Melaku Alemayehu Household

Furniture & Accessories

Retail Enterprise

Business Plan for Working Capital Financing

By: Mr. Melaku Alemayehu Tsegaye

Submitted to: Sinqe Bank

Dire Dawa

June 2024
 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Contents

0. Executive Summary ............................................................................................................................ 2

1. The Enterprise ....................................................................................................................................... 3

2. Mission ................................................................................................................................................. 3
3. Keys to Success ................................................................................................................................ 3
4. Basic Information of the Enterprise .............................................................................................. 3

4.1. Profile of the Owner/ General Manager ............................................................................... 4

4.2. Products ........................................................................................................................................... 4
5. Financial Considerations .................................................................................................................... 4

Table: Past Performance ........................................................................................................................ 4

Table: Personnel Plan .............................................................................................................................. 5

Table: Operating expenses .................................................................................................................... 7

Table: Total Investment ......................................................................................................................... 8

Table: Source of Finance ........................................................................................................................ 9

Table: Yearly Loan Repayment Schedule ........................................................................................ 9

Table: Profit and Loss Statement ..................................................................................................... 10

By: Mr. Melaku Alemayehu Tsegaye 1|Page

 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

0. Executive Summary

This business plan proposes a working capital financing for the Melaku
Alemayehu Household Furniture & Accessories Retail Enterprise owned
by Mr. Melaku Alemayehu and located in Dire Dawa Town.

The proposed loan request has planned to satisfy the working capital
shortage of the Business by delivering an adequate stock of inputs.

The existing value of the Business amounts to Birr 16,569,971.68.

However, the Enterprise requires addition working capital financing, in
the form of short term loan for an amount of Birr 15,338,500.00 in
order to operate without any shortage of cash and inventory.

The results of the feasibility analysis indicate that the company will have
a strong potential to be a successful enterprise.

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

1. The Enterprise
Melaku Alemayehu Household Furniture & Accessories Retailer is a sole
proprietorship business owned entirely by Mr. Melaku Alemayehu. It was first
established on 2005 E.C with initial capital of ETB 54,000.00 (fifty four
thousand birr) in Dire Dawa City Administration.

The enterprise has built a strong market position in the town, due to the
owner’s experience and mild competitive climate in the city.

The enterprise aims to offer its products and services at a competitive price to
meet the demand of the community.

2. Mission

The Enterprise envisions to be reputable by the society and to become the

first choice of customers by providing high quality Household Furniture &
Accessories in Dire Dawa.

3. Keys to Success

Keys to success for the Enterprise will include:

1. Providing the highest quality product with personal customer service.

2. Competitive pricing

4. Basic Information of the Enterprise

Name of the enterprise: Melaku Alemayehu Household Furniture &
Accessories Retailer
Business Type: Retail Trade
Location: Dire Dawa City

The Company has been registered and issued with a business license from the
Dire Dawa trade and industry Office.

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

4.1. Profile of the Owner/ General Manager

Name: Mr. Melaku Alemayehu Tsegaye
Address: Region/City- Dire Dawa City
Tel (mob): +251-915-750-145

Mr. Melaku Alemayehu, the owner of the Enterprise, is a successful

Entrepreneur with more than 30 years of experience managing various private
Businesses in Dire Dawa City.

During his business years, Mr. Melaku has acquired smooth business
transaction practices with different financial institutions.

4.2. Products
The Enterprise offers a broad range of different Household Furniture &
Accessories at all times during business operations. Some of the products in
the store include:

 Bed Mattresses
 Floor Mats
 Bed Sheets & Comforts
 Kitchen materials and etc..

5. Financial Considerations

The currently existing asset values of the Enterprise’s current investments are
depicted in the following table.

Table: Past Performance

Current Asset Value, Birr

Cash 1,600,000.00

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Store Inventory 2,697,765.00

Total Current Asset 4,297,765.00

Fixed Asset

Building 10,515,416.89

Vehicle 1,756,789.78

Total Fixed Asset 12,272,206.68

Total Asset 16,569,971.68

Table: Sales Forecast

Unit Sales Year 1 Year 2 Year 3
Mattresses (pieces) 520 572 629
Floor Mats (pieces) 440 484 532
Bed Sheets & Comforts (set) 490 539 593

Other products (Lump sum) LS LS LS

Total Unit Sales 1,450 1,595 1,755

Unit Prices Year 1 Year 2 Year 3

Mattresses (pieces) 25,000.00 27,500.00 30,250.00
Floor Mats (pieces) 27,000.00 29,700.00 32,670.00
Bed Sheets & Comforts (set) 4,900.00 5,390.00 5,929.00

Other products (Lump sum) LS LS LS

Sales Year 1 Year 2 Year 3

Mattresses (pieces) 13,000,000 15,730,000 19,033,300
Floor Mats (pieces) 11,880,000 14,374,800 17,393,508

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Bed Sheets & Comforts (set) 2,401,000 2,905,210 3,515,304

Other products (Lump sum) 1,800,000 2,070,000 2,380,500

Total Sales 29,081,000 35,080,010 42,322,612

Unit Purchase Year 1 Year 2 Year 3

Mattresses (pieces) 520 572 629
Floor Mats (pieces) 440 484 532
Bed Sheets & Comforts (set) 490 539 593

Other products (Lump sum) LS LS LS

Total Unit Purchase 1,450 1,595 1,755

Direct Unit Costs Year 1 Year 2 Year 3

Mattresses (pieces) 12,500.00 13,750.00 15,125.00
Floor Mats (pieces) 13,500.00 14,850.00 16,335.00
Bed Sheets & Comforts (set) 2,450.00 2,695.00 2,964.50

Other products (Lump sum) LS LS LS

Direct Cost of Sales Year 1 Year 2 Year 3

Mattresses (pieces) 6,500,000 7,865,000 9,516,650
Floor Mats (pieces) 5,940,000 7,187,400 8,696,754
Bed Sheets & Comforts (set) 1,200,500 1,452,605 1,757,652

Other products (Lump sum) 1,440,000 1,656,000 1,904,400

Subtotal Direct Cost of Sales 15,080,500 16,505,005 19,971,056

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Table: Personnel Plan

Description year 1 year 2 year 3
General Manager 144,000 151,200 158,760

Sales Clerks (2) 72,000 75,600 79,380

Cleaner 36,000 26,400 29,040

Accountant 108,000 113,400 29,040

Total Payroll 252,000 253,200 267,180

Table: Operating expenses

Description year 1 year 2 year 3
Transportation 108,000.00 113,400.00 119,070.00

Rent 240,000.00 252,000.00 264,600.00

Salary and wage 252,000.00 264,600.00 277,830.00

Utilities 24,000.00 25,200.00 26,460.00

Miscellaneous expenses 31,200.00 32,760.00 34,398.00

Total Operating Costs 655,200.00 687,960.00 722,358.00

Table: Fixed Asset

Description Value in Birr

Building 10,515,416.89
Vehicle 1,756,789.78
Total Fixed Asset 12,272,206.68

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Table: Depreciation

Description Rate Original Value Annual cost

Building 5.0% 10,515,416.89 525,770.84

Vehicle 10.0% 1,756,789.78 175,678.98

Total Fixed Asset 12,272,206.68 701,449.82

Table: Working capital Determination

Days of coverage Required
Direct costs (days) working capital
Store one year 15,080,500.00

Sub total 15,080,500.00

Overhead working capital costs

Rent six months 120,000.00

Wage and Salaries six months 126,000

Utilities six months 12,000.00

Sub total 258,000.00

Total required working

capital 15,338,500.00

Existing Working Capital 4,297,765.00

Tot Working Capital 19,636,265

Table: Total Investment

Description Costs
Building 10,515,417
Vehicle 1,756,790

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Subtotal (Fixed Investment) 12,272,207

Working capital 19,636,265
Total Investment Capital 31,908,472

Table: Source of Finance

Owner’s equity Bank Loan
Description Total Costs Amount % Amount %
Building 10,515,417 10,515,417 100% 0.00 0%

Vehicle 1,756,790 1,756,790 100% 0.00 0%

Subtotal (Fixed
Investment) 12,272,207 12,272,207 100% 0.00 100%

Working capital 19,636,265 4,297,765 22% 15,338,500.00 78%

Grand Total 31,908,472 16,569,972 52% 15,338,500.00 48%

Table: Yearly Loan Repayment Schedule

Loan Interest Outstanding
Year
Repayment (18.5%) Balance
0 15,338,500.00

1 3,067,700.00 2,837,622.50 12,270,800.00

2 3,067,700.00 2,270,098.00 9,203,100.00

3 3,067,700.00 1,702,573.50 6,135,400.00

4 3,067,700.00 1,135,049.00 3,067,700.00

5 3,067,700.00 567,524.50 0.00

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Table: Profit and Loss Statement

Description Project Years
1 2 3 4 5
Sales
29,081,000 35,080,010 42,322,612 46,554,873 51,210,361
Direct cost of sales
15,080,500 16,505,005 19,971,056 20,969,609 22,018,089
Gross Profit 14,000,500 18,575,005 22,351,556 25,585,264 29,192,271
Operational
722,358 758,476 796,400 836,220 878,031
expense
Profit before tax
13,278,142 17,816,529 21,555,156 24,749,045 28,314,241
and interest
Depreciation
701,449.82 701,449.82 701,449.82 701,449.82 701,449.82
EBITDA (Earning
before tax, interest 13,979,592 18,517,979 22,256,606 25,450,495 29,015,691
and depreciation)
Interest expense 2,837,623 2,270,098 1,702,574 1,135,049 567,525
Profit tax (35%) 3,132,155.85 4,663,929.33 5,955,774.86 7,084,198.73 8,324,014.85
Net profit 7,308,363.65 10,882,501.77 13,896,808.00 16,529,797.04 19,422,701.33

Table: Cash Flow Statement

Production Year
Cash in flow 0 1 2 3 4 5

Owners' equity 16,569,972

Existing Bank Loan 0

Additional Bank
15,338,500
Loan

Net Profit 0 7,308,364 10,882,502 13,896,808 16,529,797 19,422,701

Depreciation 701,450 701,450 701,450 701,450 701,450

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Total Cash in flow 31,908,472 8,009,813 11,583,952 14,598,258 17,231,247 20,124,151

Cash out flow

Replacement 0 0 0

loan repayment 3,067,700 3,067,700 3,067,700 3,067,700 3,067,700

Capital Expenditure 0 - - -

Existing Working
0 - - -
capital

Working capital 19,636,265

Pre-operating
expenses and 0
interest

Total Cash out

19,636,265 3,067,700 3,067,700 3,067,700 3,067,700 3,067,700
flow

Net Cash Flow 12,272,207 4,942,113 8,516,252 11,530,558 14,163,547 17,056,451

Cash balance 24,578,378 33,094,630 44,625,188 58,788,735 75,845,186

Table: Balance Sheet Statement

Production Year
Description Investment

ASSETS 0 1 2 3 4 5
Current Assets

Cash 19,636,265 24,578,378 33,094,630 44,625,188 58,788,735 75,845,186

Other Current
0 0 0
Assets

Total Current
19,636,265 24,578,378 33,094,630 44,625,188 58,788,735 75,845,186
Assets

Fixed Asset

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 Melaku Alemayehu Household Furniture & Accessories Retailer Dire Dawa, 2024

Building 10,515,416.89 9,989,646 9,463,875 8,938,104 8,412,334 7,886,563

Vehicle 1,756,789.78 1,581,111 1,405,432 1,229,753 1,054,074 878,395

Total Fixed Asset 12,272,207 11,570,757 10,869,307 10,167,857 9,466,407 8,764,958

Pre-operating Costs
0 0 0 0
including interest

Total Asset 31,908,472 36,149,135 43,963,937 54,793,045 68,255,142 84,610,143

LIABILITIES

Short term liability - - - -

Long term liability

15,338,500 12,270,800 9,203,100 6,135,400 3,067,700 0
(Bank Loan)

Sub Total 15,338,500 12,270,800 9,203,100 6,135,400 3,067,700 0

CAPITAL

Owner's Equity 16,569,972 16,569,972 16,569,972 16,569,972 16,569,972 16,569,972

Retained Earnings 0 7,308,364 18,190,865 32,087,673 48,617,470 68,040,172

Earnings 7,308,364 10,882,502 13,896,808 16,529,797 19,422,701

Sub Total 16,569,972 23,878,335 34,760,837 48,657,645 65,187,442 84,610,143

Total Liability &

31,908,472 36,149,135 43,963,937 54,793,045 68,255,142 84,610,143
Capital

Net Worth 16,569,972 23,878,335 34,760,837 48,657,645 65,187,442 84,610,143

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