Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

1.0 Executive Summary

For the Last twelve years Asmerom Gebremedhin Abaye Household and office hardware’s wholesale
trading business has vast and proven experiences that goes through either grasping and surveyed
the past and current market opportunity and obstacle’s that grows and flourishes its Household and
office hardware stores wholesale trading business and becomes one of the best stores located at the
well-known Merkato Market.

Asmerom Gebremedhin Abaye Household and office hardware’s wholesale store found in 2004 EC
which is registered in Ethiopia, Addis Abeba, Lemmi Kura Sub City, Woreda 08, House Number Addis
B.N 422 and located at Merkato.

Through the use of superior personal customer attention, great product selection, and reasonable
prices, Asmerom Gebremedhin Abaye Household and office hardware’s wholesale has been
capitalize on this promising and ever-growing market opportunity. A location is being secured at the
great Merkato that offers excellent traffic with a built-in magnet for urban household and businesses
customers. The parent import businesses that help efficiently lay out and plan the store to increase
sales and give the customers the utmost in attention. The company owner and the team have a
wealth of business, financial, and mechanical experience that will ensure a great investment and the
overall success of the venture. The projected growth rate for Asmerom Gebremedhin Abaye
Household and office hardware’s wholesale is quite consistent and has the potential to grow
exponentially along with the increase in residential and business development in Addis Abeba also
throughout the country.

The graph of home ownership, new families and businesses have changed radically in Addis Abeba
also throughout the country new demands projections gives confidence to the owner impact of
demand increase on Household and office hardware’s in the store sales growth one way or another.

Today's Household and office hardware’s store, which more and more is dominated by the wholesale
businesses located at Merkato. Asmerom Gebremedhin Abaye Household and office hardware’s
wholesale is uniquely positioned to take advantage of this past and new fact of the industry.
Conveniently located to serve every household and businesses in Addis and Regional cities.

This is why Asmerom Gebremedhin Abaye Household and office hardware’s wholesale store
Business needs an additional working capital to meet these growing demands that plans and
requested 20 million working capital term loan form the Commercial Bank of Ethiopia and promises
to meet all obligations under the social and criminal code of the Federal Democratic Republic of
Ethiopia.

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2. Market Study and Industry Overlook

Ethiopia has a large domestic market with a total population of over 120 million people (2023), making it
the second most populous country in Africa after Nigeria. Over the 15 years prior to 2019, Ethiopia’s
economy had one of the fastest growth rates in the world, averaging 9.5% per year, driven in part by
significant public infrastructure investments. Abiy Ahmed’s appointment to the office of Prime Minister
in 2018 signaled a new push toward liberalizing Ethiopia’s economy through improving the investment
climate and privatizing leading state-owned enterprises in several sectors, including telecoms, shipping
and logistics, power, rail, and sugar. This momentum came to a halt with the double onset of the COVID-
19 pandemic and a prolonged civil conflict. However, with these events now in the rearview mirror, the
country is showing signs of a move toward recovery and reconstruction. Key sectors, including telecoms
and banking continue to move in a more open market direction.

In 2022, Ethiopia had a real gross domestic product (GDP) of 6%, which was greater than the 4% average
for East Africa. Agriculture has historically been the driver of the Ethiopian economy but recently the
service sector has grown to become the largest contributor to GDP. According to the National Bank of
Ethiopia (NBE), services, agriculture, and industry accounted for 40%, 32%, and 29% of GDP respectively,
during the 2021/22 Ethiopian fiscal year. Service sector growth is dominated by expansion in
communication and transport services, hotel and restaurant businesses, as well as wholesale and retail
trading. Growth in the industrial sector is particularly due to investments in roads, railways, dams,
industrial parks, and housing.

While we expect further economic liberalization, the country still faces several issues that dampen
foreign trade and investment, the largest being high inflation rates and a scarcity of foreign exchange
reserves.

In September 2023, Moody’s downgraded Ethiopia’s credit rating from Caa2 to Caa3. Fitch and S&P also
recently downgraded their ratings - Fitch in December 2022 from CCC to CCC- and S&P from CCC+ to
CCC. The negative ratings, which have a significant effect on the country’s borrowing costs, are due to
heightened political instability and the Government of Ethiopia (GOE)’s participation in the G20 Common
Framework debt relief initiative. During 2022, the year-on-year inflation rate gathered momentum and
rose due to price increases in both food and non-food items, peaking in May 2022, at an annualized rate
of 38%. Real interest rates in Ethiopia remain largely negative. The minimum bank deposit rate of 7%,

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bond yield of 4%, and treasury bill yield of 9.46% are lower than the annual average inflation rate of
33%.

The Ethiopian birr is a non-convertible currency, and allocation of foreign exchange (e.g., U.S. dollars) to
the private sector is determined by the NBE. The NBE operates within the context of a large trade deficit
and the need to meet sovereign debt obligations stemming from government infrastructure projects
funded by foreign debt, which enjoys priority for scarce foreign currency. The birr has continued to
follow a steady depreciation, with the NBE following a crawling peg exchange rate policy. The shortage
of available dollars has led to a black-market exchange rate close to double the official rate.

Table 2: Ethiopia Exchange rate historical data USD TO ETB

Year Exchange rate (1 US dollar to ETB) % change

2021 43.73 22.4

2022 51.76 16.8

2023 54.35 4.8

Source: World Bank and Commercial Bank of Ethiopia

A second phase of Ethiopia’s Homegrown Economic Reform Agenda, first introduced in 2019, is under
development according to the Ministry of Planning and Development. This forthcoming initiative is
expected to include liberalizing the banking sector, readjusting the exchange rate to strengthen the birr’s
market-based valuation, and eventually introduce a liberalized foreign currency market. Ethiopia’s trade
deficit has been widening, with total imports rising by more than 12% annually on average during the
last 11 years. The trade deficit grew to $14 billion in 2022 from nearly $11 billion in 2021, with total
imports reaching $18 billion due in part to rising imports of consumer goods, fuel, and semifinished
goods. According to an annual NBE report, 42% of total import spending ($7.6 billion) was on consumer
goods and 17% ($3 billion) was on capital goods.

Ethiopia’s imports from the United States have increased steadily throughout the past decade. In 2022,
Ethiopia imported over $1 billion worth of goods from the United States, with transportation equipment

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—primarily in aviation—comprising the largest segment, followed by construction equipment,

agricultural machinery, and engineering services. Many U.S. companies based in the United Arab
Emirates (UAE) do business in Ethiopia using Dubai as an intermediary export platform due to proximity
and availability of reliable air shipping and air passenger services. Please refer to the tables below for
U.S./Ethiopia bilateral trade figures.

1.1 Objectives

There are four major objectives of this business plan, of which three are immediate and the fourth is of a
longer-term nature.

1. Plan and determine the next five years growth of the business.
2. Develop the strategy to manage and grow the profitability Asmerom
Gebremedhin hardware store venture.
3. Explore potential growth in the current and future market

1.2 Mission

To become A store that offers great provider and selection of household and businesses hardware and
home improvement products in a customer friendly environment.

1.3Vision

To be the best-in-class provider of products and solution choices that drive our members' and our co-
op's profitability.

1.3 Keys to Success

 Hardware Industry: The Home Improvement industry has been consistently growing at
a rate of 17% per year for the past decade according to the AU Department of Commerce, with
total Ethiopia market Sales of over 3.1 billion in 2022. While the economy has fluctuated up and
down over the past decade, the growth of the hardware industry has continued to grow at the
same pace.

 Location: The current location Asmerom Gebremedhin Abaye Household and office
hardware’s wholesale trading is in the heart of Merkato which is no needs to elaborate about
the potential, the scale and customer magnetic nature of the market and also Merkato is the
large open market in the African content.

 Urban Products: The store location in Merkato has a different product mix than
a suburban store, there are unique product demand from urban Businesses and households. we
have been a big part of determining the mix of products that will be right for the urban market
through their IAIS concept (Inventory Always in Stock). Asmerom Hardware will be in touch

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with, and focus on, the city urban market, delivering products that are applicable to any
customers, and marketing these items at competitive prices.

 Commercial Customers: Asmerom Gebremedhin Abaye Household and office

hardware’s wholesale trading also focus on becoming the hardware products source for every
building and business in Addis and all over the country. We will work hard to establish
relationships with property managers and service personnel. Those main business customers
are hotels, Bar and Restaurants, shopping malls, Banks and also the Government.

 Service and Convenience: Service and Convenience are the keys to success in this
business. They are also the strengths of independent hardware stores. The store needs to be
easy to get to and easy to use when the customer walks inside. Our personnel have experience
in high-end client hospitality. This experience will be invaluable in dealing with customers and
clients. Also keep meticulous records on what customers are looking for that we do not
currently have in stock. On the other hand, the market to the suburban commuter who works
downtown and can take advantage of the convenience of stopping on their way to or from
work.

2.0 Company Summary

Asmerom Gebremedhin Abaye Household and office hardware’s wholesale store found in 2004 EC which
is registered in Ethiopia, Addis Abeba, Lemmi Kura Sub City, Woreda 08, House Number Addis B.N 422
and located at Merkato, the business employes ten permanent and 5 contract workers.

2.1 Start-up Summary

Asmerom Gebremedhin Abaye Household and office hardware’s wholesale store establish in 2004 EC
detailed start-up cost list are explained under.

2.1.1 Start-up Expenses

The start-up costs of Asmerom Gebremedhin Abaye Household and office hardware’s wholesale store, as
detailed below, it consists primarily of inventory, equipment and fixtures Asmerom Gebremedhin invest
cash and labor to the startup, throughout the past times successes the need for additional working
capital emerges that the company asked to secure an WCTLof 20 million loan to be paid back on a 7-year
amortization form the Commercial Bank of Ethiopia.

Table: Start-up

Start-up

Requirements

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Start-up Expenses
The Tool Room Rental Training 251,200
Salaries for Fixture Set-up 114,716
Merchandiser Cost for Regular Merchandise Set-up 2,532,000
Merhcandiser Cost for Paint and Tool Shop 157,500
Set-up Salaries 222,916
Other 115,800
Total Start-up Expenses 3,394,132

Start-up Assets
Cash Required 4,000,000
Start-up Inventory 2,532,000
Other Current Assets 157,800
Long-term Assets 650,886
Total Assets 7,340,686

Total investment 8,045,318

1.
1.1 Our Products and Services

Asmerom Gebremedhin Abaye Household and office hardware’s wholesale store is

in the Household and office hardware’s industry to service a wide range of clients
and of course to make profits, which is why we will ensure we go all the way to
make available a wide range of hardware’s from top manufacturing brands in the
best manufacturing countries of the world.

 Sources of Income

We make sure that; we do all that under the law and of the Federal Democratic
Republic of Ethiopia to achieve our aim and ambition of the business. Our general
product sales services are;

 Selling new household and businesses hardware and accessories which

are critical to kitchen and living house products and also various products
of to the business firms

 Distributing household and businesses hardware and accessories retailers

 Various types of houses, office and business firm Decorative products

4. Our Mission and Vision Statement

 Our vision is to become one of the best wholesalers of household and
businesses hardware and accessories and décor Store in the city and
throughout the country.

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 Our mission is to establish a city – best household and businesses

hardware and accessories and décor Store business that will make
available a wide range of hardware and accessories from top brands at
affordable prices to the residence of Addis Abeba, Main Businesses and
the country.

The company Structure

Although our household and businesses hardware and accessories and décor Store
might not be as big as Advance other company’s but We hire people that are
qualified, honest, customer centric and are ready to work to help us build a
prosperous business that will benefit all the stakeholders (the owners, workforce,
and customers). we have qualified and competent staff and hands to occupy the
following positions;

 General Manager Mr. Asmerom Gebremeduhen

 Store Keeper Mr. Alemayehu Melesse

 Sales and Marketing Manager Mr. Hailegebreal Rediet

 Cashier Ms. Tigist Rediet

 Sales Person Mr. Tesfaye Birhanu

5. Job Roles and Responsibilities

General Manager: Mr Asmerom Gebremeduhen
 Raises management’s effectiveness by recruiting, selecting, coaching,
counseling, and disciplining staffs; communicating values, strategies, and
objectives.

 Creates better sales operation leading the development and

implementation of the overall targets of the store.

 Accountable for fixing prices and signing business deals

Sales and Marketing Manager Mr. Hailegebreal Rediet

 Brings about external research and coordinate all the internal sources of
information to retain the organizations’ best customers and attract new
ones

 Responsible for supervising implementation, advocate for the customer’s

needs, and communicate with clients

Store Keeper: Mr. Alemayehu Melesse

 In control of managing the daily activities in the store

 Guarantees that proper records of auto parts are kept and warehouse
does not run out of products

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 Ensures that the store facility is in tip top shape and goods are properly
arranged and easy to locate

 Interfaces with third – party suppliers (vendors)

Cashier: Ms. Tigist Rediet

 Performs cash management, general ledger accounting, and financial
reporting

 Responsible for administering payrolls

 Ensures compliance with taxation legislation

 Handles all financial transactions for the organization

Service Person Mr. Tesfaye Birhanu

 Ensures that all contacts with clients (walk-In center, SMS or phone)
provides the client with a personalized customer service experience of
the highest level

 Through interaction with customers in person, uses every opportunity to

build client’s interest in the store product and services

 Consistently stays abreast of any new information to answer customer

queries regarding the store and the merchandise.

 Find out the customer’s needs, recommend, select and help locate the
right merchandise, describe a product’s features and benefits.

6. SWOT Analysis

Our intention of starting outlet of household and businesses hardware and

accessories and décor Store in Addis Merkato is to run the business profitably for a
long period of time in this regard we invest money and time to expand the business
and then in the mean future opening other outlets all over city is our main target.

We are quite aware that there are several household and businesses hardware
stores all over Addis and even in the same location where are settled, which is why
we are following the due process of properly managing a business.

We know that if a proper SWOT analysis is conducted for our business with
consideration of current market trend and conditions, we will be able to position our
business to maximize our strength, leverage on the opportunities that will be
available to us, mitigate our risks and be welled equipped to confront our threats.

 Strength:

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Our location, the business model we will be operating on physical store with
varieties of payment options, wide range of household and businesses hardware’s
from different manufacturing brands from abroad and our excellent customer
service culture will definitely count as a strong strength for Asmerom Gebremedhin
Abaye Household and office hardware’s wholesale store. Also, our team of highly
qualify staff members is also a plus for the business.

Weakness:
Now a days it is difficult to compute in today business environment shortage of
finance hindered a business to serve customers properly and shortage of finance is
the main weakness for us.
 Opportunities:
The fact that we are going to be operating our Household and office hardware’s
wholesale store close to one of the largest markets in Addis and the country, for us
this is a great opportunity to sell our products to a large number of individuals,
businesses and retailers.

 Threat:
Just like any other business, one of the major threats that we may face is economic
downturn. It is a reality that economic downturn affects purchasing and spending
power.
7. MARKET ANALYSIS
 Market Trends
If you are conversant with this Industry, you will quite agree that the changes in
disposable income, consumer sentiment, and ever-changing trends are major
growth drivers for sales in this industry. No doubt, a massive rise in consumer
confidence has also contributed in helping the industry experience remarkable
growth, but uneven performance in these drivers has led to slightly constrained
revenue growth for the industry.

So also, the rising demand for parts manufactured by a third-party manufacturing

company, as a result of increasing disposable income and consumer sentiment, will
result in revenue growth, but profit margins will increase as household and
businesses hardware’s and décor is always high because of everchanging nature of
human behavior.

Lastly, in recent time, the household and businesses hardware’s stores landscape
has seen tremendous changes in the last 20 years; it has grown from the smaller
outlets to a more organized and far-reaching venture. The introduction of franchise
and online store makes it easier for a retailer to reach out to a larger market far
beyond the areas where his physical auto parts retail store is located.

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8. Target Market
Perhaps it will be safe to submit that the auto household and businesses hardware’s
and décor stores industry has one of the largest ranges of customers; almost every
Household and business would have one reason or the other to purchase various
types of accessories.

In view of that, we have positioned our household and businesses hardware’s and
décor stores at Merkato to service the wide range of home and businesses in the
city and every other location we are planning to open other outlet and will be
located key cities in the city.

Beside past experience we conducted our market research and studies and we have
additional ideas of what our target market would be expecting from us. We are in
business to retail a wide range of household and businesses hardware’s and décor
stores to the following groups of people and corporate organizations;

 Any family or person who have home

 Retailers of household and businesses hardware’s and décor stores

 major businesses like Hotels, Bar and Restaurants, Banks, Hospitals, and
others

 House rentals and Real-estates

 The Government

Our competitive advantage

A close study of the household and businesses hardware’s and décor stores industry
reveals that the market has become much more intensely competitive over the last
decade. As a matter of fact, you have to be highly creative, customer centric and
proactive if you must survive in this industry and we fully aware of the stiffer
competition and we are well prepared to compete favorably with other Wholesale
stores.

Our household and businesses hardware’s and décor stores are located at the
largest market in Addis Abeba. And also, we have enough parking spaces that can
accommodate well over 10 cars per time.

One thing is certain; we will ensure that we have a wide range of matrials from
leading auto parts manufacturers available in our store at all times. It will be
difficult for customers to visit our auto parts retail store and not see the type of
auto parts and accessories they are looking for.

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One of our business goals is to make the store a one stop shop for family or person
who have home, Retailers, major businesses like Hotels, Bar and Restaurants,
Banks and Hospitals, online store, various payment options and highly secured
facility will serve as a competitive advantage for us.

1.3 Marketing and Sales Strategy

we conduct a thorough market survey and study in order to be able to penetrate

the available market and become the preferred choice.

We have detailed information and data that we were able to utilize to structure our
business to attract the numbers of customers we want to attract per time.

We hired experts who have good understanding of the household and businesses
hardware’s and décor stores business to help us develop marketing strategies that
will help us achieve our business goal of winning a larger percentage of the
available market in the city.

In other hand to continue to be in business and grow, we must continue to sell the
household and businesses hardware’s and décors that are available in our store
which is why we will go all out to empower or sales and marketing team to deliver.
In summary, Asmerom Gebremedhin Abaye Household and office hardware’s
wholesale store that adopt the following sales and marketing approach to win
customers over;

 Redesign our wholesale store in a grand style with a party for all

 Introduce our auto store by sending introductory letters alongside our

brochure to organizations, households, retailers and other key stake holders
in Addis Abeba.

 Ensure that we have a wide range of accessories from different brands at all
times.

 Make use of attractive handbills to create awareness and also to give

direction to our wholesale store

 Position our greeters to welcome and direct potential customers

 Engage in direct marketing and sales

 Encourage the use of Word-of-mouth marketing (referrals)

 Payment Options

The payment policy adopted by Asmerom Gebremedhin Abaye Household and office
hardware’s wholesale store is all inclusive because we are quite aware that different
customers prefer different payment options as it suits them but at the same time,

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we will ensure that we abide by the financial rules and regulation of the Federal
Democratic Republic of Ethiopia.

 Payment via bank transfer

 Payment with cash

 Payment via credit cards / Point of Sale Machines (POS Machines)

 Payment via online bank transfer

 Payment via check

 Payment via mobile money transfer

In view of the above, we have chosen banking platforms that will enable our client
make payment for the purchase of product and accessories without any stress on
their part. Our bank account numbers will be made available on our store.

 The company Past Three Years Balance sheet Performance

Past Three Years Balance Sheet

of Asmerom Gebremedhin wholesale Trading
ASSETS 2021 2022 2023 2024 Interim
Current Assets
Cash 478,900 1,907,532 907,500 983,048
Accounts Receivable 1,237,252 1,302,671 1,857,155 2,497,690
Inventory 5,526,382 6,045,300 7,056,100 3,545,440
Other

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Total Current Assets 7,242,534 9,255,503 9,820,755 7,026,178

Total Fixed Assets (Net of Depreciation)
Equipment 1,028,627 1,937,531 1,520,418 1,292,355
Investment
Total Net Fixed Assets 1,028,627 1,937,531 1,520,418 1,292,355
Other Assets
Intangible
Long-Term Investments
Other
Total Other Assets
TOTAL ASSETS 8,271,161 11,193,034 11,341,173 8,318,533
LIABILITIES 2021 2022 2023 2023
Current Liabilities
Short-Term Debt
Accounts Payable 76,355 72,051 63,331 187,364
Taxes Payable 1,188,772 1,029,424 1,490,225 1,354,992
Current Long-Term Debt
Other
Total Current Liabilities 1,265,127 1,101,475 1,553,556 1,542,356
Net Curret Asset 7,006,034 10,091,559 9,787,617 6,776,177
Long-Term Liabilities
Long-Term Debt
Owner/Shareholder's Loans
Capital
Registered Capital 4,000,000 4,000,000 4,000,000 4,000,000
Retained Earning 3,006,035 6,091,561 5,787,618 2,516,415
Owner payable 259,761
Equity 7,006,035 10,091,561 9,787,618 6,516,415
Total Equity 7,006,035 10,091,561 9,787,618 6,776,176
TOTAL LIABILITIES & EQUITY 8,271,162 11,193,036 11,341,174 8,318,532

10. Past Three Years Profit and Loss Account Performance

Past Three Years Profit and loss account

Of Asmerom Gebremedihen wholesale Trading
INCOME
Sales 24,667,514.00 31,072,303 52,318,000 16,936,223
Cost of Goods Sold 17,834,612.00 23,739,239 38,715,320 9,484,285
GROSS PROFIT 6,832,902 7,333,064 13,602,680 7,451,938
EXPENSES
Salaries, wages and allowances 872,000 1,054,800 2,272,000 1,254,144

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Pension 95,920 116,028 249,920 137,956

Rent 120,000 180,000 2,400,000 1,324,800
Communications 57,800 62,300 65,120 35,946
Insurance
Repair and maintenance 24,765 133,823 157,210 86,780
Utility 132,011 204,359 350,239 193,332
Depreciation 284,607 222,195 417,114 228,063
car rental 97,600 106,087 146,123 79,169
Printing and stationery 89,700 102,300 89,087 49,176

License, municipality and other taxes 1,200 1,200 1,200 662

Travel and transport 458,900 430,700 342,100 188,839

Miscellaneous 1,422 2,754 1,515
Other
TOTAL Expense 2,235,925 2,613,792 6,492,867 3,580,383
NET PROFIT BEFORE INCOME TAXES 4,596,977 4,719,272 7,109,813 3,871,555
INCOME TAXES 1,590,942 1,633,745 2,470,435 1,354,992
NET PROFIT 3,006,035 3,085,527 4,639,378 2,516,563

10. Sales Forecast

One thing is certain when it comes to Household and office hardware’s
wholesale store, if your store is well stocked with various types of product
and accessories and your store is locationally well positioned, that always
attract customers and that will sure translate into increase in revenue
generation for the business.
We have been able to critically examine the Household and office hardware’s
wholesale store business and we have analyzed our chances in the industry
and we have been able to come up with the following sales forecast. The
sales projections are based on information gathered from the Audited
financial statement and on the field proven experiences.

9.1 Main products Sales Plan

We are planning to increase our sales by 58%. Our sales for cast are made
based on Audited financial statement of the business, all forecast is made

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based of the past trend of the business and current situation assessing
different study made by different scholar’s.

9.1 Product based sales projection

3-Year Product Based Sales Forecast

Main Product Unit sales
Price Year 1 Year 2 Year 3 Year 4 Year 5
Gear and Steering box 920 920 920 920 920
Shaft Axle and crank
Shaft 527 527 527 527 527
Piston and Spindle 701 701 701 701 701
Bearing and Slider Head 1034 1034 1034 1034 1034
Total 3,182 3,182 3,182 3,182 3,182
Main Product Unit sales
Price Year 1 Year 2 Year 3 Year 4 Year 5
Gear and Steering box
21,087.44 31,420.28 46,816.00 69,756.17 103,936.70
Shaft Axle and crank
Shaft 33,004.75 49,177.07 73,273.84 109,178.02 162,675.25
Piston and Spindle
23,858.09 35,548.55 52,967.35 78,921.34 117,592.80
Bearing and Slider Head
12,939.67 19,280.11 28,727.36 42,803.76 63,777.61
Total 90,890 135,426 201,785 300,659 447,982
Main Product Total Price Year 1 Year 2 Year 3 Year 4 Year 5
Gear and Steering box 19,400,444.40 28,906,662.16 43,070,720.00 64,175,680.67 95,621,764.19
Shaft Axle and crank
Shaft 17,393,501.88 25,916,317.80 38,615,313.52 57,536,817.15 85,729,857.55

Piston and Spindle 16,724,521.04 24,919,536.35 37,130,109.16 55,323,862.64 82,432,555.34

Bearing and Slider Head 13,379,616.83 19,935,629.08 29,704,087.33 44,259,090.11 65,946,044.27

Total 66,898,084 99,678,145 148,520,230 221,295,451 329,730,221

Main Product Unit Cost of
Sales Year 1 Year 2 Year 3 Year 4 Year 5
Gear and Steering box 16,549.64 25,651.94 39,760.50 61,628.78 95,524.60
Shaft Axle and crank 62,230.66 96,457.52 149,509.16

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Shaft 25,902.46 40,148.81

Piston and Spindle 18,724.07 29,022.31 44,984.58 69,726.10 108,075.45
Bearing and Slider Head 10,155.18 15,740.53 24,397.83 37,816.63 58,615.78
Total 71,331 110,564 171,374 265,629 411,725
Main Product Total Cost
of Sales Year 1 Year 2 Year 3 Year 4 Year 5
Gear and Steering box 15,225,665.23 23,599,781.10 36,579,660.71 56,698,474.10 87,882,634.86
Shaft Axle and crank
Shaft 13,650,596.41 21,158,424.44 32,795,557.88 50,833,114.71 78,791,327.81

Piston and Spindle 13,125,573.47 20,344,638.88 31,534,190.27 48,877,994.92 75,760,892.12

Bearing and Slider Head 10,500,458.78 16,275,711.11 25,227,352.21 39,102,395.93 60,608,713.70

Total 52,502,294 81,378,556 126,136,761 195,511,980 303,043,568

Main Product TOTAL NET
SALES Year 1 Year 2 Year 3 Year 4 Year 5
Gear and Steering box 4,174,779.18 5,306,881.06 6,491,059.29 7,477,206.56 7,739,129.33
Shaft Axle and crank
Shaft 3,742,905.47 4,757,893.36 5,819,755.64 6,703,702.44 6,938,529.75

Piston and Spindle 3,598,947.57 4,574,897.46 5,595,918.89 6,445,867.73 6,671,663.22

Bearing and Slider Head 2,879,158.05 3,659,917.97 4,476,735.11 5,156,694.18 5,337,330.57

Total Net Sale 14,395,790 18,299,590 22,383,469 25,783,471 26,686,653

9.0 Sales and Financial Projections

Our financial projection will include sales, cost of goods sold and gross profit,
income statement, cash flow and Break-Even Analysis. Our projection will
base recent financial statement of the business and also, we will consider the
external environment for projection.
body.

 Basic Assumptions for Sales and Financial Projections

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 Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

The assumptions used for financial analysis purposes are based on the fact
that business Potential and Overall working environment which can be
assumed that it is possible to increase the sales volume and possible to
expand the business in accordance with our expansion plan. The
assumptions we used to forecast the financial plan are presented as follows.

Assumptions

 The bank will finance 20 million

 The sales revenue will increase by 45% per year
 Assuming the finance injected after June 30,2024.
 The average cost of the sale increase by 45%
 The profit of the business will be fully retained
 The profit tax rate is 35%
 The loan will be repaid within five years with quarterly annually
 All expenses will be increased by 15%

8.1 Sales and gross profit Forecast

The sales projections start in the month of June, 2024, the immediate goal is to
achieve robust sales in the first year. It is thought that double digit percentage
total sales increases can be achieved and maintained throughout the five years of
this business plan.

Year 1st 2nd 3rd 4th 5th

Revenue 75,861,100 109,998,595 159,497,963 231,272,046 335,344,467
Cost of Good 56,137,214 81,398,960 118,028,492 171,141,314 248,154,905
Sale
Gross profit 19,723,886 28,599,635 41,469,470 60,130,732 87,189,561

8.3 Projection of profit and loss and Income and expense

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 Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

The projected profit and loss, Income and expense and Cash Flow Statement are
expected to show the ability of a business to serve its debts. To project profit and
loss, Income and expense of this business the above assumptions are taken to
account.

Year 1st year 2nd year 3rd year 4th year 5th year
Revenue 75,861,100 109,998,595 159,497,963 231,272,046 335,344,467
Cost of 56,137,214 81,398,960 118,028,492 171,141,314 248,154,905
sales
Gross 19,723,886 28,599,635 41,469,470 60,130,732 87,189,561
Profit
Expenses 7,463,682 8,583,234 9,870,719 11,351,327 13,054,026
Profit 12,260,204 20,016,401 31,598,751 48,779,405 74,135,535
before
tax
Profit tax 4,168,469 6,805,576 10,743,575 16,584,998 25,206,082
(35%)
Profit 8,091,735 13,210,824 20,855,176 32,194,407 48,929,453
after tax

8.6 Projected Cash Flow The company will generate a net positive cash flow in
its first year. Repayment of debt is a significant factor in the amount of cash that
gets paid out. short-term debt is on a 5-year amortization.

The Coming Five Years Cash Flow Projection

of Asemerom Gebremedhin Wholesale Trading
Year Year Year Year Year
CASH BALANCE 2024 2025 2026 2027 2028
Date Ending 9/3/2024 9/3/2025 9/3/2026 9/3/2027 9/3/2028
Cash at Beginning of 2,107,10 8,091,73 13,210,82 20,855,17
32,194,407
Period 0 5 4 6
8,091,73 13,210,82 20,855,17 32,194,40
Cash at End of Period 48,929,453
5 4 6 7

CASH INFLOWS 2024 2025 2026 2027 2028

Cash from Operations
Receipts sales from 75,861,10 109,998,59 159,497,96 231,272,04 335,344,467

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 Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

Customers 0 5 3 6
Total Cash from 75,861,10 109,998,59 159,497,96 231,272,04
335,344,467
Operations 0 5 3 6
Cash from Financing
Total Outstanding 29,759,40 23,807,52 17,855,64 11,903,76
6,010,827
loan with interest 1 0 0 0
Borrowing -
- - - -
Total Cash from 29,759,40 23,807,52 17,855,64 11,903,76
6,010,827
Financing 1 0 0 0
105,620,50 133,806,11 177,353,60 243,175,80
Total Cash Inflows 341,355,294
1 5 3 6

CASH OUTFLOWS 2024 2025 2026 2027 2028

Operations
2,612,80 3,004,72 3,455,42 3,973,74
Wages 4,569,804
0 0 8 2
56,137,21 81,398,96 118,028,49 171,141,31
Inventory Purchases 248,154,905
4 0 2 4
General Operating 4,850,88 5,578,51 6,415,29 7,377,58
8,484,222
Expenses 2 4 1 5
3,131,35 2,636,37 2,054,52 1,370,56
interest expense 566,578
6 4 5 7
4,168,46 6,805,57 10,743,57 16,584,99
Income Taxes 25,206,082
9 6 5 8
Total Outflows from 70,900,72 99,424,14 140,697,31 200,448,20
286,981,592
Operations 1 4 2 6
Financing
2,820,52 3,315,50 3,897,35 4,581,31
Repayment of Loans 5,326,355
4 6 5 3
Dividends Paid
Total Outflows from 2,820,52 3,315,50 3,897,35 4,581,31
5,326,355
Financing 4 6 5 3
Investing
Purchase of Property 1,500,00 500,00 350,00 300,00
250,000
and Equipment 0 0 0 0
Making Loans to
Other Entities
Total Outflows from 1,500,00 500,00 350,00 300,00
250,000
Investing 0 0 0 0
75,221,24 103,239,65 144,944,66 205,329,51
Total Cash Outflows 292,557,946
5 1 7 9

30,399,25 30,566,46 32,408,93 37,846,28

NET CASH FLOW 48,797,348
5 5 6 7

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 Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

10.0 Break-Even Analysis

The Break-even Analysis has determined approximate break-even sales as shown

below. There will be a constant monitor on this number in an attempt to lower it.
Once again, it is believed that efficiencies, experience, and knowledge will help in
decreasing the break-even number.

 Break-Even Analysis

Break-Even Analysis
Total Selling Price (per unit) 106,028.57

FIXED COSTS
Salaries, wages and allowances 2,612,800.00
Pension 287,408.00
Rent 2,760,000.00
Communications 74,888.00
Insurance 0.00
Repair and maintenance 180,791.50
Utility 402,774.85
Depreciation 479,681.10
car rental 164,936.45
Printing and stationery 102,450.05
License, municipality and other taxes 1,380.00
Travel and transport 393,415.00

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Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

Miscellaneous 3,156.75
Other
Total Fixed Costs 7,463,681.70

VARIABLE COSTS Per Unit

Variable Costs based on dollar amount per unit
Cost of Goods Sold 78,461.14
Direct Labor
Overhead
Other (specify)
Total 78,461.14

Variable Costs based on percentage per unit

Commissions 0.08
Other (specify)
Total 0.08

Total Variable Cost per Unit 86,413.28

Contribution Margin per Unit 19,615.29
Contribution Margin Ratio 0.19

Break-Even Point
Break-Even Units 381.00
Break-Even Sales 40,344,225.41

 Break-Even Analysis

Freselam Rediet Turebo Break-Even Analysis

Selling Price (per unit) 90,890.00

FIXED COSTS
Salary & Other benfits 427,800.00
Office rent 116,293.75
Insurance expenses 164,933.00
Utility 38,896.96
Interest Expense 402,774.79
Service charge 6,258.88
Stationery & Printing 2,831.99
Liscence & registration 1,666.40
Depreciation 45,294.60
Amortize Loan Payment 2,975,940.06

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Asmerom Gebremedhin Abaye Household and office hardware’s wholesale trading

Total Fixed Costs 4,182,690.42

VARIABLE COSTS Per Unit

Variable Costs based on dollar amount per unit
Cost of Goods Sold 71,331.00
Direct Labor
Overhead
Other (specify)
Total 71,331.00

Variable Costs based on percentage per unit

Commissions 0.03%
Other (specify)
Total 0

Total Variable Cost per Unit 71,353.72

Contribution Margin per Unit 19,536.28
Contribution Margin Ratio 21.49%

Break-Even Point
Break-Even Units 215 units
Break-Even Sales 19,459,425.28

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