Jimma University School of Civil and Environmental Engineering Department of Civil Engineering Entrepreneurship Project

BUSINESS PLAN FOR HIBRET METAL AND HOUSEHOLD FURNITURE MANUFACTURING
ENTERPRISE
JIMMA UNIVERSITY
SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING
DEPARTMENT OF CIVIL ENGINEERING

ENTREPRENEURSHIP PROJECT
Business plan for Hibret metal and household furniture manufacturing

enterprise.
BUSINESS PLAN FOR HIBRET METAL AND HOUSEHOLD FURNITURE MANUFACTURING
ENTERPRISE
List of students
Name Id No
Jemal Taha RU 1091/08
Hiko Abu RU 1207/08
Hayder Abdulnasir RT 0025/09
Chaltu Taye RU 0979/08
Amanuel Gachamo RU 1607/08
Gemechu Etana RU 1321/08
Bikila Teasfaye RU 5016/08
Bekat kebede RU 1993/08
Deksisa Alemu RU 0917/08
BUSINESS PLAN FOR HIBRET METAL AND HOUSEHOLD FURNITURE
MANUFACTURING ENTERPRISE
Statement of purpose
This project is studied and prepared to motivate and initiate beginners and entrepreneurs to
create a new working direction and to make them contribute to our country’s development.
Besides, it is to make familiar with how to prepare a business plan and lay a solid foundation
on how to become an entrepreneur. It is intended to create job opportunity for others. Using
this well-studied project, one can create his/ her own business and can benefit from it. In
addition to that, it introduces how to make effective business plan and setting direction towards
creating job opportunity.
Page | i
Executive Summary
The project focuses on establishing metal work and household furniture firm for small
enterprise. Under this document, the background of the project like goals, objectives of the
project is clearly presented. The other thing is, the market analysis and financial plan sated
out. Henceforth, the purpose of this project is to provide all kind of metal and household
furniture work products like window, door, tables, bed, shelf, fences and so many different
household equipment for all customers. The project will increase our revenue & profit by 20%
& 30% respectively in the first & will do better in the coming years. The project will be
organized as a partnership by incorporating all kinds of designs of doors, windows, tables,
chairs, shelves, benches, beds, fences & other various metal and wood products that meet the
requirement of the customers. The project will serve all people who want to have a type of
product with best design, good quality, better durability and strength.
Page | ii
Contents
Statement of purpose................................................................................................................................ i
Executive Summary ................................................................................................................................ ii
CHAPTER ONE ..................................................................................................................................... 1
INTRODUCTION .................................................................................................................................. 1
1.1 Background and History ............................................................................................................... 1
1.2 Description of the project.............................................................................................................. 1
1.3 Goal and Objectives ...................................................................................................................... 1
1.3.1 Goals ...................................................................................................................................... 1
1.3.2 Visions ................................................................................................................................... 1
1.3.4 Objectives .............................................................................................................................. 1
1.4 Delivers of the product.................................................................................................................. 1
CHAPTER TWO .................................................................................................................................... 3
MARKET PLAN .................................................................................................................................... 3
2.1 Demand and market analysis ........................................................................................................ 3
2.1.1 Market analysis ...................................................................................................................... 3
2.1.2 Result of market survey ......................................................................................................... 3
2.1.3 Demand analysis .................................................................................................................... 3
2.2 Market implication ........................................................................................................................ 3
2.2.1 Customer analysis .................................................................................................................. 4
2.2.2 Pricing strategy ...................................................................................................................... 4
2.2.3 Method of distribution and promotion strategy ..................................................................... 4
2.2.4 Supply and competition ......................................................................................................... 4
2.2.5 Legal requirement and demand forecasting ........................................................................... 4
2.2.6 Positioning strategy ................................................................................................................ 5
2.3 Environmental and risk analysis ................................................................................................... 5
2.3.1 Environment analysis ............................................................................................................. 5
2.3.2 Risk analysis .......................................................................................................................... 6
2.4 Project location and site ................................................................................................................ 6
2.5 Technical analysis ......................................................................................................................... 6
2.5.1 Input or Raw material ............................................................................................................ 7
2.5.2 Form of ownership ................................................................................................................. 7
CHAPTER THREE ................................................................................................................................ 8
FINANCIAL PLAN................................................................................................................................ 8
3.1 Cost of the project (initial investment cost) .................................................................................. 8
3.1.1 Operating cost ........................................................................................................................ 8
Page | iii
3.2 Financial statement ....................................................................................................................... 8

3.3 Income statement .......................................................................................................................... 8
3.4 Balance sheet .............................................................................................................................. 10
3.5 Statement of cash flow ................................................................................................................ 11
3.5 Source of finance ........................................................................................................................ 12
3.7 Financial ratio ............................................................................................................................. 13
3.7.1 Financial Evaluation of the project ...................................................................................... 13
3.8 Organizational plan ..................................................................................................................... 14
Conclusion ............................................................................................................................................ 15
Page | iv
CHAPTER ONE
INTRODUCTION
1.1 Background and History
Metal and household furniture work small enterprise is a new project that established by nine
members. Which will provide different products based on the needs of the customers and also
design an attractive product for display to attract the customers. The project will have more
than 100 kinds of design products which will be increased based on customer needs.
1.2 Description of the project

Attractive and various type of decorative design to make the customer comfortable and
Satsfied. This project provide comfortable surface decoration, Large display & shop having
enough spaces for keeping of materials, two classes one in the front to serve customers & the
other at the back for different work activities.
1.3 Goal and Objectives

1.3.1 Goals
 Creating accessibility of all necessary products of metals and wood at one place with
affordable price &save our customers time, money & buying effort.
1.3.2 Visions
 To be first and competant designer and supplier in Ethiopia by the year 2018.
1.3.4 Objectives
 To serve the people (target customers), to increase sales revenue of owners by higher
rate, to solve the problem of customer (product related imperfections).
1.4 Delivers of the product

• In product aspect
• All various size of windows and doors
• Different kinds of tables
• shelves , chairs, & benches
• beds , fences
• Other various products
• In service aspect
Page | 1
• Provide painting service

• Provision of designing service with the help of computer
• Welding service
• Providing decoration service
• Providing good aesthetically appeared products
Page | 2
CHAPTER TWO
MARKET PLAN
2.1 Demand and market analysis
2.1.1 Market analysis
Metal and household furniture manufacturing small enterprise has searched number of
customers who will likely to use or benefit from the project through interviewing
As a result, we estimated that the number of customers to be 2000 -5000 by 2018
2.1.2 Result of market survey

 Doors and windows are mostly used by contractors.
 Shelf, tables & chair are mostly used by new house owners.
 Most of the people used large amount of wood product at the beginning of the year.
 Individuals who needs tables, shelves, hairs and other wood products.
2.1.3 Demand analysis

Now days, in estimation, there are around 5500 people who needs a best design and durable
product. From this population:
• 45% of the people assign us to have the product at the beginning of each year.
• 18% of the people assign us to have the product regularly.
• 9% of people bring raw materials from their home and assign us to get what
they need.
• Another 9% of peoples buy raw materials by the time and bring it to us for work.
• The remaining 19% 0f people use our finished product in the last of their holiday
or ceremonies.
2.2 Market implication

Most of the people will be very satisfied by the opening of metal and household furniture
work project. Therefore, we have to
 Work hard to meet customer’s expectation.
Page | 3
 Attract people who buy our product for their home to increase our market
share & to make them customer of us.
 Work hard to attract customers during the beginning of each year, holidays &
ceremonies.
2.2.1 Customer analysis

Our target customers will people of the country at large including individuals, & different
organizations, contractors, real estate & so many other customers.
2.2.2 Pricing strategy

The metals and wood work project will use cost plus pricing strategy particularly market
penetration which is setting lower price for a product especially at the introduction stage of the
business to attract price sensitive customers.
2.2.3 Method of distribution and promotion strategy

Metals and wood work project will distribute large amount of products by covering
transportation cost of the buyer from the store to the buyer’s destination. But this is done only
when customers buy our products in a very large amount. Our promotional strategy will be as
follows:
 Word of mouse referrals : through customer referrals
 Developing good relation metal and wood work owners
 Brochures & fliers advertisement
2.2.4 Supply and competition

Our sources of supply will be sheet metals manufacturing industries in Addis Ababa &
rectangular and flat bar manufacturing industry found at Addis. There will be also competitors
who will provide finished wood to our project. Then our enterprise will be competent by
having flexible strategies.
2.2.5 Legal requirement and demand forecasting

The metals and wood work project will be established with respect of governmental policies,
rules & regulation.
The metals and wood work project estimate demand for three (3) years using time projection
method of demand forecast are as follows:
Page | 4
Year demand
2016 8000
2017 8500
2018 9000
2.2.6 Positioning strategy

 Our project will provide products and services to the customers, contractors,
employees, real state owners and general community.
 The project will position itself as” number one” provider of house hold materials and
other related services for all interested groups around.
 Unlike other small enterprise metal and wood work product suppliers, our project will
provide all the necessary products that are wanted and assigned by the customers with
the right quality, quantity, shortest time and affordable price. This will alarmingly
reduce customer’s time.
2.3 Environmental and risk analysis

2.3.1 Environment analysis
Both external & internal aspects of the environment. This also called SWOT analysis.
A, Strength
 Purchasing raw materials in whole sale directly from industries & importer companies
will reduce the unit cost of purchased materials.
 Attractive decoration of the product will exactly meet customers need.
 It will be the only producer of all kinds of metals and wood products
B, weakness
 Difficult to expand the project in the whole country
 Shortage of capital
 High transportation cost of raw materials from Addis to the project site
C, Opportunities
Page | 5
 People found near by the project will be the most customer of the product
 The project can easily meet demand of different level of customers
 The project can provide all types of product based on the customers need.
 The project will be also a good examples for other enterpriser in hard working and
time using.
D, threats
 Seasonality of market
 Shortage of input supply for our project.
2.3.2 Risk analysis

The major risks that may affect our business are listed below.
• Lack of information about the product produced by the project.
• Loan may not easily found from the bank
• Absence of sales at any time
• Low switching cost of customers towards competitors product
2.4 Project location and site

The project will established in Jimma town. The reasons for selecting jimma town as a best
location are:
 Establishment of new construction

 Absence of a good metal and wood work product producers
 Good environment of jimma & wood can be easily found
 To use infrastructure of jimma town
 To get government support b/c there is no a best and well known metal and
wood work product providers.
 Generally this project can be anywhere because no matters we can meet
our target through promotions and advertisements
2.5 Technical analysis

The project is also technically feasible because it will use new technological developments
from starting of the business up to provision of products & services.
Page | 6
2.5.1 Input or Raw material

 Modern design equipment
 Welding machine
 Cutter and drilling machine
 transformers
 Sheet metals for sample work
 Different size of lead
 And other materials
2.5.2 Form of ownership

 The project will be established as strong partnership with the term of agreement of
sharing the profit generated & lose incurred equally among all partners.
 The business will have ten (9) partners. These all are owners of the business.
 managed by the general manager of the project who is graduated in management who
have both general business & general marketing concept
Page | 7
CHAPTER THREE
FINANCIAL PLAN
3.1 Cost of the project (initial investment cost)
 Machinery & equipment ……………31000
 Legal fee for license & others ……….5000
 Production marketing cost ……………3000
3.1.1 Operating cost
 Decorating ………………………………..2000
 Material cost …………………………….10000
 Utilities…………………………………….250
 Wages’ & salaries…………………..….129768
 Telephone………………………………….2000
 Electricity…………………………………1500
 Water……………………………….……..1000
 Ventilator…………………………………..800
3.2 Financial statement

 Financial statements of the proposed project for the next three years will be presented
as follows
 Income statement
 Balance sheet
 Cash flow statement
3.3 Income statement

Income statement of metals and wood work project for the year ended June 2016
Revenue
 Fees earned…………………………………………..…………………350000
Less operating expense
 Utility expense……………………………………………….2500
Page | 8
 Advertising expense…………………………………………1500
 Salary expense…………………………………………….129768
 Supply expense…………………………………………..…10000
 Depreciation…………………………………………………1800
 Equipment…………………………………………………31000
 Total Operating Expense…………………………………176568
 Net Income……………………………………………….173432
Income Statement of metals and wood work project for the year ended June, 2017
Revenue
Fees earned……………………………………………….385000
Less Operating costs
 Utility expense…………………………………………..3000
 Advertising expense……………………………………1500
 Salary expense……………………………………….129768
 Supply Expense……………………………………….15000
 Depreciation Expense…………………………………2000
 Equipment……………………………………………34500
 Total Operating Expense…………………………….185768
 Net income……………………………………………199232
Income Statement of metals and wood work project for the Year Ended June, 2018
Revenue
 Fees Earned……………………………………………….415000
Less Operating Expense
 Utility Expense…………………………………….3250
 Advertising Expense………………………………..1400
 Salary Expense……………………………………...130500
 Supply Expense…………………………………….18500
 Depreciation………………………………………...2500
Page | 9
 Equipment……………………………………..……34900
 Total operating Expense…………………………….191050
 Net Income………………………………………….223950
3.4 Balance sheet

Balance Sheet of metals and wood work project For the Year ended June, 2016
Assets
 Cash……………….…………………………………………19500
 Account Receivable……………………………..…………..45000
 Inventory……………………………………..………………10000
 Supplies………………………………………………………10000
 Land& Equipment…………………………..………………166000
 Machinery……………………………………………………..31000
 Total Asset……………………………………………………457000
Liability & Owners Equity
 Liability……………………………………………….200000
 Owners’ equity…………………………………………257000
 Total Liability& Owners equity…………………..……457000
Balance Sheet of metals and wood work project For the Year ended June, 2017
Assets
 Cash…………………………………………………………………..185000
 Account receivable…………………………………………………….50000
 Inventory……………………………………………….………………42500
 Supplies ………………………………………………………………..10500
 Land& Equipment…………………………………………….……….164500
 Machinery………………………………………………………………31000
Total Asset……….…………………………………………………………………..483500
Page | 10
Liability& owners’ Equity:
 Liability………………………………….……200000
 Owners’ equity…………………………….…...283500
Total Liability& Owners Equity…...483500
Balance sheet metals and wood work project For the Year ended June, 2018
Assets
 Cash……………………………………………………………….170000
 Account receivable…………………………………………………42000
 Inventory……………………………………………………….……52000
 Supplies………………………………………………………….…..11000
 Equipment& land……………………..……………………………172000
 Machinery……………………………………………………………20000
Total Asset………………………………………………………..………….467000
Liabilities& Owners equity:
 Liability………………………………………………………………175000
 Owners’ equity……………………………………………………….292000
Total liability& Owners Equity…...467000
3.5 Statement of cash flow
Statement of Cash Flow for metals and wood work project for the year ended June, 2016
Page | 11
Cash receipt 195000

Less: cash paid for operation 166000
Less: equipment& supply 10000
Cash out inflow 19000
Add beg cash 257000
End balance 276000
Cash receipt 185000

Add beg cash 283500
End balance 293500
Cash receipt 17000

Add beg cash 292000
End balance 279000
3.5 Source of finance

 Metal and wood work project will be set up by total capital of 457000 birr.
 This amount of capital contains both equity and debit sources.
 The source of finance will be 257000 birr from owner’s contribution and the remaining
200000 birr will be found from financial institutions or banks.
Page | 12
 The equity part will be divided into equal amounts for each owner because the
contribution is equal.
 The owner’s contribution is as follows.
Owner’s contribution
Owner Amount contributed

Jemal Taha 30000
Hiko Abu 30000
Hayder Abdulnasir 30000
Chaltu Taye 30000
Amanuel Gadamo 30000
Gemechu Etana 30000
Bikila Teasfaye 30000
Bekat Kebede 30000
Deksisa Alemu 30000
Total owners capital…………….270000
Loan from bank………………….150000
Total fund……………………….420000
3.7 Financial ratio

3.7.1 Financial Evaluation of the project
𝑈𝐶
𝑃𝐵𝑃 = 𝑌𝑒𝑎𝑟𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝑓𝑢𝑙𝑙𝑦 𝑟𝑒𝑐𝑜𝑣𝑒𝑟 +
𝑈𝑁𝐷𝑂
Where,
PBP is payback period
UC is uncovered cost
UNDO is cash flow for the next period
PBP =2 + 77000/170000
=2+ 0.45
Page | 13
=2.45 years
Net percent value (NPV)
NPV = - 420000/1.10+195000/1.11+ 185000/1.12+170000/1.13
= -420000 +177273 + 152893 + 127724=890
BCR= percent interest (PI) = percent value benefit (PVB) / I
=499339 / 420000= 1.18
Net benefit coast ratio (NBCR) is given by the formula,
𝑁𝐵𝐶𝑅 = 𝐵𝐶𝑅 − 1
NBCR = BCR – 1,
= 1.18 – 1
= 0.2
Therefore out of the total benefit only nine percent (20 %) is the net benefit and the rest
ninety one percent (80 %) is the cost of the metal and wood work project.
3.8 Organizational plan

Human resource
Organizational chart for metal and wood work small enterprise
general
manager
purchasing accounting
sales unit
unit unit
secretary store unit cashier
gatekeeper workers
Page | 14
Conclusion
• Metals and wood work project is a business enterprise that will provide a metal and
wood work products for customers and increases sales revenue of owners.
• The market is analysed by interviewing some customers and observing buying

behaviour of product customers as well as other people’s need.
• As the market survey shows most of the customers are very happy in the opening of
the business. Most of the users of the project will be new house maker (couples) ,
contractors and other people .
• The metal and wood work project will use cost plus pricing strategy particularly
market penetration (giving lower to attract customers).
• The environment does not have significant effect on the operation of the business.
Page | 15

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BUSINESS PLAN FOR HIBRET METAL AND HOUSEHOLD FURNITURE MANUFACTURING

SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING

DEPARTMENT OF CIVIL ENGINEERING

Business plan for Hibret metal and household furniture manufacturing

3.2 Financial statement ....................................................................................................................... 8

1.2 Description of the project

1.3 Goal and Objectives

1.4 Delivers of the product

• Provide painting service

As a result, we estimated that the number of customers to be 2000 -5000 by 2018

2.1.2 Result of market survey

2.1.3 Demand analysis

• 18% of the people assign us to have the product regularly.

2.2 Market implication

 Work hard to meet customer’s expectation.

2.2.1 Customer analysis

2.2.2 Pricing strategy

2.2.3 Method of distribution and promotion strategy

 Word of mouse referrals : through customer referrals

 Developing good relation metal and wood work owners

 Brochures & fliers advertisement

2.2.4 Supply and competition

2.2.5 Legal requirement and demand forecasting

2.2.6 Positioning strategy

2.3 Environmental and risk analysis

 Attractive decoration of the product will exactly meet customers need.

 Difficult to expand the project in the whole country

 Shortage of input supply for our project.

2.3.2 Risk analysis

• Lack of information about the product produced by the project.

• Loan may not easily found from the bank

• Absence of sales at any time

• Low switching cost of customers towards competitors product

2.4 Project location and site

 Establishment of new construction

2.5 Technical analysis

2.5.1 Input or Raw material

 Cutter and drilling machine

 Sheet metals for sample work

 Different size of lead

 And other materials

2.5.2 Form of ownership

3.1.1 Operating cost

3.2 Financial statement

 Cash flow statement

3.3 Income statement

Less operating expense

Less Operating costs

Less Operating Expense

3.4 Balance sheet

Liability & Owners Equity

Liability& owners’ Equity:

Total Liability& Owners Equity…...483500

Total liability& Owners Equity…...467000

3.5 Statement of cash flow

Cash receipt 195000

Cash receipt 185000

Cash receipt 17000

3.5 Source of finance

 This amount of capital contains both equity and debit sources.

 The owner’s contribution is as follows.

Owner Amount contributed

Total owners capital…………….270000