Shemsu Shafi Business Plan

Industry Overview

Building material wholesale companies in basically engaging in trading and then package and sell
them to wholesale distributers or other Buildingmaterialrelatedbusiness. They purchase Building
Raw material inputs from wholesalers or directly from growers.

The main fact that Building material wholesale provide goods that are considered building steeples,
the industry whileremain relevant in the years to come. The revenue and profit generated from this
industry will depend on the price and production of Building material. As companies vertically
integrate and merge operations to take advantage of economies of scale revenue will rise.

According to areport related by theBuilding material industry of which Construction material

wholesale production line of business is a part of is characterized by a low level of market share
concentration. The report 2021, the top three players are expected to account for less than 43
percent revenue.

While the industry exhibits low concentration, the industry is expected to approach moderate
concentration over the next

Executive Summary

Shemsu Shafi Was a starting business located in the SNNPR ofDilla Town. The company
specializes in the Supplies and Trade of BuildingMaterial, specifically Cement Nail, Tin, Paint
Etc.

Shemsu Shafi Will Wholesale a wide Range of Building Material and Building Finished
material at affordable prices from different brands and manufacturers both form Ethiopian
and other countries and around ofDilla area

Apart from retailing the goods and products of top brands in the industry, my customer care
is second to be known in the whole of Dilla town and woredas around the town. I know that

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my I will go the extra mile to get them satisfied when they visit store and also to become my
loyal customer’s member and ambassador

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plan. This is the sole proprietorship business that is owned by my legal Agent ShemsuShafi .
I have well over 5 year of experience in this Business industry

1.1 Objectives

ShemsuShafi .is in the Building materials Wholesale trade store industry and I ensure I will
go all is a growth-oriented business. Its ten year goal is to become a regional leader in
Building material Sales, with store in the Dilla and Environments area. With this in mind,
the objectives over the next three years for ShemsuBuilding Material Trade are the
following:

 Achieve steady growth in sales revenues by year three.

 Achieve local market share (in the Dilla area) of approximately 20% by year five.
 Expand product line to include authorized Construction material consumption sales.

1.2 Mission

The mission of ShemsuShafi .Building Material Trade is to provide high quality, convenient
and comprehensive Cement, Nail, Tin, paint and other material preparing at a low cost. The
most important aspect of our business is trust. It is the goal of our firm to have 100%
customer satisfaction in regards to product, and time to completion, and discover new ways
to exceed the expectations of our customers while doing so at the lowest possible cost.

1.3 Keys to Success

In the Raw material preparation a company builds its client base one customer at a time and
mostly through established marketing practices. With this in mind, the keys to success for
ShemsuBuilding Material Trade are:

 High-quality work.

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  Attention to professional appearances at all times.
 Knowledgeable Employees that are friendly, customer oriented, and will take the time to
explain to customers the intricate nature of our business and our work.
 Maintaining a highly aggressive managerial oversight on costs to provide our services at the
lowest price.

Company Summary

ShemsuShafiBuildingis envisioned to be the low cost leader in BuildingMaterialindustry

Manufacturing Product for theDilla area that will also be able to eventually provide
Building material sales/servicing and raw Material sales, making it the local leader in
comprehensive construction material sales/services.

The company will be a sole proprietorship registered in the state of SNNP and owned by Mr.
ShemsuShafi .The initial facilities will contain a sales area, repair room in the back of the
shop, office space and storage for parts and inventory.

2.1 Start-up Summary

The data obtained for the opening table comes from research done in the dilla area with
other small raw material warehouse who have started their own business, in addition to Mr.
ShemsuShafiprevious experience within thebusiness. Inflation has been taken into account
between the estimates of these fellow business owners (and when they started) and the
current prices for expensed items. Much of the product to go into the facilities such as tools,
are currently owned by Mr. ShemsuShafi .

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own business plan.

Business and Services

ShemsuShafi Building Material Trade offers a wide range of services as outlined in the
detailed sections below. It is ultimately the goal of the company to offer a one-stop facility

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for all Building material Consumption needs, including both sales and servicing. In this way
the company can offer greater perceived value for the customer than many other
Storewhich only offer sales or services.

The business is highly competitive with suppliers having a great deal of power in setting and
negotiating the prices of their products and services to selling store. In addition, because the
customers see the service as undifferentiated and a “commodity” with little value separation
between competitors, buyer power is also very high. Finally, the barriers to entry are
moderately low, and the large number of competitors in this field, including substitutes
(such as do-it-yourself work) means that the pricing for such sales is very competitive. The
only way to have an advantage in thisbusiness is a low cost leadership principal applied
aggressively or to create higher switching costs through the building of strong business-to-
customer ties. It is the aim of shemsuShafi Buildingmaterial Trade tocreate a competitive
advantage through both the low cost strategy and by offering greater value through its
broader product and service line.

3.1 Product and Service Description

ShemsuShafi Building Material Trading provides a wide range of home Building Consumption
services. These include:

 Construction Material of home and home Building Tin and Cement.

 Selling and cleaning of Building consumptions.
 Sale of Cement Tin, Paint, Nail and MDFs.
 Authorized warranty servicing on all major Construction material Consumption
systems.
 Face to face contact and free transport and delivery.

Future products and services that ShemsuShafi Building material will prepare to institute
include Cement Tin, Paint, Nail and MDFs .Supplies and servicing, sales of building Material

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 3.2 Sourcing

ShemsuShafi Building material will be obtaining most of its parts through established dealers
and directly through the supplies of the relevant Materials. As part of the wholesales low
cost strategy, the merchandise will seek to purchase parts in large quantities whenever
possible to take advantage of volume discounts. In addition, the company will aggressively
seek to procure its parts from local suppliers in order to start forming close relations with
such organizations. It is the ultimate aim of ShemsuShafi to form strategic partnerships with
such organizations in order to lower overall costs of goods.

A large part of ShemsuShafiBuildingMaterialenhanced services will be free transport and

delivery of construction material to a person’s Building Site .

3.3 Competitive Comparison

The Buildingmaterialis highly competitive. Each organization within this field has high labor
costs, low margins, and a high intensity of competition.

Suppliers have a great deal of power in setting and negotiating the prices of their products
and services to Seles shops. This is due to the fact that the suppliers who absorb the
greatest amounts of cash from Seles shops are large Building material supplies companies
such as Sale of Cement Tin, Paint, Nail and MDFs etc. These organization aremore
consolidated than the trade industry, have deeper pockets, an almost limitless number of
substitute customers, and finally they are the single most important supplier to the raw food
preparation organization. Therefore, these companies can set whatever price they wish to.
Furthermore, labor is the single most important expense in this Organization, and salaries
for such individuals are well known and not very flexible.

3.4 Future Business and Services

Future products and services that ShemsuShafi Building material will prepare to institute
include Cement Tin, Paint, Nail and MDFs Factory and servicing, sales of new Building

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Finished material and /sale of Building material . Mr. Shemsu also investigating the
possibility of offering a new product line of Building material cabinets at some future date.

ShemsuShafi Building material Trade will start implementing these new products or services
in the following time periods:

The capital investment needed for such expansion will primarily come from the company’s
accumulated operating cash account. It is anticipated that some of these product/service
expansions that require significant inventory, such as new sales, may require additional
cash inflow such as loans. The organization will be preparing business plan for various
lending institutions in anticipation of this need.Our Request Bank loan.The Following
Merchandise Inventory ShemsuShafi Building material Proposal.

Presently the product that is really driving the preparation building finishing material
market is good activity. While ShemsuShafi not currently positioned to take advantage of this
situation, it is the long-term goal of ShemsuShafiincorporateBuilding Material Supplies
services within the company. Once the firm is able to generate enough cash to retain the
services of a Building material Consumption supplies Seles , the organization only will
evaluate the viability of such a move. It is anticipated that this service will be offered
sometime after 3rdMarch 2015.

Market Analysis Summary

There are approximately 3,500 households in the greater Dillaarea, which includes suburbs
such as Green Valley, Ina, and South dilla. Virtually all of these households have Cement, Tin
Paint MDF’s etc. Dilla Construction Material segments its market into product categories
that reflect the estimated number of each Building material Consumption currently being
used in the greater Dilla area, since each of this Buildingmaterialmay fail at any time and
require our product. In addition the growth rate of each product emplaced in the home is
based on the current sales growth of each product. Presently, the fastest growing product, in
terms of sales, is the Cement . It is anticipated that the Cement will replace the product the
next three to five years as movie Whole sales stores replace their existing with Cement. The

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largest segment is the Store segment, since usually a household has more than one of these
systems. The wholesale will be focusing on selling all of these systems, and not focusing on
one over the other.

4.1 Market Segmentation

ShemsuShafisegmented the households in the Dilla area as follows:

 Provide with Society.

 provide without Retailer
 Retired people.
 Yang living in multi-unit housing.
 Single people living consumption.
 Single people living with Construction material consumption.

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plan

4.1.1 Market Trends

The market demand for Building material consumption has been relatively stable over the
past decade. With the advent of Cement the market is seeing more highly trained Seles Man
needed. As technology progresses, long-term planners within this market expect to see new
opportunities for Building Consumptionquickly arise. Such Inventory as cellular Cement
andotherBuilding Material products may have a role to play in the people who have a broad
vision in this field.

4.2 Service Business Analysis

Much of the Building Material analysis is contained in the competitive comparison section.
However, the key points are that the industry is highly competitive and that most firms have
little power to affect the forces that influence them or to affect the price levels that the
market determines. In essence, ShemsuShafirates in a purely competitive environment
where the demand curve is horizontal. In other words the organization is discounts

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tosalesConstructionmaterial maximum capacity without effecting the price or demand for
its services. With this type of environment and with customers seeing such services as a
“commodity” the only strategy open to companies in this field is the low cost leadership
approach.

The low cost leadership strategy will not be simple to achieve. Realistically speaking,
because of the fragmented nature of the wholesale, Sultan Construction materialwill only
seek a low cost leadership in the South region for the first seven to ten years of operations.
In order to capture this position and achieve its benefits of high market share and
profitability, the company is expected to have higher provided costs and lower profits
within the first few years as the company invests in better and more efficient facilities and
product than most competitors and engages in aggressive pricing to capture market share.
The organization will rigorously evaluate every aspect of the company to improve efficiency
and lower costs. Once in operation, management will concentrate on developing
established procedures that will create the most effective sales experience. Finally, as part of
this low cost leadership strategy, the company plans to vertically integrate to include
original sales and broad services that will spread costs and serve all major customer types
so as to build volume.

4.2.1 Competition and Buying Patterns

Customers traditionally purchase services in this industry because of effective advertising

and reputation. The customers wish to be reassured that they will receive prompt
andreliable service and have an understanding service representative will listen to their
problems and seek to solve them in a fast and professional manner. Therefore image during
the entire service experience is crucial to maintain word-of-mouth marketing and keep a
low corn rate. Currently the largest problem that faces small firms is product/service
awareness.

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4.2.2 Business Participants

As stated before, the Buildingmaterialis highly deprivation . In fact, there are so many small
providers that any company in this industry is facing a purely competitive environment.
Approximately 2,900 Construction Material firms exist in the country today. Firms within
this field range in sizes from the “mom and pop” outfits such as Cement andTinSeles in
downtown dillato regional companies like yirgachefe supplying and the national chains
such asdillaCity. Not all of these organizations are purely sales outfits. In fact all of the larger
firms make the majority of their revenue in original sales. It is these companies that have
the largest market share and have the opportunity to compete by differentiating on
customer sales or product/sales range.

5.1 Pricing Strategy

Shemsu exists in a purely competitive environment where each firm must be a price taker.
In other words, the firm has no ability to affect the market price of its services, regardless of
how many Cement, Tin, Paint MDF’s it Seles. In this case, therefore, marginal revenue (the
revenue incurred by producing or servicing one more unit) is equal to the price charged.

Furthermore, because the demand curve is essentially

horizontal,ShemsuShafiserviceRawmaterial at total capacity without effecting the price.

What all of this means for the company is that the we must seek to charge our clients at the
market price (or lower). Research has shown that the average price is approximately
Birr755 per BuildingMaterial. As long as marginal costs do not exceed revenues, the
company’s method to maximize short-run profits is to service the various home
consumption at maximum provided. This means that ShemsuShafiBuildingmaterialcan
expect anshort–termCement of approximately 94%.

5.1.1 Promotion Strategy

The company’s promotion strategy will take the form of only face to face Approach, price
discounts, andfree test fresh Construction Material. Cement expects to spend a large amount

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on marketing in the first two years in order to build up product awareness and sales value
in the minds of our customers.

5.2 Competitive Edge

Our purchase forecast

U/M Year 1 Year 2
Item Description Quant U.P Total Quant U.P Total
Quinta
Cement l 22839 1,190 27,185,809.84 28,545.00 1,309.00 37,365,405.00
Tin Piece 10990 930 10,220,700.00 1090 1023 1,115,070.00
Nail Packet 3340 1,320 4,408,800.00 4009 1,320 5,291,880.00
Paint Gallon 435 475 206,625.00 5012 475 2,380,700.00
Total Sum 42,021,935 46,153,055.00
Shemsu Shafi competitive edge lies in its ability to provide quality and fast Construction
material supplied at lower cost than any local small competitor. This positioning of the
organization provides protection against the power of suppliers by creating more flexibility
to cope with increasing costs. In addition, this approach will provide returns even during
economic downturns and when other unforeseen problems arise

Sales Forecast

The sales forecast is based on the estimated number of construction material

theorganizationcould service that are currently emplaced in the homes in Dilla. This is
conservatively estimated at about two million units. From that number it is assumed that
approximately 3% of all those will fail in any year. These two numbers multiplied together
give us yearly market demand for our sales. With an aggressive promotional strategy, a 10%
market sales is assumed by year three and multiplied by the estimated market demand. This
is then multiplied by the estimated price per unit to arrive at the yearly sales figure assumed
for year three (once the wholesale marketing efforts have paid off). This number is then
decreased by a logical amount to estimate the first two years of revenue.We recommend
using LivePlan as the easiest way to create table for your own business plan.

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 Our Salse forecast
Item Year 1 Year 2
Description U/M Quant U.P Total Quant U.P Total
Cement Quintal 22839 1,293.83 29,549,783.37 28,545.00 1423.21 40,625,529.45
Tin Piece 10990 1,010 11,099,900 1090 1072 1,168,480.00
Nail Packet 3340 1,430 4,776,200.00 4009 1490 5,973,410.00
Paint Gallon 435 515 224,025.00 5012 475 2,380,700.00
Total Sum 45,649,908.37 50,148,119.45

7.1 Personnel Plan

Shemsu Shafii nitial staffing will consist of Mr.Shemsu Shafi, General Manager , and two part-
time sales man trainees. Accounting, bookkeeping, and casher will be outsourced. The
organization intermediate goal is to have four full-time, fully trained Sales man at the original
facility, plus a full-time wholesale owners. However, management has decided to await future
developments before determining the best time to bring on such owner.

Financial PlanThe following sections outline the financial plan for Shemesu Shafi
BuildingMaterial

General Assumptions
Plan Month 1 2 3
Current profit Rate 10.00% 12.00% 15.00%
Long-term profit Rate 10.00% 15.00% 20.00%
Tax Rate 35.00% 35.00% 35.00%
Other 0 0 0
I would need an estimate of bill 20,000,000 to successfully set up my construction material
store in Dilla town but form this I will use saving account and I will require 20,000,000 birr
from interest free financing from CBE Dilla District

Generating Funding For ShemsuShafi Construction Material Trade Shemsu Shafi

Construction material trade is private business that is solely owned and financed
byShemsushafi. they do not intend to welcome any external business partner which is why
he has decide to restrict the sourcing of the start –up capital major sources

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 These are the area I intend generating may start –up capital

 Generate part of the start –up capital from personal Saving

 Apply for interest free Financing from Commercial bank of Ethiopia Dilla
district

We recommend using Live Plan as the easiest way to create automatic financials for your
own business plan.The business the two year projected cash flow statements as follows

Shemsu Shafi Building Material

Income Statement
For the Towelve Month June 30, 2024-25
Revenues Year 2024 Year 2025
Salse Revenue 45,649,908.37 50,148,119.45

Total Revenues 45,649,908.37 50,148,119.45

Cost of Sales
0
Add Purchase 42,021,934.84 46,153,055.00
Total Cost of Sales 42,021,934.84 46,153,055.00
Gross Profit 3,627,973.53 3,995,064.45
Expense
Waerhouse Rent Expense 394,419.52 408,123.00
Loading Unloading Expense 338,000.00 513,450.00
Transport Expense 608,263.00 623,457.00
Utility Expense 4,325.00 8,765.00
Feul Expense 5,220.70 7,654.00
Dep Epense Automobile 435,058.40 555,058.40
Dep Expense Building 156,600.00 156,600.00
Total Expenses 1,941,886.62 2,273,107.40
Net Income Befor Tax 1,686,086.91 1,721,957.05
Provision Profit Tax 572,130.42 584,684.97
Net Income After Tax 1,113,956.49 1,137,272.08

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 Shemsu Shafi Building Material
Balance Sheet
June 30,2024-2025
ASSETS
Current Assets June 30,2024 June 30,2025
CASH ON HAND 415,044.96 402,145.00
Inventory 1,220,329.49 992,666.75
Total Current Assets 1,635,374.45 1,394,811.75

Property and Equipment

Building 3,132,000.00 3,132,000.00
Acc Dep building (156,600.00) (313,200.00)
Aotomobil 2,175,292.00 2,775,292.00
Accumulated Depe Automobil (435,058.40) (555,058.40)
Total Property and Equipment 4,715,633.60 5,039,033.60
Other Assets

Total Other Assets

Total Assets 6,351,008.05 6,433,845.35

LIABILITIES AND CAPITAL

Current Liabilities
Profit Tax Payable 572,130.42 584,684.97
Total Current Liabilities 572,130.42 584,684.97

Long-Term Liabilities
Bank Loan
Total Long-Term Liabilities -

Total Liabilities 572,130.42 584,684.97

Capital
BEGGNING EQUITY 3,355,585.11 3,355,585.11
Retained Earninigs 737,205.61 771,618.22
Net Income 1,686,086.91 1,721,957.05
Total Capital 5,778,877.63 5,849,160.38
Total Liabilities & Capital 6,351,008.05 6,433,845.35

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 Shemsu Shafi Building Material
Statement of Cash Flow
For the Towelve Month June 30, 2024-25
Income June 30,2024 June 30,2025
Sales 45,649,908.37 50,148,119.45
other income 0 0
Total Cash inflow 45,649,908.37 50,148,119.45
Cash Outflow 0 0
Purchase 42,021,934.84 46,153,055.00
Expense 1,941,886.62 2,273,107.40
Total Cash outflow 43,963,821.46 48,426,162.40
Less Deperciation Expense (591,658.40) (711,658.40)
Nate Cash Flow 2,277,745.31 2,433,615.45
8.1 Break-even Analysis
The wholesale break-even analysis is based on an average company’s running costs within
this organization, including payroll, and its fixed costs for such things as rent, utilities, etc.
As ShemsuShafi Building operates as a job-wholesale, with each task unique, customized
sales, it is difficult to estimate revenue per unit and goods costs. The reader must
understand that there is a high degree of variance within these estimates.

The reader will also note that the organization is not expected to reach its break-even point
until the last three months of sales of the first year.

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