UNIVERSITY

COLLEG OF BUSINESS AND ECONOMICS

DEPARTMENT ECONOMICS
INDIVIDUAL ASSIGNMENT

Business plan on Best Bakery

COURSE TITLE - ENTREPRENEURSHIP

COURSE CODE-MGMT 3211

Set by:

ID.BER/393/11

Submitted To:

Submission Date:

02-12-2021
 Table of Contents

1. Executive Summary ………………………………………………………………………….1

1.1 Opportunity …………………………………………………………………………...….1

1.1.1 Problem ……………………………………………………………………..….. 1
1.2 Solution …………………………………………………………………………………..1
1.3 Market ……………………………………………………………………………………1
1.4 Competition …………………………………………………………………………..….1
2. Introduction ……………………………………………………………………………….…2
2.1 Background of Best Bakery………………………………………………………………2
2.2 Objectives of Best Bakery ……………………………………………………………….2
2.2.1 General objective ………………………………………………………….…….2
2.2.2 Specific Objective …………………………………………………………..…..3
2.3 Mission of Best Bakery………………………………………………………………..….3
2.4 Vision of Best Bakery ………………………………………………………………..….3

3. Considerations In Selecting The Project…………………………………………………...…3

4. Location of project……………………………………………………………………...…….4
5. Sources of capital……………………………………………………………..........................5

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6. Project layout/ Infrastructure.……………………………………………………………..….5
7. Advertising Strategy ………………………………………………………………………....6
8. Financial Analysis……………………………………………………………………….……7
8.1 Building……………………………………………………..……………………………8
8.2 Plant machinery and material costs for production…………………………………...….9
8.3 Costs of supply…………………………………………………………………………...9
8.4 Manpower and Supplies expense ………………………………………………………10
8.5 Utility expense………………………………………………………………………….10
8.6 Annual costs………………………………………………………………………….…11
9. Market Analysis……………………………………………………………………………..11
9.1 Market size…………………………………………………………………………...…11
9.2 Products……………………………………………………………………………...….12
9.3 Demand Forecasting………………………………………………………………...…..12
10. Project Management....… ....................................................................................................14
10.1 Organizational structure………………………………………………………….……15
10.2 Major duties and responsibilities………………………………………..………….….15
11. Project evaluation………………………………………........................................………...21
12. Environmental feasibility…………………………………………………………………....22
13. Risk assessment……………………………………………………………………….….…22
14. Project implementation …………………………………………………………………......23
15. SWOT Analysis…………………………………………………………………………..…23
15.1 Strength……………………………………………………………………………..….23
15.2 Weakness…………………………………………………………………………..…..24
15.3 Opportunity………………………………………………………………………...…..24
15.4 Threat………………………………………………………………………………......24
16. Conclusion…………………………………………………………………………….….....24
17. Acknowledgments……………………………………………………………..……………26

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 1. Executive Summary

1.1 Opportunity

1.1.1 Problem

There is a shortage of freshly baked bread and pastries where customers can get
high quality in Wolkite town and around.

1.2 Solution

Best Bakery offers a broad range of bread and pastries products, all from high
quality row materials. Best Bakery provides to all of its customers by providing
each customer bread and pastries products made to suit the customer, down to the
smallest detail.

1.3 Market

Because Wolkite has relatively location advantage bread and pastries products are
very much in demand. Throughout the year, bread and pastries products are in
significantly high demand. Much of the day’s activity occurs in the morning hours,
with a relatively steady flow for the remainder of the day.

1.4 Competition

Competition in the local area is somewhat scarce and does not provide nearly the
level of product quality and customer service as Best Bekery. Local customers are
looking for a high quality product in a relaxing atmosphere. They desire a unique,
exclusive experience

2. Introduction

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 2.1 Background of New Bakery

The birth date of Top bakery was in 2009 E.C. The establishment of and
construction of new bakery is in Wolkite town, Selamber kebele as a basis for
production and distribution of bread. In this area, the idea of establishing this
business is penetrated in many of owners mind and appropriate to establish the
business. From the beginning the business is formed in the form of partnership
with equal capital accumulations. The accumulated capital; used for beginning the
business is 1million ETB which 80% is funded by partners and the remaining 20%
is borrowed from other financial institutions as a loan.

Best bakery (BB) engaged in providing quality product at fair market value for its
clients. From the beginning the business attempt to distribute its products through
different distribution center that it will open. During the first establishment, the
business purchases necessary raw materials from surrounding factories.

2.2 Objectives of Best Bakery

2.2.1 General objective

Generally, Top bakery aims to:-

 Increase its customers and production level throughout times to

increase its return.
 Satisfying the customers wants as an essential for the business
survival and competition.

2.2.2 Specific objectives

Specifically, the Best Bakery aims to:-

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  Provide the product through different distribution center
 Increase the efficiency of current resource
 Offer a quality services attached with selling product

2.3 Mission of Best Bakery

 To provide quality product at fair market price/value by using quality raw

material supplied by surrounding manufacturing companies.
 To assess the change in current demand and satisfy the customers need to
increase the business profit.

2.4 Vision of Best Bakery

 To build the flour factory in 2015 E.C to improve the cost of

production which currently purchased from other factories and to
save different production cost incur associated with transportation.
 To open a new plant in surrounding small towns in order to ensure
the profitability of the business.

3. Considerations in Selecting the Project

Bread still remain one of the more common popular and stable food that you would find
in Ethiopia today. Bread is consumed by all - the old, young poor and rich consume bread
on daily basis. Bread production still remains one of the best investment venture one can
think of setting up in Wolkitw town. Irrespective of your location, there is always people
that want to buy and eat bread. Bread is regarded as a food for the masses. It is taken as
breakfast in many houses
Finally, the project will help to increase the revenues of owners.

The main factors in selecting the project are:-

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  The current unbalance between the growth of town and demand for
consumption of bread.
 The Location of former bakery business is mostly concentrated at
the center of the town. So, many people lived around the town face
that has shortage of bread and the existence of enough demand.

4. Location of Project

The project will be located in Wolkite town in Selamber kebele. This location is
selected because of the following considerations:-

 In the selamber there are high populations and low bakeries. This high
population in turn brings the increase of demand for projected business.

 This location will help to approach/easily get/ the raw materials from the
nearest towns/area when the business is constructed its own factory in the
near future.

 Decrease current competitions highly observed in the town.

 Because of easily getting of the license from the government. This will be
a helpful for the business to be free from any problems will occurred if the
business start to build its own factory.

5. Source of capital

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From the beginning of establishment the project is financed through individuals`
investment and loans from Banks. Each partner contributions for the establishment
of the project presented in the following table:

Partners’ investment

No. Partners name ETB contributed to the project

The remaining sources of capital (i.e. 96,000.00) which is 20% of the total capital
funded from banks as loan.

6. Project Layout (Infrastructure)

The surrounding of the Top bakery project will be set in an attractive layout.

That means the buildings position for the convenience for management staffs, easy
to safeguard the surroundings for guards and safe to the Janitors to clean.

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Layout

S/N ITEM SIZE QUANT. PURPOSE

1 Administrative office 10m2 1 For administration &

management

2 Baking bread room 180m 2 For baking/preparing

bread

3 Bath room 20m 2 For Washing

4 Material storage class 100m 1 For storing flour and

other materials

5 Class for guards 12 1 For keeping/safeguard

6 Staffs for employees 60 1 For resting during

tiredness of employees

7 Class for launch 40 1 For providing food for

employees

7. Advertising Strategy

It’s important to develop an advertising strategy that will work most effectively
with the target market. It will be used social media to create an online presence for
the business, Or It will use newspapers and flyers. In addition to this, the business
organization will use the following advertising strategy:

 Preparing business card

 Preparing brochure

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  Participating in different bazaars
 Wolkite FM 89.2 Radio
 And other social interactions

8. Financial Analysis

The project will start the operation with Birr 1million. Out of this 80% of the total
amount of investment is financed by the owners (384,000.00) and 20%
(96,000.00) is from banks as a loan which will be paid for the next five years.
Most of this investment will expanded on planting the business for future rather
than increasing short term gain of owners. This means some fixed asset of the
business may use high portion of the investment.

The investment arrangement and expenditure expected is preserving on the

following constructive table with its respective category.

Financial analysis

S/N Item/description Measurement Quantity Unit Total price

price
1 Land purchase 60X30 - - 76,400
2 Land preparation M - - 2,000
3 Building M2 4 - 120,000
4 Plant mach.&equip. - - - 25,000
5 Man power & salary - - - 110,400
6 Supplies - - - 10,000
8 Working capital - - - 110, 600
9 Utilities - - - 15,600
10 Other costs - - - 10,000
TOTAL 480,000.00

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8.1 Building

The proposed project will consist of four different buildings. These are buildings
for the purpose of planting machinery, buildings for the purpose of storing
purchased materials, buildings for management and staffs and buildings for other
purpose (i.e. showering house, bathrooms, etc.).The investment arrangement for
these buildings is presented as follows:-

S/N Description Measurement Quantity Unit Total price

/Items/ price
1 Cement Pkt 150 400 15,000
2 Roofing sheet M2 200 120 4,000
3 Nail Kg 10 40 400
4 Doors M2 10 1000 3,000
5 Windows M2 15 400 6,000
6 Labor costs - - - 10,000
7 Electric mainten. - - - 3,000
8 Design costs - - - 10,000
9 Water pipe - - - 10,000
10 Fire controller - - - 38,600
11 Other related material - - - 20,000
cost
Total 120,000.00

8.2 Plant machinery and material costs for production

S/N Description Quantity Unit price Total price

1 Gills 3 3000 9,000
2 Mabukia/ baldi 5 150 750
3 Plantary mixer 3 2000 6,000

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4 Flour sifter 2 500 1,000
5 Working tables with 3 400 1,200
aluminum top
Total 17,950.00

8.3 Cost to supplies

S/N Description Measurement quantity Unit price Total

price
1 Wheat Flour Kg 200 650 13,000
2 Salt Kg 200 3.5 700
3 Oil/leaving agent Kg 5 50 250
4 Yeast Kg 20 30 600
5 Edible color & Kg 10 15 150
Flavor
Total 14,700

8.4 Man power and supplies expense

S/N Position Qualification Experi No. Monthly Annual salary

ence req. salary
1 G.manager BSc in production 2 1 2,500 30,000

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2 Purchaser Diploma in 3 1 1,500 18,000
purchasing
3 Sales Diploma in 3 4 1,500 18,000
person marketing
4 Baker 10th grade& above 2 4 1,000 12,000
5 Cashier Diploma in 2 1 1,500 18,000
accounting
6 Janitor 6th grade and above 0 1 500 6,000
Guard 8th grade and above 4 1 800 8,400
Total salary expense 110,400.00

8.5 Utility expenses

No. Description Measurement Consumption Yearly cost in birr

per month

1 Water Liter 10,000 4,800

2 Electric power Kw/h 15,000 7,200

3 Telephone 250 3,600

Total 15,600.00

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8.6 Annual costs

Salary expenses………………………………………………..110,400

Interest expenses (96,000x14%).....…………………..13,440

Supplies expenses………………………………………………14,700

Utility expenses………………………………….15,600
Depreciation expenses:
Building………………………………......4,000
Machinery and equip…………………...5,000
Transportation expenses…………………………,,,9,500
Rent expenses………………………..……………7,000
Total ………….179,640

Depreciation expense- building= Cost_-salvage value = 120,000-0

=4,000
Estimated useful life 30

Depreciation expense- machinery & equip.=25,000-0 = 5,000

9. Market analysis

9.1 Market Size

In the recent period, the bread market showed a better growth rate than in previous

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years.
This was mainly because retail price cuts were fewer and less stringent, but it was
also because of the growing importance of added-value products, especially in the
specialty bread and bakery products sectors.

9.2 Products

Although the bakery products market grew faster than the traditional bread sectors
and it to became the target of price cuts, and growth slowed considerably in the
past. However, there was something of a recovery and its share of the total bread
market showed an increase through time.
This project, the New Bakery, is planned to satisfy the current needs and wants of
the people around the area which there shows a shortage of bread suppliers in the
near area. The demand for bread shows an increase through time. Because of this
reason we prefer to start the New Bakery project in this area/place. my sources of
revenue will comes from the daily sale of bread.

9.3 Demand Forecasting

we expect/forecast our sales by using a quantitative method called trend

projection/time series method that enables us to predict the next annual sales.
Depending on this trend we try to forecast for the next two or more years sales as
follows:

Years Estimated annual revenues

(00,000)
2009 1.728
2010 2.34
2011 2.52

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 2012 3.06
2013 3.60

This trend projection method uses the formula that is a linear relationship between
annual sales volume and the year that we can expect.

Y=a+bx where, x- no of years

a -intercept relationship
b- Slope relationship

X Y X2 Xy
1 1.728 1 1.728
2 2.34 4 4.68
3 2.52 9 7.56
4 3.06 16 12.24
5 3.60 25 18
x=15 y=13.23 x2=55 xy=44.21

Computation for the values of a and b:

a = x2(y)-x(xy) = 55(13.23)-15(44.21) = 64.65 =1.29

nx2-(x)25(55)-(15)2 50

b = nxy-x (y) = 5(44.21)-15(13.23) = 22.6 = 0.45

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 nx2-(x)25(55)-(15)2 50

So, here, y=a+bx

Y6 = 1.29 + 0.45(6) = 3.99
This means that the next 2011 annual sales will be 3.99x100,000= 399,000
Y7 = 1.29 + 0.45(7) = 4.44
Annual sales for 2012 will be 4.44x100,000 = 444,000
Y8 = 1.29 + 0.45(8) = 4.89 X 100,000 = 489,000

10. Project management

The proposed project will have consolidated management system controlled by the
owners of the project. This enables us to get the profit that we estimate and
minimize the cost of administrative through replace other employees being hired
from outside. Besides, to business owners other employees will be hired on
permanent and contract basis.

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10.1 Organizational structure

General Manager

Finance dep`t

Purchasing dep`t Selling dep`t

Janitors Production dep`t

Guards

Bakers Other employees

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10.2 Major Duties and responsibilities

From the beginning the major activities performed in organization will expect to
done by the owners to minimize the related initial cost and to increase the
profitability of the business.
General Manager will be responsible to lead and control all other employees to
attain the goal of the organization. The purchaser will be responsible for search
market and present the supplies with reasonable market price.

The sales person will be responsible for selling the prepared product by searching
and attracting a good market segments to increase the share of market. Finance
department will be responsible to prepare and follow up the business budget and
periodic control of cash inflows and out flows. It also responsible to pay the
employee`s salary and wage in time and in accurate ways. These all are the major
responsibilities related to administrative department.
The other major duties are related to production department. Under this
department there are responsibilities to prepare and bake a quality and attractive
product for customers. They will be responsible for the use of the organization`s
input materials and other equipment in proper ways.
In addition to these responsibilities, other employees work in organization will
have different responsibility related to their jobs.

These are the responsibility declared by the organization`s administrative to

increase the earning of the business and to ensure the benefit of employees. These
duties are the responsibilities given to guard, janitors and other contract

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employees. Guard will be responsible for keeping the security of the surrounding
of the business organization. Janitors will be responsible to keep the organization
clean and make the compound attractive/ maintain the attractive site in the
organization/. They are also responsible for the proper use of the organization`s
property in a cleaned and safety ways.

Generally, imposing these all responsibilities to each individual is important to

keep the business strength and increase the earning of the business and benefit of
employees too.

Best Bakery
Income Statement
For The Year Ended Sene, 2009-2013

2009 2010 2011 2012 2013

Revenues 172,800 234,000 252,000 306,000 360,000
Expenses:
Salary expense 110,400 110,950 120,500 125,500 127,800
Interest expense 13,440 14,100 15,000 16,000 16,950
Supplies expense 14,700 15,000 16,000 16,850 17,100
Utility expenses 15,600 15,750 16,100 16,150 16,900
Depreciation exp:
-Machinery 5,000 5,000 5,000 5,000 5,000
-Building 4,000 4,000 4,000 4,000 4,000
Travel expense 9,500 11,050 12,050 12,900 13,500
Rent expense 7,000 7,000 8,000 8,550 9,000
Total operating 179,640 182,850 196,650 204,950 210,250
expenses

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 Operating income (6,840) 51,150 55,350 101,050 149,750
Tax 20% -0- 10,230 10,690 20,210 29,950
Net income
(6,840)
40,920 42,760 80,840 119,800

Top Bakery

Opening balance sheet

Meskerem 1, 2009
Assets:
Cash………………………………………………….…289,760
Investment for:
Supplies………………..………………………….14, 700
Machinery..........................................................25,000
Utilities…………………………………….……...15,600
Land……………………………………….……....78,400
Building……………………………………………120,000
Others ……………………………………………..10,000
Total assets………………………………………..……….480,000

Liabilities:
Accounts payable…………………………………………..96,000
Owner`s equity:
Owner`s capital………………………………….……384,000

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 Total liabilities and owner`s equity………………………480,000

New Bakery
Statement of owner`s equity
For the year ended sene, 30,2009

Balance sheet meskerem1, 2009 capital…………………………384,000

(-) net loss year sene 30, 2009…………………………………….(6,840)
Balance on sene 30, 2009…………………..…………………377,160

Top Bake

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 Balance sheet
Sene, 30, 2009
Assets:
Cash …………………………………………..206,260
Investment for:
Land……………………………………………78,400
Supply …………………………………………14,700
Machinery………………………………………25,000
(-) accu.deprn…………………………………..(5,000)
Building………………………………………….120,000
(-) accu,deprn……………………………………(4,000)
Utility……………………………………………..15,600
Others …………………………………………...15,600
Total assets……………………………………466.560

Liabilities:
Accounts payable………………………………………………82,560
Owner`s equity:
Capital ………………………………………………..……….384,000
Total liabilities and owner`s equity……………………………466,560

Top Bakery
Statement of cash flow
For the year ended sene 30,2009

Source of cash 2009 2010 2011 2012 2013

Earnings before interest 20,280 65,250 70,350 117,050 166,700
and tax
Depreciation machinery 5,000 5,000 5,000 5000 5,000

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& equip.
Depreciation building 4,000 4,000 4,000 4,000 4,000
Total source of cash 29,280 74,250 79,350 126,050 175,700
Cash out flows
Payment of interest 13,440 14,100 15,000 16,000 16,950
Payment of tax 0 10,230 11,070 20,210 29,950
Payment of long-term 19,200 19,200 19,200 19,200 19,200
loan
Total cash out flows 32,640 43,500 45,270 55,410 66,100

Surplus/deficit (3,360) 30,720 34,080 70,640 100,600

Opening balance 0 (3,360) 27,390 72,660 143,300

Cash ending balance (3,360) 27,390 72,660 143,300 243,900

11. Project evaluation

Years Cash inflows Cumulative cash inflows
2009 (3,360) (3,360)
2010 27,390 24,030
2011 72,660 96,690
2012 143,300 239,990
2013 243,900 483,890

Payback period (PBP) =Years Before full recovery + unrecovered cost

Cash flow in next plan

= 4 + 269,300-239,990 = 4.12
243,900
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PBP= 4 years and a month. This means that our initial investment cost will be
covered after 4 years and 1 month cash inflows.

Net present value (NPV)

Years cash inflows PV of cash flows @ 10%
2009 (3,360) (3,360)x0.909091=(3,054.55)
2010 27,390 27,390x0.826446=22,636.4
2011 72,660 72,660x0.751315=54,590.55
2012 143,300 143,300x0.683013= 97,875.76
2013 243,900 243,900x0.620921=151,442.63
Total PV of cash inflows……………..……323,490.79
(-) PV of cash outflows…………..…………..(269,300)
Net present value……………………….54,190.80
Therefore, this project is feasible because it has a NPV of greater than 0 or above
the equilibrium point.

Benefit cost ratio (BCR)

BCR = PV of cash inflows =323,490.8 =1.2
PV of cash out flows 269,300

So, the profit is greater than or higher than one.

12. Environmental feasibility

As it is known environmental issue is the current critical things which require

detail study whenever any business is attempt to established. This is helpful to
assess the impact of that project on the environment as well. My project is planned
to engage in production process. Thus, our project is highly concentrated on the
use of electric power/energy to prepare/bake bread. This enables us to minimize

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the pollution that our business can cause to the environment if we use other
sources of energy such as wood burning and use of kerosene. In addition to this
advantage the use of the source of power saves the product that our organization
can produce in different ways. In fact, bakery project doesn`t have any noise and
other influence with environment.

13. Risk Assessment

The risks for top bakery are there might be natural and human disasters we cannot
control natural disasters because they are uncontrollable but we can control human
made disasters by creating awareness on our employees we are going to insure our
assets by giving insurance.

14. Project implementation

In fact, at this stage there are different challenges that arise from evaluation of a
project. A project evaluated it is difficult to implement but with support if other
advisory and consultants who try to evaluate my project. I can conclude our
project as follows:
 Although some fixed assets require high cost at the beginning ,it enables to
plan the project for future on good ground
 As the current earning of the project can cover all related expenses and
yield profit to owners, the length of period to cover initial cost never
frustrate the project from implementation.
When I decide to implement our project by using different methods and as I expect
some difficulties at this stage. Some of them are:

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  Technical problem related materials
 Shortage of distribution point
 Unfamiliarity with customers. This may affect the test of market during
implementation.

15. SWOT Analysis

15.1 Strength
 To prepare and bake a quality and attractive product for customer
 Increase market share by using low price strategy
 The organization use input materials and other equipment in proper
way.

15.2 Weakness
 The size of bread is small
 Lack of skilled man power

15.3 Opportunity
 It is good for poorer societies because of low price
 It is good for the society to create job opportunities

15.4 Threat
 Lack of raw material
 Lack of electric power

16. Conclusion

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As I know Bakery in Ethiopia is still a crucial and valuable activity because
countries like Ethiopia have citizens who want to consume bread more than once a
day. The needs and wants of the people for bread consumption in ADDIS ABEBA
town grow from time to time that enables us to open/start the new bakery business
project in the town especially in kebele 05.

In reality, Bakery project can cause less environmental pollution because it can be
baked by electricity. This enables us to get our license from the government of the
country and the administrative office of ADDIS ABEBA town. Thus, government
allows this kind of project to enhance the access bread for dwellers by encouraging
the newly open business firms and already existed business organizations in
Bakery project.
There are formal and informal as well as legal and illegal baking and selling of
bread in the country as a whole including rural and urban areas. However, we
prefer our project to be formal and legal one because I can distribute our product
and compete as I want without price fluctuation ( i.e. by setting my price
affordable for the people) and enables us to accumulate my own capital by provik
wants and serving them in satisfied WAYS.

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 ACKNOWLEDGMENTS

I wouldI like to thank to my lecturer for the helping on this project, and I am glad to see
the successful of my project.

THANKYOU ALL 08-2013 E.C

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