1 Final Paper

Feasibility Study of Ato Abushu Tolossa Bakery Business
UNIT ONE
Executive Summary
Ethiopia is one of the African countries that possess the highest number of UNESCO World Heritage Sites in
Africa, with different sites spread throughout the whole country, and, therefore, has great potential to develop itself
as an industrial & tourist destination. The Government of Ethiopia (GOE) has prioritized manufacturing & service
sector development in its development strategy, to optimize the existing manufacturing & service resources as a
driving force of economic growth for the whole country.
Ethiopia is a strategically important country in the Horn of Africa’s foremost countries and therefore, many
international meetings and conferences are held in Ethiopia. This creates huge demand for both sectors at an
international standard and even an increase in such a demand is expected in the future because the importance of
Ethiopia has been growing and many international organizations have been continuously strengthening their
institutions and augmenting their personnel in Ethiopia.
Since the manufacturing & service industries can create job opportunities, the development of both industries
benefits not only the manufacturing & service sector but also has a great impact in poverty reduction. In the past
twenty years the country has shown an encouraging private investment in all areas of economic and social
activities. The private sector has been motivated by free market oriented economic policy on the government. To
stimulate private investment, the government amended the investment proclamation several times which resulted
in rising of investment in all sectors of the economy.
Considering the attractive investment climate, Ato Abushu Tolossa has decided to establish a new bakery firm that
can produce standardized healthy bread for consumers with a total capital of birr 4,435,965.00 at Dukem town of
the Oromia regional state. The promoter Ato Abushu Tolossa has secured a total land with the area of 2,000m 2 on a
lease agreement with the town’s municipality. The ownership title certificate was registered under his wives name
W/ro Nigatua Soressa.
The project site has already acquired a 3 phase electric power with a total cost of more than 400,000.00 birr. In
addition, the promoter Ato Abushu has constructed a medium scale warehouse for the production of its final
product (Baking Warehouse).
The proposed project will be managed by the owner of the project who has accumulated adequate experience in
several types of business activities within the country. In addition to this, hired employees will handle the day to
day activities of the project. It will also create employment opportunities for about 19 residents of Dukem &
Bishoftu towns in different types of employment designation.
Abushu Tolossa Bakery /“Tena Dabo”/ is established by one of the outstanding business man in Dukem town, he
has several types of businesses in the town including cereal whole trade and construction machinery rentals. Before
these he has been engaged in different types of businesses and accumulated several challenges. He has a robust
experience in the whole trade of cereals business having worked both in the private and in collaboration with his
mates before starting his own businesses individually.
Abushu Tolossa Bakery will be one of the leading bakery business based in Dukem & Bishoftu towns. The
location of the project is ultimate for successfully run such type of business. It covers a wide range of clients both
domestic and corporate clients. The firm is not only a unique bakery brand because it does not just produce & sell
breads, cakes, and snacks, amongst others, but it also plans to deliver a healthy and standardized and accredited
breads in both towns (Dukem & Bishoftu).
Because of our goal of becoming one of the top bakery companies in Dukem & Bishoftu towns, the promoter is
willing to go the extra mile to invest in some of the finest bakers we can find, as well as set plans in place to
acquire the best of equipment when it comes to setting up a standard bakery.
When it comes to hygiene, the project has put plans, processes and structures in place that will ensure that it is
always at the top of the game. Essentially, the firm has been able to secure permits and legal procedures from all
relevant governmental offices in both towns.
No doubt the demand for breads, cakes and snacks is not going to plummet any time soon, which is why the
promoter of this project initially put plans in place to continue to explore all available markets around the cities
where the bakery business is located and ensure that it will create a wide range of distribution channels. With that
all in check, this study finds that the firm will be able to get good returns in its investments.
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This brief survey has been undertaken to assess the technical as well as economic viability of the complex outfit.
As subsequent sections of the report reveal; the project shall be financially sound while its socio-economic
contributions cannot be neglected.
The total investment cost of the project including its working capital requirement and contingency, furniture’s and
related equipments plus acquisition of one 50kva generator is estimated to Birr 4,435,965.00 based on the
estimations prepared by the engineers of the building and assessment of current market price of furniture’s,
equipments & machineries on their respective proforma invoices. Out of which about 50.94% accounts for Birr
2,259,775.00 is already injected & being ready to the manufacturing work, acquisition and pre-production costs of
the land, owner’s contribution for purchase of furniture’s, equipments & machineries and additional working
capital contribution raised from the owner’s own capital. The remaining balance of Birr 2,176,190.00 (49.06%)
will be expected from Bank’s in the form of long term debt.
Since the area under consideration is only 37kms far from the metropolis of the country and uninterrupted struggle
of the municipality of the town, Dukem town had to have well developed socio-economic infrastructures. Such as
road, electric power, water sources, telephone & internet line accesses and other infrastructures.
To take a broad view, the project is ideally located for the purpose of modern bakery production & delivery center.
Even though, like most other business ventures, it aims to maximize return on invested capital, it also aspire the
promoter to contribute an additional competence to the town, create more job opportunities for the local people and
making its own contribution to the renaissance and development of the country as a whole.
Moreover, in a process of attaining this basic original idea, it also benefits the community by creating a new
healthy and standardized bread and the public of the towns will also benefited by having a high-quality breads. The
town’s administrations will also have an additional revenue/income through taxation and employment income
taxes.
It is clear that Ethiopia follows the free market system and this in turn needs the individuals to inject their
potentials to the economy, as a result the problems that the nation currently faced will gradually eradicated and the
national economy will also become progressively developed. It is this understanding and courage for this project to
be planned by the promoter Ato Abushu Tolossa.
This feasibility study is meant to briefly show the project’s importance, area advantages, planned activities,
estimated project capital, its profitability and other important aspects for the concerned stakeholders.
Major Findings of this Study
 The minimum net profit from sales is expected to be Birr 138,088.00 in the first year and the maximum
profit will be registered in year 8 is more than birr 3.6 million.
 The cumulative net cash balance is to be Birr 6.88 million at the end of the project life.
 Using the major investment decision techniques, the launching of the project is found to be attractive
showing positive financial results, presented in Financial Evaluation section of this study.
 The project will create job opportunity for 19 workers permanently and will pay more than 493 thousand
birr yearly for its employees as a form of basic salary.
 The project will generate income to the government in the form of profit tax during the whole project life,
at the end of its projected years the project can pay more than 6.5 million birr in the form of profit tax
payments.
The Project
 Project Promoter: - Ato Abushu Tolossa Buraka
 Project:- Bakery Production & Distribution Business
 Address:-Oromia Region, Dukem town, Kebele-01 H.No. -.
 Form of Business: - Sole Proprietorship
 Tin No.:- 0003101854
 Issued on:- 12/10/2004
 Authorizing Office:-Oromia Regional Government, Dukem Town Investment Agency.
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Background of the Promoter

Due to the presence of high demand gap, suitability and relative advantage of Dukem town as industrial,
commercial and residential quarter and personal interests of the owner of the project, Ato Abushu Tolossa needs to
involve in additional project for himself and wants to be one of the pioneers in the town to engage in a
standardized bakery production business center. He is one of the most known and respectful business persons in
the town; Ato Abushu is a married person & has six children with his wife W/ro Nigatua Sorresa.
Ato Abushu Tolossa as a sole trader engaged in several types of businesses of his own since 1994. Some of his
previous businesses are retail trade, sales of construction materials, whole and retail trade of cereals and
construction machinery rentals. Currently he needs to engage in manufacturing sector by engaging in bakery
industry.
Name of the Firm
The proposed name of the firm is “Tena Bread” because it is simply promotes health for our body and also for the
well-being of our mind or spirit. Promoting a healthy and convenient way of eating by introducing varieties of
nutritious breads to the consuming public. Wherein “bread” has been popular around the world and is one of the
oldest reproduction foods, having been of importance since the mainstay of economic sector in Ethiopia currently
is agriculture. That’s why we came up to our business name “Tena Bread”.
Location
The Location of the firm will be on Dukem town. The business is located here because it is near to our target
market and competitors and it is simply the town is proper for running such type of business.
The main highway road crossing the town is considered to be the life line of the capital city of Ethiopia, at the
same time it is also the main gateway to the major parts and connects to most important business cities such as
Djibouti, Adama, Hawassa, Dire Dawa, Harar, Asala, etc. This indicates that the site selected for the business is
suitable for the reason that the sales outlet will be located adjacent to the main highway road from Addis Ababa to
Djibouti and on the center of Dukem & Bishoftu towns.
Management Feasibility Summary
The management aspect of this proposal will preview what strategy of management the promoter will apply. This
will give an overview of the manner he will be managing the business and show his strategy on how he’ll do &
operate the business. It is shown that he, as a General Manager will be taking care of the administrative aspects of
the business. This will ensure that the success of the business will depend on how the promoter manages the firm
and the way he perform the overall tasks, duties and responsibilities of the bakery business.
Marketing Feasibility Summary
The Marketing study covers the General business condition, competitive condition, target market, demand and
supply, product, pricing strategy, promotion and packaging. This area talks about the structured questionnaire
floated to the respondents and the result determines the demand and supply and to know whether the final product
will penetrate the target market or not.
Technical Feasibility Summary
A large part of determining resources has to do with assessing technical feasibility. It considers the technical
requirements of the proposed project. The technical requirements are then compared to the technical capability of
the organization. The systems project is considered technically feasible if the internal technical capability is
sufficient to support the project requirements.
The analyst must find out whether current technical resources can be upgraded or added to in a manner that fulfills
the request under consideration. This is where the expertise of system analysts is beneficial, since using his own
experience and his contact with vendors he will be able to answer the question of technical feasibility.
Financial Feasibility Summary
The project promoter will have his own contribution in the capital contribution of the business. The proponent will
also make projected financial statements to somehow disclose information on financial position, performance and
cash flow of the business.
A study on whether a project is viable after taking into consideration its total costs and probable revenues. If the
revenues cover the costs of the project, then the project is visible.
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UNIT TWO
Introduction
Abushu Tolossa Bakery is a bakeshop & producer that produces & distributes only healthy baked goods and proud
itself to be an environment-friendly products. The promoter would like to focus on the interest of the buyers and
also the consumers with his own version of Breads. He would like to introduce different flavors that are
extraordinary to the consumer’s taste.
This idea was a brainchild of the promoter Ato Abushu Tolossa with a strong belief that a goodies should taste like
a goodies without the worry of it going straight to your gut or your health! That should give the feeling of lively
and satisfied, not sick or sluggish. After countless & uninterrupted work, Abushu Tolossa Bakery facility is proud
to serve up an array of super-yummy goodies baked with premium quality locally produced organic ingredients.
The Company Logo
The company logo will be made as the promoter decides its design on how it will looks like. The main thing with
the logo will came up with the idea of the logo that it must be simple but yet have the sense of elegance, easy to
recognize and it is appealing to the people. The consumer’s will choose “Tena Bread” because it is a highly visible
color that is able to focus attention quickly and get people’s attention to it. It also increases craving for food and
other stimuli, and it signifies a passion and desire, promoting ambition and determination. The proponent desired
to gratify for his customers.
A man's starter for a progressive day is always a basket of bread. From this humble wheat, kneaded and baked with
a pinch of love and care rises forth healthy bread which nourishes a man's soul and body. We call it “Tena Bread”
for our product from nutritious, delectable raw materials and health additives that sum up the wholesomeness of
our masterpiece.
Bread in all its various forms, is the most widely consumed food in the world. Not only is it a rich source of
carbohydrates, it’s also portable and compact, which helps to explain why it has been an integral part of our diet
for thousands of years.
Type of Business Organization
Abushu Tolossa Bakery is formed as a Sole Proprietorship business type with a capital of total of birr
4,435,965.00. It would be owned, operated and sustained by the promoter Ato Abushu Tolossa.
Some of the advantages considered in establishing a sole proprietorship business are:
 Ease of Organization
 To exploit the wider pool of talents, easy judgments, evaluation and knowledge and skill of the promoter
will be utilized and to provide and creating brain storming for the success of the business
 Maximization of personal interest of the proponents to the success of the firm
Description and Nature of the Business
This study makes this product proposal for the purpose that the promoter wants to serve his valued customers in a
new product dishes that he give them a healthy food that will enjoy not only for adults but also for the young ones,
the promoter plans to add especial ingredients for his products such as squash, vanilla etc. He would like to
introduce varieties of flavors that consumers would not normally taste of the bread. He believe that consumers will
patronize healthy choices instead of those bread contains amount of sugar and unhealthy ingredients.
Mission Statement
The Promoter’s duty is to delight his customer by producing healthy bread with extraordinary flavors to choose
from and to achieve high efficiency with the resource available.
Vision Statement
Tena Bread is a business oriented organization of young entrepreneur aiming to satisfy customer’s needs through
providing quality products with affordable prices at suitable places and creative promotions.
Objectives
 To optimized our customer’s satisfaction.
 To accomplish consistency in the services offered.
 To determine the marketing strategies to be applied in the business.
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 To assure that all of the operation process in our business is functioning well to meet the demand of our
customers.
Project Implementation Plan
Jan Mar Apr Ma Jun Jul Aug Oct
Year Activity . Feb. . . y . . . Sept. . Nov. Dec.
<2017/1
8 Land Acquisition
Construction Work
Legal Document
2018/19 Preparation
Construction of
Buildings
Debt Financing
Acquisition of
Machinery & Eqpmts
2021
Procurement of
Manpower
Operation
As indicated above, the project inception was started before 2017Gc, and majority works have been done for the
last four years. The remaining works would be finalized in year 2021 and the project is expected to become
operational on December, 2021.
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UNIT THREE
Economic and Sector Review
Ethiopian Economy
The services sector of the country’s economy has—for the first time in the history—overtaken agriculture as the
largest segment of the Ethiopian economy. This reverses a centuries-long economic structure, wherein agriculture
was the dominant sector, followed in a distant second place by the services sector, and lastly a very small industrial
sector. The recent release of FY 2018/19 GDP statistics, however, revealed that the service sector is now clearly at
top, comprising 50.9percent of GDP, followed by agriculture at 37.5 percent, and Industry at just 13.2 percent
(Ministry of Finance & Economic Development) . The customary shorthand description of the Ethiopian economy as being
overwhelmingly agriculture-based-has thus just becomes obsolete. The overtaking of agriculture by services is not
some statistical blip or a one-off occurrence linked to a particularly poor crop season.
Agriculture has actually been overtaken by services at a time when crop output reached a record level of 17.1
million tons. Indeed, for close observers, the trend lines have been prevalent for almost a decade; agriculture was
more than 50 percent of GDP as recently as 2010/11 but started a gradual decline over the past decade, falling to
about 47percent in the middle of the decade and to a low of 43.2 percent of GDP most recently. The services share
of GDP moved slowly but consistently in the other direction, moving up from just 38 percent at the start of the
decade to 45 percent of GDP most recently.
Projected Composition of Ethiopian GDP
Services Industry Agriculture
FY 2015/16 GDP Share 45.1 13.0 43.2
FY 2016/17 GDP Share 48.0 13.1 40.2
FY 2017/18 GDP Share 49.6 13.2 38.6
FY 2018/19 GDP Share 50.9 13.2 37.5
Source: MoFED & Access Capital Projections
As indicated in the above statistical data the service sector GDP contribution in the overall economy has grown
year after year in arrow.
Ethiopia
With its diversified natural endowments can be one of those main tourist attraction countries in the world. The
main features of the natural tourist attractions of the country are its landscape with numerous scales of
topographies, attractive rivers and waterfalls, gorges, caves, rift valley, lakes, fauna and flora, monuments and
artifacts, and diverse ethnic and cultural blends. Being an ancient country it has got rich history. The famous
historical routes are Addis Ababa, Bahir Dar, Gondar, Axum, Lalibela, Mekelle, Sof-Oumer, Arba Minch,
Hawassa, etc. These areas are famous for monasteries, ritual obelisks, manuscripts, castles, rift valley and lakes,
monolithic stones, etc.
The archeological attractions are Haddar in Awash Valley, Melka Kontur, Dilla and Dire Dawa areas. Ethiopia is
the cradle of mankind where four million years old fossil remains (Selam) has been recently found. The unique
character of the country are its attractive cultures and more than 80 ethnic groups having over 200 dialect, varied
traditions and customs, very interesting music, folk songs and dancing.
In addition to this, Addis Ababa is the centre of Africa, the seat of numerous diplomatic missions and
representatives of international organizations. It is a venue of many conferences and seminars and a home for
thriving commercial community.
Former’s Travel Guides, which has been offering the best tourist destination sites for those planning the perfect
travel excursion for the last 50 years, posted on Frommer’s.com scoured the globe, and poll edits stable of authors
and experts to identify twelve surprising, thriving, or emerging travel destinations. Following this, Ethiopia is
selected one of the top ten travel destinations.
Former’s Travel Guides also disclosed Ethiopia as finally emerged out of the shadows caused by year’s political
strife, economic hardship, and famine. The improved infrastructure has made travelling in Ethiopia increasingly
popular, especially for those seeking adventure. Ethiopia is reverted for its rich history as one of the earliest
Christian country, the town of Axum which is the home of the ancient ark of the covenants as well as the
monolithic rock-hewn churches of Lalibela are some of the tourist attraction sites in Ethiopia. The country has a
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unique calendar of its own and it has celebrated its own Millennium. The African Union head of states on its
summit decided the Ethiopian Millennium to be called as the African Millennium. This helps the country to
promote its tourism industry throughout the world.
Statistical report on most developing countries show that the demand for facilities such as hotels, transportation,
banking, insurance, telecommunications, road, electricity, etc are rising and should assist the growing tourism
industry. It is, therefore, high time for the country to develop and improve its tourist facilities to a level of
internationally acceptable standard.
Dukem Town
Favorable situation for the private sector in Dukem town causes to raise performance of investment and
considerable number of projects are flourished as recent facts reveled. Relatively presence of well-developed
infrastructure and its nearness to national capital makes the town highest recipient of investment.
From time to time the increment and expansion of urban zone causes the demand of manufacturing, hotel &
commercial buildings are alarmingly increasing. The good governance experienced in the town is the main cause
of expansion of business movement which in turn seeks for suitable and modern working premises.
Dukem town is located at 37kms southeast of Addis Ababa and gate-way to the eastern and south-eastern part of
the country and is served as the main link to major economic centers of the country and has a heavy traffic
movement due to being a main transit location for heavy and medium weight travelers.
Emerged due to train station of the Ethio-Djibouti Railway, the town is established around 1915E.c in between
Akaki & Bishoftu towns. The name Dukem is drived from afan Oromo “Duka Demi” mean “Go With”. The town
is located in Finfinne Surrounding Special Zone of Oromia Region.
Physical Characteristics of Dukem
The landscape of Dukem and Bishoftu owns its origin to the volcanism Quaternary that gave rise to the existing
peculiar geomorphology of volcanic environment. This was later modified, to a limited extent, by recent alluvial
depositions and formation. As a result, numerous cinder and spatter cones as well as old volcanic create over
within and in the vicinity of Dukem and Bishoftu. The two towns and its immediate vicinity are surrounded by
relatively highly elevated areas like Mt. Yerer to the north, Mt. Sokour to the south, Mt. Zikuala to the south-west
and some scattered cinder and spatter cones to the east and west.
Under this setting, Dukem and Bishoftu towns are located at the northwestern tip of the G.R.V (Great Rift Valley)
within in the southern part of the Awash River Basin. Specifically, it is within the wood chat River catchments, a
tributary of the Modjo River that fall into the Awash and into the Koka Lake and Aba Samuel River.
Since Dukem town is one of the neighboring towns and found in between to the metropolis and Bishoftu, different
types of consumers should pass through Dukem town and that makes the town one of the most attractive
residential, recreational, business plus industrial area of the region.
What makes Dukem & Bishoftu towns unique is also the colorful annual ceremony for Irrechaa (Thanks giving) at
Lake Hora Arsedi as a true manifestation of Oromo religion and culture. This is part of the thousands of nationals
and international visitors. Currently, it has drawn large-scale attention and received wide media coverage. Thus, in
addition to its significant as a shrine for the worship of Oromo religion, it has a magnificent potential as valuable
source of beauty.
Population
Dukem is situated along the Addis Ababa - Djibouti highway and is a station on the Ethio-Djibouti Railway. It is
also found adjacent to the location of an industrial park covering more than 500 hectares owned and developed by
East Industrial Zone & East African Group (Ethiopia), Ltd. The town has an elevation of 1950 meters above sea
level. The town has an estimated population size of more than ninety seven thousand, which is not the exact figure
but the projection made based on the estimated growth rate of 8% that was briefly discussed on the Oromia
Regional State Master Plan document of Dukem town. During the 1994 census the population size of the town was
around 15,200.
Business and Finance
As Dukem town is becoming an established investor’s destination throughout the nation, many state owned and
private banks are opening their branch in the city to exploit the financial activity. The town has more than ten
private and three state owned banks.
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Economic Activities
Despite its status as one of the fastest growing towns in the region for decades, Dukem is physically not larger than
most of zonal/woreda towns in the regional state of Oromia. Coupled with urban agriculture, the availability of
suitable flat land, infrastructure, abundant water resource, feed for animals etc. has contributed to the establishment
of agro-industrial manufacturing, recreational resorts, hotels and business firms. Presence of a number of
governmental, non-governmental organizations and private sectors, in addition to its proximity to Addis Ababa
offered and easy access to transportation of raw materials, finished goods and other trade and commerce activities.
With more to come, these are the major economic basis and potentials of the town.
Due to its favorable area for investment, there are a lot of private investors investing on different type of industries
which create a lot of employment opportunities for the residents of the town.
Investment Overview
Existing Investment Economic Policy of the country makes Dukem the ideal place to invest.
 Capital and decentralized economy
 Free Market Policy (Minimum Government Intervention)
 Encouraging investment and private capital Accumulation
 Favorable investment Policy and Conditions
 Encouragements made for Investors (Tax free, duty free and the like....) made the town one of the ideal
business locations in the nation.
Infrastructure Development
By way of infrastructure rehabilitation, Dukem town has undertaken various forms and qualities of developmental
schemes. Among these are asphalt and coble stone roads, draining and flood protection structures such as walls and
check dams, new and rehabilitated market places, water supply and sewerage developments within the town. In
addition telecom services, electricity & water resources are available in good quality and quantity.
Bakery Industry Overview
The bakery industry has come a long way, and will continue to evolve with countless of bakers bringing creativity
into the industry. The Baked foods production has been in existence for tens of centuries. In the true sense of the
word, it has been around for over two thousand years.
If per chance there is a doubt about this; then perhaps there would be a need to take a look at the bible era. One of
the predominant meals that were widely talked about in the bible was the bread. So, it wouldn’t be wrong to say
that those of old have been able to successfully pass the art from one generation to another generation.
The Romans who generally like baked foods are actually the people who improvised and developed the baking of
foods commercially – bakeries. In nearly all their occasions; ranging from mere feasts to weddings, they are known
to always celebrate with baked foods. As such, they may be accorded the praise of being the ones who introduced
bakery as an occupation and they achieved this around 300 BC. After this significant milestone was achieved, the
drastic appeal for baked goods increased throughout Europe and expanded into the eastern parts of Asia.
At that point, bakers started baking breads and goods from their kitchens and thereafter took to the streets to have
them sold out. Selling of baked foods became the trend and before too long, baked products were getting hawked
in streets of Rome, Germany, London and Paris.
Over time, bakeries no longer had to rely solely on retailing their baked breads and snacks in the streets, in the
open market or via home deliveries, but could now move ahead to open their bakery stores for customers to come
in and order for their freshly baked bread and other foods. History has it that Paris in France happens to be the first
city in the world to have started open air bakery.
Bread and all flour based foods are generally consumed by almost everybody in our planet; as such, anyone who
chooses to establish a bakery in any part of the world is sure going to get good returns on his or her investment, as
long as they are doing the right things when it comes to running a business.
Aside from bread which seems to be the face of the bakery industry, cake is also one of the products of the bakery
commerce that is doing pretty well in the market all over the world. Yes, people eat bread and other flour made
snacks on a daily basis, but you would quite agree that cake making is also one of the major money spinners for
bakers.
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Although not all bakers are specialized in cake making, but those who are into the art, alongside bread and other
snacks, are the ones who seem to be maximizing the bakery industry. The fact that people order for cakes during
their special events like birthday parties, wedding ceremonies, wedding anniversaries, and other memorable
occasions, makes the bakery business a high – in – demand business.
Why Invest in Dukem?
 Access to market because of its geographical location
 Peace and Stability is always in the town and around
 Cheap Potential Resources (Human and Natural Resources)
 Infrastructure is at its best (Transportation, Power, Telecommunication, Water are adequately available)
 Conducive Environment Policy
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UNIT FOUR
Marketing, SWOT & Technical Feasibility
Marketing is the process of perceiving, understanding, stimulating, and satisfying the customer needs, wants and
expectations through the goods and services of specially selected target market which is better than the
competitors.
Marketing Philosophy
A marketing philosophy defines the mission of a company using the satisfaction and benefits that using that
company offers; it focuses on a two-way system of communication with the customer, so that the marketing
department understands the customer needs more clearly.
Abushu Tolossa Bakery promotes healthy lifestyle, eating our special bread gives a lot of benefits to a person’s
body and attitude as well as to our environment. The promoter believes that customers can have great tasting baked
goods if the right attention is paid to sourcing, recipes, and consistency. Tena Bread will launch a first location at
Dukem & Bishoftu, around the main business and living areas of the towns in order to serve the public as well as
the other municipalities. The firm will have its own different branches to build local brands to the coming years.
This marketing plan will allow the owner, to focus on marketing efforts by taking the long view, and looking for
results on a daily and weekly basis to see that the chosen tactics are successful.
Target Market Segmentation
The division of a market into different homogeneous groups of consumers is known as market segmentation.
Rather than offer the same marketing mix (product, price, place, and promotion) to vastly different customers,
market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better
satisfying customer needs. Not all elements of the marketing mix are necessarily changed from one segment to the
next. For example, in some cases only the promotional campaigns would differ. Most small businesses cannot
afford to market to the general, mass-market customer resources are just too limited. Instead, it must focus its
efforts, communications, and resources on those segments of the market that offer the most promise for the
business and that have been neglected by larger competitors. The niche strategy aims at making its successful
practitioners immune to competition and unlikely to be challenged. Successful practitioners of market segmenting
take the cash and let the credit go.
A market segment should be:
 Measurable
 Accessible by communication and distribution channels
 Different in its response to a marketing mix
 Durable and not changing too quickly
 Substantial enough to be profitable
Geographic Segmentation
Geographic segmentation criteria include region, climate and population density. A small bakery in a suburban
community may serve just the local residents. Using population estimates from the latest census and information
on the competitive structure from the local chamber of commerce, the bakery can estimate the number of potential
customers and plan its operations accordingly. By putting up an online order-entry system and contracting with
part-time delivery people, it may also be able to supply different flavors of breads to locations outside its normal
geographic area.
Based on the information gathered from the municipalities of Dukem & Bishoftu towns, the populations currently
lived in the towns are estimated more than 107,000 and 324,000 respectively. For the purpose of this study, it is
estimated that only 7% of the population will utilize the final product of our firm on daily bases with a rise of 10%
each successive years.
Projected Daily Demand - Target Market
Year 2021 2022 2023 2024 2025 2026 2027 2028
Dukem 6,790 7,469 8,216 9,037 9,941 10,935 12,029 13,232
Bishoftu 21,980 24,178 26,596 29,255 32,181 35,399 38,939 42,833
Total 28,770 31,647 34,812 38,293 42,122 46,334 50,968 56,065
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Target Market Description

Tena bread wants to distress the purchasing influence of most of the public as it is offering an affordable price and
addressing health and wellness trends in our product offering. The target market of our business proposal will not
only concentrate to individual person, professional or not, male or female but also to the walk-in costumers among
all for those who lived in both towns as well as hotels, restaurants, resorts and cafes.
Our Target Market
We are quite aware that the target market for bakery products cut across people of all walks of life. Since
everybody needs food to survive; we are prepared to meet the needs of as much people as we can, within the
various locations our bakeries will be located.
It is indeed difficult to create a list of the people we intend selling our bakery products to, because everybody
needs what we have to offer in our products & services. Here are just a few of the people / places that we intend
selling our products and services to:
 Families (Homes)
 Schools (boarding house and campus)
 Groceries Stores
 Shopping Malls
 Wedding Ceremonies
 Event Planners
 Sport Centers
 Corporate Organizations
 Hotels, Restaurants & Resorts
Factors Influencing the Market
 Comparative price realization from the other products
 Carryover stocks and serve as per the demand of consumers
 Technological gains through improved facilities and management scheme
 Development of new applications and substitutes of products & services
Source of Marketing Demands
According in our survey, we obtained the data we needed to determine individual preferences. We examine what
they usually consider in buying a baked goods and how often it is. The survey focused partially in certain
population of Dukem & Bishoftu towns. Where “Tena Bread” has identified its overall market to consist of people
who have a higher level of discretionary income to indulge in and appreciate the exquisite creativity and flair to
consume extraordinary bread that not only taste good and look good, but also reflect the company’s concern for
improving the environment. These publics include the population who live in Dukem, Bishoftu and also the walk-
in-customers.
Also it is estimated that most standardized schools, non-governmental organizations, manufacturing plants,
groceries, hospitals, hotels, restaurants, cafes, resorts and organizations will utilize our product due to their
preferences and choices to provide of good quality products to their customers.
SWOT Analysis
Strengths
 High quality product
 Strong financial condition
 Great strategy
Weaknesses
 First time business
 Popularity among competitors
 Startup costs are only estimated
Threats
 Expansion
 Introduce New Product
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 Expand produce line

Opportunities
 Economy
 Competitors
 Price changes in product
Mitigation Plan towards Government Policy and Regulation Changes
 Support the business with additional business opportunities and services
 Accustomed the business with the policy changes
 Fulfilling the required government regulations
 Revising the business strategies frequently
 Forecasting the future trends and making necessary arrangements to cope with change
Marketing Strategy
The focus of our Strategy should be making sure that our products and services meet customer needs and
developing long – term and profitable relationships with those customers. To achieve this, we will need to create a
flexible strategy that can respond to changes in customer perception and demand. It may also help us identify
whole new markets that we can successfully target.
Product Strategy
We are offering different breads and cookies but we are proud to offer our very own “Tena Bread” style. Since we
are a health – giving group, these are the health benefits that we can get from it.
 It is one of the very low calorie bread types.
 It is a storehouse of many anti–oxidant vitamins such as Vitamin A, Vitamin C, and Vitamin E.
Place Strategy
The location of Abushu Tolossa Bakery is in Dukem town, the sales outlets will be opened in Dukem and Bishoftu
towns in different location in order to reach the consumers. This in turn believed to widen the consumer base of the
firm. The proponent prefer this place because it is accessible to the target market such as the people residing in
those places, a lot of walk-ins because of those adjacent establishments and it is near to our competitors.
Price Strategy
The starting price that the proponent will offer to the target market is cheaper than the other competitor because of
the availability of the raw needed for the production. The enterprise follows certain calculations arrive at the
suggested retail price. The price will be based on the cost directly incurred in manufacturing the product, cost of
raw materials plus overhead cost.
The proponent will sell the “Tena Bread” with a minimum cost of 3.50 each at the bakery shop depends on its size,
due to some environmental factors that may affect the future financial status of the business. The price of the
product will be least competitive for those who will buy it. The price is crucial consideration. Selling prices will
increase by 7% each year.
In pricing management, must determine the right basis price for the products. It must then decide on strategies
concerning discounts, consignment payment and other price related variables.
Advertising Strategy
Promotion is the ingredients used to inform and persuades the customers to buy the proponent product.
Advertising, personal selling, displaying tarpaulins in some popular place where most people come in, giving
flyers for the walk-ins, brochures so that the customer will be aware in our product proposal and sales promotions
are the major promotional activities. Also since this business is new to the industry customers will be given
discounts and other promos in its 1 st week of operation. The proponent also used social networking sites such as
Facebook, Twitter, and Instagram in promoting the product in a wider range of customers to avoid spending too
much with the promotional tools. In this promotion, any form of promotions will be executed by the company.
As the promotional strategy, the proponent will make sure that the name of the business and the product itself will
seize the attention of their target market. In this way we are able to attract other potential consumers regarding the
product.
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Advertising and Promotion Materials

 Sign board
 Flyers
 Tarpaulin
 Web advertisement
Technical Aspects
Land and Location
The project is located in Dukem town suburb to east of Addis showing fastest growth. The land area of 2,000m 2
allocated for the project is adequate to accommodate the building with its facilities and enough for storage &
parking spaces.
Infrastructures
The project area is designed by professional engineers. The building designed was taken keen attention for
architectural, structural, sanitary and electrical layouts. The project site is availed with water, electrical light and
power with excellent access road.
Service Capacity
At first the project plans to produce and provide standardized wheat flour bread with several types of sizes, tests &
prices. But for the purpose of this study it is taken that the bread to be sold to consumers will be only one type and
the selling price is 3.50 per bread. It is estimated that only 25% & 12% of the target market in Dukem & Bishoftu
towns can be satisfied, so that the production capacity of the project is depicted as follows:
Projected Daily Production Capacity - Bread
Year 2021 2022 2023 2024 2025 2026 2027 2028
Dukem 1,698 1,867 2,054 2,259 2,485 2,734 3,007 3,308
Bishoftu 2,638 2,901 3,191 3,511 3,862 4,248 4,673 5,140
4,33 6,34
Total 5 4,769 5,245 5,770 7 6,982 7,680 8,448
Capital and Employment
 The project is established at a total capital of Birr 4,435,965.00 in Dukem town, Akaki woreda. 50.94% of
the project is financed by the promoter of the business.
 The project under consideration reaches its final stages; all the electrical and sanitary installation works are
finalized.
 Taking the estimations of engineers the building under consideration, the promoter Ato Abushu has
already injected birr 2,259,775.00 (50.94%) of the project work (including pre-operating expenses) and
birr 2,176,190.00 (49.06%) is remain to finalize the remaining investment job of the proposed project.
 The current business project will create job opportunity for 19 permanent and additional temporary
employees will be hired as needed at the time of commencement.
 The company will keep records of transaction for Audit by applying Generally Accepted Accounting
Principle more over the project will prepare quarterly and annual reports for concerned parties and
management of the project.
Resources & Alternatives
Supply Resources Alternatives
Raw Materials Governments Individual Traders, Companies & Farmers
Furniture Local Producers Imported Goods
Equipments Local Importers Imported Goods
Baking Machines TOPSUN Trading & Mfg Plc
Appliances Local Importers Imported Goods
Office Supplies Local Producers Imported Goods
Generator Local Importers Importers
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Baking Equipments
Item Qty Unit Unit Cost Total Cost
Rotary Oven 1 Pcs 626,000.00 626,000.00
Mixer 1 188,000.00 188,000.00
Volumetric Dough Divider 1 177,000.00 177,000.00
Bread Slicer 1 40,000.00 40,000.00
Molding Machine 1 140,000.00 140,000.00
Frigg trice Electric Fry 1 58,000.00 58,000.00
Planetary Mixer 1 88,000.00 88,000.00
Steam Generator 1 60,869.57 60,869.57
VAT - 15% 206,680.43
Grand Total 1,584,550.00
Baking Tools
Items Qty Unit Unit Cost Total Cost
Working Table 1 Pcs 3,500.00 3,500.00
Baking Sheet / Pan set of 10 1 Pcs 6,500.00 6,500.00
Loaf / Toast Pan Set of 3 1 x 70 Set 7,000.00 7,000.00
Mixing bowl Set 1 Set 2,800.00 2,800.00
Rolling Pin 2 Pcs 300.00 600.00
Bench Scraper 1 Pcs 150.00 150.00
Food Processor 1 Pcs 4,800.00 4,800.00
Knife Set 1 Set 1,800.00 1,800.00
Oven Mits 3 Pcs 600.00 1,800.00
Tong 3 Pcs 120.00 360.00
Digital Kitchen Timer 1 Pcs 480.00 480.00
Whisk 1 Pcs 190.00 190.00
Measuring Cups Set of 3 1 Set 3,750.00 3,750.00
Measuring Spoon 1 Pcs 1,900.00 1,900.00
Dry Measuring Spoon 1 Pcs 2,200.00 2,200.00
Pastry Brush 2 Pcs 75.00 150.00
Silicone Pastry Brush 2 Pcs 120.00 240.00
Pastry Bag with Nozzle 1 Pcs 1,420.00 1,420.00
Non-Stick Casserole 1 Pcs 3,400.00 3,400.00
Can Opener 1 Pcs 200.00 200.00
Spatula 2 Pcs 100.00 200.00
Grater 2 Pcs 140.00 280.00
Parchment Paper 1 Pcs 160.00 160.00
Grand Total 43,880.00
Generator
Generator 50KVA 1 Pcs 480,000.00 480,000.00
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Other Tools & Equipments
Power Juicer 2 Pcs 6,600.00 13,200.00
Heavy Duty Blender 1 Pcs 3,400.00 3,400.00
Fork 1 Doz 400.00 400.00
Bread Plate 2 Doz 250.00 500.00
Bread Knife 2 Doz 300.00 600.00
Mason Jar 3 Pcs 370.00 1,110.00
High Ball Glass Rack 1 Pcs 500.00 500.00
Serving Tray 4 Pcs 140.00 560.00
Dish Plate Rack 1 Pcs 380.00 380.00
Fork Dispenser 1 Pcs 245.00 245.00

Office Furniture, Equipments & Supplies
Qt
Items y Unit Unit Cost Total Cost
Office Supplies 1 Set 4,500.00 4,500.00
Shop Shelf 2 Pcs 8,700.00 17,400.00
Shop Balcony 2 Pcs 4,800.00 9,600.00
Single Sofa with Pillow 1 Pcs 14,000.00 14,000.00
Office Chair 2 Pcs 3,100.00 6,200.00
Office table 2 Pcs 7,000.00 14,000.00
Desktop Computer 1 Pcs 10,000.00 10,000.00
Canon Printer 1 Pcs 4,500.00 4,500.00
Window Type Aircon 1.5HP 2 Pcs 18,500.00 37,000.00
Refrigerator 2 Pcs 25,000.00 50,000.00
Exhaust fan 1 Set 11,000.00 11,000.00
Roof Ventilation 2 Set 4,780.00 9,560.00
Fire Extinguisher (Red) 3 Pcs 2,400.00 7,200.00
DVD Player w/ Speaker Set 1 Pcs 4,700.00 4,700.00
Cashier Chair 2 Pcs 3,000.00 6,000.00
Cleaning Materials 1 Set 5,980.00 5,980.00
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Raw Materials
Wheat Flour 100 Sacks - 50kg 1,700.00 170,000.00
Sugar 20 Sacks - 50kg 1,250.00 25,000.00
Baking Soda 10 Sacks - 50kg 200.00 2,000.00
Vanilla 10 Liter - 5 350.00 3,500.00
Cocoa Powder 20 Sacks - 50kg 1,200.00 24,000.00
Egg (medium) 50 Tray - 24 150.00 7,500.00
Corn Flour 50 Sacks - 50kg 850.00 42,500.00
Strawberry Syrup 10 500ml 380.00 3,800.00
Chocolate Syrup 15 500ml 420.00 6,300.00
Strawberry Powder 20 Kilos 160.00 3,200.00
Corn Syrup 12 560ml 380.00 4,560.00

Manufacturing Process
Making the perfect bread takes a lot of initial experimentation. The general procedures in making our products are
outlined below:
Methods in making Bread Dough
Step 1: Mix in the yeast
After you've measured out your flour, it's time to mix it with yeast. Stir the mixture with a wooden spoon to evenly
distribute the yeast into the flour. Look for the expiration date on the yeast package to make sure the yeast is fresh
(expired yeast could prevent bread from rising).
Step 2: Add liquid
Check the temperature of the liquid with an instant-read thermometer. If it is too hot, the yeast will die and your
bread won't rise. If it is too cold, the yeast won't activate and your bread won't rise.
Step 3: Beat with a mixer
Add warm water and melted butter to the flour mixture all at once. Beat with an electric mixer on low to medium
speed (you can do this by hand as well). Scrape the side of the bowl to make sure all of the flour and yeast are
moistened.
Note: Gluten, a protein in wheat flour and several other flours, starts working as soon as the dough is mixed.
Gluten gives dough elasticity, helps it rise and hold its loaf shape, and helps it create the desired texture.
Step 4: Stir in remaining flour
Use a wooden spoon to stir in as much of the remaining flour as you can. Start with the minimum amount of flour
given in a recipe, and add only as much as you need during the mixing and kneading steps. Too much flour creates
a dense, dry loaf.
Tip: Stir the dough until it looks ropey and pulls away from the side of the bowl.
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Step 5: Knead dough

Fold the dough over and push down with the heel of your hand. Turn, fold dough over, and push down again.
Repeat this process over and over. The dough is ready when it is smooth and elastic. This means it is smooth and
soft and holds together nicely in a ball.
Tip: Moderately soft dough, used for sweet breads, requires 3 to 5 minutes of kneading and will still be slightly
sticky. Moderately stiff dough, used for most no sweet breads, requires 6 to 8 minutes of kneading and is slightly
firm to the touch.
You can also knead bread in the food processor with the plastic blade or in a stand mixer with a dough hook. These
methods take less time, so check with the instruction manual for the appliance.
Step 6: Form dough into a ball
Shape the dough into a ball with your hands and place it in a greased bowl that is at least twice as large as the ball
of dough. Turn the dough over once to grease the entire surface.
Step 7: Cover dough and let rise
Cover the bowl with plastic wrap that's been sprayed with nonstick cooking spray. This prevents the dough from
sticking to the wrap as it rises. Let it rise in a draft-free place between 80 and 85 degrees F until double in size.
This step is also called proofing.
Tip: Use your recipe as a guideline for rise time, and keep an eye on the dough. Another trick is to press two of
your fingers 1/2 inch into the center. If the indentations remain after you remove your fingers, the dough has
doubled in size and is ready for the next step.
Step 8: Deflate the dough
Punch the dough down by pushing your fist into the center. Then use your fingers to pull the edges into the center.
This releases some of the gases and makes the dough easier to shape.
Step 9: Shape the dough and rise again
Now your bread is ready to take a quick rest. Then it can be shaped and set aside for a second rise before baking.
This time, stop the dough from rising just short of doubling in size. This will allow it to raise more in the oven and
create the ideal loaf size. When the second rise is complete, bake the bread in a preheated oven according to recipe
directions.
Environmental and Social Impacts

 The hygiene of the employees /both clerical and non clerical/, the type of outputs and rendered to the
domestic / local markets will be keep up based on the standards and directives stated by Ministry of Health
 There will be no environmental pollutions affecting the area with relation to the proposed project
 The Eco system of the area will not be degraded by the project work
Developmental Impact of the Project in Socio-economic
Given the multi-sectoral nature of the manufacturing economic sector in Ethiopia and as a major gear to enhance
the renaissance and transformation of the country, a valuable impact will be create since every economic sector
needs sufficient supply of credit facilities, land, infrastructures, fuel and gas as well as transportation services.
The project will help the sector to minimize the current market price of good quality breads if it is assisted by the
government, banks and related parties to extensive involvement of the manufacturing and service outputs.
As a whole it will have significant socio-economic developmental impact for several types of stakeholders.
Contingency Plan
Unexpected calamities and disasters can affect a business. Our bakery production center and shops has a built-in
fire exit for the safety of all people working and for our valuable customers in case of emergency. We also provide
fire extinguisher in every designated area of our establishment like kitchen in order for our bakers and staff to
prevent fire in case there is one. We also give them the proper training on how to use it to prevent a disaster with
the help of a seminar given by the local government.
Our location is elevated in case of flooding. We also provide a standby generator in case there is a power
interruption. Lastly, the marketing manager, production manager and financial manager can take charge of the
duties of the employees in case he/she cannot work because of sickness and other valid reasons.
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Waste Disposal
Bakery process generates lots of waste which can be either disposed of or can be recycled in many cases. Bakery
waste management needs clear strategy for identification, segregation, storage and disposal. Process waste such as
dough, flour dust, sugar dust, burnt biscuits, broken biscuit, burnt loaves or rejected loaves, market returned old
bakery products. These can be sold out to suppliers who deal into cattle feeding. Precaution should be taken that
none of these have contamination so that it can be used for cattle feeding.
Packaging like wrappers, tins, cardboard boxes, bags, cores, sacks, plastic trays and pallets, most of them can
recycled by packaging material supplier. Our bakery shop has three 3 segregated cans used for the recycling
materials, located at the back of our kitchen, the other one for biodegradable and non-biodegradable garbage for
light materials that cannot be used and has to be disposed. The Small & Micro Enterprises who are organized to
clean and collect trash will collect our garbage every 5-7 days. We are confident that whenever there is a sanitary
inspection in our bakery shop, we can guarantee them that our place will be graded A for safety, cleanliness and
orderliness.
Implementing Rules and Regulations of the Country
General Provisions
Section 1- Title
These Rules shall be known and cited as the "Implementing Rules and Regulations of the Ethiopian Ecological
Solid Waste Management."
Section 2- Purpose
These Rules are promulgated to prescribe the procedures and guidelines for the implementation of the Ethiopian
Solid Waste Management in order to facilitate compliance therewith and achieve the objectives thereof.
Section 3- Scope
These Rules shall lay down the powers and functions of the Department of Environment and Natural Resources,
the Department of Trade and Industry, all other concerned agencies and local government units, the rights and
obligations of stakeholders and the rights and duties of the people with respect to the implementation of the
Ecological Solid Waste Management.
Section 4- Construction
These Implementing Rules and Regulations shall be liberally construed to carry out the national policy of adopting
a systematic, comprehensive and ecological solid waste management program consistent with the pursuit of
sustainable development. The Rules also cover support actions such as research and studies on solid wastes,
providing technical standards and guidelines for effective waste management systems.
Section 5- Administrative and Enforcement
These Rules and Regulations shall be administered by the promoter or its duly authorized representative or
thorough any other department, bureau, office, agency, local government units, state university or college and
other instrumentalities of the government for assistance in the form of personnel, facilities and other resources as
the need arises in the discharge of its functions.
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UNIT FIVE
Organization & Management Feasibility
The Management Feasibility is the study that concerns the organizational set-up of the business, which includes the
organizational chart and the qualifications of the people involved and manage the business. It also determines the
type of the business ownership.
The term “Management” in this section refers to the scientific and procedural contributions of human resources
towards the accomplishment of the proposed business endeavor. This section, therefore, determines the human
resource requirements of the project.
Since organizations can be viewed as systems, management can also be defined as human action, including design,
to facilitate the production of useful outcomes from a system. This view opens the opportunity to ‘manage’
oneself, a pre-requisite attempting to manage others.
General Manager
Production Mgr Finance Mgr Marketing Mgr
Delivery Boy
Head Baker Cashier 1 Cashier 2
Baker 1 Baker 2
Organizational Structure
The typically hierarchical arrangement of lines of authority, communications, rights and duties of an organization.
Organizational structure determines how the roles, power and responsibilities are assigned, controlled, and
coordinated, and how information flows between the different levels of management.
A structure depends on the organization’s objectives and strategy. In a centralized structure, the top layer of
management has most of the decision making power and has tight control over departments and division. In a
decentralized structure, the decisions making power is distributed and the departments and division, at have
different degrees of independence.
The business will be operated and maintain by 3 administrative officers, Headed by the General Manager,
Marketing Managers, Financial Manager, and Production Manager. The proponents will hire head baker, baker,
and cashier and delivery boy.
Features of the Line and Staff Organization Structure
There are a variety of organizational structures that companies use when developing an operational model. One of
the most common is the line and staff organizational structure. This consists of a line, which is managers who
make business decisions for their respective departments, and a staff, whose members perform tasks in support of
the directives issued by the line. Though the duties of these two components seem clear, there is often overlap in
tasks that they perform.
The Line
The Line comprises professionals whose day-to-day tasks directly work toward accomplishing the organization’s
mission and goals. Alternative names for the line are the business groups or, in the financial services industry, the
front office. These employees produce and sell the goods and services of the firm. For example, the research and
development team creates the product s, while the supply chain manufactures them. The marketing department
works to raise consumer awareness of the products and services, while the sales group initiates costumer
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transactions .The actions of the line generate the organization’s revenue. As a result, this group makes the most
decisions regarding the company’s operational policies and procedures.
The Staff
The Staff is composed of every non-revenue generating department. Though these groups do not directly
contribute to the firm’s bottom line, their actions make those of the line possible. The human resources department
ensures that the line is staffed with the top-tier talent, content in their jobs. Legal makes sure that the actions of the
line and its employees are within the scope of the law. Likewise, the finance group secures capital resources for the
organization while the accounting department balances the books. Alternative names for the staff include the
support groups and, in the financial services industry, the back office.
Merits
This form of organization came to existence as an improvement over the line organization. Line and staff
organization has removed serious drawbacks of the line organization.
 Specialization - It is based on planned specialization; line managers get the benefit of specialized
knowledge of staff specialist at various levels.
 Encouragement to research and development programs - The growth of an enterprise depends largely on
various research and development programs. The staff provides this service to the line departments.
 Balance decisions - Line managers may not have specialized knowledge in all areas and due to this line
managers may sometimes give wrong orders or pass wrong judgment. The suggestions and advice given
by staff manager help them in making rational judgment and balanced decisions.
 Less burden on line managers - Staff managers relieve the line managers from botheration of
concentrating on the specialized functions like accounting, selection and training of employees, public
relations etc. Thus there is a less burden on line managers. Many problems that are ignored or poorly
handled in the line organization can be properly covered. It is more flexible.
Demerits
Demerits of line and staff are as follows:
 Confusion - It is very difficult to clearly establish the authority and responsibility relationship between
line and staff executives. This creates confusion among them.
 Ineffectiveness of the staff - The role of the staff is purely advisory. Since they do not have the power to
get their recommendations implemented, the staff services may prove to be ineffective.
 Conflict between line and staff - There is generally a conflict between line and staff executives, line
authorities feel that staff executives do not always give right type of advice and therefore reject even some
very good schemes. Line authorities do not want to give an impression to the management that they are in
any way inferior to staff. Thus there is conflict between line and staff.
Job Descriptions & Qualifications
The job descriptions the project will use are discussed briefly under this section, but the job qualifications & work
experience requirement of the project is depicted in the financial projections & analysis part of this study.
Job Title: General Manager
 In charge for the overall operation of the business.
 Plans and implements the management policies of the firm.
 Execute authority necessary to achieve the goals of the business.
 One who has control over a business and direct or overseas the affairs.
 Must have the organizational skills and leadership qualities integral to partner’s success.
 Must be a planner, policy developer, organization and systems supervisor, and appraiser of results.
 Scheduled and presides all the meetings of the business.
 Ensure the training and development opportunities are available to employees to enhance their
performance and achieve the employer’s business aim.
 Recruiting staffs – which include developing job descriptions and person specifications, referring job
adverts, checking application forms, short listing, interviewing and selecting candidates.
 Advising on promotion and benefits.
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 Undertaking regular salary reviews.

Job Title: Marketing Manager
 Develop strategies and tactics to get the word out about the company and drive qualified traffic to our front
door.
 Deploy successful marketing campaigns and own their implementation from ideation to execution.
 Experiment with a variety of organic and paid acquisition channels – content creation, publicity, social
media, lead generation campaigns, and much more.
 Build strategic relationships and partner with key industry players, agencies and vendors.
 Be in charge of marketing budget and allocate/invest funds wisely.
 Measure and report performance of marketing campaigns, gain insight and assess against goals.
Job Title: Financial Manager
 Provide financial reports and interpret financial information to managerial staff while recommending
further courses of action.
 Advise on investment activities and provide strategies that the company should take
 Maintain the financial health of the organization.
 Analyze costs, pricing, variable contributions, sales results and the company’s actual performance
compared to the business plans.
 Develop trends and projections for the firm’s finances.
 Conduct reviews and evaluations for cost-reduction opportunities.
 Oversee operations of the finance department, set goals and objectives, and design a framework for these
to be met.
 Manage the preparation of the company’s budget.
 Liaise with auditors to ensure appropriate monitoring of company finances is maintained.
 Correspond with various other departments, discussing company plans and agreeing on future paths to be
taken.
Job Title: Production Manager
 Liaise with other managers to formulate objectives and understand requirements.
 Estimate costs and prepare budgets.
 Organize workflow to meet specifications and deadlines.
 Monitor production to resolve issues.
 Supervise and evaluate performance of production personnel (quality inspectors, workers etc.)
 Determine amount of necessary resources (workforce, raw materials etc.)
 Approve maintenance work, purchasing of equipment etc.
 Ensure output meets quality standards.
 Enforce health and safety precautions.
 Report to upper management
Job Title: Head Baker
 Monitor all duty schedules in the bakery operation.
 Create high quality and creative bakery products to satisfy the customer.
 Follow the instructions and recommendations from the immediate Superiors to complete the daily tasks.
 Ensure the highest standards and consistent quality in the daily preparation and keep up to date with new
recipes and preparation techniques.
 Participate in establishing the month end inventory in the bakery.
 Handle all food transfers out of the bakery to other areas and ensures proper documentation.
 Coordinate and participate with other sections of requirements, cleanliness, wastage and cost control.
 Consult and check on daily bakery requirements, functions, buffets and last minute events.
 Ensure highest standards of hygiene within the bakery section.
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Job Title: Baker

 Prepare and bake foods.
 Prepare and make all bakery items for a large number of guests.
 Lead a team of bakers to prepare bakery items for banquets and events.
 Inspect and ensure proper color combination for all baked items.
 Provide training to staff in baking activities.
 Meet the requirements of clients.
 Ensure proper storage of all items in refrigerators and freezers.
 Ensure product freshness and food safety.
 Assist and support senior chef and other bakers.
 Retain existing customer-base through preparation and serving of tasty items.
 Test baked items by tasting or smelling them.
Job Title: Cashier
 Receive payment by cash, check, credit cards, vouchers, or automatic debits.
 Issue receipts, refunds, credits, or change due to customers.
 Count money in cash drawers at the beginning of shifts to ensure that amounts are correct and that there is
adequate change.
 Greet customers entering establishments.
 Maintain clean and orderly checkout areas.
 Establish or identify prices of goods, services or admission, and tabulate bills using calculators, cash
registers, or optical price scanners.
Job Title: Delivery Boy
 Deliver products on time.
Recruitment and Hiring Procedures
1. Job Hiring Advertisement - an announcement in a newspaper, on television, or on a poster about a post of
employment, job hiring will be advertised as necessary and will remain posted until the position is filled.
2. Selection of Applicants - the recruitment and selection process is important for new and established businesses
alike. Your human resources department has the support and expertise of employment specialists who assist
hiring managers with the procedures to ensure your company leaders are making wise hiring decisions. There are
several pieces to the recruitment and selection process: sourcing candidates, reviewing and tracking applicants,
conducting interviews and selection for employment. The selection will be based on the statement and
specification stated.
3. Initial Interview- is a type of job interview that is conducted to determine if the applicant has the qualifications
needed to do the job for which the company is hiring. An initial interview is typically the first interview in the
hiring process.
4. Final Interview –the final job interview is the last step in the interview process and the last interview you will
have before finding out whether or not you will be getting a job offer. Before, the final interview, you may have
an initial interview and one or more person interviews. You final job interview is your last chance o make a
strong impression on the employment before he chooses between you and, typically, a small pool of other
candidates for the job.
5. Orientation -serves to assimilate the new employee (or employees) by introducing him or her to other workers,
and explaining office information such as working hours, performance standards, benefits, etc. Orientation is
often followed by formal job training.
6. Training –it is the practice of improving skills, ability and skills of an employee, to be more familiarized in his
job employment.
Performance and Appraisal Program
The process by which a manager or consultant examines and evaluates an employee's work behavior by comparing
it with preset standards, documents the results of the comparison, and uses the results to provide feedback to the
22
employee to show where improvements are needed and why. Performance appraisals are employee to determine
who needs what training, and who will be promoted, demoted, retained, or fired.
The following factors will be considered by the business:
1) Documented Process - effective performance appraisal is formal and not left to chance. More than just asking
supervisors and managers to evaluate staff, effective systems provide step-by-step guidance and standardized
evaluation forms for all managers to evaluate all employees. This not only lends to consistency, but also allows the
results of the evaluations overall to be reviewed and compared to identify areas of strength and areas where there
may be opportunities for improvement. Making the process as easy as possible for managers to follow will help
ensure that performance appraisal is effective.
2) Communication - communicating the performance appraisal process, not only to new managers but on an
ongoing basis, can help remind all supervisors that the process exists, what it is, how it works and where to get
advice and assistance if needed. In addition, business leaders and human resources staff should make sure
managers and supervisors understand why performance appraisal is important--to employees, managers and the
organization.
3) Training - supervisors and managers don’t automatically know how to conduct performance appraisals. In
addition, processes and philosophies at companies differ, so training and education is critical. Training should take
place regularly to provide refreshers and updates on any changes to the process or the evaluation forms.
4) Evaluation of Results - while performance appraisal generally focuses on one individual, looking at the
aggregated results of performance appraisals can tell a company a lot about the general level of performance of its
staff, areas where there may be training or development needs and trends within and between departments.
5) Follow-Up and Performance Improvement - the greatest effect on performance appraisal effectiveness is how
the business uses the results. Employees both individually and across the organization should use the appraisal
system as a tool to improve performance.
General Business Policies
The statement of general policy set out your general approach, objectives and the arrangement you have put in
place for managing health and safety in your business. It is a unique documents that says who does what, when and
how. In view of this, the company has set rules, policies and regulations in order to promote order, discipline and
harmony among employees. Policies are implemented to achieve efficiency in the operations of the company, to
prevent taking advantage of employees and to secure that each employees fulfill his obligations to the company.
1) Customer - Related
 Quality products must be ensured to the customers;
 The customer’s preferences and best interests must be aptly followed by the employees.
 Employees must deal with the customers with respect.
2) Supplier - Related
 The company should see to it that its suppliers are always reliable;
 A friendly and harmonious relationship with the supplier should always be maintained;
 Regular communication is needed, in case of changes, communicate promptly with suppliers;
 Every transaction with the suppliers must be properly documented.
3) Employee - Related
 All transactions must be made known to the manager;
 Document transaction properly;
 Employees must be fully aware of their of their duties and responsibilities;
 Employees should understand their legal duties that they have to provide a safe working environment, safe
work equipment and safe methods of work.
 Employees should ensure safety when specific task or work activities are carried out, or in specific areas of
the work place.
 Any complaints, request and suggestions must be directed to the General Manager;
 Personnel Records – all transactions which regards to the personnel shall be keep by the General Manager
who also the right to access the records in the legal business time.
23
4) Attendance
 Every employee must use the clock to identify their time in and time out provided by the company for
attendance and time keeping.
 All employees must report for work in time required by the management to observe regular working of
hours as stated in there and conditions contract.
 Working hours will be (8) hours from Monday to Sunday. Each employee will be given day-off.
Punctuality/Tardiness – delay of work due to tardiness of employees will be given a memo by the General
Manager.
5) Working Time
 All employees should report ten (10) minutes before their duties.
 During working hours, all employees are required to be on their assigned posts.
 All workers will be given fifteen (15) minutes break for morning and afternoon coffee break.
6) Codes of Action
 All employees must familiarize themselves with the rules and regulations drafted from the Labor Code of
the Country. Regardless of the position, each and everyone within the business is expected and required to
follow the policies as it was drafted on the context of impartiality and justice prevailing on the
organizational framework of the business. The relationship among personnel should be in conformity with
established known norms of human conduct and behavior.
 The employee may, due to dishonesty, oppression, misconduct, negligence of duty, conviction of crime
involving moral turpitude, notoriously disgraceful conduct, willful disobedience, violation of existing rules
and some other reasonable directives as may be promulgated as time to time under articles stated in the
Labor Code of Ethiopia as a just cause for termination, imposed on its erring members disciplinary actions
which consist of but not restricted to reprimand, supervision, and dismissal from service as it may find
commensurate with the gravity of offenses committed.
Grounds of Disciplinary Actions – the following are declared by the management to be the grounds for
disciplinary actions. Thus, the employees are deemed to act within the context of organizational policies.
 Habitual absence;
 Falsification or irregularity in accomplishing time records;
 Abandonment of work/leaving the bakery shop & production center during working hours without consent
or permission;
 Loafing, loitering and sleeping during work hours.
 Dishonestly/discourtesy/insubordination or refusal to obey lawful orders;
 Inefficiency and incompetence in performance of the assigned task;
 Refusal to overtime or rest day work under any of the circumstances
 Gambling and/or intoxication while on duty;
 Dereliction of duty, grave misconduct, negligence or carelessness in the performance of duty;
 Unauthorized of firearm or deadly weapon;
 Stealing of business and fellow employees properties through direct and indirect means;
 Unauthorized solicitation from clients;
 Falsifications of business records and documents, bringing them home or outside the business premise
without consent.
 Fighting or provoking a fight within the bakery shop & production premises.
24
UNIT SIX
Financial Projections & Analysis
The financial analysis of the project is based on the data provided in the previous chapters and the following
assumptions:-
 Construction period (Remaining) Fully constructed
 Source of finance 50.94% Owner’s equity
49.06% Bank loan
 Tax holidays 0 years
 Bank interest 17.5%
 Loan Period 8 Years
 Insurance Expense 2% of Fixed Assets
 Repair & Maintenance 0.6% of Fixed Assets
 Depreciation Expense 20% for Mach. & Equip., & 5% for Bldgs.
 Accounts receivable 30 days
 Work in progress 325 days
 Raw material (perishable) 3 days
 Raw Material (non perishable) 30 days
 Cash in hand 5 days
 Accounts payable 30 days
Loan Request
 The credit requirement that the promoter of this project presented to the bank is 2,176,190.00 that can be
repaid back within the next 8 years including all the interest and related charges.
 The repayment will be made monthly due to the nature of the business.
 The requested loan amount will be utilized for purchase of baking machinery & related equipments &
tools for the business.
 All the remaining costs will be covered by the promoter from his own source of finance in order to make
the project feasible and be operational.
Owners Contribution Debt Finance
Description Total cost % age Birr % age Birr
Mfg Bldg 1,450,000.00 100% 1,450,000.00 0% -
Baking Machine (Full Set) 1,584,550.00 0% - 100% 1,584,550.00
Generator 50KVA 480,000.00 0% - 100% 480,000.00
Furniture’s 211,640.00 47.25% 100,000.00 52.75% 111,640.00
Other Equipments 64,775.00 100% 64,775.00 0% -
Pre-operating Expenditure 145,000.00 100% 145,000.00 0% -
Total Fixed Investment 3,935,965.00 44.71% 1,759,775.00 55.29% 2,176,190.00
Other Investments - 0% - 0% -
Initial Working Capital 500,000.00 100% 500,000.00 0% -
Total Working Capital 500,000.00 100% 500,000.00 0% -
Total Equity + Bank Finance 4,435,965.00 50.94% 2,259,775.00 49.06% 2,176,190.00
Loan Repayment Schedule
 The banks are assumed to charge an interest rate for the term loans which lasts for ten years is 17.5% per
year as per the present scenario.
 Hence the requested project loan will be paid within the scheduled period through monthly repayment
amount of 42,264.24 that leads to an annual repayment amount of 507,170.88, the related interest charges
and principal payments are presented below.
25
Years Annual Interest Principal Outstanding Loan

Repayment Payment Payment Balance
0 - - - 2,176,190.00
1 507,170.88 370,190.78 136,980.10 2,039,209.89
2 507,170.88 344,199.94 162,970.94 1,876,238.96
3 507,170.88 313,277.56 193,893.32 1,682,345.63
4 507,170.88 276,487.91 230,682.97 1,451,662.66
5 507,170.88 232,717.73 274,453.15 1,177,209.51
6 507,170.88 180,642.52 326,528.36 850,681.14
7 507,170.88 118,686.47 388,484.41 462,196.73
8 507,170.88 44,974.15 462,196.74 0.00
Total 4,057,367.04 1,881,177.05 2,176,190.00
Fixed Investment Costs
Fixed investment costs include constriction/civil work/ cost, Garden and Parking area construction cost, sewerage
and electricity installation costs, vehicle, machinery cost and different machinery & equipment costs, while annual
operating cost /working capital costs/ includes the costs that will be expended per annum for the operation of the
project to cover running cost of the whole project. The existing total project costs requirement of this project is
described as follows:
The construction cost is the major cost incurred in an establishment of any project. The construction work of the
project covers the warehouse for production of its final product, offices & storages with a total cost of
1,450,000.00 birr.
Next to the construction cost of the project the promoter needs to furnish the offices of the project with quality
equipments and furniture’s in order to be competitor and succeed the current market competition, the costs that
will be incurred to purchase for office furniture & equipments will take birr 211,640.00.
The other main cost of the project is the acquisition of baking machine with a total cost of birr 1,584,550.00.
Baking tools, equipments and machineries will cover a total of birr 64,775.00.
The related working capital requirements that will be used after the completion of the whole project including
contingencies, the total working capital need of the project after completion is birr 500,000.00. These costs are also
being planned to be covered from the owner’s capital contributions.
The project needs one 50kva generator for back-up at a total cost of birr 480,000.00
Ato Abushu costs a total of birr 145,000.00 birr for pre production expenses; all are covered from his own capital
contribution. This pre operating expenditures includes broker commission, fees made for ownership certificate
transfer, architectural, structural, electrical, sanitary, bill of quantity, feasibility study and other charges.
Therefore the total cost of the project will be birr 4,435,965.00.
N Fixed Investments Total cost
o
1 Construction cost
2 Parking, Gardening & Fence Works
3 Sewerage, Sanitation Installation
4 Electrical Installation 1,450,000.00
Sub total 1,450,000.00
5 Other Equipments 64,775.00
6 Pre-operating Costs 145,000.00
7 Baking Machine (Full Set) 1,584,550.00
8 Furniture 211,640.00
9 Generator 50KVA 480,000.00
10 Working Capital + Contingency 500,000.00
Sub total 2,985,965.00
GRAND TOTAL 4,435,965.00
* N.B: Pre-production expenditure includes interest during construction, costs of registration, licensing and formation of the
company including legal fees, commissioning expenses, architectural, structural, electrical, sanitary, bill of quantity &
feasibility studies etc.
26
Owners Equity Debt Equity %

Items to be Acquired Total Cost (50.94%) (49.06%) Share
Mfg Building 1,450,000.00 1,450,000.00 - 32.69
Baking Machine (Full Set) 1,584,550.00 - 1,584,550.00 35.72
Generator 50KVA 480,000.00 - 480,000.00 10.82
Furniture 211,640.00 100,000.00 111,640.00 4.77
Other Equipment 64,775.00 64,775.00 - 1.46
Pre-production Cost 145,000.00 145,000.00 - 3.27
Working Capital + Contingency /10%/ 500,000.00 500,000.00 - 11.27
Total Investment Cost 4,435,965.00 2,259,775.00 2,176,190.00 100.00
Annual Revenue Projection
The revenue of the project is expected to be generated from sales of its quality bread products.
 Based on the current market assessment and demand for the projects product the firm will satisfy the
demand of its customers at 25% & 12% of its production capacity in Dukem & Bishoftu towns.
Projected Daily Production Capacity - Bread
Year 2021 2022 2023 2024 2025 2026 2027 2028
Dukem 1,698 1,867 2,054 2,259 2,485 2,734 3,007 3,308
Bishoftu 2,638 2,901 3,191 3,511 3,862 4,248 4,673 5,140
Total 4,335 4,769 5,245 5,770 6,347 6,982 7,680 8,448
 Every product will be sold out at a price of 3.50 for the first year & it will rise by 7% in each successive
years.
 It is expected that 48% of total sales from its final products will be considered as gross profit, so that cost
of goods sold will be 52% of these sales incomes.
Accordingly the project is assumed to generate annual total income of birr 4,931,176.00 on the first year and will
be followed by an increasing income value for the whole project life.
Revenue generated from Sales - Projected
Years 1 2 3 4 5 6 7 8
No of Breads 4,335 4,769 5,245 5,770 6,347 6,982 7,680 8,448
Selling Price 3.50 3.75 4.01 4.29 4.59 4.91 5.25 5.62
4,931,17 5,803,99 6,831,30 8,040,44 9,463,60 11,138,65 13,110,20 15,430,70
Total Income 6 4 1 2 0 7 0 5
Associated Costs & Expenses
Utilities Expense: The major essential utilities required for the envisaged project are electricity, water and
telephone lines. The following points are assumed to be expended per month:
 Telephone Expense – 700.00
 Water Expense – 3,590.00
 Electricity Expense – 5,300.00
 Utility expenses are assumed to increase by 6% annually.
Projected Years Utility Expenses
1 115,080.00
2 121,984.80
3 129,303.89
4 137,062.12
5 145,285.85
6 154,003.00
7 163,243.18
8 173,037.77
27
Supplies Expense: Br 4,500.00 for 1st year will be spent for different types of stationeries & printing expenses and
other supplies expenses. Then after it will have an annual increment of 6%.
Project Years
Expense Item 1 2 3 4 5 6 7 8
Supplies Expense 4,500 4,770 5,056 5,360 5,681 6,022 6,383 6,766
Insurance Expense: Is expected to be 2% of the value of total fixed assets owned by Ato Abushu. 114,349.30 will
be assumed as an annual insurance expense of the project (3,790,965.00 * 2% = 75,819.30).
Repair & Maintenance Expense: is estimated to be 0.6% of the projects fixed asset, which will be birr 22 ,745.79
per annum (3,790,965.00 * 0.6% = 22,745.79). After five years of operation repair & maintenance costs of the
project is expected to rise to 1.2% of fixed assets and will become birr 45,491.58 per year.
Type of Expenses Rate Fixed Assets Value of Expense
Insurance Expense 2.00% 3,790,965.0 75,819.30
0
Repair & Maintenance Expense 0.60% 3,790,965.0 22,745.79
0
Repair & Maintenance Exp. after 5 yrs 1.20% 3,790,965.0 45,491.58
0
Depreciation Expense: Fixed assets of the project will have their proportional depreciation expenses as per the
following determination.
Fixed Assets Original Value Depreciation Rate Annual Depreciation
Building 1,450,000.00 5% 72,500.00
Baking Machine 1,584,550.00 20% 316,910.00
Generator 50KVA 480,000.00 20% 96,000.00
Furniture 211,640.00 20% 42,328.00
Other Equipments 64,775.00 20% 12,955.00
Total 3,790,965.00 540,693.00
Miscellaneous Expenses: includes expenses incurred for transportation, loading/unloading, internet services,
cleaning and other expenses used for the project. Per annum 48,410.00 birr will be expected to be spent for
miscellaneous reasons and it will have an increment of 6% yearly.
Project Years
Expense Item 1 2 3 4 5 6 7 8
Miscellaneous Expense 48,410 51,315 54,393 57,657 61,117 64,784 68,671 72,791
Shop Rent Expenses: the project will acquire two shops at Dukem & Bishoftu town in order to use as its sales
outlets. As per the current cost/m 2, the project will pay birr 318,000.00 as a rent expense with a rise of 6%
increment per every two year.
Expense Project Years
Item 1 2 3 4 5 6 7 8
Shop Rent 318,00 357,30 378,74
Expense 0 318,000 337,080 337,080 5 357,305 3 378,743
Fuel, Oil & Lubricants: the expenses incurred for fuel, oil, grease & lubricants for Vehicles and generators is
expected to be birr 78,000.00 for the first year. It will rise by 6% every year.
Expense Project Years
Item 1 2 3 4 5 6 7 8
Fuel, Oil & 104,38
Lubricants 78,000 82,680 87,641 92,899 98,473 2 110,644 117,283
28
Salary Payments: The total permanent manpower requirement will be 19, of whom 11 will be skilled and semi-
skilled the rest 8 employees will be unskilled manpower. The list of the manpower requirement is presented above
along with monthly and annual salaries and wages.
Salary will be higher than before by 5% for permanent employees every year.
Description No. of Monthly Annual Educational Year of

Persons Salary (Birr) Salary (Birr) Background Experience
General Manager 1 5,000.00 60,000.00 BA Degree 4 Years
Production Manager 1 4,000.00 48,000.00 Diploma 2 Years
Financial Manager 1 4,000.00 48,000.00 Diploma 2 Years
Marketing Manager 1 4,000.00 48,000.00 Diploma 2 Years
Delivery Boy 2 1,800.00 43,200.00 TVET 1 Year
Head Baker 1 4,500.00 54,000.00 TVET 2 Years
Ass. Baker 1 1 2,500.00 30,000.00 Certificate 1 Year
Ass. Baker 2 1 2,500.00 30,000.00 Certificate 1 Year
Cashier 1 1 1,500.00 18,000.00 TVET 1 Year
Cashier 2 1 1,500.00 18,000.00 TVET 1 Year
Guards 4 1,000.00 48,000.00 10+ 1 Year
Cleaners 4 1,000.00 48,000.00 10+ 1 Year
Grand Total 19 33,300.00 493,200.00
Expense Item
Projected Years Salary Expense
1 493,200.00
2 517,860.00
3 543,753.00
4 570,940.65
5 599,487.68
6 629,462.07
7 660,935.17
8 693,981.93
Projected Total Operational Costs
Hence, the operational cost at almost full capacity of the project for one year is estimated at Birr 1,271,331.00
including 9.09% contingency for the year.
The utility cost accounts for 9.05 percent; while repair and maintenance take 1.79 percent of the operational cost;
supplies expense will cover 0.35 percent; miscellaneous expenses are also take 3.81 percent of the total working
capital needed for the project.
Out of the total operational cost of the project salary and wage expense covers 38.79 percent, in addition to those
insurance expense accounts for 5.96 percent of the working capital, shop rent & fuel, oil & lubricant expenses will
take 25.01 & 6.14 percents respectively.
Contingency will take 9.09 percent of the total working capital budget of the project.
29
Projected Total Cost Table
Project Year
Cost Items 1 2 3 4 5 6 7 8
Utility Exp. 115,080 121,985 129,304 137,062 145,286 154,003 163,243 173,038
Supplies Exp. 4,500 4,770 5,056 5,360 5,681 6,022 6,383 6,766
75,819.30 75,819.30 75,819.30 75,819.30 75,819.30 75,819.30 75,819.30 75,819.30
Insurance Exp.
Salary Exp. 493,200 517,860 543,753 570,941 599,488 629,462 660,935 693,982
Repair & Main.
Exp. 22,745.79 22,745.79 22,745.79 22,745.79 22,745.79 45,491.58 45,491.58 45,491.58
Misc. Exp. 48,410 51,315 54,393 57,657 61,117 64,784 68,671 72,791
Shop Rent Expense 318,000 318,000 337,080 337,080 357,305 357,305 378,743 378,743
Fuel, Oil &
Lubricants 78,000 82,680 87,641 92,899 98,473 104,382 110,644 117,283
Contingency 115,576 119,517 125,579 129,956 136,591 143,727 150,993 156,391
Operational Costs 1,271,331 1,314,692 1,381,372 1,429,520 1,502,506 1,580,995 1,660,924 1,720,305
540,693.0
Depr. Exp. 540,693.00 540,693.00 0 540,693.00 540,693.00 72,500.00 72,500.00 72,500.00
313,277.5
Bank Interest Exp 370,190.78 344,199.94 6 276,487.91 232,717.73 180,642.52 118,686.47 44,974.15
Non-oper. Costs 910,884 884,893 853,971 817,181 773,411 253,143 191,186 117,474
Total Cost 2,182,214 2,199,585 2,235,342 2,246,701 2,275,916 1,834,137 1,852,110 1,837,779
30
Determination of Working Capital Requirement

From the total investment cost of 4,435,965.00; 11.27% will be utilized for working capital requirement of the
project including its contingencies.
The working capital can be used for one year from where the project commences its operation.
Description Amount in Birr %age Share
Utility Exp. 115,080.00 9.05%
Supplies Exp. 4,500.00 0.35%
Insurance Exp. 75,819.30 5.96%
Salary Exp. 493,200.00 38.79%
Repair & Main. Exp. 22,745.79 1.79%
Misc. Exp. 48,410.00 3.81%
Shop Rent Exp. 318,000.00 25.01%
Fuel, Oil & Lubricants 78,000.00 6.14%
Contingency 115,575.51 9.09%
Total Working Capital Required 1,271,330.60 100%
31
Projected Income Statement of the Project

Abushu Tolossa Bakery
Forecasted Profit & Loss Statement of the Project (in Birr)
For the Year Ended XXXX
Description Project Years
1 2 3 4 5 6 7 8
Sales Income 4,931,176 5,803,994 6,831,301 8,040,442 9,463,600 11,138,657 13,110,200 15,430,705
Other Income 0 0 0 0 0 0 0 0
Gross Income 4,931,176 5,803,994 6,831,301 8,040,442 9,463,600 11,138,657 13,110,200 15,430,705
Cost of Goods Sold 2,564,212 3,018,077 3,552,277 4,181,030 4,921,072 5,792,102 6,817,304 8,023,967
Gross Profit 2,366,965 2,785,917 3,279,025 3,859,412 4,542,528 5,346,555 6,292,896 7,406,738
Operational costs 1,271,331 1,314,692 1,381,372 1,429,520 1,502,506 1,580,995 1,660,924 1,720,305
Profit After Operational

Costs 1,095,634 1,471,225 1,897,653 2,429,892 3,040,022 3,765,561 4,631,972 5,686,433
Depreciation Exp. 540,693 540,693 540,693 540,693 540,693 72,500 72,500 72,500
Interest Payment 370,191 344,200 313,278 276,488 232,718 180,643 118,686 44,974
Non-operational costs 910,884 884,893 853,971 817,181 773,411 253,143 191,186 117,474
Profit Before Tax 184,750 586,332 1,043,682 1,612,711 2,266,612 3,512,418 4,440,786 5,568,959
Less: Profit Tax 46,663 187,216 347,289 546,449 775,314 1,211,346 1,536,275 1,931,136
Net Profit 138,088 399,116 696,394 1,066,262 1,491,298 2,301,072 2,904,511 3,637,823
32
Projected Cash Flow Statement

This study applies a decomposition approach of projection of cash inflows and outflows of Ato Abushu Tolossa.
Cash flows rather than profits are used in financial analysis for the following three reasons.
 Cash is what ultimately counts; profits are only a guide to cash availability: they cannot actually be spent.
 Profit measurement is subjective, the time period on which income and expenses are recorded, and so on,
are a matter of judgment.
 Cash is used to pay the term loans and owners equity, owners equity are the ultimate method of
transferring wealth to the project holders as a dividend at the time of official declaration of the members.
33

Forecasted Cash Flow Statement of the Project (in Birr)
For the Year Ended XXXX
Description Project Years
0 1 2 3 4 5 6 7 8
Cash Inflow
Beginning Cash Balance 664,775 664,775 580,242 813,827 1,217,610 1,841,297 2,713,041 3,717,507 5,078,918
Bank loan - 2,176,190 - - - - - - -
Sales Income - 4,931,176 5,803,994 6,831,301 8,040,442 9,463,600 11,138,657 13,110,200 15,430,705
Other Income - - - - - - - - -
Total Inflow 664,775 7,772,141 6,384,237 7,645,128 9,258,052 11,304,897 13,851,699 16,827,706 20,509,623
Cash Outflow
Fixed Inv. - 2,340,965 - - - - - - -
Purchase - 3,025,770 3,561,331 4,191,687 4,933,615 5,806,865 6,834,680 8,044,418 9,468,281
Operating Expense - 1,271,331 1,314,692 1,381,372 1,429,520 1,502,506 1,580,995 1,660,924 1,720,305
Bank Repayment - 507,171 507,171 507,171 507,171 507,171 507,171 507,171 507,171
Tax Payment - 46,663 187,216 347,289 546,449 775,314 1,211,346 1,536,275 1,931,136
Total Outflow - 7,191,899 5,570,410 6,427,518 7,416,755 8,591,856 10,134,192 11,748,788 13,626,892
Cash Balance 664,775 580,242 813,827 1,217,610 1,841,297 2,713,041 3,717,507 5,078,918 6,882,731
Projected Depreciation & Amortization Schedule of the Project:
Depreciation & Amortization Expense Schedule
Depreciation & Amortization Schedule
Original Rate Depreciation Project Years
Description Value % Amount 1 2 3 4 5 6 - 8th year
Building 1,450,000.00 5% 72,500.00 72,500.00 72,500.00 72,500.00 72,500.00 72,500.00 72,500.00
Baking Machine 1,584,550.00 20% 316,910.00 316,910.00 316,910.00 316,910.00 316,910.00 316,910.00 0
Generator 50KVA 480,000.00 20% 96,000.00 96,000.00 96,000.00 96,000.00 96,000.00 96,000.00 0
Furniture 211,640.00 20% 42,328.00 42,328.00 42,328.00 42,328.00 42,328.00 42,328.00 0
Other Equipments 64,775.00 20% 12,955.00 12,955.00 12,955.00 12,955.00 12,955.00 12,955.00 0.00
Total 3,790,965.00 540,693.00 540,693.00 540,693.00 540,693.00 540,693.00 540,693.00 72,500.00
34
Projected Balance Sheet of the Project

Forecasted Balance Sheet of the Project (in Birr)
PROJECT YEARS
DESCRIPTION Beginning 1 2 3 4 5 6 7 8
ASSETS
Current Assets
Cash 500,000 580,242 813,827 1,217,610 1,841,297 2,713,041 3,717,507 5,078,918 6,882,731
Inventory 0 461,558 543,254 639,410 752,585 885,793 1,042,578 1,227,115 1,444,314
Total Current Assets 500,000 1,041,801 1,357,081 1,857,020 2,593,882 3,598,834 4,760,085 6,306,033 8,327,045
Fixed Assets
Building 1,450,000 1,450,000 1,450,000 1,450,000 1,450,000 1,450,000 1,450,000 1,450,000 1,450,000
Baking Machine 1,584,550 1,584,550 1,584,550 1,584,550 1,584,550 1,584,550 1,584,550 1,584,550 1,584,550
Generator 50KVA 480,000 480,000 480,000 480,000 480,000 480,000 480,000 480,000 480,000
Furniture 211,640 211,640 211,640 211,640 211,640 211,640 211,640 211,640 211,640
Other Equipments 64,775 64,775 64,775 64,775 64,775 64,775 64,775 64,775 64,775
Acc. Depreciation 0 -540,693 -1,081,386 -1,622,079 -2,162,772 -2,703,465 -2,775,965 -2,848,465 -2,920,965
Total Fixed Assets 3,790,965 3,250,272 2,709,579 2,168,886 1,628,193 1,087,500 1,015,000 942,500 870,000
Total Assets 4,290,965 4,292,073 4,066,660 4,025,906 4,222,075 4,686,334 5,775,085 7,248,533 9,197,045
LIABILITIES
Bank Loan 2,176,190 2,039,210 1,876,239 1,682,346 1,451,663 1,177,210 850,681 462,197 0
Tax Payable 0 46,663 187,216 347,289 546,449 775,314 1,211,346 1,536,275 1,931,136
Total Liabilities 2,176,190 2,085,872 2,063,455 2,029,634 1,998,112 1,952,524 2,062,028 1,998,472 1,931,136
CAPITAL
Owner's Equity 2,114,775 2,068,112 1,604,088 1,299,878 1,157,702 1,242,513 1,411,986 2,345,551 3,628,086
Current Year Profit 0 138,088 399,116 696,394 1,066,262 1,491,298 2,301,072 2,904,511 3,637,823
Total Capital 2,114,775 2,206,200 2,003,204 1,996,271 2,223,964 2,733,811 3,713,057 5,250,061 7,265,909
Total Liabilities and Capital 4,290,965 4,292,073 4,066,660 4,025,906 4,222,075 4,686,334 5,775,085 7,248,533 9,197,045
35
UNIT SEVEN
Financial Evaluations
Profitability
Based on the projected profit and loss statement, the project will generate a profit throughout its operation
life. Annual net profit after tax will be Birr 46,663.00 at the first year of its operation and at the end of the
project year it will have a profit of birr 1,931,136.00.
Liquidity
The cash flow projection also shows an incremental cumulative cash balance from Birr 580,242.00 of the
first project year to Birr 6,882,731.00 of the last projection period implying that the project will not face
liquidity constraint to finance its operational costs and at the same time its debt obligation. Even the
project can start its 2nd phase project expansion work from its own financing strategies.
Ratios
In financial analysis, financial ratios and efficiency ratios are used as an index or yardstick for evaluating
the financial position of a firm. It is also an indicator for the strength and weakness of the firm or a
project. Using the year-end balance sheet figures and other relevant data, the most important ratios such
as return on sales which is computed by dividing net income by revenue, return on assets (operating
income divided by assets), return on equity (net profit divided by equity) and return on total investment
(net profit plus interest divided by total investment) has been carried out over the period of the project life
and all the results are found to be satisfactory.
Acid Test Ratios: Is a strength indicator that determines whether a firm has enough short-term assets to
cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the
working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory
assets. As per the determination of this ratio it shows that the project has an acid test ratio of 0.28 at the
beginning of the project year and 3.56 at the end of its projected years.
Debt Ratio: A financial ratio that measures the extent of a company’s or consumer’s leverage. The debt
ratio is defined as the ratio of total debt to total assets, expressed in percentage, and can be interpreted as
the proportion of a company’s assets that are financed by debt.
The higher this ratio, the more leveraged the company and the greater its financial risk. As per this ratio
indicates that at the end of first year the projects debt ratio shows 0.49 and then will decline as long as the
loan is paid regularly, finally at the end of its project life the debt ratio will almost close to 0.21.
Asset Turnover Ratio: The amount of sales or revenues generated per birr of assets. The Asset Turnover
ratio is an indicator of the efficiency with which a company is deploying its assets.
Generally speaking, the higher the ratio, the better it is, since it implies the company is generating more
revenues per birr of assets. At the first the project will record a 1.15 asset turnover ratio and finally will
reach 1.68 at the end of its project life.
Gross Profit Margin: A financial metric used to assess a firm's financial health by revealing the
proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings. This study proves that the
project will amount 0.48 gross profit margins at the beginning and 0.48 at the end of its project life.
Return on Assets/Return on Investment: An indicator of how profitable a company is relative to its
total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage.
Sometimes this is referred to as "Return on Investment". The project reaches 0.03 percent of Return on
Asset/Investment at the beginning and finally will reach 0.40 percent of Return on Assets/Investments at
the end of its project life.
Break-even Analysis: The break-even analysis establishes a relationship between operation costs and
revenues. It indicates the level at which costs and revenue are in equilibrium. To this end, the
break-even point of the project including cost of finance when it starts to operate at full capacity is
estimated by using income statement projection.
36
BE = Fixed Cost = 3.46%

Sales – Variable Cost
Payback Period
The payback period, also called pay–off period is defined as the period required recovering the original
investment outlay through the accumulated net cash flows earned by the project. Accordingly, based on
the projected cash flow it is estimated that the project’s initial investment will be fully recovered within
its project life time.
Economic Benefits
The project can create employment benefit for 19 permanent employees at the time of operation and more
than 50 temporary laborers under the construction period.
In addition to supply of the domestic needs of standardized production of bread and narrow the gap, the
project will generate birr 6,581,688.00 in terms of profit tax revenue for the Government within the
projected years of time.
Moreover, the Regional Government can collect Employment Income Tax and Sales Tax Revenue.
Future Development & Exit Strategies
Every business undertakings be it large or small should have to have future development plan. It is a plain
fact that business activities are undertaken in a dynamic and turbulent environment. Hence to overcome
or minimize the risks of uncertain future business risks, every project should devise effective strategies
that enable them to be successful in their operation & lifetimes. Likewise the envisaged project has
devised strategies to overcome the future risk of operation.
 The first strategy is diversification of its activities to different other business forms.
 The second future development plan of the project is expanding its branches in many other parts
of the country.
 The third strategy of the project is making a joint venture with other similar business
undertakings either from domestic or foreign partners from abroad.
 The final strategy of the project is selling the whole project to other interested organizations or
individuals.
37
UNIT EIGHT
Conclusions & Recommendations
Since the manufacturing & service sector in Ethiopia is in a low level progress, growth and improvement
of both sectors can substantially contribute to the economic development at National, Regional and
Family level. The project promoter believes that, the project will contribute its own part to the modern &
standardized production & distribution of bread system of the towns as well as will confirm sustainability
of the firm’s growth and development.
By investment in advanced technologies, standardized machineries and equipments and by implementing
codes of conducts of the town and regional government more added values can be generated to the towns
marketing system.
As shown in the above analysis, the project will pay back its debt equity within its projected years as per
the scheduled time table. Create a job opportunity for not less than 19 permanent residents of Dukem &
Bishoftu towns. Contribute to the government significant revenue in the form of income tax and business
taxes.
Therefore, the project is beneficial both for the owner, residents of Dukem & Bishoftu towns, the towns’
administration and the regional government as a whole.
Hence this study believes and recommends that financing the project of Ato Abushu Tolossa and replying
the requests of the promoter has a great impact for the development of the towns and will have a direct
and indirect positive effect on the project owners wealth, the development and renaissance of the region
and the country as a whole.
The bank will also be profitable from the loan it injects to this project by generating an interest income of
birr 1,881,177.05 within the project loan period.
 This project study believes that, Ato Abushu Tolossa’s business will have its own part to the
modern plus standardized production & delivery of bread in Dukem & Bishoftu towns.
 The financial analysis confirms sustainability of the firm’s growth and development.
 By investment in customary manufacturing procedures and by implementing codes of conducts of
the region and the town, more added values can be generated.
 Loan should be obtained in order to manage the cash flow during the construction & production
period. The loan would cover only 49.06% of the project value and therefore pre-finance request
from the project owner shall be presented to the bank on time.
 The Investment agency of the town should also give a hand to the project by renewing the
Investment license and paves the way to facilitate duty free privileges to the promoters on time.
 The strong management capacity is one of the main aspects to accelerate the process of acting
according to business plan indicators.
 In order to increase loyalty of employees and other stakeholders towards the projects aim and
goal, the communication flow shall be strengthened. Loyalty and membership feeling within the
stakeholders is important aspects to increase accountability and responsibility of employees.
As a result this study believes that financing this project will have a direct and indirect positive effect on
Ato Abushu Tolossa’s wealth, the residents lived in Dukem & Bishoftu towns, other stakeholders and yet
the project will have a great impact to the development and renaissance of the country as a whole.
38
GENERATOR, MACHINERY, FURNITURE & EQUIPMENT REQUIREMENT and COSTS

S. Description UoM Qty Unit Price Total Price Total Price
No. (Birr) (Birr) (USD)
Generator
1 Generator 50KVA Pcs 1 480,000.00 480,000.00 12,000.00
Baking Equipments & Machineries
1 Rotary Oven Pcs 1 626,000.00 626,000.00 15,650.00
2 Mixer Pcs 1 188,000.00 188,000.00 4,700.00
Volumetric Dough Pcs 1 177,000.00 177,000.00 4,425.00
3 Divider
4 Bread Slicer Pcs 1 40,000.00 40,000.00 1,000.00
5 Molding Machine Pcs 1 140,000.00 140,000.00 3,500.00
6 Frigg trice Electric Fry Pcs 1 58,000.00 58,000.00 1,450.00
7 Planetary Mixer Pcs 1 88,000.00 88,000.00 2,200.00
8 Steam Generator Pcs 1 60,869.57 60,869.57 1,521.74
9 VAT - 15% Pcs - 206,680.43 206,680.43 5,167.01
Baking Tools
1 Working Table Pcs 1 3,500.00 3,500.00 87.50
2 Baking Sheet / Pan Pcs 1 6,500.00 6,500.00 162.50
set of 10
3 Loaf / Toast Pan Set Set 1x 7,000.00 7,000.00 175.00
of 3 70
4 Mixing bowl Set Set 1 2,800.00 2,800.00 70.00
5 Rolling Pin Pcs 2 300.00 600.00 15.00
6 Bench Scraper Pcs 1 150.00 150.00 3.75
7 Food Processor Pcs 1 4,800.00 4,800.00 120.00
8 Knife Set Set 1 1,800.00 1,800.00 45.00
9 Oven Mitts Pcs 3 600.00 1,800.00 45.00
10 Tong Pcs 3 120.00 360.00 9.00
11 Digital Kitchen Timer Pcs 1 480.00 480.00 12.00
12 Whisk Pcs 1 190.00 190.00 4.75
13 Measuring Cups Set Set 1 3,750.00 3,750.00 93.75
of 3
14 Measuring Spoon Pcs 1 1,900.00 1,900.00 47.50
15 Dry Measuring Spoon Pcs 1 2,200.00 2,200.00 55.00
16 Pastry Brush Pcs 2 75.00 150.00 3.75
17 Silicone Pastry Brush Pcs 2 120.00 240.00 6.00
18 Pastry Bag with Pcs 1 1,420.00 1,420.00 35.50
Nozzle
19 Non-Stick Casserole Pcs 1 3,400.00 3,400.00 85.00
20 Can Opener Pcs 1 200.00 200.00 5.00
21 Spatula Pcs 2 100.00 200.00 5.00
39
22 Grater Pcs 2 140.00 280.00 7.00

23 Parchment Paper Pcs 1 160.00 160.00 4.00
Other Tools & Equipments
1 Power Juicer Pcs 2 6,600.00 13,200.00 330.00
2 Heavy Duty Blender Pcs 1 3,400.00 3,400.00 85.00
3 Fork Doz 1 400.00 400.00 10.00
4 Bread Plate Doz 2 250.00 500.00 12.50
5 Bread Knife Doz 2 300.00 600.00 15.00
6 Mason Jar Pcs 3 370.00 1,110.00 27.75
7 High Ball Glass Rack Pcs 1 500.00 500.00 12.50
8 Serving Tray Pcs 4 140.00 560.00 14.00
9 Dish Plate Rack Pcs 1 380.00 380.00 9.50
10 Fork Dispenser Pcs 1 245.00 245.00 6.13
Office Furniture, Equipments & Supplies
1 Office Supplies Set 1 4,500.00 4,500.00 112.50
2 Shop Shelf Pcs 2 8,700.00 17,400.00 435.00
3 Shop Balcony Pcs 2 4,800.00 9,600.00 240.00
4 Single Sofa with Pillow Pcs 1 14,000.00 14,000.00 350.00
5 Office Chair Pcs 2 3,100.00 6,200.00 155.00
6 Office table Pcs 2 7,000.00 14,000.00 350.00
7 Desktop Computer Pcs 1 10,000.00 10,000.00 250.00
8 Canon Printer Pcs 1 4,500.00 4,500.00 112.50
9 Window Type Aircon Pcs 2 18,500.00 37,000.00 925.00
1.5HP
10 Refrigerator Pcs 2 25,000.00 50,000.00 1,250.00
11 Exhaust fan Set 1 11,000.00 11,000.00 275.00
12 Roof Ventilation Set 2 4,780.00 9,560.00 239.00
13 Fire Extinguisher Pcs 3 2,400.00 7,200.00 180.00
(Red)
14 DVD Player w/ Pcs 1 4,700.00 4,700.00 117.50
Speaker Set
15 Cashier Chair Pcs 2 3,000.00 6,000.00 150.00
16 Cleaning Materials Set 1 5,980.00 5,980.00 149.50
Grand Total 2,340,965.00 58,524.12
40

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Feasibility Study of Ato Abushu Tolossa Bakery Business

Background of the Promoter

Target Market Description

 Expand produce line

Advertising and Promotion Materials

Other Tools & Equipments

Items Qty Unit Unit Cost Total Cost

Power Juicer 2 Pcs 6,600.00 13,200.00

Heavy Duty Blender 1 Pcs 3,400.00 3,400.00

Fork 1 Doz 400.00 400.00

Bread Plate 2 Doz 250.00 500.00

Bread Knife 2 Doz 300.00 600.00

Mason Jar 3 Pcs 370.00 1,110.00

High Ball Glass Rack 1 Pcs 500.00 500.00

Serving Tray 4 Pcs 140.00 560.00

Dish Plate Rack 1 Pcs 380.00 380.00

Fork Dispenser 1 Pcs 245.00 245.00

Grand Total 20,895.00

Items Qty Unit Unit Cost Total Cost

Wheat Flour 100 Sacks - 50kg 1,700.00 170,000.00

Sugar 20 Sacks - 50kg 1,250.00 25,000.00

Baking Soda 10 Sacks - 50kg 200.00 2,000.00

Vanilla 10 Liter - 5 350.00 3,500.00

Cocoa Powder 20 Sacks - 50kg 1,200.00 24,000.00

Egg (medium) 50 Tray - 24 150.00 7,500.00

Corn Flour 50 Sacks - 50kg 850.00 42,500.00

Strawberry Syrup 10 500ml 380.00 3,800.00

Chocolate Syrup 15 500ml 420.00 6,300.00

Strawberry Powder 20 Kilos 160.00 3,200.00

Corn Syrup 12 560ml 380.00 4,560.00

Grand Total 292,360.00

Step 5: Knead dough

Environmental and Social Impacts

Production Mgr Finance Mgr Marketing Mgr

Head Baker Cashier 1 Cashier 2

 Undertaking regular salary reviews.

Job Title: Baker

Years Annual Interest Principal Outstanding Loan

Owners Equity Debt Equity %

Description No. of Monthly Annual Educational Year of

Projected Total Cost Table

Determination of Working Capital Requirement

Description Amount in Birr %age Share

Utility Exp. 115,080.00 9.05%

Supplies Exp. 4,500.00 0.35%

Insurance Exp. 75,819.30 5.96%

Salary Exp. 493,200.00 38.79%

Repair & Main. Exp. 22,745.79 1.79%

Misc. Exp. 48,410.00 3.81%

Shop Rent Exp. 318,000.00 25.01%

Fuel, Oil & Lubricants 78,000.00 6.14%

Contingency 115,575.51 9.09%

Total Working Capital Required 1,271,330.60 100%

Projected Income Statement of the Project

Profit After Operational

Projected Cash Flow Statement

Abushu Tolossa Bakery

Projected Balance Sheet of the Project