1.

THE BUSINESS

1.1 Introduction
Tafache Cake and Cookies is a partnership business engaged in the bakery sector which will be established
by Four partners namely Amanuel Demeke, Seyfe Mesay, Muluken Ayalew and Metadel Ayalew. The
company starts its business in Addis Ababa city, situated in different sub cities around selected private
elementary and high schools.

The name “Tafache” is an Amharic word meaning Sweet, the company try to position its self as sweet and
fresh deserts baker. The logo of the company shows a hot cake served in a plate but the plate also represents
a smile sign to indicate that the customers will be delighted by our cakes.

This business will produce and provide high-quality unique cakes and cookies, especially Croissant,
Chocolate cake, Doughnut, Orange cake and varieties of Cookies (fasting and non- fasting). This cake shop
will target private elementary and high school students and provide quality cakes and cookies suitable for
breakfast, break time and after school meals.

The cake shop branches will be situated in the possible nearby areas of selected private elementary and high
schools. The main branch will be around 5 kilo, near Radical Academy and the first group branches will be
at 4 kilo around Seba Dereja, near Nazareth School; Piassa around Cathedral School; Adwa Bridge around
Signal area, near Magic Carpet School and around Summit area, near Safari Academy.

1.2 Financing
Initial financing requested for the business is ETB 375,000 in which ETB 180,000 will be contributed by the
3 partners and the rest ETB 195,000 will be covered by a loan from Microfinance institute to be paid off
over 2 years. This will be invested for cake bakery and shop space leasing and furnishing, equipment and
supplies and one delivery vehicle (Dawoo Damas) purchase.

1.3 Vision
To be the best-known bakery for its variety and distinct cakes, cookies and doughnuts in the country.

1.4 Mission Statement

The Company’s mission is to provide high-quality cakes and cookies to private elementary and high school
students in Addis Ababa. The Company offers creative and customer focused products to meet or exceed
customer needs through teamwork and continuous improvement.
1.5 The Company’s Logo

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2. MARKET ENVIRONMENT

2.1 Competitors Analysis

The bakery industry in Addis Ababa is showing growth every year with regard to the number of new
entrants to the industry, the improvement of products offered by the existing companies and addressing
customers’ needs. As accessing readily available industry database / sector report is not an easy task in
Ethiopia, a precise data about the current market environment of the bakery industry could not be found.
However, the sector is highly competitive in which businesses ranging from small-scale bakery shops up to
high-class luxurious pastry shops and cafeterias are providing varieties of products with different levels of
quality and prices targeting different groups of customers.

As the target market of Tafache Cake and Cookies is students, the major competitors of the company are
School Lounges and Cafeterias and Pastry shops around the schools.

The School Lounges and Cafeterias have competitive advantage of location as they are situated in the
school compounds, students could easily access their products. Their other strength is pricing as their target
customers are students they offer their products with much affordable prices for the students. Their
weakness is mainly with the quality and variety of food items they offer especially in pastry products. They
do not assess their customer needs and try to address it, they do not continuous improve their business to
catch up with the changing environment, they often do business as usual.

Whereas, the different levels of pastry shops and cafeterias nearby the schools offer a wider product ranges
and better quality than the school lounges. But they do not focus on the students as their target customers
hence their pricing is very expensive.

Tafache Cake and Cookies plans to enter the market through focused marketing strategy by serving private
elementary and high school students offering limited ranges of quality cakes and cookies with reasonable
prices especially targeting to meet the needs and tastes of this group of customers.

Hence, Tafache Cake and Cookies will fill the gaps in the niche (small) market group of students through
quality, focused and distinct product ranges and reasonable pricing. The location is also the most important
competition factor, as the students will tend to buy from shops nearby their schools. So Tafache Cake and
Cookies shops will be situated in the nearby places to the school as much as possible. Customer service is
the number one priority. The company will ensure that each customer is treated with kindness, respect, and
a warm welcome on each visit

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2.2 Customer Analysis

People of all ages, children through adults, enjoy sweet cakes and cookies, however, young children and
teenagers love sweet treats more than the adults, that is why Tafache Cake and Cookies focuses on this age
group. And from this age group, the students of private elementary and high schools are selected because
from the small scale market assessment done for the purpose this business plan, these group of customers
are from families of better economic status/background, they consume cakes, biscuits, snacks and other fast
foods for their breakfast, break time and after school meals and they are dynamic and willing to try new
offerings in the market. Hence, for these reasons Tafache Cake and Cookies found this group of customers
as a convenient and profitable targets to be addressed.

3. DESCRIPTION OF VENTURE

3.1 Products offered

The products that will be offered vary from cakes, cookies and doughnuts. To be specific:

Cakes

Croissant

Orange Cake

Chocolate Cake

Doughnut

Plain doughnut (Bonbolino)

Chocolate glazed doughnut

Strawberry glazed doughnut

Custard filled doughnut

Powdered sugar doughnut

Cookies

Macarons

Chocolate Chip

Peanut butter cookies

Cinnamon cookies

The products offered by Tafache Cake and Cookies mainly focuses on types of cakes, doughnuts and
cookies that are simply, tasty and easily eaten for breakfast, break time and after school meals by the
students. The product ranges are limited for the start and in the future other product types will be added
based on customer need assessment. Ingredients and cooking precision are given a due attention so as to
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 always offer fresh, quality and tasty cakes and cookies that constantly meet customer needs. The packing of
the cakes and the doughnut is designed to prevent the leakage of crème or oil of the cakes and the doughnuts
to make it convenient for the students to put them in their bags. The cookies are packed in different levels of
gram starting from 125 grams, 250 grams, 500 grams and 1Kg packing, this enable to address the students’
needs with their purchasing ability.

3.2 Personnel

1. Pastry Chef
A pastry chef is a cook that specializes in making deserts such as cakes and pastries. The pastry chef is
responsible for measuring the ingredients correctly, mixing and blending accurately, creating new
recipes and improving the existing product offerings. In addition to the technical responsibilities, the
pastry chef has the responsibility of managing the work inside the kitchen and all the work that has to do
with production and should create a harmonious work atmosphere.

Pastry Chef is at the focal point of the business as the quality of the cakes and the cookies lays in the
ingredients and their blending. The Pastry chef needs to be careful in making deserts as there are lots of
ingredients that have to be measured precisely and added in a specific way and order so the chef should
be very organized.

Tafache Cake and Cookies will have 1 pastry chef with the qualification of certificate in Cooking
specifically in cake baking from a recognized cooking school and 4 years’ experience out of which at
least 2 years in pastry/desert baking.

2. Assistant Pastry Chef

The Assistant Chef works under the head pastry chef and helps the chef and also takes the head chefs
place if needed and has some authority over the kitchen staff. In addition to the responsibilities similar
to the head pastry chef, the assistant pastry chef is responsible for ensuring safety and sanitary measures
are taken and followed throughout the kitchen area, ensuring the kitchen always has enough ingredients
and order more if needed and administrating and motivating the kitchen staff.

Tafache Cake and Cookies will have 1 assistant pastry chef with the qualification of certificate in
Cooking specifically in cake baking from a recognized cooking school and 3 years’ experience out of
which at least 1 year in pastry/desert baking.

3. Baker
The bakers are responsible for making dough, baking the cakes and cookies and packing the cookies. In
addition, they will handle the sanitation of the kitchen, clean the utensils and kitchen appliances.
Tafache Cake and Cookies will have 2 bakers with the qualification of certificate in Cooking
specifically in cake baking from a recognized cooking school and 2 years’ experience in pastry/desert
baking.

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4. Sales person
The sales person is responsible for serving the end customers at selling points of the cake shops. The
sales people are the interface of company and the customers so they are expected to have a very good
customer service skills and abilities. The sales person has to be able to explain to the customer what
they are offering, they should also be good listeners and take the time to listen to customer and get them
exactly what they need. The sales persons are expected to create a friendly and welcoming relationship
with the customers and serve at most speed and accuracy.
Tafache Cake and Cookies will have 5 sales persons (1 sales persons per shop) with the qualification of
high school certificate and at least 1 year related experience.

5. Cashier
The cashier is responsible for receiving cash from the customers and issuing cash register receipt, keep
the petty cash fund and fuel coupon in safe custody and replenish when it is exhausted and pay monthly
utility bills.
Tafache Cake and Cookies will have 5 cashiers (1 cashier per shop) with the qualification of diploma /
certificate in accounting from recognized technical and vocational college and at least 1-year experience
and familiar in using cash register machine.
6. Driver
The driver is responsible for delivering the cakes and the cookies from the bakery located at 5 kilo area
to the branch shops in different parts of the city. The driver will do first round delivery in the early
morning and the second-round delivery will be done in the afternoon, besides the two round deliveries
when the shops request for addition cakes the driver will deliver as per the operation manager’s order.
The driver receives the cakes and cookies from the bakery after counting and signing receiving voucher
and deliver to the respective shops by getting the receiving sales persons’ signatures.

Tafache Cake and Cookies will have 1 driver / delivery person with a driving license of 3 rd level driving
license and 2 years of driving experience.
7. Accountant
The accountant is responsible for preparing settlement of all types of taxes due to the government,
preparing payroll and other staff benefit payments, collecting financial documents and preparing
financial reports, and handle all financial related issues in consultation with the management.

Tafache Cake and Cookies will have 1 accountant with a diploma in accounting and from a recognized
college and 3 years of related experience.

As mentioned in detail above the company will have 16 employees with diversified skills, experiences and
responsibilities. The company gives a great emphasis in handling the human resource starting from
recruiting and hiring. Salaries, overtime payments and other benefits packages are designed in order to
motivate and attract employees. The company encourages women applicants and employees.

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3.3 Background of Entrepreneurs

The Partners of the business are Four namely: Amanuel Demeke, Seyfe Mesay, Muluken Ayalew and
Metadel Ayalew. All the entrepreneurs are university graduates. The managerial responsibilities are
undertaken by the partners themselves. Accordingly, the management position of the partners of the
business are as follows:
 Seyfe Mesay: General Manager
 Amanuel Demeke: Operation Manager
 Muluken Ayalew: Purchasing and Supplies Manager
 Metadel Ayalew: Marketing Manager

3.4 Location of business

The cake shop branches will be situated in the possible nearby areas of selected private elementary and high
schools. The main branch will be around 5 kilo, near Radical Academy and the first group branches will be
at 4 kilo around Seba Dereja, near Nazareth School; Piassa around Cathedral School; Adwa Bridge around
Signal area, near Magic Carpet School and around Summit area, near Safari Academy.

The head office is located at 5 kilo whereby the office of the partners, the baking plant and the main cake
shop are situated. All the cake shops, the baking plant and office are rented. The rented buildings are
renovated and the interior designs are upgraded to make them appeal for the customers.

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4. PRODUCTION PLAN

4.1 Raw materials

The raw materials necessary for the bakery include:

 Flour  Vanilla

 Sugar (Crystal, Powder and Brown)  Chocolate

 Egg  Cocoa powder

 Milk  Food colors

 Butter  Fruits

 Vegetable oil  Raisin

 Baking powder  Peanut butter

 Yeast

4.2 Equipment and Vehicle

The equipment and kitchen utensils required for the business are:

 Mixer  Digital scale

 Oven  Kitchen utensils

 Cake and cookies displays  Offices furniture

 Raw material shelf (steel rack)  Cash register machine

 Fridge

One Dawoo Damas car will be purchased that is necessary for the delivery of the cakes and cookies from
the bakery to the branch shops.

4.3 Manufacturing and delivery process

The pastry chefs and the bakers start working 4.00 am in the late evening, they start their work by cleaning
the kitchen and then make the dough for the varieties of cakes, doughnuts and cookies, bake and pack them.
They will finalize and make ready for sales the first batch products up to 6.00 am in the morning. And the
sales persons, the delivery person (driver) and the cahiers will start working at 6.00 am in the morning. They
clean the shops and the displays and put the cakes and the cookies in their place. The delivery person
receives the products from the bakery to be dispatched to the different branch shops and distribute
accordingly. The bakery opens for customers at 6.30 am in the morning and gives the service up to 7.00 pm
in the evening. The bakers bake the second batch in the afternoon and the delivery will be done in the same
pattern.
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5. MARKETING STRATEGY AND PLAN

5.1 Pricing

The pricing of the cakes, doughnuts and cookies is designed to address the target customers purchasing
capacity so as to make it affordable for the students, still keeping the profit margin for the company.

Accordingly, the prices are as follows:

Product items Unit Price / Unit

Cakes Piece ETB 12.00

Doughnut Piece ETB 8.00

Cookies: 125 gram Package ETB 10.00

Cookies: 250 gram Package ETB 25.00

Cookies: 500 gram Package ETB 45.00

Cookies: 1 Kg Package ETB 85.00

5.2 Place / Distribution

The cake shops are strategically located in the nearest possible areas of the selected private elementary and
high schools, this enables the students to easily access the company’s products when the pass by to and from
their schools.

In the future after the first 5 branches become successful additional branches will be opened in other
selected private elementary and high schools.

Besides the private elementary and high school students, the company has a plan to provide its products
specifically the varieties of cookies to customers other than the students in the future. The cookies will be
distributed to various mini markets, super markets and shops in the city.

5.3 Promotion

Promotion objectives of Tafache Cake and Cookies will consist of creating consumer awareness, generating
interest and desire, and moving the customer to make the purchase. Strategies for making consumers aware
of the bakery will include advertising and hosting a grand opening. Offering one free cake for those who
buy two cakes at the grand opening may lead to both consumer interest and desire. Word of mouth and
customer perception are immensely important to promote the business. Flyers will be distributed to the
students and also school occasions and events will be sponsored to get more attachment with the students.

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5.4 Product forecasts

Tafache Cake and Cookies gives emphasis on product quality as it is essential for the success of the
business. In order to ensure product quality, this bakery will emphasize on cleanliness and sanitation, use
quality ingredients, and will always be sure all cakes are properly baked. Innovation is also an important
factor in the growth and success of the company.

The company will diversify its product ranges based on the customer need assessment in the future. The
company also has a vision to add the product line of events and occasions cake and cookies offering, these
includes school events, birthdays, weddings, anniversaries cakes.

6. ORGANIZATION PLAN

6.1 Form of ownership

Tafache Cake and Cookies is a partnership established by six partners namely: Seyfe Mesay, Amanuel
Demeke and.

Terms of partnership

- The percentage of ownership is as indicated below:

1) Amanuel Demeke –25 %

2) Seyfe Masay – 25 %

3) Muluken Ayalew: – 25 %

4) Metadel Ayalew: – 25 %

The owners share profit and losses according to the partnership agreement which is:

i. The net income is divided in a percentage of 45% to retained earnings and 55 % to be paid to the
partners

ii. From the 55 % of the portion of net income paid to the partners is distributed as per the ownership
percentage indicated above

- Each partner has to make decision on the overall issues of the company

- The General Manager position will rotate among the partners every two years

- The ownership of partnership can be transferred or inherited

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6.2 Organizational Structure

General Manager

Deputy Manager

Purchasing and Administration

Operation Manager Marketing Manager Accountant
Supplies Manager Manager

Pastry Chef Sales persons Cashier

Assistant pastry chef

Baker

Delivery person

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7. ASSESSMENT OF RISK

In any business, owners face different kinds of risks like financial risk, operational risk, political risk,
economic risk, etc. In similar manner, Tafache Cake and Cookies has some potential risks in the future and
careful analysis (assessment) will help to be prepared for minimizing losses that could be resulted by these
risks.

The major risks identified include:

 The debt that could negatively affect the profitability of the company especially at the initial stage

 Raw material shortage especially flour and sugar shortage is a critical issue

 Electric power interruption

 Not finding skilled labor especially pastry chefs / bakers as needed

Strategies to deal with risk

 A strict loan payment scheme/schedule will be undertaken to be able to repay the loan from the income
generated by the normal operation

 The purchasing plan will be given a due attention, the replenishment of raw material before they reach
the minimum amount will be done.

 The problem of not finding employees with required skills and experience especially the pastry chef
will be alleviated by training and development programs for the chefs so as to improve their skills to
meet the required level qualification.

8. FINANCIAL PLAN

8.1 Sources and application of funds

8.1.1 Sources of fund

Initial financing requested for the business is ETB 375,000 in which ETB 180,000 will be contributed by
the 4 partners and the rest ETB 195,000 will be covered by a loan from Microfinance institute to be paid
off over 2 years. This will be invested for cake bakery and shop space leasing and furnishing, equipment
and supplies and one delivery vehicle (Dawoo Damas) purchase.

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8.1.2 Application of fund

 Purchase of the vehicle

1 Dawoo Damas car will be purchased at a cost of ETB 160,000

 Purchase of mixer and oven

1 oven and 1 mixer will be purchased at a cost of ETB 64,000

 Purchase of cake and cookies display

Purchase of cake and cookies display at cost of ETB 16,000

 Leasing of office space, bakery plant and cake shops

Office space, bakery plant and 5 cake shops will be rented and three months rent expense will be
paid in advance that amounts ETB 90,000

 Purchase of furniture and Kitchen utensils

Office furniture and Kitchen utensils will be purchased at a cost of ETB 25,000

 Purchase Company name signal

5 company name signals will be printed and fixed at the cake shops with a total cost of ETB 10,000

 Renovation of office space, bakery plant and cake shops

Office space, Bakery plant and Cake shops will be renovated and modified at a cost of ETB 10,000

8.2 Financial statements forecasting

The sales forecast is done by a projection that around 250 – 350 customers/day per each branch with the
average of 300 customers/day will purchase, out of which 75 % of them purchase cakes/doughnuts and the
rest purchase cookies. As the major target customers are the students, the main selling days are from
Monday to Saturday in which the schools be open.

The cost of goods sold (direct cost) is done with a rough estimation of the costs of the ingredients used for
each cake / cookies, and it is calculated to be around 50 % of the sales prices.

Tafache Cake and Cookies Income statement, Balance Sheet and Cash flow statement projection for the
first year of operation are presented in the preceding subsections.

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8.2.1 Income statement projection

TAFACHE CAKE AND COOKIES

INCOME STATEMENT
FOR THE YEAR ENDED SENE 30, 2010 EC

Sales ............................................................................................................................... Br. 5,896,800

Cost of goods sold .......................................................................................................... (Br. 2,948,400)

Gross Profit ................................................................................................................... Br. 2,948,400

Operating Expenses

Salaries expense .................................................................................. Br. 576,000

Rent expense ....................................................................................... Br. 360,000

Supplies expense ................................................................................. Br. 24,000

Utilities expense .................................................................................. Br. 36,000

Insurance expense – Vehicle insurance .............................................. Br. 250

Total operating expense................................................................................................. (Br. 996,250)

Earnings before interest and tax ................................................................................... Br. 1,952,150

Interest ........................................................................................................................... (Br. 15,000)

Earnings before tax ....................................................................................................... Br. 1,967,150

Income tax (30%) .......................................................................................................... (Br. 590,145)

Net income ..................................................................................................................... Br. 1,377,005

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8.2.2 Balance sheet projection

TAFACHE CAKE AND COOKIES

BALANCE SHEET
AS OF SENE 30, 2010 EC

ASSET
Current Assets
Cash ........................................................................................................ Br. 10,000
Bank deposit ........................................................................................... Br. 619,652
Inventory ................................................................................................. Br. 17,500
Total Current Assets ................................................................................ Br. 647,152
Fixed Assets
Car .......................................................................................................... Br. 160,000
Oven ....................................................................................................... Br. 50,000
Mixer ...................................................................................................... Br. 14,000
Office furniture and kitchen appliances .................................................... Br. 41,000
Total Fixed Assets ................................................................................... Br. 265,000
Total Asset ................................................................................................................... Br. 912,152
LIABILITY
Loan .......................................................................................................... Br. 112,500
Total Liability ........................................................................................... Br. 112,500
OWNERS’ EQUITY
Owners’ equity .......................................................................................... Br. 180,000
Retained Earnings ..................................................................................... Br. 619,652
Total owners’ equity .................................................................................. Br. 799,652
Total Liability and Owners’ equity ............................................................................... Br. 912,152

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8.2.3 Cash flow projection

TAFACHE CAKE AND COOKIES

CASH FLOW STATEMENT
FOR THE YEAR ENDED SENE 30, 2010 EC

CASH FLOW FROM OPERATING ACTIVITIES

Cash received from customers ............................................................ Br. 5,896,800

Cash paid to suppliers and employees ................................................ (Br. 3,944,650)

Cash generated from operations ........................................................ Br. 1,952,150

Interest ................................................................................................. (Br. 15,000)
Income tax (30%) ................................................................................. (Br. 590,145)

Net cash flow from operating activities .......................................................................... Br. 1,377,005

CASH FLOW FROM INVESTING ACTIVITIES
Additions of Equipment ......................................................................... (Br. 2,000)
Net cash flow from investing activities ........................................................................... (Br. 2,000)
CASH FLOW FROM FINANCING ACTIVITIES
Payment of loan...................................................................................... (Br. 112,500)
Net cash flow from financing activities ........................................................................... (Br. 112,500)
Net increase / decrease in cash ........................................................................................ Br. 1,262,505
Cash at the beginning of the period ................................................................................ -
Cash at the end of the period .......................................................................................... Br.1,262,505

8.3 Financial and economic viability

The initial estimation and analysis of the plan shows that the project is viable both financially and
economically.

The business payback period is 1 year, i.e. it will return the partners’ initial investment cost within 1-year
period.

The cost is less than the benefit (money and mental satisfaction) of the business that makes it economically
feasible.

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9. Funding Request and Exit Strategy

9.1 Amount and Type of Funds Requested

The type of fund requested is an equity funding. We need venture capitalists and angel investors to invest in our
business. The amount needed is 195,000 Birr.

9.2. Exit Plan

● Merger & Acquisition (M&A). We plan on merging with a similar company, or being bought
by a larger company

● Initial Public Offering (IPO)

● Sell to individuals who has interest in this particular business

● Make it our cash cow by finding someone to run it for us, while we develop a great idea.

● Liquidation and close.

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