Addis Ababa institute of technology(AAiT) Department of

. Civil Engineering

Executive summary
a) Brief Description of the project

ENDALE Aggregate Producing Project is registered with the countries small

industries office in 2012 as a sole proprietorship and is located in Akaki sub
city at 2km from Tirunesh Beijing Hospital to the East. It aims to Produce good
quality Aggregate

The total project cost amounts to Birr 300,000 and I propose to finance this
capital requirement by a loan 240,000 or 80% and the balance of Birr 60,000
by my own capacity.

b) Brief profile of the Entrepreneur

The business is owned by Endale Mamuye living in Akaki 25km From Addis
Ababa

I was motivated to go into the production of Aggregate after hearing many

complaints From Contractors about the inferior quality of existing Aggregate.

I gathered information and studied the process of Aggregate production from

several literatures

I also have a father who is presently working in Aggregate producing firm for
information and guidance .

I am graduate of 2012 in civil Engineering from Addis Ababa University.

I have studied to determine the Commercial, technical and financial viability of

the Project, that is producing and marketing good quality Aggregate for
supplying the product In the local sub city and surrounding sub cities.

c) Project’s Contributions to the local Economy

The project will employ 23 employees, excluding members of the entrepreneur.

It aims to raise the quality standard of the Aggregate .It will also result in
healthy Competition by forcing existing Aggregate producers in the Area to
improve their product quality.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Chapter 1
Sales and Marketing Plan

1.1 Description of the Product

Aggregates are important Constituents in Concrete. They occupy about 65% to

75% of the volume of concrete. They are natural aggregates which are obtained
from quarries(crushed rock).They have normal weight with specific gravity
between 2.4 and 3.0. The aggregate types are fine aggregates(type FA) with size
less than 4.75mm and coarse aggregates (Type CA) with size greater than
4.75mm. They are well graded in order to satisfy cement requirement.
Moreover, they contain no impurities which adversely affect strength
&durability of the concrete

1.2 Comparison of product with its competitors.

I have long observed that the quality of aggregate currently sold in the
market is poor costly. I have the interest to produce better quality aggregate by
exploiting the aggregates from high strength rocks and using standardized
machineries for crushing. Which satisfies aggregate requirements according to
EBCS. the product is tested &approved by standard material testing
organization ,before supplying to the market. the product is sold at reasonable
price.

1.3 Business Location

The business will be located in akaki sub city at 2km from Tirunesh Beijing
Hospital and the trunk road of Addis to Nazhret.this location has been chosen
for the following reasons. The Production operation can easily be supervised by
the owner it is close to its targeted markets and it is easily accessible to the
customers as .it has got access road to the production site.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

1.4 Market Area

I principally supply the aggregate to the local construction projects being

underway& many more infrastructures, constructions and to the vicinity
construction sites. This area has been selected because projects:

1) I personally know many of the project contractors

2) It is near to many construction projects.

1.5 Major Customers

The main customers are mainly private government contractors which are
working at different sites in the nearby localities as well as individuals who
engage in private construction.

1.6 Estimated Total Demand

These contractors require approximately 120m3 of aggregate per day .

1.7 Estimated Market Share

There are only suppliers supplying Aggregate product to the local market. The
Competitors are Their products is inferior to what is planned by the project
Because the number and size suppliers is small, market share of 30% is
estimated as being reasonable. In the initial stages of production, Operating
100% capacities cannot be assumed. There are bound to be initial Operating
problems, raw material shortages , distribution difficulties etc. have only 70% is
projected to be served in the first year.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

1.8 selling price

The selling price is based on “cost-Plus Method” I feel that a profit of 10% over
the total product cost is very reasonable and Competitive especially at this
stage.

Unit product cost is estimated at 500 Birr/m3 Adding the 10% profit ,my whole
sale price is 550 Birr/m3 .At this price, it is well below the price of the two
manufacturers.

1.9 sales forecast

If the total demand is 3600m3/month and the projected market share is

30% ,the project’s potential market site is 3600*(30/100) or 1080m 3 per month.
However, for practical purpose, only 70% of the projected market will be
considered for sales fore cast , the is ,3600m 3*(70/100)or 2520m3per month. I
believe that the market is expanding rapidly as infrastructure investment in
the area is high . Conservatively, I project that my sale volume will increase by
10% every year and attain 100% of the projected market share by the third
year.

1.10 Promotional measures

In order to secure the goodwill of the customers, one month credit will be
extended to these who regularly buy in bulk. Other promotional measures to
help in marketing the product will be free delivery for volume purchases, use of
mouth advertisement by satisfied clients, use of posters, and regular and
prompt supply by the manufacturer.

1.11 Marketing Strategy

The project's marketing strategy is based on the following strategies:

a) product strategy - it has a good quality product product.

b) pricing strategy - its supplying price is lower than the other products..

c) promotion strategy – Advertisement

- Prompt and efficient service

d) distribution strategy – market-center stock piling sites.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

1.12 Marketing Budget

ENDALE Aggregate Producing Project will have very modest cost to promote and
distribute its product. It will rely mostly on word of mouth promotion by
satisfied customers as well as endorsement by the customers of the product
because of its superior quality. Hence, the only cost it will incur will be
occasional posters advertisement for a total monthly marketing budget of birr
1000 or annual budget of 12,000birr

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Chapter 2
Production Plan

2.1 Production Process

The Production Process of Aggregates is as follows

I. Crushed stone is Produced from rocks by manual labor with a help of

Jack hammer
II. The crushed stone is loaded and transported to the Aggregate Crushing
Plant
III. The crushed stone is feed into the Aggregate crushing plant.

IV. The produced Aggregate stock piled at the site and transported to other
marketing site for sale.

2.2 Fixed capital

Per month (Birr)

Land ………………………………… 1500

Office …………………………………….. 2000

The equipment needed for producing will have a capacity of 90m 3 per day or
2160 m3 per month , assuming 24 working days.

Equipment

1.Jack hammer ……………………………………140,000

1. loader ……………………………………… 110,000

2 aggregate Crushing Plant ………………………… 230,000

Hand tools ……………………………………..10,000

=490,000

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

2.3 Life of fixed Capital

The useful life of the Aggregate plant is because of its regular contact with
stones 7years.The depreciation will be 15%.

The total description costs will be

Aggregate Crushing plant (15%) = 171,428 Birr

Office (10%) = 2,400 Birr

Hand tools & furniture (20%) = 24,000 Birr

Annual depreciation Cost = 197,828 Birr

Monthly depreciation Cost = 16,500 Birr

2.4 Maintenance and Repairs

Because of the simplicity of the machineries almost all services & repair can
be done on the production site.

2.5 Source of machinery

The aggregate crushed plants will be Purchased on the production site.

2.6 Planned Capacity

The factory has a production capacity of 120 m3per day of operation the
factory will initially operate at 70% Capacity, 84 m3 per day for 24 days in a
month.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

2.7 Future Capacity

Extra Capacity will be used only when demand is sufficiently large to justify
working Overtime.

2.8 Terms and Conditions of Purchase of Machinery

The machineries will be Paid for at the time of installation.

2.9 Production site Location and Layout

The production site will be located in two rooms adjacent to the quarry . The
aggregate crushing plant will be installed by professionals from the
manufacturing factory. The total size of the production site is 1000sq.m. The
land is owned sub city and has a lease cost of 1500birr/month.

2.10 Raw materials needed

For a daily Production level of 90m3 ,the following raw materials are
required.

Fuel …………………. 100 liter

Water …………………… 300 liter

2.11 Cost of raw material

Fuel …………………….. 40 Birr per lit.

Water ……………………. 0.5 Birr per lit.

Raw materials Cost per month will be :

Fuel = 100*40*24 = 96,000

Water = 300*0.5*24 = 3,600

Total = 99,600 Birr

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

2.12 Raw Materials Availability

The most essential raw material for Aggregate production is fuel. The
availability of fuel varies from season to season. The most frequently used fuel
for the crushing plant are benzene.

I have contacted a number of small suppliers of fuel in the town vicinity, and
because the requirement for this project is not large, regular availability is
assured. I have however, made a provision to keep a regular stock of fuel
equivalent to one month production to ensure continuous production. This will
mean 100 lit. per day x 24 days in a month or 2400 lit. of fuel stocks are
required to run the production continuously.

2.13 Labour

I myself participate in management of workers. one full-time assistant or

foreman will be hired to help in production and to supervise the production
operation. In addition,20 daily laborers and 1 store keeper as well as 1 watch
man will be hired.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

2.14 Cost of Labour

Direct Labor

20 workers at birr 800 = 16,000

Indirect Labor

1manager = 5,000
1 fore man = 3,000
1 secretary = 1,000
1 store keeper=1000
2 watchmen = 1,600
Total Labor Cost = 27,600 Birr

2.15 Labour Availability

Workers for this type of industry are available throughout the year, even in
seasons of peak agricultural activity. No foreseeable problems are expected as
most of the work requires no previous skills.

2.16 Labour Productivity

Wages to the workers will be paid on a productivity rate basis, i.e., on the
volume of Aggregate products . Tea will be served free during break time lasting
15 minutes

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Chapter 3
Organization and Management plan

3.1 Form of Business

The business will be registered under the name "Endale Aggregate producing"
as a sole proprietorship and owned by Endale Mamuye. It will have its business
address located at Akaki sub city.

3.2 Organizational Structure

The business will be managed by the owner Endale mamuye who will act as
general manager, personnel manager and production manager. I will be
assisted by a production foreman who will be in charge of production in the
absence of the entrepreneur. My brother will act as marketing manager as well
as treasurer.

3.3 Business Experience and Qualifications of the Entrepreneur

The entrepreneur is graduate of the ,2012 in civil Engineering. And I have

worked as a supervisor in Aggregate production sites for 4 months.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Organization Chart

Endale Aggregate producing Project

Owner Manager

(Endale)

Secretary

(to be hired)

Marketing Productio Finance

superviso n (Treasurer)
r
Superviso

Foreman

(to be

Daily
Laborer

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

3.4 Pre-Operating Activities

I have listed down the following activities to be undertaken before I can operate
My business:

1. Registering the business - 2 day

2. Preparing the business plan - 4 weeks

3. Applying for a loan and approval - 3 weeks

4. Contacting machinery suppliers - 1 week

5. Installing machineries - 4 weeks

6. Hiring labour - 2 days

7. Purchasing raw materials - 2 days

8. Trial production - 1 week

I aim to start my operation approximately three months after my loan

application, or six weeks after release of my loan.

These pre-operating activities with their corresponding timetable appear in

Table in a Gantt chart.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Table 3.4 Gantt Chart

ENDALE Aggregate Producing Project

Pre operating Activities

Activities Time table in Weeks

1 2 3 4 5 6 7 8 9 10 11 12 13

1. Registering the Business

2. Preparing the Business Plan

3. Applying/Approval of Loan

4. Contacting machinery Suppliers

5. Installing the Machinery

6. Hiring Labour

7. Purchasing Raw Material

8. Trial Production

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Chapter 4
Financial Plan
• Salaries and rent are the two major expenses, while depreciation is another
significant cost that will increase as the company develops.

• I want to finance growth mainly through cash flow. I recognize that this
means

I will have to grow slowly.

• It should be noted that the owner of ENDALE AGGREGATE PRODUCING

PROJECT do not intend to take any profits out of the business until the long-
term debt has been satisfied. Whatever profits remain after the debt payments
will be used to finance growth.

4.1 Important Assumptions

Key assumptions for ENDALE AGGREGATE PRODUCING PROGECT are:

• I sell the Aggregate product on one month credit.

• I assume the continued popularity of ENDALE AGGREGATE PRODUCING

PROGECT in Addis Ababa.

• Monthly sales are the largest indicator for this business. There are some
seasonal variations, with the months January through June being the highest
sales months.

• I assume access to capital and financing sufficient to maintain our financial

plan as shown in the tables.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Table: General Assumptions

General Assumptions 2013 2014 2015

Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 15.00% 15.00% 15.00%
Other 0.00% 0.00% 0.00%
Calculated Totals
Payable Expense 120,000 birr 165,000 birr 210,000birr
Payroll New Accounts 200,000 birr 300,000 birr 500,000birr
Inventory Purchase 250,000 birr 320,000 birr 400,000birr

4.2 Break-even Analysis

For my break-even analysis, assume running costs of approximately 99,600

birr per month, which includes payroll, rent, utilities, and an estimation of
other running costs.

Based on a 30% margin, we need to sell about 129,480birr per month to break
even, according to my assumptions. My sales forecast indicates that monthly
sales are expected to be much greater than the break-even point mentioned in
the table.

4.3 Projected Profit and Loss

The annual estimates are included on the following page. I expect income to
hit358,560 birr at the end of the first year of business. It should increase to
around600,000 birr by the third year as the of my business, its employees, and
services become apparent to the local owners. Second year revenues anticipate
the addition of one part-time employee, along with one fulltime employee in the
third year.

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

Table: Profit and Loss

Pro Forma Profit and Loss 2013 2014 2015

Sales 600,000 birr 800,000 birr 1000,000birr

Direct Costs of Goods 200,000 birr 300,000 birr 400,000 birr
……………………………… …………… ………… …………….
Gross Margin 60,000 birr 96,000 birr 136,000 birr
Gross Margin 30.00% 32.00% 34.00%
Expenses:
Payroll 25,000birr 35,000bir r 60,000birr
Sales and Marketing and
Other Expenses 13,000birr 15,000birr 18,000 birr
Depreciation 3,000birr 5,000birr 8,000 birr
Depreciation 1,200birr 1,500birr 3,000 birr
Depreciation 6,000birr 6,000birr 6,000 birr
Depreciation 500 birr 500 birr 500 birr
Insurance 12,000birr 12,000 birr 12,000birr
Rent 20,000 birr 20,000birr 20,000 birr
Depreciation 6,000birr 6,000birr 6,000birr
Payroll Taxes 7,500birr 7,500birr 7,5000birr
Other 0birr 0birr 0birr
Total Operating Expenses 107,000birr 107,000birr 107,000birr
Profit Before Interest and 96,000birr 96,000birr 96,000birr
Taxes 48,000birr 48,000birr 48,000birr

Net Profit/Sales 10% 10% 10%

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

2.4 Projected Cash Flow

Cash flow projections are critical to our success. The following table shows cash
flow for the first three years.

Table: Cash Flow

Pro Forma Cash Flow 2013 2014 2015

Cash Received

Cash from Operations

Cash Sales 600,000birr 800,000birr 1,000,000birr

Cash from Receivables 0birr 0birr 0birr

Subtotal Cash from 300,000birr 400,000birr 600,000birr

Operations
Additional Cash 0birr 0birr 0birr
Received
Non Operating (Other)
Income

Sales Tax 0birr 0birr 0birr

New Current Borrowing 0birr 0birr 0birr

New Other Liabilities 0birr 0birr 0 birr

(interest-free)

Subtotal Cash Received 250,000birr 350,000birr 550,000birr

Purchase Long-term 0birr 0birr 0birr

Assets
Dividends 0birr 0birr 0birr
Subtotal Cash Spent 400,000birr 300,000birr 500,000birr

Net Cash Flow 120,000birr 140,000birr 160,000birr

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 Addis Ababa institute of technology(AAiT) Department of
. Civil Engineering

References
Toolkit, Start and Improve your Business, Addis Ababa,7/2004
Business Plan guid line and examples
How to Prepare your Business Plan, UNITED NATION ,New York and
Geneva,2002

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