Business Plan for Ferezer Desalegn

Executive Summary

Ferezer Desalen Was a starting business located in the South Ethiopia Reign of Dilla
Town. The company specializes in the Retail and Trade of Construction Material ,
specifically Cement Nail, Tin, Paint Etc.

Ferezer Desalen Will Retail a wide Range of Construction Material and Building Finished
material at affordable prices from different brands and manufacturers both form
Ethiopian and other countries and around of Dilla Town 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 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

We recommend using Live Plan as the easiest way to create graphs for your own business
plan. This is the sole proprietorship business that is owned by my Ferezer Desalen. I have
well over 3 year of experience in this Business industry

1.1 Objectives

Ferezer Desalen is in the construction materials retail 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
Construction material Sales, with store in the Dilla and Environments area. With this in
mind, the objectives over the next three years for Ferezer Desalen Construction 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 Two.
 Expand product line to include authorized Construction material consumption sales.

1.2 Mission

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The mission of Ferezer Desalen Construction 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 Ferezer Desalen Construction Material Trade are:

 High-quality work.
 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

Ferezer Desalen Construction is envisioned to be the low cost leader in Construction

Material industry Manufacturing Product for the Dilla area that will also be able to
eventually provide Construction 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 South Ethiopia and
owned by Mr. Ferezer Desalen The initial facilities will contain a sales area, repair room
in the back of the shop, office space and storage for parts and inventory.

The company is seeking a loan in order to finance the one year of operations for the
company. The owners will be putting up additional capital of their own as equity.

2.1 Start-up Summary

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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. Ferezer Desalen previous experience within the business. 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. Ferezer Desalen

We recommend using Live Plan as the easiest way to create automatic financials for your
own business plan.

Business and Services

Shemsu Kelil Construction 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
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
Store which 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 this business 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 shemsu Construction material Trade to
create 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

Ferezer Desalegn Construction Material Trading provides a wide range of home Building
Consumption services. These include:

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

Future products and services that Ferezer Desalegn Construction material will prepare to
institute include Cement Tin, Paint and Nail .Supplies and servicing, sales of building
Material

3.2 Sourcing

Ferezer Desalegn construction 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 Ferezer Desalegn
to form strategic partnerships with such organizations in order to lower overall costs of
goods.

A large part of Ferezer Desalegn Construction Material enhanced services will be free
transport and delivery of construction material to a person’s Building Site .

3.3 Competitive Comparison

The Contraction material is 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 Construction material
supplies companies such as Sale of Cement Tin, Paint and Nail etc. These organization are
more consolidated than the trade industry, have deeper pockets, an almost limitless
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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.

In addition, because the customers see the service as undifferentiated and a “commodity”
with little value separation between competitors (if they offer a suitable level of quality)
buyer power is also very high. Additionally, the costs of our product are cheap, and
buyers are willing to search for the most favorable combination of price and acceptable
service.

The barriers to entry and exit are moderately low in this industry. Switching costs are
virtually non-existent and the costs to entry and exist the market are low. The large
number of competitors in this field including substitutes means that pricing for such
products are very competitive. The only way to have an advantage in this organization is
a low cost leadership principal applied aggressively to all aspects of the business or to
build up customer relations to a point where the switching costs are raised.

Based on this analysis, Ferezer Desalegn Construction material Trade will pursue a low
cost leadership strategy as its primary competitive advantage. Furthermore, the
organization will simultaneously build up its product and service line to take advantage
of the limited opportunity to create higher switching costs through enhanced value
creation and to spread out costs

3.4 Future Business and Services

Future products and services that Ferezer Desalegn construction material will prepare to
institute include Cement Tin, Paint and Nails Factory and servicing, sales of new Building
Finished material and /sale of Construction material . Mr. Ferezer Desalegn also
investigating the possibility of offering a new product line of Building material cabinets
at some future date.

Ferezer Desalegn Construction material Trade will start implementing these new products
or services in the following time periods:

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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 Ferezer Desalegn Construction material Proposal.

Presently the product that is really driving the preparation building finishing material
market is good activity. While Ferezer Desalegn is not currently positioned to take
advantage of this situation, it is the long-term goal of Ferezer Desalegn incorporate Cereal
and Pules 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 3rdQtr 2015.

Market Analysis Summary

There are approximately 332,500 households in the greater Dilla area, 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 these Food
material may 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 largest segment is the home
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

Ferezer Desalegn segmented the households in the Dillal area as follows:

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  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.

Sultan will target the following segments.

Middle class couples without Building contractor. This group will tend to have a
higher disposable income since they have two incomes but do not have the expense of
Contractor. They prioritize socializing and spend a fair amount of time entertaining in
their home and in the homes of their friends. For this reason they will spend more on
their Building material.

Single men living alone or with Retailer. This group is not the largest segment for us,
but potentially one of the most profitable, since single men tend to prioritize their home
Consumption . They will spend a greater percentage of their income on high-quality
Cement Building material Consumption.

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plan.

4.1.1 Market Trends

The market demand for Construction 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 Consumption quickly arise. Such Inventory
as cement still , and other construction products may have a role to play in the people
who have a broad vision in this field.

4.2 Service Business Analysis

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Much of the Construction 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, Ferezer Desalegn operates in a purely
competitive environment where the demand curve is horizontal. In other words the
organization is discounts to sales Construction material 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, Ferezer Desalegn Construction
material will 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 provide 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 and reliable 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 Construction material is 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 and Tin Seles in downtown Dilla to regional companies like Wonago high
supplying and the national chains such as Dilla City. Not all of this organization 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.

As stated before, Ferezer Desalegn will seek a low cost leadership approach in the local
south region first. Its goals are not to directly compete with the larger companies who
could effectively out compete Ferezer Desalegn di construction Material. Instead, the
company will seek to out price the local “mom and pop” outfits and acquire their market
share in order to then compete with the regional firms. There are eight such “mom & pop”
firms that will be Ferezer Desalegn main competitors in its first few years of operation.

5.1 Pricing Strategy

Ferezer 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, Ferezer Desalegn sale of 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 Construction product . 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 Ferezer Desalegn Construction
material can expect an short–term Cement of approximately 14%.
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 5.1.1 Promotion Strategy

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

Ferezer Desalegn 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

Our Sales forecast

Year 1 Year 2
Item
U/M Quan Quan
Description U.P Total U.P Total
t t

Rodas Paint 1750 234 409,500.00 1900 400.00 760,000.00

Quartzes 250 1400 350,000.00 350 1,600.00 560,000.00

Nail 1550 680 1,054,000.00 1650 750.00 1,237,500.00

Tin 1700 520 884,000.00 1850 650.00 1,202,500.00

Cement 1950 1300 2,535,000.00 2100 1,350.00 2,835,000.00

jibsum 1300 120 156,000.00 1500 130.00 195,000.00

Cleat 12 550 1450 797,500.00 700 1,330.00 931,000.00

Cleat 14 450 1800 810,000.00 600 1,900.00 1,140,000.00

Cleat 16 230 1700 391,000.00 400 1,800.00 720,000.00

Total Sum 7,387,000.00 9,581,000.00

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 Sales Forecast

Since the Construction Material trade is, operationally, a job-wholesale and retailer
environment, it is somewhat difficult to estimate sales. For job-wholesale, each individual
product or sales is tailored or unique to that job, and is only initiated once an order is
made. However, the sales forecast reflect the professional opinion of Mr. Ferezer in how
many sales he will make.

The sales forecast is based on the estimated number of cereal and pulse the organization
could 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 Live Plan as the easiest way to create graphs for your own business plan.

Our purchase forecast

Year 1 Year 2
Item Description U/M
Quant U.P Total Quant U.P Total
Rodas Peint 1700 380 646,000.00 1880 450 846,000.00
Quartize 200 1450 290,000.00 320 1600 512,000.00
Tin 1530 820 1,254,600.00 1600 950 1,520,000.00
korkoro 1670 700 1,169,000.00 1800 750 1,350,000.00
Cement 1900 1720 3,268,000.00 2150 1800 3,870,000.00
jibsum 1250 150 187,500.00 1400 170 238,000.00
Cleat 12 500 1,600.00 800,000.00 650 1650 1,072,500.00
Cleat 14 400 1,950.00 780,000.00 550 2150 1,182,500.00
Cleat 16 190 1,850.00 351,500.00 350 2300 805,000.00
Total Sum 8,746,600.00 - 11,396,000.00

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7.1 Personnel Plan

Sultan Abdi initial staffing will consist of Mr. Ferezer Desalegn, 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 Plan The following sections outline the financial plan for Ferezer Desalegn
Construction Material

General Assumptions
Plan Month 1 2 3
Current profit Rate 10.00% 10.00% 10.00%
Long-term profit Rate 10.00% 10.00% 10.00%
Tax Rate 35.00% 35.00% 35.00%
Other 0 0 0
I would need an estimate of bill 1,464,000 to successfully set up my construction material
store in Dilla town but form this I will use 1,373,000 birr from my saving account and I
will require 4,000,000 birr from with interest financing from Commercial Bank of
Ethiopia Dilla District. Then the Remaining other liquidity of Finance our return of sales
increasing equity

Generating Funding For Ferezer Desalegn Construction Material Trade

Ferezer Desalegn Construction material trade is private business that is solely owned
and financed by Ferezer Desalegn and his legal agent Ato Mohamed Ferezer Desalegn .
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

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

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

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

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

FEREZER DESALEGN CONSTRUCTION MATERIAL TRADE

PROJECTED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED JULY 7,2024-25

JULY 07/2024 JULY 07/2025

Revenues

Sales 8,746,600.00 11,396,000.00

Total Revenues 8,746,600.00 11,396,000.00

Cost of Sales 7,387,000.00 9,581,000.00

Total Cost of Sales 7,387,000.00 9,581,000.00

Gross Profit 1,359,600.00 1,815,000.00

Expenses

Leas Rent Expense

Administrative expense 309,860.00 357,500.00

Net Income Before Tax 1,049,740.00 1,457,500.00

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 Profit Tax 349,409.00 492,125.00
Net income After Tax 700,331.00 965,375.00

FEREZER DESALEGN CONSTRUCTION MATERIAL TRADE

PROJRCTRD STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED JULY 7,2024-25

ASSETS June 30/2024 June 30/2025

Current Assets
Regular Checking Account 185,290.00 25,600.00
Inventory 225,000.00 352,000.00
Accounts Receivable 325,900.00 428,900.00
806,500.0
Total Current Assets 736,190.00 0
Property and Equipment
Total Property and Equipment - -
Building 4,330,210.00 4,330,210.00
Aksum. Depreciation - Building (649,531.50) (866,042.00)

Total Assets 4,416,868.50 4,270,668.00

LIABILITIES AND CAPITAL

Current Liabilities
Profit Tax 349,409.00 492,125.00
Total Liabilities 349,409.00 492,125.00
Capital
Paid Up Capital 40,000.00 40,000.00
Retained Earnings 2,977,719.50 2,773,168.00
Net Income 700,331.00 965,375.00
Total Capital 4,067,459.50 3,778,543.00

Total Liabilities & Capital 4,416,868.50 4,270,668.00

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 FEREZER DESALEGN CONSTRUCTION MATERIAL TRADE

PROJECTED STATEMENT OF CASH FLOW

FOR THE YEAR ENDED JULY 7,2024-25

July 07/2024 July 07/2025

Cash in Flows
Sales 8,746,600.00 11,396,000.00
Other Income - -
Total Cash inflow 8,746,600.00 11,396,000.00
- -
Cash Outflow - -
Purchase 7,387,000.00 9,581,000.00
Expense 309,860.00 357,500.00
Total cash Outflow 7,696,860.00 9,938,500.00
Net Cash Flow 1,049,740.00 1,457,500.00
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 Ferezer Desaledn Construction 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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