WATER WELL DRILLING SERVICE PROVIDER

BUSINESS PLAN

XXXXXX NAME XXXXXX

APRIL 2024

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Table of Contents
EXECUTIVE SUMMARY 3
COMPANY DESCRIPTION 4
Business Type: 4
Business Structure: 4
Operational Area 4
MARKET ANALYSIS 5
Business Overview 5
SERVICE OFFER 5
Service Description: 5
Pricing Strategy: 5
MARKETING AND SALES STRATEGY 6
MACHINERY and EQUIPMENT 7
Machinery and Equipment 7
TOTAL CAPITAL INVESTMENT 8
Total capital cost 8
Means of Finance 8
FINANCIAL ASPECTS 9
Fixed capital costs: 9
Machinery and Equipment costs 9
Working Capitals 9
Staff and labor per well/month/year 9
Utility costs per well/month/well 9
Other expenses per year 10
Total working capital per well/month/year 10
Total working cost per year 10
Turnover per well/month/year 11
Fixed costs per year 11
PROFIT ANALYSIS 12
Net profit 12
Profit per service (%) 12
Return on Investment (%): 12
Break-Even Analysis 12

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 EXECUTIVE SUMMARY
Business plan for a medium-scale mechanical water well drilling service requires careful
planning and market analysis. The business include well drilling only. It targets agricultural
producers (small and medium scale farmers), industries, and residents. The main machinery and
equipment needed for the service are drilling rig, compressor and mud pump. In Ethiopia, the
drilling service is provided by state owned enterprises, private owned (domestic and foreign) and
NGOs. Mostly they are engaged in large-scale well drillings.
Domestic demand for fresh agricultural produces has more than tripled in the last few decades.
With continued population growth, urbanization and improvement in living standards demand is
likely to rise in the area.
Being a business a place for high-value cash crops, small to medium scale fruit and vegetable,
federal and regional industries makes ideal for the business. Therefore, marketing of this service
may not be a problem.
Goals To be successful and a leader in medium scale water well drilling service.

Objectives: Provide water well drilling service with affordable prices

Service Multi-purpose water well drilling

▪ Fruit and vegetable growers for commercial

Target
Market

▪ Khat growers

▪ Hotel Industries

▪ Manufacturing industries

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 ▪ NGOs

▪ Educational sectors (schools and colleges)

▪ Governmental offices

COMPANY DESCRIPTION
Business Type:
The service business will established as PLC
Business Structure:
We aim to be a leader in drilling service in the area. Therefore, we supposed to set business
structure that will ensure our ultimate goal. The business team will consist: Executive supervisor,
Machine Operator and Accountant/Cashier
Operational Area
Geographical locations: the business will cover the eastern side of Wollo, Amhara Region.
# Description Details

1 Southern Wollo and Oromo Nationality Zones chefa, kemisea area, harbu area, bati area,
tewhuledere Woreda, worebabo, major cities

2 Northern Wollo All Woreda

Potential for the business

As our secondary sources and the current business operators the selected area is a potential
location for the business because;
Suitability for drilling operation: The soil, hydrogeology, and water resources shows the
suitability of the mechanical drilling in many part of the working area selected.
Potential customer availability

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The farmers that has experience of growing high-value cash crops need access to expand their
production as the market demand for high value crops increasing.
The area also known for private owned high value irrigated crops production like khat, orange,
watermelon etc.
Regional and federal industrial zones located in the region creating the market.
Our drilling service using medium scale mechanized well drilling rig will provide affordable
options to access groundwater resources.

MARKET ANALYSIS
Business Overview
Domestic demand for fresh agricultural produces has more than tripled in the last few decades.
With continued population growth, urbanization and improvement in living standards demand is
likely to rise in the area.

▪ This means good prospects for income positive projection of agricultural producers.

Thus, they need additional investment to increase to expand the cultivation and the yield.

▪ The growing demand for high-value cash crops proceedes a demand for production

expansion this creates business opportunities for the drilling service providers.

▪ The rise in demand for fresh agricultural produces in domestic and regional markets will

mean that it is economically viable for existing producers to increase production.

▪ The industries, hotels and other commercials located in the area also our target market.

Accessing water resources with affordable manner will become a key factor in their ability to
take advantage of this opportunity.
Therefore, providing easily accessible and affordable drilling service for our target customers
will be our main assignments. In order to expand our target market, we will develop customized
marketing strategies and awareness creations.
As the existing operators informed as there is a growing demand for mechanical drilling services
and the market can accommodate additional operators. Thanks to the increasing domestic
demand for fresh agricultural produces, well drilling service is becoming popular both in rural,

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and in urban areas and its demand is increasing. Therefore, marketing of this service may not be
a problem.

SERVICE OFFER
Service Description:
The service is offering well drilling for various purpose. We will be accessible in comparably
affordable service price.
Pricing Strategy:
The price for drilling will be calculated per depth (in meter) of the well. It increases with as the
drilling depth increases as follow:
1. Up to 10m drilling the price will be calculated by rate of 5000/meter
2. For each additional 10m there is 1000birr increment
For example;
Supposed to drill 50m well, the projected price will be
10∗5000+10∗6000+10∗7000+ 10∗8000+10∗9000=350000
The detail is as follow

▪ 5000birr for the first 10m,

▪ 6000 for 2nd 10m

▪ 7000 for 3rd 10m

▪ 8000 for 4th 10m

▪ 9000 for 5th 10m

Therefore, the total payment for a well will be 350,000birr/well

MARKETING AND SALES STRATEGY

Marketing strategies: using the following marketing strategies we will acquire customers and
grow our client base.

▪ We will address on demand drilling services. Making the drilling service accessible in the

ways that the target customers reaching us easily and provide the service reasonably

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 affordable. We will prepare business cards, posters and stickers for to address target
market.

▪ Demand creation: we will create the demand using customers’ awareness and by offering

different drilling service options like promoting the farmers to drill in groups. Providing
awareness for farm owners and the one who has a potential to start or expand agricultural
productions.

▪ Use pilot plots as a business show fields in strategically selected locations

▪ Working with stockholders (suppliers, government and ngos)

MACHINERY and EQUIPMENT

Machinery and Equipment
# Item Description Quantity

1 Tractor Mounted Drilling Capacity: 200m @ > 10inch diameter 1

Rig
Drilling Methods: DTH and Rotary

2 Compressor 20bar 1

3 Mud Pump 1

4 Accessories Set of drilling accessories 1

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TOTAL CAPITAL INVESTMENT
Total capital cost
# Description Cost Cost Cost
(birr)/well (birr)/month (birr)/year

1 Fixed capital cost 3,427,325 3,427,325 3,427,325

2 Total working capital 82,000 181,000 4,106,000

TOTAL COST 3509,325 3608325 7,533,325

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Means of Finance
# Description Cost (birr)/year

1 20% of fixed cost 685,465

2 Bank loan 2741,860

3 Personal savings (working capital) 82,000

FINANCIAL ASPECTS
Fixed capital costs:
Machinery and Equipment costs
# Description No. Unit Cost Total Cost

(birr) (birr)

1 Drilling Rig 1 2,565,000 2,565,000

2 Compressor 1 641,250 641,250

3 Mud Pump 1 141,075 141,075

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 4 Accessories 1 80,000 80,000

Total Capital Cost 3,427,325

Working Capitals

Staff and labor per well/month/year

# Description NO Cost Cost Cost Cost
. (birr)
(birr)/well (birr)/month (birr)/year

1 Machine operator (Driver) 1 - - 10000 120000

2 Officer/Supervisor 1 - - 7000 84000

3 Semi-skilled workers 2 10000* 10000 20000 480000

Total 10,000 37000 684000

*- 1000birr/day and 5 days for drilling a well

Utility costs per well/month/well

# Description Cost Cost Cost Cost
(birr)
(birr)/well (birr)/month (birr)/year

1 Hydraulic oil 500 500 1000 24000

2 Petrol 16000 16000 32000 768000

3 Petrol for water draining 48000 48000 96000 2304000

4 Motor oil 700 700 1400 33600

5 Digging aid (bentonite/foam) 4800 4800 9600 230400

Total 70,000 140000 3360000

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Other expenses per year
# Description Cost (birr)

1 Advertisement, Postage, stationery 1000

3 health and safety materials 1000

4 License and training expenses 12000

Total 14,000

Total working capital per well/month/year

# Description Cost Cost Cost
(birr)/well (birr)/month (birr)/year

1 Staff and labor 10000 37000 684000

2 Utility costs 70000 140000 3360000

3 Maintenance 2000 4000 48000

4 Other expenses - - 14000

Total 82,000 181,000 4,106,000

Total working cost per year

# Description Cost Cost Cost
(birr)/well (birr)/month
(birr)/year

1 Total working capital 82,000 181,000 4,106,000

2 Depreciation - - 25, 650

3 Interest (14%) - - 383,860.4

4 Tax (35%) - - 4,410,000

Total Working Cost 82,000 181,000 8,925,510.4

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Income Projection per well/month/year
Description Cost Cost Cost
(birr)/well (birr)/month (birr)/year

Income* 350,000 3*350,000 = 3*12*36=12,6

1,050,000** 00,000

Total 350,000 1,050,000 12,600,000

*-Income projection
We plan to meet our set target of generating enough income from the three months of operations
and grow the business and our operation base.
See its calculation in pricing strategy section. It is calculated based on the current business
operators and the market trend.
**-forecasting to drill 2 wells per month

Fixed costs per year

# Description Cost (birr)/year

1 Depreciation 25,650

2 Interest (14%) 383860.4

4 Bank loan return 548,372

5 Staff salaries 204000

6 50% of other expenses 7000

Total 1,168,882.4

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Net profit = 12,600,000 - 8925510.4 = 3674488.6
Percentage Profit per income = 3674488.6/12600000 = 0.2916 = 29.2%

Percentage return on investment

3674488.6/7533325 = 0.48877*100% = 49%
Pay-back period of the machinery

PROFIT ANALYSIS

Net profit
Net profit=income−total cost
Per year
Net profit=12,600,000−8925510.4=2,272,776.6

Per month
Net profit=700,000−181,000=519,000
Per well
Net profit=350,000−82,000=268,000

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Profit per service (%)
profit
profit per service ( % )= ∗100
service cost

2,272,776.6
profit per service ( % )= ∗100=14 %
16,800,000

Return on Investment (%):

2,272,776.6
Returnon investment ( % ) = ∗100=30.2 %
7,533,325

Break-Even Analysis
FC
break−even ( % ) ∗100
(FC + profit )

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