BUSINESS PLAN

By:

SIME DEMISE EBISA

Addis Ababa

September, 2023

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1. Executive Summary

Sime Demise Ebisa was established to engage in Retail trade of textiles

business. The entity has received Principal registration No.
AA/AK/08/3/1/0000480/2005, Business license No. 14/671/271113/2005
from Addis Ababa Trade Bureau Addis Ketema sub city as at 11/11/2005 EC
and with paid up capital of birr 913,644. It is registered in Addis Ketema sub
city and House No G-032C. It also received Tax Payers Registration Certificate
No. 0001445223. the owners of the Company were engaged in Retail trade of
textiles business. for so long period and they do their business successfully tile
to date

The company is mainly owned by, Sime Demise Ebisa,. who has extensive
experience in textile business..

The Company seeks to raise interest in its business and to seek out financial
support. By showing that the Company has a well thought-out plan, Sime
Demise Ebisa believes that business people and financial institutions will
recognize the potential in this endeavour and will Support it.

The company’s location is suitable to trade textile business. The new business
will also require some additional renovation, expand and diversification to
update the existing business and increase the profitability of the business and
the company will create 10 jobs for both professional and nonprofessional
citizens of Ethiopians. On average the Company’s total sales is estimated to
ETB 108,212,121.69 for the next four consecutive years under operation and
serve many customers per week resulting in the expected total sales.

The total cash required for additional working capital for the business
estimated birr 4,900,000 from the total costs required birr 4,900,000 will be
Provide by Bank as a loan.

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2. Mission Statement

Our Mission and Vision Statement

 Our mission is to become the preferred supply partner to all of our

customers across the country and achieve sustained growth, through
consistent delivery of up-to-date, customer centric, world class quality
products.
 Our vision is to be the preferred textile retailer company in Ethiopia
through our supply of quality products as well as offering the best prices
for these product to our customers. We also hope to be a leading brand
in the industry by the year 2023.
 In order to achieve our vision, we intend to ensure that we liaise with
only trusted textile retailer companies.

3. Business Objectives
The primary objectives of the business plan are presented as below:

 Obtain start-up funding.

 To supply customer with product on demand and ensure utmost
satisfaction.
 Achieve strong annual revenue within the first year.
 Providing an easily accessible location for customers.
 Offering clients a wide range of products in one setting, and extended
business hours.

4. Guiding principles
i. Being mindful of our customers and our staff
Coinciding with our Company values, we will treat both our customers
and staff in a manner in which we ourselves would want to be treated (or
better!)
ii. Gratitude

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 “An attitude of gratitude” shown to our customers, employees and
vendors – because without their input, service, labor and time, our
business would not be here without them!
iii. Our Service
Provide the reliable, warm and friendly service expected from Customers
creating an informal, comfortable environment which will make the
customers satisfied and want to repurchase and consume again and
again.

5. Keys to Success
 Repeat business. Every customer who comes and contact us once should
want to return, and recommend us. Word–of–mouth marketing is a
powerful supporter.

 For the businesses and other services we provided we hire skilled

employees and offer training to keep the employees on top of his/her
game, and pay competitive wages to ensure they stay with us.

 We hiring the most known and skilled professionals and pay the top
wages to them.

 Provide and supply up-to-date Products.

 Location. The convenience of alocation is essential to our business; we

need to be close to our market because we are not trying to get people to
travel to reach us.

 Expanding customer base through expansion into other geographic areas

to retain a sufficient level of profitability.
 A variety of offerings system will be developed for each business
customers.

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6. Brief profile of the owners and the business

Sime Demise Ebisa was founded by Sime Demise Ebisa who has extensive
experience in the Retail textile business. Through his expertise, he will bring
the operations of the business to profitability within its first year.

7. Company Profile

Company’s Legal Name:- Sime Demise Ebisa

Business Registration Number: AA/AK/08/3/1/0000480/2005

Business LicenseNumber: 14/671/271113/2005

Business Type:-Retail textile

Year of Registration: 2005 E.C

TIN Number: 0001445223

Type of Organization: Sole Proprietorship.

7.1 Establishment
Sime Demise Ebisa established since 2005 EC, with an initial investment
capital ETB 913,644.

7.2 Legal Form

The above stated company Sime Demise Ebisa organized as a Sole
Proprietorship and legally registered and operating in Ethiopia.

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7.3 Location and Addressed

Name of the company City Woreda Hou.No

Sime Demise Ebisa
Addis 08 house no-
Ketema G-032C

ContactAddress:-
General Manager (Owner)-Mr. Sime Demise
Ebisa +251911213948

8. Our Products
Our aim is to be able to supply both branded and quality polyester ladis textile
material and other to all our customers here in Addis Ababa Ethiopia and in
locations around the state as well.

We are also established to make profit and in order to ensure that we generate
enough revenue to make profit; we intend to create multiple sources of income,
by offering other services as well as creating a franchise for those who intend to
use our product distribution model when starting up rather than start from the
scratch. All our sources of income will be under all the legal and permissible
laws of the Ethiopia government.

Therefore, some of the products which we intend to offer our customers are;

 Sale of polyester Knit ladies material

 Sale of polyester printing ladies material
 Sale of polyester silky ladies material

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9. Price

Penetration Pricing will be the pricing strategy for our business, as our
business is at the high street of Addis Ababa where competition is huge, so we
try to give good quality at low price to penetrate in the market and try to
achieve higher sales volume to set low price and better quality strategy. Once
we achieve this objective then try to charge higher price for our customized
service for value addition.

10. Promotion and Advertising:

Every business that is established to generate revenue and make profit does so
in addition to be able to favourably compete with its other competitors either in
the same environment or in other strategic locations that would have an
impact on its own business. Drafting publicity and advertising strategies is
very important for any business that intends to survive in the business
environment.

Advertising:

1. above the Line:

 Internet
 Radio
 Magazines
 Newspapers
2. below the Line:

 Flyers
 Coupons..etc

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11. Competitors
The market is very competitive because they offer the same products and
services, but has different physical attributes to the Product and different
costs, which buyers have choices to choose from. Companies want to provide
the best products and services to attract buyers by lowering cost and
improving products, which makes the industry very competitive.

However, Companies want to provide the best products and services to attract
buyers by lowering cost and improving products and the owners is well
experienced in business sector more than 15 Years. Thus, this experience
makes it competitive and able it to win the battle. Moreover, the owners are
focusing on skilled personnel and customer centric approaches to easily win
the rivalry competitors in the business sector.

12. Suppliers
Because of its years of business experience combined with its existing
capabilities, the company has established relationships with qualified suppliers
for its products. The suppliers can provide at reasonable prices each product
and also delivered according to the schedule. Each business unit has its own
supplier.

13. Management profile has

It is evident that for the proper and continuous profitable of the business, due
consideration has to be given to the organization and management.

The owner, being accountable to the business, will manage all activity of the
business, market information and customer needs and wants as well as
providing new and quality products that satisfy customer needs. The owners
will manage all financial aspects the business.

The company currently has two staff members which are permanent employees,
and three other members are employees on contract basis of the company.

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14. Marketing strategy:

The main business strategy of the company is customer driven approach and
focused to address the need and want of their valuable customers.

14.1 SWOT Analysis

 Strength
 Huge Service Line with variations.
 Business will have longer hours and better prices as
compared to competitors.
 Discounts are available for customer.
 Expertise in getting new service to the market quickly.
 Expertise in providing good customer service.
 Customization available for individual customers.

 Weakness:
 New in business as compare to rivals.
 Huge capital required to start business as credit is not easily
available from supplier in start.
 Marketing expense in the start will be huge, to establish brand
name required lot of advertising.
 Threats
 Competition is high and big chains Incorporation introduced their
product shops in the city and penetrating in market.
 People are more conscious for pricing due to recession and going
for discounts

15. Required costs

Currently the company intended to diversify and expand its existing
business activities. Therefore for the expansion and diversificationof its
business the companies required a total working capital cost of ETB
4,900,000 and the total cost required from bank as a loan.

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 Table: Working Capital Cost

Items Total Cost

Working Capital Cost 4,900,000

Operation cost 4,900,000

2 Expected income from thenext four Consecutive year

The analysis shows the presence of promising future demand for businee. The
demand for each item is growing fast as the economy is growing. This result
also in lined with high rate of population and national growth. As it is known
Ethiopia is one of the fast growing economies in the world and. These are an
advantage for the company to its future investment. In addition the
government’s political commitment to help and encourage the sector is also a
driving force to invest in the business.

The new business will also require Working capital to increase the profitability
of the business and the company will create 20 jobs for both professional and
non professional citizens of Ethiopians. On average the Company’s total sales
is estimated to ETB 108,212,121.69 for the next four consecutive years under
operation and serve many customers per week resulting in the expected total
sales.

(I). Table: Revenue/Forecast (5 Years)

Revenue (Sales) 2016 2017 2018 2019 Total

Income 24,190,489.2 108,212,121.69
20,158,741.00 0 29,028,587.04 34,834,304.45
20,158,741.00 24,190,489.20 29,028,587.04 34,834,304.45
Total revenue 108,212,121.69

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 II. Profit and Loss Projection (5 Years)

Profit and Loss Projection Total

Year 2016 2017 2018 2019
Revenue 20,158,741.00 24,190,489.20 29,028,587.04 34,834,304.45 108,212,121.69
Total revenue 20,158,741.00 24,190,489.20 29,028,587.04 34,834,304.45 108,212,121.69

Cost of Service
Cost of Service 15,119,055.75 18,142,866.90 21,771,440.28 26,125,728.34 81,159,091.27
Total Cost of Sales 15,119,055.75 18,142,866.90 21,771,440.28 26,125,728.34 81,159,091.27
-
Gross Profit 5,039,685.25 6,047,622.30 7,257,146.76 8,708,576.11 27,053,030.42
-
Administration Expense -
Salary and Benefits 220,000.00 253,000.00 290,950.00 334,592.50 1,098,542.50
Printing and stationery 5,500.00 6,325.00 7,273.75 8,364.81 27,463.56
Communication 8,800.00 10,120.00 11,638.00 13,383.70 43,941.70
Professional fee 11,000.00 12,650.00 14,547.50 16,729.63 54,927.13
Office & Store rent 118,800.00 136,620.00 157,113.00 180,679.95 593,212.95
License and registration 1,320.00 1,518.00 1,745.70 2,007.56 6,591.26
Transportation 3,300.00 3,795.00 4,364.25 5,018.89 16,478.14
Depreciation 2,406,377.46 2,767,334.08 3,182,434.19 3,659,799.32 12,015,945.06
Miscellaneous 2,200.00 2,530.00 2,909.50 3,345.93 10,985.43
Total Expense 2,777,297.46 3,193,892.08 3,672,975.89 4,223,922.28 13,868,087.72
Net Profit/Loss Before Tax 2,262,387.79 2,853,730.22 3,584,170.87 4,484,653.83 13,184,942.71

(III). Projected Balance Sheet

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SIME DEMISE EBISA
STATEMENT OF PROJECTED BALANCE SHEET
Currency in Ethiopia Birr
Beginning of
the Year Year, 1
ASSETS
Current assets
Cash and cash equivalent 60,125 66,138
Account Receivable 143,949 158,344

Prepayments - 0
Inventories 1,198,980 1,318,878

Other current assets -

Total current assets 1,403,054 1,543,359

Non-current assets

Property, plant and equipment 33,060,597 31,456,789

33,060,597 31,456,789

Total non-current Assets 33,060,597 31,456,789

Total assets 34,463,651 33,000,148

Liabilities and equity

Current liabilities
Accounts payable 271,872 299,059
Tax payable 738,175 811,992

Other current liabilities - -

Total current liabilities 1,010,047 1,111,051

Non-current liabilities

Bank Loan - -

Total non-current liability - -

Total liabilities 1,010,047 1,111,051

Equity
Capital 913,644 913,644
Owners 28,302,542 24,475,647
Retained Earning 4,237,418 6,499,806
Total equity 33,453,604 31,889,097
Total equity and liabilities 34,463,651 33,000,148

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3 Financial Evaluation
12.1. Underlying Assumption

The financial analyses of the companies are based on the data provided in the
preceding sections and the following assumptions.

12.2. Profitability
According to the projected income statement underlying assumption, the
company is generating profit in first year of operation and sales turn over well
be increased average (20%) with average profit margin (25%) for the next
consecutive years. Important ratios such as profit to total sales, net profit to
equity (Return on equity) and net profit plus interest on total investment
(return on total investment) show an increasing trend during the life-time of
the project. The income statement and the other indicators of profitability show
that the project is viable.

12.3. Break-even Analysis

One of the most common tools used in evaluating the economic feasibility of a
company or product is the break-even analysis. The break-even point is the
point at which revenue is exactly equal to costs. At this point, no profit is made
and no losses are incurred. The break-even point can be expressed in terms of
ETB sales. That is, the break-even units indicate the level of sales that are
required to cover costs. Sales above that number result in profit and sales
below that number result in a loss. The break-even sales indicate the ETB of
gross sales required to break-even.
The break-even point of the sales including cost of finance is estimated by

using income statement projection .

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The result shows the Company is operating above the breakeven point in terms
sales volume i.e the result is above sales volume is above zero. That means the
company is profitable to return its bank loan.

12.4. Cash flow

2016 2017 2018 2019
Year
Cash Inflow 20,158,741.00 24,190,489.20 29,028,587.04 34,834,304.45
Cash outflow 17,896,353.21 21,336,758.98 25,444,416.17 30,349,650.61
Net Cash Flow 2,262,387.79 2,853,730.22 3,584,170.87 4,484,653.83

The result shows the cash flow indicated positive that means the company is
profitable to return its bank loan.
Pay Back Period
Simply payback period show long it will take for an investment to show a profit.
It is the time it takes for your project torecoup the funds expended and

normally is expressed in years or months .

Several capitals budgeting decision rules have been created to reduce the
probability that incorrect capital budgeting decisions will be made. These
capital budgeting decision rules are applied to the cash flows of any project
which comes under consideration. Whereas, the Payback Period rule does not
involve discounting cash flows, the NPV rule is based on discounting
considerations. Accept any project that has cash inflows which exceed the
initial outlay within a specified number of years.
The cash flow and income statement projection are used to project the pay-
back period. The project’s initial investment will be fully recovered within Five
years period.

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12.6. Financial Ratios
A financial ratio is used to calculate a company’s financial status or production
against other firms. It is a tool used by investors to analyze and gain
information about the finance of a company’s history or the entire business
sector. To calculate financial ration, numbers are taken from the balance
sheet, income statement, and cash flow statement. The financial ratio is not a
calculation but an explanation of the economic status of a company, in terms
of profit, liquidity, leverage, and market valuation. A ratio may serve as an
indicator, red flag or clue for various issues.

Return on Equity = Net Profit before tax 2,262,387.79 0.070945

Net Equity 31,889,097.12

Current ratio = Current asset 1,543,359.29 1.389098

Current Liability 1,111,051.17

Quick ratio = Current asset- Inventory 224,481.29 0.202044

Current Liability 1,111,051.17

Debit to Equity = Total Liability 1,111,051.17 0.034841

Net Equity 31,889,097.12

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