ALIIED HOTEL BUSINESS PLAN

MANAGER: - DEQA MOHAMMED ALI SUB

JIGJIGA

10/23/2023
Executive Summary
Deqa Mohammed renting house Service will draw in with the business for next
consecutive year. Establishing her service activities in Fafan zone Jigjiga city 16
Kebele, In 2016 E.C received the legality from the concerned government
authorities to start my progress. After months of customers demand study for
the quality renting house I have decided to pursue marketing this service offer to
highly organize and market networked distribution.

This business plan focused on the current state of renting house in Somali
region and its marketing, financial operation and whole management and
contribution to broader economic transformation. This plan reviews the factors
likely to influence service demand for renting house & in region and details
different existing and potential renting house supply models. Although an
empirical analysis of renting house demand and the effectiveness of supply
chains is beyond the scope of this plan,

From the visiting different areas in the country the business was aware of the
fact that the vast majority of business ( renting house ) activities for growing
demand of getting offer of business were carried out using transport which is
followed by a pair of oxen power to cover the renting house with the soil and
chi-seal loaded

As my goal of offer the service will have develop several business (service ) to
fight against poverty, insecurity , in other hand to increase my income for the
next and will be offered in large extent.

At present renting house service on improved business in some amount but to

maximizing my offer there is no limitation identified by the business unable to
improve the capable of purchase, and offer to no homes.
My business plan suggestion goes to renting house in Somali region, focusing
on finishing renting house rooms and offer service. I suggests that where
demand has emerged, relatively to meet demand. I tend to build the renting
house bed rooms demanded by gusts, for which markets for service may be
relatively developed in Jigjiga town, while no homes numbers will tend to
increase the demand of bed rooms,

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Table of Contents
Executive Summary...............................................................................................................................2
Preliminary Description.........................................................................................................................5
1. Introduction.......................................................................................................................................6
BUSINESS DESCRIPTION.........................................................................................................................6
ECONOMIC BENEFITS OF THE BUSINESS................................................................................................7
FINANCIAL ANALYSIS.............................................................................................................................7
Debt/Equity ratio...............................................................................................................................7
Projected profitability........................................................................................................................7
Cash flow balance..............................................................................................................................7
Debt service coverage ratio...............................................................................................................8
Overall goal........................................................................................................................................8
Specific Objectives............................................................................................................................8
Mission Statement.............................................................................................................................8
Vision.................................................................................................................................................8
Our Mission.......................................................................................................................................9
My keys to success............................................................................................................................9
Business Ownership........................................................................................................................10
SERVICE DESCRIPTIONS.......................................................................................................................10
Future offer.....................................................................................................................................10
Anticipated outcomes......................................................................................................................11
Opportunities...................................................................................................................................11
Competition.....................................................................................................................................11
PROMOTIONAL PLAN..........................................................................................................................11
Promotion and Advertising Strategy................................................................................................11

Promotional Channels................................................................................................................12
Service Offering Promotions...........................................................................................................12
Relations..........................................................................................................................................12
Direct Marketing.............................................................................................................................12
Potential areas..................................................................................................................................13
Beneficiaries....................................................................................................................................13
Service Offer Description....................................................................................................................13
Offer Costs..................................................................................................................................14
Ownership Costs..........................................................................................................................14

3
 Operating Costs...........................................................................................................................14
Aims & Objectives of business in Marketing..................................................................................15
Marketing Strategies........................................................................................................................15
MARKET............................................................................................................................................16
Demand and Supply............................................................................................................................16
Existing demand..............................................................................................................................16
Demand of renting house.............................................................................................................16
Start-Up Costs.................................................................................................................................16
Offers Strategy................................................................................................................................17
Projected Profit and Loss.................................................................................................................18
Means of Finance................................................................................................................................18
Cash Flow........................................................................................................................................19
Working capital...............................................................................................................................19
Planned investment outlay...............................................................................................................19
FINANCIAL AND BUDGETARY PLAN.........................................................................................20
Revenue and Operating Cost Projected............................................................................................20
Revenue business ion.......................................................................................................................20
Operating Cost of the business ion..................................................................................................20
Financial business ions....................................................................................................................20
Profit/loss business ion....................................................................................................................20
Cash Flow Projection.......................................................................................................................21
Balance Sheet Projection.................................................................................................................21
Bank finance....................................................................................................................................21
Projected Finance scheme...............................................................................................................21
Essential Facilities...............................................................................................................................22
Schedule of Implementation................................................................................................................22
ORGANIZATION AND MANAGEMENT........................................................................................22
Leadership.......................................................................................................................................22
Organizational Structure..................................................................................................................22
Management Team..........................................................................................................................23
STRUCTURE......................................................................................................................................24
Management....................................................................................................................................25

4
Preliminary Description

1. business /Entity Name:

Deqa renting House Service
2. business /Entity address including woreda and keblel
Somali Region, Fafan Zone, 16 Kebele Jigjija city
3. business tax identification
Number: 0051580402
Land Registration 00/05/01/01/01/01/XR
4. business registration number and business license as
Appropriate: - SM/JCCC05/1/8814255/2015
: 980/2016
5. key contact (name and position)
Deqa, General Manager
Key contact Telephone and e-mail information: - Mob. 0915111982
Future number of regular employees in the business disaggregated by
gender and if applicable disability:
Female 4 Male 6 Total 10

A. Form of organization and legislations

Establishment Established as individual
Founders/organizers Comprising one person
Manager Deqa Mohammed
Form of organization Services

5
1. Introduction
Deqa renting house Service is a small scale enterprise which was incorporated
as a private owned by me, on 2 Aug 2023 and was issued with business
registration number SM/JCCC05/1/8814255/2015. Only I owns the firm. The
firm whose principal business is renting house service, along the region. In an
attempt to commence service activities at Jigjiga, the firm rented an office,
therefore, to keep the opportunity of high market demand for renting house
offer if and only if a finance and other supports will available. Deqa requested
2500000 Birr for the purpose of finishing renting house rooms to establishing of
own business and suggested for the purpose of renting house service.

BUSINESS DESCRIPTION
MARKETING CONSIDERATIONS

The business’s main service is renting house service, which is important for
resident of no own home in the Jigjiga’s, the business’s main objective is to
provide an easily accessible market for renting house users as well as to bring
no homes with this service particularly those in Jigjiga currently has no enough
providers of quality renting house service. The main competitors for renting
house service is so much and, whom is within Jigjiga. I shall therefore be the
supplier of quality renting house service in region as well as provide a very
accessible market service in the same area. The business’s target customers
include the following:

 Peoples in Jigjiga
 Tempo arrivals
 Individuals

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ECONOMIC BENEFITS OF THE BUSINESS
The business has the following economic benefits:

 It will initially create three (3) jobs, and the number may increase as the
business equally grows.
 The establishment of the service shall be contribute to the growth of
entrepreneurship in the area.
 The government shall benefit from the business taxes
 Provision of a very important service (renting house) to local community

FINANCIAL ANALYSIS

Debt/Equity ratio
Whereas the business is seeking a finance amounting to ETB 3281420, the
business promoters’ equity contribution is valued at ETB 750260. This
represents a debt/equity ratio of 1 to 2.69, which means that the business
promoters’ contribution is quarter times less the finance requested for. This also
means that the finance amount is 20% secured by cash.

Projected profitability
The projected profit and loss statement, which is based on 80% capacity
utilization, shows that the business gross profit margin is 34.8% and the net
profit margin is 12.7%. This means that for every items 1 of, the business’s
gross profit for the 3rd year is which 4,410,000 the net profit is ETB 707167.0645
both margins are comfortably high and go to show that the business is

financially viable.

Cash flow balance

Throughout the five years, the projected cash flow reveals positive cash
balances which clearly shows that all things being equal, the business would be
able to repay the finance without interest and still sustain its operations.

7
Debt service coverage ratio
The business’s debt service coverage ratio is 1 to 3. This is an acceptable ratio,
which shows that the business shall make timely repayments without resorting
to the further borrowing and shall remain sustainable during and after finance
repayments.

Overall goal
Even supposing there is sufficient people movements for business development,
no enough organized/ business operating reach to enough offer in the area. The
business goal of services to offer with sustainable way to consumer in business
area, region.

Specific Objectives
 To increase the keeping quality of above mentioned offer
 To improve economic benefit by procuring the renting house offer in
time

 Be the key offer market actors

 Develop systematic my benefit able opportunities

 To offer of as premarket demand

 To provide quality offer at affordable prices to the consumes
 Development of business Increasing by providing technical input offer
 Procurement of business

Mission Statement
My mission is to raise the best and finest quality offer for the customers.
Business uses only legal vat based methods.

Vision
A vision of mine is to contribute to vision of people working together in
business and responsibly to achieve their social and economic wellbeing

8
through organizations they own and control. A picture that vividly represents
what the business can become in the future. Ideally, my business will receive
vision pictures from all of stakeholders and commission a professional
performer to combine the drawings into one picture for the whole organization.

Our Mission

The mission of my business expresses how to reach the vision which is

mentioned above. My mission statement is clearly defining the long-term
direction of the owner and customer offer, offer quality; employee relations,
management style and competitive positioning are important components of the
mission statement which provide guidelines for the detailed, results-oriented
measurable objectives.

I will be an associate and a catalyst in developing and strengthening business

economies by providing highly effective development offers to, our customers
and community.

My business’s mission also to provide customers with service to respect all

employees and enable everyone to have a say in business affairs.

I intend to have the largest different offer. I plan to increase and expand my
offer of different suitable services to challenge the ever-growing demand for
renting house.

Economic and social: To generate a source of income and economic

improvement especially for local population.
Socioeconomic aspect: Poverty alleviation for disadvantaged people
especially women.
Sustainability aspect: Income generation, capacity building and human
resource development Innovation: Small business and renting house can
be linked with microfinance.

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My keys to success
I will follow these principles in order to achieve success in market:
 State of art cage framework accommodating quality of offer with
lessened possible hazards.
 Diverse network, market chain management, optimum inventory level
and ‘customer is king’ policy.
 Regular assess by pharmacist’s workers, researcher and environment.

Business Ownership
The business owned by one person. My name is mentioned on legal
certificates. In future to enhance the size of business it will be a ownership and
no one have share in the business.

SERVICE DESCRIPTIONS
The business provides the following service keeping customers demand, quality
environmental aspect of renting house offer supply.

 Offering technology based service delivery

 Offering subscription packages

 Becoming the "Best and most modernized renting house offer by online
orders provision.

My renting house Service \business will start in early 2024. With the goal of 20
weeks. Shares will be come approximately different offer of every 12 weeks of
in-period. Here is an example of types of throughout the period:
I have learned that offer these service merrily except holy days. More renting
house.

10
Future offer
 renting house service have plans to introduce some additional service
offer

 The following period as a major offer.

 On occasion, My Service with neighboring bed rooms owners in nearest
and from time to time customers will find nonstop especial offer.
Other future plans include accessing the internet to increase awareness and the
importance of business renting house offer system.

Anticipated outcomes
During the next five years the target user’s satisfied in supplied service and
income increased. In other hand my imitation efficiency in all and development
activity enhanced.

Opportunities
 The greater huge market and bank finance availability is a prime location
for my business with a historically high demand.
 High demand because many number of peoples is exceed the number of
business.

Competition
Competition is not so keen in the markets, however it still exists. The reasons
are;

 Business are not branded offer; hence what usually in matters is effective
positioning and timing. Business (service) offer market is not crowded; it’s a
provider’s market.
 Most renting house auxiliary offer is through informal channels.
Competition is usually found within local level rather than well-organized
ones.

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PROMOTIONAL PLAN

Promotion and Advertising Strategy

The best strategy is word of mouth advertising. When people are happy with
their share they tell friends.
This renting house Service will place brochures with other businesses such as
the local factories and neighboring whole offers.

Promotional Channels
Online Advertising:
Pay per click:
Google Ad Sense:
Google Ad words:
Affiliate Program:
Social Media:

Service Offering Promotions

I will use different promotion methods to attract customers who are always on
the look-out for a bargain so as they will continue to the offer .There are many
methods of offers promotion, including:

Money off coupons

Free gifts
Posters

Relations
To getting my renting house Service have the best FR tools to putting it into
practice such as :

 Hold a media event

 Prominent on the web
 Own Brand

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  Link PR with advertising

Direct Marketing
These good, well-developed, profitable techniques will have appropriated by
this business .

The key idea, or strategic inputs, which I will be apply are:

 Customer management,
 Customer loyalty,
 Relationship marketing,
 One-to-one marketing,
 Transaction marketing

Potential areas
Somali region is currently leading in renting house is one of the major
subsidiary activities of most of the transport sectors. Despite of no business
factories in the region there is always a demand supply miss match for business.

Beneficiaries
Our target beneficiaries may be individuals/customers from towns, rural, no
homess, tourist and business societies etc.

Opportunities

 Expansion into large scale offer (services)

 A large and successful offer

Threats

 More competition

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  Rent and employees cost increases
 Threat of scarcity of No. of renting house

Service Offer Description

Customer’s injection is an important staple offer in the demand of many
customers, provides customers with carefully selected equipment on the basis of
an offer, whereby the customer is reenter, who has a conditional right to use the
service, and I will be the service provider, who owns the vehicles.

I have a new awareness on the importance of discount in service offer. In spite

of the great advancement in ways and means of offer for knowledge available,
the most important factor is those one which their demand is high. In order to
improve my offer with the no homess must have first a thorough and all-
rounded knowledge and practical experience on management in general.

Offer Costs
I understand that once a type of business control, or customers has been
targeted, the question of how to minimize offer costs must be answered.
Business that is too much for a particular situation will cause renting house
ownership costs to be unnecessarily high over the long run; renting house that is
too small may result in lower in No. of transport or reduced quality.

Ownership Costs
Ownership costs include charges for tax, fee on investment, property taxes,
insurance and housing. These costs increase in direct proportion to transport
investment and size.

Operating Costs
Operating costs include wedges. Operating costs per numbers change very little
as vehicles size is increased or decreased. Using larger vehicles consumes more
fuel, but this is essentially offset by the fact that more numbers are covered per
hour. Much the same is true of technology use costs. Thus, operating costs are
14
of minor importance when deciding what size renting house is best suited to a
certain business operation.

Significantly, enough to more than offset the higher fixed costs. However, as
renting house size continues to increase, the timeliness cost savings diminish,
and eventually total costs begin to rise. One objective of renting house selection,
then, is to select renting house in the size range where total renting house costs
are lowest.

Aims & Objectives of business in Marketing

The broad aim of business marketing is to rationalize the whole marketing
system so that it will be beneficial. My immediate objective is to strengthen the
bargaining capacity of the customers so as to secure them better price . The
chief objects and aims of business in marketing are briefly given below.
1. Strengthen the bargaining capacity of my business
2. Secure the customers a better price for their offer.
4. Provide customers the needed service.
5. Persuade the business grow better quality offer.
6. Stabilize the price.
7. Develop fair offer practices.
8. Act as an agent of government for procurement and implementation of price
support policy.
10. Promote the economic interest of mine by encouraging self-help, thrift and
better business among customers.

Marketing Strategies
My renting house will began in the residential area then after one month of this
plan expansion intends to the expansion to different sub city part of Jigjiga, this
program will enable the business to introduce quality offer and dream into the
target areas under more favorable market conditions.

15
These offer decided to provide as per the marketed requirements and it can be
varied depending upon market situation.

MARKET

Demand and Supply

Existing demand
Jigjiga does not have enough of renting house. Over the last four Month,
particularly since 2015, the rent of various types of house has shown a definite
increased trend. Reasons is, namely, increased population in the city.

Demand of renting house

There is an increasing trend in the number vehicles due to increased number of
population. Nowadays, local people are being used in the urban areas by poor
transport more frequently than the past.

The performance of the renting house users is dependent on a number of inter-

related variables. Accordingly, the variables that are essential in determining the
magnitude and trend of demand for service are:
 -Performance of the national economy;
 -Performance of the transport sector;
 -Demand for usage ;
 -Performance of the transport sector; and
 -Rate of population growth and urbanization.

Start-Up Costs
SR.NO summary of Operational Cost/Working Capita

Cost item Annual cost

1 Raw Material

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1.1 Direct cost

Raw food and drink materials Purchase 316684.375

1.2 Uty 30000

Sub total 346684.375

2 Administrative costs

2.1 Salary and wage 420000

2.2 Employee benefit 42000

2.3 Travel expense 42000

2.4 Repair and maintenance 325000

2.5 Insurance 65000

2.6 Advertising expense 25000

2.7 Telephone expense 9120

2.8 Wi fi Internet offer 1700

2.9 Office supplies 2500

2.1 Miscellaneous expense 93500

Sub total 220000

Initial W.C. requirement 566684.375

17
Offers Strategy
I have planned for the upcoming future to the following offer in next five years.
In order to meet these goals, I will continue to rely on advertising fliers, our
online presence and most importantly word of mouth.
Annual Offers Forecast
1st year 2nd year 3rd year 4th year 5th year

Sale of Bed Room (15 single 4,500 4,500 4,500 4,500 4,500
bed ) for a year

Price per room 600 630 662 695 729

Gross income 2,700,000 2,835,000 2,976,750 3,125,588 3,281,867

Revenue from rent front 8 384,000 384,000 384,000 384,000 384,000

class 4000 birr per night for a
year

Revenue from Cafe 902,250 947,363 994,731 1,044,467 1,096,691

Total 3,602,250 3,782,363 3,971,481 4,170,055 4,378,557

Projected Profit and Loss

1st year 2nd year 3rd year

Gross Revenue 3,602,250 3,782,363 3,971,481

Less: Operating cos 1,290,879 1034549.75 1100172.238

Income before Principal & profit share 2311370.625 2747812.75 2871308.388

&Depr

Less :Principal & profit share 1638000 1449630 1282922.55

Income before Deprecation 673370.625 1298182.75 1588385.838

Less :Depr. 258190 314742 173896.8

Profit before tax 415180.625 983440.75 1414489.038

Less: Income Tax (35%) 495071.1631

Net Profit 415180.625 983440.75 919417.8744

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 Means of Finance
Particulars Amount in Birr
Promoters contribution 1300000
Short term finance/lease 5200000

Total 6500000

Cash Flow
The statement total of cash flow shows the incoming and outgoing
cash of this business:

Table 7.5.2 Pro Forma Cash Flow

Pro Forma Cash Flow 1st year 2nd year 3rd year
Total Cash out Flow 1638000 2210307.75 1295771.028

Total Cash In Flow 3475863.866 3555123.047 3087585.846

Net Cash Flow 1837863.866 1344815.297 1791814.818

Cumulative Cash Bal. 1837863.866 3182679.163 4974493.981

Working capital
Working capital is the most crucial input for viability of any business and
service marketing unit. Nowadays, banks are free to finance working capital
based on actual need of the borrower. A provision of adequate working capital
needs to be considered by the financing banks. Oromia Cooperative bank
provides in kind finance/lease/Ijara.
The required investment of Birr 6500000 for initial capital investment is supposed
to be financed by finance providers and business owner own equity. The bank
finance will be 1300000 (80%) and that the remaining of 5200000 (20%) is
financed with business own equity for meeting the renting house business
establishment in-kind.

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Planned investment outlay
The major investment cost of the business is Finishing renting house rooms
finishing renting house rooms .

FINANCIAL AND BUDGETARY PLAN

Revenue and Operating Cost Projected

Revenue business ion
The business is expected to generate its first year revenue amount Birr
3,986,250 and Birr 4,762,557 at the fifth business projected year.
For more detail figure analysis, refer to the projected revenue
estimation of the business projected in the table page 46.

Operating Cost of the business ion

This cost basically includes direct material cost, direct transport cost, direct bed
rooms cost and overhead costs. The total projected operating cost of the
business for the first year is expected to be Birr 1290879.375 and will be raised to
Birr 1226717.662 at the last year of the business life. The detailed operating costs
projection for the first eight months of the business life time is depicted on the
table below.

Financial business ions

There are three financial statement business ions made to analyze the financial
viability of the business. These are the income statement business ion made to
analyze the financial viability of the business. These are the income statement
business ion cash flow statement business ion and the balance sheet projection.

Profit/loss business ion

The business is expected to generate a net income of Birr 1268652.659 at the fifth
of operation period which shows that the business is a highly profitable business

20
at my start up stage and throughout its life. The detail income/loss statement
business ion is as shown in the table below.

Cash Flow Projection

This is the future forecast of the liquidity position of the business over its life
time. In this regard the business under caption is expected to generate a net and
cumulative positive cash flow. The cash flow projection statement shows
cumulative cash balance of Birr 6250539.454 in the fifth year. The cash flow
statement business ion depicted in the table shows that the business is liquid
enough to meet our short term and long term debt obligations and even to meet
my investment expansion plan in the future. See the table below for more detail
figure analysis of the cash flow forecast of the business for the coming five
years.

Balance Sheet Projection

The projected balance sheet of the business for the coming fifth year of the
business life time indicates that the business’s worth will stand at Birr
3353180.625 during the first period of operation and Birr 3588724.57 at the last
year of the business operation period. The detail balance sheet business ion of
the business for the coming five tears is depicted in the table below

Bank finance
I believe that it is compulsory to take bank lease financial according Islamic
way to avail various subsidy schemes of government therefore, business is
desirous of availing financial support should adhere to the means of investment
i.e. the quantum of finance and margin prescribed according to rule and
regulation of financing institute scheme.

Projected Finance scheme

I P r P+r
4146940 829388 476898.1 1306286.1

2840653.9 829388 326675.1985 1156063.19

21
 9

1684590.70 829388 193727.9307 1023115.93

2 1

661474.770 829388 76069.59865 905457.598

8 6

- 829388 -28058.0252 801329.974

243982.827 8
8

Essential Facilities
I. Equipment’s and all transport will be stand by on the park under the
shed
II. Store for row food items
III. Shade area for vehicles

Schedule of Implementation
Normally, it will takes about 15 days to 2 Months period for obtaining finance,
approval of plans, finalizing the suppliers invoice and various equipment’s and
correct of all systems. Hence, during 1st year of business, only one month of
procurement can be assumed. Proper planning needs to be done to take up
various activities without any break. The activity wise schedule of
implementation is to be given.

ORGANIZATION AND MANAGEMENT

Leadership
I will provide the leadership and inspiration to motivate the employees towards
the measurable objectives of the organization. The confidence exhibited by me,
their openness in listening to and flexibility in implementing employees' ideas

22
will provide the organizational leadership required to make the business a
success.

Organizational Structure
Deqa renting house will be wholly owned and operated by business owner. I
will perform all office and accounting functions such as calculating the initial
costs, renting house costs and planting times. Business will hire one apprentice
business for each additional acre that is purchased. Over time, I have plan to
hire -time delivery drivers as well as bookkeeper.

Management Team
Ahmed Deqa will actively manage the business management duties will include
the creation of a detailed offer of include renting house. Mr. Deqa will also be
responsible for assign the accountant for preparing detailed accounting records
for the tax accountant.
Mr. Deqa will also actively participate in managing the service during the busy
period /Month. All of us will work to achieve the business and supplement
revenue.

23
 STRUCTURE

Owner

G.Manager

Saler

Cashier
Guard

24
 Management
H.R:- Requirement, allocation and Salary
I will employ a team of highly skilled technicians and experienced management
professionals to establish offer at business. Also employed are experts in R & D
and support systems for the and management, including etc. extra supports are
also made available see the table1 and 2
Table 1 Personnel
No particulars Address Education Overall work
background experience
1. General Manager Jigjiga- Degree/ 5 years
kebele Diploma
2. Other positions Jigjiga - - -
Will be announce

Table 2 Employment Plan

Employee No. of No of shifts Month’s Annual salary
employee salary
Gen, manger 1 1 15000 180000
Administration and 2 2 5000 60000
finance staffs

Coffle Machine operator 1 1 6000 72000

Waiters 2 1 4000 48000

cleaners 2 1 6000 72000

Guards 2 2 4000 96000

Total 528000

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Fund allocation and source of finance

Description

Existed Planned Ex+Pla investment Equity loan Total

Inves. inve.

Supply and plaster work of gypsum 560000 560000 112000 448000 560000
cost

Supply and install of ceramic cost 1279000 1,279,000 255800 1023200 1279000

Supply and painting it’s all work cost 1262300 1262300 252460 1009840 1262300

Supply and install doors and windows 300000 300000 60000 240000 300000
cost

Supply and install all electrical works 150000 150000 30000 120000 150000
cost

Outer floor cementing and install 200000 200000 40000 160000 200000
terrazzo work cost

Sub-total 3751300 3751300 750260 3001040 3751300

Pre-operation cost 200000 200000 40000 40000

Working capital 350475 350,475 70095 280380 350475

Total 1839000 1839000 750260 3281420 4031680

Loan & Equity in % 20% 80% 100%

26
Revenue Projection

Description Year

2,023 2,024 2,025 2,026 2,027

Sale of Bed Room (15 4,500 4,500 4,500 4,500 4,500

single bed ) for a year

Price per room 600 630 662 695 729

Gross income 2,700,000 2,835,000 2,976,750 3,125,588 3,281,867

Revenue from rent front 8 384,000 384,000 384,000 384,000 384,000

class 4000 birr per night for
a year

Revenue from Cafe 902,250 947,363 994,731 1,044,467 1,096,691

Total 3,602,250 3,782,363 3,971,481 4,170,055 4,378,557

27
 Operating cost projection

cription Project year

1 2 3 4
ect cost
w food and drink materials Purchase 316684.38 348352.81 383188.09 421506.9 463657.

ity 30000 33000 36300 39930 43

ary and wage 420000 462000 508200 559020 614
aire and Maintenance 91595 96174.75 100983.49 106032.66 111334.
vel and Perdium 42000 44100 46305 48620.25 51051.2
ployees benefi 42000 44100 46305 28547.033 28547.0
ionery and P.T.I 12600 12600 12600 12600 12
form 21000 21000 21000 21000 21
urance 65000 65000 65000 65000 65
l and Lubricants 81250 85312.5 89578.125 94057.031 98759.8
al and Audit service 25000 25000 25000 25000 25
ministrative cost 50250 52762.5 55400.625 58170.656 61079.1
cellaneous 93500 93500 93500 93500 93
al Operation cost 1290879.4 1034549.75 1100172.24 1151477.63 1226717.

28
 Total investment costs

Description/Year YEAR
0 1 2 3 4 5

Total fixed investment costs 1262300 0 0 0 0 0

Total pre-production expenditures 161,965 0 0 0 0 0

Increase in net working capital 0 350,475 367998.75 386398.688 405718.62 426004.55

Total investment costs 1424265 350,475 367,999 386,399 405,719 426,005

29
Projected Income Statement('') In ETB

Description Year
2,023 2,024 2,025 2,026 2,027
Gross Revenue 3,602,250 3,782,363 3,971,481 4,170,055 4,378,557
Less: Operating cos 1,290,879 1034549.75 1100172.24 1151477.63 1226717.662
Income before Principal & 2311370.63 2747812.75 2871308.39 3018577.02 3151839.727
profit share &Depr
Less :Principal & profit 1638000 1449630 1282922.55 1135386.46 1004817.014
share
Income before 673370.625 1298182.75 1588385.84 1883190.57 2147022.713
Depreciation
Less :Depr. 258190 314742 173896.8 108824.24 195249.392
Profit befor tax 415180.625 983440.75 1414489.04 1774366.33 1951773.321
Less: Income Tax (35%) 495071.163 621028.215 683120.6623
Net Profit 415180.625 983440.75 919417.874 1153338.11 1268652.659

30
 Projected Cash Flow Statement In ETB

Description Year

0 1 2 3 4
Cash Inflow
Owners Equity 1056640
Bank Loan 4226560
Net Profit 527126.225 1082512.61 976408.96 1203775.223
Depreciation 3060683.241 2571682.3 2168167.97 1834274.297
Total Cash Inflows 5283200 3587809.466 3654194.9 3144576.93 3038049.521
Cash outflows
Investment on bus 5200000
Working Capital 0
Increase in W.Capital 0 760677.75 12848.4781 13490.90203
Pre prod.expediture 0
Replacement 0 0 0 0
Loan Repayment 1526054.4 1350558.14 1195243.96 1057790.902
Working Loan Repayment
Pre-operation cost
Withdrawal 0 0 0 0
Total Cash Outflows 5200000 1526054.4 2111235.89 1208092.44 1071281.804
Net Cash Flow 83200 2061755.066 1542959.01 1936484.5 1966767.716
Cumulative Cash Bal. 0 2061755.066 3604714.08 5541198.57 7507966.287

31
 Balance Sheet Projection In ETB
Description Year
0 1 2 3 4
Asset
Current Asset
Cash 1837863.866 3182679.16 4974493.98 6813229
Inventery 3782362.5 3,782,363 3971480.63 4170054.66 4378557
Total current Assets 3782362.5 5620226.366 7154159.79 9144548.64 1119178
Fixed Assets
Vehicle 5733200 5733200 5733200 5733200 57332
Total Fixed Assets 5733200 5733200 5733200 5733200 57332
Less Depreciation 258190 258190 314742 173896.8 108824
Net Fixed Asset 5475010 5475010 5418458 5559303.2 5624375
Total Assets 9257372.5 11095236.37 12572617.8 14703851.8 1681616
Liabilities &Capitals
Liabilities
DBE Loan 1638000 1638000 1449630 1282922.55 1135386
Sub Total 1638000 1638000 1449630 1282922.55 1135386
Capital
Owner Equity 1300000 1300000 1300000 1300000 13000
Retained Earnings 415180.625 415180.625 983440.75 919417.874 1153338
Sub Total 1715180.63 1715180.625 2283440.75 2219417.87 2453338
Total Liabilities & Capitals 3353180.63 3353180.625 3733070.75 3502340.42 3588724

32
Cash Flow Projection for Discounting
YEAR

0 1 2 3 4

Total cash inflow 0 3,986,250 4,166,363 4,355,481 4,554,055 4,76

Inflow operation 3,986,250 4,166,363 4,355,481 4,554,055 4,76

Salvage valu 0 0 0 0

Total cash outflow 1424265 6275500 6589275 6918738.75 7264675.688 76

Increase in fixed assets 1424265 0 0 0 0

Increase in net work 0 350,475 367,999 386,399 405,719

capital

Operating costs 1290879.375 1034549.75 1087934.738 1139240.132 12

Income (corporate) 0 306517.5838 530866.543 641809.2649 -727035.272 -35

tax(35%)

Net cash flow -1424265 -2289250 (2,422,913) (2,563,258) (2,710,621) (2,86

Cumulative net cash -1424265 (3,713,515) (6,136,428) (8,699,686) (11,410,307) (14,2

flow

Net present value 454199.8

Internal rate of return 34%

Payback period 3 years

33
Assumption Employed in the Projected Economic Analysis

Pre-Production Cost

Description Cost (Birr)

Consultancy Fee 20,000

Land Acquisition & License Fee 50,000

Access Road Construction 91,965

Plant Erection

34
Expenditure for sale of shares

Total 161,965

Operating Costs

Monthly Annual salary

salary
No

Gen, manger 1 1 15000 180000

Administration and 2 2 5000 60000
finance staffs

Coffle Machine operator 1 1 6000 72000

Waiters 2 1 4000 48
cleaners 2 1 6000 72

Guards 2 2 4000 96000

Total 528000

Fuel, Lubricants

Description Consumption Birr/liter Cost/three

(Liter/Month) months (Birr

35
Light Vehicles and Generator 309 80 148320
Total cost 148320
Lubricants Cost = 10% of fuel cost

Assuming 10% increment per annum

Repair and Maintenances

Repair and maintenance = 2% of the fixed assets

Table Repair and Maintenance

Repair and
Maintenance
Items Original Rate Repair
Value and
Maintenance
cost
Building ( only Finishing 4,833,200 0.02 96664
costs )
Furniture and comp 150,000 0.02 3000
Total 4,983,200 99664

Miscellaneous (Ten percent incremental per Annum)

Item Cost (Birr/year)

Personnel Insurance (= 3% of annual salary) 12600

Fixed asset Insurance (=0.75% of fixed capital) 4200

Medical expense 50,000

Uniforms for (machine operator, helpers and guards) twice 65000

36
per year(Birr 550x10x2)

Environmental cost 20,000

Total 82,600

Initial Working Capital

Three months of salaries and Wage expense. Birr 132000

Three months of fuel lubricants & chemicals 148,320

expense… Birr

Three months of utilities expense………….. Birr 7,500

Three months of miscellaneous expense………Birr 62,655

Total…………………Birr 350475

37