RIFT VALLEY UNIVERSITY

DEPARTMENT OF ICT

BUSINESS PLAN FOR FAMILY BLOCKET FACTORY.

PREPIARED BY LEVEL 2
Name ID No

1
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7

SUBMITTED TO: ………………………….

SUBMISSION DATE: 24/12/2015 EC

Burayu, ETHIOPIA
e-maill – familyblocket24@gmail.com
Phone No- 0914307265
Address
Region-- Oromia
Zone—Sheger City Administration
Town-- BURAYU

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TABLE OF CONTENTS
Contents page
1. Excutive Summary…………………………….................................................5
2. Introduction …………………........................................................................6
2.1 The business ………………………………………………………….……..6
2.2 Product and service…………………………………………….....................6
2.3 The market……………………………………………………......................7
2.4 Economic and social benefit………………………………………….……..7
2.5 Finacial considration…………………………………………………...........7
3. Business profile………………………………………………………….........8
3.1 Objectives…………………………………………………………………....8
3.2 Business mission……………………………………………………….…….8
3.3 Business vission…………………………………………...............................8
3.4 Core values………………………………………………………………..…8
3.5 Key success ……………………………………………................................9
3.6 Business ownership……………………………………………………………... 9
3.7 Business history …………………………………..........................................9
4 Situation analysis…………………………………………….……………..….9
4.1 Swot analysis ……………………….............................................................9
5 Production plan ……………………………...................................................11
5.1 Future products.……………………………………………………….……11
6 market plan and analysis……………..............................................................11
6.1Market segmentation …………………………………………… .…………13
6.2 Target market segment strategy…………………………………………...13
6.3 Service business analysis……………………………………………….…..13
6.4 Comptation and buying analysis……………………………………...……14
6.5 strategy and implmentation………………………………………….……..14
7. Human resource business and its management plan…………..…………….14
7.1 Management team ………………………………………………………....16
7.2 Personal plan……………………………………………………………...17
8.Finacial analysis………..………………….....................................................17
8.1 Finacial plan………………………………………………………………..17
8.2 Break-even analysis……………………………………………..…………17
8.3 Sale forecasts……….…………………………………………….……….19
9.Appendex……………………………………….. ………………………….
Table 1; fixed investment cost estimation …………………………………..18
Table 2;Tools and equipments……………………………………………....19
Table 3;Business profit and loss…………………………………………….20
Table 4;Business cash flow…………………………………………….…...22
Table 5;Balance sheet……………………………………………………….24

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 Family Blocket Business Plan

1. Executive Summary

We are Family , a blocket factory in Burayu town, aims to offer high quality blocket
products at a competitive price to meet the demand of the middle- to higher-income
households, school, café and restaurant, and others constractions.

Our target market will be the higher end of middle class workers and above, however
effort will be made to give lower incomes opportunities to buy our products.
Family will be a limited liability partnership between Ebise and her freinds, who will
also act as operators. All partners will share equal ownership of the company.

We will require 383,000 for start-up cost, and from which 80,000 will be placed fully on
bank long term loan, but we predict that the debt will be paid after two years allow it and
demand requires it.

2. Introduction/summary/

Family will be run as a partnership between Ebise and he Friends. This Business plan
is prepared for the purpose of providing an understanding of blocket manufacturing
business. A brief analysis on business is thus conducted to identify the current market
trend and to fullfil the shortage and to satisfy the unsatisfied market in Burayu town.

2.1The business

 Family is a limited liability partnership engaged in the blocekt manufacturing

business. It is equally owned by 7 partners and managed by one. The
business is controlled and managed by a Partner . The owners has the capacity
to produce the product effectively and efficentely by using new technologies.
The partnership intends to hire 4 full-time workers and 3 part-time labors to
handle customer service and day to day operations.

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2.2 Products and Services

Family offers a broad range of blocket products, all from high quality sands and cements
. Family provide blocket to all customers by making all types of blocket with good
quantity and quality . Family also plans to digout ground water for the production of
blocket in the future.

2.3 Location

Family is a start-up blocket producer and retail establishment located in Burayu, expects
to catch the interest of a regular loyal customer base with its broad variety of blocket
products.

2.4 Economic and Social Benefit

The business has the following socio economic benefits:

 Create job opportunities for the surrounding population

 To introduce modern production methods and deploy highly durable and
effective machineries.
 It increases the government revenue in the form of taxes
 To provide a sustainable firm steady income for the business owner

3 Business Analysis

3.1 Objectivess

The over all objective of the business is to offer its products at a competitive price to
meet the demand of the individual, government and private organizations.

 Provides quality of product to the customers

 Attract the customer or expand with in short period of time
 Transform the business to level 7 contractor and consultant and machinery supplier
agency within 5 years.

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3.2Business Mission

Family aims to offer high quality blocket products at a competitive price to meet the
demand of the individuals,government and ptivate organization.

3.3 Business vision

In the future we intend to adapt through marketing and technology to sustain our modern
edge to be as customer-friendly as possible and provide the Family products in our field.
We also plan to continue to invest in our community through partnerships with other
businesses and nonprofit organizationsand after five years we would hope to set up similar
operation in another area.

3.4 Core Values:

Serve... Sustain... Contribute...

Service: We work hard to provide an inviting environment for our customers and serve
them in the Family and most efficient way possible.
Sustainability: We wish to use technology to connect with the people of the advancing
times, working with our customers to produce their own inspired creations and update as
the technology around us advances.
Community Contribution: We are committed to contributing to organizations in through
our products and funding, and increasing our involvement in other opportunities.

3.5 Keys to Success

Keys to success for Family will include:

 Providing the highest quality product with personal customer service.

 Competitive pricing.
 Ongoing employee education and recognition programs.
 Give back to the community.

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3.6 Business ownership

The partnership owners are Ebise,………,…….e.t.c.

3.7 Business History

Family is start-up business. Financing will come from the partners and loans. The
following table illustrates the company's projected initial start-up costs.

Our start-up costs come to Br 383,000 which is mostly equipment, store furnishings and
construction, and starting inventory expenses associated with opening our first store.

4. SWOT Analysis

Strengths
 Blocket would be strong and light.
 Highly quality blocket offering.
 Choice of different menu items not available any where
 Great retail space that is new clean and located in perfect area
 Passionate owner who believes in giving back to their community/environment
 Financial resources will be used to give back to assist in the nation

Weaknesses
 First time business venture
 Limited marketing budget available to create awareness
 Lack of experience in the blocket productoin
 Start up costs are only estimates
 Funding a small business could be difficult
 Potentially could be understaffed if our product demand increases drastically
 Experience in marketing our product is minimal

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 Opportunities

 There are low number competitors at the areas.

 New building complexities are being built near by so we can increase our operation
 Diversifying our operation by opening other operation area
 Suitability of the areas for trading such materials
 We can increase our production as the consruction sector is growing
 To grow quickly and expand, possibly partner with another business

Threats

 Will there be increasing of tax.

 New blocket factorys are opening up which might out profit margins
 Will there be inflation.
 Competitors from surrounding may respond by reducing their price to increase
sale
 The high increment of rent of house
 Competitors could “steal” our ideas
 Partnerships may not become available
 Financial problems could threaten our first year’s success

5 Marketing strategy and Competitive Analysis

Family is a blocket that sells quality blocket and other type of blocket. We want to target
the higher income of the middle class, maintain the quality of our products but also keep
the prices reasonable.

Target Market: Our target customers mainly consist of the higher income and the top of
the middle class. Although this is a smaller group of customers to appeal to, we hope to
position our-self as a business in the downtown area or along by passing Family blocket
where there is easy access to our selected customers

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Product: Our product is a high-quality, orginal blocket that is extremely adaptable
to both special events, and to the special construction needs of our customers.

Pricing: Our prices will be slightly higher than those of our local competitors, mainly for
the reason that we strive for quality in our products. This goes hand in hand with the
market that we plan to target that of the upper middle class, and our higher income
customers.

Place (Distribution): Our primary way of distributing our products would be through our
store. Hopefully in the future we will be able to offer catering services, but during start up
we will work out of our own facilities

Promotion: We hope to contact our customers through advertising in FM, radio and in
the beginning use advertisements in the newspaper to introduce our new business. We
hope that our idea to sell blocket for half price will promote our products, although we
want to be known as a blocket that sells our fresh maded blocket

5.1 Market Segmentation

Is the process of analyzing and classifying customers in a given market to create smaller,
more precise target markets
Family focuses on the middle- and upper-income markets. These market segments
consume the majority of blocket products. The market would be segmented based on the
quantity purchased both for households and organizations.

Households

Family wants to establish a large regular customer base. This will establish a healthy,
consistent revenue base to ensure stability of the business. It expects low amount of
purchase for a large amount of households per individual.

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 Public and private organizations

The company expects high amount of purchase from organization like real state
company, café, hotels and restaurants. It will have its own strategy to satisfy the demand
of these large purchasers.

5.2 Target Market Segment Strategy

Is the identification of target markets and determination of marketing mixchoices that

focus on those markets. The dominant target market for Family is a regular stream of local
residentsand public and private organizations.

5.3 Service Business Analysis

The blocket business in Ethiopia has recently experienced rapid growth. Despite low
competition in the immediate area, Family will position itself as a blocket where
customers can enjoy blockets with Family quality and low price with reliable services.

5.4 Competition anlysis

Competition in the local area is some what sparse and does not provide nearly the level
of product quality and customer service as Family. But some of the competitors have
strength and weakness.

Strength

Extreme blocket: it will definitely be major competitor because of its strong financial
position and established marketing and operational practices. However, despite of they
entrenched market position, many customers favor smaller, independent establishments
that offer comfortable atmosphere and good blocket at affordable prices.

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 Weakness

 They made more blocket product; but they do not have large number of customers
so the blocket did not complete finish selling. Unsold left blocket will prepare for the
next period.
 They don’t have good management practice,
 They don’t keep the personality of the customer as Family

5.5 Strategy Implementation

Family will succeed by offering high quality blocket products with personal service at
a competitive price. The owner’s strategy is to profitably and efficiently utilize present
and future blocket production technology.

6 Business strategy

Family offers a broad range of blocket products, all from high quality sands and
cements. Family provide all its products with great quality to all respected customers
with fairly prices.

6.1 Future Products

In the meantime, the company would like to explore the possibilities of blocket
production from the local cement. The company also believes that if cement production
is successful then it could become the number one endeavor of blocket and cement
business.

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 8 Financial analysis

Nature and Limitation of Business:

This financial projection is based on sales volume at the levels described in the sales
forecast section and presents, to the Family of management's knowledge, the company's
expected assets, liabilities, capital, and revenues and expenses. The projection reflects
management's judgment of the expected conditions and its expected course of action
given the hypothetical assumptions. As the table show, Family anticipates sales of about
Br.496,000 in the first year, Br. 505,92 0in the second year, Br526,157 in the third year,
Br.557,726 in the fourth, and Br. 602,344 in the fifth year of the plan.

7 Financial strategy

There are different major types of blocket: in-store house and small retail. With most
revenue coming from in-store house, our business would draw off these sales. We would
specifically target upper middle class to high-class citizens who are willing to pay a little
more for a higher quality product with more specialization and service than that of major
supermarkets. A loan from the bank will be needed to receive capital for start up costs.
The requested long term loan amount Birr 80,000.

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7.2 Personnel Plan

As the personnel plan shows, Family expects to make significant investments in sales,
sales support, and product development personnel.

Personnel Year
Plan
2016 2017 2018 2019 2020
Manager 25,000 25,600 26,600 27,000 28,000
Operators 20,000 20,600 22,000 23,000 24,500
Workers 15,000 15,000 15,048 17,467 20,364
0 0 0 0 0
Total People 4 4 5 5 6
Total salary Br 60,000 Br 61,200 Br 63,648 Br 67,467 Br 72,864

8.2 Break-even Analysis

Break even is useful tool in business analysis. The break even point occurs when total
revenue is equal to total cost . Family Break-even Analysis is based on the average of
the first-year figures for total sales by units, and by operating expenses. These are
presented as per-unit revenue, per-unit cost, and fixed costs. These conservative
assumptions make for a more accurate estimate of real risk. Family should break even
by the second year of its operation as it steadily increases its sales.The total no of blocket
sold in the first year is 2800+1200+1600+28,000=33,600

Weighted average contiribution margion

=wb1cmb1+wb2cmb2+wb3cmb3+wb4cmb4

2800/33600*50+1200/33600*32+1600/33600*10+28000/33600*1

4.166+1.142+0.4762+0.7778=6.562

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 BEPquontity=fc/wacm=230,000/6.562=35,050 Blockets

Blocket 1 2 3 4

No be sold 2920 1252 1670 29,208

Selling 100 80 40 2
price
Sales 292,000 100,000 66,800 58,416

Total sales=517,217 Birr

Table 1: Fixed investment cost estimation

No. Description Unit Quantity Unit Total

price cost
1 Blocketmaking Machine No 2 30,000 60,000
2 Cash register Machine No 1 15,000 15,000
3 Cement mixing Machine No 1 12,000 12,000
4 store house No 1 15,000 15,000
Sub total base cost 102,000
Contingency (4.16%) 424,320
Total 526,320

Table 2: Tools and Equipment

No Description Unit Quantity Unit cost Total cost

1 Display Case 3 180 540
B
r
2 Mixer 3 1000 3000
3 Proofer 1 2000 2000

4 Signs 1 2200 2200

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 5 Cash register 1 300 300

Sub total 8040

Contingency (2.85%) 700
Total 8740

8.3 Sale forecast

Our Sales Forecast shows modest estimates for the first year of operations beginning in
July of 2018. After establishing Family 'the' place for sweets and celebrations, we project
aggressive sales increases for the following years.

1. Year-one revenue
expectancy
Blocket 1 Blocket 2 Blocket 3 Blocket 4
Number of units sold annually 2,800 1,200 1,600 28,000
Average sales price per unit Br 100.00 Br 80.00 Br 40.00 Br 2.00
Annual revenue per product Br 280,000 Br 96,000 Br 64,000 Br 56,000
Total year 1 revenue Br496,000
2. Year 1 cost of goods sold
Blocket 1 Blocket 2 Blocket 3 Blocket 4
Expected gross margin per pro 50.00% 40.00% 25.00% 50.00%
Duct
Annual cost of goods sold per Br140,000 Br 38,400 Br 16,000 Br 28,000
product

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 Total year 1 cost of goods sold Br 222,400
3. Annual maintenance, repair, and overhaul
Factor (%) on capital equipment 15%
4. Number of years for straight-line depreciation 5

5. If long-term debt is being used to finance operations, enter the total Br 80,000
loan value.

Table 3: Business Profit and Loss

As the Profit and Loss table shows, Family expects to continue its steady growth in
profitability over the next five years of operations.

The income statement (profit and loss statement) shows the revenue, expenses, and net
income (or net loss) for a period of time. Net income is the amount by which total
revenue exceeds total expenses. The resulting profit is added to the partners capitals . A
net loss reduces the partners capital account.

BudgtedIncome and loss statement

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue
Gross revenue Br496,000 Br505,920 Br526,157 Br557,726 Br 602,344

Cost of goods sold 222,400 226,848 235,922 250,077 270,083

Gross margin Br273,600 Br279,072 Br 290,235 Br 307,649 Br 332,261

Other revenue [source] Br 0 Br 0 Br 10,000 Br 0 Br 0

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Interest income Br 1,000 Br 0 Br 0 Br 0 Br 0

Total income Br274,600 Br279,072 Br 300,235 Br 307,649 Br 332,261

Operating expenses

Sales and marketing Br 40,000 Br 40,800 Br 42,432 Br 44,978 Br 48,576

Salary 60,000 Br 61,200 Br 63,648 Br 67,467 Br 72,864

Depreciation 40,000 40,800 41,600 42,400 43,200

Insurance 40,000 Br 40,800 Br 42,432 Br 44,978 Br 48,576

Maintenance, repair, and overhaul 15,000 15,300 15,600 15,900 16,200

Utilities 30,000 Br 30,600 Br 31,824 Br 33,733 Br 36,432

Property taxes 15,000 Br 15,300 Br 15,912 Br 16,867 Br 18,216

Administrative fees 20,000 Br 18,360 Br 19,094 Br 20,240 Br 21,859

Other 14,700 Br 4,080 Br 4,243 Br 4,498 Br 4,858

Total operating expenses Br274,700 Br267,240 Br 276,786 Br 291,061 Br 310,782

Operating income Br -100 Br 11,832 Br 23,449 Br 16,588 Br 21,479

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Interest expense on long-term 3,590 2,866 2,106 1,308 470
debt(interst r x amount borrowed)

Operating income before other Br -3,690 Br 8,966 Br 21,344 Br 15,281 Br 21,010

items

Loss (gain) on sale of assets 0 0 1,000 0 0

0 0 0 0 0
Earnings or net income Br -3,690 Br 8,966 Br 22,344 Br 15,281 Br 21,010

Table4: Business Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to
meet Family needs as the business generates cash flow sufficient to support operations.

Cash flow
Year 1 Year 2 Year 3 Year 4 Year 5

Operating activities
Net income Br -3,690 Br 6,276 Br15,641 Br10,697 Br 14,707
Depreciation 40,000 40,800 41,600 42,400 43,200
0 0 0 0 0
Accounts payable 0 1,000 0 -1,500 0
0 0 0 0 0

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 0 0 0 0 0
0 0 0 0 0
Total operating Br 36,310 Br48,076 Br57,241 Br51,597 Br 57,907
activities
Investing activities
Br 0 Br 0 Br 0 Br 0 Br 0
0 0 0 0 0
Sale of fixed assets Br 0 Br 0 (Br1,000) Br 0 Br 0
0 0 0 0 0
Total investing Br 0 Br 0 (Br1,000) 0 Br 0
activities
Financing activities
Long-term Br 85,522 (Br65,202) Br 9,038 Br 33,240 (Br 92,598)
debt/financing
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
Total financing Br85,522 (Br65,202) Br 9,038 Br33,240 Br 92,598)
activities
Cumulative cash flow Br121,832 (br17,125) Br65,279 Br84,836 (br 34,691)
Beginning cash balance Br 50,000 Br 81,829 Br164,704 Br229,982 Br 314,819
Ending cash balance Br171,832 Br164,704 Br229,982 Br314,819 Br 280,128

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 Table 5 Balance Sheet

The following is a projected Balance Sheet for Family.

Balance Sheet of the business plan for five consecutive years

Assets Initial Year 1 Year 2 Year 3 Year 4 Year 5

balance
Cash and short-term Br 50,000 Br 181,829 Br 164,704 Br 229,982 Br314,819 Br 280,128
investments
Accounts receivable 3,000 3,000 3,000 3,000 3,000 3,000
Total inventory 25,000 25,000 25,000 25,000 25,000 25,000
0 0 0 0 0 0
Other current assets 5,000 5,000 5,000 5,000 5,000 5,000
Total current assets Br 83,000 Br 214,829 Br 197,704 Br 262,982 Br347,819 Br 313,128
Buildings Br 100,000 Br 100,000 Br 100,000 Br 100,000 Br100,000 Br 100,000
Land 100,000 100,000 100,000 100,000 100,000 100,000
0 0 0 0 0 0
Machinery and 100,000 100,000 100,000 100,000 100,000 100,000
equipment
Less: Accumulated 0 40,000 80,800 122,400 164,800 208,000
depreciation expense
Net Br 300,000 Br 260,000 Br 219,200 Br 177,600 Br135,200 Br 92,000
property/equipment
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
Total assets Br 383,000 Br 474,829 Br 416,904 Br440,582 Br483,019 Br 405,128
Liabilities Initial Year 1 Year 2 Year 3 Year 4 Year 5
balance
Accounts payable Br 2,000 Br 2,000 Br 3,000 Br 3,000 Br 1,500 Br 1,500
0 0 0 0 0 0

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 0 0 0 0 0 0
0 0 0 0 0 0
Other current Br 1000 100 100 100 100 100
liabilities
Total current Br 3000 Br 2,100 Br 3,100 Br 3,100 Br 1,600 Br 1,600
liabilities
Long-term debt from Br 80,000 Br 65,522 Br 50,320 Br 34,358 Br 17,598 Br 0
loan payment
calculator
Other long-term debt Br 0 Br 98,800 Br 50,900 Br 74,900 Br 24,900 Br 49,900
Total debt Br 83,000 Br 164,322 Br 104,320 Br 112,358 Br 44,098 Br 51,500
Other liabilities 0 0 0 0 0 0
Total liabilities Br 83,000 Br 164,322 Br 104,320 Br 112,358 Br144,098 Br 51,500
Equity Initial Year 1 Year 2 Year 3 Year 4 Year 5
balance
Partners capital Br 300,000 Br 296,310 Br 312,584 Br 328,224 Br Br 353,628
338,921
00
0 0 0 0 0 0
0
Br B

Total liabilities and Br 383,000 Br 474,829 Br 416,904 Br 440,582 Br483,019 Br 405,128

capital

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