BUSINESS PLAN

For
Abay Garment Manufacturing Company

MAY, 2021
Contents
1.Executive Summary..................................................................................................................................2

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3. Company profile......................................................................................................................................3
4. Products and Services..............................................................................................................................3
5.Market Analysis .......................................................................................................................................4
5.1.Target market....................................................................................................................................4
5.2. Competition......................................................................................................................................4
6. Marketing Plan........................................................................................................................................4
6.1. Business Strategy .............................................................................................................................4
6.2. Competitive Edge..............................................................................................................................5
6.3. Sales Strategy....................................................................................................................................5
6.4. Pricing Strategy.................................................................................................................................5
7.SWOT Analysis..........................................................................................................................................5
8.Management and personnel....................................................................................................................6
8.1. Management Plan.............................................................................................................................6
8.2. Personnel Plan..................................................................................................................................6
9.Financial Plan ...........................................................................................................................................7
9.1. Assumptions and Parameters...........................................................................................................7
9.2. Start-up costs....................................................................................................................................8
9.3. Total Operating Costs.......................................................................................................................8
9.4. Total investment cost and Financial Plan of the Project...................................................................9
9.4.2. Financial Plan of the Project.......................................................................................................9
9.5. Projected revenue of the project....................................................................................................10
9.6. Projected Income Statement..........................................................................................................10
9.7. Projected cash flow statement.......................................................................................................10
9.4. Projected Balance Sheet Statement................................................................................................11

1. Executive Summary
Abaynesh garment manufacturing company is a ready-made garment manufacturing company
located in manufacturing shade of Kechenie medhanialem, Gulele sub city, Addis Ababa. We
have been able to secure a working shade in that strategic area. The company will be involved in
the production of ready – made garments like ties, polo shirts etc. Our business goal is to become
among the leading ready-made garment manufacturing companies in the area and we will make

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sure that every readymade cloth that leaves our factory can favorably compete with the good
brands in the industry.

Our workers are going to be selected from a pool of experienced garment factory workers. We
have put plans in place to build state of the art machineries. We will procure brand sewing,
cutting and overlooking machines from brand suppliers. Our company will manufacture high
quality garments for both the high – end customers and also for low income earners. Apart from
production of ready-made garments, we will also be engaged in the customized production of
clothes for customers based on their demands.

Abaynesh garment manufacturing Company is solely owned by abaynesh. She is fashion

enthusiast with over one and half year worth of experience in the fashion industry. She will
occupy the position of the general manager of the organization. She has graduated in Fashion
Designing from Hewan fashion designing school and She had worked in Teddy and Tsegay
Garment as a fashion designer and Sewing Machine Operator for one and half years.

2. Our Mission and Vision Statement

 Our vision is to establish a ready-made garment manufacturing company that can be

among the leading in the city.
 Our mission is to build a ready-made garment manufacturing company that will design
produce high quality ready-made garments.

3. Company profile
AbayneshGarment Manufacturing company is wholly owned by Mrs. Mahlet Luelebirhan
Tefera. The company will initially formed as a sole proprietorship in Addis Ababa, Gulele sub
city, Kechenie area, and to achieve more success in that market it will expand to other areas in
the near future.

4. Products and Services

abaynesh garment manufacturing company is established with the aim of producing high quality
and highly fashionable ready – made garments for men, and women. Here are the products we
will be manufacturing;
 Shirts for men and women

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  Skinny (Tight fit) Trouser for women

5. Market Analysis
Ready-made garments are mass-produced finished textile products of the clothing industry. They
are made from many different fabrics and yarns. Their characteristics depend on the fibers used
in their manufacture. The garments are very simple to manufacture and easily marketable both in
urban and rural areas. The demand of readymade garments is increasing day by day due to
urbanization of the cities.

Readymade garments are a part of our daily life. Clothes are an epitome of a culture. People in
different parts of the world have their own styles of dressing which symbolize their culture and
status. It is the same in our country Ethiopia. The Readymade garments industry is increasing
day by day due to changes of fashion in day to day life.

Rapid urbanization and huge population of our country provides huge demand for readymade
garments in Ethiopia. Rising per capita disposable income, coupled with the steady upward trend
in the country’s population, will give way to rising demand for ready-made garment.

5.1. Target market

When it comes to selling readymade garments, there is indeed a wide range of available
customers made garments (men, women, young adults and children). In essence, our target
market will be men and women of the country. More focus will be given for women’s.

5.2. Competition
Ethiopian garment industry is well known with fierce competition. To survive in the business,
Players in the clothes manufacturing industry and related businesses thrive on creativity,
branding (media hype) and good marketing. The Ethiopia readymade cloth market is dominated
by big foreign companies of Chinese and Turkish origin and local big garment manufacturing
companies. However, small s garment manufacturing companies getting a breakthrough in the
local and export market recently.

6. Marketing Plan
6.1. Business Strategy
Providing good quality product, Skill at what we do, good customer service, and creating a
pleasant environment for our customers will be important to implementing our business plan.

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6.2. Competitive Edge
We understand how competitive the garment industry is. As a matter of fact, you have to be
highly creative, customer centric and proactive if you must survive in this industry. We are
aware of the competition and we are prepared to compete favorably with other garment
manufacturing companies in the city. Our company competitive edge will be:
Location: Locating the company in a suburb of Kechenie medhanialem manufacturing shades
which can help the company to have access not only to the market for Addis Ababa but also
customers to all over the country.
Customer Service: The Company owner Abaynesh knows the market very well. She has
extensive experience in the garment industry and she is very familiar with her target customer
base. She had worked in Teddy and Tsegay Garment as a fashion designer and Sewing Machine
Operator for one and half years. During this period she has established strong business
relation/network with wholesalers and distributer of cloths who come from all over the country.
In the process she built excellent reputation for customer service. Hence, she will utilize all these
networks to the company’s advantage.

6.3. Sales Strategy

The sales strategy of Abaynesh Garment Company is simple. The key to customer satisfaction is
having the product and services that meet the customer's needs. A crucial part of that is availing
our products as per the requirement of our customers.
6.4. Pricing Strategy
The pricing strategy of our company is mark up of 10 % of the direct cost of goods. I have
assessed the profit margin of the small and micro garment manufacturers in the city. I found that
the profit margin ranges between 10 to 20 percent. In order to penetrate in to the market and
attract large number of customers my company will apply the lowest profit margin in the
industry.

7. SWOT Analysis
Strength:
 Recruitment of highly trained tailors to produce quality product
 Discounts are available for bundle buying.

 Expertise in providing good customer service

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  Customization available for individual customers

 Well-timed delivery

 Quality guaranteed goods

Weakness:
 New in business as compare to rivals

 Huge capital required to start business as credit is not easily available from supplier in
start
Opportunity:
 Sector is growing fast in state and in the area our business operating

 Girls’ wear demand is huge

 High birth rate and high population of the country

Threat:
 Competition is high and big in the industry

 Changing fashions and changing behavior of demographics

8. Management and personnel

8.1. Management Plan

The management and the workers of the company is made up of with the owner and manager
(Mrs. Abaynesh ) and three other personnel’s.
8.2. Personnel Plan
The required man power of the company is discussed as follows

No. Description Req. No. Monthly Salary Annual Salary

1. General manager 1 5,500 66,000

2. Sewing Machine Operators 3 2,500 90,000
3 Cutting and Overlook machine operator 1 2,200 26,400
4 Sub total 5 10,200 182,400

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 Employees benefit 16% of monthly salary 1,632 29,120
Grand Total 5 11,832 211,520

9. Financial Plan
It is assumed that the owner's private resources and loan from micro finance is required to start
the business. The following pages include multi-year projections for income, cash flow, balance
statement, as well as estimated financial ratios.

9.1. Assumptions and Parameters

Working days per annum: 300
Number of Working Hours per Day: 8
Profit margin: 5% of the cost of goods sold
Products stoke period is maximum 2 days
Yearly 10% growth for costs and revenue
Machinery Depreciation: 20% of the purchasing cost
On average one sewing machine operator can make 60 shirts per day or 50 trousers per day.
Price of synthetic cloth fabric required for tight fit trousers for women: 120 birr per meter
Price of cloths fabric required for shirts: 170 birr per meter
Decoration required for shirts: 5 birr for each shirts
Accessory for tight fit trousers: 2 birr for each
Average Sewing Thread cost: 3 birr for each (For both shirts and trousers’)
Wastage: 5%
On average one tight fit trouser can be produced from 0.65 meter of close fabric
On average one shirt can be produced from 1.15 meter of close fabric
Production program
Shirts 30% 16,200 Pcs per year
Tight fit trousers for women 70 % 31,500 Pcs per year
Unit cost of Shirts

Ser Type of raw Average Input Price

. Total Cost
materials utilization
No Qt Birr Birr
close fabric
1.25 meter
1 1.25 170.00 213
accessory 2.5
2 pcs
2 0.60 0 2

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 Sewing 3.0
1 unit
3 Thread 1.00 0 3
wastage 170.
5.00%
4 0.06 00 11
packing 2.0
1 unit
5 material 1.00 0 2
Total 230

Unit cost of Tight fit trousers for women

Ser Input Price Total Cost

Type of raw
. Average
materials Qt Birr
No Birr
close fabric
0.65 meter
1 0.65 120.00 78
Accessory
0.8 meter
2 0.80 2.50 2
1 unit
3 Sewing Thread 1.00 3.00 3
wastage 10
5.00%
4 0.03 0.00 3
packing material
1 unit
5 1.00 2.00 2
Total 88

9.2. Start-up costs

The project needs the following machineries and equipments

Unit Cost Total Cost

Description Unit Qty
(Birr) (Birr)
sewing machine Pcs 3 14,500 43,500
overlook machine Pcs 1 9,000 9,000
Inter-look machine Pcs 1 1,500 1,500
Cutting machine Pcs 1 6,000 6,000
Installation and transport
3,000
cost
Total investment costs 63,000

9.3. Total Operating Costs

The details of operating costs of the project are discussed here under.

Proj
ect
Yea
Description rs
1 2 3 4 5

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 Direct Cost
cost of raw material 6,498,00 7,147,80 7,862,58 8,648,83 9,513,72
0 0 0 8 2
Sub-Total 6,498,00 7,147,80 7,862,58 8,648,83 9,513,72
0 0 0 8 2
Indirect Costs
Salary 211,520 232,672 255,939 281,533 309,686
Travel & Perdiem 10,576 11,634 12,797 14,077 15,484
Telephone 3,600 3,600 3,600 3,600 3,600
Uniform & Protective 2,600 2,600 2,600 2,600 2,600
Oil & Lubricants 630 630 630 630 630
Litter and cleaning 40
400 400 400 400
materials 0
Rep & maintenance 1,260 1,260 1,260 1,260 1,260
manufacturing shad rent 120,000 132,000 145,200 159,720 175,692
Sub Total 350,586 384,796 422,426 463,820 509,353
Total Production Costs 6,848,586 7,532,596 8,285,006 9,112,658 10,023,075
Working capital
requirement ( For three
days all cost except rent 97,116.3
and three months’ rent
advance payment)

9.4. Total investment cost and Financial Plan of the Project

9.4.1. Total investment cost

The total investment cost of the project is birr 160,116.30.

Description Cost
Machineries and Equipments 63,000.00
Sub-Total 63,000.00
97,116
working capital
Sub-Total 97,116.30
Total 160,116.30

9.4.2. Financial Plan of the Project

Financial Plan
Total project cost Loan Owner's Equity

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 Micro finance loan Planned Equity Contribution
(80%) in Cash (20%)

160,116.30 128,093.04 32,023.26

9.5. Projected revenue of the project

The only source of revenue for the project is sales of readymade garments. The sales revenue of
the project is forecasted here under for five years.

Project
Year
profit
Source of Revenue margin 1 2 3 4 5

Sales of readymade 10% of the 7,147,80 7,862,58 8,648,83

garments direct costs 0 0 8 9,513,721.80 10,465,093.98

6,498,00 8,648,8 9,513,721 10,465,093.

Total 0 7,862,580 38 .80 98

9.6. Projected Income Statement

As shown in the table below the project will bring a profit of birr 173,146 in the first year and
birr 279,123 at the end of fifth year.

P
r
o
je
ct
Description Y
e
a
r
s
1 2 3 4 5
Net Sales Income 7,147,800 7,862,580 8,648,838 9,513,722 10,465,094
Less: Production Costs 6,848,586 7,532,596 8,285,006 9,112,658 10,023,075
Income Before Int, Depr& Tax 299,214 329,984 363,832 401,064 442,019
Less: Interest 20,235.48 13,323.01 5,058.34
Income before Depreciat. & 278,97 316,66 358,77 401,06 442,01
Tax 9 1 4 4 9
Less: Depreciation Expense 12,600 12,600 12,600 12,600 12,600

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 Income before Tax 266,379 304,061 346,174 388,464 429,419
Less: Income Tax 35% of IBT 93,232 106,421 121,161 135,962 150,297
Net Profit/Loss 173,146 197,640 225,013 252,502 279,123

9.7. Projected cash flow statement

Table below shows the projected cash flow statement of the project for five years.

Project Years
Description 1 2 3 4 5
Cash Inflows
173,14 197,64 225,01 252,50 279,12
Net Profit / Loss
6 0 3 2 3
12,60 12,60 12,60 12,60 12,60
Annual depreciation Expense
0 0 0 0 0
185,74 210,24 237,61 265,10 291,72
Total Cash Inflows
6 0 3 2 3
Cash Out
flows
Loan repayment - -
35,337 42,249 50,514
Withdrawal : 20%of the Net 34,62 39,52 45,00 50,50 55,82
profit 9 8 3 0 5
69,96 81,77 95,51 50,50 55,82
Total cash outflows
6 7 6 0 5
115,78 128,46 142,09 214,60 235,89
Net cash flow
0 3 7 1 8
115,78 244,24 386,34 600,94 836,83
Cumulate Cash Balance
0 3 0 1 9

9.4. Projected Balance Sheet Statement

Projected
Balance
Sheet
Project
Years
Description 0 1 2 3 4 5

Assets

Current Asset

Cash -
115,780 244,243 386,340 600,941 836,839
Inventory 97,116 97,116 97,116 97,116 97,116 97,116

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(W/cap)
Total
97,116 212,897 341,360 483,456 698,057 933,955
C/Assets(1.1)
FIXED
ASSETS
Machinery and
50,400 -
Equipments 63000 37,800 25,200 12,600

Total F.Assets 63,000 50,400 37,800 25,200 12,600 0

assets total 160,116 263,297 379,160 508,656 710,657 933,955

Liabilities &
Capi

Liabilities

Loan - - -
128,093 92,757 50,508
Sub-Total 128,093 92,757 50,508 -

Capital

Owner's Equity 32,023 32,023 32,023 32,023 32,023 32,023

Retained
- 138,517 296,629 476,639 678,640 901,938
Earnings
Sub-Total (2.2) 32,023 170,540 328,652 508,662 710,664 933,962
Total liabilities
160,116 263,297 379,160 508,662 710,664 933,962
& Capital

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