Biftu Selemon Cosmotic, Beauty and Fragran

BIFTU SELEMON COSMOTIC, BEAUTY and

FRAGRANCE BUSINESS PROPOSAL
BUSINESS PROPOSAL PREPARED FOR LOAN REQUEST

February, 2016 E.C

YABELO, ETHIOPIA
 Biftu Selemon Cosmotic, Beauty and Fragrance Distributor

Table of Contents

Content Page

1. Industry Overview.................................................................................................................................. 2

2. Executive Summary................................................................................................................................ 3

3. Products and Services........................................................................................................................... 4

4. Our Mission and Vision Statement..................................................................................................... 5

5. Job Roles and Responsibilities............................................................................................................. 6

6. SWOT Analysis...................................................................................................................................... 10

7. MARKET ANALYSIS............................................................................................................................ 11

8. Our Target Market............................................................................................................................... 12

9. SALES AND MARKETING STRATEGY........................................................................................... 15

10. Sales Forecast.................................................................................................................................. 16

11. Publicity and Advertising Strategy................................................................................................. 18

12. Our Pricing Strategy...................................................................................................................... 19

14.FINANCIAL ANALYSIS................................................................................................................... 20

14.1 Basic Project Parameters............................................................................................................ 20

14.2 Fund Allocation............................................................................................................................. 20

14.3 Financial Returns........................................................................................................................... 21

ANNEXES................................................................................................................................................... 23

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 Biftu Selemon Cosmotic, Beauty and Fragrance Distributor

1. Industry Overview
A cosmetic, beauty and fragrance Shop is a retail outlet where different cosmetics,

perfumes, toiletries and personal grooming products are sold. Businesses in this line of

business include beauty supply stores, specialty cosmetics stores and fragrance stores.

Starting a cosmetic, beauty and fragrance store is a very easy business to start and it is

not so capital intensive- especially if you choose to start on a small scale in a small

community. Getting the right brands that people want to buy and good stock keeping

records are the secrets of running a retail business such as cosmetics, beauty and

fragrance store.

In recent times, it has been observed that the Cosmetics, Beauty and Fragrance Stores

industry shows a moderate level of market share concentration, with the leading brands

accounting for over half of the available market share in the Ethiopia and the rest of

African.

Industry concentration has increased in recent years due to rapidly increasing demand for

specialty beauty retailers like Sephora and Ulta Salon, Cosmetics and Fragrances Inc. Going

forward, the industry concentration is projected to continue increasing over the next five

years as consumer-spending levels rise and people turn to well-known, trusted stores for

their fragrance, beauty and cosmetics needs.

The Beauty, Cosmetics & Fragrance Stores Industry is a thriving sector of the economy of

the United States, United Kingdom, France, Italy, Nigeria and Canada and in most countries

of the world.

The Beauty, Cosmetics & Fragrance Stores Industry generates a whooping sum of well over

$21 billion annually from more than 91,236 registered fast Beauty, Cosmetics & Fragrance

Stores scattered all around the western. The industry is responsible for the employment of

well over millions people.

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Experts project the cosmetics industry to grow at a 4.7 percent annual rate. L Brands,

Sephora, Sally Beauty Holdings Inc. and Ulta Salon, Cosmetics and Fragrances Inc. are the

leaders in The Beauty, Cosmetics & Fragrance Stores Industry; they have the lion market

share in the industry.

No doubt, expansive product selections and skilled employees have driven revenue for the

Cosmetics, Beauty and Fragrance Stores industries.

So also with the increase in youth-targeted cosmetics, the expansion of male-specific

products and of course the reformulation of anti – aging products have given specialty

beauty stores a new collection of cosmetics, beauty and fragrance products to offer

customers.

Going forward, per capita disposable income will continue to rise and the revenue generated

from this industry will also enjoy positive growth. If you are contemplating to start your

own cosmetics, beauty and fragrance store business in the Ethiopia, you should endeavor to

carry out a thorough market survey and feasibility studies.

Despite the fact that this line of business is a thriving and profitable venture, if you get

some key factors wrong before starting your own cosmetics, beauty and fragrance store

business, then you are likely going to struggle to stay afloat.

But over and above, cosmetics, beauty and fragrance store business is a thriving and

profitable business especially if you are creative and ready to take on the available market

within the location where your business.

2. Executive Summary
Biftu Cosmetics, Beauty & Fragrance Stores is a standard and licensed cosmetics, beauty

and fragrance store business that will be based in Yabello – Borena Zone Oromia.

We have been able to secure a corner piece property (store facility) where we intend to

launch our first cosmetics, beauty and fragrance store before venturing out to opening our

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store outlets cum franchise in strategic locations all around Yabelo and key cities in the

Oromia regional State of Ethiopia.

Our business goal as a standard and licensed cosmetics, beauty and fragrance store

business is to become the number one choice of residence in the whole of the communities

where we intend opening our stores.

We are set to retail a wide range of Hair care and shower products, cosmetics, skin care

products, fragrances, nail care products, deodorant and shaving products, sun care, baby

care and other related product set all from different manufacturers both from the

Ethiopia and from other countries.

We have been able to secure permits from all relevant departments in the Oromia regional

state to run the business. Spotless Cosmetics, Beauty & Fragrance Stores is set to redefine

how neighborhood based cosmetics, beauty and fragrance store business should be run, not

just in Yabelo town, but also in the whole of the Oromia Zones.

This is why we have put plans in place for continuous training of all our store keepers and

other back office staff members at regular interval. No doubt the demand for hair care

and shower products, cosmetics, skin care products, fragrances, nail care products,

deodorant and shaving products, sun care, baby care and other related products is not going

to plummet any time soon.

Which is why we have put plans in place to continue to explore all available market around

the communities where we intend opening our chains of stores. In the nearest future, we

will ensure that we create a wide range of distribution channels via franchising.

3. Products and Services

At Biftu Cosmetics, Beauty & Fragrance Stores we will be involved in retailing cosmetics,

retailing perfumes, retailing toiletries, and retailing personal grooming products from

different manufacturers in the country and from other countries.

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Our intention to start Biftu Cosmetics, Beauty & Fragrance Stores is to maximize profit

from the cosmetics, beauty and fragrance stores retailing industry and we will do all that is

permitted by the law in the Ethiopia to achieve our corporate aim and ambition. Here are

the products that will be found in our stores;

 Hair care and shower products

 Cosmetics

 Skin care products

 Fragrances

 Nail care products

 Deodorant and shaving products

 Sun care, baby care and other products

4. Our Mission and Vision Statement

Our vision as a standard cosmetic, beauty and fragrance store business is to become the

number one choice in the whole of Borena Zone.

Our mission is to build a highly successful, profitable all round business; a cosmetic, beauty

and fragrance store business that will grow from one store to chains of stores in different

locations all around the Zone and other key cities in the Region.

We want to become a one stop cosmetics, beauty and fragrance shop.

Our Business Structure

We are aware that the success of any business depends on the foundation on which the

business is built on, which is why we have decided to build our cosmetics, beauty and

fragrance store business on the right business foundation.

As a matter of fact, we are set out to build a cosmetics, beauty and fragrance store

business that will favorably compete with some of the leading brand in the industry

Cosmetics and Fragrances. in the Region.

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We want to build a business of dedicated workforce who will go all the way to ensure that

our customers are satisfied. In other to achieve this, we aware that it takes a business with

the right employees and structure to achieve all what we have set to achieve.

Which is why will be putting structures and standard operating processes in place that will

help us meet our clients demand and run the business on autopilot. The success of our

cosmetics, beauty and fragrance store business will be anchored on the team not on any

individual.

With the nature of cosmetics, beauty and fragrance store business we intend running and

the plan to open chains of stores in various locations all around Borena zone and key cities in

the Region, we are only expected to employ more than it is required to run a conventional

cosmetics, beauty and fragrance store business. In view of that, we have decided to hire

qualified and competent hands to occupy the following positions;

 Chief Executive Officer (Owner)

 Store Manager

 Human Resources and Admin Manager

 Merchandize Manager

 Sales and Marketing Manager

 Accountants / Cashiers

 Customer Services Executive

 Cleaners

5. Job Roles and Responsibilities

Chief Executive Officer – Owner:

Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching,

counseling, and disciplining managers; communicating values, strategies, and objectives;

assigning accountabilities; planning, monitoring, and appraising job results; developing

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incentives; developing a climate for offering information and opinions; providing educational

opportunities.

Creates, communicates, and implements the organization’s vision, mission, and overall
direction – i.e. leading the development and implementation of the overall
organization’s strategy.
Responsible for fixing prices and signing business deals
Responsible for providing direction for the business
Creates, communicates, and implements the organization’s vision, mission, and overall
direction – i.e. leading the development and implementation of the overall
organization’s strategy.
Responsible for signing checks and documents on behalf of the company
Evaluates the success of the organization
Admin and HR Manager

Responsible for overseeing the smooth running of HR and administrative tasks for

the organization

Maintains office supplies by checking stocks; placing and expediting orders;

evaluating new products.

Ensures operation of equipment by completing preventive maintenance requirements;

calling for repairs.

Updates job knowledge by participating in educational opportunities; reading

professional publications; maintaining personal networks; participating in professional

organizations.

Enhances department and organization reputation by accepting ownership for

accomplishing new and different requests; exploring opportunities to add value to job

accomplishments.

Defining job positions for recruitment and managing interviewing process

Carrying out staff induction for new team members

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Responsible for training, evaluation and assessment of employees

Responsible for arranging travel, meetings and appointments

Oversees the smooth running of the daily office activities.

Store Manager:

Responsible for managing the daily activities in the store

Ensures that proper records of goods are kept and our racks and warehouse does not

run out of products

Ensures that the store facility is in tip top shape and goods are properly arranged

and easy to locate

Interfaces with third – party suppliers (vendors)

Controls goods distribution and supply inventory

Supervises the workforce in the cosmetics, beauty and fragrance store sales floor.

Merchandize Manager
Manages vendor relations, market visits, and the ongoing education and development

of the organizations’ buying teams

Helps to ensure consistent quality of cosmetics, beauty and fragrance products on

our rack

Responsible for the purchase of goods and products for the organizations

Responsible for planning sales, monitoring inventory, selecting the merchandise, and

writing and pricing orders to vendors Ensures that the organization operates within

stipulated budget.

Sales and Marketing Manager

Manages external research and coordinate all the internal sources of information to

retain the organizations’ best customers and attract new ones

Models demographic information and analyze the volumes of transactional data

generated by customer purchases

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Identifies, prioritizes, and reaches out to new partners, and business opportunities

et al

Identifies development opportunities; follows up on development leads and contacts;

participates in the structuring and financing of projects; assures the completion of

development projects.

Responsible for supervising implementation, advocate for the customer’s needs, and

communicate with clients

Develops, executes and evaluates new plans for expanding increase sales

Documents all customer contact and information

Represents the company in strategic meetings

Helps to increase sales and growth for the company

Accountant / Cashier:

Responsible for preparing financial reports, budgets, and financial statements for the

organization

Provides managements with financial analyses, development budgets, and accounting

reports; analyzes financial feasibility for the most complex proposed projects;

conducts market research to forecast trends and business conditions.

Responsible for financial forecasting and risks analysis.

Performs cash management, general ledger accounting, and financial reporting

Responsible for developing and managing financial systems and policies

Responsible for administering payrolls

Ensures compliance with taxation legislation

Handles all financial transactions for the organization

Serves as internal auditor for the organization

Sales Girls and Sales Boys

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Sells our cosmetics, beauty and fragrance products to our customers

Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides

the client with a personalized customer service experience of the highest level

Through interaction with customers on the phone, uses every opportunity to build

client’s interest in the company’s products and services

Manages administrative duties assigned by the human resources and admin manager in

an effective and timely manner

Consistently stays abreast of any new information on the organizations’ products,

promotional campaigns etc. to ensure accurate and helpful information is supplied to

customers when they make enquiries

Cleaners:

Responsible for cleaning the store facility at all times

Ensures that toiletries and supplies don’t run out of stock

Cleans both the interior and exterior of the store facility

Handles any other duty as assigned by the store manager.

6. SWOT Analysis
Because of our drive for excellence when it comes to running a standard cosmetics, beauty

and fragrance store business, we were able to engage some of the finest business

consultants in Yabelo town to look through our business concept.

Strength:

Our location, the Business model we will be operating on (selling franchise and opening

chains of stores in various locations), varieties of payment options, wide range of hair care

and shower products, cosmetics, skin care products, fragrances, nail care products,

deodorant and shaving products, sun care, baby care and other related products from

different manufacturers and from other countries.

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Our excellent customer service culture will definitely count as a strong strength for

Spotless Cosmetics, Beauty & Fragrance Stores.

Weakness:

A major weakness that may count against us is the fact that we are a new cosmetics, beauty

and fragrance store outlet and we don’t have the financial capacity to compete with multi –

million dollars cosmetics, beauty and fragrance stores. when it comes to retailing cosmetics

products at a rock bottom prices.

Opportunities:

The fact that we are going to operate our cosmetics, beauty and fragrance store in one of

the busiest streets in Yabello provides us with unlimited opportunities to sell our cosmetic

products to a large number of people.

We have been able to conduct thorough feasibility studies and market survey and we know

what our potential clients will be looking for when they visit our cosmetics, beauty and

fragrance store; we are well positioned to take on the opportunities that will come our way.

Threat:

Just like any other business, one of the major threats that we are likely going to face is

economic downturn. It is a fact that economic downturn affects purchasing / spending

power. Another threat that may likely confront us is the arrival of a new cosmetics, beauty

and fragrance store or even a supermarket that retails

7. MARKET ANALYSIS
Market Trends

Cosmetics, beauty and fragrance store cum retailing business has been in existence for as

long as human started trading goods, which is why you can easily find mom and pop shops

scattered all around world. In most cases, those people that you find running mom and pop

business in a very small scale in a street corner may not have the education that would want

them to aspire to run the business on a large scale.

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Just like in any retailing business, it is common to find cosmetics, beauty and fragrance

stores locating their business in a location with the right demographic composition and a

place that is visible to their target market.

Lastly, it is a common trend to find cosmetics, beauty and fragrance stores that are

determined to stay top if the game retail a wide range of hair care and shower products,

cosmetics, skin care products, fragrances, nail care products, deodorant and shaving

products, sun care, baby care and other related products et al from different

manufacturers both from the United States of America and from other countries.

With that, they can be considered a one stop cosmetics, beauty and fragrance shop and if

they retail in rock bottom prices, then they are going to stay atop for a long time.

8. Our Target Market

As a matter of fact, the cosmetics, beauty and fragrance stores industry has one of the

widest ranges of customers; everybody on planet earth has one or more things that they

would need from cosmetics, beauty and fragrance store- be it an adult or a kid.

It is difficult to find people around who don’t patronize cosmetics, beauty and fragrance

stores. In view of that, we have positioned our cosmetics, beauty and fragrance store to

service the residence of Yabelo town and every other locations where we intend opening our

chains of cosmetics, beauty and fragrance stores.

We have conducted our market research and we have ideas of what our target market would

be expecting from us. We are in business to retail a wide range of cosmetics, beauty and

fragrance products to the following groups of people;

 Households

 Bachelors and Spinsters

 Corporate Executives

 Business People

 About to wed couples

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 Expectant Mothers

 Sports Men and Women

 Students

 Tourists

Needs and preference of Competitors

Customers customers
Product
Perfumes 1st Corporate they need unique scent that Low quality perfumes
class employees
is packed in luxurious that are not unique

containers and can last long

Does not always have
when used.
knowledge of the latest

Must be available in time products

and in recognizable
Inconsistent supply and
supermarkets and
so shortages in the
shopping malls
market
Lemon body lotion Students Wide range of differently High prices and limited

colored and flavored lotions varieties not consistently

offered at relatively low supplied.

prices.
Low quality and

Different sizes and shapes. unattractive colours and

shapes.

MARKET RESEARCH

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Hair relaxer Market vendors Hair softeners with Unreliable supply and un
cream
reliable supply in all defined distribution

corners of the country channels that affects

availed to all vendors in constant supply.

time.
Avocadoes Tourists High quality products Low quality lotions with

body cream availed in recognized less moisturizing content

smoother shopping centers and malls

High level of skin

moisturizing and

smoothening.
Hair glow Retailers Reliable supply at the Delays in supply and un

right time and place in coordinated supply chain

right quantities. and distribution channels.

Our Competitive Advantage

A close study of the cosmetics, beauty and fragrance stores industry reveals that the
market has become much more intensely competitive over the last decade. As a
matter of fact, you have to be highly creative, customer centric and proactive if you
must survive in this industry.

We are aware of the stiffer competition and we are well prepared to compete

favorably with other leading cosmetics, beauty and fragrance stores in Borena Yabelo

and throughout the region.

Biftu Cosmetics, Beauty & Fragrance Stores is launching a standard cosmetics, beauty

and fragrance store that will indeed become the preferred choice of residence of

Yabelo town.

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Our cosmetics, beauty and fragrance store is located in a corner piece property on a

busy road directly opposite one of the largest residential estates in Yabelo town. One

thing is certain, we will ensure that we have a wide range of cosmetics, beauty and

fragrance products available in our store at all times. It will be difficult for

customers to visit our store and not see the product that they are looking for.

One of our business goals is to make Biftu Cosmetics, Beauty & Fragrance Stores a

one stop cosmetics, beauty and fragrance shop. Our excellent customer service

culture, various payment options and highly secured facility will serve as a competitive

advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be

among the best within our category (startups cosmetics, beauty and fragrance stores)

in the industry meaning that they will be more than willing to build the business with

us and help deliver our set goals and achieve all our aims and objectives.

We will also give good working conditions and commissions to freelance sales agents

that we will recruit from time to time.

9. SALES AND MARKETING STRATEGY

Sources of Income

Biftu Cosmetics, Beauty & Fragrance Stores is in business to retail a wide range of

cosmetics, beauty and fragrance products to the residence of Yabelo town. We are in

the cosmetics, beauty and fragrance stores industry to maximize profits and we are

going to go all the way out to ensure that we achieve or business goals and objectives.

In essence, our source of income will be the retailing of a wide range of cosmetics,

beauty and fragrance products at affordable prices. We will retail products such as;

 Hair care and shower products

 Cosmetics

 Skin care products

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 Fragrances

 Nail care products

 Deodorant and shaving products

 Sun care, baby care and other products

10. Sales Forecast

One thing is certain when it comes to cosmetics, beauty and fragrance stores, if your

store is well stocked and centrally positioned, you will always attract customers cum

sales and that will sure translate to increase in revenue generation for the business.

We are well positioned to take on the available market in Yabelo town and we are quite

optimistic that we will meet our set target of generating enough income / profits from

the first six month of operations and grow the business and our clientele base.

We have been able to critically examine the cosmetics, beauty and fragrance stores

industry and we have analyzed our chances in the industry and we have been able to

come up with the following sales forecast. The sales projection is based on

information gathered on the field and some assumptions that are peculiar to startups

in Yabelo town.

Below are the sales projection for Biftu Cosmetics, Beauty & Fragrance Stores, it is

based on the location of our business

First Fiscal Year-: Birr 1,227,530.00

Second Fiscal Year-: Birr 1,718,542.00

Third Fiscal Year-: Birr 1,964,048.00

N.B: This projection is done based on what is obtainable in the industry and with the

assumption that there wouldn’t be any major economic meltdown and there won’t be

any major competitor offering same products and customer care services as we do

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within same location. Please note that the above projection might be lower and at the

same time it might be higher.

Marketing Strategy and Sales Strategy

Before choosing a location for Spotless Cosmetics, Beauty & Fragrance Stores, we

undertook a thorough market survey and feasibility studies in order for us to be able

to be able to penetrate the available market and become the preferred choice for

residence of Yabelo town.

We have detailed information and data that we were able to utilize to structure our

business to attract the numbers of customers we want to attract per time. We hired

experts who have good understanding of the cosmetics, beauty and fragrance stores

industry to help us develop

In other to continue to be in business and grow, we must continue to sell the

cosmetics, beauty and fragrance products that are available in our store which is why

we will go all out to empower or sales and marketing team to deliver. In summary, Biftu

Cosmetics, Beauty & Fragrance Stores will adopt the following sales and marketing

approach to win customers over;

Open our cosmetics, beauty and fragrance store in a grand style with a party for all.

Introduce our store by sending introductory letters alongside our brochure to

organizations, households and key stakeholders in Yabelo town

Ensure that we have a wide range of cosmetics, beauty and fragrance from different

brands at all times. Make use of attractive handbills to create awareness and also to

give direction to our cosmetics, beauty and fragrance store Position our signage /

flexi banners at strategic places around Yabelo town. Position our greeters to welcome

and direct potential customers Create a loyalty plan that will enable us reward our

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regular customers Engage on road shows within our neighborhood to create awareness

for our cosmetics, beauty and fragrance store.

11. Publicity and Advertising Strategy

Despite the fact that our cosmetics, beauty and fragrance store is well located, we

will still go ahead to intensify publicity for the business. We are going to explore all

available means to promote our business.

Biftu Cosmetics, Beauty & Fragrance Stores has a long term plan of opening chains of

stores in various locations all around Borena yabelo town and key cities in the region

which is why we will deliberately build our brand to be well accepted in Yabelo town

before venturing out.

As a matter of fact, our publicity and advertising strategy is not solely for winning

customers over but to effectively communicate our brand. Here are the platforms we

intend leveraging on to promote and advertise

Place adverts on community based newspapers, radio stations and TV stations.

Encourage the use of word of mouth publicity from our loyal customers Leverage on

the internet and social media platforms like; YouTube, Instagram, Facebook ,Twitter,

LinkedIn, Snapchat, Badoo, Google+ and other platforms to promote our business.

Distribute our fliers and handbills in target areas in and around our neighborhood

Contact corporate organizations, households, landlord associations and schools by

calling them up and informing them of Biftu Cosmetics, Beauty & Fragrance Stores and

the products we sell

Advertise our cosmetics, beauty and fragrance store business in our official website

and employ strategies that will help us pull traffic to the site Brand all our official

cars and vans and ensure that all our staff members and management staff wears our

branded shirt or cap at regular intervals.

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12. Our Pricing Strategy

Pricing is one of the key factors that gives leverage to retail business like cosmetics,

beauty and fragrance stores, it is normal for consumers to go to places (retail outlets)

where they can get cosmetics, beauty and fragrance products at cheaper price. Which

is why big player in the cosmetics, beauty and fragrance stores industry will attract

loads of consumers. Products in their stores are tagged with the cheapest price you

can get anywhere in the region.

We know we don’t have the capacity to compete with Cosmetics and Fragrances. but

we will ensure that the prices of all the cosmetics, beauty and fragrance products

that are available in our store are competitive with what is obtainable amongst

cosmetics, beauty and fragrance stores within our level.

13. Startup Expenditure (Budget)

In setting up any business, the amount or cost will depend on the approach and scale

you want to undertake. If you intend to go big by renting a place, then you would need

a good amount of capital as you would need to ensure that your employees are well

taken care of, and that your facility is conducive enough for workers to be creative

and productive.

This means that the start-up can either be low or high depending on your goals, vision

and aspirations for your business. The tools and equipment that will be used are nearly

the same cost everywhere, and any difference in prices would be minimal and can be

overlooked.

As for the detailed cost analysis for starting a cosmetics, beauty and fragrance store

business; it might differ in other countries due to the value of their money. These are

the key areas where we will spend our start – up capital;

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14.FINANCIAL ANALYSIS
14.1 Basic Project Parameters
The basic issue in the financial analysis is to establish the financial viability check for

the envisaged Tractor service provide project. The analysis provides a basis for a

decision so as to whether to proceed or not with the establishment of this project.

Though assumptions used for financial analysis of the project is summarized in the

annexed worksheet, the table below presents some of the basic project parameters

employed in the undertaking of the financial study.

Table Basic Project Parameters

1. Project life 3 years

2. Financing Sources and Terms:

Equity (Share Capital) 16.7 % of the investment cost

Loan 83.3 % of the investment cost
Loan Repayment 3 years
Interest rate 9.5% p.a.
3. Income Tax 35% (as per Gov’t proclamation)
4. Depreciation Method Pooling Depreciation Method

14.2 Fund Allocation

The project would be financed by own equity and bank loan. The total investment cost

is Birr 3,000,000.00. The financing arrangement is assumed at bank loan to cover

Birr 2,500,000.00 (nearly 83.3%) of total investment cost. The fund allocation of the

project is below.

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14.3 Financial Returns

a) Profitability

The project would start to generate profit as of first year operation. The projected

profit and loss statement forecasted for 3 project years shows that the net profit of

the project would be Birr 366,205.00 and Birr 585,928.00 in the first and last year

of operation period, respectively, showing that the project could run profitable

business venture.

b) Liquidity

The cash flow projection also shows an incremental cumulative net cash balance from

Birr 452,955.00 in the first project year to Birr 724,728.00 in the last projection

period indicating that the project will not face liquidity constraint to finance its

operational cost meeting at the same time its debt obligations.

c) Return on Investment

The internal rate of return of the project before and after tax with respect to

committed resource has been also computed to be 54% and 45% respectively.

d) Sensitivity Analysis

The project's sensitivity to adverse circumstance is viewed from three different

scenarios: by decreasing its sales revenue, increasing its investment cost and

operating cost, all by 10%. The result indicates that IRR decreases to 54%, 45% and

10% with decrease in sales revenue, increase in operating cost and an increase in the

cost of fixed assets respectively. It implies that the project is still viable at these

adverse situations. However, it is advisable for the project's management to be cost

conscious in taking any financial decisions.

Finally, in view of all the findings stated in this feasibility study, this project deserves

a high priority. And to make the project operational, it is therefore required that the

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promoter and the Bank need to contribute their expected shares so that the timely

implementation of the project would take place.

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Biftu Selemon Cosmotic, Beauty and Fragrance Distributor

ANNEXES

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