Business Plan On
SHEGER AUTOMATIC LAUNDRY
Owner of the Business
Mr. Afework Gebreziabher
Addis Ababa
January, 2024
1
Table of Contents
1. Executive Summery ..................................................................................................................... 2
2. Background of the company ............................................................................................................... 4
2.1 Business Description ...................................................................................................................... 4
2.3 Mission, Vision and Objective of the Business ................................................................................ 6
3 Organization and Management plan ..................................................................................................... 7
4. Marketing strategy ............................................................................................................................ 10
4.1 Pricing.......................................................................................................................................... 12
4.2 Advertising & sales....................................................................................................................... 13
5. Service Process ................................................................................................................................. 13
6 Financial Plan...................................................................................................................................... 17
6.1 Working Capital requirement-estimation ......................................................................................... 18
5.1 Loam Amortization Schedule ......................................................................................................... 1
5.2 Credit Information with other Bank................................................................................................ 1
5.3Expected income projection from the next four Consecutive year................................................... 1
5.3 Relevant assumptions ........................................................................................................................ 2
5.4. Projected Cash Flow .................................................................................................................... 3
5.5 Projected Balance Sheet ................................................................................................................ 4
5.6 Financial Ratios .............................................................................................................................. 5
2
1. Executive Summery
Business Name
Sheger automatic Laundry
Project owner
Afework Gebreziabher
Type of Establishment
Automatic Laundry
Nationality
Ethiopian
Legal form
Sole ownership
location
Addis Ababa
Service Type
Laundry Service
Target Market
Individuals, Hotels and restaurant
Working Capital
Requirement
10,000,000 Birr
Investment capital and
sources of Financial
10.5 million Birr of total investment 10 million from
long term bank loan & the remaining finance by
owners’ equity.
Financial viability
The project is highly attractive with positive cash
flow.
2
As the middle class grows together with their disposable income, the demand for
dry cleaning services and laundry services will continue increasing in the coming
years. As many countries continue to develop with the urban population
increasing, the demand for convenient services such as dry cleaners and
laundromats will continue to rise.
This business plan was created with the goal of directing our services.
A. Business Description:
"Sheger automatic Laundry" is a visionary laundry enterprise based in Ethiopia,
committed to providing high-quality and reliable laundry services to both
residential and commercial customers. With a strategic location and a focus on
customer satisfaction, Sheger automatic Laundry aims to become a leading name
in the local laundry service industry.
B. Promoters and Shareholders:
Sheger automatic Laundry is the brainchild of Afework Gebreziabher, an
experienced entrepreneur with a proven track record in the service industry.
Afework Gebreziabher brings a wealth of knowledge in operational management
and customer service. The business is structured as a privately held entity, with
Afework Gebrezgabhers's as the primary shareholder.
C. Business Expectations and Rationale:
Market Demand:
Sheger automatic Laundry identifies a significant gap in the market for
professional and reliable laundry services. The growing urban population and
changing lifestyles contribute to an increased demand for time-saving solutions
like outsourced laundry services.
Service Offering:
The laundry will offer a comprehensive range of services, including but not limited
to regular laundry, dry cleaning, and specialized garment care. With state-of-theart equipment and skilled staff, Sheger automatic Laundry aims to set a new
standard for laundry excellence in the region.
1
Strategic Location:
The business will be strategically located in Addis Abeba Gulelle subsidy wereda 7Adissu Gebeya ensuring easy accessibility for both residential and commercial
clients. This prime location will enhance visibility and convenience for customers,
contributing to increased foot traffic and service uptake.
Operational Efficiency:
Sheger automatic Laundry plans to leverage the latest technology and efficient
operational processes to streamline services, reduce turnaround times, and
minimize costs. This commitment to operational excellence will not only enhance
customer satisfaction but also contribute to long-term sustainability and
profitability.
General Over View
Consumable stock items for laundry services, particularly those procured locally
for Sheger Automatic loundary, play a pivotal role in ensuring the smooth and
uninterrupted functioning of the business. These items encompass a diverse
range, including laundry detergents, fabric softeners, cleaning agents, and other
supplies essential for the laundry process. Local procurement not only fosters
community engagement but also facilitates timely restocking and supports the
overall
sustainability
of
Sheger
Automatic
loundary
operations.
Efficient
management and utilization of these consumable stock items contribute to
maintaining the high standards of service and customer satisfaction associated
with Sheger Automatic's laundry services.
It is known that the price of these Consumable stock items and operating cost has
increased significantly. However, recently the company competed with different
customers, so it is necessary to purchase more Consumable stock items in order
to deliver the works received to the customers in a timely manner It is necessary to
get a loan from the bank to overcome this lack of purchase.
2
The Company is planning to increasing Service income and Improving profitability
of the business, The company plans also to create a branch in Addis Ababa,
Ethiopia, to grow its current business location and enhance service income and
profitability. It also hopes to attract more consumers, particularly from hotels,
restaurants, and hospitals, the company requires additional Working Capital
Finance for covering its Consumable stock items and operational costs and the
plan indicate that working capital loan from Leander institution will be obtained in
order to avoid financial strain at the beginning of the 2016 E.C. fiscal year in order
to run at the expected level.
According to the strategy, the company must invest a total of ETB 10.5 million to
cover its operating costs and the purchase of consumable stock items. Of this
amount, ETB 10 million will come from a bank credit facility, which will be fully
repaid in four years at an estimated interest rate of 15.5%. Owners' equity will
cover the remaining financing. This loan choice will be very beneficial to us in
accomplishing our business objectives.
Beside to this, the promoter believes the loan will strengthen the relationship
between the investor and the bank. in addition to this loans and advances to
various sectors of the economy on the strength of viability and assessment of
concentration risk will increase the success of the business.
The business is financially feasible based on the appropriate income projection
assumption, with an average annual sales growth of 30%, a 20% profit margin,
and positive cash inflow over the next several years, as demonstrated and briefly
explained in the financial plan.
The Business also will create employment Advantage and will create backward
linkage with suppliers and forward linkage with the sub sectors and generate
income for the Government in terms of tax revenue and payroll tax.
3
2. Background of the company
Sheger Automatic loundary was established to engage in dry cleaning and loudary
service
business
and
the
entity
has
received
Principal
registration
No.
GU/AA/1/0007759/2011, Business license No. GU/AA/14/668/171867582011
from Addis Ababa Trade Bureau Gulele sub city as at 2007 EC and with paid up
capital of birr 1,300,000 and registered by the concerned government organ to
undertake domestic business in Ethiopia. It is registered in Gulele sub city and
House No SA-B1-002. It also received Tax Payers Registration Certificate No.
0045880739.
The company also has business license in, construction Whole sale and retail
trade, repair, hotel and restaurant, import and export, Transport storage and
communication, community, social and personal service business.
Sheger automatic Laundry is the brainchild of Afework Gebreziabher, an
experienced entrepreneur with a proven track record in the service industry.
Afework Gebreziabher brings a wealth of knowledge in operational management
and customer service. The business is structured as a privately held entity, with
Afework Gebrezgabhers's as the primary shareholder
The business will be strategically located in Addis Abeba Gulelle subsidy wereda 7Adissu Gebeya ensuring easy accessibility for both residential and commercial
clients. This prime location will enhance visibility and convenience for customers,
contributing to increased foot traffic and service uptake
2.1 Business Description
Sheger automatic Laundry operates as a dedicated laundry service provider,
committed to delivering excellence in garment care. Our business model focuses on
leveraging advanced technology and efficient operational processes to meet the
laundry needs of our discerning clientele.
4
Recent Operational History:
Sheger automatic Laundry takes pride in a successful operational history, marked
by meticulous management and financial prudence. Our business has undergone
comprehensive audits, ensuring transparency and compliance with industry
standards. This solid foundation positions us as a trustworthy and reliable entity
with a proven track record.
Sector Synopsis and Industry Statistics
The laundry service sector in Addis Ababa is witnessing a surge in demand due to
the city's growing urban population and changing consumer lifestyles. Industry
statistics indicate a consistent upward trend, with an increasing number of
residents and businesses seeking convenient and reliable laundry solutions.
Sheger automatic aims to capitalize on this growing market by providing highquality services and setting new standards in the sector.
Purpose of Business Establishment:
Sheger automatic Laundry is established with the core purpose of meeting the
rising demand for professional and reliable laundry services in Addis Ababa. Our
goal is to provide a one-stop solution for individuals and businesses seeking
efficient, affordable, and top-quality garment care. By combining cutting-edge
technology, strategic location, and a commitment to operational excellence, Sheger
automatic Laundry seeks to contribute to the economic landscape of Addis Ababa
while creating employment opportunities and delivering value to our customers.
The purpose of establishing a laundry service business is to provide a convenient
and essential service to individuals and businesses by taking care of their laundry
needs. Here are some key purposes and benefits of a laundry service:
Convenience: Many people lead busy lives and may not have the time or
inclination to do their own laundry. A laundry service offers convenience by taking
5
care of the entire process, from washing to folding, allowing customers to focus on
other priorities.
Time-saving: laundry services save customers time that would otherwise be spent
on sorting, washing, drying, and folding clothes. This is particularly valuable for
individuals with demanding schedules or businesses with large volumes of
laundry.
Professional Quality: Laundry services often use commercial-grade equipment
and have experienced staff, ensuring that clothes are cleaned and handled with
care. This can result in better stain removal, fabric care, and overall cleanliness
compared to home washing.
Cost-effective: For businesses or individuals without access to high-capacity
washing machines and dryers, outsourcing laundry can be more cost-effective.
Laundry services can handle large volumes efficiently, reducing overall costs.
Hygiene and Sanitization: Laundry services contribute to maintaining cleanliness
and hygiene by using proper washing and disinfecting techniques. This is
particularly important for businesses such as hotels, hospitals, and restaurants
that require high standards of cleanliness
2.3 Mission, Vision and Objective of the Business
Vision:

We are dedicated to become well recognized and competitive company in the
business through providing outstanding customer service via committed and
professional team.



Establish Sheger automatic Laundry as a recognized and trusted laundry
service brand in Addis Ababa.
Expand our service offerings to meet the evolving needs of our customers.
Foster sustainable growth and profitability through strategic partnerships
and customer loyalty
Mission: Our mission is to continually expand our successful line of Service by
providing the best quality and reliable Service that excel our customers’
expectations; keep our margins as high as possible with continual growth in our
6
market share and work competitively and profitably in all businesses that we deal
by adopting and utilizing modern technology and well-trained personnel in socially
responsible manner.
 Launch operations within three years achieving full operational capacity.
Capture a significant market share in the Adisu Gebeya district within the
first year. Establish a loyal customer base through exceptional service and
competitive pricing.
Objectives: The main objective of our company is to achieve our sales, gross
margins and net profit forecasts for the coming years, as outlines in this business
plan. Specifically, we will strive to achieve the following objectives
 Long-lasting relationship with diverse customer and supplier in
different countries, both in domestic and regional level.
 Forming a valid and enforcing contractual agreement
 Effective utilization of state-of-the-art machinery, and information and
communication technology for quality and speedy operation.
 Visionary and committed management.
 Skilled, experienced and motivated work force and lastly, modern
strategic
management,
marketing
and
operational
management
system.
3 Organization and Management plan
It is evident that for the proper and continuous profitable of the business, due
consideration has to be given to the organization and management.
The owner, being accountable to the business, will manage all activity of the
business, market information and customer needs and wants as well as providing
new and quality service that satisfy customer needs. The owners will manage all
financial and operational aspects the business.
7
The Following table shows all management and Employee staff description.
R/no Name of Personnel
1.
2.
3.
4.
Afework Gebreziher
Kalkidan Alemayehu
Elias Assefa
Megersa Alemayehu
Educational
qualification
Diploma
10 complete
12 completed
Diploma
5.
Yohans Tekle
10 completed
5years
6.
Zerihun G/michael
12 completed
4years
7.
Abel Mamo
10 completed
1years
8.
Mulugeta Meresa
Degree
1years
9. Tomas Girma
10. Tamrat Abera
10 completed
degree
2years
2years
Case executive
Machine
operator
Machine wash
Reception
Reception and
driver
Branch
Reception
Cloth ironer
Cloth ironer
11. Tadesse Bereda
12. Monaz Ahmed
10 completed
10 completed
1 year
1 year
Delivery Boy
Delivery Boy
13. Total
Experience
8years
5years
6years
5years
Job Role
Salary
ETB
Manager
Owner
Casher
Owner
Supervisor
8000
Accountant & 6900
Annual salary
ETB
Owner
Owner
96,000
82,800
5000
60,000
5000
60,000
3000
36,000
3000
36,000
4000
4500
48,000
54,000
3000
3000
36,000
36,000
45,400
544,800
Advisers and Assistance:
Financial Adviser:
 Hillina Tsegaye &Kibrom Tsegay: Provide guidance on financial planning and
investment decisions.
Legal Adviser:
 Hillina Tsegaye
Offer legal counsel, ensuring compliance with local
regulations.
Technical Assistance:
 [Afro Impact consultancy and training Hub: Provide technical support for the
setup of laundry equipment and systems.
Training Requirements:
Staff training programs will be implemented to ensure proficiency in handling
advanced laundry equipment and delivering high-quality services.Periodic training
8
sessions will address customer service, hygiene standards, and operational best
practices. Training for employees in a laundry service business is crucial to ensure
that they have the necessary skills, knowledge, and understanding of the
processes involved in providing high-quality service. Here are some key areas of
training for employees in a laundry service: Laundry Operations: Stain Removal
Techniques, Customer Service: Quality Control: Technology and Equipment
Training: Teamwork and Communication
Organizational Structure:
The organizational structure will consist of key departments: Operations, Finance,
Marketing, and Customer Service. Clear reporting lines and communication
channels will be established to facilitate efficient decision-making.
The business is structured with key essential personnel to ensure proper handling
of the machines and to provide efficient continued service. The total manpower
required is 13 persons. It will have General Manager (the owner) and other 9
workers. The manager who is responsible for running the daily operations to plan,
coordinate, control and supervise the overall activities of the service, developing
new marketing strategies, as well as dealing with the clients while ensuring quality
cleaning services. In addition to this there will be a secretary, an administrator,
machinists, menders. tailors, a storekeeper, organizers, guards and cleaner's It is
believed that the existence of good management of the business, and conducive
working environment are very crucial for any success undertakings. In this regard,
the intended business is expected to be managed by the owner himself. Thus, the
envisaged business will have qualified and skilled persons.
Organization chart
Admin/Supervisor
Secretary/Cashier
9
4. Marketing strategy
Here briefly described your laundry service, its unique selling propositions, and
the purpose of seeking a loan from CBE. Our mission is to offer affordable and
high-quality laundry services to the diverse residents of Addis Ababa. We envision
becoming a trusted brand synonymous with efficiency and customer satisfaction.
The Current Market Size Recognized the increasing demand for laundry services
due to urbanization and changing lifestyles. Consider factors like a growing middle
class with disposable income. The Growth Rate show high demand for the service
due to acknowledge the potential for a rapid growth rate as urbanization
continues. Moreover highlight the increasing awareness of laundry services.
The Current Market Share acknowledges that the market is still emerging, with
room for new entrants. Existing providers may not fully cover the market's
demands. Main Competitors and Market Shares: Identify existing local laundry
service providers. Recognize potential gaps in services and customer satisfaction.
To make more dominant and renowned laundry, we have Plan get max Market
Share: we have Set realistic goals based on the city's growth and the competition.
Emphasize adaptability to changing market dynamics.
Potential customer and purchase commitments of customers
Consider the diverse demographics and lifestyles in Addis Ababa to identify
potential customer segments:
A. Residential Customers:
 Urban professionals with busy schedules.
10
 Families with young children or elderly members.
 Students and young adults living independently.
B. Commercial Customers:
 Hotels and guesthouses.
 Restaurants and cafes.
 Corporate offices and businesses.
C. Specialized Customers:
Consider targeting specific groups such as expatriates, who may seek convenient
laundry services.
 Understand Customer Needs:
 Conduct surveys or interviews to understand the laundry needs of potential
customers.
 Consider factors such as Laundry frequency.
 Preferred laundry services (standard, express, eco-friendly). Preferred pickup and delivery times. Pricing expectations.
D. Purchase Commitments:
To secure purchase commitments from potential customers:
 Offer Incentives: Provide discounts or exclusive offers for customers who
commit to using your services regularly.
 Subscription Plans : Introduce subscription plans that offer discounted
rates for customers committing to monthly or quarterly services.
 Corporate Partnerships: Approach local businesses, hotels, or offices for
bulk contracts, ensuring a consistent flow of laundry business.
E. Digital Presence:
 Online Pre-Orders: Set up an online platform where customers can pre-order
services, allowing them to commit to using your service in advance.
 Social Media Engagement: Leverage social media platforms to engage with
potential customers, offering promotions for early commitments.
Competitive
advantage
strategy
to
lure
customers,
and
competitive
In the competitive landscape of laundry services in Addis Ababa, it's essential to
craft a strategy that not only sets your business apart but also attracts customers
from existing competitors. Here's a brief overview of the competitive strategy:
A. Differentiation through Service Quality:
 Focus on Excellence: Provide a level of service excellence that exceeds
customer expectations. This includes careful handling of garments, prompt
delivery, and attention to customer preferences.
 Quality Assurance: Implement stringent quality control measures to ensure
that each item is returned to the customer in pristine condition.
11








Convenience and Flexibility:
Pick-up and Delivery Services: Offer a hassle-free experience by providing
reliable and efficient pick-up and delivery services. Consider flexible
scheduling to accommodate the diverse lifestyles of your customers.
Online Platform: Develop a user-friendly online platform for order
placement and tracking, making it easy for customers to engage with your
services.
Competitive Pricing and Packages: Transparent Pricing: Clearly
communicate your pricing structure, ensuring transparency and avoiding
hidden fees.
Discounts and Loyalty Programs: Introduce attractive discounts for bulk
orders and create a loyalty program to encourage repeat business.
Environmentally Friendly Practices: Eco-Friendly Options: Differentiate
your laundry service by incorporating environmentally friendly practices,
such as the use of eco-friendly detergents and energy-efficient machinery.
Promote Sustainability: Educate customers about your commitment to
sustainability, appealing to environmentally conscious consumers.
Customer Engagement and Communication:
Personalized Communication: Engage with customers on a personal level,
addressing them by name and tailoring communication to their preferences.
Feedback Mechanism: Establish a feedback mechanism to continuously
improve services based on customer insights.
B. Competitive Advantage:
 Technology Integration: Advanced Tracking Systems: Implement cuttingedge tracking systems to provide customers with real-time updates on the
status of their orders.
 Mobile App: Develop a mobile app for easy and convenient access to your
services, allowing customers to place orders and track their laundry on the
go.
4.1 Pricing
Our projected sales prices for laundry services in Addis Ababa are strategically
positioned to offer fair value to our customers while ensuring the sustainability of
our business. Our transparent pricing model considers factors such as garment
type, special requests, and service frequency, with an emphasis on affordability. In
comparison to competitors, we aim to provide competitive rates, offering loyalty
programs and bulk discounts to incentivize customer loyalty.
12
While our prices align with industry standards, our commitment to quality and
eco-friendly practices sets us apart, providing customers with added value and
contributing to a socially responsible business model. Additionally, we emphasize
fair payment practices, ensuring that our customers receive a reliable and efficient
service at a reasonable cost.
4.2 Advertising & sales
The main marketing strategy begins as a provide quality, unique and full package
services; deliver to the needs of potential customers, that will fill the needs of
them. We are planning our marketing strategy so that we ensure excellence
product and Service with affordable price.
Our promotion channels include print ads in the form of business card, brochures,
fliers and banners that keep the company
name, phone and address of the
company in front of the customer.
We will give advertising in different newspaper and magazine in our country. In
addition, we intend to participate in business workshop and related exhibition.
On the other hand, Word of Mouth - By giving first-time customers great service
and a fair price, the word is sure to spread.
All marketing decisions with regard to specific media choices, frequency, size,
and expenditures will be conducted on an on-going basis with careful
considerations of returns generated.
5. Service Process
Our laundry service process is streamlined to ensure efficiency and high-quality
results. The machinery and equipment required include industrial-grade washing
machines, dryers, and folding machines. The washing process involves the
separation of garments, use of eco-friendly detergents, and careful handling of
delicate items. Once washed, garments proceed to industrial dryers, ensuring a
13
quick and thorough drying process. Finally, the folding machines meticulously fold
each item, presenting customers with neatly arranged and ready-to-wear laundry.
The capacity of our machinery is designed to handle a significant volume of
laundry, allowing us to meet the demands of both individual and corporate clients.
These machines have a long-life expectancy, backed by regular maintenance
schedules to ensure optimal performance. Maintenance includes routine checks,
cleaning, and immediate repairs when needed, ensuring the longevity and
reliability of our equipment. Sourcing machinery from reputable suppliers is
crucial, and we have established relationships with trusted providers to guarantee
the quality and efficiency of our laundry equipment. Costing invoices from
suppliers are meticulously managed and reviewed to ensure transparency and
cost-effectiveness in our service process
 Source of raw materials
The primary source of raw materials for our laundry service, specifically chemical
detergents, involves establishing strategic partnerships with reputable suppliers
known for providing high-quality and environmentally friendly different cleaning
agents namely:-
So
No
items
Quantity
Unit of
measurement
Unit Cost
Total Cost
1
Perchloroethylene dry cleaning
chemical
7
barell
445,000.00
3,115,000.00
2
Plastic Hager
5,000.00
Dozen
104.34
521,700.00
3
Plastic Bag
6,000.00
Kg(90*60=300kg
and 60*30=300kg)
271
1,626,000.00
4
5
6
7
8
9
Largo
DeterjentPowder
altaj low foam powder
silex 210
silex 800
silex 450
2,000.00
300
1,000.00
160
180
180
Ltr
bag(1bag=10kg)
kg
kg
ltr
ltr
39.13
1,800.00
192
572.6
681.31
594.35
78,260.00
540,000.00
192,000.00
91,616.00
122,635.80
106,983.00
14
10
eco star soft plus chemical
11
12
DeterjentPowder
Generetor fuel (nafta
13
chemical of dry laundry inkgo
14
15
16
17
22
23
24
25
26
27
28
29
30
31
32
33
34
laundry pen
laundry Attachment pad
Diva soup
leather paint
plastic roll
spoting chemical qwikgo
spoting chemical bongo
spoting chemical rustgo
spoting chemical targo
spoting chemical silex210
Generetor oil filter
Generator fuel filter
Generator air cleaner
Dimension fastner
stepler
steples
spill
160
ltr
398.7
63,792.00
150
1,000.00
bag(1bag=20kg)
LTR
2,478.26
78
371,739.00
78,000.00
20
ltr
9,500.00
190,000.00
6
525
19
5
150
20
20
20
20
1,000.00
6
6
6
200
3
20
50
TOTAL COST
Dozen
pcs
Dozen
Ltr
Kg
ltr
Ltr
ltr
ltr
kg
pcs
pcs
pcs
carton
pcs
packet
packet
180
43.48
2,000.00
150
248
9,350.00
9,500.00
9,700.00
3,800.00
757
2,608.70
3,913.04
6,521.74
100.00
709
37
50
1,080.00
22,827.00
38,000.00
750.00
37,200.00
187,000.00
190,000.00
194,000.00
76,000.00
757,000.00
15,652.20
23,478.24
39,130.44
20,000.00
2,127.00
740.00
2,500.00
8,705,210.68
 Comment on the workforce
In establishing our laundry service in Addis Ababa, the workforce plays a pivotal
role in ensuring the success and efficiency of our operations. Availability of skilled
labor is a key consideration, and we are committed to hiring locally to contribute to
the community's economic growth. Skilled requirements include expertise in
garment care, quality control, and customer service. Projected wages are
competitive, reflecting our commitment to fair employment practices, and we offer
opportunities for career growth within the organization. Supervision is crucial for
maintaining high standards, and our management team will provide ongoing
support and guidance to foster a collaborative and productive work environment.
Comprehensive training programs will be implemented to equip our workforce with
15
the necessary skills and knowledge in the laundry industry, ensuring a skilled and
customer-oriented team that aligns with our commitment to excellence.
 Delivery methods of finished goods to the customers
Our laundry service in Addis Ababa offers convenient and reliable delivery
methods to ensure a seamless experience for our customers. Embracing a
customer-centric approach, we provide door-to-door delivery, allowing clients to
schedule pick-ups and drop-offs at their preferred locations. Our delivery service
employs a fleet of vehicles equipped with secure and climate-controlled
compartments to maintain the freshness of laundered items. Real-time tracking
options through our website or mobile app keep customers informed about the
status of their orders, ensuring transparency and peace of mind. Whether it's
individual customers with residential laundry needs or businesses requiring bulk
services, our flexible and efficient delivery methods underscore our commitment to
providing a hassle-free and accessible laundry solution throughout Addis Ababa.
 State the capacity utilization plan;
Our laundry service's capacity utilization plan is carefully crafted to ensure
optimal efficiency and resource allocation. The plan takes into account the diverse
needs of our customer base and the capabilities of our production system. During
peak hours and high-demand periods, the capacity utilization plan emphasizes
maximizing the output of our machinery and workforce to meet increased service
requests promptly. Conversely, during off-peak hours, the plan allows for
maintenance and cleaning schedules to ensure that our machinery operates at
peak performance levels consistently.
16
6 Financial Plan
As we Discus earlier in the Executive summary Consumable stock items and
operational cost for laundry services, particularly those procured locally for Sheger
Automatic laundry, play a pivotal role in ensuring the smooth and uninterrupted
functioning of the business. These items encompass a diverse range, including
laundry detergents, fabric softeners, cleaning agents, and other supplies essential
for the laundry process. Local procurement not only fosters community
engagement but also facilitates timely restocking and supports the overall
sustainability of Sheger Automatic laundry operations. Efficient management and
utilization of these consumable stock items contribute to maintaining the high
standards of service and customer satisfaction associated with Sheger Automatic's
laundry services.
It is known that the price of these Consumable stock items and operating cost has
increased significantly. However, recently the company competed with different
customers, so it is necessary to purchase more Consumable stock items in order
to deliver the works received to the customers in a timely manner It is necessary to
get a loan from the bank to overcome this lack of purchase.
The Company is planning to increasing Service income and Improving profitability
of the business, The company plans also to create a branch in Addis Ababa,
Ethiopia, to grow its current business location and enhance service income and
profitability. It also hopes to attract more consumers, particularly from hotels,
restaurants, and hospitals, the company requires additional Working Capital
Finance for covering its Consumable stock items and operational costs and the
plan indicate that working capital loan from Leander institution will be obtained in
order to avoid financial strain at the beginning of the 2016 E.C. fiscal year in order
to run at the expected level.
According to the strategy, the company must invest a total of ETB 10.5 million to
cover its operating costs and the purchase of consumable stock items. Of this
17
amount, ETB 10 million will come from a bank credit facility, which will be fully
repaid in four years at an estimated interest rate of 15.5%. Owners' equity will
cover the remaining financing. This loan choice will be very beneficial to us in
accomplishing our business objectives.
Based on the nature of the financing, we have chosen the Commercial Bank of
Ethiopia to be our bank for filling our financial need. Accordingly, we have decided
to lodge our financing request of Birr 10.5 million to be addressed by in the form of
term loan. In order to secure the requested loan, the company is willing to offer
collaterals worth of Birr 7.5 million.
As it is discussed above, Purchase consumable stock items and Service
related costs are bottlenecks for the company such as operational costs,
Salary and Wage, utility, machine Repair and Maintenance, fuel and
lubricants, rent of warehouse and other administration expense.
6.1 Working Capital requirement-estimation
Description
Cost of Purchase consumable
stock items
Rent of Laundry shop and office
Salary and wages
Utility
Machine repair and Maintenance
Fuel and Lubricant
Other Administration Cost
Total Requirement
Estimated working
capital
8,705,210.68
480,000
544,800
360,000
180,000
80,000
150,000
ETB 10,500,000
Note:- From The total working capital requirement 10 million covered by bank loan and the
remaining fund covered by owners’ equity.
18
 Cost of Purchase consumable stock items
As we Discus earlier in the Executive summary Consumable stock items for
laundry services, particularly those procured locally for Sheger Automatic laundry,
play a pivotal role in ensuring the smooth and uninterrupted functioning of the
business.
It is known that the price of these Consumable stock items and operating cost has
increased significantly. However, recently the company competed with different
customers, so it is necessary to purchase more Consumable stock items in order
to deliver the works received to the customers in a timely manner It is necessary to
get a loan from the bank to overcome this lack of purchase.
Basic assumption in forecasting our Purchase consumable goods costs is the
following:
So
No
items
Quantity
Unit of
measurement
Unit Cost
Total Cost
1
Perchloroethylene dry cleaning
chemical
7
barell
445,000.00
3,115,000.00
2
Plastic Hager
5,000.00
Dozen
104.34
521,700.00
3
Plastic Bag
6,000.00
Kg(90*60=300kg
and 60*30=300kg)
271
1,626,000.00
4
5
6
7
8
9
Largo
DeterjentPowder
altaj low foam powder
silex 210
silex 800
silex 450
2,000.00
300
1,000.00
160
180
180
Ltr
bag(1bag=10kg)
kg
kg
ltr
ltr
39.13
1,800.00
192
572.6
681.31
594.35
78,260.00
540,000.00
192,000.00
91,616.00
122,635.80
106,983.00
160
ltr
398.7
63,792.00
150
1,000.00
bag(1bag=20kg)
LTR
2,478.26
78
371,739.00
78,000.00
9,500.00
190,000.00
180
43.48
1,080.00
22,827.00
10
eco star soft plus chemical
11
12
DeterjentPowder
Generetor fuel (nafta
13
chemical of dry laundry inkgo
20
ltr
14
15
laundry pen
laundry Attachment pad
6
525
Dozen
pcs
19
16
17
22
23
24
25
26
27
28
29
30
31
32
33
34
Diva soup
leather paint
plastic roll
spoting chemical qwikgo
spoting chemical bongo
spoting chemical rustgo
spoting chemical targo
spoting chemical silex210
Generetor oil filter
Generator fuel filter
Generator air cleaner
Dimension fastner
stepler
steples
spill
19
5
150
20
20
20
20
1,000.00
6
6
6
200
3
20
50
TOTAL COST
Dozen
Ltr
Kg
ltr
Ltr
ltr
ltr
kg
pcs
pcs
pcs
carton
pcs
packet
packet
2,000.00
150
248
9,350.00
9,500.00
9,700.00
3,800.00
757
2,608.70
3,913.04
6,521.74
100.00
709
37
50
38,000.00
750.00
37,200.00
187,000.00
190,000.00
194,000.00
76,000.00
757,000.00
15,652.20
23,478.24
39,130.44
20,000.00
2,127.00
740.00
2,500.00
8,705,210.68
 Rent of Laundry shop and office
● Rent Expenses- the company will pay office, Work Shop and store
rent which is presented as follows.
Monthly
Rent
Annual
Rent
S.no
Description
1
Work Shop and
Stor rent
40,000.00
480,000.00
Total
40,000.00
480,000.00
 Salary and Wage
It is computed taking the following assumptions regarding the required
number of staff, basic salary
Table 1- Staff Salary and Wage Plan:-
20
R/no
1.
2.
3.
4.
Name of Personnel
Afework Gebreziher
Kalkidan Alemayehu
Elias Assefa
Megersa Alemayehu
Educational
qualification
Diploma
10 complete
12 completed
Diploma
Experience
8years
5years
6years
5years
Job Role
Salary
ETB
Manager
Owner
Casher
Owner
Supervisor
8000
Accountant & 6900
5.
Yohans Tekle
10 completed
5years
6.
Zerihun G/michael
12 completed
4years
7.
Abel Mamo
10 completed
1years
8.
Mulugeta Meresa
Degree
1years
9. Tomas Girma
10. Tamrat Abera
10 completed
degree
2years
2years
Case executive
Machine
operator
Machine wash
Reception
Reception and
driver
Branch
Reception
Cloth ironer
Cloth ironer
11. Tadesse Bereda
12. Monaz Ahmed
10 completed
10 completed
1 year
1 year
Delivery Boy
Delivery Boy
13. Total
Annual salary
ETB
Owner
Owner
96,000
82,800
5000
60,000
5000
60,000
3000
36,000
3000
36,000
4000
4500
48,000
54,000
3000
3000
36,000
36,000
45,400
544,800
● This shows that the Company’s annual salary and benefit expense
will be Birr 544,800 offering competitive salary and employing
adequate staff.
 Utility● The laundry service industry used a lot of water and electricity.
According to the company's forecast, the yearly energy and water
cost will be birr 360,000 based on past usage.
 Machine repair and Maintenance
 The business has a Dry washing and laundry machine for its
Service. However, in order for this machine to work at its maximum
potential and to guarantee smooth, continuous operation, regular
21
repair and maintenance are required. Based on past data, the
business estimates that the annual cost of repair and maintenance
will be birr 180,000.
 Fuel and Lubricant
 In the event of an electricity outage, the company uses a diesel
generator as an alternate energy source this generator consume fuel.
Based on past data, the business estimates that the annual cost of
fuel will be birr 80,000.
 Other Administration Cost
● Loading un-loading- it will be significant cost element and it is
expected to cost 1% of the total cost of purchase.
● Administrative
expenses-
comprises
stationery
and
printing,
professional fees, license and legal fees, travel and postage, per diem,
telephone, bank charges, etc. It is expected that administrative
expenses amounts to 2% of annual sales.
● Profit tax- Annual profit tax is computed assuming effective tax rate of
35%. Income tax liability of a fiscal year is assumed to be paid in the
same year
● Interest Expenses: - It is planned that the Company will obtain bank
term loan of ETB 10 million to be repaid in 3 years as shown in the
table below. The loans are expected to be obtained at annual interest
rate
of
15.5%.
22
5.1 Loam Amortization Schedule
Loan amount
Annual interest rate Loan
period in years
Number of payments per year
Start date of loan
Pmt.
No.
Payment
Date
Enter values
10,000,000
15.50 %
4
4
Loan summary
Scheduled payment Scheduled number of
850,305.24
16.00
payments Actual number of payments
16.00
Total early payments
Total interest
1/3/2024
Beginning
Balance
Scheduled
Payment
Total
Payment
Principal
Interest
3,604,883.81
Ending
Balance
Cumulative
Interest
1
4/3/2024
10,000,000.00
850,305.24
850,305.24
462,805.24
387,500.00
9,537,194.76
387,500.00
2
7/3/2024
9,537,194.76
850,305.24
850,305.24
480,738.94
369,566.30
9,056,455.82
757,066.30
3
10/3/2024
9,056,455.82
850,305.24
850,305.24
499,367.58
350,937.66
8,557,088.25
1,108,003.96
4
1/3/2025
8,557,088.25
850,305.24
850,305.24
518,718.07
331,587.17
8,038,370.18
1,439,591.13
5
4/3/2025
8,038,370.18
850,305.24
850,305.24
538,818.39
311,486.84
7,499,551.78
1,751,077.97
6
7/3/2025
7,499,551.78
850,305.24
850,305.24
559,697.61
290,607.63
6,939,854.18
2,041,685.61
7
10/3/2025
6,939,854.18
850,305.24
850,305.24
581,385.89
268,919.35
6,358,468.29
2,310,604.95
8
1/3/2026
6,358,468.29
850,305.24
850,305.24
603,914.59
246,390.65
5,754,553.70
2,556,995.60
9
4/3/2026
5,754,553.70
850,305.24
850,305.24
627,316.28
222,988.96
5,127,237.41
2,779,984.56
10
7/3/2026
5,127,237.41
850,305.24
850,305.24
651,624.79
198,680.45
4,475,612.62
2,978,665.01
11
10/3/2026
4,475,612.62
850,305.24
850,305.24
676,875.25
173,429.99
3,798,737.37
3,152,095.00
12
1/3/2027
3,798,737.37
850,305.24
850,305.24
703,104.16
147,201.07
3,095,633.21
3,299,296.07
13
4/3/2027
3,095,633.21
850,305.24
850,305.24
730,349.45
119,955.79
2,365,283.76
3,419,251.86
14
7/3/2027
2,365,283.76
850,305.24
850,305.24
758,650.49
91,654.75
1,606,633.27
3,510,906.60
15
10/3/2027
1,606,633.27
850,305.24
850,305.24
788,048.20
62,257.04
818,585.07
3,573,163.64
16
1/3/2028
818,585.07
850,305.24
818,585.07
786,864.90
31,720.17
$
-
3,604,883.81
1
5.2 Credit Information with other Bank
In order to improve business performance, the company secured loans from
Oromia International Bank and Dashen Bank in the form of term loans and bank
over draft facilities. Dashen Bank granted the company a term loan totaling birr
700,000, which it consistently settled. Additionally, the business received a term
loan from Oromia International Bank and paid it off early. Additionally, it was
granted an overdraft facility by Oromia International Bank for a total of birr
700,000 and paid it off on a regular basis.
5.3Expected income projection from the next four Consecutive year
The Company is planning to increasing Service income and Improving profitability
of the business, The company plans also to create a branch in Addis Ababa,
Ethiopia, to grow its current business location and enhance service income and
profitability. It also hopes to attract more consumers, particularly from hotels,
restaurants, and hospitals in order to meet sales targets for the following four
years.
Expected income projection from the next four Consecutive years are as follows
Profit and Loss
Projection
Year
Total
2016
2017
2018
2019
Revenue
20,384,000.00
26,499,200.00
34,448,960.00
44,783,648.00
126,115,808.00
Total revenue
20,384,000.00
26,499,200.00
34,448,960.00
44,783,648.00
126,115,808.00
Cost of Service
Cost of Service
16,307,200.00
19,874,400.00
25,836,720.00
33,587,736.00
95,606,056.00
Total Cost of Sales
16,307,200.00
19,874,400.00
25,836,720.00
33,587,736.00
95,606,056.00
4,076,800.00
6,624,800.00
8,612,240.00
11,195,912.00
30,509,752.00
Gross Profit
Administration
Expense
Printing and
stationery
Communication
1,258.00
1,446.70
1,663.71
1,913.26
6,281.67
12,589.00
14,477.35
16,648.95
19,146.30
62,861.60
Professional fee
10,000.00
11,500.00
13,225.00
15,208.75
49,933.75
1,000.00
1,150.00
1,322.50
1,520.88
4,993.38
License and
registration
-
1
Transportation
Depreciation
Miscellaneous
15,000.00
17,250.00
19,837.50
22,813.13
74,900.63
11,256.00
12,944.40
14,886.06
17,118.97
56,205.43
100,000.00
115,000.00
132,250.00
152,087.50
499,337.50
3,604,883.82
Interest expense
1,439,591.13
1,117,404.47
742,300.47
305,587.75
Total Expense
1,590,694.13
1,291,172.92
942,134.19
535,396.53
4,359,397.76
Net Profit/Loss
Before Tax
2,486,105.87
5,333,627.08
7,670,105.81
10,660,515.47
26,150,354.24
5.3 Relevant assumptions
The following relevant assumptions are considered to draw financial
projections.

The financial plan is prepared taking into account the internal
capability an existing physical facility as well as environmental
opportunities and threats.

The previous year's financial performance serves as the key forecasting
basis for the years under consideration.

The fiscal year refers to a period of 12 months covering from Hamle 1
to Sene 30 of Ethiopian Calendar.

To finance the growth in sales, it is projected that, the company will
secure additional loan in the form of term loan from banks.
Interest rate on the loan is assumed to be 15.5% per annum

Previous period sales revenue was taken as base year for comparison.
Based on this scenario, the 2016 E.C sales will grow by 30% as per
critical assumptions explained previously in this paper.

For long-term assets, the business employed the straight-line
deprecation method.

Sales will increase by average 30% every year after 2016 E.C.

Administrative and Selling Expenses is assumed to increase by 10%
per annum.

Profit margin is Assumed as 20%.
2

Operational costs are considered from historical costs.

Income tax of 35% is applied on profit.
5.4. Projected Cash Flow
Year
2016
2017
2018
2019
26,499,200.00
34,448,960.00
44,783,648.00
Cash Inflow
Beginning Cash
219,214.00
Income
20,384,000.00
Loan
10,000,000.00
Total Inflow
30,603,214.00
26,499,200.00
34,448,960.00
44,783,648.00
16,307,200.00
19,874,400.00
25,836,720.00
33,587,736.00
Cash outflow
Cost of Sales
Printing and stationery
1,258.00
1,446.70
1,663.71
1,913.26
Communication
12,589.00
14,477.35
16,648.95
19,146.30
Professional fee
10,000.00
11,500.00
13,225.00
15,208.75
License and registration
1,000.00
1,150.00
1,322.50
1,520.88
Transportation
15,000.00
17,250.00
19,837.50
22,813.13
Depreciation
11,256.00
12,944.40
14,886.06
17,118.97
100,000.00
115,000.00
132,250.00
152,087.50
1,439,591.13
1,117,404.47
742,300.47
305,587.75
852,137.05
1,848,769.48
2,666,537.03
535,396.53
Total Outflow
18,750,031.18
23,014,342.40
29,445,391.22
34,658,529.05
Net Cash Flow
11,853,182.82
3,484,857.60
5,003,568.78
10,125,118.95
Miscellaneous
Interest expense
Profit tax
The cash flow projection is made assuming that:
●
The Company will obtain ETB 10,000,000 loan finance at the beginning of
operation,
●
Interest rate assumed 15.5 %.
●
Beginning cash balance taken from Previous year Audited financial statement.
●
All purchases are on cash basis.
●
The annual sales of the company will be collected in the current year,
●
Profit tax of the fiscal year will be paid in the same year.
3
Overall, the projected cash flow shows that the Company will generate series of
surplus cash flows after covering all operational and financial commitments that
confirms its liquidity.
5.5 Projected Balance Sheet
STATEMENT OF PROJECTED BALANCE SHEET
Currency in Ethiopia Birr
Beginning of the
Year
Year, 1
ASSETS
Current assets
Cash and cash equivalent
Debtors and pre payement
Prepayments
Inventories
Other current assets
219,214
2,317,894
2,504,169
-
10,258,741
2,212,783
0
2,754,586
Total current assets
5,041,277
15,226,110
1,469,613
1,458,357
1,469,613
1,458,357
Total non-current Assets
1,469,613
1,458,357
Total assets
6,510,890
16,684,467
1,138,834
522,610
1,252,717
852,137
Non-current assets
Property, plant and equipment
Liabilities and equity
Current liabilities
Accounts payable
Tax payable
Other current liabilities
-
-
1,661,444
2,104,854
814346
10,000,000.00
-
10,000,000.00
Total liabilities
2,475,790
12,104,854
Equity
Capital
Owners
Retained Earning
1,300,000
0
2,735,102
1,300,000
Total equity
4,035,102
4,579,612
Total equity and liabilities
6,510,890
16,684,466
Total current liabilities
Non-current liabilities
Bank Loan
Total non-current liability
3,279,612
4
5.6 Financial Ratios
A financial ratio is used to calculate a company’s financial status or production
against other firms. It is a tool used by investors to analyze and gain information
about the finance of a company’s history or the entire business sector. To calculate
financial ration, numbers are taken from the balance sheet, income statement, and
cash flow statement. The financial ratio is not a calculation but an explanation of
the economic status of a company, in terms of profit, liquidity, leverage, and
market valuation. A ratio may serve as an indicator, red flag or clue for various
issues.
Return on Equity
=
Net Profit before tax
Net Equity
2,486,105.87
14,579,612.45
0.170519
Current ratio
=
Current asset
Current Liability
15,226,109.90
2,104,854.45
7.233807
Quick ratio
=
Current asset- Inventory
Current Liability
12,471,524.00
2,104,854.45
5.925124
Debit to Equity
=
Total Liability
Net Equity
2,104,854.45
14,579,612.45
0.14437
5