BUSINESS PLAN FOR MIXED USE BUILDING

FEASIBLITY STUDY FOR THE BUILDING OF

MIXED-USE BUILDING (G+2) IN NORTH SHAWA

ZONE SHENO TOWN ADMINSTRATION .

PROJECT OWNER: DEJENE DEMISE WOLDE

Oct , 2024

SHENO,ETHIOPIA
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 BUSINESS PLAN FOR MIXED USE BUILDING

Table of Contents
1 Executive Summary ............................................................................................................ 5
2. Introduction ....................................................................................................................... 6
2.1 General Background ..................................................................................................... 6
2. Project Objectives .............................................................................................................. 8
2.1 General Objective......................................................................................................... 8
2.1.1 Specific objective ............................................................................................ 9
2.3 Project description ........................................................................................................ 9
2.4 Project Rationale .......................................................................................................... 9
2.5 The significance of the project .................................................................................... 11
2.6 Project Location ......................................................................................................... 12
3. The Market Study ............................................................................................................ 13
3.1 Market Analysis ......................................................................................................... 13
3.2 The Demand-Supply Gap ........................................................................................... 13
3.3 Current supply of Mixed-use building ........................................................................ 14
3.4 Future market or Demand of commercial Building Rental........................................... 14
3.5 Target customers ........................................................................................................ 15
3.6 Marketing promotion and strategy .............................................................................. 15
3.7 Competition ............................................................................................................... 16
3.8 The project facilities and Services plan ....................................................................... 16
4 Technical Studies .............................................................................................................. 18
4.1 Description of the project Service ............................................................................... 18
4.1.1 Land Use Plan ..................................................................................................... 18
4.2 Building and Technology ........................................................................................... 19
4.2.1 Construction schedule.......................................................................................... 19
4.2.2 Architectural Design & Layout ............................................................................ 19
4.2.3 Structural design .................................................................................................. 20
4.2.4 Reinforced concrete ............................................................................................. 20
4.2.5 Foundation Design............................................................................................... 21
4.2.6 Construction Plan and process ............................................................................. 21
4.3 Utilities ...................................................................................................................... 22
5 Engineering and civil works .............................................................................................. 23

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5.1 Land, Building and Civil Works ................................................................................. 23

5.2 Manpower and training requirement ........................................................................... 24
5.2.1 Manpower requirement ........................................................................................ 24
5.2.2 Labor Availability ............................................................................................... 25
5.3 Project implementation ............................................................................................... 25
5.4 Organizational Structure ............................................................................................. 25
5.4.1 Organization and management ................................................................................. 25
6 Financial analysis.............................................................................................................. 32
6.1 Repair and Maintenance Cost ..................................................................................... 32
6.2 Depreciation and Amortization ................................................................................... 32
6.3 Total Revenue ............................................................................................................ 33
6.4 Discounted Payback Period ........................................................................................ 33
6.5 Cash flow ................................................................................................................... 33
6.6 Benefit cost ratio ........................................................................................................ 33
6.7 Internal Rate of Return ............................................................................................... 34
6.8 Net present value........................................................................................................ 34
7. Conclusions and Recommendations ................................................................................. 35
Conclusion....................................................................................................................... 35
References ........................................................................................................................... 37

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List of tables
Table 1: Office Space Demand Forecast ....................................................... 12

Table 2: The ground will be partitioned in to different rooms ........................ 4

Table 3: land utilization Plan ........................................................................ 16

Table 4: Utilities ............................................................................................ 20

Table 5: List of Building and Civil Works and Their Costs ........................... 21

Table 6: Manpower Requirement and Annual Labor Cost ............................. 22

Table 7: project Implementation schedule ...................................................... 23

Table 8: Repair and Maintenance Cost........................................................... 31

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 BUSINESS PLAN FOR MIXED USE BUILDING

1 Executive Summary
KEY INFORMATION HIGHLIGHTS

PROJECT OWNER Dejene Demise wolde

PROJECT TITLE Mixed use Building

LAND REQUIREMENT 500 M2

PROJECT AREA Sheno town

PRODUCTION CAPACITY B+G+2

PRODUCTS TO BE MANUFACTURED
Rental Rooms Primary & secondary level schools, Hospital (higher
Clinics) with standardized Pharmacy Public Library with average size
Youth recreational sites; Various Prayer sites & Play grounds
Supermarkets & other facilities that may be required by the ‘would be
residents ‘Apartment and Wholesales Shopping Mall
MARKET Domestic and International

COST OF THE PROJECT Total investment Cost: 15,000,000ETB is required, from this
amount 20% or 3,000,000ETB from owner equity and the rest
80% 12,000,000ETB from bank loan.

PROJECT LIFE 10 YEARS

NUMBER OF WORKING DAYS 365 DAYS

FINANCIAL VIABILITY ( AT 10% DISCOUNT RATE )

NPV (NET PRESENT VALUE) 54,439,417 BIRR

IRR (INTERNAL RATE OF RETURN) 34.13%

PBP ( PAY BACK PERIOD) 3year and 9month

ANALYSIS RESULT

THE PROJECT IS TECHNICALLY FEASIBLE, FINANCIALLY AND COMMERCIALLY VIABLE

AS WELL AS SOCIALLY AND ECONOMICALLY ACCEPTABLE. HENCE, THE PROJECT IS
WORTH IMPLEMENTING.

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 BUSINESS PLAN FOR MIXED USE BUILDING

2. Introduction

2.1 General Background

Ethiopia has embarked on a long-term development strategy which aims at achieving

sustainable human development with all pre-requisites for a middle-income country by the
year 2025. This envisages creation of a strong, diversified, resilient and competitive economy
that can effectively cope with the challenges of development and that can easily adapt to the
changing market and technological conditions in the regional and global economy. The
priorities identified as the essential catalyst for the attainment of the Vision 2025 objective
include development of infrastructure as an important ingredient towards attainment of faster
economic growth. The construction industry is a fundamental economic sector which
permeates most of the other sectors as it transforms various resources into constructedphysical
economic and social infrastructure necessary for socio-economic development. It embraces the
process by which the physical infrastructure is planned, designed, procured, constructed or
produced, altered, repaired, maintained, and demolished. The construction industry has
important contributions to the Ethiopian economy, as demonstrated by its share in the GDP.
The sector has registered a remarkable growth, over the last 11 years there has been increased
investment on the development and expansion of various infrastructure projects.

During the past decade robust public and private expenditure on infrastructure and other
construction works has served as a catalyst for Ethiopia’s rapid economic development. The
country has consistently invested more than 30% of GDP into Gross Fixed Capital Formation
(GFCF) expenditure since 2010 and as a result, Ethiopia has emerged as one of the fastest-
growing economies in the world. The market value of the construction sector is currently
estimated at more than US$7bn. According to the 2017 edition of African Economic Outlook,
construction activities in Ethiopia accounted for 15.9% of GDP at current prices during the
2015/16 fiscal year.

The current fast and dynamic economic growth of Ethiopia especially in Sheno town necessitates
equivalent growth of building and construction sector. The sector should expand rapidly to support
the overall economic development sustainable.

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In the building sector of the economy, the multi- purpose in the one becoming rapidly expanding in
Sheno town since dynamic economic development of urban economy requires the construction of
these buildings in the city to support the growing of business service sectors like supermarkets,
Beauty salon, shops, offices cinemas, Computer Center, Cafeterias, Restaurant, Assembly hall,
apartments and other activities. In this regard, mixed used building expands in the all parts of the
city.

Investment and property development play an important role in any emerging markets or economies.
Property generally comprises residential houses and commercial real estate property (mainly mixed-
use building) developed for rental business, company office and sale. The property investment
market in Ethiopia remained under developed for several years. As a consequence, the supply of
residential houses and non-residential real estate that can be used for residence, office space,
shopping malls and catering services in the urban centers of the country is disproportionately low
to cope with the growing demand in the country spinning from the average growth in GDP of 5.5%
over the last ten years and population increase. The relatively good performance of the macro-
economy (real growth in GDP, low inflation rate and growth in investment and export sector) has
stimulated unprecedented investment growth in the property sector over the last five years. The
growth of investment in the property market over the last five years in consistent with the global
experience suggesting that investment in the residential and commercial property is greatly
influenced by the performance of the macroeconomic conditions. Ingeneral, a stable macroeconomic
condition leads to economic and business growth and develops investors’ confidence. This certainly
spurs large demand in the property market for office space, shopping malls, catering services,
apartment and residential houses. Following growing demand trends, and with the expectation of
high return on their investment capital, large number of land developers pooled their financial
resources and invested in the property market.

To this effect, the owner of the envisioned Mixed-Use Building Ethiopia-based company has been
living for long time in this city, planned to buy and rent in Sheno town ) and undertaken this project
study to check the market, technical and financial feasibility of this project. The promoter is very
ambitious and committed to realize the project to buy and rent B+ G+2 mixed use building. Hence,
they expect to get the necessary support from United Bank to make the project to be operational.

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Besides, the government policies and incentives for the private sector investment are very
promising that motivates the promoter to engaged in mixed use building business.

2. Project Objectives

2.1 General Objective

The major goal of this project is to contribute towards the growth of the trade sector in Sheno
town .

Its specific objectives include the following.

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2.1.1 Specific objective

 To construct and develop modern shops, offices, and restaurant & cafeteria facilities that
enable to provide standard services to customers.
 To undertake trading and other refuted business activities that enable to generate a
reasonable to the invested capital.
 To develop modern business center that would provide full services on city standard.
 To create employment opportunities.
 Contribute towards the beautification of the city through the construction of modern
building infrastructure and facilities.
 To establish economically viable, socially acceptable and environmentally friend mixed
use Apartment.

2.3 Project description

The long-term goal of the project is become the best choice trade center in the city. The proposed
project will have a total area of 500m2 in which the construction area is 250m2, designed to reader
a multipurpose giving business, which will in turn plays significant role towards solving shortage of
business center in Sheno town .

The historical nature of the city as business unique location in one of the most attractive centers in
Ethiopian (100% urban center). The owners plan the project to render banking and insurance,
shopping facility, offices and cafeteria services to create high quality class to satisfy the interest of
customers in the city. Based on environmental and other considerations, the entrepreneur has
determined the type and size of the building which is already determined by the site; conceptual
planning and preliminary analysis have been carried out by analysts.

In order to attract its clients to the service, the project will develop high standard shop & banking
rooms and office of best choices and will also save best quality apartments, restaurant and café.

PROJECT ORGANIZATIONAL PLAN

DEVELOPMENT PLAN THE PROJECT
Land ownership: The land ownership is acquired through a lease contract from the Sheno town

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Administrative lease period. The total land area is assumed to be 1,000M2 of which 700M2 is Main
terrace Building. The detailed information is shown the proposed land space program with the
various planned outlets and their respective areas in square meters and its cost is located in land
utilization plan section.
RENTAL LOGISTIC SUPPORT
The mission of the Mall Business Complex Building center’s directory is to create high quality
service. For this purpose it is necessary to supply standard bed room service and rental room, which
is through operation activities shopping center with all the required manufacturing equipment, means
of communication, leisure material, gymnasium, office service, internet cafe and other safety. The
professional manufacturing equipment will be used in the shopping center for the provision of
services. The equipment and fittings meet all the standards specified for modern shop equipment.
Lightening
TECHNOLOGY AND PROCESSING
ENGINEERING SUPPORT FACILITIES
HEATING, VENTILATION AND CONDITIONING SYSTEM
The lightening, heating and conditioning facilities of the building are provided with the help of
central plant air conditioning system, with water circuit based on the two built-in dual-purpose
lithium bromide absorption machines, operating by the heat pump cycle using the thermal value of
natural gas. It is planned to use urban network as a backup heat supply source.

The heating and conditioning system in the Bulging Center would be installed with the help of fan
coils connected according to the scheme of the dual-purpose lithium bromide absorption machine.
Such scheme allows to operate the system both centrally (by temperature changing of the dual-
purpose lithium bromide absorption machine circuit), and locally (by changing the productivity of
fan coils). Warm air heating equipment will be used for the heating system.

The ventilation system and conditioning system in the Bulging Center is the jointly operated
systems. All these systems are called the environmental control system which is able to set not only
the temperature parameters, but also the parameters of humidity, air purity and air changes. It is
necessary to equip the used air system with the fan coils both with cold (conditioning) and hot
(heating) water line, operating in summer and winter time. After being heated or cooled in the air
inlet units, the air is delivered through air ducts.
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The ventilation in the Bulging Center consists of the following systems:

Story general exhausts ventilation consisting of exhaust ventilation units. General exhaust
ventilation is characterized by its high degree of automation quick response of the air quality sensors.
The automation system of the general combined exhaust and inlet ventilation makes it possible to
adjust the air balance between large spaces depending on the number of visitors. 2) Local exhaust
ventilation units built in cooking spaces (restaurant and café’s kitchen, kitchen in the food-court area
and food preparatory workshop), in the engineering building rooms (individual heating plant,
transformer substation), in amenities (bathroom units, shower cubicles, smoking areas).
WATER SUPPLY AND SEWAGE SYSTEM
The one input of the city cold water conduit, located at sheno town is used as water supply. The
water supply system is designed as the down distribution, with floor-by-floor offsets. Main and
sectional conduits (hot and cold water), sewage pipelines (sanitary and storm water drain) are made
of polypropylene pipes. The design project provides a separate public water supply system and fire
fighting water conduit.

For the necessary water height in inner fire line we use pressure-holding pumps installed in the
pumping plant. The inner fire pipelines are made of steel gas water pipes. For collecting and pumping
of sewage effluent formed at the first basement floor (bathroom units, shower cubicle, food
preparatory workshops, and washing plants in the supermarket) we arrange pumping plants at the
second basement floor. Every pumping plant is equipped with two pumps (operating and standby).
Storm water is collected from the roof (3, 4 floors) via intake head equipped with heating coils for
frosting prevention. Storm water drain is installed indoor. Storm water collection from the roads is
made through the surface water conduit with storm water inlets equipped with storm water gratings.

POWER SUPPLY
Power is received from the main and standby power supply-bus section I and II 6 kV ПС 110/6 kV
of «К» and Sheno town city substations. The connection of power receivers to the building of the
shopping center according to the power receive scheme meet the requirements of customer contract
demand (3800kW), as well as the safety requirements to the 1 class of power receivers according to
its energy saving. The substation of the shopping center is designed as a double transformer
substation 2×2500 kVA with two backup bus sections 0.4kW, without automatic transfer circuit
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breaker. The loading of 1st category is to be connected through the fast-acting automatic transfer
circuit breaker. The main load of electrical consumers is proportionally connected to the both bus
sections РУ-0,4kV. The maximum available load of the transformer substation is defined by the
power of transformers and its non-reserved power makes 5000kVA. The installation of static
compensators on the side of 0,4kV allows to decrease costs and to unload the power transformers
from inductive component of the consumed energy.
ELECTRICAL EQUIPMENT AND LIGHTING
For indoor power supply we designed switch boards on each floor, the switch boards installed in
separate rooms are available for maintenance personnel only (two switch boards per story with
zoning of the north and south side of the building). The switch boards are allocated overlapped and
carry the load from main bus bar wired from transformer substation РУ-0, 4 ТП of the shopping
center. For the customers’ security there is a separate section specially designed for the customers
of the first security factor, the section is connected through the automatic circuit breaker from the
inlets of the transformer substation РУ-0,4kV. The switch boards are connected according to the
main power supply diagram. For working lighting in common areas it is necessary to use energy-
saving luminous tube lamps. Within the space of bowling, billiards, café and restaurant we use
combined lighting with incandescent lamps.
PRINCIPLES AND STANDARDS OF FINISHING
The principles of finishing presuppose various approaches; each approach is used due to the
agreement between the tenant and the lessor.
Space finishing at the expense of tenant: This approach means the lease of gross leasable areas
with no “fine” finish, final finishing is executed at the expense of the tenant and according to his
project. The areas are leased according to the following standard of shell and core fit-out:
Rental Area: thermal contour, open plan of the shopping area, flat waterproof floor with the heating
system, naked walls, operating ceiling;
Utility Rooms (Bed Rooms): flat waterproof floor with the heating system, naked walls, operating
ceiling;
System Assembly (in the rental area and in the utility rooms): ventilation system, conditioning
system for the shopping area (main routes without end-use devices), heating system, sewerage and
water supply system, fire-fighting system, security and fire alarm;

Electricity: terminal only (without interconnection wiring). This approach provides less fine finish
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expenses for the lessor, but includes the expenses incurred by the tenant, dealing with the lease rent
- less expense than when leasing with the fine finish.
Finishing anchor area is at the expense of the tenant, fine thread and total areas at the expense of
the lessor. In this case anchor areas are leased according to “shell & core” standard and “fine” finish
is executed by their independent projects subject to their technologies. For this period there is a
“leasing vacation”. In the project calculation we accept the term that the anchor areas are transferred
according to the standard “shell & core”, subject to its technology concept by the approved decision
of the lessor, and the final finish is executed at the expense of the tenant.
The rest areas are finished according to the common interior design developed for the shopping
center. In the case when franchise raises special demands to the design they pay for the finishing
works at their expenses. The signing contracts with the anchor tenants at an early stage of designing
allowed make the project oriented to the technologies of concrete tenants
INSTALLATION OF TELEPHONES
The external telecommunications networks are manufactured and laid at the expense of Network
proved Close Corporation according to the technical conditions provided by ETC. The installation
of telecommunication networks provides quick net connection, connection to the urban telephone
network and access to the internet.

2.4 Project Rationale

Mixed-use projects are developments which combine two or more types of revenue producing real
estate developments. Mixed-use projects may be either low rise suburban projects or high rise, high
density urban projects. Mixed-use projects were created to satisfy a convenience and marketing
demand using valuable property for its highest and best use. For instance, to have a hotel function
provides advantage for office visitors while creating a demand for the hotel itself. The synergy created
between the components creates vitality for the mixed-use development and generally combining
different functions in one single project is superior to each single development. Mixed- use
developments are characterized by:
 three or more significant revenue-producing uses (such as retail/entertainment, office,
residential, hotel, and /or civic/cultural/recreation) that in well planned projects are mutually
supporting;
 significant physical and functional integration of project components (and thus a relatively
close-knit and intensive use of land), including uninterrupted pedestrian connections,
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 development in conformance with a coherent plan (that frequently stipulates the type and
scale of uses, permitted densities and related items).
Integrated shared parking is a key component, improving land-use efficiencies and reducing cost.
Pedestrian circulation and orientation are critical elements in the planning process, because without
them, the project will not work as a whole and will not achieve the desired synergies and sense of
place that are the hallmarks of mixed-use developments. This second criteria distinguishes mixed-
use developments from other real estate projects that may include three or more significant revenue
producing uses but do not fully integrate them such as business parks or master planned communities.
Physical configuration of mixed-use developments can be categorized into three groups as below:
 Mixed-use Towers: These are single, high rise, high density towers. Functions are layered
vertically. Mostly located in downtown. They have striking physical profile and create land
marks so helpful in marketing the development but have a disadvantage of creating less
public outdoor space.
 Integrated Multi-tower Structures: These structures architecturally connect individual
buildings and towers in one multi-component development. Common building may be an
atrium, a shopping center or underground parking area. Mostly found in downtown central
business district (CBD) or high-density suburban downtowns.
 Mixed-use Town Centers, Urban Villages and Districts: This type of mixed-use projects is
made up of variety of individual buildings around streets, parks or squares and seems like
an urban district more than a single project. Mostly developed outside downtowns. Mixed- use town
centers, urban villages and districts are clearly the direction that most mixed-use designs are moving
today. They also offer greater flexibility for timing and phasing projects, important factors in
improving feasibility and reducing risk. The existing promising investment opportunities, the
demands of service need along with relatively sound investment support made by the government in
such kinds of feasible projects, compelled the project promoter to initiate the multipurpose oriented
business project to be established. Despite the promising business opportunities of the city, the trend
on such kinds of investment found to not enough. The mismatch between the demand for and supply
of such kind of services in easily observed in the city.

Therefore, the existing shortage or absence in the supply of these services, along with its commercial
and administrative access, better location and infrastructure access, escalating trend of urbanization
and business activities, thus it is with such reason that this project is identified and proposed and
assumed to be more profitable.

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In general, the country’s privatized and free market economy; good governance creates a favorable
environment for the development of investment for private investors.

2.5 The significance of the project

The envisaged project deemed to add to the economic development of the city in general inspecific
with following ways:

A. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income taxes,
payroll income tax, lease payment and VAT are collected from undertaking business activities.
Therefore, the building will serve as sources of revenue for the city.

B. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of the
government is working on tackling the problem of unemployment and fostering the

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development process either through creating self-employment or employment in other organization.

Hence, this project will hire 26 individuals after completion of the project and more than 400
individuals during construction.

2.6 Project Location

The license area is located in Sheno town City Administration;Nifas Silk lafeto Sub city, the total
area of the project is 500 m2.

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3. The Market Study

3.1 Market Analysis

MARKET STUDAY AND APPLICATION

GENERAL OVER VIEW
Nowadays the sphere of service industry commercial activity is being developed rapidly in Ethiopia.
Originally the development took place in multi-million-strong cities, and then this extended to the
cities with the population over 200,000 citizens, and now Sheno town is concerned the cities with
the population about 200,000 people. It is caused by high consumer demand, and also the will of
commercial operators to open Business Complex Building service in these cities. There are several
operating modern Shopping centers in large cities, the large amount of projects are in development
and are going to entry into the market in the next two years. As for the cities with the population of
300-700,000 people, here some modern forms of trading are being created; mainly there is a
tendency for reconstruction of Business Complex Building center plants or out-of-repair department
stores existing in the new democratic period. As government plan small Shopping Centers are often
developed in district and Zone town with the total area from 100 to 500 sq., as a rule, they are located
in restructured buildings, often not quite suitable for commercial purpose. It is in line with the rapid
growth of population in the urban center and the rural transport route sustainable markets are
essential to the success of the public multipurpose building market center service industry. The
markets include local municipality or community based market; domestic markets provides a
foundation for export market; and tourism markets contributes to country development
competiveness and foreign currency earnings for local economies. The envisaged project
expectations of the proponents collectively point to a high volume, high-value destination. In order
to maximize revenue yield, the feasibility study recommends a cautious approach of focusing on the
proven market demand from the existing public multipurpose building service demand, through the
establishment of BUSINESS COMPLEX BUILDIN (G+2) a phased approach is envisaged to the
development of public multipurpose service

MARKET STUDY AND MARKET ANALYSIS

There are a number of factors which affects the demand of standardized mixed use building. Of these
factors, the most important to have influence is population growth and the level of income. The
currently expanding service industry in sheno town and from every corner of the country the city
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has been inviting skilled and unskilled labor forces to the center; in addition, the number of both
national and international offices has been increasing. Above all the increase in the number of
population increases for the provision of different services. Nowadays, most of the private business
organizations need their own small-medium offices in order to give their services and provide their
products, and they prefer the place that found in the center or close to the road. As clearly indicated
in the introductory part of this proposal, Sheno town is the dynamically growing urban center of
Ethiopia. Though the market demand gap for mixed use building is not clearly understand there is
wider gap for such demand as many merchants, organizations are flouring to the city every day.
From prior business experiences, the demand of mixed use building is very high and hence the
demand and the supply gap is very wide.

3.2 The Demand-Supply Gap

There has been a significant growth in the number of local and international trades across the
country. This increase is mainly associated with the stimulation of economic activist and partly due
to an increase in the flow of international and local traders in to the Sheno town . Since Sheno town
is an important commercial center in addition there is a significant increase in business activates and
hence increasing the number of traders. Even though there is a lack of quantitative estimates that
depict the actual demand and also the annual growth rate commercial facilities are scarce in the city.
As a result, there is a large gap between the developed and that of the supply for modern Bank and
cafeteria accommodation hence this project would not face any problem of demand scarcity for its
business Centre and it would provide good service to customers.

SHENO TOWN CITY MIXED USE BUILDING DEMAND

Commercial building/office sector has shown a dynamic change in the past few years. The reason
for this could be rapid economic growth and a supporting public infrastructural development. Other
factors relevant in the specific case of commercial buildings are the large increases in national and
international
businesses, particularly firms in the services sector. The business of multipurpose buildings in Sheno
town in booming highly due to the recent rapid growth experienced in Ethiopia. As a result, a good
number of local and international organizational are coming in place. Government offices which
used to operate in limited spaces all over the city are also concentrating on leasing new and modern
buildings. Increasing numbers of international organization which in the past had typically converted
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residences into office space are now moving towards renting whole floors or even multiple floors in
modern city-center commercial buildings. This phenomenon can be observed everywhere, and not
only along the building line, but also in “bedroom suburbs”. There is lack of real estate, lack of
reasonable credit resources, remoteness from the capital part of the regional capital city caused the
unavailability of modern shopping and multifunctional centers, high grade shopping malls that
satisfy recent demands and have modern conception. Therefore to make the sales area calculation
we have to use the active commercial projects data
FUTURE MARKET OR DEMAND OF COMMERCIAL BUILDING CENTERS
The demand for office space is a derived demand because firms rent space as an input to the
production of services or goods they provide to businesses and households in the local or national
economy. Following our survey of office space users in several areas are mainly firms providing
banking, offices, cafeteria and restaurants, supermarkets, computer center service. Future demand
for office space is actually driven from growth in number of offices in the city which in turn is
influenced by the macro-economic growth in the country. Assuming that demand for office space is
directly related to the growth in the economy, the forecast for office space demand is shown

3.3 Current supply of Mixed-use building

Commercial building/office sector has shown a dynamic change in the past few years. The reason
for this could be rapid economic growth and a supporting public infrastructural development. Other
factors relevant in the specific case of commercial buildings are the large increases in national and
international businesses, particularly firms in the services sector.

The business of multipurpose buildings in Sheno town in booming highly due to the recent rapid
growth experienced in Ethiopia. As a result, a good number of local and international organizational
are coming in place. Government offices which used to operate in limited spaces allover the city are
also concentrating on leasing new and modern buildings. Increasing numbers of international
organization which in the past had typically converted residences into office space are now moving
towards renting whole floors or even multiple floors in modern city-center commercial buildings.

3.4 Future market or Demand of commercial Building Rental

The demand for office space is a derived demand because firms rent space as an input to the
production of services or goods they provide to businesses and households in the local or national
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economy.

Following our survey of office space users in several areas are mainly firms providing banking,
offices, cafeteria and restaurants, supermarkets, computer center service. Future demand for office
space is actually driven from growth in number of offices in the city which in turn is influenced by
the macro-economic growth in the country. Assuming that demand for office space is directly related
to the growth in the economy, the forecast for office space demand is shown in the following table;

Table 1: Office Space Demand Forecast

Office space demand under base Office space demand under high
case economic case economic
Years E.C Growth Growth
2010/2011 9,916,543 11,304,859
2011/2012 11,007,363 12,057,416
2012/2013 12,218,173 12,953,878
2013/2014 13,562,173 13,963,577
2014/2015 15,054,011 14,554,534
2015/2016 16,709,952 14,987,431
Source: estimation based on GTP’s forecasted Ethiopian Economic Growth

3.5 Target customers

The target customers of this envisaged project include: -

 Business Community
 Business organization
 The government bureau
 Non-governmental organizations

3.6 Marketing promotion and strategy

In order to penetrate and gain considerable market share, one of the major marketing strategies for the
project is consistently rendering quality service to its tenants. Due emphasis must be placed on improving
quality of service and facilities. The major marketing strategies to promote the project and gain
considerable market share include:

 Advertising through different means focusing on the existing service and facilities
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 BUSINESS PLAN FOR MIXED USE BUILDING

 Promote in association to the key location and nearby business

 Working on sustained promotional work.
 Working on public relations to reach and influence key personas and organization with a
capacity of making decision.
 Keeping the quality of its service/ facilities and consistently improving with changing
situations.

 Seasonal discount pricing different others customer centric marketing strategies will be
used by the company.

3.7 Competition

There are different forms of competition that may face the envisaged mixed-use building. These
are price and non-price-based competition. Moreover, there are different competitors that will
compete with the project either directly or indirectly. But the mixed-use building under discussion
has diversified marketing strategies that could enable it come up with the different competitors in
the market. Moreover, it will frequently conduct competitors research which focuses on, the strength
and the weaknesses, the different competitors’ strategies, the techniques they use in rendering the
service, their customer handling methods, and others. Generally, the project has many other projects
all over Sheno town villages which compete with it.

3.8 The project facilities and Services plan

In order to provide mixed use business center building services of a high standard, it has been
planned to construct and develop the infrastructure and facilities that would viable to meet the
requirements of an international standard business center. Accordingly, various buildings and
facilities will be constructed phase by phase starting with the most needed ones that are essential to
commence the operation of its business activities. With the completion of construction, the building
will provide a combined service such as shops, offices, restaurant and café service as wellas modern
business center that primarily serve its guests and major clients.

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 BUSINESS PLAN FOR MIXED USE BUILDING

Table 2: The plan is that the ground will be partitioned in to different rooms:

Building Description Measure Unit Total

pric
e in
Birr
Basement Parking Cars 5/per 5*50*365=91,250
Service hour
Ground Supermarket, M2 350 350*1100*12*2=9,240,000
Bakery,
Pharmacy,
Banking &
Insurance
1st floor -2rd Beauty salon, M2 150 224*1100*12*3=8,870,400
floor shop, Computer
Center, Cafeteria
and Restaurant
Total 15,504,850.00

Since the project will be engaged in mixed building the main sources of its annual revenue would be from
the rental of building spaces such as different types of shops, offices, and banking, café and restaurant.
Therefore, the sources of revenue have been classified in to one category namely the rental of banking and
supermarket, offices, shops, restaurant and café, meeting halls based on these classifications. Based on
the market price of similar mixed-use building in the area, the envisioned buildings set the following fair
price (Before VAT) for its service, hence when the building construction fully get operational it is assumed
to generate a yearly income of ETB 55,504,850.00.

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 BUSINESS PLAN FOR MIXED USE BUILDING

4 Technical Studies

4.1 Description of the project Service

The envisioned mixed purpose building will provide different rental services to the different
customer groups for different purpose. The building will have basement, ground and 20 (twenty)
floors. The purpose of the building explained as follows;

 The ground floor, first floor second floor and third floor designed for different business
centers like banks, supermarket, beauty salon (man and women), Computer center,
pharmacy, internet café, boutiques, bakery, different shops and other business activities,
 3rd floor designed for Offices.
 4th-5th floors designed for entertainment and meeting hall

4.1.1 Land Use Plan

The total land required for the envisioned project is estimated to be 500m2. The total area for the
construction of the building will be 350m2, as revealed below.

Table 3: Land utilization Plan

No Description Land M2
Basemen Groun First floor- floor
t d Twenty
1 Building (G+12)
1. Basement 350
1
1. Ground 350
2
1. First floor- Floor Twenty 350
3
Total 500

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 BUSINESS PLAN FOR MIXED USE BUILDING

4.2 Building and Technology

4.2.1 Building

The building has been completed and is fully operational. The rest of the work will be completed
the next time and you will be able to earn extra income by renting out unoccupied rooms..

Mechanical and Electrical install coincided with each other due to the need for coordination between
the two divisions. There were several periods of construction during the schedule in which there
were multiple construction activities occurring at the same time.

The construction site must be organized accordingly as these processes take place. As with any
construction project, the goal of the schedule will to complete all the maintenance and finishing
activities. This date of completion of maintenance & finishing works are practical based on the
time of year.

4.2.2 Architectural Design & Layout

Although functional spaces for the project were laid out in significant detail, the rest of thebuilding
had designated spaces but set layouts. It was at the discretion of the project promoter to devise typical
layouts for the non-detailed commercial and office spaces. To make sure that the building’s layouts
were practical, the project owner researched typical architectural layouts for laboratory and
executive office spaces. The walls and partitions throughout the floor were congruent with the
structural frame and column locations.

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 BUSINESS PLAN FOR MIXED USE BUILDING

4.2.3 Structural design

One of principle deliverables of the project is the structural design of the building. The structural
bays were coordinated with the layout of the building adjustments would be made to the bays if
specific layouts were necessary. The frame would be made up of a grid with repeating standard
structural bays. Included in the structural system were bay sizes, shape and size of structural
members, floor compositions and curtain walls. These elements were established to resist gravity
at lateral loads as appropriate.

The gravity load design was completed for two frames; one of structural steel and one of reinforced
concrete. The structural steel frame was choose for further design based on cost per square foot,
local availability of material and constructability considerations, such as erection and fabrication.
The steel system was then be designed for lateral loading with necessary adjustment being made to
framing.

4.2.4 Reinforced concrete

The project group prepared hand structural design calculations for a typical bay of a reinforced
concrete frame. In all reinforced concrete bay designs, a superimposed dead load of 8 pounds per
square foot was assumed for mechanical equipment, floor coverings and ceilings.

Similarly, the design of the typical bay accounted for the use of different commercial space, in which
a live load of 1000 pounds per square was assumed. Loads was calculated based on the requirements
of the minimum Design loads for Buildings and other Structures.

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 BUSINESS PLAN FOR MIXED USE BUILDING

4.2.5 Foundation Design

The design of a superstructure may be accurate, have considered all possibilities and still fail because
the substructure is incapable of distributing the applied loads to the supporting soil.

Foundation design takes more into consideration than merely the loading from the columns. While
the main part of the project focused on the structural frame and its alternate designs, a preliminary
foundation plan was designed based upon maximum load carried from the superstructure through
the columns. The foundation design conducted by the project team consisted of the selection of
foundation type, determination of the bearing capacity and the design for typical interior and exterior
spread footings.

4.2.6 Construction Plan and process

The construction process for this project is normally a disjointed three mages development by which
the conceptualized need of the promoter of this project is translated into a functional facility that was
meet their needs in terms of time, cost and quality.

Based on a general program of the project owners the consultant who was going to be hired makes
site studies, develops structural designs, prepares drawings and specifications, determines quantities
involved and estimated the resultants costs. All these activities was done in the first phase of the
project which is the design stage after the document are produced by the designers have been
received, and the works secured the project is supposed to construct by its owncompany. And then,
the project constructor was expected to prepare and submits a detailed construction program which
includes material schedule, manpower requirement and cash flow forecast.

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 BUSINESS PLAN FOR MIXED USE BUILDING

4.3 Utilities

A number of utilities world be put in place in order to ensure smooth functioning of the project.
These utilities include:

Table 4: Utilities

Cost
No Description Qty. Unit cost (Birr)
1 Electricity supply, kWh 100,000 1.30*10,000 130,000
2 Water Supply m3 50,000 10*500,000 500,000
20,000
3 Telephone and Internet Broadband

2000 19*2000 38,000

4 Fuel, Oil and lubricant

Total
1,188,000

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 BUSINESS PLAN FORMIXED USE BUILDING

5 Engineering and civil works

5.1 Land, Building and Civil Works

The Mixed-use building has a total site area of500 m2. The building floor area has covered
350 m2 and the remaining 150 m2 is left for construction. The type of buildings and its
corresponding civil construction cost is given on Table 5.

Table 5: List of Building and Civil Works and Their Costs

No Description Total price

A. SUB-STRACTURE
1 excavation and earth works 483,657.25
2 concrete work 1,350,225.34
Sub total 2,833,882.42
B. SUPER STRACTURE 4,667,765.01
1 Concrete work 3,413,310.11
2 Block work 954,154.51
3 Roofing 296,016.84
4 Carpentry and joinery 560,104.80
5 Metal works 1,420,087.80
6 Finishing 1,382,686.43
7 Painting 477,132.06
8 Electrical installation 518,850.90
9 Sanitary installation 991,268.06
Subtotal 10,013,611.51
A+B 14,681,376.51
Vat (15%) 318,623.49
Grand total 15,000,000

As shown on Table 5, the total cost of building and civil work is estimated at Birr 15,000,000
and out of which the proponent has worked more than birr 10 million.

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 BUSINESS PLAN FORMIXED USE BUILDING

5.2 Manpower and training requirement

5.2.1 Manpower requirement

The list of manpower and the annual cost of labor is indicated in Table 6.

Table 6: Manpower Requirement and Annual Labor Cost

Position No Qualification Monthly Annual

SN salary /Birr salary /Birr
1 General manager 1 BA in management 10,000 120,000
2 Building admin 1 BA in Acct/Mgt 8,000 96,000
3 Secretary 1 10+2 in secretariat 3,000 36,000
science
4 HRM Officer 1 10+2 in HRM/ 4,000 48,000
Management
5 Technical and 1 Diploma in building 8,000 96,000
maintenance maintenance
manager
6 Finance head 1 BA in Accounting 6,000 72,000
7 IT Technician 1 Diploma in computer 72,000
science/IT 6,000
8 Marketer 1 Diploma in marketing 5,000 60,000
9 Accountant 1 Diploma in accounting 4,000 48,000
10 Guards/Security 4 Basic 2,500 30,000
11 General Service 1 Diploma in Mgnt 6,000 72,000
head
12 Purchaser 1 Diploma in purchasing 3,500 42,000
&Sup Mgt
13 Electrician 1 10+2 in general 4,000 48,000
electricity
14 Plumber 1 10+2 in general 3,500 42,000
mechanic
15 Casher 1 10+1 in bookkeeping 3,500 42,000
16 Cleaner 5 Unskilled 3,000 36,000
17 Maintenance 1 10+2 in General 3,500 42,000
officer mechanic
18 Driver 1 10 completed 2,500 30,000
Total 26 86,000 1,032,000
Benefit (20%) 17,200 206,400
Grand Total 103,200 1,238,400

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 BUSINESS PLAN FORMIXED USE BUILDING

5.2.2 Labor Availability

Workers for this type of plant were available throughout the year. No foreseeable problems
are expected as most of the work requires no previous skills.

5.3 Project implementation

The building is in full swing, with some work to be completed. The major activities include
Bank loan processing to buy and rent the building. The time schedule for major activities is
presented below:

Table 7: project Implementation schedule

S Activities Date
N
1 Preparation Project Proposal March 2025
2 Bank loan processing Mar- April 2025
6 Service execution May, 2025

5.4 Organizational Structure

5.4.1 Organization and management

Organizational Structure

The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
manager with the responsibility of supervising the overall activity of the building. Depending
up on the nature of the center and the amount of work to be performs; thereexist auxiliary
units under the general manager.

Employees under each unit will be supervised by the department head that is accountable for
the general manager. General Manager is appointed by the owners

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 BUSINESS PLAN FORMIXED USE BUILDING

As clearly shown in the organizational structure, the center organization has one general
manager and three main sections. Under the general manager there are the, Marketing
Department, Maintenance and Building administration department. Under building admin
dept there exist two sections i.e., HRM & finance and general service. Further sub sections
are also organized under technical and maintenance manager. The following section deals
with the duties and responsibilities of each department.

A. The General Manager’s Duties and Responsibilities

 He/she will plan, organize, direct and control the overall activities of the building.

 He/she will devise policies and strategies that will enable the center to be
profitable.

 He/she will incorporate modern technological innovation that will facilitate the
service delivery of the building to increase customer’s satisfaction.

 He/she will plan, organize, direct and control the human and non-human
resources of the building so as to achieve the short and long run objectives of the
organization.

B. Building Administration Department

The building Administration Department of the multipurpose building has two main sections
(HRM and Finance and General Service section). It has responsible for undertaking the
following activities;

 Manage the human resources and control employee’s activity

 Well non-human resources of the project, which include; effective handling of the
different resources of the building, and devise strategies of controlling against fraud
and damage.
 Will provide the right material or inventory to the center with right price at the right
time.

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 BUSINESS PLAN FORMIXED USE BUILDING

 Will plan, organize direct and control the financial transaction of the building by
using all the necessary documents.
 Accountant and casher that will collect money from the customers.
 Will develop sound financial control system by developing modern financial
control systems.
 Will prepare the annual financial statements and prepare condensed reports for both
the General Manager and other concerned government body.
 Follow the overall status of the business and provide maintenance and repair
services

C. The marketing Department

 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Will develop the marketing strategies for future multipurpose building development
 Will develop effective customer handling strategies.
 Execute the promotion methods.

D. Technical and maintenance manager

 Will handle the overall physical maintenance and related issues

 Will make sure electricity and back up is organized.
 Follow up security issues and educate tenants
 Works in collaboration with general service to make sure tenants are well served

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 BUSINESS PLAN FORMIXED USE BUILDING

Owners

General Manager

Building Maintenance Marketing Service Delivery

administration Department Department Department

Personnel Promotion
&Property Finance
Officers

Supervisors

Figure 1.organizational structure

33
 5.Financial Requirement and Analysis
The financial resource is a prime resource for undertaking any activities. Hence for
implementing this mixed use building a total of 15,000,000ETB is required, from this amount 20% or
3,000,000ETB from owner equity and the rest 80% 12,000,000ETB from bank loan from bank at the
prevailing interest rate.
Therefore the said amount of finance is needed for undertaking the following.

1.1 Fixed Investment

A. Land, Building & Construction

Table 1 Land, Building & Construction

S.N Description of works Total Cost in birr

1 Building construction 10,060,990.00
2 Site Development 25,200.00
3 Design and supervision 120,000.00
st
4 1 Year land lease & (10%) down payment 26,239.5
Total 10,232,429.5

B. Building Machineries and Equipment

Table 2 Building Machineries and Equipment

SN Description Measurem Qty Unit cost in Birr Total cost in Birr.

ent
1 Generator Unit 1 120,000.00 120,000.00
2 Carpentry tool box Set 1 17,000.00 17,000.00
3 Electrician tools box Set 1 18,500.00 18,500.00
4 Plumber tools kit Set 1 12,300.00 12,300.00
5 Fire extinguisher Unit 10 6,000.00 60,000.00
(Security Equipment)
6 Total 227,800.00

C. Vehicle

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 BUSINESS PLAN FORMIXED USE BUILDING
Table 3 Vehicle cost

SN Description UOM Qty Unit Cost in Total cost in Remark

Fr. Birr

1 Mini-Bus Unit 1 700,000.00 700,000.00 Duty Free

2 Sedan Unit 2 1,250000.00 1,250000.00 Duty Free

Total 3,200,000.00

D. Office Equipment
Table 4 Office Equipment

SN Description Measurement Qty Unit cost in Total cost in

birr Birr
1 Managerial tables Unit 5.00 2,600.00 13,000.00
2 Managerial chairs Unit 5.00 1,950.00 9,750.00
3 Office table with chair Unit 7.00 1,350.00 9,450.00
4 Secretarial table with chairs Unit 1.00 1,450.00 1,450.00
5 Computer with chairs Unit 3.00 15,000.00 45,000.00
6 Shelf Unit 1.00 3,500.00 3,500.00
7 Filing cabinets Unit 1.00 1,500.00 1,500.00
8 Guest chairs Unit 1.00 900.00 4,500.00
9 Fax & Telephone machine Unit 5.00 1,300.00 1,300.00
10 Carpet and Curtain LS 1.00 23,000.00
Total 112,450.00

1.2 Working Capital

1.2.1 Operating Expense at full Capacity

a. salary Expense
Table 5 salary Expense

SN Position No Qualification Monthly Annual salary

salary in Birr in Birr
1 General manager 1 BA in management 300 36,000
2 Building admin 1 BA in Acct/Mgt 2500 30,000

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 BUSINESS PLAN FORMIXED USE BUILDING
3 Secretary 1 10+2 in secretariat science 900 10,800
4 HRM Officer 1 10+2 in HRM/Management 950 11,400
5 Technical and 1 Diploma in building maintenance 1500 18,000
maintenance manager
6 Finance head 1 BA in Accounting 2500 30,000
7 IT Technician 1 Diploma in computer science/IT 1150 13,800
8 Marketer 1 Diploma in marketing 1150 13,800
9 Accountant 1 Diploma in accounting 1150 13,800
10 Guards/Security 4 Basic 500 24,000
11 General Service head 1 Diploma in Management 1500 18,000
12 Purchaser 1 Diploma in purchasing &Sup Mgt 1150 13,800
13 Electrician 1 10+2 in general electricity 1000 12,000
14 Plumber 1 10+2 in general mechanic 1000 12,000
15 Casher 2 10+1 in bookkeeping 850 20,400
16 Cleaner 5 Unskilled 450 27,000
17 Maintenance officer 1 10+2 in General mechanic 1000 12,000
18 Driver 1 10 completed 850 10,200
Total 26 327,000
Benefit (20%) 65,400
Grand Total 392,400

1.2.2 Operating Expenses

The annual operating cost at full operation capacity is estimated at Birr 12.9 million (see Table 10). The
cost of raw material account for 3% of the operating cost. The other major components of the production
cost are utility (11%) , maintenance and repair (10 %) and financial cost (66 %). For detail production cost
see Appendix A.2.

Table 6 Annual Operating Cost At Full Capacity (Year Two)

Items Cost %
Raw Material and Inputs 325,000 3%
Utilities 1,478,000 11%
Maintenance and repair 1,245,000 10%
Labor direct 392,400 3%
Administration Costs 60,000 0%
Land and Lease Cost 885937.5 7%

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 BUSINESS PLAN FORMIXED USE BUILDING
Cost of marketing and distribution 50,000 0%
Total Operating Costs 4,436,338 34%
Depreciation 0%
Cost of Finance 8,545,670 66%
Total Production Cost 12,982,007 100%

1.3 Total initial investment cost

The total investment cost of the project including working capital is estimated at Birr 15 million (See Table
10). From the total investment cost the highest share (Birr 10.63 million or 3.16 %) is accounted by
Building and civil work cost followed by initial working capital (Birr 580,163 ).

Table 7 initial investment cost

Local Foreign Total %

Sr. No Cost Items
Cost Cost Cost Share
1 Fixed investment
1.1 Land Lease 809,000 809,000 2.25%
1.2 Building and civil work 10,360,000 10,360,000 42.16%
1.3 Machinery and equipment 183,450 183,450 12.89%
1.4 Vehicle cost 200,000.00 200,000 0.00%
1.5 Office furniture and equipment 112,450.00 112,450 11.42%
Sub total 11,664,900 0 11,664,900 68.71%
2 Pre operating cost *
2.1 Pre operating cost 1,343,225 13,343,225 3.93%
2.2 Interest during construction 1,670,129 4,670,129 6.54%
Sub total 3,013,354 0 1,013,354 10.48%
3 Working capital ** 580,163 580,163 20.81%
Grand Total 15,000,000 0 15,000,000 100.00%

* N.B Pre operating cost include project implementation cost such as installation, startup, commissioning,
project engineering, project management etc and capitalized interest during construction.

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 BUSINESS PLAN FORMIXED USE BUILDING

** The total working capital required at full capacity operation is Birr 1.16 million. However, only the
initial working capital of Birr 580,163 during the first year of operation is assumed to be funded through
external sources. During the remaining years the working capital requirement will be financed by funds
to be generated internally (for detail working capital requirement see Appendix .A.1).

1.4 Financial analysis and Statements

1.4.1 Underlying Assumption

The financial analysis of the mixed use building is based on the data provided in the preceding sections and
the following assumptions.
A. construction and finance
Construction period 2 Years
Source of finance 30% equity and 70 loan
Bank interest rate 10%
B. depreciation
Building 3% after 5 year
Building machinery and equipment 10%
Office Equipment 10%

1.5 Sources of Fund

The source of fund to finance the project is planned to be from two sources. These are promoter’s equity
and bank loan. The loan is expected to be obtained from one of the local lending institutions. Since the
project is expected to take some times to repay all its debts, the bank loan is assumed to obtain on long term
credit basis. Taking the financial position of the promoters into account, equity contribution and bank loan
to finance the total investment outlays of the project are assumed to be 30% and 70% respectively.
Accordingly, the total financial requirement from the two sources will be;

Table 8 Source of fund

SN Description Percentage share Amount

Owners Share 30% 3,000,000

Bank Loan 70% 12,000,000

Total 100% 15,000,000

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 BUSINESS PLAN FORMIXED USE BUILDING

1.5.1 Bank loan Repayment Schedule

Year Principal Payment Interest (10%) Total annual Remaining

Payment in ETB Balance
0 12,000,000
1 1,200,000 1,200,000 20,896,178.26 94,032,802.16
2 1,200,000 9,403,280.22 19,851,369.34 83,584,713.03
3 1,200,000 8,358,471.30 18,806,560.43 73,136,623.90
4 1,200,000 7,313,662.39 17,761,751.52 62,688,534.77
5 1,200,000 6,268,853.48 16,716,942.61 52,240,445.64
6 1,200,000 5,224,044.56 15,672,133.69 41,792,356.51
7 1,200,000 4,179,235.65 14,627,324.78 31,344,267.39
8 1,200,000 3,134,426.74 13,582,515.87 20,896,178.26
9 1,200,000 2,089,617.83 12,537,706.95 1,200,000
10 1,200,000 1,044,808.91 11,492,898.04

1.5.2 Depreciation Schedule

SN Description Original Value in Depreciation rate Depreciation per year in

Birr in % Birr
1 Construction and Building 10,360,000 New up to 5 year 2,649,242
the 3%
2 Bldg. machines & Equipment 183,450 10 18,345.00
3 Vehicle 200,000.00 5 160,000.00
4 Office Equipment 112,450.00 10 11,245.00
Total 10,855,900 2,838,832

1.6 Financial evaluation

1.6.1 Profitability

Based on the projected profit and loss statement, the project will generate a profit throughout its operation
life. Annual net profit after tax will grow from Birr 15.05 million 43.8 million during the life of the project.
Moreover, at the end of the project life the accumulated net cash flow amounts to Birr 162.6 million. For
profit and loss statement and cash flow projection see Appendix A.3 and A.4, respectively.

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 BUSINESS PLAN FORMIXED USE BUILDING

1.6.2 Ratios

In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for evaluating
the financial position of a firm. It is also an indicator for the strength and weakness of the firm or a project.
Using the year-end balance sheet figures and other relevant data, the most important ratios such as return
on sales which is computed by dividing net income by revenue, return on assets (operating income divided
by assets), return on equity (net profit divided by equity) and return on total investment (net profit plus
interest divided by total investment) has been carried out over the period of the project life and all the results
are found to be satisfactory.

1.6.3 Break-even Analysis

The break-even analysis establishes a relationship between operation costs and revenues. It indicates the
level at which costs and revenue are in equilibrium. To this end, the break-even point for capacity utilization
and sales value estimated by using income statement projection are computed as followed.

Break- Even Sales Value = Fixed Cost + Financial Cost = Birr 12,132,201.5

Variable Margin ratio (%)

Break- Even Capacity utilization = Break -even Sales Value X 100 = 33 %

Sales revenue

1.6.4 Pay-back Period

The pay-back period, also called pay – off period is defined as the period required for recovering the original
investment outlay through the accumulated net cash flows earned by the project. Accordingly, based on the
projected cash flow it is estimated that the project’s initial investment will be fully recovered within 6 years.

1.6.5 Internal Rate of Return

The internal rate of return (IRR) is the annualized effective compounded return rate that can be earned on
the invested capital, i.e., the yield on the investment. Put another way, the internal rate of return for an
investment is the discount rate that makes the net present value of the investment's income stream total to
zero. It is an indicator of the efficiency or quality of an investment. A project is a good investment
proposition if its IRR is greater than the rate of return that could be earned by alternate investments or
putting the money in a bank account. Accordingly, the IRR of this project is computed to be 17 % indicating

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 BUSINESS PLAN FORMIXED USE BUILDING
the viability of the project.

2 Environmental impact of the project

The EIA of the project activities was determined by identifying the environmental aspects and then
undertaking an environmental risk assessment to determine the significant environmental aspects. The
environmental impact assessment has included all phases of the project namely construction phase and
operational phase. The building has both positive and negative impact
The positive impact of the project is:-
 Generation of employment opportunity
 Source income for the government through business income tax
 Income generation for the promoter
 Being exemplary for other investors who want to engage in the same business line.
Negative impact of the project
The project has the following negative impacts:
1. noise and Dust emission during Construction
There are some noises during the construction due to the construction operation and the company
will use construct the construction during the day time. Again there is the emission of dust which
will be mitigated by sprinkling water on the service.
2. problem on workers on construction
During construction there are some problems that will materialize on workers. These are: damage on
operation by using machines, construction materials and others. To mitigate such impact the company will
provide safety insurance and safety equipment.
3. sewages during operation
During operation there are some wastes emitting from the mixed use building. These are wastes from the
latrine and will be mitigated by using modern waste treatment technology.

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 BUSINESS PLAN FORMIXED USE BUILDING

3 Appendix .A

FINANCIAL ANALYSES SUPPORTING TABLE

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 BUSINESS PLAN FORMIXED USE BUILDING

Appendix 7.A.1
NET WORKING CAPITAL ( in 000 Birr)

Items Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Total inventory 120,838 217,508 241,675 241,675 241,675 241,675 241,675 241,675 241,675 241,675
Accounts receivable 201,250 362,250 402,500 402,500 402,500 402,500 402,500 402,500 402,500 402,500
Cash-in-hand 24,150 43,470 48,300 48,300 48,300 48,300 48,300 48,300 48,300 48,300
CURRENT ASSETS 346,238 623,228 692,475 692,475 692,475 692,475 692,475 692,475 692,475 692,475
Accounts payable 50,000 85,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
CURRENT
50,000 85,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
LIABILITIES
TOTAL WORKING
296,238 538,228 592,475 592,475 592,475 592,475 592,475 592,475 592,475 592,475
CAPITAL

Appendix 7.A.3

INCOME STATEMENT ( in 000 Birr)

Item Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Sales revenue 36,312,500 58,100,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000

Less variable costs 1,524,000 2,438,400 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000
VARIABLE
34,788,500 55,661,600 69,577,000 69,577,000 69,577,000 69,577,000 69,577,000 69,577,000 69,577,000 69,577,000
MARGIN
in % of sales revenue 96% BUSINESS
96% PLAN FORMIXED
96% USE
96% BUILDING
96% 96% 96% 96% 96% 96%

Less fixed costs 940,938 979,938 995,938 995,938 995,938 995,938 995,938 995,938 995,938 995,938

OPERATIONAL
33,847,563 54,681,663 68,581,063 68,581,063 68,581,063 68,581,063 68,581,063 68,581,063 68,581,063 68,581,063
MARGIN

in % of sales revenue 93% 94% 94% 94% 94% 94% 94% 94% 94% 94%

Financial costs 10,682,087 9,613,879 8,545,670 7,477,461 6,409,252 5,341,044 4,272,835 3,204,626 2,136,417 1,068,209

GROSS PROFIT 23,165,475 45,067,784 60,035,393 61,103,601 62,171,810 63,240,019 64,308,228 65,376,436 66,444,645 67,512,854

in % of sales revenue 55% 54% 53% 58% 59% 59% 60% 60% 61% 61%
Income (corporate) tax 8,107,916 15,773,724 21,012,387 21,386,260 21,760,134 22,134,007 22,507,880 22,881,753 23,255,626 23,629,499

NET PROFIT 15,057,559 29,294,059 39,023,005 39,717,341 40,411,677 41,106,012 41,800,348 42,494,684 43,189,019 43,883,355

in % of sales revenue 41% 50% 54% 55% 56% 57% 58% 59% 59% 60%

Appendix 7.A.4

CASH FLOW FOR FINANCIAL MANAGEMENT ( in Birr)

Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
TOTAL CASH 144,008,125 37,240,760 58,293,725 72,754,150 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000
INFLOW
Inflow funds 144,008,125 928,260 193,725 129,150 - - - - - - -
0 36,312,500 58,100,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000
Inflow operation
0 0 0 0 0 0 0 0 0 0 0
Other income
TOTAL CASH 144,008,125 30,299,047 37,593,981 42,268,003 41,341,602 40,647,266 39,952,931 39,258,595 38,564,259 37,869,924 26,727,499
OUTFLOW
Increase in fixed 144,008,125 0 0 0 0 0 0 0 0 0 0
assets
Increase in 0 580,162.50 348,097.50 232,065.00 - - - - - - -
current assets BUSINESS PLAN FORMIXED USE BUILDING
0 1,524,000 2,438,400 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000
Operating costs
0 25,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Marketing and
0 8,107,916 15,773,724 21,012,387 21,386,260 21,760,134 22,134,007 22,507,880 22,881,753 23,255,626 23,629,499
Income tax
0 9,613,879 8,545,670 7,477,461 6,409,252 5,341,044 4,272,835 3,204,626 2,136,417 1,068,209
Financial costs
Loan repayment 0 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089
SURPLUS 0 6,941,713 20,699,744 30,486,147 31,283,398 31,977,734 32,672,069 33,366,405 34,060,741 34,755,076 45,897,501
(DEFICIT)
CUMULATIVE 0 6,941,713 27,641,458 58,127,605 89,411,003 121,388,736 154,060,806 187,427,211 221,487,951 256,243,028 302,140,528
CASH

Appendix 7.A.5
DISCOUNTED CASH FLOW ( in Birr)
1 2 3 4 5 6 7 8 9 10
Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
TOTAL CASH
0
INFLOW 36,312,500 58,100,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000
Inflow operation 0 36,312,500 58,100,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000 72,625,000
Other income 0 0 0 0 0 0 0 0 0 0 0
TOTAL CASH
144,008,125 9,656,916 18,252,124 24,110,387 24,484,260 24,858,134 25,232,007 25,605,880 25,979,753 26,353,626 26,727,499
OUTFLOW
Increase in fixed assets 144,008,125 0 0 0 0 0 0 0 0 0 0
Increase in net working
0 0 0 0 0 0 0 0 0 0 0
capital
Operating costs 0 1,524,000 2,438,400 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000 3,048,000
Marketing and
0 25,000 40,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Distribution cost
Income (corporate) tax 8,107,916 15,773,724 21,012,387 21,386,260 21,760,134 22,134,007 22,507,880 22,881,753 23,255,626 23,629,499
Loan repayment 0 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 10,448,089 0
NET CASH FLOW -144,008,125 26,655,584 39,847,876 48,514,613 48,140,740 47,766,866 47,392,993 47,019,120 46,645,247 46,271,374 45,897,501
CUMULATIVE NET BUSINESS
- PLAN FORMIXED USE BUILDING
-144,008,125 -77,504,666 -28,990,053 19,150,687 66,917,553 114,310,547 161,329,667 207,974,914 254,246,288 300,143,790
CASH FLOW 117,352,541
Net present value -144,008,125 24,911,760 34,804,678 39,602,375 36,726,340 34,057,116 31,579,953 29,281,145 27,147,959 25,168,562 23,331,962
Cumulative net present -
-144,008,125 -84,291,687 -44,689,311 -7,962,972 26,094,144 57,674,097 86,955,242 114,103,200 139,271,762 162,603,724
value 119,096,364

NET PRESENT
162,603,724
VALUE
IRR 18%
NORMAL PAYBACK 6 years