Dilla university

Collage of Agriculture and Natural Resource

Management.

Department of :Agricultural Economics.

A business plan on :-Coffee manufacturing and processing.

Course title: Entrepreneurship and small Business
Course code:-Agec3102
Prepared by:-

1. Hikma Sultan ……………………………………………….043/15

2. Hizkel Mada…………………………………………………044/15
3. Jemila Dereja……………………………………………….045/15
4. Kedamawit Minase…………………………………………047/15
5. Kelem Misawey…………………………………………….048/15
6. Solomon Tadesse……………………………………………078/15

Submitted to:-Eyasu.K

submission date/ January ,23,2018

 Table of content
Content Page
1. Executive summary……………………………………………………….1

2 .Business description……………………………………………………….2

2.1.owner description……………………………………………………..2

2.2.mission………………………………………………………………..2

2.3.vision…………………………………………………………………2

2.4. objective of the enterprise…………………………………………..3

2.4.1.short term objective……………………………………………3

2.4.2.long term objective…………………………………………….3

3.Service description…………………………………………………………….3

3.1.Market research and analysis…………………………………………….3

3.2.SWOT Analysis………………………………………………………….3

3.2.1.Strength of competitor………………………………………………4

3.2.2.Weakness…………………………………………………………….4

3.2.3.opportunity…………………………………………………………4

3.2.4.Threat………………………………………………………………4

4.Marketing plan……………………………………………………………………4

4.1.Pricing……………………………………………………………………5

4.2.Promotion strategy………………………………………………………5

4.3.Place……………………………………………………………………5

4.4.Product description………………………………………………………5

5.Production plan…………………………………………………………………6
6.The Business Budget………………………………………………………..6

7.Management plan……………………………………………………………10

8.Financial plan……………………………………………………………….11

8.1.Start-up financing………………………………………………………11

8.2.Financial documentation………………………………………………11

8.2.1.Profit and loss statement…………………………………………..11

8.2.2 First year Balance sheet of business………………………………12

9.Break Even Analysis…………………………………………………………..15

10.Assessment of Risk…………………………………………………………..15

11.Exit Strategy…………………………………………………………………..16

12.Appendix………………………………………………………………………16
1 EXECUTIVE SUMMARY
Yirga chafe coffee processing enterprise is forecasted to be one of the fantastic coffee
processing enterprise in Dilla town with a local interest of the society around the town. The
location of the enterprise is at Dilla . The partners followed a minimum of one year marketing
research and they looked the demand of processed coffee is highest.

The Yirga chafe coffee processing enterprise offers high quality and quantity of processed
coffee for users and customers. The product of the business will be available for sale at home and
also sold to wholesalers and retailers who sells in the other market. From the beginning
business enterprise the market for processed coffee is not limited in local market. This enterprise
is aiming at serving the society. It is forecast-ed to fulfill the needs of society who have a great
desire on using processed coffee. Our beginning capital is about 2,000,00.birr for purchasing
fixed asset and for the operation of different work of our business need 522,000 birr with total
birr of 2,522,000 From this amount we get 522,000 birr from commercial bank of Ethiopia
through loan and its loan repayable over one year.As owners our commitment is to take personal
accountability for all financial debt.

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 2 .Business description
The name of this business is Yirga chafe coffee processing enterprise which will start as a
business in Dilla town, kebele 10/11. As we observed in this area there are few competitor
which supply both qualitative and quantitative processed coffee products.Also in this area we
observed that most of the communities population of this kebele are students and the other
includes those who are busy on working day and night.So such types of individuals highly need
the product of our processed coffee.
2.2 Mission.
 Our business enterprise mission is utilizing available resources and providing with due
service adopting to the dynamic environment throughout the operation, providing afford able
living standard to its workers and supplying high quality of processed coffee suitable for
the society.
2.3.Vision
 Our vision is not only having a profit but also satisfiying our customers equally as much as
possible.
 Considering employees welfare,giving them training , treat them equally and rewarding
employee that works hardly as the part of our success.
2.4.Objective of the enterprise
Our business has two main objectives for the first two years this are:
2.4.1 short term objective.
 Solving the time wastage problem in processing coffee.
 Providing a quality processed coffee for the market.
 Getting the average estimated sales per year.
 Maximize coffee supply .

2.4.2.Long term objectives.

 Open on other places where processed coffee demand is high.

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 Expanding our products to nighbor countries.

 To create employment opportunity to the surrounding community and others.

 To generate maximum profit by assuming any risk.

3 .Service description

3.1.Market research and analysis

We conducted market research and built a thought around our customer,by our survey Dilla
comprises a huge number of people live around and some of them are (self employed and
investors) run their business and government employees those who does not run their business
such as bankers,students,lectures,doctors… therefore there are a great competition between them
especially the investors and self employed workers ,those competitors have their own strength
and weakness.

3.2.SWOT Analysis

It shows the strength ,weakness,opportunity,and threat of the business.

3.2.1 strength of the competitors.

Our competitors have a greater access of information about the market activities.The other
strength is they have worked for long period of time than us.Also they have a greater financial
capital.

3.2.2.Weakness

Their main weakness is they do not use a most preferable machines that process a coffee in high
quality also they do not add any value when they process it.their other weakness is they
purchase the raw materials with high price and this lead to set a high price to their product but
our enterprise aims to sell its product with secure price .

3.2.3.Opportunity

 Low number of competitors in the area.

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 High demand for processed coffee in the area.

 Utilization of standard technology.

3.2.4.Threats

 The high increment of house

 Will there be shortage in supply of raw materials

 Will there be a lower demand in consumers

 Will there be increasing tax

 Will there be an inflation

4.Marketing plan

In general we provide domestic consumption service for our customer with effective price better
ethics and comfortable place and we add some future for the quality of the product.

4.1 Pricing

The basis of our coffee price is the market price and cost benefit analysis. Therefore due to
presence of small competition the business can’t set high price. Even if extension of the business
operates at lower cost, It would not price below the market price just because of the purpose
result coffee processing providing business enterprise. As a result processed coffee providing
business enterprise set the price of processed coffee as the market that is it fluctuates over the
time with market price.

4.2 Promotion strategy

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The promotion activity will be done once in a couple of month through notices to be posted at
public center and also through

 News papers and magazines

 Radio
 Tv
4.3 Place

Dilla comprise a huge numbers of peoples lives around. Consequently our out put will be
consumed more in this area. We hope to be located to this area because of the potential of the
market.

The location is preferred for the following reasons

 We can get raw material from different areas.

 We hope to get a large number of users in selected area.
 Addis Ababa town is the central place to distribute product.
4.4.Product description

Our main products that we wish to supply are fresh coffee, washed coffee, unwashed coffee
roasted coffee and grinned coffee.

5.Production plan

N-o Types of Amount in kg Unit price per Total selling Annual

product month price per selling price
month

1 Fresh 2000 70 140,000 1,680,000

2 Washed 3000 100 300,000 3,600,00

3 Unwashed 2000 90 180,000 2,160,000

4 Roasted 3000 120 360,000 4,320,000

5 Grinned 4000 150 600,000 7,200,000

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TOTAL 1,580,000 18,960,000

6, The Business Budget

The following tables that shows the amount of capital that we invested on raw materials for the
attainment of our business.:-
Starting capital of the business.

No Investment cost

1 Place of production

2 Production house 1,000,000

3 Manual production machine 1,000,000

Gross investment 2,000,000

Expense of operating

4 Worker fee per month 2000

5 Expense of raw material per 520,000

month

Different expense per

month

Total operating expense 522,000

Total starting capital 2,522,000

List of investment conditions

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No Kind of Identification Quantity Unit price Total price
investment

1. Green coffee Machine 1 2200 2200

loader
2. Coffee Machine 2 841,458 1,682,916
Roasting
machine
3 De- Machine 1 23,850 10500
stoner(stone
separator
4. Roasted Machine 1 10,500 3200
coffee
mechanical
loader
5. Roasted coffee Machine 1 2800 2800
silo
6. Coffee grinder Machine 3 3100 9300

7. Auto burner Machine 1 7800 7800

8. Ground coffee Machine 3 4,200 12,600

screw loader

9. Mixer and Machine 1 8400 8400

coffee silo
10. Main control Machine 1 10,100 10,100
panel
11. Automatic Machine 1 118450 118450
vacuum

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12. Executive Tool 2 5000 10,000
table
13. Executive Tool 2 2500 5000
chairs
14. Tables and Tool 12 2800 33600
chairs
15. Guest chairs Tool 20 500 10000

17. Filing Tool 3 1308 3924

cabinets
17. computer Machine 4 9850 39400

18. Printer Machine 2 4875 9750

19. Fax Machine Machine 1 4500 4500

Total 2,000,000

Raw materials ,which is necessary for our production are:-

Kind Amount Unit price Total cost

Coffee 7,000kg 70 490,000

water 6,000

Light 10,000

Special expense 5000

Total raw material 520,000

Labor force 5 3 of them with 6000 22,000

And two of them with

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 3000

Total 522,000

Total starting capital 2,522,000

Source of capital

No kind source Amount

1 Own Saving 2,000,000

2 Credit Commercial 522,000

bank of Ethiopia

Total capital 2,522,000

The amount we get from CBE will be paid in one year with no interest rate.

No Level of Responsibilit Level of Monthly Total

worker y education payment

1. Technician Producer and Degree 6000 6000

monitor

2. Technician Producer and Degree 6000 6000

monitor

3. Operator Operating on Degree 6000 6000

machines

4. Packer Packing Diploma 3000 3000

5. Driver Giving home Certificate on 3000 3000

to home driving(drivin
service g license)

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Tax rate:- 5% of Gross profit.

7.Management plan
Abyssinia coffee manufacturing and processing enterprise is a partnership
organization.partnership are founders of Abyssinia coffee manufacturing and processing
enterprise.It is owned and operated by 6 persons,it require simple organizational structure b/c it
is not that much bigger.This organizational structure includes all owners to make major
management decision and to monitor the business activity easily. So,
…….Manager
……Vice manager
…Supervisor
……Accountant
…….Sells man

The role of the managers will be managing the overall activity of the business that is

 Making decision regarding the state of business in the future

 Raising capital contribution in the future
 Evaluating the quality of the products /processed coffee
 Controlling the performance of workers
 Making decision regarding from where coffee should be purchased
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 five workers. the three are responsible for
day to day activity of the business.
8.Financial Plan
The primary element of our financial plan is improving the factors that create,Stabilize and
increase our cash flow.Also it helps to treat our variable costs and fixed cost.The financial plan
depends on the assumption of a strong economy without major recession.

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8.1 Start -up funding
This business plan is prepared on financial amount of birr 2,5,2200 in order to obtain birr
3,000,000of retained earning in the first year.The following sections lay out the detail of our
financial plan for the next two years.
8.2 Financial documentation
8.2.1.Profit and Loss Statement
The most important assumption in the projected profit and loss statement is the gross margin.the
business will develop its customer base and reputation and the growth will pick up more rapidly
towards the second years of business .

 Income statement of Abyssinia coffee processing and manufacturing

business plan for year 1

Sales of product…………………………18,960,000
Cost ……..………………………………1,000,000
Gross profit…………………………….17,960,000
Operating expense……………………4,000,000
Income before tax……………………3,500,000
Tax payment………….1,000,000
Income after tax ……….2,500,0000
Dividends………500,000
Retained earnings……..2,000,000
8.2.2.First year Balance sheet statement of business
The following is the beginning balance sheet of Yirga chafe , statement of balance sheet for the
beginning year 2009.
Asset
Current asset
Cash…………522,000
Account receivable………0.

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Total current asset ……..522,000
Fixed asset
Housing………………..1,000,000
Equipment………………1,000,000
Total fixed asset…………2,000,000
Total asset……………2,522,000

Liability and owner equity

Liability
Current liability…………….522,000
Note payable……………….…..0
Total liability………. ……………………….5,22000
Owner equity…………………………………2,000,000
Total liability and owner equity………………2,522,000
 First year cash flow statement of Yirga chafe coffee manufacturing and
processing business plan for year 1.
Cash inflow from operating activities
Net income………………………….2,000,000
Depreciation expense………..0
Account payable ………………522,000
Net cash flow from operating activities……..2,574,200
Subtract
Cash flow from investing activities
Sale of equipment……………..0
Purchase of equipment……….1,000,000
Net cash flow from investing……..1,574,200
Cash flow from financing activities
Payment for dividends……………………..500,000
Net cash flow from financing activities……500,000
Note payable……………………………..0
Net change in cash…………………………813,200
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Asset 1st year

Sale of product 18,960,000

Cost of goods sold 1,000,000

Gross profit 17,960,000

Operating expense 4,000,000

Income before tax 3,500,000

Dividend earning 500,000

Retained earning 3,000,000

Balance sheet statement at the end of 1st

Asset 1st

Cash 522,000

Account Receivable 0

Housing 1,000,000

Equipment 1,000,000

Total Asset 2,522,0000

Current liability 522,000

Owner Equity 2,000,000

Total liability and owners 2,522,000

Equity

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Cash flow statement at the end of 1st

Asset 1st

Net income 2,000,000

Depreciation 0

Account Payable 522,000

Net cash flow from operating 2,574,200

expense activities

Sale equipment 0

Purchase equipment 1,000,000

Net cash flow from investment 1,574,200

activities

Payment of dividends 500,000

Note payable 0

Net cash flow from financing 500,00

Net change in cash 1,074,200

9.Break Even Analysis

The break even analysis show what we need to salary our service to meet cost.
Benefit obtained from the project:-

No Project Cos t Income Benefit Discount Net benefit

year factor 5%

1 1st year 1,000,00 3,000,000 2,000,000 0.23 460,,000

10.Assessment of risk
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The expected risk to the business may be loss of income from burnt coffee during roasting may
happen in the future; hence no one is certain about the future. The other loss is attributed to
fluctuation of market prices (inflation, deflation and devaluation) and also reduction of market
share due to the entrance of new competitors.

11. Exit strategy

Our enterprises may inter a higher loss if the expected risks become severe .at this time our
enterprises will have two options. First, we will analyses other places where the processed
coffee market is good and secondly if this strategy is impossible searching other business
with new idea.

12. Appendix

CV of the owners

No Name Sex Region Nationality Educational status

1 Hikma Sultan F Addis Ethiopian BSC degree in Agricultural
Economics
Ababa
2 Jemila Dereja F worabe Ethiopian BSC degree in Agricultural
Economics

3 Kedamawit Minase F sidama Ethiopian BSC degree in Agricultural

Economics

4 Kelem Misawey F Amhara Ethiopian BSC degree in Agricultural

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 Economics

5 Hizkel Mada M wolayta Ethiopian BSC degree in Agricultural

Economics

6 Solomon Tadesse M Amhara Ethiopian BSC degree in Agricultural

Economics

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