EXECUTIVE SUMMARY

1. Brief description of the business

Name of business: Making Sheet Metal Bending Machine
Sheet metal manufacturing is registered with the country’ small industries office in 2006e,c as a sole proprietorships and located at
arada areka street in the town of wolayta soddo .it aims to produce bending machine during the last l0 years. The total project cost
is1,000000.

2.Brief profile of the entrepreneur

The business is owned by Mr. Tarekegn Haile, a native of sodo from the capital town of wolaita zone, I was motivated to go into the
manufacturing of sheet metal bending machine after hearing many complains from retailers and customers about the inferior quality
of existing machine. I was gathered information and studded the process of making the machine from several literature give to me by
the regional TVET bureau. I was attended 17- day training on machine making technology. I was completed MA in Technology
University and I was worked for six years as collage instructor.

Project contributions to the local /national economy

The project will employ eight employees. It aims to raise the quality standard of the urban and rural population by providing superior
quality sheet metal bending machine. It will also result in competition by forcing existing sheet metal bending machine manufacturing
in the area to improve their product quality.

Marketing plan
Description of the product
Common sheet metal bending machine is currently sold in large round which can easily be assembled and portable. The size and
weight of the machine is according to customers needed and what they can afforded but the normal 110cm length with 80cm height.
Depending on the standard, the color of the machine is green and also carries the brand name “superior quality”.

Comparison of the product with its competitors.

I am regularly deal and observe that the quality of the machine currently sold in the market is poor and I was received many requests
from customer for a better quality machine. Due to the distance of the area from the import area. Quality of the machine based on its
selection of the materials to increase the life span of the machine. The proposed manufacturing project aims to fulfill the quality
requirement.
Location
The business will be located in the area of entrepreneur leaving town. This location has been chosen for the following reasons: the
production process can be easily supervised by the owner. It is near to the transportation and it is close to its targeted markets.

Market area
I plan to distribute the machine principally in my metal work shop and 13 woredas of the wolaita zone and all of the Ethiopia. This
area has been selected because:
1. The entrepreneur knows many of the major retailers of the machine in the different areas.
2. It is close to different customers
3. It is often neglected by distributors fro the capital town of wolaita zone.

Total demand
These retailers, when surveyed, claim that each of them sells approximately 40pcs every month, or a total demand 60pcs per month.

Market share
As ample survey of competitors in the area indicated that there is one manufacturers selling machine to the 20 major retailers to whom
CEFE sheet metal bending machine manufacturing plans to sell it product. The competitors are small in size and the quality of their
product is inferior to what is planed by the project. Because the number of competitors are small, their size is small and product is
dissimilar to the one proposed. In the initial stages of production, operating at 100% capacity can not be assumed. There are bounded
to be initial operating problems, raw material shortages, difficulties etc, hence only 20% is projected to be served in the first year.

Selling price
The total selling price of the each product is 13,000 local currencies.

Sales forecast
If the total demand is 50 per month and the projected market share is 20 % the projects potential market size is 10% per
month.

SN year Projected sales volume(kg) Amount(LC)

1 2006 600 780000

2 2007 620 8060000
3 2008 650 8450000
4 2009 700 9100000
Promotional measures
By using mass media, news paper, flyers, etc

Marketing strategy
The project marketing strategy is based on the following strategies.
A) Product
It is a quality product
It is a superior product
Its brand name is superior quality
B) Pricing
Its retail price of birr is lower than the most expensive brand
C) Promotion
Free delivery
Word of mouth advertizing
D) Place
Over the counter sales in his existing store.
Its major words retailers.
Marketing budget
Manufacturing will have every modest cost promoted and distribute its product. It will be relay mostly mouth promotion by
satisfied customers as well as endorsement by the retailers of the product because of its superior quality. Hence, the total
marketing budget is 500.000 local birr.
Production process
The production process of making sheet metal bending machine are as follows.
 Sketching the working drawing or detail drawing.
 Reading and understand the working drawing properly.
 Lay out and measuring the dimension with required specification.
 Cut the work piece with the required dimension.
 Assembling properly by using the required fasteners.
 Demonstrating the machines each part is correctly assembled.
 Grinding & finishing the machine /work piece/
 Painting the machine
 FIXED ASSETS

No List of fixed assets Unit cost Depreciation Total cost

1 Land 160,000 160,000
2 Building 80,000 20% 80,000
3 Machinery 200,000 10% 200,000
4 Furniture 60,000 5% 60,000

List of machinery, suppliers & price

Machines tools & Suppliers Price per No of units Total cost Terms of
fixtures unit purchase
Arc welding Market 6000 2 12000
machine
Portable gridding Market 2500 2 5000
machine
Portable drilling Market 2000 1 2000
machine
Tap and die Market 3000 1set 3000
Vice Market 1000 2piece 2000
bench Market 800 2 1600
Metal sawing bench Market 3000 1 3000

LIFE OF FIXED ASSETS

No Fixed Assets Cost Life Span Depreciation

1 Land 160,00 - -
0
2 Building 80,000 20 year 20%
3 Machinery 200,00 10 year 10%
0
4 Furniture 60,000 6 year 5%
MAINTENANCE & REPAIRS
Because of simplicity of the equipment almost all servicing & repairs can be done on the factory by entrepreneur.
SOURCES OF EQUIPMENT
The machinery equipment will be locally manufactured on the factory local site.

PLAND CAPACITY
The factory has a production capacity of 50 pcs per month of operation. The factory wills initially operating at
operation. The factory capacity or per day for 2 days in a month.

FUTURE CAPACITY
Extra capacity in the site of the angle iron & flat iron are available & will be used only when demand is sufficiently
large to justify working extra hours or days.

PLANT LOCATION & LAY OUT

The plant will be located for rooms adjacent to shop in the town center. The total size of the room will be 40sq ft. the
land is owned by me & have marketed value of LC160, 000 also forms part of my equity & will service as collateral.

RAW MATERIALS NEEDED

No Raw materials Specification Quantity

1 Angle Iron 5mmx60mm6000mm 2
2 Round pipe Ø30mmx3mmx6000mm 1
3 Square pipe 3mmx40mmx40mmx6000mm 1
4 Electrode 3mm 1
5 Antirust gallon 1
6 Metal pint gallon 1
7 Sand pepper standard 1
8 Wire brush - 1

COST OF RAW MATERIALS

 No Raw Materials Quantity Unit Cost Total Cost
1 Angle Iron 2 1500 3000
2 Round Bar 1 500 500
3 Electrode 1 160 160
4 Antirust 1 160 160
5 Metal pint 1 160 160
6 Sand pepper 1 25 25
7 Wire brush 1 15 15
8 Square pip 1 1000 1000

RAW MATERIALS AVAILABILITY

List Of Raw Materials, Sources & Prices

No Raw Materials Suppliers Unit Price TOTAL PRICE

1 Angle Iron Market 1500 3000
2 Round pipe Market 500 500
3 Square pipe Market 1000 1000

LABOUR
The entrepreneur will some time participant in production & manage eight part times workers.
A Job position, Qualification & Experience of Direct Labor

Direct Labor Job title of work Qualifications Experience

Manager MSC Manufacturing technology 7 years
Secretary IT 3 years
Marketing supervisor Marketing management 5 years
Production supervisor Manufacturing technology 6 years
Finance Accounting 4 years

COST OF LABOUR

Cost of Labor Salary Per Salary Per

 Month year
Manager 5000 60,000
Secretary 1114 13,368
Marketing supervisor 3000 36,000
Production supervisor 3000 36,000
Finance 2300 27,600
Guard 800(4) 38,400
Cleaner 500 6000
Other expenses 10000 10,000
Total 767,368
LABOR AVAILABILITY
Workers for this type manufacturing are available through out the year even in seasons of peak manufacturing activities.

LABOR PRODUCTIVITY
Wedges to the eight workers will be paid on a piece rate bases there fore on the number of piece of semi finished
products they form into manufacture.

FACTORY OVERHEAD EXPENSES

Factory overhead expenses consist Of 840,368 Birr

 Indirect labor - - - - - - - - - - - - - - - - - - - - - - 767,368

 Electricity & water - - - - - - - - - - - - - - - - - - 12000
 Maintenance- - - - - - - - - - - - - - - - - - - - - - - 15000
 Transportation of raw materials - - - - - - - - -10,000
 Depreciation of building and equipment - - - 36,000
 Total factory overheads per month - - - - - - 840,368

PRODUCTION COST
Production Cost

Product Planned production Direct Materials Direct Labor Factory Overhead Total Cost
volume Per Unit Total Per Unit Total Per Unit Total Per Unit Total
Sheet metal 50 price 5200 1500 9100 23,600
bending machine
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ORGANIZATION & MANAGEMENT PLAN
Form of Business
The business registered under the name CEFE manufacturing as a sole proprietor ship & the entrepreneur. My
business address located at arada Areka Street in the town of wolaita sodo.

ORGANIZATIONAL STRUCTURE

BUSINESS EXPERIENCE & QUALIFICATION OF THE ENTREPRENEUR

I was motivated to go in to the manufacture of sheet metal bending machine after hearing many complaints from
retailers & customers about the inferior quality of existing machine. I was started gathering information & studied the process
of making the machine from literature given to me by regional TVET bureau. I was attended 17-day training on preparing
proposal how to run the business. I was completed my masters degree in management & I was worked for 6 years as instructor
& dean of the college. I have some savings which I can put up as capital of the proposed manufacturing business. I plan, how
ever, to borrow money from the bank. I’m also a relative in the town which is what I plan to run this proposed business.

PRE- OPERATING ACTIVITIES

Activities Time Table (in weeks )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Registering 
the business
Preparing   
business
plan
Applying  
/approval of
loan/
Contacting  
equipment
suppliers
Constructing        
the factory
Hiring labor 

Installing  
equipment
Purchasing  
raw
materials
PRE- OPERATING EXPENSES

Pre- Operating Expenses Amount (LC)

Registration cost 8,000
Sample production -
Survey costs -
Training costs -
Entertainment costs 8,000
Transportation costs 10,000
Electricity & water costs 12,000
TOTAL PRE- OPERATING EXPENSES 38,000

OFFICE FIXED ASSETS & EQUIPMENT

I want to be modest in my expense. I will just buy 3 in expensive tables & 6 chairs, a calculator, an electric fan & a
filing cabinet. All this will cost LC 60,000 & monthly depreciation for this equipment will be LC 75 or 900 annually.

ADMINISTRATIVE EXPENSES
I want to keep my cost low in order to be competitive.
FINANCIAL PLAN

Capital requirement(Project cost)

Entrepreneur from his equity 500,000 and the bank loan 500,000.Hence the total amount of the project cost is 1,000000 Ethiopian birr.
Financing plan and loan requirement
The capital requirement for the entrepreneur is bank loan 500,000 and equity from the entrepreneur is 500,000.
Security for loan
-Building
-50% of saving
Table 4.1 Capital requirement
SN Investment Item
Fixed Assets Amount(LC) percent
1.1 land 160,000 -
1.2 Building 80,000 20%
1.3 Equipment 50,000 10%
1.4 Machinery 150,000 10%
1.4 Office equipment 60,000 5%
Sub-total 500000

Pre-operating expense

2.Pre-operating expenses Amount(LC)

Registering the business 1500
Preparing business plan 2500
Applying approval of loan 2000
Contacting equipment suppliers 1000
Constructing the factory 80,000
Installing the equipment 15000
Purchasing raw materials 260,000
Sub-total 302000
3.Working capital
Land 160,000
Building 80,000
Machinery 200,000
Office furniture 60,000
Pre-operating expenses 302000
Raw material 260,000
Sub-total 1062000

Financing Plan

SN Items Cost Source

Bank loan Equity Other Total
creditors
1 Fixed assets 160,000
1.1 land 80,000
1.2 Building 50,000
1.3 Equipment 150,000
1.4 Machinery 60,000
1.5 Office equipment 160,000
2 Pre-operating 500,000
expenses
3 Working capital 300000
4 Accounts receivable
5 Permanent capital 500000
Total(LC)
Total(%) 1,300,000

Particulars of collateral offered

Particulars of security Year of purchase Estimated value

 Building 5 years 500,000

Profit and loss statement

For the year ended

Gross sales 7,800,000

Less: Returns &Allowance 25,000
Net Sales 7,775,000
Less: cost of good sold 3,275,000
Direct materials 3,120,000
Direct labor 180,000
Factory overhead 127,200
Gross profit 4,347,800
Less: Administrative& Selling Expenses 120,000
Operating profit 4,227,800
Less: Interest Expense 4,70316
Net Profit before tax 3,757,484
Less: Estimated Income Tax 217,740
Net Profit After Tax 3,539,774

PROJECTED ANNUAL CASH FLOW STATEMENT

Items Operation month
Star 1 2 3 4 5 6 7 8 9 10 11 12 Tota
ting l
Cash
receipts
Beginning - 39, 687, 985, 1282, 1580 187, 217,5 247, 2770 3067, 3365 3662,
cash 000 500 000 500 ,000 7500 000 2500 0,00 500 ,000 500
Saving 500, - - 500,
000 000
Bank loan 500, - - 500,
 000 000
Cash sales - 650 650, 650, 650, 650, 650, 650, 650, 650, 650, 650, 650, 7800
, 000 000 000 000 000 000 000 000 000 000 000 ,
000 000
Total cash 100 104 133, 163 1932 2230 2527 2825, 3122 3420, 3717, 4015 4312, 8,80
receipts 0, 0, 750 5,00 5,00 ,000 ,500 000 , 000 500 , 500 0,00
000 000 0 0 500 000 0
Cash - -
payments
Labor - 150 150 150 1500 1500 1500 1500 1500 1500 1500 1500 15000 180,
00 00 00 0 0 0 0 0 0 0 0 000
Operating - 300 300, 300, 300, 300, 300, 300, 300, 300, 300, 300, 300, 3600
expense , 000 000 000 000 000 000 000 000 000 000 000 ,000
000
Pre- 50,0 - - - - - - - - - - - - 50,0
operatinge 00 00
xpens
Machiner 200, - - - - -- 200,
y 000 -- 000
Office 60,0 - 60,0
furniture 00 - 00
Loan - 500 500 500 5000 5000 5000 5000 5000 5000 5000 5000 5000 60,0
interest 0 0 0 00
Sales tax - 32, 32, 32, 32, 32, 32, 32, 32, 32, 32, 32, 32, 390,
500 500 500 500 500 500 500 500 500 500 500 500 000
Total cash 670, 352 352, 352, 352,5 352, 352, 352,5 352, 352,5 352,5 352, 352,500 50,8
payment 000 , 500 500 00 500 500 00 500 00 00 500 0000
500
End cash 390, 687 985, 128 1580, 187, 217, 247,2 2770 3067, 3365, 3662 396000 3720
Balance 000 500 000 2,50 000 7500 5000 500 0,00 500 000 ,500 0 000
0
Sales and cost forecast for one year
Category 1 2 3 4 5 6 7 8 9 10 11 12 total

Sales
Break-even point=Annual
Total Sales x Annual
Cash 650,00 650,00 650,000 650,000 650,00 650,00 650,00 650,00 650,00 650,00 650,00 650,00 7,8000,0
sales of 0 0 0 0 0 0 0 0 0 0 00 Total fixed costs
items
Total 650,00 650,00 650,000 650,000 650,00 650,00 650,00 650,00 650,00 650,00 650,00 650,00 7,800,00 Annual
costs 0 0 0 0 0 0 0 0 0 0 0 0 0
Total sales –Annual Total
Costs - -
variable cost

=
Cost of 325, 325,00 325,000 325,000 325,00 325,00 325,00 325,00 325,00 325, 325, 325, 3,900,00 7,800,000 x 600,000 =1,
item 000 0 0 0 0 0 0 000 000 000 0
7,800,000−3900,000
Labor 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180,000
000000

Return on investment for

Operatin 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 600,000 the project total
g cost
3666744
investment=
Loan 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 58,500 1000000
interest =3,666,744
Total 394, 394, 394, 394, 394, 394, 394, 394, 394, 394, 394, 394, 1,337,04
costs 875 875 875 875 875 875 875 875 875 875 875 875 0

Gross 255, 255, 255, 255, 255, 255, 255, 255, 255, 255, 255, 255, 6,462,
profit 125 125 125 125 125 125 125 125 125 125 125 125 960

Income 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 32,500 390,000
tax

Net
profit 2,22 2,22 2,22 2,22 2,22 2,22 2,22 2,22 2,22 2,22 2,22 2,22 3,061,50
625 625 625 625 625 625 625 625 625 625 625 625 0