Small business plan

1. Executive summary
As a recent research made by Mercer human resource consulting shows our city
Addis Ababa is the 5th dirtiest city in the world. Another research made by Dr.Yisak Tafere
(central statistical agency executive secretary) states 56% of this untidiness is caused by
packaging materials that people throw away after using what’s packed in. Waste Dizo-Art is
a company that reuses packaging materials to produce different artfully designed
merchandises that will protect the environment while also offering trending, in demand
and competitively and fairly priced products. Emphasis is placed on reusing industrial
packaging products that are driven by the society such as bags, artistic candle sticks,
decorated light bulb sticks patterned and hairbands and pen-handles.

The company will compete in a highly fragmented but competitive market. So it has
carefully chosen and combined variety of promotional strategies into a unique marketing
mix to gain as much market share as possible. After the business started and becomes
stable, we have also planned on starting an e-commerce marketing campaign based on web
content, engine search optimization and a brand promise that sets the store apart from its
competitors. Waste Dizo-Art will also accept requests from customers and produce custom-
made products.

The company will need an estimated value of around 1 million birr from the starting
of the business. Around 500,000 will be provided from our saving while the other 500,000
will be requested from commercial banks as mid-term loan that is about to be paid in about
3-5 years.
 Small Business Plan

Table of content page

1. Executive summary--------------------------------------------------1
1.1 Mission-----------------------------------------------------------------------3
1.2 Vision ------------------------------------------------------------------------3
1.3 Objective---------------------------------------------------------------------3
1.4 Value--------------------------------------------------------------------------4
2. The business-----------------------------------------------------------4
3. Funding requirement-------------------------------------------------5
3.1 Cost benefit analysis------------------------------------------------------6
3.2 Revenue---------------------------------------------------------------------6
4. Product or Service----------------------------------------------------7
4.1 competitive comparative------------------------------------------------8
5. Then plan---------------------------------------------------------------8
5.1 Marketing plan---------------------------------------------------------------8
5.2 Operational plan------------------------------------------------------------9
5.2.1 Collection system-----------------------------------------------------------10
5.2.2 Storing system----------------------------------------------------------------10
5.3.3 Designing and construction------------------------------------------------11
5.3. Organizational plan------------------------------------------------------11
5.4. Financial plan--------------------------------------------------------------12
6. Critical risks-----------------------------------------------------------15
7. Exit strategy-----------------------------------------------------------16

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1.1 MISSION
From the day of its establishment, Our Company’s customer-oriented mission will
always be stated as its brand promise:

 Offers unique and artful products at a fair price

 Provide excellent customer service through one-on-one knowledgeable
salesperson
 Accept complaints and provide fast and on-point solutions
 Accept customer request on a specific custom-made products
 Accept easy returns who are dissatisfied with purchases(online or not)

1.2 vision
Waste Dizo-Art leads at creating customer-oriented practice of changing waste into
beautiful and artful products.

As an outcome people who live around Addis Ababa:

 Will be well informed about the usage of wastes

 Take responsibility on not contributing to the untidiness of our country, but rather
helps us gain raw materials.
 Will experience the highest level of waste-reusing.

1.3 OBJECTIVES
Waste Dizo-Art’s objectives are to offer competitive, beautiful and artful products
while also contributing a lot to our city, Addis Ababa’s sanitation. Our company aims to
create awareness about the usage of ‘non-useful materials’ while also generating money.

 Using of limited capital to generate good amount of money.

 To be valued business company for our customers.
 To search for a new and improved way of utilizing waste packaging
materials.

1.4 values
 Customer-oriented service

 Honesty, integrity and professionalism

 Hard work, dedication and achievement

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2. The Business
For several years, industrial packaging materials were our stunning problems after
using them. Our streets are in full of packaging materials that are not considered after
usage. Industries use packaging materials to import their raw materials from other
country’s industry. They deliver their products for consumers by packing. Households use
the packaged commodities and they just consider these packaging materials as a waste. As
a result, they put them in waste collector tanks without considering their destructing effect
on their environment. Consequently, looking such wastes on Addis Ababa`s roads,
riverbanks, drainages, and waste collection sites are common. So, the government of
Ethiopia and also other private institutions have tried to decrease this by constructing
plastic collecting and recycling centers in capital city of Ethiopia, Addis Ababa. Some of
them are Reppi recycling center and ROSE business group, which both of them work on
collection, segregation and recycling plastic wastes. Unfortunately, they couldn`t minimize
its effect because plastic materials cannot be recycled more than two or three times (it is
dependent on the quality of the raw material that is used for making the plastic). In addition
to this, it’s not only plastic wastes that are found in the city. All packaging materials
including, Glass Packaging, Paper and Board Packaging, Plastic Packaging, Metal Packaging,
are can be found in the city. Therefore, the other wastes other than plastic are still in the
city.

As a solution giver, by considering these problems, we are here to change these

problems into wealth. Industrial packaging materials reusing project (IPMRP) is the first
project in our country that works on collecting, organizing and managing industrial wastes
(packaging materials) which aims to change them in to artistic materials. Our Company will
work to change them in to useful things by designing and investing arts on them. That is
why we call our company’s name “Waste Dizo-Art” – means changing waste to wealth by
using the power of designing and art. The aim of the project is to minimize industrial
wastes by increasing its scope into different waste types. In addition to plastics, it works on
metal, paper and other packaging materials.

The form of ownership of the business is proprietorship on which two of our partners
are designers, whom will use their artistic styles in the process of changing these materials.
Another one of our partner is a current graduate of business management, which will take
the role of manager in the company. We have also one accounting graduate partner who
will take a task of controlling the business progress of the company. On top of that, the
project needs the collaborative effort of industries, waste collectors, designers, ordinary
workers and investors. The collectors must collect these wastes from industries up to
household level. Due to the continuousness usage of manufactured materials by the clients
of industries, we can find a lot of raw materials from people. Using these collected wastes,

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designers aim at changing them in to useful and amazing things using their designing
ability and capacity.

The headquarter of the company will be on a place found nearest to Reppi landfill. This
will help us get access to wastes which are significant portion of the raw materials that the
business need. In addition to decreasing the cost on buying raw materials, getting closer to
the landfill will also minimize the transportation cost of delivering these wastes from the
landfill to our workshop site.

3. Funding Requirement
The following tables and descriptions include the capital that we need for both fixed
inputs and variable inputs that are necessary for the business. In addition to this, the
analysis below includes a monthly cost-benefit analysis and the businesses’ monthly profit
after start producing in the first month of production.

We have planned to get the financial support of the business covering both fixed capital
and operating costs from Commercial Banks that will be payed within two years. This will
be done by getting “medium term loan” from these banks on which we can repay it within
five years.

Capital needed: 500,000 Ethiopian Birr

N Item General Projection (In birr)
o
1  Machines: like
 Sewing Machine 200,000
 Small tools like hand saw
 And others supplementary materials

2  Storeroom(rent) 20,000
3  Sales shop 50,000
4  Payment for raw materials 40,000
5  Wage & Salary for – Accountant
-Designers 60,000
-Crafters
- Raw material collectors
-Supervisor
-Sellers

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6  Payment for Electricity Consumption 20,000

7  Total 390,000

3.1 Cost -Benefit Analysis per Month

Costs
No Item Fixed Costs
1 Salary for payment staff 50,000
2 Depreciation of machine 5,000
No Item Variable Costs
1 Payment for electricity 5,000
consumption per month
2 Payment for raw material 20,000

 Therefore the total cost will be :- 80,000 birr

3.2 Revenue
 If the company produces 30 different products per day and sell those by 100 birr
per unit product the revenue at the end of the month will be 90,000 birr.

= Price x Number of produced quantity x Number of days

= 100 x 30 x 30

= 90,000 birr

 If the company produce 50kg of product per day and sell it for 100 birr per 10kg of
product the revenue at the end of the month will be 15,000 birr.

= Price x Number of byproduct per 10kg x Number of days

=100 x 5 x 30
= 15,000 birr

 Therefore, the total revenue will be: 15,000 + 90,000= 105,000 birr
 The final profit of the company per month will be;
= TR-TC

=105,000 – 80,000

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= 25,000 birr

TC (Total Cost)=80,000 TVC(Total Variable Cost)=20,000

TFC(Total Fixed Cost)=60,000 TR(Total Revenue)=105,000 Price=100

 Notice: This is a profit for the business after paying all workers including us
within a month.

4. The Product or Service

Our business company produces multiple and diversified goods, which are
significantly constitute, home tools that can be used by the customer at house-chore. Some
of these products include: Simple Bags, Artistic Candle Sticks, Decorated Light Bulb Sticks
and so on. We will start our business with these simple products. And within few years, as
the business began accumulating capital we will expand the variety of products that we
produce to more artful materials such as; tools that can be used for home decoration. We
will also launch our website for online sale that will be easy to use.

4.1 Competitive Comparison

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Ethiopia use free market economic system that answers economic questions like:

 How to produce?
 What to produce?
 For whom to produce?

All these questions are answered by producers and consumers. Therefore, producers
produce their own product and compete by increasing or decreasing their price, increasing
its quality or by making effective advertisements. In order to stay in the market producers
follow the force of demand and supply.

Our company also has the competitors that produce nearly the same products like us.
These are leather companies, small enterprises and so on. There is some distinction
between their product and ours which lays on raw materials. Most of our competitors use
very expensive raw materials like leather and so on to produce while our production takes
place by using very cheap raw materials. This will enable us to produce merchandises with
cheap cost than our competitors.

The difference of usage of raw materials will make some variation in the market and
attracting of clients. We can notice that in current market the price of small bag is from 150
– 300 Ethiopian birr, which is very expensive when it is competing with us. Therefore, we
can easily penetrate into the market by using this opportunity due to the low cost of
purchasing our raw materials.

5. The Plan
5.1Marketing Plan
The marketing work will be done through two paths. The first one is distributing our
products for other sellers, shops and wholesalers. The second is selling our products in our
shop. In addition, we will participate on opportunities like conferences, commerce
symposiums, exhibitions and other Medias that will advertise our products for the people.

Wholesallers
To other shops

store 8
Retailers
To our shops
 Small Business Plan

5.1.1 Promotion Strategy

We can expand our demand by participating and advertising our products in
commercial conference, symposiums. As we change strategies, however, we need to change
the way we promote ourselves:

 Advertising: We will be using local newspaper advertising, radio, and TV programs

in the initial.
 Sales Brochure
 Direct mail

5.2 Operational Plan

The business operation (methodology) will be adopted in five phases. Each phase have
continuous flow each other.

1) Collecting the wastes from different sources.

2) Differentiate and classifying the collected wastes in the storeroom.
3) Drafting and designing in artistic way on the paper.
4) Constructing what is designed in the third stage.
5) Selling it to the clients.

5.2.1Collection system
The waste collection work is facilitating by using two ways, the first is collecting
directly from industries, and the second is collecting from aggregate households. In the first
method, the company must work with different industries. In order to do this, the company
and industries will deal on an agreement that make industries to give their packaging
wastes to the company and our company will pay. These packaging materials can be
plastics, leathers, boards and cards that used for importing raw materials from other
industries. The second method is done by searching wastes in ‘kebele’ level. People give
packaging material to the collectors and the collectors pay them for it. The payment initiate
clients to give focus on this matter.

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As researchers, indicate, “In informal collecting system KORALES (informal waste

collectors) collected plastic materials from the households. In addition, 7.9 percent also
collected materials from the street, 9.5 percent collected materials from containers, 6.3
percent collected materials from the municipal landfill, and 3.2 percent collected materials
from garages.”(Camilla. L , 2005)

Source of materials for collection by the

Korales
70
60
50
40
30
20
10
0
Household Street Containers Landfill Garage

“On an average day, a korale collects around 15 kg of mixed materials. Assuming there
are 5000 korales, the number estimated in Section 8.2.5, 75 tons of mixed materials are
collected each day. After observing the korales and looking in their bags, and based on the
survey conducted, it estimated that 30 percent of the materials collected are plastic. This
results in a collection rate c.23 tons a day, i.e. 161 tons a week, or 690 tons a month and 8395
tons a year, for plastic materials.”(Camilla. L,2005 ). Therefore, we can collect enough raw
materials per day as we want.

5.2.2 Storing
The collected materials will collect in storeroom by classifying in to different
categories. After collection, the waste is going to be classified n to; Glass Packaging, Paper
and Board Packaging, Plastic Packaging, Metal Packaging.

5.2.3 Designing & constructing

In this process, designers use their artistic styles on the wastes to change them into
useful things.

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Requirements for Operation

 Machines like sewing machine and other
 Payment for rent of storeroom
 Payment for sales shop
 Wage \ Salary for workers
 Payment to buying raw materials from industries and households

5.3Organizational Plan
The organizational system follows the continuous path that connected to each other.
The organization managed by a manager that controls the overall system and flow of the
business. Specifically the manager checks the works of supervisor and accountant.
Moreover, the supervisor checks the works of designers & crafters by seeing the quality of
designs and constructed materials. After constructing of finished materials, the whole
finished materials register and make price (considering all costs) by an accountant. The
accountant also controls the works of the sellers in the market. Finally, the delivering of
commodities to the clients make by sellers

Manager

5.4 Supervisor Accountant

financial
plan
Waste Dizo-Art
Designers Crafters Sellers
P ro forma income
statement
From September 11, 2020 to September 10, 2021
Net sales
Average price per product 75 birr
Estimated sales per year 300,000item
Gross income= 75×300,000
=22,500,000 birr
Operating expenses
Labor 600,000 birr
Utilities 35,000 birr

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Insurance 400,000 birr

Sales promotion 15,000 birr
Raw material collection and product delivery 50,000 birr
Miscellaneous 13,500 birr
Total expense 1,113,500 birr

Net revenue before tax 21, 386, 500 birr

Less corporate tax 7,485,275 birr
Net income after tax 13,901,225 birr
Assumption

1. Net sales based on price 75 birr per item

105,000 sold in our local shop 8750 items per month

45,000 sold within orders and on our online website 3750 per month
145,000 sold to other shops and retailers 12,500 per month

Sales estimated based on 5% market share for prepared whipped topping in each
market.

2. Costs of product sold include raw material collection, labor and designing expenses.

3. No salary will be drawn by the owners/ managers in the first year; all profit will be re-
invested for new market penetration and increase production.

Waste Dizo-Art
Pro forma income statement
From September 11, 2021 - September 10, 2022
Net sales
Average price per product 75 birr
Estimated sale 500,000 items
Gross income =75×500,000
=37,500,000

Operating expenses
Labor 650,000 birr
Utilities 37,500 birr
Insurance 500,000 birr

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Sales promotion 23,000 birr

Raw material collection and product delivery 52,000 birr
Miscellaneous 14,000 birr
Total expense 1,276,500 birr

Net revenue before tax 36,223,500 birr

Less corporate tax 12,678,225 birr
Net income after corporate tax 23,545,275 birr

Assumption
1. Net sale based on price of 75 birr

150,000 items sold in our shop 12,500 items per month

252,000 items sold to retail 21,000 items per month
98,000 items sold custom-made and online 8,166 items per month

Sales estimated based on 10% sales increased from previous year.

2. Costs of product sold include raw material collection, labor and designing expenses.

3. No salary will be drawn by the owners/ managers in the first year; All profit will be re-
invested for new market penetration and increase production.

Waste Dizo-Art
Pro forma income statement
From September 11, 2022 -September 10, 2023
Net sales

Cost of product per price 80 birr

Estimated sales 750,000
Gross income =80×750,000
=60,000,000 birr
Operating expenses
Salary 332,000 birr
Labor 700,000 birr
Utilities 40,000 birr
Insurance 550,000 birr

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Sales promotion 25,000 birr

Raw material and product delivery 55,000 birr
Miscellaneous 15,000 birr
Total Expenses 1,717,000 birr

Net revenue before tax 58,283,000 birr

Less corporate tax 20,399,050 birr
Net revenue after tax 37,883,950 birr

ASSUMPTION
1. Net sale based on price of 80 birr
202,400 items sold in our shop 16,866 items per month
410,000 items sold to retail 34166 items per month
88,000 items sold custom-made and online 7,333 items per month
Sales estimates based on 10%sales increase from previous year.

2. Costs of product sold include raw material collection, labor and designing expenses.
3. Salary will be drawn by the owners/managers in the third year.

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6. Critical Risks
 Technology employed may be unreliable or unproven
Our company will use a proven and patented technology that was developed by one of
the most well-known recycling machine manufacturer company in our country with two
years warranty.

 There may not be a market for the company’s products.

Even though that’s very unlikely, as we work on most demanded products there are few
governmental and non-governmental institutions participating in the market of recycling
and reusing waste materials, hence the possibility of there not being a market for our
product, our company will provide the service of reusing waste using a unique, cheaper and
quicker way with the help of our experienced employees who know very well about this
market and industry wide experience of our management team.

 The company may not be able to sell all of its production capability

Provided that our company has started a campaign to create awareness about the
adverse effect of throwing waste products to the small and medium enterprises in the city
and rural areas, we managed to have potential customers and received commitments for all
of the production potential of the initial facility.

 The company may need more employees(more labor force)

The fact that the company is planning to recycle and reuse various types of waste
materials may require a lot of labor starting from the collection process up to the final
recycling process , since we are living in a country where labor forces are easily available ,
we can hire more employees as our business expand. But that also has its consequence,
because our labor force and machinery equipment’s capacity has to match.

 Unreliable weather condition might destruct the collection system.

Since some employees will work on collecting system, a nice weather is required.
Otherwise, it will be affecting some works.
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7.Exit Strategy
While careful planning was involved in setting the strategies for Waste Dizo-Art, it
may be that these goals are not met. We have decided to set a zone of acceptability for
meeting sales and financial objectives. For both sales and financial objectives, a 10%
negative deviation from expected sales and projected returns on assets will be accepted.
However, if sales objectives and returns on investment are less than 90% of projection, we
planned out to take these actions.

1. Merger
If the company is unable to continue production because of decreasing returns or
any other factor, we can easily merge the company with other companies operating
in the same industry.
Since there are few of companies that reuse industrial packaging materials, we can
find our ideal company to merge with. This way we can easily reduce costs of
operation, unite common products and increase profits all of which should benefit
the firms’ shareholders

2. Initial Public Offer

When the company’s production capacity decreases or losses occur, we can sell a
part of our business to the public in the form of shares. This strategy offers benefits
in the sense of enhancing access to liquidity for the company in the event that
investors are seeking returns or refunds earlier than anticipated , and we can easily
do that by creating awareness to the public of the profit they can make and their
contribution to the country as a citizen.

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