Entrepreneurship Development and Incubation center

Business plan
For organized youths for supplying “injera” for Bahir Dar University College of agriculture
and environmental Science Students; Zenzelma Campus

November 2016

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Part I: BUSINESS DESCRIPTION
1.1. DESCRIPTION OF BUSINESS GOALS
1.1.1. Specific goal
The objective of this business is to enable unemployed youths to have their own jobs and create wealth for themselves and contribute
the reduction of unemployed rate of the productive labor force.
1.1.2. Specific timing
This business will be implemented starting from the January 2009 E.C. Soon after the milling machine is installed and started its
function, the injera baking will be started on Jnuary given the milling machine is operational before that.
1.1.3. Specific financial agreement
The financial supply for starting and running this business is from Bahir Dar University. This means the university will give advance
payment (startup capital) for the youth and they will start baking the injera with the startup capital they secured from the university.
Then, the enterprise will supply the injera to the university campus (zenzelima) accordingly. Therefore, the finance for starting the
business will be handled by the advance payment method the university will offer for them.
1.2. DESCRIPTION OF BUSINESS
1.2.1. Name of business (legal name)
Name of this business will be _________________________________and friends Injera baking partnership.
1.2.2. Names of owner, partners, investors
The partners to be involved in this business are 7
1.2.3. Form of business operation
This business will be conducted with a partnership form. Jobless youths will be organized by Entrepreneurship Development and
Incubation Center/EDIC. They will contribute their labor and time and they will share the profit/loss of the business equally.

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 1.3. DESCRIPTION OF KEY PERSONNEL
1.3.1. Organizational chart
The organizational structure of this enterprise is simple one. Since it is partnership business, the owners are also the employees of the
enterprise and there will not as such hierarchical differences except responsibility sharing. However, it can have the following
structure that indicates the reporting and information flow process.

Regulatory body (College of Partners Assembly

Agriculture and environmental

Manager of the enterprise Entrepreneurship development and

incubation Center –Business support

Injera baking or Marketing Unit Finance Unit

Purchasing and
production Unit logistics Unit

Fig: Organizational structure of the Enterprise

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 1.3.2. Skill and qualifications
The partners of this business will be provided an Entrepreneurship training that will equip them with the competencies that will help
them to make their business profitable and competent. Moreover, to manage their business effectively, they will be given orientation
about the nature of the business and the overall business operation issues. Besides periodical follow up and Business development
support will be given for them by EDIC.
To maintain the quality of the service, experienced Injera bakers may be employed for some period of time until the members
themselves manage the baking work.

1.4. DESCRIPTION OF PRODUCT AND SERVICES

1.4.1. Description of product and service features
The main product of this business is Injera. Baking and supplying Injera for the students is the main product.
1.4.2. Specified quality
The quality of the Injera will be controlled by controlling the input to be used. Medium Quality “Teff” will be the main input for
making the Injera quality. Besides to make the injera nutritious, the injera will be made from the mixed ingdriedients of Teff, Rice and
maiz. The proportion will be 60% teff, 30% Maiz and 10% rice.
1.4.3. Comparison of competitive products and services
Injera baking is not a new business. It is commonly known and widely operated business by many individuals. Hence what makes this
enterprise service different is the input will be checked by the university administration and the direct users of the product. The milling
machine will be installed inside the campus and this will create an opportunity to the service users (the students and the
administration) to closely follow up the quality of the product. Since advance payment will be given for the enterprise, it has a good
opportunity of doing the business in relaxed environment from the financial needs perspective.

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1.5. Description of Manufacturing and Production Process
1.5.1. Flow chart of work process

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3
1. Inputs Purchase
1 2. Cleaning
3. Milling
4 4. Lit preparation
5. Baking
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These are the basic work flow from purchasing to injera baking.

1.5.2. Quality standards

The quality standard of the injera will periodically assessed by the student representatives, the administration and the college of
Agriculture and environmental science, the direct users’ straight forwarded comments and feedback and the enterprise owners shall
respond to the feedbacks accordingly.

DESCRIPTION OF MATERIALS AND SOURCES OF SUPPLY

1.5.3. Required equipments

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Table 1: The basic materials to be used for establishing injera baking enterprise are listed below:
No Items Quantity Estimated unit Sub-total Remarks
price
1 Stove( lakech) that can handle 8 stoves in 2 8 240 1920
separated sets
2 Cover for Mittad/ “Mugid” 8 170 1360 Aluminum
3 Ye enjera Mesabia 4 20 80 One person can
operate 2 stoves
4 “Lit mabukia” safa 4 300 1200
5 “Mekibiya”(Mazorya) 4 20 80 One person can
operate 2 stoves
7 Yemasesha mekuya 1 300 300
8 Big barrel for dough storing 4 1550 6200
9 Small size to accumulate lit on the baking site 4 450 1800
10 Bret dist ye absit metaya 4 600 2400
11 Baldi ke materkemya bermil kenso wode mitad 4 40 160
lemewosed
12 Sefi ye enjerya mederderia ( can be made with - - 1000
blucket or wood
13 Tirar ke enjera mederderyaw ke sir yemikemet 4 150 600
14 Plastic sheets , le enjera maskemechana 20 meter 2 40
maguaguazya

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15 Sefed( tray) to move the enjera from bakining unit 4 40 160 Can be plastic
to the delivery unit tray or “sefet”
Total startup cost 16,700

NB:
The information for the unit price of the equipment’s and materials are from those currently working on this business

1.5.4. Potential suppliers

The potential suppliers of this business are:
1. Teff, Maiz and Rice suppliers
 There will be Teff, Maiz and Rice suppliers that provide either in a contractual base for continued supply or temporally base
2. Chopped wood suppliers
 The agriculture college/BDU/ finance as the milling machine provide

II.MARKET RESEARCH
2.1. DESCRIPTION OF CUSTOMERS
2.1.1. Target customers
The main customers of this injera baking business are the BDU Agriculture college students’ cafeteria. In addition, the staff cafeteria
of BDU may use the service.
2.1.2. Potential market size
In Zenzelma campus currently there are 1500 students who are using the cafeteria service. Based on this figure the market size for this
enterprise is attractive. Currently, the students’ cafeteria is consuming 19,376 injera per week (from Monday to Sunday) or 77,504 per

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month on average. This is the actual business for this enterprise. The market can be expanded to the staff cafeteria and other
neighboring hotels and cafeterias. Whatever the case, the student cafeteria by itself a lucrative market.

2.2. DESCRIPTION OF COMPETITORS

2.2.1. Description of competition
This enterprise will not have a direct competitor. The market is intentionally created for the enterprise. However, if the enterprise will
be unable to supply quality injera as per to the specification and quality standard on time, the business will not sustain. Other
enterprises will take the opportunity. Hence, the competition is mainly depending on the enterprises capability of supplying the injera
keeping the quality standard the customers will set.

2.2.2. Profitability
It is expected that with the current market capacity, the enterprise will generate an average profit of birr 249,048 per month. The
potential challenge that will affect its profitability will be price fluctuation of teff, maiz and rice. The cost of Chopped wood also
affects the profitability. Price of these inputs will not remained same year round. During the time when price of these inputs increases,
it is very crucial for the enterprise make a negotiation with the client (BDU) for a change on the price of the injera. If this flexible
pricing will not be entertained, the enterprise will be affected since it is difficult to have a sufficient stock of all the inputs purchased
during low price season for future use for instance for a year since this needs huge capital.

2.2.3. Level of customer satisfaction

The enterprise will do its best for satisfying the customers. It is an opportunity for the enterprise to show its capacity for scaling up the
business to other campuses too. The customers’ satisfaction will be assessed with periodical discussion and feedback collection from
students’ representatives, the Universities’ administrators and improvements will be made accordingly.

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2.3. DESCRIPTION OF LOCATION
2.3.1. Importance of location
The location of the business is an automatic. It will be at Zenzelma campus of BDU. Since the market is also there, the special
advantage that the enterprise will have is that transportation cost of the product (Enjera) to the end user will be very minimal.
2.3.2. Access, visibility, space, cost
The location has a good access to the main road. There is also a sufficient working space to be provided by the College. There is no
special cost to be incurred as a result of the location of the business.
2.3.3. Operation requirements
To make this enterprise operational, the following things need to be fulfilled:
 Constructing a new house to be used for baking the injera, storing the inputs and other logistics issues. The house to be
constructed needs to have four partitions. Storing unit for the Teff, maiz and rice, a baking unit, a unit for storing and
ventilating the baked injera and a staying room for night shift employees. A minimum of 120 m 2 space is needed. 30 m2 for
baking, 40 m2 for store, 30 m2 for sales display and 20 m 2 for night shift workers. This is the minimum with the assumption that
the enterprise will do the business for Agriculture College only.
 Installing the mill and make ready to make the injera input available is another requirement for making the enterprise
functional and this project plan is supposed with the assumption that the facility will be ready for use at the commencement
date of the project
 Selecting, organizing and providing those youths interested to do this business and this thing is particularly will be the
responsibility of EDIC
 Startup capital provision to the enterprise. The costs mentioned above and the advance payment for starting the business which
is totally birr 16,700 is needed to make the enterprise functional.

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2.4. DESCRIPTION OF MARKETING METHODS
2.4.1. Marketing strategy
The marketing strategy for this enterprise includes:
 Quality injera to be made based on the proportions of ingredients given.
 Quality service in a consistent manner
 Working closely with the direct users of their service and having a continuous feedback from them
 Making the working process neat and clean
 Applying flexible pricing when the cost of inputs change in the market place

2.4.2. Importance of advertising

Unless the enterprise will sell its products for external market, there is no need to advertise its services. However, the business can be
extended for staff cafeteria, other hotels and restaurants. If this working condition could be allowed for the enterprise, it may promote
its services in different ways like leaflets, business card, mouth to mouth advertising techniques.

2.4.3. Timing
The business naturally needs care and on time delivery availability. Planned operation is needed for supplying the product.
Accordingly, planned operation should be time sensitive, punctual in offering the product. The specific time to supply will be fixed by
discussing with the students’ representative, the college dean and the colleges’ student affairs staff.

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2.5. PRICING
2.5.1. Criteria
The price of injera will be fixed with periodical adjustment considering the following parameters: Currently the price of injera is birr
3.50.
 Price of teff, maiz and rice and other operational costs
 Negotiation with the university
 Other similar competitors price

2.5.2. Level of quality

Using 70% second class Teff/sergegna/ with 10% maiz and 20% rice, the injera will be prepared. This composition makes the injera
more nutritious and the cost of supply also reasonable. The quality of the injeral also will be assessed with its volume.

2.5.3. Cost plus

The running cost of supplying injera includes the following cost items. The cost is for monthly basis.
Assumptions:
 The enterprise can purchase 35 quintals per week and 140 quintals at a time to supply the monthly demand
 Teff………70% of 140 quintal is 98 quintals
 Rice ……..20% of 140 quintal is 28 quintals
 Maize……...10% of 140 quintal is 14 quintals
 7 member partners will involve in the business
 The members themselves will involve in the main task

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  The demand for enjera to feed 1550 students per week is estimated to be 19, 376 and 77,504 per month based on current
consumption

Cost items Quantity Unit cost (Birr) Sub-total (Birr) Remark

Sergegna Teff Purchase cost per month 98 quintals 1800 176,400
Rice purchase cost per month 28 quintals 1250 35,000
Maize purchase cost per month 14 quintals 700 9,800
Transportation and related labor cost for 140 quintals from 140 20 2,800
market to Zenzelima
Cleaning and milling cost 140 quintals 140 38 5,320
Labor force for “lit” preparation and baking per month 4 workers 550 2,200 No need if we
assume them as
workers
Total running cost per month 231,520

III.FINANCIAL PLANNING
3.1. SALES FORECASTING
3.2. Monthly sales forecast for next twelve months
The sales forecast is based on the assumption that the number of students, the campus food menu composition, and the unit price for
Injera will remain the same for one year. However, the price of injera needs at least two times revision per year as per to the market
situation of the inputs.

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Months Unit selling price (Birr) Quantity sold(enjera) Sales in Birr
January 3.5 77,504 271,264
February 3.5 77,504 271,264
March 3.5 77,504 271,264
April 3.5 77,504 271,264
May 3.5 77,504 271,264
June 3.5 77,504 271,264
Juley 3.5 77,504 271,264
August 3.5 77,504 271,264
September 3.5 77,504 271,264
October 3.5 77,504 271,264
November 3.5 77,504 271,264
December 3.5 77,504 271,264
Year Total 930,048 3,255,168
NB:
 The maximum price of Injera in the market is 4 Birr and the minimum is 3 Birr
 The fair market price is 3.5 Birr
3.3. Yearly forecast for next three years
This three year sales forecast is done based on the following assumptions
 The number of students will increase by 5 percent in each year (net of the graduated batches and new comers) and the demand
for enjera will also increases by 5 %,

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  The price of injera increases by 0.25 Birr Each (taking into account the inflation rate of the country will remain below one digit
for the coming three years)

Year Unit selling price Quantity sold Sales in Birr

2010 3.75 976,550 3,622,062.50
2011 4.00 1,025,378 4,101,512.00
2012 4.25 1,076,647 4,575,749.75
Total 2,103,001 12,299,324.25

3.4. OPERATIONAL FORECASTING

3.4.1. Estimated start-up costs
Fixed cost: The fixed cost items that will be incurred to make the business operational without considering the cost of constructing the
baking unit or facility that needs another engineering estimation is birr 15,700 as details are given above.

Operating costs: the estimation of the operation costs are based on the following assumptions. The operational cost per month is birr
231,520 as estimated above.
 The university will construct a minimum of the 120 m2 space working facility by its own and the facility cost is not entrained in
this estimation
 The milling machine, facility construction cost is not incorporated in this estimation
 The demand for enjera keeps constant for one year (number of students will not increase and the menu composition remain
unchanged)
 100 Kg with a mixture of 70%teff,10%maiz and 20%rice will yield an average of 550 Enjera

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  The monthly demand of enjera in the campus is 77,504 and 98 quintals of teff, 28 quintals of Rice and 14 quintals of Maize is
needed /month
 The fair market price for 100 Kg good quality teff (sergegna) is from 1,700 to 1,900 and and the average 1,800 birr
 The fair market price for 100 Kg good quality Maiz is birr from birr 600 to birr 800 and the average is birr 700
 The fair market price for 100 Kg good quality Rice is from birr 1200 to birr 1300 and the average is birr 1250
 The faire market milling cost is 30 Birr/100Kg and the cleaning cost is 6 Birr/ 100Kg
 Transportation cost from market to Zenzelma, the maximum cost is 20 Birr/ 100 Kg
 Fuel wood ( Saw Dust) cost is around 800 Birr per Cart ( 1 gari Kurtitrach Enchet) and 4 cart is needed per month
 Seven of the would be owners will work in a salary base though the business is theirs (1,000 Birr/person)
 Cost of masesha is Birr 5/ per a can and 150 can is needed per month
 Water and electric will be supplied by the University free of cost

3.5. Forecast costs for twelve months

Items Months Jan Feb March April May June Juley August Sept October Nov December
Raw material Cost of Teff, 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520 231, 520
maize and rice
(birr)
Production Milling 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200
/operation Masesha 750 750 750 750 750 750 750 750 750 750 750 750
costs
Cleaning 840 840 840 840 840 840 840 840 840 840 840 840
Transporting 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800

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 Fuel wood 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200
Salary 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000

Sub Total 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790

Administrativ Phone 200 200 200 200 200 200 200 200 200 200 200 200
e and utilities Electric power 0 0 0 0 0 0 0 0 0 0 0 0
expenses

Water 0 0 0 0 0 0 0 0 0 0 0 0
Sub total

Monthly Total
250,510 250,510 250,510 250,510 250,510 250,510 250,510 250,510 250,510 250,510 250,510 250,510
Year Total 3,006,120
NB:
 The fuel cost can be reduced if they get electric power from the university
 The milling cost can be subsidized by the university
 Transport can be subsidized also with the BDU vehicles

3.6. Yearly cost forecast for next three years

The three years’ cost forecast is based on the following assumptions
 The inflation of raw material (teff, maiz and rice) price will be below two digits will increase for the next three years
by10% (worst case scenario)
 The demand for ejera increases by 5% each year as the number of student’s increase by this number
 The demand for masesha, will be constants
 The cost of transportation and cleaning will increase by 5 birr per year
 The demand for fuel wood will increase by 5% each year and the price will increase by 5% each year

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  Salary per owner keep constant
 Phone communication expense will increase by 100 Birr each year
Items Year 2010 2011 2012
Raw material Teff, maiz and rice
3056064 3361670.4 3697837.44
Production cost Milling 55440 60984 67082.4
Cleaning 42000 50400 58800
Transporting
52,080 60,480 68,880
Masesha
42000 50400 58800
Fuel wood
40320 42336 44452.8
Salary
84,000 84,000 84,000
Sub Total
315840 348600 382015.2
Administrative utilities expense Telephone expense 300 400 500
Electric power 0 0 0

Water 0 0 0
Sub total 300 400 500

Yearly Total
3372204 3710670.4 4080352.64

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 3.6.1. End of year profit and loss statement
The year-end total sales are birr 3,255,168
The year-end total costs are birr 3,006,120
Balance ----------------------------- 249,048Birr per year

Jan Feb Mar Apr May June Juley Aug Sep Oct Nov Dec Total
Sales Revenue 271,264 271,264 271,264 271,264 271,264 271,264 271,264 271,264 271,264 271,264 271,264 271,264 3,255,168
Cost of sales
Raw material
231,520 231,520 231,520 231,520 231,520 231,520 231,520 231,520 231,520 231,520 231,520 231,520 2,778,240
cost
Total
18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 18,790 225,480
operation cost
Administrativ
200 200 200 200 200 200 200 200 200 200 200 200 2,400
e and utility

Balance 20,754 20,754 20,754 20,754 20,754 20,754 20,754 20,754 20,754 20,754 20,754 20,754 249,048

3.7. Recommendation
The business is relatively attractive and they can start it. It generates annual profit of birr 249,048.

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