1.

Executive summary

1.1. Name of Business: - Gudetu Metal Working Enterprise

1.2. Description: - Gudetu Metal Working Enterprise produces metal stools of high quality to
micro enterprises organized to give services such as coffee tea and fast foods. The stools can
be also used by restaurants and local community at optimum cost. The top of the stool can be
wood painted with varnish or laminated with mica based on the need of the customer. The
stool has rubber footing and painted with anti rust as well as synthetic paint to give good
appearance high durability. It is manufactured for Asela community and can widen its scope
through the time. This enterprise can also produce other metal products needed in the town.

1.3 Legal form of the business will be: - Partnership.

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 Reason for choosing this legal form

This is because the enterprise consists of three members of TVET graduates in Mechanics L-IV and
one 12th complete student. They founded this micro enterprise by contributing some amount of
money; they cooperate with each other with skill and knowledge they gained in the TVET training.

1.4Contact address
Tele: 0922835237

E-mail: gudetu@yahoo.com

Fax: 0922835237

1.5 Type of business: - Manufacturing

1.6 Brief description of the business

 Products: metal stools and other metal products.

 Target Market: micro and small enterprises giving coffee and fast food services, and
restaurants and the local community.

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  Project contribution to the economy: this micro enterprise benefits the community as well as
other micro enterprises by producing quality stools at fair cost. On the other hand this
enterprise will grow to medium enterprise and will hire or give job opportunity to others.
Similarly, it will pay tax to the government, may accumulate/adapt new technologies that may
improve the life standard of the local community.

1.7 Owner(s) profile

No Name Address Qualification Function in the relevant experience
business
1 Naga Wakweya Asela Mechanics General Manager 5 years
level IV
2 Bikila Bori Asela Mechanics Technical 3 year
level IV Manager

3 Surra Bona Asela Mechanics Financial Manager 2 year

level IV
4 Jirata Dhugasa Asela 12th complete Guard 0 year

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2 MARKETING PLAN
Description of the market: Gudetu micro enterprise is founded in Asela town which is 167 Km
from Addis Ababa in West Arsi zone. Customers are the local micro enterprises, restaurants and the
community. Even though there are few competitors to produce quality products and selling at
optimum cost, it is possible to penetrate through the market.

2.1 Marketing Plan Product

The type of product produced by Gudetu micro enterprise is a stool made of metal with its top made
of wood painted with varnish or laminated mica. This stool, to give it high strength, appearance and
durability, it will be painted with anti rust synthetic paint. The leg has footing and the welding is
done thoroughly with no or minimum defects. The stool is made of 25*25*1mmsquare pipe. Its
height is 350mm, the seat 300*300mm. The wooden top is also 300*300*2.5mm. The top is bolted
to the square pipe and then laminated with mica for good appearance. In any case, if there is a
malfunction after sale, we give response and take full responsibility to maintain or change with new
within six months. 500 stools are planned to be produced per month when the enterprise starts
functioning.

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 2.2 Marketing Plan Price
How much are How much are How much is your What are the reasons for
customers willing to competitors price? price? setting your price?
pay?
Highest-75.00 Highest-75.00 Our average price, 66.80,
is enough for our
Average-66.80 70.00 Average-66.80
enterprise to be
Lowest-63.00 Lowest-63..00 profitable but it is less
than competitors cost.
So, it is optimum or fair
for the customers.

2.3 Marketing Plan Place

Gudetu Micro enterprise is located at Asela town, in West Arsi zone, 167Km from Addis Ababa.
Asela is selected as a business area, because there are few competitors and raw materials can be
easily bought from Addis Ababa. There is also high demand of the product in the town. The product
will be distributed directly to the customers.

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 2.4 Marketing Plan Promotion
Marketing is done by displaying the products to the local community and through personal selling.
Additionally we promote our product;-
1. Flying paper
2. Brochure
3. Internet access
4. Participating on d/t exhibitions
5. Personal contact and etc.

3. PRODUCTION PLAN
Production process: List of production steps are described as stated below.
 Prepare working drawing of the stool.
 Select appropriate thickness of square pipe and wood with right quality.
 Transfer the dimensions to the work piece.
 Cut the square pipe to the given dimension.
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  Weld properly in jigs and fixtures to reduce distortion.
 Drill holes for the four bolts.
 Apply Anti rust and synthetic paint.
 Cut the wood and mica to the required dimension.
 Assemble the top to the metal frame; fix the mica to the top; and plastic footing to the legs.
 Check the overall finishing and store it properly.

3.1 List fixed assets needed and their cost

No. Item Quantity Amount
1 Sheet metal bender 1 4,500.00
2 Welding machine 2 10,000.00
3 Portable drilling machine 1 1,800.00
4 Portable grinding machine 1 2,000.00
5 Work bench 2 4,600.00
6 Machine vice 4 7,200.00
7 Ball peen hammer 4 240.00
8 Chipping hammer 2 20.00
9 Hack saw 4 160.00
10 Flat file(metal) 2 30.00

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11 Center punch 2 16.00
12 Scriber 5 24.00
13 Wood plane(hand) 2 1,500.00
14 Cross cut saw 2 360.00
15 Ripping saw 2 340.00
16 C-clamp 4 520.00
17 Try square 4 120.00
18 Bench shear 1 2130.00
19 Welding hand shield 2 260.00
Total 35,820.00

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 3.2 Factory/plant location and layout

Waste disposal
Work bench Work bench Sheet metal bender
area
Raw material store

Welding station-1

Tool room Welding station-2

Office
Finished product store

3.3 List of raw materials needed

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3.3 List of raw material
No Raw materials needed DIMENSION QUANTITY UNIT TOTAL
per month /Specification/ COST COST
1 Square pipe 25*25*1mm*6m 90pcs 160.00 14,400.00
2 Wood (keraro) M3 1/5 5,000.00 1,000.00
3 Electrode E-6013 Ø2.5mm 10 packets 80.00 800.00
4 Anti rust Gallon 2 60.00 120.00
5 Synthetic paint Gallon 2 65.00 130.00
6 Rubber footing 25*25 800 pcs 1.50 1,200.00
7 Mica 2m*1m 10 pcs 240.00 2,400.00
8 Mastics Liters 5 90.00 450.00
9 Bolts and nuts M10(cap bolt) 800 pcs 3.00 2,400.00
Total 22,900.00

 500 stools will be produced per month

 Variable material cost/unit= 22,900/500= 45.80

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 3.4 Staff cost
No Position Qualification Salary per Remark
month
1 General Manager Mechanics level IV 1000.00 Fixed cost
2 Technical Manager Mechanics level IV 10.00 birr/unit Variable cost
3 Financial Manager Mechanics level IV ,, ,,
4 Guard 12th complete 500.00 Fixed cost
Total 1500.00

 Variable labor cost per unit = 10.00

3.5 Factory overhead expenses

No Overhead expenses Amount per
month
1 Electricity 150.00
2 Water supply 50.00
3 Telephone 200.00
4 Maintenance of equipments 100.00
Total 500.00

 Factory Over Head /unit= 500/500=1.00

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3.6. Production costs of each item to be produced
-Variable RM per unit =45.80
- Variable labor cost per unit = 10.00
- Factory overhead expenses per unit =1.00
TVC = 56.80
-TFC=Salary expense/month + Rent expense/month
= 1500+ 500= 2000.00
 Let the business enterprise will cover all variable costs after producing 200 pieces.
BEP = Fixed cost/(Selling price-Variable cost per unit) 200=2000/(Sp-
56.80)
 Selling price, Sp= 11860/200 = 66.80

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 4. ORGANIZATION AND MANAGEMENT PLAN

General Manager

Technical Manager Financial Manager

Guard

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 5.FINANCIALPLAN
Capital requirement
Capital requirement/project cost Amount

Fixed assets
Equipments 35,820.00
Others -
Total fixed assets 35,820.00
Pre-operating expenses -
Working capital/Operational cost of one month
Raw materials 22,900.00
Administrative expenses 50.00
Staff costs of one month 1500.00
Overhead expenses 400.00
Workshop rent 500.00
Total working capital of one month 25,350.00
Total capital requirement 61170.00

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5.1 Monthly sales plan
Month 1 2 3 4 5 6 7 8 9 10 11 12
Price 66.8 66.8 66.8 66.8 66.8 66.8 66.8 66.8 66.8 66.8 66.8 66.8
0 0 0 0 0
Quantit 500 500 500 500 500 500 500 500 500 500 500 500
Product 1

y
Revenu 3340 3340 3340 3340 3340 3340 3340 33400 3340 3340 3340 3340
e 0 0 0 0 0 0 0 0 0 0 0 0
Price - - - - - - - - - - - -
Quantit - - - - - - - - - - - -
Product 2

y
Revenu - - - - - - - - - - - -
e
3340 3340 3340 3340 3340 3340 3340 33400 3340 3340 3340 3340
All Reven 0 0 0 0 0 0 0 0 0 0 0
produc ue
ts

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5.2 Operational cost plan
Month 1 2 3 4 5 6 7 8 9 10 11 12
Quantit 500 500 500 500 500 550 550 550 550 550 550 550
y
Unit 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8
cost 0 0 0 0 0 0 0 0 0 0 0 0
Product 1

Total 2840 2840 2840 2840 2840 2840 2840 2840 2840 2840 2840 2840
cost 0 0 0 0 0 0 0 0 0 0 0 0
All Total 2840 2840 2840 2840 2840 2840 2840 2840 2840 2840 2840 2840
produc operati 0 0 0 0 0 0 0 0 0 0 0 0
ts on cost

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 5.3 Gudetu micro enterprise Cash flow statement
September 01/2014
Particulars Pre-
ope M o n t h s
rati
ng
peri
od
Cash at the 1 2 3 4 5 6 7 8 9 10 11 12
beginning of
the month
Cash inflow 253 2401 2268 2135 2002 18690 1735 1602 1469 1332 1203 10699.1
50 8.1 6.2 4.3 2.4 .5 8.6 6.7 4.8 6.9 1
Equity 122
34
Borrowin 489
gs 36
Cash sales 334 3340 3340 3340 3340 33400 3340 3340 3340 3340 3340 33400
00 0 0 0 0 0 0 0 0 0
Collection
of A/R

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 Other
income
Total 611 587 5741 5608 5475 5342 52090 5075 4942 4809 4676 4543 44099.1
cash inflow 70 50 8.1 6.2 4.3 2.4 .5 8.6 6.7 4.8 2.9 1
Cash
outflow
Pre-
operating
expense
operating 284 2840 2840 2840 2840 28400 2840 2840 2840 2840 2840 28400
expense 00 0 0 0 0 0 0 0 0 0
Purchase 35,
of fixed 820
assets
Principal 407 4078 4078 4078 4078 4078 4078 4078 4078 4078 4078 4078
8
Interest 203. 203. 203. 203.9 203. 203.9 203.9 203.9 203.9 203.9 203.9 203.9
9 9 9 9
Rent 500 500 500 500 500 500 500 500 500 500 500 500
Salary 150 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
0

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Administrati 50 50 50 50 50 50 50 50 50 50 50 50
ve expense
Taxes 5991.36
expense
Total 35, 34731 3473 3473 3473 3473
820 .9 34731 3473 3473 3473 3473 3473
Cash 1.9 1.9 1.9 1.9
.9 1.9 1.9 1.9 1.9 1.9 34731.9
outflow
Cash at the 253 2401 2268 2135 2002 1869 17358 1602 1469 1336 1203 1069 3375.84
end of the 50 8.1 6.2 4.3 2.4 0.5 .6 6.7 4.8 2.9 1 9.10
month

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 5.4 Gudetu micro enterprise Profit & loss statement
September 01/ 2014
Gross sales 400800
Less: Returns -
Net sales 340800
Less : Cost of goods sold (361450)
Gross profit 60000
OPERATING EXEPENSE

Less: Administrative & Selling 600

Expenses

Staff cost (Salary expense) 18000

Depreciation 3582

House rent 6000

Interest expense 2446.8 (30,628.8)

Net profit before tax 29371.20
Less : Estimated income tax (5991.36)
Net profit after tax 23379.84
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5.5 Gudetu micro enterprise Balance sheet
September 01/2014
Assets Amount Liabilities Amount
Current assets Current liabilities
Cash at hand and 3375.84 Account payable 48936-
bank 48936=0
Accounts receivable - Taxes payable -
RM inventory - Others payable -
WIP inventory - Total current liabilities -
FG inventory - Long term liabilities
Total current assets 3375.84 Loans -
Fixed assets Total liabilities -
Building - Owners equity
Equipment 32238 Capital 12234
Total fixed assets 32238 Ne t profit 23379.84
Total assets 35613.84 Total liabilities & capital 35613.84

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 5.6 BEP
FC
 Guard salary = 700.00
 Workshop rent = 500.00
Total Fc = 1,200.00
Selling price of one stool is (Sp) = 66.80
Variable costs of one stool (Vc) = 56.60

Breakeven point Quantity = Fc / (Sp – Vc) = 1200 / (66.80 – 56.80) = 120 stools

Breakeven point Br = Fc / (Sp – Vc / Sp) = 1200 / (66.80 – 56.80 )x66.80 = 1300.00 /

0.13 = 8016 birr
ROI =(Amount received-Amount Invested) =35613.84-12234/12234=1.9
Amount Invested

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 6 .APPENDIX
RM= raw materials
Sp= selling price
BEP= breakeven point
FC=fixed cost
VC= variables cost
TC= total cost
OP= operational cost
ROI= Return on investment
WIP= work in process

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