential
and licensed by the government can undertake the activates. The brand of the business
is designed to be cosmetic providing enterprise, it is named so because it will have
good attitude on society, it doesn’t affect the natural environment (pollution) and initiate
people to purchase the product and as it is new.

The location of the business is Amhara regional state, the building of the state. The
building of the business includes one office, sentry box and ware house.

The location is preferred for the following reasons

 Different types of raw materials are available

 The hard (hot) weather condition and salty waters of the area

 There are large number of users in the selected specific area

 Presence of good infrastructure (road) to get supply

The business need to hire some labor force out carry out operation properly there is no
need of pre- requisite of higher educational achievement. But there are some criteria
such as

 He/she must be able to write hear, see and read

 He/she must be attractive

 He/ she must be confident enough and ability to adopt some changes

 He/she must be knowledgeable and experienced in the area rendering business

services

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  the office equipment needed would be

 table

 five charier

 one shelf

 resisters ventilator

 pens, papers reams and pencils

The above mentioned equipment will be purchased. The manager of the business has
mush experience in the field the age of student’s entrepreneurs is between 22 and 24.
The special ability of the manager possess is that he can work with others strongly. The
reason for going to setup this new business is

 To be independent form other authority

 Existence of large opportunity in the business

 The exploit the experience of gained in better manner

 Absence of strong competitor in the market can be raised main reason for the
success of the business or venture

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 5 PRODUTION PLAN
The aim of the business is to provide high quality and quantity modern cosmetics in
order to get the predicted gain and to satisfy the cosmetic the business is fully
responsible for all part of the operation. The first starting point of the business is
identifying which type of cosmetics that the consumers are in need of and then
purchasing or providing those cosmetics at minimum possible pick that doesn’t heart
any one. The equipment is needed for immediate uses are the following

 Two shelves’ on which cosmetics are put on

 The clothing (wearing) for workers

 Calculator

 Different types of cosmetics and etc.

To start the business activity the business starts with 20 different types of costs.
Totally the cost of the business includes the following:-

 The cost of busing different cosmetics

 The cost of house (rent)

 The cost of clothes

 The cost of living permanent employees

With the growth of the business additional ware houses will be needed

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 6 MARKETING PLAN

6.1 Pricing
The basis for our cosmetics prices is the market price and cost-benefit analysis.
Therefore, due to presence of small competitive, the business cannot set high prices.
Even if the business operates at lower cost it would not price below the market prices
just because of the purpose result, cosmetics providing business enterprise. As a result,
cosmetics providing business enterprise set the price of cosmetics as the market that
is it fluctuates over the time with market price.

6.2 Distribution
The distribution of the cosmetics would be in three ways first, the business its self
undertake retail service to consumers and customers at market price. Secondly, by
selling the product to the whole sales and thirdly by selling to both wholesalers and
retailer.

6.3Promotion
The promotion activity will be done once in a couple of month through notices to be
posted at public center and also through

 News paper and magazines

 Radio

 TV

7 ORGANIZATIONAL PLAN

7.1Form of ownership
Cosmetics providing business enterprises are a type of business in the form of
partnership. There are reasons for the selection of this form of business: these are

 Profitability of the business specially after the first year

 Ease of formation of the business

 Ease to formation of the business

The overall operation or function of the owner would be governed or administered by

the owner there will be only one manager the manger had served for more than four
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years in this type of business and have excellent experience in the area with his
educational background that enable him to manage the business successfully.

7.2Roles and Responsibility of Members of the Organization

The role of the manager will be managing the overall activity of the business. That is:-

 Making decision regarding the state of business in the future

 Raising capital contribution

 Evaluating the quality of the products/ cosmetics

 Controlling the performance of workers

 Making decision regarding which types of cosmetics should be purchased

The organization will contain the following members:-

1. The management of the business

2. Permanent employees

3. Temporary employees

The permanent employees of the business consist of four workers. The three are
responsible for day-to-day activities of the business

8. ASSESMENT OF RISKS

The expected of risk to the business may be loss of income from expired and
cosmetics during operation may happen in the future, hence no one is certain about
future, the other expected loss is attributed to fluctuation of market price (devaluation,
inflation, deflation)

The business also don’t use advanced technology whenever there is appropriate
technology that go with operation, is ready to make use.

9. FINANCIAL PLAN

The business plan is prepared to obtain funds amounting 30,000 birr. The
supplementary financing is required to being work on site preparation, equipment
purchases and to cover expense in the first year of operations. Additional financing has
already been secured in the form of:-

1. Birr 36520 from personal capital and

2. Birr 45,000 from closed relatives

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13
 10.PRO-FORMA INCOME STATEMENT

The sale of revenue of cosmetics is expected to be audited daily and as well as monthly
since it is difficult to predict the price of each type of cosmetics we take the
approximation of the sales of monthly on average to be 7000 birr. Hence there are 12
months in a business year total annual revenue is calculated as follows

Total revenue= 7000*12=84000 birr

10.1 Salary expense

For permanent worker: each of the three permanent workers out of the four earn 1000
birr and remaining one person earn 600 birr per month:

Total salary for permanent workers= (1000*3*12) + (600*15*12) =43,200birr

This is a salary for these permanent workers per a year plus a salary for the remaining
person per a year

For temporary workers: these temporary workers has an activity like cleaning the office
and the shop once a day he/she earns 5 birr per day or 150 per month

Total annual payment= 150* 12=1800 birr

Total salary expense=43208 + 1800= 45000birr

10.2 Depreciation Expense

The FAMILY cosmetics providing enterprise has some depreciation expense in the
form the cost of expired cosmetics. And it expected to be 12,852 birr.

Total depreciation cost (Expenses)= 12852 birr

Interest Expense= principle*interest rate

=30000*10%

=3000birr

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 10.3 Miscellaneous Expense
Items Quantity Unit price Quantity
Pen 8 2.25 18
Paper rim 2 80 160
White Piece of - - 70
cloth
Total 320

Pro-forma income statement as of year 1

Revenue
Sales-------------------------------------------------------------------------------------84000
Expense
Salary Expense-----------------------------------------------------------45000
Depreciation Expense---------------------------------------------------12852
Freight Expense----------------------------------------------------------300
Interest Expense----------------------------------------------------------3000
Advertising Expense-----------------------------------------------------500
Miscellaneous Expense--------------------------------------------------320
Total Expense---------------------------------------------------------------------------------61972
Gross Profit -----------------------------------------------------------------------------------22028
In the second year of operation it is assumed that the business will increase the
provision of cosmetics and overall sales from 7000 birr/month to 7875 birr/month on
average.

Revenue (Sales) annually 94,500 birr per year 7875*12

Pro-forma income statement of year 2

Revenue
Sales-------------------------------------------------------------------------------------94500
Expense
Salary Expense-----------------------------------------------------------------45000
Depreciation Expense---------------------------------------------------------12852
Freight Expense ----------------------------------------------------------------300
Interest Expense-----------------------------------------------------------------3000
Miscellaneous Expense---------------------------------------------------------320
Total Expense--------------------------------------------------------------------------61972
Gross profit ----------------------------------------------------------------------------32528
In the third year of operation it is assumed that the business will increases the
operation of sales volume from 7875 birr to 9625 birr per month, using full capacity at
efficiency. Therefore Revenue (Sales) annually= 9625*12=115500

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Pro-forma income statement of 3rd year
Revenue
Sales-----------------------------------------------------------------------------------115500
Expense
Salary Expense-----------------------------------------------------------------------45000
Depreciation Expense--------------------------------------------------------------12852
Freight Expense---------------------------------------------------------------------300
Interest Expense-------------------------------------------------------------------3000
Miscellaneous Expense-----------------------------------------------------------320
Total Expense ----------------------------------------------------------------------61972
Gross profit --------------------------------------------------------------------------53528

Cash flow statement for year 1

Cash Budget Total
Beginning cash balance-------------------------------------30000
Cash collected from customers---------------------------84000
Total cash available for need 114000
Operating Expense------------------------------------------61972
With draw-----------------------------------------------------1200
Total cash needed 63172
Cash Excess deficit ------------------------------------------50828

Cash flow statement for year 2

Cash Budget Total
Beginning cash balance------------------------------------ 50828
Cash collected from customers---------------------------94500
Total cash available for need 145328
Operating Expense------------------------------------------61972
With draw-----------------------------------------------------1200
Total cash needed 63172
Cash Excess deficit ------------------------------------------82156

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Cash flow statement for 3rd year
Cash Budget Total
Beginning cash balance------------------------------------ 82156
Cash collected from customers---------------------------115500
Total cash available for need 197550
Operating Expense------------------------------------------61972
With draw-----------------------------------------------------1200
Total cash needed 63172
Cash Excess deficit ------------------------------------------134484

Operating Balance sheet

Asset
Cash--------------------------------30000
Fixed asset-------------------------81200
Miscellaneous Expense-----------320
Total asset------------------------111520
Liability
Account payable------------------45000
Note payable----------------------30000
Total Liability………………..75000
Capital
Capital -----------------------------36520
Total liability and capital ---------111520

Pro-forma Balance Sheet at the end of 1st year

Asset
Cash --------------------------------50828
Fixed asset-------------------------81200
Depreciation------------------------12852
Operating Expense------------------3000
Total asset-------------------------122176
Pro-forma Balance sheet as the End of 2nd year
Asset
Cash -------------------------------82156
Fixed asset--------------------------81200
Depreciation-----------------------25704
Operating Expense-----------------6000
Total asset------------------------143,652
Pro-forma Balance sheet as the end of 3rd year
Asset
Cash -------------------------------134484
Fixed asset--------------------------81200
Depreciation-----------------------38556
Operating Expense------------------6000
Total asset-------------------------186128
Liability
Account payable------------------45000
Note payable----------------------30000
Interest payable---------------------3000
Total capital-----------------------78000
Capital------------------------------44176
Total liability and capital-------122176
Liability
Account payable------------------45000
Note payable----------------------30000
Interest payable---------------------6000
Capital-----------------------------62652
Total liability and capital ------143652
Liability
Account payable------------------45000
Note payable----------------------30000
Interest payable--------------------6000
Capital------------------------------62652
Total liability and capital-------143652

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Break-Even Analysis for 1sr year
Total sales of cosmetics on average-------------------------------birr 84000

Total cost of each cosmetics----------------------------------------birr 61972

Gross profit (GP) ------------------------------------------------------birr22028

Gross profit margin (GPM) =GP/SALES *100=22028/84000*100=26.23

Over head (fixed cost) for first year -----------------------------birr 60,172

Breakeven turn over= overhead/GPM *100

=birr 60172/26.23*100= 71.63%

Breakeven Analysis for year 2

Total sales of cosmetics on average ------------------------------------birr 94,500

Total cost of cosmetics ---------------------------------------------------birr (61,972)

Gross profit (GP) ----------------------------------------------------------birr 32,528

Gross profit margin GPM= 32528/94500*100=34.42%

Overhead (fixed cost) for 2nd year --------------------------------------------birr 60,172

Breakeven turn over=birr 60172/34.42*100=174816.97birr

Break even gross profit margin= 60172/94500*100=63.67%

Breakeven Analysis for year 3

Total sales of cosmetics on average-----------------------------------------birr 115500

Total cost of cosmetics--------------------------------------------------------birr (61972)

Gross profit (GP) ---------------------------------------------------------------birr 53528

Gross profit margin GPM= 53528/115500*100=46.34%

Overhead (fixed cost) for 2nd year--------------------------------------------birr 60172

Breakeven turn over =birr 60172/46.34*100=129848.94birr

Breakeven gross profit margin 60172/115500*100=52.096%

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Conciliation

As analyed above we become profitable after 3 year,and as well we create job

opportunity for youth.

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