Entrepreneur Assignment I
Debre berhan university
COLLEGE OF BUSINESS AND ECONOMICS
ENTERPRENUER BUSSINESS PLAN
BUSINESS PLAN ON;SITOTAW LAUNDERY
COURSE TITLE; ENTREPRENEURSHIP
COURSE CODE; MGMT 1012
PREPARED BY: - SITOTAW BITEW
SECTION ….……….. K ID NO 2728
Submission to; Mr.Sweife ALEBACHAW
Submitted date; 03/05/2013.
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Business plan of student Laundry service
Entrepreneur Assignment
Table of content
Executive sumury………………………………………... 3
Objective………………………………………….. 5
Mission …………………………………………….5
Key to success…………………………………........5
Company summary………………………………...6
Company ownership……………………………..6
Startup summery………………………………..6
Laundry location……………………………….7
Laundry service…………………………….8
Competitive cooperation……………………....8
Future service…………………………….8
Market research and analysis..........…………...9
Potential custom…………………………..9
Assumption about business……………..10
Pricing system……………………………….11
Method of distribution.………………………….12
Warranty consideration……………………………12
Sales forecast…………………………………….13
Management summery.…………………………..14
Organization structure…………………………...14
Operation plan…………………………………….14
1.0 Executive Summary
Sitotaw service will providing dry cleaning service of different cloths for the student
and communities of debre brehan towon.
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Zemen laundry Service render PLC
Entrepreneur Assignment
The Purpose of this Service is based on the demand that arise due to large student in
debre berhan university entered in debre berhan university and the desire of the
society which does not have enough access for such people. The number of university
students and the towns resident increase from time to time and it is now more than
100,000. While the number of laundery in the towon are not enough that means the
laundery around the university not targeted the large number of the universities
society. so in order to reduce this problem we start our business around this
environment. The service provided will be set in the reasonable amount of price.
Our Business have a tread mark and used as advertising our business. Latter we want
to expand our service in other towon like chacha and mndida, 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 through handling our customer in the right way to affect the competitor
in all way.
Market
The laundery service in debre berhan town recently experienced rapid growth. The
cool climate of debre brehan towon stimulate the society to give the cloth to the laundry
for washing. the laundery wants to establish a large regular customer base, and will
therefore concentrate its business and marketing on the local resident which will be the
dominant target market. this will establish a healthy, consistent revenue base to ensure
stability of the business
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 town most of the resident
are government employee, merchant and student so most of this are wants to use the
laundry service due to the shortage of time for washing clothes as a result the service
will organize in a way as to handle and give service for all this society
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Entrepreneur Assignment
The entrepreneurial Team
The laundery 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
Berhanu Hailu
Level of qualification 1st year BA degree student in debre berhan University in
accounting.
Work Duty: Director
Alayu tamene
Level of qualification 1st year BA degree student in debre berhan University in
accounting.
Work Duty: Accountant
Hired Person 3
Work Duty: Internal Auditor
Hired person 4
Work Duty: Secretary
Hired person 5
Work Duty: Casher
1.1 Objectives
The main objectives of our business are:
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Entrepreneur Assignment
Be first selected and best service offered to the debre berhan town and to the
university communities.
Achieve substantial revenue in first year and impressive growth in the
following years.
Positive net profit next year.
1.2 Mission
Sitotaw laundery service renders high quality and comfortable laundry service in
debre berhan University. Sitotaw provides laundry service for debre berhan societies
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 Sitotaw laundry and customers in
order to ensure the highest level of customer satisfaction.
To continue and expand our branches to others town that closer to debre
berhaan
2.0 Company Summary
Sitotaw laundry service is a firm that is involved in rendering laundry service for
debre berhan town and 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 because of our laundry closer to the university and this
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Entrepreneur Assignment
costumer monthly income are low so we provide our service at value price. The first
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
Sitotaw service will be created as privately owned . 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, Birr 25,000 for rent of house for four
years, Birr 200,000 for purchase of machinery and Birr 5,000 for installation of
machinery 8000 for miscellaneous expense. 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
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Installation Birr 5,000
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
Sitotaw Birr 150,000
Family Birr 150,000
Owners equity Birr 300,000
Liabilities Birr 200,000
Total investment Birr 500,000
2.3 Company location
Sitotaw laundry is located in debreberhan town Keeble 09 to left of the University.
We prefer this place because of the university student is our target costumer. As a
result, many students will use our laundry easily.
3.0 Services
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Entrepreneur Assignment
Sitotaw laundry service renders laundry service for students and university student
and the debre brehan community at value price. In addition to this, we provide door
to door service in order to satisfy our customers.
3.1 Competitive comparison
As mentioned our laundry service has mainly targeted for university students and
communities in the debre brehan. 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 want to increase our
business to boutique. And also we expand our business to other Keble of the town.
This will be help 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.
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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.
4.1 Potential Customer
There are more than 12, 000 students in the university among which more than half
of them have the potential to use in our service because of the students come from
different area that the weather condition is not so cold like debre brehan weather
condition so the student prefer to give their cloths to the laundry. Besides the
students and communities about 50% of the total populations are full time
employment and they engaged in office clerks, teachers, different traders (merchants).
We provide an enquiry for to the minimum we give 50 individuals per days about
their perceptions regarding University student and the surrounding community
desire, according to the environmental condition the society has not get enough
laundry service, and the university student has strong desire for the laundry service.
Our launder deliver service for all the society that means it include all age group, sex,
students, workers and other communities group
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.
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4.2 Assumptions about the Business
Market Place
To create a distinct marketing focus, the organization positional around debre brhan
university to get customers from the University as well us communities in the
surroundings
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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 like the weight and thickness of the
cloths and the other criteria that make difference on the price is the quality of cloths
like cotton cloths, leather and suits have not the same price with other types of cloth.
The schedule below shows the estimated plan for different items based on their colors
and size.
Pricing system for selected items
Item Price
Trouser 3
Shurab 5
Suit 30
Cote and jacket 10
T-shirt and shirt 3
Bedsheet 10
Blanket 35
Leather 80
Dress 5
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Entrepreneur Assignment I
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.
5.1 Method of Distribution (Service)
Promotion is the main activity to create a distinct marketing focus using advertising
through customer, different leaflet, university Mini media as much as possible we try
to use debrebreha FM media etc. During holydays, the business may require 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 occur 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
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Business plan of student Laundry service
Entrepreneur Assignment
that affects the customers items because the organization obliged to pay or to replace
similar items so we take all responsibility for anything that accept from our customer.
This rule and regulation makes our laundry is primary selected by the customer and
attract the customers by taking full responsibility for our works 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 100,000. 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 the reason
for this is there is no more costumer and the customer has no get more about our
service but based on different assumptions that no longer time it takes to increase the
gross revenue by assuming that: -
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 to years.
Prices
Depends on colors, size and type of the item and others may require to further
process (rewash) if necessary occurs when the items with full of dirty and
impossible to make it clear at once.
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Entrepreneur Assignment
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 dozens of items. For example, in
case of auction the normal price decrease by the discount amount.
6.0 Management summary
The initial management team depends on our members, with other additional
employee. Both partners should be used their full time in the laundry services. Even
if we have no experience in different type of operation in the business but each
partner will have responsible for any action taken in the business.
6.1 Organization Structure
Sitotaw 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 washing activity 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.
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Entrepreneur Assignment
The Sitotaw laundry wants to the best service offered to the costumer and get high
revenue from the service due to this the sales forecast of the laundry we expect to
sales more than 300,000 by investing 200,000 on machinery by using the capital from
the bank. And also we want to pay the loan with in the next five years even if the
agreement is in the long term but we want to pay our loan. Our agreement says there
is no payment of loan in the first year and the loan payment starts from the second
year and the due date is 12 years but we want to finish with in five years by paying
50% of the loan including the interest.
In order to know our laundry performance and also indicate our business how the
revenue (money received from the sale of product and service before expense are
taken out is transformed in to the net income (the result after all revenue and expense
have been accounted for) and also to display the revenue recognized for specific
period, and the cost and expense charged against this revenue including write-of and
taxes we need to work our laundry income statement. And also in order to cheek our
laundry cash position we have to cheek our laundry cash flow because without a
positive cash flow our laundry will not be able to meet its financial obligation,
thereby leading to cash crunch or bankruptcy. And also this statement able to know
what amount of money enter in to our business and out from our business. Finally,
our business fulfill all these as indicated below.
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Entrepreneur Assignment
The income statement of our business are as follow
Sitotaw Laundry Service
Income Statement
For the Ending Year 1 - 2019
Year 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) (0) (0) (0)
+ Rent expense (25,000) (0) (0) (0)
+ Depreciation expense (5,000) (5,000) (5,000) (5,000)
+ Miscellaneous expense (5,000) (7,000) (6,000) (10,000)
= Total operating expense 75,000 37,000 38,000 44,000
Operating income 80,000 158,000 182,000 191,000
+ Interest(10%) (0) (20,000) 15,000 (10,000)
+ Tax (20%) (16,000) (31,600) (36,400) (38,200)
Net income/loss 64,000 106,400 130,600 142,800
Hint: - operating income of the year = growth profit of the year total operating
expense of the year
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Entrepreneur Assignment
Income statement of Sitotaw laundry for the year 2016
Sitotaw Laundry Service
Income Statement
For the Ending Year 1
Sale 255,000
Cost of Goods sold 100,000
Gross Profit 155,000
Operating expense
Wage and salary 20,000
Rent 25,000
Miscellaneous 5000
Insurance 20,000
Advertising 1,600.00
Depreciation 5000
76600
Income from Operation 78,400
Tax 16000
0.00
Interest expense
Net Income 62,400
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Sitotaw Laundry Service
Balance Sheet
For the Ending Year 1
Assets
Cash 255,000
Prepaid insurance 20,000
Prepaid rent 25,000
Machinery 200,000
Total assets 500,000
Liabilities and Owners equity
Loan payable 200,000
Owners equity
Sitotaw 150,000
My family 150,000
Total owners equity 300,000
Total liabilities and owners equity 500,000
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This is the Sitotaw and my family income statement after three years that we
expected where we are after three year or 2019
Sitotaw Laundry Service
Balance Sheet
For the year ended 2019
Asset
Cash 350,000
Laundry machine 200,000
Accumulated deprn, 20,000
180,000
Total Asset 530,000
Liability and Owner's Equity
Current Liability
Loan payable 150,000
Total Liability 50,000
Owners Equity
480,000
Total Liability & Owner's Equity 530,000
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Monthly Cash Flow Statement from2016-2019 years
Year 2016 2017 2018 2019
Cash from rendered 255,000 270,000 290,000 310,000
service(sales)
Cash from receivable 0 0 0 0
Subtotal from operation 255,000 270,000 290,000 310,000
Cash payments (expenditure)
Insurance 20,000 0 0 0
Loan payment 0 50,000 50,000 50,000
Rent 25,000 0 0 0
Salary and wage 20,000 25,000 27,000 29,000
Interest expense 0 20,000 15,000 10,000
Total cash payments (65,000) (95,000) (92,000) 89,000)
Net cash flow(Cash 190,000 175,000 198,000 221,000
balance)
Net cash flow = Cash Received from the total operation in the given year (total
revenue) total cash paid to different material in the given year (expense)
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Break even analysis
Average price/item=19.45
Total sales 13110.54 item/year 255,000
Average cost/item =7.84
Fixed cost 25,000
Total cost to process 7.84*13110.54 = 102,786.63 127,786.63
Growth profit 127,213.37
Break even quantity = 25,000 / (19.45 7.84 ) 2,153.3 items
This break even analysis helps to the laundry to know at what amount of service
given to the customer to reach at equilibrium level. So from this the laundry at the
given fixed cost, variable cost and given price the laundry would need to give 2,153.3
item service to reach breakeven.
The breakeven analysis is important to any business owner and manager in
determining how many unit or revenue are needed to cover the fixed and variable
expense of the business. The concepts are
We get profit when total revenue greater than the total cost, when we get lose total
revenue less than total cost and reach breakeven point total revenue is equal to total
cost.
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