Entrepreneur Assignment I

DILLA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
ENTERPRENUER BUSSINESS PLAN
COMPETATION
ZEMEN LAUNDERY
PREPARED BY- ZEMEN BUSINESS GROUP
PLC.

Content pages

1.0 Executive summary …………………………………….3

1.1 Objectives………………………………………………5
1.2 Mission………………………………………………….5
1.3 key to successes…………………………………………5
2.0 company summary………………………………………………5

__________________________________________________________________________________ 1
_____________________
Business plan of student Laundry service
Entrepreneur Assignment

2.1 company ownership………………………………………….6

2.2 start up summary……………………………………………..6
2.3 company location………………………………………………….7

3.0 Service………………………………………………………………………7
3.1 competitive comparison……………………………………………7
3.2 future service………………………………………………………8
4.0 market research……………………………………………………………..9
4.1 potential
costumer……………………………………………………..9
4.2 assumption about business……………………………10
5.0 pricing system…………………………………………………..10
5.1 method of distribution………………………………………12
5.2 warranty consideration………………………………………12
5.3 sales forecast…………………………………………………………
12
6.0 management summary……………………………………………………13
6.1 organizational
structure………………………………………………13
6.2 operation
plan……………………………………………………….14
7.0 financial data………………………………………………..14

_____________________________________________________________ 2
Zemen laundry Service render PLC
Entrepreneur Assignment

1.0 Executive Summary

_____________________________________________________________ 3
Zemen laundry Service render PLC
Entrepreneur Assignment

ZEMEN LAUNDRY service will providing dry cleaning service of different cloths for
the student and communities of DILLA University.

The Purpose of this Service is based on the demand that arise due to large student
entered in the DILLA University which does not have enough access for such service.
The numbers of students increase from time to time and it is now around 8500. This
moment few laundry services are available in the campus but not targeted the large
number of the universities society. The service provided will be set in the reasonable
amount of price.

Our Business have a trade mark and used as advertising our business. The partnership
developed all round way. For instance through advertising to increase the customer,
gathering information from customer about our weakness and strength for our
business improvement, etc. if competitors are existed latter we are ready to be best
competitor trough handling our customer in the right way to affect the competitor in
all way .

Market

We conduct our market research survey on 50 students out of 50 students asked

interview way of gathering information. The largest data was taken from university of
dessie main campus students more than 50% of the student needs laundry service.

The most popular ranger for payments of service are depends on size, color and type
of the item. We can provide or give the service for the customer items like, Trousers
with cote. Blanket, Leather Jacket, T-shirt, Dress etc. on the country 25% of the
number is no need for laundry service due to low capacity to pay to the service
however the service will organize in a way as to handle and give service for all

_____________________________________________________________ 4
Zemen laundry Service render PLC
Entrepreneur Assignment

The entrepreneurial Team

ZEMEN service organized by partner who has rights and duty based upon the
partnership agreement. Based on the partner agreement each and every partnership
has accountability for the service and they have entrepreneurial role each and every
person some key personnel are listed below.

Key personnel
Mr. Dawit K/Mariam

Level of qualification 1st year BA degree student in DILLA University in

Marketing Management.

Work Duty: Director

Mr. Abiy Meseret

Level of qualification 1st year BA degree student in DILLA University in

Markrting Management.

Work Duty: Accountant

Hired Person 2

Work Duty: Internal Auditor

Hired person 2

Work Duty: Secretary

Hired person 2

Work Duty: Casher

_____________________________________________________________ 5
Zemen laundry Service render PLC
Entrepreneur Assignment

1.1 Objectives
The main objectives of our business are:

 Be first and successful laundry service firm in DILLA University.

 Achieve substantial revenue in first year and impressive growth in the

following years.

 Positive net profit next year.

1.2 Mission
ZEMEN service renders high quality and comfortable laundry service in DILLA
University. ZEMEN provides laundry service for students and university communities
at value price than its competitors. Our firm is aimed at providing door to door
service in order to satisfy our customers than other firms.

1.3 Keys to Success

 Providing safe and quality laundry service at value price.

 Maintaining open communication between ZEMEN laundry and customers in

order to ensure the highest level of customer satisfaction.

To continue and expand our branches to odayaa campus.

2.0 Company Summary

ZEMEN laundry service is a firm that is involved in rendering laundry service for
students university communities. The primary goal of our firm is to provide high
quality and comfortable service to customers. Since more of our customers are
students whose monthly income is low we provide our service at value price. The first

_____________________________________________________________ 6
Zemen laundry Service render PLC
Entrepreneur Assignment

machine we purchase is laundry machine which costs Birr 200,000 and have high
quality and also capable of washing drying many clothes at one time.

2.1 Company Ownership

ZEMEN service will be created as privately owned partnership firm between ZEMEN
business groups. All partners have invested equal capital and have equal right to share
net income and net loss. They also have equal influence on management of the firm.
Even though they have equal power to influence the management of the firm, their
duty is not similar.

2.2 Start-up Summary

The total start-up expenses (including legal fee, purchase of machinery, insurance,
rent, installation) come to Birr 260,000. Start-up assets required include Birr 2,000 for
legal fees, Birr 20,000 for four years insurance and Birr 25,000 for rent of house for
four years, Birr 200,000 for purchase of machinery and Birr 8,000 for installation of
machinery. This requirement will be financed Birr 300,000 from owners and the
remaining from long term debt at 12% annual interest rate. The details of startup
summary are indicated below.

Start-up requirements

Start-up expenses

Legal fees Birr 2,000

Insurance Birr 20,000

Prepaid rent Birr 25,000

Machinery Birr 200,000

Installation Birr 5,000

_____________________________________________________________ 7
Zemen laundry Service render PLC
Entrepreneur Assignment

Miscellaneous expense Birr 8,000

Total start-up expenses Birr 260,000

Start-up assets needed

Cash Birr 255,000

Other assets Birr 245,000

Total assets needed Birr 500,000

Funding

Investment

ZEMEN business groups Birr 300,000

Total investment Birr 300,000

Liabilities Birr 200,000

Total investment and liabilities Birr 500,000

2.3 Company location

Zemen laundry is located in DILLA University Dessie main campus. We prefer this
place because it is a center for all dormitories. As a result, many students will use our
laundry easily.

3.0 Services
Zemen laundry service renders laundry service for students and university
community at value price. In addition to this, we provide door to door service in
order to satisfy our customers.

3.1 Competitive comparison

_____________________________________________________________ 8
Zemen laundry Service render PLC
Entrepreneur Assignment

As mentioned our laundry service has mainly targeted for students and communities
in the university. We offer higher level of quality than the average unit of
competitors for example.

 By adjusting price

 Using more advertisement

 Providing services in a credit base, discount bases if customers provide a

number of items at a time etc. Because of our financial strength, we will be
able to resist competitors accordingly.

 In addition to this, we render door to door service i.e. collect clothes of

customers from their dorm and return back after washing it.

3.2 Future service

In the future apart from rendering laundry service, we will also go to increase our
business to boutique. And also we expand our business to other branches DILLA
University campuses such as odayaa campus. This will be helping our business to
attract more customers. Due to this, our profitability will increase. We are in the
process of conducting survey in order to determine the best possible market for our

business expansion.

4.0 Market Research and Analysis

The objective of market research and analysis is to establish as a market exists for the
proposed venture. We provide different market analysis about potential customer,
market and assumption about pricing and promotion.

_____________________________________________________________ 9
Zemen laundry Service render PLC
Entrepreneur Assignment

4.1 Potential Customer

There are more than 8,500 students in the university among which more than half of
them have the potential to use in our service. Besides the students and communities
about 35% of the total populations are full time employment and they engaged in
office clerks, teachers, different traders (merchants). We provide an enquiry for 200
individuals about their perceptions regarding to laundry in DILLA University,
according to their response all of they faced the problem of laundry service, and
especially about 100 of them express their comments emotionally.

The demographic information included in the analysis as follows

1. Age: Individuals, who wants to use laundry service aged above 18years old

2. Sex: Both (Male and Female)

3. Occupation: Students, Traders, Office clerks in different department

4. Location of customers: Most of them live in main campus of DILLA University

The size of the market also depends on the number of people who exhibits the need
since the market conditions are dynamic due to fluctuation of material cost resulting
to increase or decrease the size or number of customers. This problem may be cackled
by purchase and provide materials with lowest cost.

4.2 Assumptions about the Business

Market Place

To create a distinct marketing focus, the organization positional at Dessie main

campus to get customers from the University as well us communities in the
surroundings.

_____________________________________________________________ 10
Zemen laundry Service render PLC
Entrepreneur Assignment

5.0 Pricing system

The normal price is different from item to item depend on different other factors makes to have different price for different
items. The schedule below shows the estimated plan for different items based on their colors and size.

Pricing system for selected items

Item Character Trouser Cotes Complete T-shirt Bed Sheet Blanket Leather Dress Vello Shorab

& (3pcs) &

Jacket Shirt

Unit Price 3.00 5.00 30.00 2.00 10.00 35.00 80.00 5.00 - 5.00

_____________________________________________________________ 11
Zemen laundry Service render PLC
Entrepreneur Assignment

The price system mentioned above should be relation to different types of

expenditures

o Chemical cost

o Guardians wage

o Wires to string up

o Plastics

o Oil for drying the machine

o Power, utility and other miscellaneous costs are incurred and has
regarded to each/ all items.

_____________________________________________________________ 12
Zemen laundry Service render PLC
Entrepreneur Assignment I

5.1 Method of Distribution (Service)

Promotion is the main activity to create a distinct marketing focus using advertising
through Varies Mass media Like DILLA FM, different leaflet, university Mini media
etc. During holydays, the business may required to special promotion because of the
society can give a special attention to those holydays, using different opportunities
with positives effect on the business that makes awardable and great contribution to
increase sales forecast.

5.2 Warranty Considerations

The existence of warranty that support the marketing effort and makes smooth
relation between the business and its customers. Problems may occurs when power
fluctuation. Because of this it is true the item will stay in the machine for long period
of time due to this the original quality of the item will decrease. Everything that
affects the customers items because the organization obliged to pay or to replace
similar items with our any court action. This rule makes the organization customer
attracted by such decision and makes strong relation between us.

5.3 Sales Forecast

During the first year of rending services the expected gross sale or revenue from
service has birr 60,000.00 indicating for the 1 st year, the gross revenue from service
rendered will not that much satisfactory and there will be occurrence of loss arising
from over statement of cash out flow over the revenue for that period only, based on
different assumptions that no longer time it takes to increase the gross revenue by
assuming that:-
__________________________________________________________________________________ 13
_____________________
Business plan of student Laundry service
Entrepreneur Assignment

 Increase the rate of population

 Change in Technology

 Increase societies understanding about the business

All these and other factors cause to increase the amount of the expected revenue by
15% each of the coming two years.

Prices

 Depends on colors, size and type of the item and others may required to
further process (rewash) if necessary occurs when the items with full of dirty
and impossible to make it clear at once.

 Student who came a group of more than 5 will have discount based on their
delivery items and amount.

 Terms of sales mostly cash base and there is no discount for individual
customers but providing quality service on the agreed time we may allowed
for discounts to organizations that provide a dozen of items. For example in
case of auction the normal price decreases by the discount amount.

6.0 Management summary

The initial management team depends on our members, with back up assistance from
property management office of DILLA University. Each partners should be used their
full time in the laundry services. They have also experience in different type of
operation in the business so each partner will have responsible for any action taken in
the business.

_____________________________________________________________ 14
Zemen laundry Service render PLC
Entrepreneur Assignment

6.1 Organization Structure

ZEMEN laundry service depends on an organized division of responsibility among the
member in order to render high quality service. Main decision and responsibilities
will be divided among the partners. Top division manager will be given specific
responsibility such as marketing, finance, strategic management, or research and
development.

6.2 Operation Plan

As mentioned earlier the nature of the business is giving laundry service to demander
and which requires different requirement or facilities, especially capital equipment or
machine used to operate the item provided by the customers this machine covers the
largest cost of the business. Office is another facility to exchange ideas with customers
in a good manner about making an agreement regarding to price, time limits to
receive the item to be serviced and identification of guarantees. Building having
space for machine, office a well-furnished to starting up the item to be processed store
room for different accessories used in the operation space chemicals, place for wastage
must separate from the building which is used for processing the laundry service.

7.0 Financial Data and Forecasting

Cash flow of 1st year Assumption

1. The sale forecast based on DILLA university and surrounding area sale figure
the 1st year expect around birr 300,000.00

2. Machinery purchase birr 200,000.00

3. Loan from lending agency 200,000.00

_____________________________________________________________ 15
Zemen laundry Service render PLC
Entrepreneur Assignment

4. Loan payment in the 1st year 25%

5. Loan payment in the 2nd year25%

6. Loan payment in the 3rd year 25%

7. Loan payment in the 4th year 25%

_____________________________________________________________ 16
Zemen laundry Service render PLC
Entrepreneur Assignment

Monthly Cash Flow Statement from 2016-2019 years

Year 2016 2017 2018 2019

Cash from rendered 250,000 270,000 290,000 310,000

service(sales)

Cash from receivable 0 0 0 0

Subtotal from operation 250,000 270,000 290,000 310,000

Cash payments
(expenditure)

Insurance 20,000 20,000 20,000 20,000

Loan payment 50,000 50,000 50,000 50,000

Rent 25,000 25,000 25,000 25,000

Salary and wage 20,000 25,000 27,000 29,000

Interest expense 24,000 18,000 12,000 6,000

Total cash payments (139,000) (138,000) (134,000) (130,000)

Net cash flow(Cash 111,000 132,000 156,000 180,000

balance)

TSIDAT Laundry Service

Income Statement

For the Ending Year 1

_____________________________________________________________ 17
Zemen laundry Service render PLC
Entrepreneur Assignment

2016 2017 2018 2019

Revenue 255,000 285,000 325,000 350,000

Cost of service rendered (100,000) (90,000) (105,000) (115,000)

Gross profit 155,000 195,000 220,000 235,000

Operating expenses

Salary and wage expenses (20,000) (25,000) (27,000) (29,000)

Insurance expense (20,000) (20,000) (20,000) (20,000)

Rent expense (25,000) (25,000) (25,000) (25,000)

Depreciation expense (20,000) (20,000) (20,000) (20,000)

Miscellaneous expense (5,000) (7,000) (6,000) (10,000)

Operating income 60,000 98,000 122,000 131,000

Interest (24,000) (18,000) 12,000 (6,000)

Tax (30%) (10,800) (24,000) (33,000) (37,500)

Net income/loss 25,200 56,000 77,000 87,500

ZEMEN LAUNDRY BALANCE SHEET

PROFORMA FROM YEAR 2018-2019

Assets

_____________________________________________________________ 18
Zemen laundry Service render PLC
Entrepreneur Assignment

Cash 366,000

Machinery 200,000

Total assets 566,000

Liabilities

Loan payable 200,000

Total liabilities 200,000

Owners’ Equity

Capital

ZEMEN business group

ZEMEN Laundry Service

Balance Sheet

For the Ending Year 1

Assets

Cash 368,800

Prepaid insurance 7200

Prepaid rent 24000

_____________________________________________________________ 19
Zemen laundry Service render PLC
Entrepreneur Assignment

Machinery 400,000

Total assets 800,000

Liabilities and Owners’ equity

Loan payable 400,000

Owners’ equity

ZEMEN business group 400,000

Total owners’ equity 400,000

Total liabilities and owners’ equity 800,000

ZEMEN Laundry Service

Income Statement

For the Ending Year 1

Sale 235,000.00

Cost of Good sold 11,900.00

Gross Profit 223,100.00

Operating Income

Wage 30,000.00

Rent 6,000.00

_____________________________________________________________ 20
Zemen laundry Service render PLC
Entrepreneur Assignment

Miscellaneous 4,150.00

Insurance 2,400.00

Advertising 1,600.00

Depreciation 6,000.00

Light and 2,750.00 52,900.00

Tele

Income from Operation 170,200.00

Interest expense 1,200.00

Net Income 169,000.00

ZEMEN Laundry Service

Balance Sheet

For the Ending Year 1

Asset

Cash 383,120.00

Prepaid insurance 48.00-2400

Laundry Machine 388,000.00

Accumulated Depreciation -6,000.00 382,000.00

Total Asset 773,520.00

_____________________________________________________________ 21
Zemen laundry Service render PLC
Entrepreneur Assignment

Liability and Owner's Equity

Current Liability

Loan payable 200,000.00- 100,000.00

100,000.00

Total Liability 100,000.00

Owners Equity 677,520.00

Total Liability & Owner's Equity 773,520.00

_____________________________________________________________ 22
Zemen laundry Service render PLC
 Entrepreneur Assignment

Quarterly Cash flow for second Year Assumption Assume tats sale increasing
by $35000
2nd Year quarterly Sale figure
1st 2nd 3rd 4th Total
Total 37000.00 79000.00 85000.00 20000.00
Receipt
Sales 37000.00 49000.00 85000.00 100000.00 271000.00
Total Sales 37000.00 49000.00 85000.00 100000.00 271000.00

Payments

Wage 7500.00 7500.00 7500.00 7500.00 30000.00

Rent 1500.00 1500.00 1500.00 1500.00 6000.00

Miscellaneous 1000.00 900.00 750.00 1500.00 4150.00

Insurance 600.00 600.00 600.00 600.00 2400.00

Advertising 400.00 400.00 400.00 400.00 1600.00

Light & Tele. 600.00 800.00 650.00 700.00 2750.00

Capital Cost

Loan Interest 600.00 600.00 1200.00

Total Payment 12200.00 12300.00 11400.00 12200.00 48100.00

Opening Bank Account 155200.00 180020.00 216720.00 290320.00

Surplus /Eleficit/ 24800.00 36700.00 73600.00 87800.00

Bank C/Fowd 180020.00 216720.00 290320.00 283120.00

Balance Carried forward 383120.00

_____________________________________________________________ 23
Zemen laundry Service render PLC
Entrepreneur Assignment

Yearly Cash Flow Statement for 3rd Quarter

Receipts 337000.00

Total receipts 337000.00

Payments

Wage 25200.00

Rent 6000.00

Miscellaneous 3790.00

Insurance 2400.00

Advertizing 3000.00

Light and Telephone 3000.00

Capital Cost

loan interest

Total payment 43390.00

Opening band A/c 383120.00

Surplus /Eleficit/ 293610.00

Bank C/fowd 676130.00

Balance Carried Forward 67,930.00

ZEMEN Laundry Service

_____________________________________________________________ 24
Zemen laundry Service render PLC
Entrepreneur Assignment

Income Statement

For the Ending Year 1

Sale 397,000.00

Cost of Goods sold 19650.00

Gross Profit 377,350.00

Operating Income

Wage 25,200.00

Rent 6,000.00

Miscellaneous 3,790.00

Insurance 2,400.00

Advertising 1,600.00

Depreciation 6,000.00

Light and 2,750.00 41,740.00

Tele

Income from Operation 335,610.00

Interest expense 0.00

Net Income 335,610.00

ZEMEN Laundry Service

Balance Sheet

_____________________________________________________________ 25
Zemen laundry Service render PLC
Entrepreneur Assignment

For the Ending Year 1

Asset

Cash 383,120.00

Prepaid insurance 48.00-2400

Laundry Machine 382,000.00

Accumulated Depreciation 6,000.00 376,000.00

Total Asset 759,120.00

Liability and Owner's Equity

Current Liability

Loan payable 100,000.00-

100,000.00

Total Liability 0.00

Owners Equity 759,120.00

Total Liability & Owner's Equity 759,120.00

Break Even Analysis

No. of processed items in 1st Year 8000.00

_____________________________________________________________ 26
Zemen laundry Service render PLC
Entrepreneur Assignment

Average Price Birr 25.00

Total Sales 200000.00

Average Cost for 1 item Birr 10.00

Total cost to process 8000 X 10.00 80000.00

Gross profit Margin 120000.00

Total Fixed = 105000 120000X100=60%

200000

Break Even point on sales = FC FC 105000 175000.00

G.P. Margined 60%

Break Even sale on gross margin

_____________________________________________________________ 27
Zemen laundry Service render PLC