AMERICAN COLLEGE OF TECHNOLOGY

DEPARTEMENT OF BUSINESS STUDIES

MASTER OF BUSINESS ADMINISTRATION PROGRAM

FEASIBLITY STUDY ON HOME-BASED MEDICAL EQUIPMENT

RENTAL BUSINESS IN ADDIS ABEBA
A Project Proposal Submitted to the Department of Business studies of
American College of Technology as a Partial Fulfillment of requirement of
Award of Master of Business Administration
BY
Sara Mesfin
Advisor
Dr Asmamaw Atnafu

June 22, 2023

AddisAbaba,Ethiopia

1
 i. Declaration

I, Sara Mesfin hereby declare that a project work entitled Establishing Home-Base Medical Equipment
Rental Businesses in Addis Ababa submitted to The Department of Business Studies of the American
College of Technology in partial fulfillment of the requirements for the award of the Master Business
Administration is a record of original work done by me during 2023 academic year under the
supervision and guidance of _____Dr Asemamw_Mengeste_________________and it has not formed the
basis for the award of any Degree/Diploma/Associateship/Fellowship or other similar titles of any
candidate of any university.

Place: Addis Ababa

Date:08-sep-2023

2
 i. Certificate
This is to certify that the project work entitled ___________________________________
submitted to the Department of Business Administration, MBA Program in partial fulfillment of
the requirements for the award of the Master of Business Administration is a record of original
project work done by ___ during the period ____2023__academic year under my supervision
and guidance and the thesis has not formed the basis for the award of any
Degree/Diploma/Associateship/Fellowship or another similar title of any candidate of any
University and it complies with the regulation and accepted standards of the College.

Name of Advisor: ________________________

Signature: ___________________
Date: __________________

3
 AMERICAN COLLEGE OF TECHNOLOGY
DEPARTMENT OF BUSINESS STUDIES
MASTER OF BUSINESS ADMINISTRATION PROGRAM
TITLE OF PROJECT

BY: ___________________
Id Number: _________________

Approved by:

Advisor

-------------------------- -------------------------- -----------------

Name Signature Date

Internal Examiner

-------------------------- -------------------------- -----------------

Name Signature Date

External Examiner

-------------------------- -------------------------- -----------------

Name Signature Date

4
 i. Acknowledgment

First and foremost, I want to give my thanks to Almighty God for giving me the chance to enjoy
the fruits of my Endeavour.

Second, I thank my esteemed advisor ______DR ____ for his /her incessant guidance, perspicacious
thoughts, constructive criticism, and his /her great efforts to clarify things clearly and easily throughout
my thesis writing period.

Third, my profound thanks go to the department head____DR for his/her support and facilities extended
throughout this research work.

Fourth, I thank the dean of the college __________________________for the cooperation, support, and
needs rendered throughout my study period.

Fifth, I wish to express my gratitude to my friends, relatives, colleagues, and students for all the support
and help that need to be extended to me for the completion of this study.

Sixth, I also extend my gratitude to the staff members and management body of
_____________________for their cooperation in providing necessary data.

Furthermore, my indebted gratitude is expressed to all of my families and friends for their
encouragement in completing this research paper, especially for __________________________

Name:______________
Signature: _____________

Date: ----------
---------------

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Table of Contents
i. Declaration ...................................................................................................................................... 2
i. Certificate ........................................................................................................................................ 3
i. Acknowledgment ............................................................................................................................. 5
Chapter One: INTRODUCTION ................................................................................................................. 9
1.1. Background of the project ........................................................................................................ 9
1.2 Objective of the project ............................................................................................................... 10
1.2.1 General objective .................................................................................................................. 10
1.2.2 Specific objective .................................................................................................................. 10
1.3 statement of the justification of the problem ............................................................................... 10
1.4 Scope of the project ..................................................................................................................... 10
Chapter Two ; PROJECT CONCEPT .......................................................................................................... 11
2.1 Opportunity study........................................................................................................................ 11
2.2 project concept and profile .......................................................................................................... 11
2.2.1. Project concept .................................................................................................................... 11
2.2.2Preliminary study ................................................................................................................... 13
Chapter Three; Project Methods and Procedure .................................................................................... 14
3.1 project design .............................................................................................................................. 14
3.2 Type of data ................................................................................................................................. 14
3.3 source of data .............................................................................................................................. 14
3.4 population of the study ................................................................................................................ 14
3.5 Data collection methods and tools ............................................................................................... 15
3.6 sampling size ............................................................................................................................... 15
3.7 sampling design method .............................................................................................................. 15
3.8 Data analysis method................................................................................................................... 15
3.9 Schedule ...................................................................................................................................... 16
3.10 Resources Budget ...................................................................................................................... 16
Chapter Four; Project Preparation ........................................................................................................ 17
4.1 Market and demand analysis ....................................................................................................... 17
4.1.1Market Analysis: .................................................................................................................... 17
4.1.2Demand Analysis.................................................................................................................... 18

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 4.3 location and site assessment........................................................................................................ 21
4.4 Technology .................................................................................................................................. 21
4.5 organizational and human resources............................................................................................ 22
4.5.1 Organization ......................................................................................................................... 22
4.5.2 Human resources .................................................................................................................. 23
4.6 Social analysis .............................................................................................................................. 24
4.7 Economic analysis ........................................................................................................................ 25
4.8 Legal analysis ............................................................................................................................... 26
4.9 Financial analysis ......................................................................................................................... 27
4.9.1 Working capital ..................................................................................................................... 27
4.9.1 Initial investment cost ........................................................................................................... 27
4.9.3 Financial evaluation .............................................................................................................. 30
Chapter 5 conclusion and recommendation........................................................................................... 33
5.1. Project Summary: ....................................................................................................................... 33

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8
 Chapter One: INTRODUCTION
1.1. Background of the project
Home- based medical equipment rental business is a type of business that provides medical
equipment and other related supplies used in homes to manage health condition. The business
will focus on patient with chronic illness, those who are recovering from surgery and physical
disabilities. The service provides equipment such as wheel chairs, hospital beds, oxygen
equipment and other medical equipment.
In 2023 IBIS world shows that Medical equipment rental industry is fast growing industry in
world wide. Due to the outbreak of covid19 has impacted the downstream demand. Because of
these outbreaks the purchasing of medical equipment became more expensive since then this led
the rental business to its success.
Global medical equipment rental market size was valued at USD54.8 billion in 2021 and is
poised grow from 57.72 billion in 2022 to USD 92.02 billion by 2030 growing at a CAGR
(compound annual growth rate). America is one of the countries who is leading country in the
medical equipment rental industry. The revenue has been growing at CAGR of 1.7% to 4.9
billion over the five years to 2023 including estimated 0.3 growths in 2023 when profit is set to
reach 16.3%. Medical Equipment rental business in USA market size is 5 billion, number of
businesses in 1449, industry employment 22,997. As North America dominates the market
Europe is the second largest market owning mainly to increase in chronic diseases and growth in
home health care. Within Europe, Germany forecast to grow at approximately 3.6% CAGR.
Other than North America and Europe there are other geographical markets like China which
forecasts to reach the market size of 18.6 billion in the year of 2030 trailing a CAGR of 7.3%.
Also, Japan and Canada each forecast 2.9% and 3.9% respectively over 2023-2030 period.( IBIS
WORLD)

A study by the World Health Organization (WHO) found that the number of people aged 60
years and over in Middle developed and undeveloped country like Africa is expected to double
by 2050. This means that there will be a growing need for medical equipment and services to
support this aging population. The WHO also found that the prevalence of chronic diseases such
as diabetes, hypertension, and cancer is increasing in Africa. These diseases often require the use
of medical equipment, such as wheelchairs, oxygen concentrators, and infusion pumps .In
addition, many people in rural areas of Africa lack access to quality healthcare. This means that
they may need to rent medical equipment from a home-based business if they need it for a short
period of time.

Considering the need, home medical equipment rental serves great purpose in fulfilling the need
for the medical equipment in renting option with affordable price rather than purchasing. This
will give the chance for the society to have medical equipment to manage their health in their
homes for as long as they need.

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1.2 Objective of the project
1.2.1 General objective
To goal of the study is to assess o the feasibility of a home-based medical equipment rental
business in Addis Ababa, Ethiopia.
1.2.2 Specific objective
 Evaluating the business’s feasibility in terms of its impact on society
 Assessing whether the business is environmentally viable
 Determining the economic viability of the business
 Evaluating the financial feasibility of the business
 Assessing the administrative viability of the business
 Evaluating the business’s competitiveness and viability in the market
 Assessing whether the business is technologically feasible

1.3 statement of the justification of the problem

The rapid growth of the population and the need for quality health care is not on the same page.
People are in need to get the best health care but the adequacy, durability and sufficiency of
medical equipment is questionable in Ethiopia.
The governmental health care centers are trying to give the services despite the shortage of
equipment and space. Ethiopia is ranked 180th out of 191 countries, the lack of fundamental
medical equipment contributes to the Ethiopian healthcare system's low performance.( Kebede E,
Yoseph E, Asaye H, et al. (March 26, 2021)
Care givers of the patients mostly complain from lower back pain because of the load they carry
when they give care for the loved ones or patients they treat. The pain comes from the heavey
lifting and from different exercises that comes with job. (Majima, Y., Horikawa, J., Shono, I., &
Ishihara, I. (2004). Journal of UOEH, 26(1), 59–74. https://doi.org/10.7888/juoeh.26.59)
Not only the customers are benefiting from the services but also the governmental hospitals will
have their resource to be sufficient for others who are in great need. It will also create a job
opportunity for many young health professionals, engineers and others with different title.

1.4 Scope of the project

The project will provide to anyone who requires home medical equipment. The service mainly
addresses chronic patients, ambulatory patients and aged persons who need an extra hand in their
daily life. The project will look for the customers with the collaboration of hospitals and any
health center in Addis Ababa, Ethiopia.

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 Chapter Two ; PROJECT CONCEPT
2.1 Opportunity study
In Ethiopia there are 94 medical importers which they import medical supplies that supply whole
country with different equipment. Also, Addis Ababa city health administration is divided in to
10 administrative zones and has the facility of 5 public and 25 private hospitals. But still there is
a great demand for the health sector to grow and to be accessible for so many others. (Nair, V.
D., Morankar, S., Jira, C., & Tushune, K. (2011). Private hospital sector development: an
exploratory study on providers perspective in addis ababa, ethiopia. Ethiopian journal of health
sciences, 21(Suppl 1), 59–64.)
Renting medical equipment is a better way to provide the care in advance way by creating an
opportunity for many health and non-health professionals to work and in the meantime the
service will address the society.

2.2 project concept and profile

2.2.1. Project concept

The goal of this project is set up a home medical equipment rental company in Addis Ababa that
will rent out medical supplies like hospital beds, wheelchairs, and oxygen tanks to people who
need help managing their health, are recovering from surgeries or injuries, or have chronic
illness. The company will provide reasonable prices in order to serve the low-income market.
By using the business model canvas, the business wills strike in the right direction.
Project Concept: Home Medical Equipment Rental Business

 Key Partnership:

 Collaborate with healthcare providers and hospitals to establish referral systems and
partnerships for patient referrals.
 Partner with medical equipment manufacturers and suppliers to ensure a steady supply of
high-quality and up-to-date equipment.
 Form alliances with insurance companies to negotiate reimbursement rates and streamline
the billing process.

 Key Activities:

 Acquire a wide range of medical equipment, such as wheelchairs, hospital beds,

oxygen concentrators, and mobility aids.

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 Ensure proper maintenance, cleaning, and sanitization of equipment after each rental
to meet health and safety standards.
 Develop an online platform or mobile application for easy equipment booking,
tracking, and customer support.
 Provide training and support to customers on how to use the equipment safely and
effectively.

 Key Resources:

 Inventory of diverse medical equipment to meet various customer needs.

 Skilled technicians for equipment maintenance and repairs.
 Online platform or mobile application for seamless booking and customer
management.
 Knowledgeable staff to provide customer support and training.

 Value Propositions:

 Convenient and affordable access to medical equipment for patients recovering at

home.
 Wide range of high-quality equipment options to meet specific medical needs.
 Hassle-free booking process and timely equipment delivery to customer's doorstep.
 Training and support to ensure safe and effective use of the equipment.
 Streamlined billing process through partnerships with insurance companies,
reducing financial burden on customers.

 Customer Relationships:

 Provide personalized customer support, including 24/7 helplines and online chat, to
address customer queries and concerns.
 Regularly engage with customers through newsletters, informative content, and
feedback surveys to enhance their experience and understand their evolving needs.
 Maintain a strong focus on customer satisfaction by promptly addressing any issues
related to equipment quality, functionality, or delivery.

 Channels:

 Online platform or mobile application for customers to browse and book equipment
rentals.
 Partnerships with healthcare providers, hospitals, and insurance companies for
customer referrals and streamlined billing.
 Digital marketing strategies, including social media, search engine optimization,
and targeted advertising, to reach potential customers.

 Customer Segments:

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  Patients recovering from surgeries or medical procedures who require temporary
medical equipment at home.
 Elderly individuals with mobility issues who need assistance devices like walkers,
canes, and lift chairs.
 Individuals with chronic illnesses or disabilities who require long-term medical
equipment support.
 Caregivers seeking convenient and cost-effective rental options for their patients
or loved ones.

 Cost Structure:

 Equipment acquisition and maintenance costs.

 Staff salaries and training expenses.
 Technology infrastructure and platform development.
 Marketing and advertising expenditures.
 Administrative and operational costs, including insurance and legal compliance.

 Revenue Streams:

 Rental fees charged to customers based on the duration and type of equipment
rented.
 Additional revenue streams may include delivery charges, equipment setup fees,
and service/maintenance fees.
 Collaborative agreements with insurance companies for direct reimbursement.
 Potential for expansion into equipment sales based on customer demand.

2.2.2Preliminary study

The objective of this preliminary study is to assess the feasibility of establishing a home medical
equipment rental business in Addis Ababa. The study aims to analyze the market demand,
competitive landscape, operational requirements, and financial aspects of the business.
Additionally, it will evaluate the nature of the business, including the benefits of home medical
equipment rental for patients and caregivers. Demographic and socio-economic factors
influencing the demand for such services will be examined, along with the identification of
potential customer segments. The study will also consider the beneficiaries of the business,
including patients, caregivers, and healthcare providers, and the availability of key inputs such as
reliable medical equipment suppliers. Approximate investment and operational costs will be
estimated, along with expected revenues. Rough estimates of financial and economic returns,
including profitability indicators, will be provided. Major factors that may affect the project's
success, such as regulatory compliance, market competition, economic conditions, technological
advancements, and public perception, will be considered. This preliminary study will serve as a

13
foundation for further research and decision-making processes related to the home medical
equipment rental business in Addis Ababa.

Chapter Three; Project Methods and Procedure

3.1 project design

The chosen project design for the home-based medical equipment rental business is a qualitative
design. This design is selected because it allows for an in-depth exploration of the experiences,
perceptions, and motivations of the key stakeholders involved in the home-based medical
equipment rental process, including patients, caregivers, and healthcare providers. Qualitative
research methods such as interviews, focus groups, and observations will be employed to gather
rich and descriptive data. By conducting answers from the questionnaires with patients,
caregivers, and healthcare professionals, the research aims to understand their experiences with
home –based medical equipment, their satisfaction levels, and any challenges they may face.
Through this qualitative design, the project aims to gain a comprehensive understanding of the
target audience, their needs, and the factors influencing their decisions regarding home-based
medical equipment rental. The findings inform the design of rental services, marketing strategies,
and operational processes to ensure customer satisfaction and differentiate the business from
competitors.

3.2 Type of data

The type data is divided into primary data and secondary data. In this project we will use both
primary and secondary data, the primary will gathered from direct/first- hand interviews,
questionnaire. And the secondary data will be conducted from published researches, webs,
documents in the hospital and other related organization.

3.3 source of data

The project uses both sources of data; the primary data will be conducted from governmental,
private hospital and health center in Addis Ababa. And secondary data will be conducted from
different health related published researches and published reports

3.4 population of the study

The population refers the individuals who require medical equipment for home use to manage
their health. This includes the patients who are recovering from surgeries or injuries, also
patients with chronic diseases and elderly who require special attention and support.
The study also include the professional who recommended the equipment or the facility for their
patients, Such as doctors, physical therapist and nurses. And will also focus on individual who

14
have used home medical equipment in the past, are currently using it or have not used it but
potential users.

3.5 Data collection methods and tools

For primary data
In-person interview: this can be a useful method for collecting qualitative data from participant
who requires home medical equipment.
For secondary data will collected from published research, web, documents from hospital and
other related organization.

3.6 sampling size

The sampling size consist the total project population, and the population is heterogeneous it
includes the professional, the patients and the elderly people.

3.7 sampling design method

The sample design method used simple random sampling in selecting project population. We
randomly select individuals for the sampling and the population has equal chance to be selected
for the sampling. Stratified method also used for the selecting project in theme thud by dividing
the population into subpopulation. This method has select doctors, physiotherapist, nurse from
the hospital and chronic patients, elderly people and care givers.
The research use both the primary data and secondary data, as the primary data conduct first-
hand information from the selected populations. The hospitals and the professional that work
directly in contact with the patient sand elderly people, and the secondary data conducted from
the documented files from hospital and other comparable organization, publication of studies and
reports.

3.8 Data analysis method

Quantitative analysis method can provide an in-depth understanding of the home medical
equipment rental business project, using quantitative techniques to assess market demand,
financial feasibility and the competitive landscape. This can enable stakeholders to make
informed decisions and develop a successful business approach that meets customers’ needs,
generates revenues and delivers quality equipment to those who require them.

15
3.9 Schedule

Activities/Tasks Duration

Literature review May, June 2023

Proposal preparation June 2023

Proposal submission June 2023

Data gathering July 2023

Data analysis and interpretation July, August 2023

Report writing August 2023

Final submission August 2023

3.10 Resources Budget

No Items Quantity Unit cost Total cost

(ETB) (ETB)

1 Transportation cost 60 liters 70birr 4200

(fuel)

2 General stationary 2500

costs (pen, pencil,
binding, photocopy)

3 Printing cost 100 pages 6 600

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4 Internet and mobile Unlimited 10,200 10,200
cost

5 Miscellaneous 2000
Expenses

Total cost 19,500

Chapter Four; Project Preparation

4.1 Market and demand analysis
4.1.1Market Analysis:

The market analysis is based on the responses collected from a questionnaire. The questionnaire
covered various aspects related to the target market's demographics, awareness of home-based
medical equipment rental services, experience with such services, and preferences regarding
renting versus purchasing medical equipment. Here are the key findings:

Demographics:
- Age: The respondents were distributed across different age groups, with 34.09% between 20-
30, 20.91% between 30-40, and 56.4% aged 54 and above.
- Gender: 67.27% of the respondents identified as male, while 32.73% identified as female.
- Profession: 34.75% of the respondents were nurses, 12.82% were doctors, and 48.72% had
other professions.
Awareness and Experience:
- Awareness of Home-Based Medical Equipment Rental Services: 63.40% of the respondents
were aware of such services, while 26.60% were not.
- Experience with the Service: Among those aware of the services, only 24.65% had experienced
home-based medical equipment rental services, while 75.35% had not.
Perception and Preferences:

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- Perceived Convenience and Benefits: 75.35% of the respondents considered renting medical
equipment for home use as important, while 20% considered it less important, and 5.35%
considered it not important.
- Consideration of Renting over Purchasing: 79.49% of the respondents would consider renting
medical equipment if the rental services were easily accessible, while 20.51% would not.
- Financial Challenges and Cost Savings: 75.35% of the respondents had faced financial
challenges in purchasing medical equipment, and 75.35% considered cost savings and
affordability as important factors in opting for rental services instead of purchasing equipment.

Based on the market analysis, there is a level of awareness among the target market regarding
home-based medical equipment rental services. However, the percentage of individuals who
have actually experienced such services is relatively low. Convenience, cost savings, and
affordability are important factors for the target market when considering renting medical
equipment. There is also a significant segment that has faced financial challenges in purchasing
medical equipment, indicating a potential demand for rental services.
4.1.2Demand Analysis

Demand Factors:
Item Questionnaire Frequency Percent
Response
Age 20-30 15 34.09%
30-40 6 20.91%
54+ 18 56.4

Total 39 100%

Male 17 67.27%
Q2gender
female 12 32.73%
Total 39 100%
Q3what is your Doctor 5 65.25%
profession?
Nurse 15 34.75%
Other 19

Total 39 100%
Q4. Are you aware of Yes 21 63.40%
home based medical
equipment rental No 18 26.60%

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services?
Total 39 100%

Q5 if the answer is Yes 10 24.65%

yes have you ever No 29 75.35%
experience the
service? Total 39 100%

Q6. Have you or Yes 11 24.65%

someone you know No 27 75.35%
ever needed home
Total 39 100%
based medical
equipment for
temporary use or long
term use due to
injury, illness, or
recovery?

Q7,How do you Not important 3 5.35%

perceive the Less important 13 20%
convenience and
important 23 75.35%
benefits of renting
medical equipment Total 39 100%
for use in a home
setting?

Q8. Would you Yes 31 24.65%

consider renting No 8 75.35%
medical equipment
Total 39 100%
instead of purchasing
it if the rental
services were easily
accessible?

Q9 Have you ever Yes 11 75.35%

faced financial No 28 24.65%
challenges in
purchasing medical Total 39 100%
equipment for
personal use?

Q10. Do you see cost Yes 30 24.65%

savings and No 9 75.35%

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affordability as Total 8 100%
important factors in
opting for rental
services instead of
purchasing
equipment?

The demand analysis is based on the responses collected from the questionnaire, focusing on the
target market's demand for home-based medical equipment rental services. Here are the key
findings:
Demographics:
- Age: The respondents were distributed across different age groups, with 34.09% between 20-
30, 20.91% between 30-40, and 56.4% aged 54 and above.
- Gender: 67.27% of the respondents identified as male, while 32.73% identified as female.
- Profession: 34.75% of the respondents were nurses, 12.82% were doctors, and 48.72% had
other professions.
Awareness and Experience:
- Awareness of Home-Based Medical Equipment Rental Services: 63.40% of the respondents
were aware of such services, while 26.60% were not.
- Experience with the Service: Among those aware of the services, only 24.65% had experienced
home-based medical equipment rental services, while 75.35% had not.
Demand Indicators:
- Need for Home-Based Medical Equipment: 24.65% of the respondents or someone they knew
had needed home-based medical equipment for temporary or long-term use due to injury, illness,
or recovery.
- Perception of Convenience and Benefits: 75.35% of the respondents considered the
convenience and benefits of renting medical equipment for home use as important, while 20%
considered it less important and 5.35% considered it not important.
- Consideration of Renting over Purchasing: 79.49% of the respondents would consider renting
medical equipment if the rental services were easily accessible, while 20.51% would not.
- Financial Challenges: 75.35% of the respondents had faced financial challenges in purchasing
medical equipment for personal use.
- Importance of Cost Savings and Affordability: 75.35% of the respondents considered cost
savings and affordability as important factors in opting for rental services instead of purchasing
equipment.

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Based on the demand analysis, there is a level of demand for home-based medical equipment
rental services among the target market. Although awareness and experience with such services
are relatively low, there is a significant need for home-based medical equipment due to injury,
illness, or recovery. The convenience, cost savings, and affordability offered by rental services
are important factors for the target market.
These demand indicators and factors suggest a potential market opportunity for the home-based
medical equipment rental business. By addressing accessibility, raising awareness, and
highlighting the benefits and cost savings, the business can tap into the demand and attract
customers who prefer renting over purchasing medical equipment.

4.3 location and site assessment

The location of the company will be convenient for the customers, healthcare professionals and
care givers. Consider the proximity to major roads, public transportation and parking availability.
The area needs to have the necessary infrastructure and utilities such as electricity, internet
connectivity and water. The site also meets Safety requirements including fire security and
security measures. In this regard the project will take place around CMC .

4.4 Technology
The importance of the home medical equipment rental industry in providing people with
healthcare services in the comfort of their own homes. It highlights the increasing role of
technology in the project by setting different types of technologies in different subsequent
section of the organization.
 Inventory Management System:

An inventory management system will allows us to track and manage the equipment efficiently.
It should enable us to monitor availability, track rentals, and schedule deliveries and returns.
Technologies with the features like barcode scanning, real-time updates, and reporting
capabilities will be used.
 Online Platform:

Develop or utilize an online platform that enables customers to browse available equipment,
check availability, place reservations or orders, and make payments. The platform will be user-
friendly, secure, and accessible across different devices.
 Payment Processing:

A system that is secure and reliable payment processing system that allows customers to make
online payments easily. It should support various payment methods, provide secure transactions,
and integrate with the organization online platform.

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4.5 organizational and human resources
4.5.1 Organization
The proposed organization structure design will have several factors to consider. The specific
structure will depend on the company size, scope of services, and strategic goals. In the
management positions there will be three management positions.

 The general manger or CEO: will oversee the overall functioning of business, sets
strategic direction, and ensures alignment with company goals.
 Department manager: leads and supervises respective departments, ensuring efficient
operations, adherence to quality services and achievement of departmental objective.
 Supervisors or team leaders: provide direct supervision, guidance, and support to teams
within each department, ensuring smooth workflow and coordination

The functional departments will continue to do the day to day work. There will be four
departments:
 Operations: responsible for managing the day to day operations of the rental business,
including inventory management, equipment maintenance and delivery
 Customer service: focuses on providing excellent customer support, handling inquiries,
assisting with equipment selection, and addressing any issues or concerns.
 Sales and marketing: handles customer acquisition, sales and marketing strategies to
promote the rental services and attract new clients.
 Finance and administration: manages financial aspects, including budgeting, accounting,
billing and administrative functions such as human resources and legal compliance.

The designed organization structure will create the cross-functional collaboration, staffing and
setting roles and hierarchical structure in order to meet the goal of the organization.

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 General
manager/owner

Departement
managers

Team leaders

Sales and Finance and

Operational Customer service
marketing Adminstration

4.5.2 Human resources

Human resources management in the designed organization deals with recruitment and selection,
training and development, performance management and employee engagement. Accordingly
the structured organization the human resources will categorize the monthly and annual salaries
of the employees by estimating the benefit of the organization. The number of the employee and
salary will be shown below in the table.
Description Title No Possible,salary Monthly Salary/yr.
A) general manager’s office
General manager 1 25,000 25,000 300,00
Department manger 1 15,000 15,000 180,000
Sub total 2 40,000 480,000
B) operational department
Biomedical 1 10,000+2,000 12000 144,000
engineer
Biomedical 2 6,000 12,000 144,000
technician
Inventory person 2 4000 8000 96,000
Customer service 2 4500 10,000 120,,000
representative 4500+1000
Store keeper 1 4000 4000 48,000
Nurse 2 6,500 13,000 156,000

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 IT professional 1 5,000 5,000 60,000
Sub total 10 64,000 768,000

C) sales & marketing dep’t

Marketing manager 1 8,500 8,500 102,000
Sales staffs 2 4,000 8,000 96,000
Purchasing officer 1 7,000 7,000 84,000
Sub total 4 23,500 282,000
D) Administration & finance dep’t
Admin & finance 1 7,500 7,500 90,000
head
Accountant/ cashier 2 4,500 9,000 108,000
Driver 2 5,000 10,000 120,000
Janitor 2 3500 7000 84,000
Guard 2 3500 7000 84,000
Sub total 9 40,500 486,000
Grand total 25 168,000 2,016,000

4.6 Social analysis

Social analysis of the home-based medical equipment rental business in Addis Ababa involves
examining the social factors that influence the demand, adoption, and perception of such services
in the local context. It considers the social norms, cultural beliefs, and societal attitudes towards
healthcare and medical equipment. Understanding the social dynamics helps in tailoring the
business offerings to meet the specific needs and expectations of the local community. Social
analysis also involves identifying key stakeholders and their roles in the home medical
equipment rental process, including patients, caregivers, healthcare providers, and community
organizations. By assessing social determinants of health, such as access to healthcare,
affordability, and support systems, the analysis can identify potential barriers or facilitators to the
adoption of rental services. Social analysis further explores communication channels, social
networks, and influencers that can be leveraged for marketing and customer outreach. By
conducting a comprehensive social analysis, the home medical equipment rental business in
Addis Ababa can gain insights into the social fabric of the community, align its services with
local needs, and establish meaningful connections with stakeholders to foster trust and
engagement.

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4.7 Economic analysis
Economic analysis of the home medical equipment rental business in Addis Ababa involves
assessing the financial aspects and economic viability of such a venture in the local market. The
analysis examines factors such as the size and growth potential of the market, the purchasing
power and disposable income of the target customers, and the pricing dynamics of home medical
equipment rental services. It considers the economic indicators of the region, including GDP per
capita, inflation rates, and unemployment rates, to understand the economic context in which the
business operates. Evaluating the competitive landscape and market demand helps in identifying
opportunities and potential challenges for the business. Economic analysis also involves
estimating the investment and operational costs required, including equipment procurement,
staffing, marketing, and overhead expenses. It assesses the revenue potential by estimating the
pricing structure, rental rates, and projected customer volume. Additionally, economic analysis
considers the potential economic impact of the business, such as job creation, income generation,
and contributions to the local economy. By conducting a comprehensive economic analysis, the
home medical equipment rental business in Addis Ababa can make informed decisions regarding
pricing strategies, resource allocation, and growth plans, ensuring financial sustainability and
maximizing its contributions to the local economy.
4.7.1 Stakeholders
The following stakeholders could be involved in Addis Ababa
1. Customers/Patients: These are individuals or their caregivers who require medical equipment
for temporary or long-term use. They are the primary stakeholders as they directly benefit from
the rental service.
2. Healthcare Professionals: Doctors, nurses, therapists, and other healthcare professionals can be
stakeholders in the business. They may refer patients to the rental service or provide
recommendations based on their patients' needs.
3. Hospitals and Clinics: Medical facilities in Addis Ababa can be important stakeholders. They
may collaborate with the rental business by referring patients or partnering for specific services.
4. Insurance Companies: Insurance providers play a significant role in the medical equipment
rental business. They may cover the rental costs for patients who have insurance coverage for
durable medical equipment.
5. Suppliers and Manufacturers: Suppliers and manufacturers of medical equipment are essential
stakeholders. The rental business relies on them to source and maintain a diverse range of
equipment to meet customer needs.
6. Delivery and Logistics Partners: Companies or individuals providing delivery and logistics
services are important stakeholders, ensuring timely and efficient transportation of the rented
equipment to customers' homes.

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7. Government Agencies: Regulatory bodies, such as health departments or licensing authorities,
may have an interest in monitoring and ensuring the quality and safety standards of the
equipment rental service.
8. Financial Institutions: Banks or financial institutions that provide loans or financing options
for the rental business can be stakeholders. They play a role in supporting the business's growth
and expansion.
9. Non-Profit Organizations and NGOs: Organizations working in the healthcare sector,
especially those focused on providing medical support to underserved communities, may
collaborate with the rental business or refer patients in need.
10. Local Community: The local community in Addis Ababa can be considered stakeholders as
they may benefit from having access to affordable and convenient medical equipment rental
services.

4.8 Legal analysis

Legal analysis
A legal analysis of a home-based medical equipment rental business in Addis Ababa involves
examining the legal framework and regulatory requirements that govern the operation of such a
business. It is essential to ensure compliance with applicable laws and regulations to maintain
legal and ethical operations. The analysis begins by assessing the licensing and registration
requirements for establishing and operating a medical equipment rental business in Addis Ababa.
This includes obtaining the necessary permits, certifications, and licenses from relevant
government authorities, such as the Ministry of Health or other regulatory bodies. Here are the
policies we need to consider
 License and registration: for any business in Ethiopia the first step to do is getting
license and registration, this ensures the legality of the business. “The Ministry of Trade
and Industry is the main institution responsible for registering a business in Ethiopia. It
is prohibited to engage in any commercial activity unless registered in a commercial
register; and according to Proclamation No. 980/2016,” So the company will register
and have license.
 Tax obligation: Will register for Tax purpose with Ethiopian Revenue and customs
Authority(ERCA), it deals with filing tax returns and paying applicable taxes such as
income tax, value0added tax(VAT) and withholding tax.” Council of ministers federal
income tax regulation NO.410/2017”
 Employment regulation: as an employer, the company needs to meet the regulations,
including registering the employee , adhering minimum wage requirements and giving
them proper contract “The Ethiopian Civil Code of 1960, the Labor Proclamation (Proc.

26
 No. 377/2003), as amended, the Private Enterprise Employees Social Security
Proclamation (Proc. No. 715/2011), and the Social Health Insurance Proclamation (proc.
No. 690/2010).”
 Medical equipment regulation: The Ethiopian food and drug authority (EFDA) deals
with premarket and post market control. In the company all the equipment we have
needs to meet EFDA requirement and the equipment need to be registered.

4.9 Financial analysis

4.9.1 Working capital
The working capital requirement of the project during operation is calculated on the basis of the
minimum days of coverage needed for the different elements of the working capital. Hence the
minimum days are specified as follows.

Items Measures

Loan Interest rate (Bank) 15%

Source of finance
25 % equity
Discount Rate 15%
Account Receivables 30 Days
Account payables 30 Days
Utility( electricity cost+ water) 90 Days
Raw Materials local 90 Days
Work in process inventory 40 Days
Cash on hand 10 Days
Administrative Expense 90 Days
Depreciation (furniture And fixtures)SLM 25 years
Repayment period of debt 5years

4.9.1 Initial investment cost

The initial investment cost to start the project including fixed cost, operational cost of the project
4.9.1.1Fixed cost
Description Amount Unit price Price

Electrical Wheelchair 5 60,000 300,000

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Multipurpose manual wheelchair 10 37,000 370,000
Walker 10 7,000 70,000
Crutch 10 4,500 45,000
Shower chair 10 5,000 50,000
Automatic Hospital bed 4 300,000 1,500,000
Manual Hospital bed 5 51,000 255,000
Patient monitor 10 220,000 220,000
Auto clave 2 40,000 80,000
Oxygen concentrator 10 50,000 500,000
Oxygen tank 5 20,000 100,000
Nebulizer 5 40,000 200,000
Furniture 200,000
Total price 86 834,500 3,890,000

4.9.1.2Operational cost-
Description Monthly cost Yearly cost
Building rent 150,000 1,800,000
Web development 120,000
Utilities 10,000 120,000
Maintenance and repair 50,000 600,000
Rental cars 1500*2 36,000
Fuel and car services 37000 444,000
Glove 3800 45,600
Disinfectant 700 8,400
marketing budget 93,700 684,000
Salary 168,000 2,016,000
Miscellaneous cost 10,000 100,000
Total cost 643,200 5,854,000

4.9.1.3. Pre-operating
Description Price
Licensing and registration 50,000

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4.9.1.4. Marketing budget
Description Cost
Social media marketing 25,000
Sales 8,000
Business card 700
Events 35,000
Banner and broacher 25000
Total cost 93,700

4.9.1.5. Selling price

Description Quantity Monthly Annual Monthly Annual

price for price for price for price for
one one possible rent possible
equipment equipment rent
Electrical Wheelchair 5 21,840 262,080 109,200 1,310,400
Multipurpose manual 10 10,002 120,024 100,020 1,200,240
wheelchair
Walker 10 3,248 38,976 32,480 389,760
Crutch 10 3,360 40,320 33,600 403,200
Shower chair 10 2,802 33,624 28,020 336,240
Automatic Hospital bed 4 49,999.8 599,997.6 199,999.2 2,399,990.4
Manual Hospital bed 5 16,800 201,600 84,000 1,008,000
Patient monitor 10 55,440 665,280 554,400 6,652,800
Oxygen concentrator 10 33,487.98 401,855.76 334,879.8 4,018,557.6
Oxygen tank 5 4002 48,024 20,010 240,120
Nebulizer 5 3,360 40,320 16,800 201,600
Total price 204,342 2,452,101 1,513,409 18,160,908

4.9.1.6. Projection of cash flow (initial cash flow, net cash flow, and terminal cash flow)
Items Year1 Year2 Year 3 Year 4
Sales revenue 18,160,908 21,000,000 27,000,000 32,000,000

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C G sold 5,706,000 5,820,120 5,936,522.4 6,055,252
Gross Profit 12,454,908 15,179,880 21,063,477.6 25,944,748
Salary Expense 2,016,000 2,056,320 2,097,446.4 2,139,395
Utility Expense 120,000 122,400 124,848 127,345
Rent 1,800,000 1,836,000 1,872,720 1,910,174.4
Marketing and Promotion 93,700 95,574 97,485.48 99,435
Expense
Total Operating expense 5,854,000 5,971,080 6,090,501.6 6,212,312
Depreciation cost 300,000 300,000 300,000 300,000
Profit before tax 6,600,908 9,208,800 14,972,976 19,732,436
Tax Expense 990,136 1,381,320 2,245,946.4 2,959,865.4
Net Profit 5,610,771.8 7,827,480 12,727,029.6 16,772,570.6

4.9.3 Financial evaluation

4.9.4.1 Net present value(NPV)
NPV

15%
Yr CASH DISCOUNT PRESENT
FLOW(CF) FACTOR(DF) VALUE(PV)
1 5610771.8 0.869565 4878932
2 7827480 0.756144 5918699
3 12727029.6 0.657516 8368229
4 16772570.6 0.571753 9589772
PV
28755632

NPV=PV-IC
NPV=28,755,632-9,744,000
NPV=19,011,632

4.9.4.2. INTIAL RATE OF RETURN (IRR)

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At 50%
Year1=5610771.8 / (1+0.5)= 3,740,514
Year2=7827480 / (1+0.5)2= 2,609,160
Year3=12727029.6 / (1+0.5)3= 2,828,228
Year 4=16772570.6 / (1+0.5)4= 2,795,428
At 60%
Year1=5610771.8 /(1+0.6)= 3,506,732
Year2=7827480 / (1+0.6)2=2,446,088
Year3=12727029.6 / (1+0.6)3=2,651,465
Year 4=16772570.6 / (1+0.6)4=2,620,714
At 70%
Year1=5610771.8 /(1+0.7)= 3,300,454
Year2=7827480 / (1+0.7)2=2,302,200
Year3=12727029.6 / (1+0.7)3=2,495,496
Year 4=16772570.6 / (1+0.7)4=2,466,555
At 80%
Year1=5610771.8 / (1+0.8)= 3,117,095
Year2=7827480 / (1+0.8)2=2,174,300
Year3=12727029.6 / (1+0.8)3=2,356,857
Year 4=16772570.6 / (1+0.8)4=2,329,523

Percent% Year1 Year2 Year3 Year4

50 3,740,514 2,609,160 2,828,228 2,795,428
60 3,506,732 2,446,088 2,651,465 2,620,714
70 3,300,454 2,302,200 2,495,496 2,466,555
80 3,117,095 2,174,300 2,356,857 2,329,523

4.9.4.3. BENEFIT COST-RATIO (BCR)

Present value/Initial cost

BCR=28,755,632 / 9,744,000
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BCR= 2.9511
DECISION: If BCR ratio is >/= 1 accept! so it is greater than 1 we accept the project
Payback period
4.9.4.4. Payback period (PBP)
Formula =years before full recovery +( unrecovered cash flow at beginning of full recovery
year/cash flow during the full recovery year *365/1)
Year Cash flows Cumulative cash flows
1 5610771.8 5610771.8
2 7827480 5610771.8 +7827480=
13438252

3 12727029.6
4 16772570.6

PBP=1+(4,133,228.2/7,827,480 *365)
PBP= 1 YEAR,192.73 days

4.9.4.5 ACCOUNTING RATE OF RETURN (ARR)

ARR=( average annual / average investment)*100
Average annual profits= total profits/ number of years
Average annual profits=5,610,771.8 + 7,827,480 +12,727,029.6 + 16,772,570.6/4
Average annual profits=42,937,852./4
Average annual profits= 10,734,463
Average investment= initial investment/2
Average investment= 9,744,000/2
Average investment= 4,872,000
ARR=(10,734,463 / 4,872,000)*100
ARR= (2.2032)*100
ARR=220.32%
We accept the project because the ARR is above 2.2032in decimal it is 220.32%

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4.9.4.6. BREAK EVEN ANALYSIS (BEA)

Break-even analysis is a financial tool used to determine the point at which a business's total
revenue equals its total costs, resulting in neither profit nor loss. It helps in understanding the
volume of sales or level of operations required to cover all expenses. The break-even point is
calculated by dividing fixed costs by the contribution margin, which is the difference between
the selling price per unit and the variable cost per unit. By performing a break-even analysis,
businesses can assess the level of sales or production needed to cover costs, make informed
pricing decisions, evaluate the impact of cost changes, and set realistic targets for profitability. It
serves as a valuable tool in financial planning, decision-making, and assessing the financial
health of a business.

Given Year one Year two Year three Year four

assumption
Number of 1500 3000 4000 5000
customer
Average order 11,351 7,000 6,750 6,400
value

Year 1 BEA=9,744,000/11,351= 859 customer

Year 2 BEA=9,744,000/7000=1392 customer
Year 3 BEA=9,744,000/6750=1442 customer
Year 4 BEA=9,744,000/6400=1523 customer

Chapter 5 conclusion and recommendation

5.1. Project Summary:
The project aims to analyze the market and demand for such services, assess the location and
site requirements, determine the necessary technology infrastructure, and establish an
organizational structure with human resources. The market analysis reveals that there is a level
of awareness among the target market regarding home-based medical equipment rental
services. However, the percentage of individuals who have actually experienced such services is
relatively low. Convenience, cost savings, and affordability are important factors for the target
market when considering renting medical equipment. There is also a significant segment that

33
has faced financial challenges in purchasing medical equipment, indicating a potential demand
for rental services. The demand analysis further supports the potential market opportunity for
the home-based medical equipment rental business. Despite relatively low awareness and
experience, there is a significant need for home-based medical equipment due to injury, illness,
or recovery. The convenience, cost savings, and affordability offered by rental services are
important factors for the target market. The location and site assessment emphasize the
importance of a convenient location for customers, healthcare professionals, and caregivers.
Proximity to major roads, public transportation, and parking availability is crucial. The site must
also meet safety requirements, including fire security and general security measures. The
proposed location for the project is around CMC. Regarding technology, the project recognizes
the increasing role of technology in the home medical equipment rental industry. Key
technological components include an inventory management system to track and manage
equipment efficiently, an online platform for customers to browse and reserve equipment, and
a secure payment processing system for online transactions. In terms of organizational
structure, the project proposes a management team consisting of a general manager or CEO
overseeing the overall business functioning, department managers responsible for specific
departments, and supervisors or team leaders providing direct supervision and support. The
functional departments include operations, customer service, sales and marketing, and an
unspecified department. By addressing accessibility, raising awareness, and highlighting the
benefits and cost savings, the home-based medical equipment rental business can tap into the
potential market demand. The project summary provides a comprehensive overview of the
market and demand analysis, location and site assessment, technology requirements, and
organizational structure necessary for the successful implementation of the business.

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Reference
1,.( Kebede E, Yoseph E, Asaye H, et al. (March 26, 2021)
2, . (Majima, Y., Horikawa, J., Shono, I., & Ishihara, I. (2004). Journal of UOEH, 26(1), 59–74.
https://doi.org/10.7888/juoeh.26.59)

3, (Nair, V. D., Morankar, S., Jira, C., & Tushune, K. (2011). Private hospital sector
development: an exploratory study on providers perspective in addis ababa, ethiopia. Ethiopian
journal of health sciences, 21(Suppl 1), 59–64.)
4 Council of ministers federal income tax regulation NO.410/2017”

5 Labor Proclamation (Proc. No. 377/2003), as amended, the Private Enterprise Employees
Social Security Proclamation (Proc. No. 715/2011), and the Social Health Insurance
Proclamation (proc. No. 690/2010).”

35