BUSINESS PLAN FOR

Smart boutique
 Dbu universtiy
COLLEGE OF BUSINESS AND ECONOMICS

DEPARTEMENT OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT

GROUP ASSIGNMENT

GROUP MEMBER; Id Number

1. Yadesa Hinsarmu R/0801/09

2. Yirgalem Kabtamu R/0806/09

3. Milky Abera R/0641/09

4. Kubsa Mamo R/0715/09

5. Getasaw Adibaru R/0669/09

Submission Date -23/09/2010

Submitted to Instructors Gifty. B

BUSINESS PLAN FOR

SMART BOUTIQUE
“As our name providing smart products and
services”
Contents Page

EXCUTIVE SUMMERY ..........................................................................ii

1.0 Background of SMART boutique ....................................................... 1
1.1 Location of the business ................................................................... 1
1.2 Demographic structure of Assela town ............................................ 2
1.3 Economic background of Assela town ............................................. 2
1.4 OBJECTIVE ..................................................................................... 2
1.5 MISSION .......................................................................................... 3
1.6 Nature of the business ...................................................................... 3
1.6.1Form of business .......................................................................... 3
1.6.2 Product and service nature .......................................................... 3
1.6.3 Business opportunities ................................................................ 4
1.6.4 Establishing year ......................................................................... 4
2.0 Analysis of business venture (boutique) ............................................. 4
2.1 Past trend and future outlook of the industry ................................... 4
2.2 Competitive Advantage .................................................................... 6
3.0 Marketing plan .................................................................................... 6
3.1 CUSTOMER ANALYSES .............................................................. 6
3.2 Pricing Strategy ................................................................................ 7
3.3 Promotion Strategy ........................................................................... 7
4.0 ORGANIZATIONAL PLAN.............................................................. 8
4.1 Legal Form of Ownership ................................................................ 8
4.2 Roles and Responsibility of Members of the Organization ............. 9

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 4.3 ASSESMENT OF RISKS AND REMEDIAL MEASURE .......... 10
5.0 Financial analysis .............................................................................. 11
5.1. Start-up capital ............................................................................... 11
5.2. Sources of start-up Capital ............................................................ 12
5.3 Expected sales and profit ................................................................ 12
Appendix ................................................................................................. 16

EXCUTIVE SUMMERY
SMART Boutique business enterprise will be run as partnership among
Ashenafi, Atinafu, Bikila, and gurmesa by 225,000 birr.
The SMART boutique offer high quality and quantity of shoes, trouser
and jacket and other related clothes for users and customers. The
product of the business will be available for sale at home and also sold
to retailers who sells in other markets.
The price set by the business, is fair market price or it should not exploit
customers or should not annoy customers. So that customers are willing
to pay. The business will provide its product at market price by
identifying and listing each type of services with their fair prices.
The activities included in this business are purchasing and selling of
high quality and modernized clothes and shoes and preparing store
houses where they stored whenever there is excess supply, auditing daily
sales of business, etc.

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The overall objective of the business is to provide high quality and
quantity products in order to get the expected profit and to satisfy the
consumer, and we would also have a claim to create job opportunity.
In the first year the business forecast a profit of birr 215,000. The
reason for obtaining such positive gaining or profit can be mainly
attributed to: The presence of good market price, limited strong
competitors, cheap labor force and absence of payment for suppliers
(transportation cost)
In the second year and 3rd year we expect and predict that there will be
increment of profit due to further increases in sale having advantage of
economies of scale.
The SMART boutique will require loan of birr 68,000 to be repaid over
six years. The contribution made for the business is equal for each
partner and share of profits and loses also can be equally shared. The
SMART boutique will also available on www.smartbout.com always and
ready to accept its customer’s comments, suggestions and questions
regarding the quality of its products and services and serves to promote
its services and products

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1. Background of SMART boutique
1.1 Location of the business
SMART boutique will be located in oromiya regional state in Assela
town which is the capital of Eastern Arsi zone.It is 175 km far apart
from Addis Abeba the capital of Ethiopa and 75 km far from Adama.
Assela town is well known by its cold weather condition, the place
where most of our star athletes come from, and sounded by farmer who
especially grows wheat and barley products.Asella is categorized under
Waynadega or sub-tropical highland climate zone with monthly
temperature variation is low due to its elevation and closeness to
equator. This town has a latitude and longitude of 7◦57’N 39◦7’E.
The boutique will situated in Kenenus hotel building by renting shops as
it is suitable for transportation, street light, nearness to car station and
other services provided in hotel buildings.

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1.2 Demographic structure of Assela town
Like other place the demographic structure of Assela town is explained
by its birth rate, death rate, growth rate, density, age structure, sex
structure and in other ways.
The total population of Asella town is reported to be about 67,269 from
which 33,826 were man and 33,443 were women. The majority of the
population follows the Orthdox Christianity which accounts 67.43% of
the total population, while 22.65%, and 8.75% of the population were
Muslim and Protestant (2007 national census) the dominant language in
the town were AfanOromo (Oromiffa) followed by Amharic as a second
spoken but not only these two language which are spoken in the town
there is also others.

1.3 Economic background of Assela town

The populations of Assela town are engaged in different economic
activities like service provision (cafe and restaurant, hotel, club,
transportation), manufacturing activities (food complex, malt factory,
flour factory) and agriculture in the hinterland.
Generally, the location, demographic structure and economic activities
are suitable for business venture in different aspects like adequate
customer, basic infrastructure, and good weather condition.
1.4 OBJECTIVE
 To maximize boutique supply in general and satisfy consumers
consumption requirement in particular

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  To creating employment opportunity to the surrounding
community
 To provide the customer with high quality and quantity clothes
and shoes

1.5 MISSION
 Utilizing available resources
 Adopting to the dynamic environment throughout the operation
 Providing affordable living standard to its workers
 Supplying high quality clothes and shoes suitable for customers.

1.6 Nature of the business

1.6.1Form of business
SMART boutique, which is a service providing business venture, is
going to be formed as partnership by Ashenafi, Atinafu, Biylfew,
andGezahign.
1.6.2 Product and service nature
SMART boutique brings highly qualified modern clothes and shoes that
are customer focused at affordable price with smart accommodation
services. Furthermore, the products are available to customer with their
preference that is in relation to age, sex, culture in different design.
The product of our business is industrial product. So, any firms who
have the potential and licensed by the government can undertake the
activities. The business will have good attitude on society; it doesn’t
affect the natural environment (pollution) and initiate people to purchase
the product as it is new. The business will also apply managed and
controlled waste disposal.

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1.6.3 Business opportunities

High population in the town which helps to get many

customers.
The presence of good market price
Absence of strong competitors due to economies of
scale
Politically stable environment
Geographical location advantage means that near to
capital city and availability of good infrastructure like
road.

1.6.4 Establishing year

The business venture will be established in November 2016 by birr

148,000 as starting capital obtained from own capital of partners and
from borrowing.

2. Analysis of business venture

(boutique)
2.1 Past trend and future outlook of the industry

It is obvious that the clothes and shoes are among one of the basic needs
of human beings, so that individual is in need of some clothes and shoes
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for survival, to maintain suitable condition with the weather condition,
for recreation and style, and other personal purpose so that there will be
expansion of the business at an alarming rate.
It is in this respect that our business provided a lot of opportunity is for
the community of Assela ,campus students of Arsi university and
surrounding peoples (Arsi zone farmers) by enabling them to use
modern clothes and shoes and simply adapt freshman students and as
well as guests who are not familiar with the new style of wearing.
SMART boutique is going to planned to introduce clothes and shoes in
different style. For example, in variety of size and color, model, up to
dated products accordingly.
The main competitors the boutique will face are
Local mini shopping trader in Assela town
Boutiques located at Adama, Shashemene and even AddisAbeba
Other boutiques in the town
Strength of competitors
The strength of our competitors is that they have
High initial capital
Enough man power
Enough space for working.

Weakness of competitors
 They provide poor quality clothes and shoes
 Their service of time is limited
 They do not respect their customers

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2.2 Competitive Advantage

The competitive advantages of our business venture are listed in the

following manner
 We provide quality clothes and shoes for our customers better than
our competitors
 Providing entertain customer service who are in different age level.
 It addresses customers need with suitable price based on comment
and suggestion of the customers and according to the purchasing
power of customers.
 Closeness to suppliers (retailers and whole sellers in Addis Ababa
and Adama)
 Initiated workers

3. Marketing plan
3.1 Customer Analysis

Our target customers will be

 The Arsi university society
 Assela town society
 Assela and Adama boutique owners (retailers)
 Arsi zone dwellers farmers
 Customer preference

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Most of our customer’s preference is good quality and sufficient
quantity of clothes and shoes. The demand of customers varies in age,
income level, sex and location areas so that the boutique reacts
accordingly to satisfy the customer demand.
Most of the time demand and supply do not balance each other. To
balance Supply with demand we must do a continuous assessment on the
number of our customer. We must identify the primary need of our
customers. We have to measure the daily, weekly, monthly and yearly
consumptions of the customer and compare with our products. By
carrying out this process we can balance demand and supply.

3.2 Pricing Strategy

The basis for our boutique prices is the market price and cost-benefit
analysis. Even if our competitors have no so much strength, we may
reduce our price in order to attract and get our customers attention; as a
result we can increase our profit from large number of customers (by
selling more quantity of products). Actually the price of our product is
not below the market price; as a result, the boutique set the price of
clothes and shoes as the markets that are it fluctuates over the time with
market price. We also adopt price discrimination based on number of
sales, income level, ages or based on other criteria which is important to
maximize profit.
3.3 Promotion Strategy

Our promotion strategies are applied using the following methods:-

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Business card is the most important ways to promote our boutique for
the following reasons
Easy to distribute
Cost effectiveness
Availability of printing press
Additionally the business venture is going to be promoted vie
online network through email of the boutique.

4. Organizational plan
4.1 Legal Form of Ownership

SMART boutique business enterprises are a type of business in the form

of partnership. The reasons for the selection of this form of business
are:-
To gain enough capital for starting capital for establishment.
Simplicity to establish the business.
Enough supply raw materials like buildings, store house.
The overall operation or function of the business would be governed or
administered by the owner. The manager may be either one of the owner
or sometimes there may be needed to hire the manager from the outside
people that can fulfill the following criteria:
Have the knowledge of entrepreneurship.
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Sociability.
Ability to manage others.
Risk taker and experienced.

4.2 Roles and Responsibility of Members of the Organization

The role of the manager will be managing the overall activity of the business. That
is:-

Making decision regarding the state of business in the future.

Controlling the overall activity in the business.

Increase capital contribution.

Evaluating the quality of the products.

Making decision regarding purchasing and selling.

Role of cashier

Prepare receipt and receive cash

Daily sales report

Purchaser

Purchasing products from supplier

Undertaking market assessment like price.

Client server

Accommodate customers

Attracting of customers

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 Expected Organizational staff

Responsibility quantity Staff qualification

General Manager 1 (diploma management)

Client server 2

Cashier 1 (Diploma accounting)

Guarder 1

Purchaser 1

Organizational structure

The organization will contain the following members:-

1. The management of the business

2. Permanent employees
3. Temporary employees

The permanent employees of the business consist of two workers. The three are
responsible for day-to-day activities of the business.

General Manager

Purchaser Client server Guarder

Cashier

4.3 Assessment of risks and remedial measure

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The predetermined or expected risks are:-

Expiration of unsold some clothes and shoes.

Loss of income from expired item.
Loss of customers.
Natural hazardous.
Shortage of supply (fluctuation of supply).
Fluctuation of market price (devaluation, inflation, deflation)

By taking into account these risk all staff members strive to minimize and cope
with in their own respective careers.

Measure taken as remedial measure

 Good customer accommodation

 Practicing fair market price
 Good storing of products
 Technology related method of controlling hazards like protecting fire

5. Financial analysis
5.1. Start-up capital
To start the business activity the business encountered with different types of costs.
Totally the cost of the business includes the following:-

 The cost of busing different cosmetics

 The cost of house (rent)
 The cost of working clothes
 The cost of living permanent employees

The supplementary financing is required to being work on site preparation,

products purchases, and to cover expense in the first year of operations. Items and
cost analysis of 1st round starting operation is listed as follow:

No Item of name Quantity Unit price in Total cost

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 birr in birr

1 Shoes 72 310 22,320

2 Trousers 100 375 37,500

3 T-shirt 84 120 10,080

4 Jacket 55 400 22,000

5 Shirt 92 280 25,760

5 Employees 4 (1200*2*12) 48,000

+
(800*2*12)

6 Rent 65,000

7 Miscellaneous - 3,000 3,000

cost

Total 233,660

5.2. Sources of start-up Capital

The sources of starting capital are:-

The business plan is going to obtain funds amounting 42,000 birr by borrowing
from microfinance, Birr 120,000 from personal capital and Birr 53,000 from close
relatives, government, and NGOs.

5.3 Expected sales and profit

Here are the expected sales, profit, cost and NPV in the coming few consecutive
years.

Year Items Expected sales Expected cost Expected net profit

incurred

1st year Shoes 460 43000 47,000

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 Clothes 1780 71000 75,000
Total 2240 114000 122,000
Total cost 114,000
NPV @ 10% 7272.72
2nd year Shoes 1300 93,5000 94,000

Clothes 2800 119,500 120,000

Total 4100 213,000 214,000
Total cost 213,000

NPV 10 % 8099.2

3rd year Shoes 3000 160,000 175,000

Clothes 3700 243,000 250,000
Total 6700 403,000 425,000
Total cost 403,000
NPV @ 10% 24,628.1
Given NPV= ∑𝑛𝑡=0 b − C where, B=profit, C= cost

Generally, in all years NPV are greater than 1 the project is feasible.

Income statement

Smart boutique

Income statement

January 14, 2018

Revenue

Sales……………………………………………………………………….215,000

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Expense

Salary
expense………………………………………………………………………48,000

Interest
expense…………………………………………………………………….16, 000

Advertising
expense……………………………………………………………………….9, 000

Miscellaneous
expense………………………………………………………………………3,000

Rent expense………………………………………………………………….65,000

Total
expense……………………………………………………………………...141,000

Gross
profit…………………………………………………………………………74,000

Balance sheet

Smart boutique

Balance sheet

January 14,2018

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Asset Liability
Cash-----------------------80000 Account payable-----------46000
Fixed asset------------------87000 Note payable---------------22000
Total asset-----------------167000 Total Liability………………..68000
Capital
Capital -----------------------99000
Total liability and capital -----167000

Cash flow

Smart boutique

Cash flow statement for year 1

November 31 2018

Cash Budget Total

Beginning cash balance-------------------------------------80000

Cash collected from customers-----------------------------68000

Total cash available for need 148000

Operating Expense------------------------------------------76000

Withdraw-----------------------------------------------------7300

Total cash needed 63172

Cash Excess deficit ------------------------------------------64700

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Appendix

Agreements of the partnership

1) The means of acquiring the initial capital to start the business venture
from financial institution (micro finance) ,personal capital and other
relatives
2) The share and power of the business given will be based on their
contribution to business venture.
3) Any profit that the business venture gain or any loss incurred will be
distributed to each partners based on their share in the business venture
i.e. proportional to their capital contribution.

4) The partners will free to exit from the business at any time if they fulfill
all requirements of the above agreements.

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The products and shop of SMART boutique

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Shop design

Boutique shop

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