HAWASSA TEGBARED INDUSTRIAL AND

CONSTRUCTION COLLEGE

BUSINESS PLAN OF VERTICAL BAND SAW MACHINE

PREPARED By: -
1. Mintesnot Demissie
2. Lemma Adugna

Hawassa, Sidama

March 2023
EXECUTIVE SUMMARY
Name of business and financial plan for: - Band saw machine
Legal form Sole proprietorship
Contact address =Hawassa
Tel. 0913799873 /0916764440
E-mail =adugnalemma18@gmail.com /minte4044@gmail.com
Type of business
� Manufacturer � Service provider
� Retailer � Wholesaler
Brief description of the business idea

Products: - Vertical band saw machine

Customers / target group:-The customers of this product will be used to manufacture different
furniture for cutting wood and metals with different thickness dimension.
Significant contributor to the economic and social development of Ethiopia. And MS enterprises
who engaged in manufacturing industry.
Owner(s)
(Name, Address, Qualification, Function in the business, relevant experience)
Name Address Qualification Function in the Experience
business
1 Lemma Adugna Hawassa BSc in manufacturing Manager/Senior Eight
technician
2. Mintesnot Demissie Hawassa BSc in manufacturing Designer Four

Business Idea and Market

Description of the business idea
(E.g. identified needs (market gap), who are the customers, type of products or services to satisfy
the needs, how to reach the customers, etc.)
Our industry, particularly SMEs is the basis for our industrial economy. However they are not
internationally competitive. This is because most our SMEs they fabricate traditionally. To solve

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such problem and its marketability our industry are going to manufacture vertical band saw
machine to SMEs. SMEs, who are working on manufacturing of furniture can easily get the
machine from our industry.
Description of the market.
(e.g. geographical area, town, type of customers, size of total market description of competitors,
market share for the new business, etc.)
The targeted market area for the first one year will be towns and zones around Hawassa, Sidama
after one year the market will expand in most zones in SNNPR, Addis Ababa, Oromia and Amhara.
The total size of the estimated market in Ethiopia is 4millon from this total market our share will
be 10% the other 90% will be covered by others. For the time being we don’t have any competitor
but in a near future competitors will join the market by manufacturing or by importing the same
product from abroad that is why we exclude 90% of the total market.
Marketing Plan Product
Detailed description of the product or product range or service
Our product is a simple which is used to cutting of wood and metal. The machine is fair price
comparing with imported one, rational wise, easily fabricated, increase production rate, simple to
use, simple to maintain, it is effective, productive, healthy, anyone can operate it easily and
environment friendly.
Specification of the product
(e.g. size, color, quality, Packaging etc.).
No Specification of the product
1 Maximum working capacity Stock diameter 50cm/Metal thickness
8mm
2 Machine weight
3 Type of energy Electrically operated

After sale service

 Installation service
 Training /how to use the product/
 Transportation/ for customers in Hawassa
 Coaching, consulting on operating system.

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Marketing Plan Price
How much are customers willing to pay?

 Highest=100,000 ETB
 Average=95,500 ETB
 Lowest=90,000 ETB
2. How much are competitors’ price?

 Highest=150,000 ETB
 Average =145,000 ETB
 Lowest =140,000 ETB
3. How much is your price?

 Highest =130,000 ETB

 Average=125,000 ETB
 Lowest =120,000 ETB
The reasons for setting out our price
 We use selective raw materials and machine for production.
 Our manufacturing processes is a scientific not traditional
 On the bases of above two reason we set our price on the purchasing power of customer
 Our product is new for the market so to advertise the product as well as direct cost indirect
cost and overhead cost
Marketing Plan Place
 Location of the business (description of the planned location of the business):-
The planned location our band saw machine will be at the main city of Sidama, Hawassa. Because
of different factors, the factory will install in Hawassa. Sidama is the city of Hawassa city in
Sidama region located at 275km from Addis Ababa. It is one of the cities which are growing fast.
The city is near and center for many of zones SNNPR in addition to this Hawassa is one of the
cities which are furnished with various kinds infrastructures like electric power, telephone, rod,
and transportation.

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  Reason for choosing the location the business:-
Demand for our product is high through country and also no similar industries. It is center to
distribute our product for our customer with minimum cost.Infrastructures like electric power,
telephone road are available in addition many construction industry
 Methods of distribution the product to customers:-
Through individuals
 Reason for choosing this way of distribution:-
We decided to deliver the product directly to the customers to avoid unnecessary price increment
which will affect the purchasing power of our customers. To reach our customers easily, To reduce
unnecessary price increment and To give after sale service without delay.
 Marketing Plan Promotion:-
Description of the planned actions to inform customers about the opening of the new business (e.g.
printed information, brochures, posters, newspaper articles, radio advertisements, opening
ceremony, etc. Also make inquiries about the costs for the different types of promotion). To
promote our product we will use the following methods We promote our product through printed
materials like brochures, posters and also we use personal selling.
 The legal form
Our business legal form is a partnership. The reason for choosing this form:-
 Easy to form
 Low costs to start
 Added capital sources
 Shared management
 Possible tax advantage
Marketing Plan Promotion
Business card
 brochures
 posters
 participating in exhibition

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Reason for choosing this legal form
We choose this legal form because its simplicity to establish, relatively cheap to start, gives more
freedom to form, to improve as well as close down it when it is necessary etc.
PRODUCTION PLAN
Production process
List of production steps
1. Prepare working drawing
2. Select raw materials
3. Organizing the work shop according to the work procedure
4. Organizing tools and machines accordingly
5. Measure /Laying out/ marking out dimension and shapes to the work piece
6. Cut the work piece accordingly
7. Face and Turn on lath machine the pipe and rollers and pulleys
8. Drill and boar the rollers
9. Weld the frame and according to the specification
10. Assemble parts
11. Clean and remove rust and other foreign materials
12. Check the assembly for correctness
13. Check the machine without load
14. Check the machine by loading the sugarcane
15. Apply outer paint
16. Apply final coating
17. Pack the product/store the proud

List of fixed assets needed and their cost

No. Item Unit Quantity Unit cost Total Remark

cost
1. Welding machine Piece 1 10000 7000
2. Portable Grinding Piece 1 7000 5000
machine
3. Combination set Piece 3 150.00 450.00
4. Hack saw Piece 3 50.00 150.00
5. Center punch Piece 2 25.00 50.00

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 6. Divider Piece 3 25 75
7. Steel rule Piece 4 100 400.00
8. Tape rule Piece 4 50 200
9. Open end spanner Set 1 1500 1500
Wrench
10. Ball peen hammer 1.00 Piece 1 150 1500
kg
11. Bench Vice Piece 2 2000 4000
12. Bench Piece 2 1200 2400
13. File different types Piece 4 50.00 200
14. Welding table Piece 1 350.00 350.00
Total 23325

Office equipment and Office equipment fixed asset

No Item Unit Quantity Unit cost Total cost Remark

1 Desk top computer Piece 1 15000 15000 used
2 Printer Piece 1 10000 10000 used
3 Computer Table Piece 1 2500 2500

4 Table Piece 3 3000 9000

5 Chair Piece 3 2500 7500
6 Shelf Piece 1 3000 3000
Total 74000
Office supplies per month
1 Stationery Piece 1000
2 Printer ink Piece 1000
3 Others Piece 2000
Total 4000

Brief description of production capacity of the project per month

The designed capacity of the factory in each month is 15 units if everything is in the right condition.
But due to different constraints the attainable capacity is 10units per month .

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 General Manager

Production/man power Finance /marketing

Technician Security Sales Purchaser

Organizational Chart

7
List of raw materials needed
Quantity Cost per unit Quantity Total cost for one
Raw materials needed Unit cost
No Specification Unit Required per product required for month
per month In Birr
product In Birr first month In Birr
1. Angle iron 50x50x5x6000 Pieces 2 1000 2000
2. Black sheet metal 2000x1000x4 Pieces 1 12000 12000
3. Aluminum ingot Ø150 Pieces 1 600.00 600.00
4. Pipe Ø25x2x6000mm ½ 300 300
5. Bolt and nut M10x1.5 Pieces 20 10 200
6. Bolt and nut M16x 2 Pc 16 15 240
7. Round bar Ø12x6000mm Pc 1 400 400
8. Round bar Ø40x6000mm Pc 1/6 1000 1000
9. Flat iron 8x30x6000mm Pc 2 800 1600
10. Bearing 6230 Pc 12 100 320
11. Pipe Ø60x2x6000mm pc 1/3 400 400
12. Bearing UCP 207 Pieces 4 1000 4000.00
13. RHS 3X60X60X6000mm Pc 2 1500 3000
14. RHS 2x40x40x6000mm Pc 1 850 850
15. Electrode Ø2.5 Packet 1 220 220
16. Anti-rust paint Red Kg 2 160 320
17. Cutting blade Ø 300x25x3mm Pc 1 1500 1500
18. Motor 5.5hp1 Pc 1 9600 21600
19. v-blat A-Clas 4 120 480
20. Metal paint jet Blak Kg 1 350 350
21. Metal paint jet Wight Kg 1 320 320
22. Wheel Dia 55 pc 1 850 2550
23. Sand paper P80 Meter 1 220 220
24. Grinding wheel 180x 20 x 6 Pieces 2 80 160
25. Cutting disc Ø230x 20 x 6 Pieces 5 100 500
26. Dulantin Litter 8 65 520
27. Total 732200

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Organization and Staff
Staff costs in ET Birr
No Position Qualification Salary per Social Total staff
month security cost
1 Manager/chief Tec BSc in MNF 7000 500.00 7000
2 Technician GMFA L III 3000 3000
3 Junior technician GMFA LII 2000 2000
4 Accountant /finance ACU LIII 3000 3000
5 Purchaser ACU L1 3000 3000
7 Guard Grade 10 1200 1200
completed
TOTAL 19200
Factory Overhead Expenses

No Overhead expenses Amount per month

1 Indirect labor 4,100.00
2 Electricity 600.00
3 Telephone 300.00
4 Maintenance 500.00

5 Others 600.00

6 Depreciation of fixed assets 1,056.25

7 Office supplies 1,000.00
Total 7,856.25

Fixed asset
No Cost type Amount
1 Land 0
2 Machines and equipment 50,000
3 Building 20,000.00
4 Office equipment 14,200.00
Total 74200
Annual depreciation of fixed asset excluding 74200 divide
land by 4
For simplicity for all equipment the expected 18550
life is taken in average 4 year

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Operating expense
No Cost type Amount
1  maintenance 500.00
2  machine deprecation 1,056.25
3  office supplies 1,000.00
4  others 600.00
Total 3156.25

Production cost per unit product

No Cost type Amount/month Amount/year

1 Row material 175880 2110560
2 Direct labor 19200 23040
3 Factory over head expense 8156.25 97875
Total 203236.25 2231475
Cost per product 50723.1510

Start-Up Capital in E.T Birr

Estimation of start-up capital unit Amount
INVESTMENT
Land runt 200m2 120000
2
Building 100 m 20,000.00
Machine and Equipment 50,000
Office equipment 10,000
Total Investment 200,000
working capital
One months of staff costs 19200
One months of operational costs
 raw material 175880
 office supplies 10,000
 electricity 600.00
 telephone 300.00
 maintenance 500.00
 machine deprecation 1,056.25
600.00
 others
Total working capital 208136.25
Total start-up capital 408136.25

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Sources of Start-Up Capital
Sources of funding
Type Source Conditions Amount
(duration/interest)
�Own savings
Equity capital 308136
� Partner
Loan 1 � Family
� Friends
� Money lender
Loan 2 � Credit cooperative One year/10% 100,000.00
�Government scheme
� Bank loan
TOTAL FUNDING 100,000

Information about funding sources

Loan 2
Name and address of creditor or credit institution
Omo micro finance
Hawassa branch
Sidama Region
Credit agreement
�under discussion� finalized

---------------

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 Debt Service
Repayment
period 1 2 3 4 5 6 7 8 9 10 11 12
Amount Amoun Amoun Amoun Amoun Amoun Amoun Amount Amount Amoun Amount Amount
t t t t t t t
Loan 1
Installment/principal
Interest
Loan 2
Installment/ 8333.33 8333.3 8333.3 8333.3 8333.3 8333.3 8333.3 8333.33 8333.33 8333.3 8333.33 8333.33
principal 3 33 33 33 33 33 33 3 3 33 3 3
Interest 8333.33 8333.3 8333.3 8333.3 8333.3 8333.3 8333.3 8333.33 8333.33 8333.3 8333.33 8333.33
3 33 33 33 33 33 33 3 3 33 3 3
Debt service 8333.33 8333.3 8333.3 8333.3 8333.3 8333.3 8333.3 8333.33 8333.33 8333.3 8333.33 8333.33
Sum of 3 33 33 33 33 33 33 3 3 33 3 3
Installments

Monthly Sales Plan

Month 1 2 3 4 5 6 7 8 9 10

Price 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
Product 4 4 4 4 4 4 4 4 4
Quantity 4
1
Turnover 280000 280000 280000 280000 280000 280000 280000 280000 280000 280000
Price
Product
Quantity
2
Turnover
All
Turnover
product 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50

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Profit and Loss Statement (One Year)
Gross sales
280000
Less: Returns
Net Sales
280000
Less: Cost of goods sold 202892.6

Gross profit 77107.6

Less: Operating & administrative expenses

22356.25
Operating profit 54751.35

Less: Interest Expense 100000

Net profit Before Tax 77107.6

Less: Estimated Income Tax

15421.52
Net profit After Tax 61686.08

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 Business Operation and Costs
Monthly Operational Cost Plan
Planning is based on the monthly sales plan
Month 1 2 3 4 5 6 7 8 9 10 11 12
4 4 4 4 4 4 4 4 4 4 4
Produc 4
Quantity
t1
43970 43970 43970 43970 43970 43970 43970 43970 43970 43970 439
Materi
All costs
als 43970
Produc
Quantity
t2
Materi
All costs
als
43970 43970 43970 43970 43970 43970 43970 43970 43970 43970 43970 439
Materi
All costs
als
Total 19200 15,100.00 15,100.0 15,100.0 15,100.0 15,100.0 15,100.0 15,100.0 15,100.0 15,100.0 15,100.0 15,1
+ Staff
costs 0 0 0 0 0 0 0 0 0
+ Total 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 600.00 60
Others costs
3156.2 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 315
Operati Total
on costs 5
8333.333 8333.33 8333.33 8333.33 8333.33 8333.33 8333.33 8333.33 8333.33 8333.33 833
+ 8333.3
Interest 3 3 3 3 3 3 3 3 3 3
Capital 33
Depreci 1,056.2 1,056.25 1,056.25 1,056.25 1,056.25 1,056.25 1,056.25 1,056.25 1,056.25 1,056.25 1,056.25 1,05
ation 5
915789.9 915789. 915789. 915789. 915789. 915789. 915789. 915789. 915789. 915789. 915
Grand 915789
= 96 996 996 996 996 996 996 996 996 996 996
Total .996

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 Cash flow
Projected monthly cash flow statement

Pre-
operating Month
Particulars Period 1 2 3 4 5 6 7 8 9 10 11 12
Cash at
the
beginning
of the
month 70000 70,228.32 119,221.09 168,213.86 217,206.63 266,199.40 315,192.17 364,184.94 413,177.71 462,170.48 511,163.25 560,156.02
Cash
inflow

Equity 308136

Borrowings 100000
280000 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50
Cash sales
Collection
of A/R
Other
income
Total cash
inflow 408136 231,500.05 280,492.82 329,485.59 378,478.36 427,471.13 476,463.90 525,456.67 574,449.44 623,442.21 672,434.98 721,427.75 770,420.52
Cash
outflow

Investment 408136.25
operational 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25 3156.25
cost 3156.25
8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333
Loan return
Taxes 10950.27 10950.27 10950.27 10950.27 10950.27 10950.27 10950.27 10950.27 10950.27 10950.27 10950.27
payable 10950.27
Total Cash
outflow 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73 161,271.73

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Cash at
the end of
the month 18,856.25 50,541.99 119,221.09 168,213.86 217,206.63 266,199.40 315,192.17 364,184.94 413,177.71 462,170.48 511,163.25 560,156.02 609,148.79

Profit Margin
Monthly Estimation of Net Profit

Month 1 2 3 4 5 6 7 8 9 10 11 12
4 4 4 4 4 4 4 4 4 4 4 4
Quantity
70000 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50
Product 1 Turnover

Quantity

Product 2 Turnover
280000 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50 210,264.50
I. Total Sales

- Operation Total costs

202892.6 202892.6 202892.6 202892.6 202892.6 202892.6 202892.6 202892.6 202892.6 202892.6 202892.6 202892.6
II.Total Costs

I– II Profit(bt)

77107.4 77107.4 77107.4 77107.4 77107.4 77107.4 77107.4 77107.4 77107.4 77107.4 77107.4 77107.4
152421.48 152421.48 152421.48 152421.48 152421.48 152421.48 152421.48 152421.48 152421.48 152421.48 152421.48 152421.48
- Income tax 20%

Net profit 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92 61685.92

Total net profit = 740231.04 birr

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 Opening Balance
Opening Balance of My Business

Assets Value Liabilities Value

Fixed Assets Equity 308136

Land 50,000.00 Long-Term Liabilities

Building 20,000.00 Mortgage
Machine/ Equipment 50,000.00 Loans 100000
Office Equipment 10,000.00 Others
Total Fixed Assets 130,000.00 Total Long-Term Liabilities
408136
Current Assets Current Liabilities
Accounts payable
Cash and bank 178136 Taxes payable
Accounts receivable Others payable
Inventory Total Current Liabilities
Total Current

Total Assets 178138 Total Liabilities and Net Worth 408136

Loan Repayment Schedule

The loan of Birr 100,000.00 will be paid at the end of each month of the first budget year.

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Break-even point

Total fixed cost

Breakeven Quantity =
(Price per unit − variable cost per unit)

50723.15
=
70000−22356

=1.08745

=2unit

Total fixed cost x price per unit

Breakeven point=(Price
per unit – variable cost per unit)

50723.15 X 70000
70000 − 22356

= 74,523.979935

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