SARA IBRAHIM FOOD ITEM TRADE BUSINESS

PROPOSAL SUMMITED TO FINANCER BANK

OWNER: - SARA IBRAHIM

ADDRESS: ADAMA
Jan, 2023

ADAMA
Table of Contents

I. EXECUTIVE SUMMARY ..................................................................................................1

1. BACK GROUND INFORMATION ....................................................................................3

1.2. Business Name and related information.........................................................................3

1.3. Vision and business Values and Culture ........................................................................3

1.3.1. Vision of the business ................................................................................................3

1.3.2. Business values and Culture ...................................................................................3

1.3.3. Business objective of Sara Ibrahim Food Item Trade ..............................................4

1.3.4. Revenue Goals and Repeat Business ......................................................................4

2.4.3.1. Minimize Cost ....................................................................................................5

2.4.3.2. Margin Goals......................................................................................................5

2.4.3.3. Reputation Goals ................................................................................................5

2. KEY SUCCESS AND RISK FACTORS............................................................................ 10

2. Weakness ....................................................................................................................... 10

3. Opportunities .................................................................................................................. 10

4. Threat ............................................................................................................................. 11

4. MARKET ANALYSIS ......................................................................................................... 12

4.2.1. The Health Benefits of Pasta and Macaroni ..................................................... 14

1.3. Purchase and sales program ..................................................................................... 24

6.1. Underlying Assumption .............................................................................................. 26

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6.2. Working Capital .......................................................................................................... 26

6.2. Depreciation Schedule ........................................................................................................ 26

6.3. Source of Fund Loan Repayment Schedule and Collateral ........................................... 27

6.3.1. Source of Fund ..................................................................................................... 27

6.3.2. Loan Repayment Schedule ................................................................................... 27

6.4. Collateral................................................................................................................. 28

6.5. Expected Financial Results.......................................................................................... 28

6.5.1. Profit and Loss Statement .................................................................................... 28

6.5.2. Projected Flow Statement ..................................................................................... 29

6.5.3. Projected Balance Sheet ....................................................................................... 30

6.9. Socioeconomic Benefit Of The Business ........................................................................ 32

7. CONCLUSION AND RECOMMENDATION ...................................................................... 34

7.1. Conclusions ........................................................................................................................ 34

7.2. Recommendations .............................................................................................................. 34

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 I. EXECUTIVE SUMMARY

The aim of this proposal is to analyze the business performance, forecast the overall business
activity for the next five years and determining financial sources and amount that will be required
by the business. Retail trade is the business activity associated with the sale of goods to the final
consumer, the ultimate customer. It is the link between wholesalers or manufacturers and the
customers of the product. Typically retailers sell goods in large to quantities to consumers for
personal use, not for resale or business use.

The entrepreneur Sara Ibrahim wants to engage in business of trading food items particularly wheat
product items. Wheat is cultivated as a cash crop, as it produces a good yield per unit area, grows
well in a temperate climate with a moderately short growing season, and yields versatile, high-
quality flour. The majority of wheat flour is used to make products including bread, pasta, cereal,
pastries, cookies, crackers, muffins, tortillas, and pitas. The business will trade, the major product
of wheat like pasta, macaroni spaghetti and as well as Rice which is also the family of wheat grain

The business will be established in Adama city. Mrs Sara Ibrahim has been attracted by the
expanding business opportunity and conducive working environment in the trade sector and
determined to start her trade business in Adama City. She has rich experience in different business
and now wants to engage in trade of wheat products business. The entrepreneur has set to service a
wide range of client in Adama city. She know that there are several retailers all around the city and
she has spent time and resources to conduct a thorough feasibility studies and market survey so as
to be well positioned to favorably compete with her competitors. She will ensure that all the food
items traded through the business are of the highest quality. She wants to build a business with a
wide range of client base that cuts across people of different financial status.

Currently the promoter has studied the market she wants to engage in. The marketing are of the
business is Adama. Therefore, the market for products under consideration is forecasted to grow
rapidly in the coming years as the number of population increases. The entrepreneur prepared all
requirements for the business including shop site and different necessary infrastructures. However
it has requires Birr 4,000,000 to cover the financial requirement of the business.

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Finally the very important part of the business financial analysis outputs indicated that the business
is profitable. The most important indicators for this are profitability and liquidity. The business can
generate positive net profit through its all operations years. The business is liquid through of all its
lifespan. According to payback and NPV business decision factors the business passed all the two
capita; budgeting tools. The social economic benefit is great by inviting more labor to the job sector
contributing in increasing government revenue by tax contribution. In sum-up the business is
attractive and financeable.

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 1. BACK GROUND INFORMATION

1.1.The entrepreneur business history

Sara Ibrahim food items trade is established in Adama city. The entrepreneur has engaged trading of
cloth and other business for long period of time as it’s the information from her TIN Number
indicates. She has gathered many experience in general trade business. Due to good business
performance registered and growing market for different food items, she is initiated to engage in trade
business of wheat product food items.

1.2.Business Name and related information

 Name :- Sara Ibrahim Wheat Product Trade

 Address:-
Region: -Oromia
Zone: East Shewa
Twon: Adama
Kebele:- Irrecha
Mobile:- :0911-7041-84
 TIN No:-0008826073
1.3.Vision and business Values and Culture

1.3.1. Vision of the business

The business has set the vision of becoming one of best quality wheat product (food item) trader
and recording sustainable good profit. The vision of the business will be actualized through
performing strict business principle with quality product trade, good management and lobar force,
customer satisfaction. In addition, different strategies will be designed to realize the vision of the
business.

1.3.2. Business values and Culture

Business culture refers to the set of behavioural and procedural norms that can be observed within a
business which includes its policies, procedures, ethics, values, employee behaviours and attitudes,
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goals and code of conduct. It also makes up the “personality” of a business. In other way, it is also
the business values toward which activities of the business are directed and one of the most
important functions the business owner must perform is setting objectives. Values are also
certainly part of firm culture, but until the firm put them into action they’re just words on paper. In
fact, core values can negatively impact culture if they aren’t adhered to. Employees will see this as
the business paying lip service and failing to live up to its own standards.
A successful business culture is one that is bought into by everyone from the newest intern to the
CEO. It’s living and breathing your core values. The job of the business is to make sure that every
employee understands the expectations and acts accordingly. A truly great business culture is one
that inherently promotes curiosity, respect, and teamwork and employee health. A way to really
boost business culture is to put a concerted emphasis on diversity and inclusion. In simplified terms,
diversity and inclusion in the workplace is making a group of individuals, with completely different
backgrounds and experiences feel safe and accepted in expressing their uniqueness while at work.
Allowing employees to express their differences learn from each other and feel safe while doing it
creates a strong cultural bond that breeds employee happiness and productivity.

1.3.3. Business objective of Sara Ibrahim Food Item Trade

The Business objective is trading of Food Items and other related products to the individuals based
on their order coupled with the small sales counter for the end customer. Through doing this the
entrepreneur is expected to generate income which in-fact will help her to expand her business to
giant food item supplier and then to the food processing factory in future. The business has also
different goals which it planned to meet in its trading period. These goals include; generating
income and other in direct benefits gained from the business.

1.3.4. Revenue Goals and Repeat Business

This trading business can increase its revenue through advertising and promotions such as offering
deals on specific items on different days of the week. You can add to sales totals by carefully
monitoring and adapting to demand, paying attention customer flow as well as sales patterns. Many
changes that bring in additional revenue require little or no monetary outlay, such as adjusting your
hours to be open when you are likely to be busiest or creating displays that tempt customers to buy
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additional product. Promotional offerings bring new customers in the door but monthly revenue
targets are more easily met by encourages return visits. Excellent customer service and
rewards/referral systems are major revenue drivers. Therefore, the entrepreneur will generate and
increase his income through the above ways.

2.4.3.1.Minimize Cost

The income of this business is the amount left over after subtracting deductible expenses from sales
revenue. To achieve this objective of maximizing income, Sara Ibrahim Wheat Products trade must
minimize cost of sales without running out of popular activities. Because customer demand is rarely
consistent, it is nearly impossible to avoid cost altogether. However, keeping careful records of
which items sell fastest enables the business to predict some sales patterns. The business can
achieve additional accuracy by paying attention to variables that affect sales patterns, such as
holidays and season ether in winter or summer.

2.4.3.2.Margin Goals
The trade business model of selling optimal product creates so much potential for revenue
generation, the business should closely monitor profit margins, or the percentage of sales that
exceeds operating expenses. Shop around for low prices on product, but don't compromise quality
for the sake of price if customers hold the business to a high standard. Introduce efficiencies that
enable the business to sale more in less time, such as consolidating processes, eliminating
bottlenecks and achieving economies of scale. Maintaining margin is critical to any business model.

2.4.3.3. Reputation Goals

Building a strong reputation is essential for objective of attracting a loyal clients and generating a
consistent sales volume. Build your reputation by producing high-quality products and maintaining
excellent customer service. Although it is tempting to sell product that are less than perfect, these
sales may cost more in the long run by compromising the business reputation. Develop a specialty,
and practice until the entrepreneur becomes an expert. Build the reputation through social media,
community events and local promotional opportunities. Creativity and positive customer
interactions/reviews will boost business in the long run. In conclusion, Sara Ibrahim Wheat
products (food Items) trade business is believed that the trading business will have significant social

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and economic benefits that accrue to the society, the region and the country beyond boasting the
financial performance of the entrepreneur.

5.2. Product/Service Description:-

Sara Ibrahim Wheat Products (food Item) trade business offers wide range of Food Items. She set to
service a wide range of client in the Adama. The product offerings are listed below;

 Pasta

 Macaroni

 Spaghetti

 Endomin

 Rice

 Sugar and etc

There are different types Macaroni and Pasta products

Fusilli: - is a type of helix- or corkscrew-shaped pasta. It has bend shape and it is also sometimes
called rotini. Pastini: - is a variety of pasta consisting of tiny pieces of pasta available in a variety
of shapes. It is the smallest type of pasta product that most of the time suitable for the children.

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Elbow: - is a type of short cut pasta which is sometimes called small macaroni. It is called elbow
due to its bend shape. This can be classified in to small, medium, and big elbow depending on die
used to produce it.

Penne: - is a type of pasta with cylinder-shaped pieces. It is identified by small cylinder shapes, and
it comes in a variety of flavors.

Rigatoni: - is the thickest type of short cut pasta which is sometimes called large macaroni.
Rigatoni is much larger and more circular than penne. a. Fusilli, Elbow and Pastini Penne
andrigatoni Short pasta can also be produced in a rectangular, triangular, an irregular shapes and
can be decorative. This pasta types can be minute in size and generally can be used in soups.

Instant noodle:- These are products with solid rode form of minimum length of 200mm and with
diameter between 1mm to 2mm and ribbons of minimum length of 200mm with a width from
1.5mm and thickness ranging 1mm to 2mm. 7 Instant noodle is classified based on drying method
and temperature level applied, raw material required to produce, and brand. Based on raw materials
required to produce them, noodle are further classified into wheat flour based instant noodle, rice
based instant noodle, starch based instant noodle, buckwheat based instant noodle, and wheat flour
and starch based instant noodle. Similarly, brand based noodle are further classified into indomie,
koka noodle, maggi, mama, maruchan, supper noodle, waiwai, etc. The other classification which is
based on drying method and temperature level applied is also classified into fried noodle and non
fried noodle.

Fried noodle - Noodle in a metal mold are fried in the oil at 140-160˚C for a minute or two.
Moisture content of the dough is reduced from a 30-40% level to a 3-6% level, and
pregelatinization is accelerated in this process. This study covers this class of instant noodle.

Non-fried noodle -This is literally noodle that is not fried in oil. Noodle in a metal mold are put
into an air-drier and dehydrated with hot air at approximately 80˚C for more than 30 minutes. The
noodle made with this method is "air-dried noodle''. Between instant fried and instant non-fried
noodle, remarkable differences lie in moisture and fat contents. Fried noodle have significantly less
moisture content than non-fried noodle. On the other hand, when it comes to fat, one serving of

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fried noodle typically contain approximately 20 gram of fat, while non-fried noodle only contain 4-
6 g or one-fourth of fat, because they are not fried in oil.

 Rice
Rice is edible starchy cereal grain and the grass plant family by which it is produced. Roughly
one-half of the world population, including virtually all of East and Southeast Asia, is wholly
dependent upon rice as a staple food; 95 percent of the world’s rice crop is eaten by humans. Rice
is cooked by boiling, or it can be ground into a flour. It is eaten alone and in a great variety of
soups, side dishes, and main dishes in Asian, Middle Eastern, and many other cuisines. Other
products in which rice is used are breakfast cereals, noodles, and such alcoholic beverages as
Japanese sake. In Ethiopian the consumption of rice also becoming commend as the food style or
culture of the country is changing and the product is also produced partially in the country
especially in the northern part of the country.

Fig 1.2:- Rice

 Sugar
a sweet crystalline substance obtained from various plants, especially sugar cane and sugar beet,
consisting essentially of sucrose, and used as a sweetener in food and drink. It is very common to
utilize sugar to sweeten coffee, tea and different foods in Ethiopia. Sugar is the most demanded
food items now days. Sara food item trade also has a plan to trade such product. All the above listed
wheat product food are common in Ethiopia since many years ago. Particularly due to their
readymade nature of such product the community in Ethiopian is experience to consume in their

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day to day life. As such food is simple to be cooked by everyone especially young people they have
got increasing demand and engaging in such business (trade) is like exploiting the business
opportunity prevailed there.

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3. KEY SUCCESS AND RISK FACTORS

A business key success factors also known as Critical Success Factors (CSF) refers to the most
important elements or factors that contributes to the highest result, impact or outcome, in achieving
a business goal and objectives. There are various Success factors for wheat products (food Item)
trade business established in Ethiopia in general and Adama city in particular.

The key to success in business will always depend on the entrepreneur skills and psychology in
these key critical success factors. In this business; access to credit provision at lower interest rate,
attractive investment policy and other packages, Continues increment in household income and
associated expenditure patterns on such product, Government incentives and encouragements,
increasing demand for the product which mostly tied with the growth of population and growing
per-capita income are the major success factors of the business at macro level.

3.1. Strength, weakness, opportunity and threat analysis of the Project

1. Strength
This business strength lies in the fact that it has wants to trade a wide range of wheat products that
can meet the needs of a wide range of customers. It has state of the art facility and equipment that
has positioned it to meet the demand of products even if the demand tripled over night or if it had a
massive order to meet and emergency delivery deadline. Another factor that counts to the advantage
is the background of the entrepreneur W/ro Sara Ibrahim; she has a robust experience in the
business and also a pretty good academic qualification to match the experience acquired which has
placed her one of the top management of the business.

2. Weakness
 The fact that the entrepreneur setting up the business in Adama city with the existence of
other same products traders might likely pose a challenge for it in increasing sales volume
in the market surrounding towns.
3. Opportunities

 The opportunities available are unlimited. With increasing number of population and per
capital income lots of people are using/utilizing/ different products of wheat like pasta
macaroni, Spaghetti, Endomin and others.
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4. Threat

 The threat that is likely going to confront the business is the fact that the business is
competing with already established food item traders in Adama city and surrounding towns
and also there are other entrepreneurs who are likely going to launch similar businesses
within the same location the business plan to launch out from. The issue of inflation is also
other challenge which may increase the price of the product to be traded which indirectly
may challenge the purchasing power of the customers.

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4. MARKET ANALYSIS
4.1. Market segmentation
Market segmentation is the practice of dividing the target market into approachable groups. Market
segmentation creates subsets of a market based on demographics, needs, priorities, common
interests, and other psychographic or behavioral criteria used to better understand the target
customers. By understanding the market segments, this business can leverage this targeting
in product, sales, and marketing strategies. Market segments can power the business’s product
traded cycles by informing how it trade offerings for different segments like urban vs. semi- urban
or high income vs. low income or young vs old people.

4.1.1. Benefits of market segmentation

a. The benefits of market segmentation for this business includes;

 Stronger marketing messages:
This business has no longer to be generic and vague. It should speak directly to a targeted group of
people in ways they can relate to, because it understands their characteristics, wants and needs.

 Targeted digital advertising:

Market segmentation in this business helps to understand and define the targeted group
characteristics, so it can direct its marketing efforts to specific ages, locations, buying habits,
interests etc of its customer.
 Developing effective marketing strategies:

Knowing the target customer gives the business a head start about what methods, tactics and
solutions they will be most responsive to.

 Increasing brand loyalty:

When customers feel understood, uniquely well served and trusting, they are more likely to stick
with your brand

 Identifying niche markets:

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Segmentation can uncover not only underserved markets, but also new ways of serving existing
markets opportunities which can be used to grow the brand of the business.

 Enhanced profits:
Different customers have different disposable incomes; prices can be set according to how much
they are willing to spend. Knowing this can ensure the business doesn’t over (or under) sell itself.

 Food Item Selection:

The business can able to trade food items with the needs of its customers’ top of mind, and trade
different products that cater to its different customer base areas.

4.1.1. Geographical Segmentation of the business

When discussing about segmentation it is critical to overview about marketing segmentation most
importantly pertaining to this business. Depending on trading capacity and location of the business
which is under establishment, the business coverage will be in Adama city. The populations in this
area are segmented for as targeted group/consumers of the products of food item business under
establishment.

4.1.2. Segmentation based on Economic Factors

The amount of money the target customers have influences in the purchases of the entrepreneur’s
tradable product. Therefore, it is important for the business to focus on customer who can afford the
price set by Sara Ibrahim for her tradable product or Food Items products

4.2. Challenges to penetrate the market of eye-glass and its accessory trade
There are few barriers that would challenge entry into this trade business. Some of the big barriers
that keep business from gaining or maintaining success are; lack of capital, brand recognition and
increasing cost of sales. Companies that are able to function and survive despite the sub-arrivers
can enjoy lot of success as there is increasing demand for the tradable product (food item). There
are key factors that can help to determine whether a a business survive or fail. These are the ability
to pass on cost increases, use of the most efficient work practices, and establishment of brand

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names. In fact the entrepreneur has different experience in business all most challenges listed above
may not confront her business.

 Inflation
Inflation, defined as the general rise in price level, has a heavy hand in determine the demand for
tradable products under consideration. Inflation is known in eroding the purchasing power of
middle income stratum of the population, which is taken to be the major consumer and even
determiner of the economic and political well-being of a nation. Then, if the purchasing power of
the most decisive segment of population and consumer of many products is eroded, the demand for
products will be certain to shift down ward. If new entrants in the trade or if existing companies
within the are able to utilize the factors as well as avoid some of the costly barriers in the trade,
they will be able to bring joy to many homes for many years to come and the trade itself will enjoy
many years of growth hand success.

4.2.1. The Health Benefits of Pasta and Macaroni

Pasta is the perfect foundation for a healthy, nutritious and satisfying meal. Why? For starters, pasta
is the ideal partner for so many other foods, including fibre rich vegetables and beans, heart healthy
fish, antioxidant rich tomato sauce and protein packed cheeses, poultry and lean meats. Pasta also
offers:
 Sustained energy:
Carbohydrates like pasta provide glucose, the crucial fuel for your brain and muscles. And because
pasta is an awesome source of complex carbohydrates (unlike those of the refined and processed
variety – yuk), releasing energy at a slow and sustained level, you don’t get the energy spikes
associated with simple sugars.

 low sodium and cholesterol free:

If you’re watching your cholesterol levels, pasta is perfect for you, being very low in sodium and
cholesterol free. Per cup, enriched varieties of pasta provide good sources of several essential
nutrients, including iron and B-vitamins.

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 folic acid:
Enriched pasta is fortified with folic-acid – essential for women of child-bearing age. A serving of
dry pasta supplies the equivalent of roughly 100 micrograms of folic acid, or 25% of the
recommended daily intake
 Balanced diet:
Pasta is part of a well-balanced diet, with current Australian Government guidelines suggesting
35% of our daily calories intake should come from complex carbohydrates such as pasta. Combine
pasta with lean protein and vegetables for a complete meal that puts you well on the path to hitting
those dietary goals!

4.3. The Nutrition Values of Rice

Carbohydrate
Carbohydrates are the main source of energy for the body. The carbohydrates derived from plant-
based foods that you eat. You can immediately use carbohydrates for energy needed by the body, or
convert it into fat to be used as a backup energy source. Carbohydrates are divided into three types,
namely sugar, starch and fiber. No matter how big the amount is, all carbohydrates are made of
carbon, hydrogen and oxygen with a general formula that Cm (H2O) n.

Vitamin D
Vitamin D is one of the nutrients the body needs to maintain levels of calcium and phosphate. The
fat-soluble vitamin is needed to help the body to absorb calcium, a mineral that is essential to
establish and protect the structure of bones and teeth.

Calcium
Calcium is one of the most minerals in the body, especially bones. Thus, calcium phosphorus
becomes the most important component in establishing and maintaining healthy bones. It formed
calcium phosphate, and as the base material of bones and teeth. So, that calcium can be absorbed by
the body effectively, we must consume it along with vitamin D.

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Fiber
Fiber is often associated with food that is effective to help your diet program. Fiber is a type of
mineral that is not easily digested and absorbed by the body. Fiber is almost the same as
carbohydrates that can provide energy to the body, but the fiber is lower in calories. Although it is
difficult to digest but increase the consumption of fiber can reduce the risk of cardiovascular
disease, diabetes, cancer, and obesity. You can find fiber in vegetables, fruits, beans, legumes,
grains, and wheat.

Iron
Iron is the vital substance needed by the body to fix the availability of the number of blood cells
every day. In the body, these substances work is very important for our survival, which helped the
transport of oxygen into the tissues of the lungs and transports electrons in the formation of energy
in cells. When transporting oxygen, iron needs the help of other nutrients such as the protein which
later merged to create hemoglobin (in red blood cells) and myoglobin (in the muscle fibers).

Sodium
Sodium is a mineral found in the body and in many foods. Sodium is an essential nutrient for
maintaining blood volume, regulate the water balance in the cells, and maintain nerve function.
Kidney controlling sodium balance by increasing or lowering the sodium in the urine. Excessive
sodium intake is a factor known to affect blood pressure, but not everyone has the same
vulnerabilities. Sensitivity to sodium is highly individual and usually increases with age.

The Main Source of Energy

As explained before, it can be concluded that rice also becomes the main energy source for most of
the human in the Asian. Also, rice possesses a huge amount of carbohydrate which is used by the
human body as fuel to do their activity. That’s why people in most of Southeast Asia take rice as
their staple food.

4.4. Demand Analysis

 Global Food Demand
Every business has to critically study the availability of real demand for the product they want to
produce/trade. Consumer demand for food is an important element in the formulation of various
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agricultural and food policies. For consumers, changes in food prices and per capita income are
influential determinants of food demand. Estimates of consumer demand quantify the effects of
prices and total expenditures on the demand for food. Over the last century, the global population
has quadrupled. In 1915, there were 1.8 billion people in the world.
Today, according to the most recent estimate by the UN, there are 7.3 billion people and we may
reach 9.7 billion by 2050. This growth, along with rising incomes in developing countries (which
cause dietary changes such as eating more protein and meat) are driving up global food demand.
Food demand is expected to increase anywhere between 59% to 98% by 2050. This will shape
agricultural markets in ways we have not seen before. Farmers worldwide will need to increase
crop production, either by increasing the amount of agricultural land to grow crops or by enhancing
productivity on existing agricultural lands through fertilizer and irrigation and adopting new
methods like precision farming. However, the ecological and social trade-offs of clearing more land
for agriculture is often high, particularly in the tropics. And right now, crop yields the amount of
crops harvested per unit of land cultivated are growing too slowly to meet the forecasted demand
for food.

Many other factors, from climate change to urbanization to a lack of investment, will also make it
challenging to produce enough food. There is strong academic consensus that climate change–
driven water scarcity, rising global temperatures and extreme weather will have severe long-term
effects on crop yields. These are expected to impact many major agricultural regions, especially
those close to the Equator. For example, the Brazilian state of Mato Grosso, one of the most
important agricultural regions worldwide, may face an 18% to 23% reduction in soy and corn
output by 2050, due to climate change. The Midwestern U.S. and Eastern Australia two other
globally important regions may also see a substantial decline in agricultural output due to extreme
heat.

Yet some places are expected to (initially) benefit from climate change. Countries stretching over
northern latitudes mainly China, Canada, and Russia are forecasted to experience longer and
warmer growing seasons in certain areas. Russia, which is already a major grain exporter, has huge
untapped production potential because of large crop yield gaps (the difference between current and
potential yields under current conditions) and widespread abandoned farmland (more than 40
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million hectares, an area larger than Germany) following the dissolution of the Soviet Union, in
1991.

The country arguably has the most agricultural opportunity in the world, but institutional reform
and significant investments in agriculture and rural infrastructure will be needed to realize it.
Advanced logistics, transportation, storage, and processing are also crucial for making sure that
food goes from where it grows in abundance to where it doesn’t. This is where soft commodity
trading companies, such as Cargill, Louis Dreyfus, or COFCO, come in. While Big Food
companies such as General Mills or Unilever have tremendous global influence on what people eat,
trading companies have a much greater impact on food security, because they source and distribute
our staple foods and the ingredients used by Big Food, from rice, wheat, corn, and sugar to soybean
and oil palm. They also store periodically produced grains and oilseeds so that they can be
consumed all year, and they process soft commodities so that they can be used further down the
value chain. For example, wheat needs to be milled into flour to produce bread or noodles, and
soybeans must be crushed to produce oil or feed for livestock.

Nonetheless, even if some regions increase their output and traders reduce the mismatch between
supply and demand, doubling food production by 2050 will undeniably be a major challenge.
Businesses and governments will have to work together to increase productivity, encourage
innovation, and improve integration in supply chains toward a sustainable global food balance.

First and foremost, farmers, trading companies, and other processing groups (Big Food in
particular) need to commit to deforestation-free supply chains. Deforestation causes rapid and
irreversible losses of biodiversity, is the second largest source of carbon dioxide emissions after
fossil fuels, and has contributed greatly to global warming adding to the negative pressure on
agriculture production for which these forests were cleared in the first place.

Farmers must also grow more on the land they currently operate through what is called “sustainable
intensification.” This means using precision farming tools, such as GPS fertilizer dispersion,
advanced irrigation systems, and environmentally optimized crop rotations. These methods can
help produce more crops, especially in parts of Africa, Latin America, and Eastern Europe with
large yield gaps. They can also reduce the negative environmental impacts from over-stressing
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resources–preventing groundwater depletion and the destruction of fertile lands through over-use of
fertilizer.

The agricultural sector also needs significant long-term private investment and public spending.
Many large institutional investors, including pension funds and sovereign wealth funds, have
already made major commitments to support global agricultural production and trading in recent
years not least because agricultural (land) investments have historically delivered strong returns,
increased diversification, and outpaced inflation.

Still, investment in agriculture in most developing countries has declined over the last 30
years and much less is spent on R&D compared to developed countries resulting in low
productivity and stagnant production. And because banking sectors in developing countries give
fewer loans to farmers (compared to the share of agriculture in GDP), investments by both farmers
and large corporations are still limited. To attract more financing and investment in agriculture, the
risks need to be reduced by governments. Regulators need to overhaul policies that limit inclusion
of small, rural farmers into the financial system for example, soft loans (i.e., lending that is more
generous than market lending) and interest rate caps discourage bank lending. More supportive
policies, laws, and public spending on infrastructure would help create a favourable investment
climate for agriculture.

Global policy makers, corporations, and consumers must put the global food balance higher up the
agenda. International business leaders who are participating in this supply chain have to better
communicate the need for policy changes and for developed countries to incentivize investment in
regions where there is the most potential for growth. Our food security will depend on it.

 Ethiopian Demand for Food

The Ethiopian population is increasing from year to year with 4% annual growth and has reached
110M. This large number of population created big demand for food which is opportunity both for
producers and food item traders. It is unquestionable that there is huge demand for food items like
Pasta, Macaroni, Rice Sugar and others which are commonly utilized the county. All the above
listed wheat product food are common in Ethiopia since many years ago. Particularly due to their
readymade nature of such product the community in Ethiopian is experience to consume in their
19
day to day life. As such food is simple to be cooked by everyone especially young people they have
got increasing demand and engaging in such business (trade) is like exploiting the business
opportunity prevailed there.

The profitability of individual trading company depends on their ability to supply quality and best
eyewear models that effectively target consumer tastes and preferences. Wheat product (food item)
traders have economies of scale in distribution and marketing compete successfully by crafting
customized eyewear based in their client’s preference. With recent developments, there will be
influx of new consumers and this will put pressure on product developers to meet their unfamiliar
preferences and needs. Developed economies placing their products in emerging markets will also
have to adjust their pricing strategies to compete with local low-price products. As part
of marketing strategies, Food Item trading business ensures that they have showrooms at different
locations where they display the products. As a matter of fact, it is even cheaper to purchase
directly from these showrooms as against purchasing from Food item retail stores. It is a strategy
that helps those increases sales and income for their business.

 Target Market
The target market is the group of people who are willing to buy the product. Learn about the people
in the area where the product is sold. Look for age, gender, education, occupation, income level,
and household type. This information can help predict buying patterns of people in the area. In view
of that, the entrepreneur has positioned her trading business company to service the client in Adama
city. The business is in the food item trading industry to trade a wide range of food item for the
following people of all age;

 Childs
 youngs
 elders

 Competitive advantage
A close study of the industry reveals that the market has become much more competitive over the
last decade. As a matter of fact, the business has to trade highly quality products with smart designs
and market approach, customer centric and proactive way.
20
Providing of quality product and excellent customer service culture, various payment options and
highly secured facility will serve as a competitive advantage for this business. The employees will
be well taken care of, and their welfare package will be among the best within category in the same
business meaning that they will be more than willing to build the business and help deliver set goals
and achieve all aims and objectives.

4.5. Product Distribution Mechanism

It is planned that the entrepreneur will distribute the product directly to customer through shops
opened by the entrepreneur or retailers. The product will be sold on by cash bases and there may
same special credit sales

Figure 4.1. Tradable Product distribution mechanism of the business

4.6. Marketing Strategy

A marketing strategy refers to a business's overall game plan for reaching prospective consumers
and turning them into customers of their products or services. A marketing strategy contains the
business value proposition, key brand messaging, data on target customer demographics, and other
high-level elements. A thorough marketing strategy covers "the four Ps" of marketing product,
price, place, and promotion.

i. Product:- the business didn’t produce its own product but it is trader of food items products
ii. Price:-Determining the selling price is the most important element in business
establishment. Since there are some businesses in the towns, the entrepreneur will follow the

21
 same price for the same product. But she will do promotion and brand building to attract
customers.
iii. Promotion:- The business will promote the product it traded using different promotional
methods which includes
 Advertising using printed leaflets combined with an introductory discount for new customers
 Proving online booking and related serviced
 Direct marketing:- it can often be an effective way to contact customer directly and tell about
the product in order to increase numbers of customer and sales
 A brand trading name be used as promotion, such businesses often want to establish a positive
branded trade name.

iv. Place:- product can reside in many places, which is the fourth "P" of marketing. You can
usually determine the ideal place based on the specific product and the organization's available
budget. Some products may only be available for sale and use online, like software available
for download or a digital consulting service.

4.7. Pricing Strategy

Sara Ibrahim food item business knows the trend in the price of food items which is why she have
decided to trade various categories of Food items. In view of that, the prices will conform to what is
obtainable in the trading business but will ensure that within the first 3 to 6 months the products are
sold a little bit below the average price in the Adama city. She has put in place business strategies
that will help her run on low profits for a period of 6 months; it is a way of encouraging people to
buy from her.

4.8. Payment Options

The payment way adopted Sara Ibrahim retailer trading business is all inclusive because it is quite
aware that different customers prefer different payment options as it suits them. Here are the
payment options that business will make available to its clients;
 In cash
 Payment via online bank transfer
 Payment via check

22
 Payment via bank draft
In view of the above, the business has have chosen banking platforms that will enable her
clients make payment for product purchase without any stress on their part.

23
5. Technical Analysis of The Trading Business

1.2. Business location

The location of the business is strategic as it is to be situated in an area where the basic utilities such
as electricity, water, and telephone lines are available at reasonable cost availably of infrastructure
for transporting tradable items to the business site and finished product to the market are another
advantage that the location selection will consider. It is also best place to trade the describe material
in the selected business area/Adama city.

1.3. Purchase and sales program

The all the items are purchased from local market and imported from abroad. According to this the
annual purchase plan summarized in table 4.1 below.

Table 5.1. Annual Purchase plan in quantity and Birr

year

Purchase Qt in Total Price at 2024 2025 2026 2027

Sr. No Items Quintal unit price base year 2023
1 Pasta 2,000 5,500.00 11,000,000.00 11,550,000.00 12,127,500.00 12,733,875.00 13,370,568.75
2 Macaroni 2,000 5,300.00 10,600,000.00 11,130,000.00 11,686,500.00 12,270,825.00 12,884,366.25
3 Rice 1,500 5,400.00 8,100,000.00 8,505,000.00 8,930,250.00 9,376,762.50 9,845,600.63
4 Sugar 1,200 8,750.00 10,500,000.00 11,025,000.00 11,576,250.00 12,155,062.50 12,762,815.63
Total 40,200,000.00 42,210,000.00 44,320,500.00 46,536,525.00 48,863,351.25
As clearly indicated in the above table, the business is trading the above listed Food items namely
Pasta, macaroni, Rice and Sugar. The annual traded food item will be six thousand seven hundred
Quintals of the listed items.

Table 5.2 Annual Sales plan in quantity and Birr

year
Total Sales at
2024 2025 2026 2027
Sr. No Sales Items Qt in Quintal
unit price base year 2023
1 Pasta 2,000 6,600.00 13,200,000.00 13,860,000.00 14,553,000.00 15,280,650.00 16,044,682.50
2 Macaroni 2,000 6,360.00 12,720,000.00 13,356,000.00 14,023,800.00 14,724,990.00 15,461,239.50
3 Rice 1,500 6,480.00 9,720,000.00 10,206,000.00 10,716,300.00 11,252,115.00 11,814,720.75
4 k 1,200 10,500.00 12,600,000.00 13,230,000.00 13,891,500.00 14,586,075.00 15,315,378.75
Total 48,240,000.00 50,652,000.00 53,184,600.00 55,843,830.00 58,636,021.50
24
The above table also shows that the business sales will be 48.24M in the year 2023 due to injection
of fund to the business. The trend clearly showed that the volume of sales increase as it got further
fund. Now the forecasted sales volume of the business grows up to Birr 48.2M after 4M
commercial loan is considered. It also grows to Birr 50M, 53M, 55M & 58M for the year 2024,
2025, 2026 and 2027 respectively.

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6. Financial projection
6.1. Underlying Assumption
It is assumed that the Mrs. Sara Hussien established to trade food item in Adama City. The
financial study and analysis is done based on the following assumption.

 Bank commission 7% of profit

 Cost of purchased Material 1 months
 Administrative & selling expense Six months
 Pre- paid insurance One year
 Utility expense six month
 Selling expenses 2 month

6.2.Working Capital
The total working capital required is birr 4.2 million determined by the above assumption
underlined the section 5.1 above and the detail calculation is presented in table 6.1 below.
Table: 6.1. Working capital required for the year, 2023

1 Raw material Purchase 1 10% 40,200,000.00 4,020,000.00

2 Salary and Benefit 6 50.00% 150,000.00 75,000.00

3 Administrative Expense 6 50.00% 120,000.00 60,000.00

4 Insurance 12 100.00% 50,000.00 50,000.00

Total 51,320,000.00 4,205,000.00

The total working capital demanded by the business is Birr 4.2 M of which Birr 4million will be
financed by Bank and the rest is covered by the owner.

6.2. Depreciation Schedule

The business use straight line methods of depreciation and the annual depreciation estimated to birr
200,000 showed tables 6.2 below.

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Table 6.2. Depreciation schedule

fixed asset y1 y2 y3 y4 y5
building 4,000,000.00 200000 3800000 3600000 3400000 3200000 3000000

Depriciation 200000 3,800,000.00 3,600,000.00 3,400,000.00 3,200,000.00 3,000,000.00

depriciation 200000 200,000.00 200,000.00 200,000.00 200,000.00
accu depr 200000 400,000.00 600,000.00 800,000.00 1,000,000.00

Revenue is the money generated from normal business calculated as the average sales price times
the number of it sold. It is the top line (gross income) figure from which costs are subtracted to
determine net income. Revenue is also known as sales on the income statement. The business will
generate revenue from food item trade. It has the capacity to sell around Birr 48M at initial year
from the sale of food items and Birr 58M at the end of the fifth operational year as illustrated in the
above table.

6.3. Source of Fund Loan Repayment Schedule and Collateral

6.3.1. Source of Fund
The working capital demanded by the business will be financed by bank.

6.3.2. Loan Repayment Schedule

The loan will be repaid with five years on quarterly base and it will be completed within twenty
instalment periods within five years. The loan is interest free loan provided by commercial bank of
Ethiopia on the bases of commission fee. The following table clearly indicates the repayment of the
loan
Table 6.3: Loan Repayment Schedule for 5 years and within 20 instalments on quarterly bases

Loan 4,000,000.00
loan repayment years 5
instalments 20
payment per instalment 200,000

27
6.4. Collateral
The total collateral values that has owned by owner which have an estimated market value of 4
million to secure the loan proceeding i.e. residential building. The building is found in Adama
twon.

6.5.Expected Financial Results

This section defines certain key financial accounts used by this proposal from the standard. The
definitions are provided in two main sections, (1) those found on the income statement; and (2)
those found on a balance sheet. There is additional cash flow statement which used to measure the
business liquidity position.

6.5.1. Profit and Loss Statement

The income statement is also known as the profit and loss statement. It is a flow statement that
summarizes all financial activity during a stated period of time, usually a month, quarter or year. It
displays all revenues and expenses for a stated over three years. The bottom line of an income
statement is the net income (or net profit or surplus) for the period.

Sara Ibrahim Food Item trade expects to make a reasonable after- tax profit of birr 3.7 Million to
Birr 9.7 million form year 2022/23 to 2026/27 respectively. This is before the owner’s drawings.
Any owner’s drawings will be contain Sara expects on performance being better that expected in
the plan and expected to earn monthly income in the form of owner drawing account.

28
 Sara Ibrahim Food Item Trade
Projected Profit and Loss Statement
For the Period of 2022/23-2026/27

y1 y2 y3 y4 y5
sales 48,240,000.00 50,652,000.00 53,184,600.00 55,843,830.00 58,636,021.50
Cost of Good sold
beginning inventeroy 300,000.00 405,000.00 406,050.00 406,060.50 406,060.61
purchase 40,200,000.00 40,200,000.00 40,200,000.00 40,200,000.00 40,200,000.00
avialeble for sale 40,500,000.00 40,605,000.00 40,606,050.00 40,606,060.50 40,606,060.61
ending inbentory 405,000.00 406,050.00 406,060.50 406,060.61 406,060.61
Cost of Good sold 40,095,000.00 40,198,950.00 40,199,989.50 40,199,999.90 40,200,000.00

Gross Profit 8,145,000.00 10,453,050.00 12,984,610.50 15,643,830.11 18,436,021.50

Administrative expense 964,800.00 1,013,040.00 1,063,692.00 1,116,876.60 1,172,720.43
promotion 241,200.00 253,260.00 265,923.00 279,219.15 293,180.11
others 482,400.00 506,520.00 531,846.00 558,438.30 586,360.22
depriciation expence 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00
Total Operating Expense 1,888,400.00 1,972,820.00 2,061,461.00 2,154,534.05 2,252,260.75
Profit before Int & tax 6,256,600.00 8,480,230.00 10,923,149.50 13,489,296.06 16,183,760.75
interest 437,962.00 593,616.10 764,620.47 944,250.72 1,132,863.25
Profit before tax 5,818,638.00 7,886,613.90 10,158,529.04 12,545,045.33 15,050,897.50
profit tax 35% 2,036,523.30 2,760,314.87 3,555,485.16 4,390,765.87 5,267,814.12
net profit 3,782,114.70 5,126,299.04 6,603,043.87 8,154,279.47 9,783,083.37

6.5.2. Projected Flow Statement

The cash flow projections for the year show that a positive cumulative cash flow for year-end in
202223- 2026/27 birr 475K to Birr 7.2 million respectively, after the owner has forecasting
additional loan financing of birr 4 million that will be repaid within five years. Therefore, the cash
flow forecast clearly indicated that the business will generate sufficient cash to cover all it business
operating cost and loan with commission that will be borrowed from commercial bank of Ethiopia

29
 Sara Ibrahim Food Item Trade
Projected Cash Flow Statement
For the Period of 2023-2027

Cash flow statment year 1 year 2 year 3 year 4 year 5

Net Income 3,782,114.70 5,126,299.04 6,603,043.87 8,154,279.47 9,783,083.37

depriciation 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00
change in AR - 2,412,000.00 - 120,600.00 - 126,630.00 - 132,961.50 - 139,609.58
change in AP 1,929,600.00 96,480.00 101,304.00 106,369.20 111,687.66
change in Defered rev - 1,467,600.00 24,120.00 25,326.00 26,592.30 27,921.91
operating cash flow 2,032,114.70 5,326,299.04 6,803,043.87 8,354,279.47 9,983,083.37

investment activities
cap exp - - - -

free cash flow 2,032,114.70 5,326,299.04 6,803,043.87 8,354,279.47 9,983,083.37

financing activities
debt repayment - 800,000.00 - 800,000.00 - 800,000.00 - 800,000.00 - 800,000.00
withdrowal - 756,422.94 - 1,025,259.81 - 1,320,608.77 - 1,630,855.89 - 1,956,616.67
cash flow from financing - 1,556,422.94 - 1,825,259.81 - 2,120,608.77 - 2,430,855.89 - 2,756,616.67

net cash flow 475,691.76 3,501,039.23 4,682,435.10 5,923,423.57 7,226,466.70

6.5.3. Projected Balance Sheet

The balance sheet of the business shows what the asset liabilities and owner’s capital for specific
date especially end of the year, because the business fiscal year runs from 2022/23- 206/27 each
year shows balance sheet projections of Sara Ibrahim Food Item trade. Accordingly, the asset the
owner is expected to grow from Birr 6 Million to Birr 29 Million.

30
 Sara Ibrahim Food Item Trade
Projected Balance Sheet
As at June 30, each year from 2023-2027

Asset Base year year 1 year 2 year 3 year 4 year 5

cash 2,000,000.00 2,475,691.76 5,976,730.99 10,659,166.09 16,582,589.66 23,809,056.36
Account reciveble 2,412,000.00 2,532,600.00 2,659,230.00 2,792,191.50 2,931,801.08
total current Asset 2,000,000.00 4,887,691.76 8,509,330.99 13,318,396.09 19,374,781.16 26,740,857.43

Fixed Asset 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00

Accumulated Depriciation - - 200,000.00 - 400,000.00 - 600,000.00 - 800,000.00 - 1,000,000.00
Net Fixed Asset 4,000,000.00 3,800,000.00 3,600,000.00 3,400,000.00 3,200,000.00 3,000,000.00

Total Asset 6,000,000.00 8,687,691.76 12,109,330.99 16,718,396.09 22,574,781.16 29,740,857.43

liablity
Account payeble 1,929,600.00 2,026,080.00 2,127,384.00 2,233,753.20 2,345,440.86
Defered revenue 1,950,000.00 482,400.00 506,520.00 531,846.00 558,438.30 586,360.22
Total current liablity 1,950,000.00 2,412,000.00 2,532,600.00 2,659,230.00 2,792,191.50 2,931,801.08

long term liablity 4,000,000.00 3,200,000.00 2,400,000.00 1,600,000.00 800,000.00 -

Total liablity 5,950,000.00 5,612,000.00 4,932,600.00 4,259,230.00 3,592,191.50 2,931,801.08

Equity
Sara's capital 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00
retained earning - 3,025,691.76 7,126,730.99 12,409,166.09 18,932,589.66 26,759,056.36
Total Equity 50,000.00 3,075,691.76 7,176,730.99 12,459,166.09 18,982,589.66 26,809,056.36
Total Equity and liablity 6,000,000.00 8,687,691.76 12,109,330.99 16,718,396.09 22,574,781.16 29,740,857.43

6.6.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 commission of finance when it starts to operate at full capacity is estimated
by using income statement projection.

6.7. Payback Period

The payback period, also called off period is defined as the period required recovering the original
investment outlay through the accumulated net cash flows earned by the project. Accordingly,
based on the projected cash flow it is estimated that the project’s initial investment was fully
covered at the end of 3rd yare operation at earlier.

31
 6.8. 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. Accordingly, the net present value of the project at 16% discount rate is Birr 4.8
million which is acceptable.

dicounting present value discounti present value

years cash outflow NPV
cash iout flow @ 16% of cash flow ng @16% of cash
outflow
Total Inflow Total Outflow
2 2,032,115 0.74 1,510,192 475,692 0.74 353,516 1,156,676
3 5,326,299 0.64 3,412,334 3,501,039 0.64 2,242,968 1,169,367
4 6,803,044 0.55 3,757,261 4,682,435 0.55 2,586,067 1,171,193
5 8,354,279 0.57 4,740,443 5,923,424 0.57 3,361,110 1,379,333
6 9,983,083 0.51 5,057,741 7,226,467 0.51 3,661,153 1,396,588
NPV 4,876,569

6.9. Socioeconomic Benefit Of The Business

A. Employment Opportunity:
7.

One of the problems that our country faced is unemployment. Therefore, current objective of the
government is working on tackling the problem of unemployment and fostering the development
process either through creating self-employment or employment in other organization. In this
regard, business will hire permanent employees and create many employment opportunity for day
labourers who will participate on works like loading and unloading of tradable items.

B. Benefit for Local Community:

Apart from employment opportunity for local community, as a corporate responsibility the business
has been engaged in different development activities. This will better worth the community in
particular and contribute for the development of the nation as a whole.

C. Stimulate the Local Economy:

32
Trade is an important part of the global economy, helping to provide businesses with new markets
spurring growth and increasing resilience. According to the World Bank, economies that trade more
generally grow faster, are more productive, more innovative and have higher incomes.
Additionally, trade usually benefits lower-income households by increasing competition in the
market and helping to keep prices lower. Trade also provides widespread social benefits, ranging
from increased social opportunity due to the economic benefits of trade, to increased product
variety in the market. Additionally, trade can help facilitate cultural exchange between nations
around the world by bringing products from one corner of the globe to another. The trade business
will increase economic relationship and transactions among different actors in the local economy,
in this regard the business will create income for government in the form of income tax.

33
7. CONCLUSION AND RECOMMENDATION
7.1. Conclusions
The entrepreneur Sara Ibrahim wants to engage in business of trading food items particularly wheat
product items. The business will be established in Adama city. Mrs Sara Ibrahim has been attracted
by the expanding business opportunity and conducive working environment in the trade sector and
determined to start her trade business in Adama City. She has rich experience in different business
and now wants to engage in trade of wheat products business.

The business has an importance of satisfying the population of Adama city demand for food item,
generating additional income for owner and creating permanent and temporary employment
opportunity for skilled, semi-skilled as well as unskilled workers directly as well as indirectly. The
project can also contribute for government income through tax and opportunity of transferring
better trade idea for the city.

7.2. Recommendations
In all the business proposal analysing tools implemented in this business proposal shows that the
business is worth profitable and acceptable. It is therefore recommendable that the business should
get active support from all stakeholders like financers and government offices to get all legal
recognition and capital budgeting.

34