Contents

1. Executive Summary........................................................................................................................2
2. Background and Description of the Farm............................................................................................3
3. Organization and Management Plan...................................................................................................4
3.1. MANPOWER REQUIREMENT........................................................................................................4
3.2. TRAINING REQUIREMENT............................................................................................................5
4. MARKET STUDY AND SERVICE CAPACITY.............................................................................................7
4.1. MARKET STUDY............................................................................................................................7
4.1.1. Past Supply and Present Demand........................................................................................7
4.2. Projected Demand.......................................................................................................................8
4.3. Pricing..........................................................................................................................................9
5. SERVICE CAPACITY AND PROGRAMME................................................................................................9
5.1. Capacity.......................................................................................................................................9
5.2. Service Program...........................................................................................................................9
5.3. MEDICAL SUPPLIES & UTILITIES...................................................................................................9
5.3.1. MEDICAL SUPPLIES..................................................................................................................9
5.4. UTILITIES....................................................................................................................................10
6. TECHNOLOGY AND ENGINEERING.....................................................................................................11
6.1. TECHNOLOGY.............................................................................................................................11
6.1.1. Process Description............................................................................................................11
6.1.2. Source of Technology:........................................................................................................11
6.2. ENGINEERING............................................................................................................................11
6.2.1. Equipment.........................................................................................................................11
7. Land, Building and Civil Works...........................................................................................................13
8. Financial Plan.....................................................................................................................................13
8.1. TOTAL INVESTMENT COST.........................................................................................................14
8.2. FINANCIAL PLAN........................................................................................................................15
9. ANNEX...............................................................................................................................................17
 1. Executive Summary

This profile envisages the establishment of a medium clinic with a capacity to treat 7,320 out-
patients and 1,464 in- patients per year.
The market study shows that in Adama currently an additional other clinics are required. If
additional higher clinics are not established the requirement will increase to 376 Medium clinics
by the year 2022.
The total investment requirement is estimated at about Birr 4.27 million, out of which
Birr 1 million is required for working capital to solve this problem the cline will need this birr for
bank. The service will create employment opportunities for 16 persons.
The project is financially viable with an internal rate of return (IRR) and a net present value
(NPV).

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 2. Background and Description of the Farm

Medium Clinic is an institution run by a general medical practitioner or specialist assisted by

various other specialists; and where diverse out-patient medical services are given. A Medium
Clinic can have 1-5 beds for delivery and emergency cases.

Specifically, the Medium Clinic would provide the following services:

• Antenatal out-patient emergency services;
• Diagnostic services on laboratory, x-ray, sonography;
• Minor surgery; and
• Other services allowed to the medical members

The type of the business which this business plan is made is the Clinic.

The proposer of this idea is Dr. Dawit Getachew, who was born and grown up in has got more than 15
years experience in government and non Governmental hospitals and he is very known MD Expert
Internist. Dr. Dawit Getachew, is married and got 2 kids. Dr. Dawit Getachew, has been fully engaged in
professional businesses.

The appropriate locations for the envisaged project in view of the availability of input and
infrastructure are East Shoa Zone, of Adama woreda, Adama town, Kebele 12 house number
255 ( in front of St merry church ) of Oromia regional state. The town is located at about 78kms
from the federal Capital, Addis Ababa, to the south east direction.

The surrounding rural community mainly depends for their livelihood on crop production and
cattle rearing similar to other areas in the country. The town dwellers, however, could be
classified as civil servants, industrialists, livestock raisers, artisans, traders and jobless too.
Therefore, the major reasons for selecting this area for the proposed investment project are:-

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  Climatic conduciveness

 Closeness to potential markets

 Good governance of the zone

 Existence of all sorts of transport facilities and services

3. Organization and Management Plan

3.1. MANPOWER REQUIREMENT

The manpower requirement of the envisaged project is 16 persons. The list of required
manpower and corresponding labour cost is given in Table 3.1.
Table 3.1
MANPOWER REQUIREMENT AND LABOUR COST

Sr. Description Req. Salary ( Birr)

No. No. Monthly Annual
1 Specialist/General Practitioner – Head 1 12,000.0
0 144,000.00
2 Finance and Admin 1 2,000.00 24,000.00
3 Health officer 1 6,000.00 72,000.00
4 Nurse 2 1,800.00 43,200.00
5 Laboratory Technician 3 1,500.00 54,000.00
6 Store Keeper 1 1,000.00 12,000.00
7 X-ray Technician 1 1,500.00 18,000.00
8 Reception and Cashier 1 850.00 10,200.00
9 Janitor 2 800.00 19,200.00
10 Guard 3 1,000.00 36,000.00
Total 16   432,600.00
Employee's Benefit 25%     108,150.00
Grand Total 16   540,750.00

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 3.2. TRAINING REQUIREMENT

The qualification of the professionals would be adequate for the operation of the Medium
clinic.

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 Medical Director

Finance and
Medical Stuff Admin

X-ray
Technician Specialist Nurse Laboratory Admin Finance

Reception Cleaner Guard Store Cashier

3.3. Organizational structure

 4. MARKET STUDY AND SERVICE CAPACITY

4.1. MARKET STUDY

4.1.1. Past Supply and Present Demand
Health services are essential elements in ensuring a full and meaningful life for people.
Good health contributes to increased production of goods and services while poor health puts
labor force out of income. This implies the necessity of providing adequate health services
through establishment of health facilities that are adequately staffed and well supplied with
qualified medical personnel, equipment and drugs.
Current health service providers in the city include Federal Government Agencies, Oromia
Health Bureau, Non Governmental Organizations (NOGs), factories, and the private sector.
health facilities registered and licensed by the City Administration including 4 governmental and
private hospital, 6 health center, 1 Nongovernmental health center, 6 higher clinics, 28 middle
level clinics, 14 minor clinics and thirty nine pharmacies which are devoted to work for 24 hours
now a days our city’s health coverage is 77%. Currently the private sector is leading in terms of
ownership of number of health facilities.

Though there have been some improvements in health status of residents in recent years it is
still at a low level. HIV/AIDS is registering a declining trend but the prevalence rate is still very
high in the city, which is another indication to the low level of development of health service in
the city.
According to the Ministry of Health one clinic is to serve a maximum of 5,000 people to achieve
a reasonable level of quality and coverage standard in health service in the country. Supply
gap/shortfall in health service in the city is calculated based on this standard parameter. The
result is that the supply of clinic is short of the demand by
23%, and to achieve the standard set by the Ministry of Health additional clinics are required.
Therefore, considering the shortage of medical service in the city, it is assumed that the
envisaged medium clinic will have adequate present and future market
Source Adama city Administration bullet of 2006 page number 44
 4.2. Projected Demand

The demand for health service facilities has unfilled gaps when compared to the standard set by
the Ministry of Health. The present observed gap is expected to be influenced in the future by
the rate of population growth and economic development. Accordingly, based on the
population projection by CSA and the standard requirement for clinics as set by Ministry of
Health and assuming the present existing clinics continue operating, the number of additional
clinics required is shown in Table 4.2 below.

Table 4.2
PROJECTED DEMAND FOR TOTAL ADDITIONAL HIGHER CLINICS

Total Additional
Year Higher Clinics
2006 88
2007 105
2008 122
2009 140
2010 159
2011 177
2012 195
2013 214
2014 233
2015 251
2016 270
2017 288
2018 306
2019 324
2020 342
2021 359
2022 376

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 4.3. Pricing

For the purpose of this study a price of Birr 50 and Birr 150 per check up for out-patients and
per night for in-patients respectively is adopted. Moreover, for ultrasound check up and
laboratory analysis of blood and stool average, the envisaged clinic will charge Birr 110 and Birr
90 respectively.

5. SERVICE CAPACITY AND PROGRAMME

5.1. Capacity

The clinic will have a capacity to treat 20 out patients per day. Therefore, the clinic will treat
7,320 out-patients per year, Moreover, the clinic will have 5 beds for in-patients and assuming
that one patient will stay 3 days on average, the total annual number of inpatients will be
1,464. Out of the total 8,784 patients that will be treated in the envisaged clinic in a year, 80 %
are assumed to make ultrasound and laboratory checkups.

5.2. Service Program

The Medium Clinic can deliver 24 hour medical service throughout the year from the very
beginning of its operation.

5.3. MEDICAL SUPPLIES & UTILITIES

5.3.1. MEDICAL SUPPLIES

Emergency drugs and medical supplies required by the medium clinic are outlined in Table 5.3.1
below. The total cost is estimated to be about Birr 1,006,700.00 the materials can be sourced
locally from establishments such as PHARMID or pharmacies.

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Table 5.3.1

Sir Cost Birr

No. Description Quantity Price/packet Total
         
1 Adrenaline injection 50 1,000.00 50,000.00
2 Minophyllioc injection 60 1,250.00 75,000.00
3 Savlon (Chlorhexidine + Cotrimide) 75 1,100.00 82,500.00
4 Alcohol Solution 79% 45 750.00 33,750.00
5 Dextrese 40% injection 50 500.00 25,000.00
6 Ergometrine maleate injection, tabs 40 1,350.00 54,000.00
7 Hydrocortisone sodium succinate 45 2,000.00 90,000.00
8 Lidocaine hydrochloride injection 45 1,750.00 78,750.00
9 Procaine hydrochloride injection 40 1,350.00 54,000.00
10 Vitamin k injection 35 2,000.00 70,000.00
11 Hyoscine hydropromide injection 50 1,150.00 57,500.00
12 Bandage different sizes 60 1,120.00 67,200.00
13 Cotton 60 650.00 39,000.00
14 Disposabel syringe different types 100 1,350.00 135,000.00
15 Disposable needle different types 100 950.00 95,000.00
  Grand Total   18,270.00 1,006,700.00

5.4. UTILITIES
The major utilities required by a higher clinic are electricity and water. These are given in Table
5. 4.
Table 5.4

ANNUAL UTILITIES REQUIREMENT & COST

Sr. No. Unity of Qty. Unit Cost

measurement Price
1 Electricity[kWh] 110,000 0.4736 52,096
3 Water[m3] 1,000 3.25 3,250
  Total     55,346

6. TECHNOLOGY AND ENGINEERING

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 6.1. TECHNOLOGY

6.1.1. Process Description

The processes involved in the delivery of medical services at a Medium clinic include:
_ Receiving/registering of patients;
_ Arranging orders to see doctors;
_ Seeing doctors; laboratory/other tests, and
_ Diagnosis and prescription
Waste from the clinic is disposed off through Incinerator - incorporated –while other waste is
disposed off through connection to the city`s drainage system.
A medium clinic does not have negative impact on the environment.

6.1.2. Source of Technology:

An agent of equipment supplier is PHARMID

6.2. ENGINEERING

6.2.1. Equipment

Equipment required for a higher clinic is outlined in Table 6.2.1 below. The estimated cost of
the equipment is about Birr 835,805.

Table 6.2.1
Sr. No. Items Qty Cost (Birr)
1 Sphygmomanometer 1 350.00

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 2 Clinical Thermometers 2 set 20.00
3 Diagnostic set 1 200.00
4 Adult Scale 1 750.00
5 Infant Scale 1 425.00
6 Examination bed 1 1,500.00
7 Infusion stand 1 300.00
8 Dressing Trolleys 1 500.00
9 Refrigerator 1 4,000.00
10 Catheter 1 20.00
11 Stethoscope 1 150.00
12 Binocular Microscope 1 10,000.00
13 Centrifuge 1 3,000.00
14 Lab bench 1 1,100.00
15 Timer 1 1,260.00
16 Photometer 1 50,000.00
17 Water bath 1 1,260.00
18 Test Tube racks 1 set 500.00
19 Slides 1 set 80.00
20 Cover Slides 1 70.00
21 Hemocytometer with cover slide 1 350.00
22 Electrical boiler 1 1,500.00
23 Delivery table 1 1,500.00
24 Foetal monitor 1 4,250.00
25 Vacuum extractor/low forceps 1 2,450.00
26 Aspirator/manual 1 100.00
27 Breast pump 1 400.00
28 Resuscitator/Ambu bag 1 800.00
29 Suction machine 1 9,000.00
30 Portable light/mobile 1 4,900.00
31 Auxiliary operating light 1 10,000.00
32 Vaginal speculum 1 70.00
33 Minor operating set 1 500.00
34 Autoclave 1 14,000.00
35 Delivery Kit 1 500.00
36 Ultra sound 1 200,000.00
37 X-ray Machine 1 500,000.00
38 Oxygen Cylinder 1 2,500.00
39 Incinerator 1 7,500.00
  Total   835,805.00

7. Land, Building and Civil Works

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The total land area required for Medium clinic is estimated to be about more than 600 m 2. This
area is rented from Adama city Administration. According to the Federal Legislation on the
Lease Holding of Urban Land (Proclamation No 272/2002) in principle, urban land permit by
lease is on auction or negotiation basis, however, the time and condition of applying the
proclamation shall be determined by the concerned regional or city governments depending on
the level of development.

8. Financial Plan

The financial analysis of the higher clinic project is based on the data presented in the previous
chapters and the following assumptions:-

Source of finance 76.40 % equity

23.60 % loan

Bank interest 9.5%

Discount cash flow 8.5%

Accounts receivable 30 days

Medicine and medical supplies 30 days

Cash in hand 5 days

Accounts payable 30 days

Repair and maintenance 5% of Medicine Equipment

8.1. TOTAL INVESTMENT COST

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The total investment cost of the project including working capital is estimated at Birr 3.84
million. The major breakdown of the total initial investment cost is shown in Table 8.1.

Table 8.1

INVESTMENT COST (Birr)

Description Total Bank Loan Owner

Financial Equity
Requirements
(Birr)
Building & Construction 2,000,000.00 0.00 2,000,000.00
Medical Equipment 835,805.00 0.00 835,805.00
Office Furniture and Equipment 73,126.00 0.00 73,126.00
Vehicle 300,000.00 0.00 300,000.00
Sub Total 3,208,931.00 0.00 3,208,931.00
2.Working capital (table 5.3.1) 1,056,700.00 1,006,700.00 50,000.00
Sub Total 1,056,700.00 1,006,700.00 50,000.00
Total 4,265,631.00 1,006,700.00 3,258,931.00
Debt/Equity Ratio 100% 23.60% 76.40%

Hence, this document is prepared to be submitted to Commercial Bank of Ethiopia to obtain expansion
loans of birr 1,000,000.00 intending to finance working capital only the rest had been be covered by the
owner, like purchase of some necessary equipments and facilities that is required to purchase additional
medical equipments in Year 2007.

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 8.2. FINANCIAL PLAN

8.2.1. 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 449,195.21 to Birr 501,678.59
during the life of the project. Moreover, at the end of the project life the accumulated cash flow
amounts to Birr 3.05 million.

8.2.2. Ratios

In financial analysis financial ratios and efficiency ratios are used as an index or yard stick 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.

8.2.3. 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 of the project including cost of finance when it starts to operate at full capacity (year 2) is
estimated by using income statement projection.

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 8.2.4. 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
the IRR value indicating the variability of the project.

8.2.5. Net Present Value

Net present value (NPV) is defined as the total present (discounted) value of a time series of
cash flows. NPV aggregates cash flows that occur during different periods of time during the life
of a project in to a common measuring unit i.e. present value. It is a standard method for using
the time value of money to appraise long-term projects. NPV is an indicator of how much value
an investment or project adds to the capital invested. In principal a project is accepted if the
NPV is non-negative.

8.2.6. ECONOMIC BENEFITS

The project can create employment for 16 persons. In addition to contributing to the
improvement of the city’s population health, the project will generate Birr 395,676.15 in terms
of tax revenue. The establishment of the project will contribute to improving the life of the
residents of the City Administration.

9. ANNEX

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 Loan Amortization Schedule
   Table 9.1              

                 
  Enter values Loan summary
3,500,00 96,750.7
  Loan amount 0.00 Scheduled payment 8
Scheduled number of 12.0
  Annual interest rate 11.50 % payments 0
Actual number of 12.0
  Loan period in years 3 payments 0
  Number of payments per year 4 Total early payments -
161,009.
  Start date of loan 2/1/2015 Total interest 34
  Optional extra payments            
                 
  Lender: Dr. Dawit Getachew M/ Clinic          
                 
                 
                 
Pmt. Payment Beginning Scheduled Total Ending Cumulative
Principal Interest
No. Date Balance Payment Payment Balance Interest
1,000,000. 73,000. 23,750. 926,999. 23,750.0
1 5/1/2015 00 96,750.78 96,750.78 78 00 22 0
926,999. 74,734. 22,016. 852,264. 45,766.2
2 8/1/2015 22 96,750.78 96,750.78 55 23 68 3
852,264. 76,509. 20,241. 775,755. 66,007.5
3 11/1/2015 68 96,750.78 96,750.78 49 29 18 2
775,755. 78,326. 18,424. 697,428. 84,431.7
4 2/1/2016 18 96,750.78 96,750.78 59 19 59 0
697,428. 80,186. 16,563. 617,241. 100,995.6
5 5/1/2016 59 96,750.78 96,750.78 85 93 74 3
617,241. 82,091. 14,659. 535,150. 115,655.1
6 8/1/2016 74 96,750.78 96,750.78 29 49 45 2
535,150. 84,040. 12,709. 451,109. 128,364.9
7 11/1/2016 45 96,750.78 96,750.78 95 82 50 5
451,109. 86,036. 10,713. 365,072. 139,078.8
8 2/1/2017 50 96,750.78 96,750.78 93 85 57 0
365,072. 88,080. 8,670. 276,992. 147,749.2
9 5/1/2017 57 96,750.78 96,750.78 30 47 27 7
276,992. 90,172. 6,578. 186,820. 154,327.8
10 8/1/2017 27 96,750.78 96,750.78 21 57 06 4
186,820. 92,313. 4,436. 94,506. 158,764.8
11 11/1/2017 06 96,750.78 96,750.78 80 98 25 1
94,506. 92,261. 2,244. 161,009.3
12 2/1/2018 25 96,750.78 94,506.25 73 52 - 4

Dr. DAWIT GETACHEW MEDIUM CLINIC

Projected Income Statement Ended on June 30…..

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 Table 9.2.
Project Years
Description 1 2 3
Service Income 2,357,040.00 2,592,744.00 2,852,018.40

Cost of services      
Purchase of medicine 1,006,700.00 1,107,370.00 1,218,107.00
Gross profit 1,350,340.00 1,485,374.00 1,633,911.40
Salaries 432,600 475,860 523,446
Benefits 108,150 118,965 130,862
Travel & perdiem 5,000.00 6,000.00 7,000.00
Postal, Telephone and Telex. 2,248.78 2,473.66 2,721.02
Rent Expense 25,854.00 28,439.40 31,283.34
Utilities 7,184.00 7,902.40 8,692.64
Legal & Audit fee 5,000.00 10,000.00 10,000.00
Ultrasound Rent 13,926.00 14,622.30 15,353.42
Deprec & Amort 10,000.00 10,000.00 10,000.00
Miscellaneous Expanse 25,000.00 100,000.00 100,000.00
Stationary 20,000.00 22,000.00 24,200.00
Total Operating cost 654,962.78 796,262.76 863,557.92
Profit Before int.& tax 695,377.22 689,111.24 770,353.48
Interest Expense 53,669.78 53,669.78 53,669.78
Profit before tax 641,707.44 635,441.46 716,683.70
Profit tax 192,512.23 190,632.44 215,005.11
Net profit 449,195.21 444,809.02 501,678.59

Dr. DAWIT GETACHEW MEDIUM CLINIC

PROJECTED BALANCE SHEET FOR THE YEAR ENDED SENE 30,

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 Assets   2007 2008 2009
Current assets      
Cash 20,000.00 857,157.34 954,467.37
Inventory 14,408.00 25,000.00 27,500.00
  34,408.00 882,157.34 981,967.37
Fixed assets      
Office furniture 73,126.00 58,500.80 46,800.64
Medical Equipment 617,699.00 494,159.20 395,327.36
Total Fixed Assets 690,825.00 552,660.00 442,128.00
  Total Assets 725,233.00 1,434,817.34 1,424,095.37
Liabilities        
Bank Loan 0.00 666,666.67 333,333.33
Account Payable 81,250.00 0.00 0.00
  Total Liabilities 81,250.00 666,666.67 333,333.33
Capital        
Capital 40,000.00 50,000.00 65,000.00
Additional Investment 603,983.00 268,955.46 580,953.02
Net Income   449,195.21 444,809.02
Total Capital 643,983.00 768,150.67 1,090,762.04
  Total Liabilities and Capital 725,233.00 1,434,817.34 1,424,095.37

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 Dr. DAWIT GETACHEW MEDIUM CLINIC
3 Years Projected Cash Flow Statement

  2007 2008 2009

Beginning Cash Balance 50,000.00 1,175,861.88 1,297,337.57
Plus - Cash from revenue collection 2,357,040.00 2,592,744.00 2,852,018.40
Plus - Cash from bank loan 1,000,000.00 0 0
Plus- Depreciation Expense 10,000.00 10,000.00 10,000.00
Total Inflow 3,417,040.00 3,778,605.88 4,159,355.97
Less- Operating Expenses 654,962.78 796,262.76 863,557.92
Less - Loan repayment 387,003.11 387,003.11 387,003.11
Less- Cost of goods sold 1,006,700.00 1,107,370.00 1,218,107.00
Profit taxes 192,512.23 190,632.44 215,005.11
Total Outflow 2,241,178.12 2,481,268.31 2,683,673.14
Ending Balance ( Net ) 1,175,861.88 1,297,337.57 1,475,682.83