ADDIS ABABA UNIVERSITY

College of Business and Economics

Department of Accounting and finance
Assignment of project analysis and Evaluation

BUSINESS PLAN
Name ID NO
Prepared by: BEE/6187/08
BEE/6197/08
BEE/3417/08
Section: Three

Submitted to: Kassaye T

November 29, 2018

Table of Contents
1. Executive Summary.................................................................................................................................3
 Introduction.............................................................................................................................................3
The Company...........................................................................................................................................3
The Services.............................................................................................................................................3
The Market..............................................................................................................................................3
Financial Considerations..........................................................................................................................4
1.1Mission...........................................................................................................................................4
1.2 Keys to Success..............................................................................................................................4
2. Mission/Vision Statement.......................................................................................................................5
2.1Mission...............................................................................................................................................5
2.2Vision..................................................................................................................................................5
2.3Values/Culture....................................................................................................................................5
3. Company Description..............................................................................................................................5
4. Start-up Summery...................................................................................................................................6
5. Description of Services............................................................................................................................7
6. Marketing Plan........................................................................................................................................7
6.1 Service Business Analysis...................................................................................................................7
6.2 Market Segmentation........................................................................................................................8
6.3 Strategy and Implementation............................................................................................................8
6.4 Sales Strategy....................................................................................................................................9
7. Description of the Management Team....................................................................................................9
7.1 Personnel Plan...................................................................................................................................9
8. Plan of Operation...................................................................................................................................10
9. Financial Plan.........................................................................................................................................10
9.1 Break-even Analysis.........................................................................................................................10
9.2 Investment Plan...............................................................................................................................11
9.3 Projected Profit and Loss Statement...............................................................................................12
9.4 Projected Cash Flow........................................................................................................................14
9.5 Projected Balance Sheet..................................................................................................................15
10. Legal Issues.........................................................................................................................................15
1. Executive Summary
Introduction
Lunch Box Delivery Service PLC is a business located in the capital city of Ethiopia, Addis
Ababa. It expects to catch the interest of professionals, traders and the elderly in different
organizations ranging from government to privately owned organizations. The company plans to
build a strong market position in the city, due to the absence of competitive climate in the
business area.

The Company aims to offer its services at a competitive price to meet the demand of the target
customers by providing state of the art service.

The Company
Lunch Box Delivery Service PLC is to be licensed by the Ministry of Trade under the ownership
of two entrepreneurs who initiated the idea to the city.

One of the owners ,Mrs. Gelila wodwossen extensive experience in sales, marketing, and
management and Mr. Fuad Nesredin experience in the area of finance and administration.

The company intends to hire five full-time couriers and one cashier to handle customer service
and day to day operations.

The Services
Lunch Box Delivery Service PLC delivery of lunch boxes to customers either from their own
home or from preferred hotels to their work place or living area.

The company provides freshly prepared foods from the customers’ home/hotels according to the
preference of customers. The foods are prepared at the morning time either in the home or at the
hotels before they are picked up by the scheduled couriers at the right time at the right place with
no delay.

The Market
The company’s business is new in its kind in the country. Several situations have forced to
generate such a business idea to help our community. Our community is becoming conscious of
their health and aware of the relationship of their health with their living styles especially with
the type of food they eat.

Lunch Box Delivery Service PLC wants to establish the business around the Yeka sub-city for
the start-up and in the future the business will be expanded considering the growing demand of
the services to other areas in the city. The target customers are basically professionals in the
private and government organizations who are busy for taking their lunch due to shortage of
time. The trade communities in the sub-city are the second target groups and the third are the
elderly people who are unable to purchase or prepare their food.
To attract such target groups promotion strategy will be designed putting different groups in to
consideration.

Financial Considerations
Lunch Box Delivery Service PLC expects to raise 50,000 Eth. Birr of its own capital, and to
borrow 50,000 Eth. Birr guaranteed by the Addis Saving and Credit Association as a five-year
loan. This provides the bulk of the current financing required.

The Company anticipates sales of about birr 990,000 in the first year, birr 1,138,500 in the
second year, and 1,309,275 in the third year of the plan. The company should break even by the
fourth month of its operation as it steadily increases its sales. Profits for this time period are
expected to be approximately birr 376,055 in year 1, birr 407,737 by year 2, and birr 503,174 by
year3. The company doesn’t anticipate any cash flow problems.

1.1Mission
Lunch Box Delivery Service PLC aims to offer high quality service to deliver boxed lunches for
our customers at right time and at a competitive price to meet the demand of professionals,
traders and the elderly so that they would get healthy foods according to their choices either from
their home or their preferred hotels in Addis Ababa city.

1.2 Keys to Success

Keys to success for Lunch Box Delivery Service PLC will include:

1. Providing the highest and reliable quality service with individual customer service.

2. Competitive pricing.
2. Mission/Vision Statement
2.1Mission
To deliver boxed lunches for our customers with quality and reliable services at the right time so
that our customers would get healthy foods according to their choices either from their home or
their preferred hotels in Addis Ababa city.

2.2Vision
To be a center of excellence in lunch box delivery service in Ethiopia.

2.3Values/Culture
Our core values are:
 Great Respect for Time
 Customers’ Choice is first
 Value for Money
 Quality Service

3. Company Description
Lunch Box delivery service PLC is a company located in Addis Ababa city in Ethiopia. The
company is dedicated to deliver customers lunch boxes either from their home or their preferred
hotels at a reasonable price, at the right time with well facilitated services and staffs who are
competent enough to serve and work for excellence.
The idea for starting this business emanates from observing some problems in the professionals,
elderly and trade community. Even though there was no research conducted in this area so far,
some of the problems observed are:
 The working force in some places are forced to eat foods which are not health for
their specific health conditions like obesity, diabetics, low-fat, dairy-free, allergy-
free etc because there is no alternative choices in their work place
 The majority of them are eating cold foods which are not recommended for health
 Some of them become ill due to food borne diseases from cross contamination
 Majority of them are forced to carry their lunch boxes since they cannot afford the
cost and they do not like seen carrying their lunch boxes.
  There is no available facilities to heat their lunch boxes before eating at the work
place

Such type of delivery service is practiced in some developing countries like India. But out
company is new in its kind for the country. For the time being this business has no competitors
but the company will work as if there are lots of them in the business area. The Initial investment
is around 100, 000 Ethiopian Birr. The total number of employees is to be dependent on the
demand of our customers and on future consideration for expansion.

4. Start-up Summery
The owners of this company will invest birr 50,000 and the remaining required financing will
come from five year investment loan in the amount of birr 50,000. The total investment is birr
100,000. The following chart and table show projected initial start-up costs for the lunch box
delivery service.

Start-up
Start-up Expenses
Legal birr 5000
Business plan preparation birr 2000
Other birr 2000
Total Start-up expenses birr 9000
Start-up Assets Needed
Cash Balanced on Starting date Birr 9000
Start-up Inventory
other assets birr 5000
Total Assets Birr 14000
Total Requirement Funding
Owner investment birr 50000
Current Liabilities
Accounts Payable
Current borrowing birr 50000
other current liabilities
Total Current Liabilities birr 50000
Loss at start-up birr (9000)
Total Capital birr 41000
Total Capital and Liabilities birr 91000
5. Description of Services
The company provides delivery of individual lunch boxes from their home/hotels to their work
places. The company believes there is demand for this service due to the aforementioned
problems. Even though detail investigation on this issue was not done so far by, different
scholars from other countries have studied that around 70% of workers eat their lunch outside
either carrying their lunch boxes or buying from the nearby restaurants.
Our delivery service is special in that we provide quality service to our customers with reliable
and dependable services. All individuals who can be professionals, elderly, traders etc affording
our service price could be our customers.
Since the market demand is high our company will start in small area and practice the service
and then for the future it will expand its service to cover larger area. We always work to become
best company in lunch box delivery service not only in the region but also to become known in
Ethiopia.

6. Marketing Plan
Market Analysis: the company estimates that about 50% of the revenue comes from
government and private employees who could afford our price, 20% comes from elderly peoples
and the rest 30% comes from traders. The table below further estimates the total market potential
of the service in the Yeka sub-city.

Market Analysis
Potential Customers Growth 2017 2018 2019
Elderly 15% 100 115 133
Traders 10% 200 220 242
Government and Private Employees 5% 300 315 331
Total 600 650 706

6.1 Service Business Analysis

The market for the lunch box delivery service is new to the city. The majorities of caterers in the
city always prepares and service their meals on request when the customers are in their hotels.
Some hotel services prepare their meals and deliver to the Institute or company not based on
individual requests. The niche where the company positions itself represents a convenient
location for start-up. Middle and upper class customers to whom the company serves the service
are less price sensitive as they value the high quality of service and health issues.
6.2 Market Segmentation
The market focuses on middle and upper income customers. The market looks for high quality,
rapid service with as much convenience as possible. Most individuals in this market segment are
willing to pay an extra premium within the pricing of lunch box delivery services to avoid
inconveniencies in relation with meal.
Our customers are:
 Government employees
 Private company employees
 Traders
 Elderly society members
 Any other individuals who are willing to be served

6.3 Strategy and Implementation

Our target area for the start up business is a place around Yeka sub-city in Addis Ababa. Our
office will be located in this area. We will advertise our business through different channels like
TV, Radio, newsletters, distributing smaller fliers in and around the target area. After advertising
our business very well, we began to register our customers request according to the following
inputs:
 Full name
 Address ( home/hotel address and exact location)
 Tel. No. ( mobile and home/hotel)
 Work place address ( location, direction, name of company, telephone number )
 Delivery hour
 Meal preference (sugar free, low fat, vegan, vegetarian, etc.)
After collecting all this information it will be kept in our central data base system for reference.
These customers might come from different corner of Addis Ababa city, so the lunch box
collectors from their home/hotels will be arranged after segregating/clustering the customers
according to their living area/hotels.
6.4 Sales Strategy
The company will focus its sales strategy on effectively reaching the target customers of middle
and upper class customers. For this purposes, the company will employ direct sales staff. At the
same time, the company will further strengthen its relationship with government & private
institutions, hospitals, clinics, social “Edirs” and prisoner houses to capture needs of the services

7. Description of the Management Team

The company is owned by two owners. One of the owners, Gelila wodwossen has extensive
experience in sales, marketing, and management and Fuad Nesredin brings experience in the area
of finance and administration.

7.1 Personnel Plan

In addition to the owners as managers, the company will have administrative and core staffs. The
total annual wages and salary is estimates at Birr 154,800.

Personnel
Total Annual
Position Number Monthly Salary Salary
Manager 2 Birr 3000.00 Birr 72000.00
Secretary 1 700.00 8400.00
Sales Person 1 600.00 7200.00
Courier 5 1000.00 60000.00
Cashier 1 600.00 7200.00
Total 10 5900.00 154800.00
8. Plan of Operation
The lunch box delivery service has the following main processes:
1. Receiving requests
2. Registration and signing of agreement
3. Collecting lunch boxes
4. Delivery of lunch boxes
5. Returning lunch boxes
6. Cost collection
7. Final reporting
8. Receiving feedback for continuous improvement
The service will have its head quarter around the Yeka sub-city which is rented. Five vehicles
used for collecting, delivering and returning the lunch boxes will be all rented. The cost of raw
material in our case the fuel used for the vehicles will be covered by the business.

9. Financial Plan
The company expects to raise birr 50,000 own capital and to borrow birr 50000 long term loan.
This provides the bulk of financing required. In making financial projections the assumptions
taken are annexed in appendix1 and the loan payment schedule is stated in appendix 2.

9.1 Break-even Analysis

The company break-even analysis is based on the average of the first year figure total sales by
units, and operating expenses.
Break-even point (sales):
BEP (annual sales) = Annual sales*Annual fixed costs
Annual sales-Annual Variable costs
= (990000*241000)/(990000-208000)
= birr 305183

BEP (percentage): = Annual fixed costs *100

Annual sales-Annual Variable costs
 = (2410000*100)/(990000-208207)
= 30.8%

9.2 Investment Plan

Investment Plan (in birr)
FIXED INVESTMENT EQUITY LOAN TOTAL
1.office equipment 27000 50,000 77000
2.others 5000 0 0
Total Fixed Investment 32000 50000 82000
PRE-OPERATING INVESTMENT
1. business plan preparation 2000 2000
2.licenses and registration 5000 5000
3. others 2000 2000
Total pre-operating Investment(POI) 9000 9000
TOTAL INVESTMENTS WORKING
CAPITAL 41000 50000 91000
DIRECT OPERATING COST
WORKING CAPITAL REQUIRED 9000 0 9000
TOTAL PROJECT COST 50000 50000 100000
DEBT TO EQUITY SHARE(%) 50% 50% 100%
9.3 Projected Profit and Loss Statement
In Birr
Year 1 Year 2 Year 3
SALES 990000 1138500 1309275
DIRECT OPERATING COSTS
1. raw material 198000 227700 261855
2.direct labor cost 67200 139000 139000
3. overhead cost 7227 8539 9820
Total Direct Operating Costs 272427 375239 410675
GROSS PROFIT 717573 763261 898600
INDIRECT OPERATING COSTS
1.office supplies 1980
2.Rentals 72000
3. indirect labor cost 84600
4.other expenses 1000
5. Depreciation 15400
6. POI 1800
Total Indirect Operating Costs 176780 176780 176780
OPERATING PROFIT 540793 586481 721820
INTEREST 5000 4000 3000
PROFIT BEFORE TAX 535793 582481 718820
TAX 187528 203868 251587
PROFIT 348265 378613 467233

DEPRECIATION CALCULATOR Value (birr) Period (yrs) Annual Depreciation

1.building 0 20 0
2.machinery and equipment 0 10 0
3.office equipment 77000 5 15400
4. vehicles 0 7 0
TOTAL 15400

POI CALCULATION Value (birr) Period (yrs) Amount/year

1.pre-operating investment 9000 5 1800
9.4 Projected Cash Flow
In Birr

Year 0 Year 1 Year 2 Year 3

SALES 990000 1138500 1309275
Cash in-flow
1. cash sales 148500 170775 196391
2.receivable 841500 967725 1112884
3. equity 50000
4. Fixed investment loan 50000
5.working capital loan 0
Total cash in-flow 100000 990000 1138500 1309275
cash out-flow
1.Total investment 91000
2.direct operating costs 272427 375239 410675
3.total operational cost before dep.&
POI 159580 159580 159580
4. Interest 5000 4000 3000
5. Tax 187528 203868 251587
Total cash out-flow 91000 624535 742687 824842
Net Cash 9000 365465 395813 484433
Loan Payments
1.principal for fixed investment 10000 10000 10000
2.principal for working cap loan 0 0 0
Total Loan payment 10000 10000 10000
Ending cash balance 9000 355465 385813 474433
9.5 Projected Balance Sheet
In Birr
Year 0 Year 1 Year 2 Year 3
ASSETS
CURRENT ASSETS
1. cash 9000 355465 385813 474433
2.receivable 148500 967725 1112884
3. inventories
Total current Assets 9000 503965 1353538 1587317
FIXED ASSETS
4. office equipment 77000
6. others 5000
Total Fixed Assets 82000 82000 82000 82000
Accumulated Depreciation 15400 30800 46200
Book value of fixed assets 82000 66600 51200 35800
POI 9000 9000 9000 9000
Accumulated POI 1800 3600 5400
Book value of POI 9000 7200 5400 3600
TOTAL ASSETS 100000 577765 1410138 1626717
LIABILITIES & EQUITY
CURRENT LIABILITIES
1.account payable
Total current liabilities 0 0 0
LONG TERM LIABILITIES
1. Long term investment loan 50000 40000 30000 20000
Total long term liabilities 50000 40000 30000 20000
EQUITY
1. owners' equity 50000 50000 50000 50000
2.profit of previous period 348265 696531
3.current profit 348265 378613 467233
Total Equity 50000 398265 776878 1213764
TOTAL LIABILITIES & EQUITY 100000 577765 1410138 1626717

10. Legal Issues

The legal personality of the business will be private limited company (PLC), which will be
established according to the commercial law of Ethiopia.
The licensing process, permits and legal registration have cost the partners birr 5000.
Appendices
Appendix1: Financial Assumptions
1. About 15% of the annual sales will be in cash and the rest will be payable during
the next month.
2. The direct operating costs as a percentage of sales will be as follows:
i. Materials: 20%
ii. Labor (direct)
iii. Overheads: 0.73%

3. Generally, costs will neither increase nor decrease for the coming three years.
4. The business will not obtain any credit from materials and equipment suppliers.
5. The business will have negligible or nil inventory level at the end of each business
year.
6. Depreciation and pre-operating investment are calculated based on the financial
rules.
7. The loan will be payable in five years and with no grace period.
8. The interest rate of the fixed investment loan will be 10% annually.
9. The business is subject to 30% of tax on net profit payable at the end of each
business year.
Appendix 2: Loan Payment Schedule

Amount of
Principal Installment Interest Payable Total
Year outstanding Due at 10% Amount
1 50000 10000 5000 65000
2 40000 10000 4000 54000
3 30000 10000 3000 43000
4 20000 10000 2000 32000
5 10000 10000 1000 21000
Total 50000 15000 65000