Business Plan for Operation of a new In-

Land Freight Transport Services

By: Biftu Baha Oromiya Share Co.

Presented to: Awash International Bank,

Dire Dawa

July 2021
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Contents

1. Executive Summary ......................................................................................................................... 2

2. The Company ..................................................................................................................................... 3

a. Our vision ...................................................................................................................................... 3

b. Our Mission ................................................................................................................................... 3

c. Our values : .................................................................................................................................. 3

3. Achievements to date ..................................................................................................................... 4

4. Purpose of the Business Plan ....................................................................................................... 4

5. Financial Considerations ................................................................................................................. 5

Table: Past Performance ..................................................................................................................... 5

Table: Personnel Plan ........................................................................................................................... 7

Table: Operating Expenses ................................................................................................................ 7

Table: Vehicles to be purchased ...................................................................................................... 7

Table: Total Investment ...................................................................................................................... 9

Table: Source of Finance ..................................................................................................................... 9

Table: Yearly Loan Repayment Schedule ................................................................................... 10

Table: Profit and Loss Statement .................................................................................................. 10

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

1. Executive Summary

This Business Plan proposes the start-up operation of a new In-Land Freight
Transport Services Enterprise to be operated by Biftu Baha Oromiya Share
Co., a Company established in 2019 to engage in trading, agribusiness,
manufacturing, and other related lines of business by committed citizens.

The Company has already achieved paramount result in bringing foreign

currency of 8 million USD within the last five months operation of its Khat
Export Business. Further the Company has been engaging in distribution of
cement product to the market by investing more than 90.95 million Birr
running capital and playing major role in stabilizing price of the product.

The primary objective of the Company, in preparing this Business Plan, is

therefore to request financing for the purchase of Light Duty and Heavy Duty
Trucks that would mainly be employed by the Company’s own Khat Export
and Cement Distribution Businesses.

Our Financial Analysis indicates that the total investment required to start-
up the Business amounts to ETB: 68,464,000.00 which is expected to be
financed by your esteemed Bank.

By implementing this project, the Company expects to save huge amount of

expenses and also gain more profit by providing Transport service for other
similar Businesses in the Country. As such, our study results indicate that
the Enterprise has a strong potential to be a successful Business Venture in
no time.

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

2. The Company
Biftu Baha Oromiya share company was established in May,2019 by
concerned citizens and career entrepreneurs to partake in the economic
empowerment and development of Hararghe, the Oromiya region and the
country by engaging in agriculture products export, import of merchandise
and goods, agro industry and manufacturing, real estate development,
construction, mining, transport and logistics , hotels, tourism, education and
health and banking services.

a. Our vision
Biftu Baha Oromiya Share Company aspires to be one the leading and most
dependable business conglomerate that provides high quality products and
services at a competitive price in east Africa.

b. Our Mission
The mission of Biftu Baha Oromiya Share Company is to create surplus for
its members through provision of quality products and services at a
competitive price to its customers.

c. Our values :
 We are Committed to quality and excellence
 We strive to exceed our customers’ expectation
 We are committed to continuous learning
 We work in team
 We safeguard the resources entrusted to us and create surplus for our
share holders while behaving in a socially responsible and operating as
good corporate citizen.

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

3. Achievements to date
Biftu Baha Trade Share Company is established as a public company to engage
in trading, agribusiness, manufacturing, and other related lines of business by
committed citizens. It is a company initiated by entrepreneurs and committed
promoters to partake in the economic development of the country and the region.
It has just completed the initial stage of public company formation.

The promoters have secured 98,000,000 registered and 25,000,000 paid capitals
from 325 founders. The founders have concluded the formation stage by signing
the memorandum of association and charter of establishment and elected board
members on May 2019.

Since Feb 2021 the company has started export of khat to Somalia. In doing so, the
Company has already achieved paramount result in bringing foreign currency of 8
million USD within the last five months only. Further the Company has been
engaging in distribution of cement product to the market by investing more than
90.95 million Birr running capital and playing major role in stabilizing price of the
product.

4. Purpose of the Business Plan

With the objective of transporting the Company’s products by own Vehicles, the
Company proposes to purchase Light Duty and Heavy Duty Trucks mainly for use
by its Khat Export and Cement Distribution Businesses respectively.

In doing so, the Company expects to save huge amount of expenses and also gain
more profit by providing Transport service for other similar Businesses in the
Country.

The new Freight Transport Services Enterprise by Biftu Baha Trade Share
Company aims to offer its services at a competitive price to meet the demand for
transportation services in the Country.

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

5. Financial Considerations
The currently existing asset values of the Enterprise’s current investments
are depicted in the following table.

Table: Past Performance

Current Asset
Cash 110,000,000.00
Store Inventory Cement 90,950,000.00
Total Current Asset 200,950,000.00
Fixed Asset
Vehicles 0.00
Furniture & fixture 380,000.00
Other equipment 1,150,000.00
Total Fixed Asset 1,530,000.00
Total Asset 202,480,000.00

Table: Sales Forecast

Unit Sales Year 1 Year 2 Year 3
Khat 3,600.00 3,960.00 4,356.00
Cement 900.00 990.00 1,089.00
Transport 213.30 234.63 258.09
Services
Total Unit Sales 4,713.30 5,184.63 5,703.09

Unit Prices Year 1 Year 2 Year 3

Khat 233,066.67 256,373.33 282,010.67
Cement 150,500.00 165,550.00 182,105.00

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Transport 35,668.50 39,235.35 43,158.89

Services

Sales Year 1 Year 2 Year 3

Khat 839,040,000.00 1,015,238,400.00 1,228,438,464.00
Cement 135,450,000.00 163,894,500.00 198,312,345.00
Transport 32,101,650.00 38,842,996.50 47,000,025.77
Services
Total Sales 1,006,591,650.00 1,217,975,896.50 1,473,750,834.77

Unit Purchase Year 1 Year 2 Year 3

Khat 3,600.00 3,960.00 4,356.00
Cement 900.00 990.00 1,089.00
Transport 213.30 234.63 258.09
Services
Total Unit 4,713.30 5,184.63 5,703.09
Purchase

Direct Unit Costs Year 1 Year 2 Year 3

Khat 139,840.00 149,628.80 160,102.82
Cement 90,300.00 96,621.00 103,384.47
Transport 21,401.10 22,899.18 24,502.12
Services

Direct Cost of Year 1 Year 2 Year 3

Sales
Khat 503,424,000.00 592,530,048.00 697,407,866.50
Cement 81,270,000.00 95,654,790.00 112,585,687.83

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Transport 19,260,990.00 22,670,185.23 26,682,808.02

Services
Subtotal Direct 603,954,990.00 710,855,023.23 836,676,362.34
Cost of Sales

Table: Personnel Plan

Description year 1 year 2 year 3
Sales Clerks (2) 36,000 37,800 39,690
Drivers (20) 2,400,000 2,520,000 2,646,000
Cleaner 12,000 26,400 29,040
Accountant 24,000 25,200 29,040
Total Payroll 2,448,000 2,584,200 2,714,730

Table: Operating Expenses

Description Year 1 Year 2 Year 3

Fuel, Oil & Lubricants 10,800,000.00 11,340,000.00 11,907,000.00

Rent 120,000.00 126,000.00 132,300.00

Salary and wage 2,448,000.00 2,570,400.00 2,698,920.00

Utilities 24,000.00 25,200.00 26,460.00

Miscellaneous expenses 669,600.00 703,080.00 738,234.00

Total Operating Costs 14,061,600.00 14,764,680.00 15,502,914.00

Table: Vehicles to be purchased

Description Qty Unit Cost Total Cost

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

ISUZU Light Duty Truck for Khat

Transportation 10 1,900,000.00 19,000,000.00
SINO Heavy Duty Truck for
Cement Transportation 10 4,500,000.00 45,000,000.00
Total 64,000,000.00

Table: Fixed Asset

Description Total
Vehicles 64,000,000.00
Furniture & fixture 380,000.00
Other equipment 1,150,000.00
Total Fixed Asset 65,530,000.00

Table: Depreciation
Description Rate Original Value Annual cost in Birr
Vehicles 10.0% 64,000,000.00 6,400,000.00

Furniture & fixture 10.0% 380,000.00 38,000.00

Other equipment 10.0% 1,150,000.00 115,000.00

Total Fixed Asset 65,530,000.00 6,553,000.00

Table: Working capital Determination

Description Days of coverage Required
working capital
Existing Working Capital
Cash LS 110,000,000.00

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Store Inventory Cement LS 90,950,000.00

Subtotal, Existing working 200,950,000.00
capital
Planned Working Capital
Rent 120 40,000.00
Fuel, Oil & Lubricants 120 3,600,000.00
Wage and Salaries 120 816,000
Utilities 120 8,000.00
Subtotal, planned working 4,464,000.00
capital
Total working capital 205,414,000.00

Table: Total Investment

Description Costs
Vehicles 64,000,000
Furniture & fixture 380,000
Other equipment 1,150,000
Subtotal (Fixed Investment) 65,530,000
Working capital 205,414,000
Total Investment Capital 270,944,000

Table: Source of Finance

Owners’ equity Bank Loan
Description Total Costs Amount % Amount %
Vehicles 64,000,000.00 0.00 0.00% 64,000,000.00 0.00%
Furniture &
fixture 380,000.00 380,000.00 100.00% 0.00 0.00%

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Other
equipment 1,150,000.00 1,150,000.00 100.00% 0.00 0.00%
Subtotal
(Fixed
Investment) 65,530,000.00 1,530,000.00 2.33% 64,000,000.00 100.00%
Working
capital 205,414,000.00 200,950,000.00 97.83% 4,464,000.00 2.17%
Grand Total 270,944,000.00 202,480,000.00 74.73% 68,464,000.00 25.27%

Table: Yearly Loan Repayment Schedule

Year Loan Repayment Mudarabah Outstanding Balance

0 68,464,000.00
1 13,692,800.00 11,296,560.00 54,771,200.00
2 13,692,800.00 9,037,248.00 41,078,400.00
3 13,692,800.00 6,777,936.00 27,385,600.00
4 13,692,800.00 4,518,624.00 13,692,800.00
5 13,692,800.00 2,259,312.00 0.00

Table: Profit and Loss Statement

Description Project Years
1 2 3 4 5
Sales 1,006,591,650 1,217,975,897 1,473,750,835 1,621,125,918 1,783,238,51
Direct cost of 603,954,990 710,855,023 836,676,362 878,510,180 922,435,689
sales
Gross Profit 402,636,660 507,120,873 637,074,472 742,615,738 860,802,821
Operational 15,502,914 16,278,060 17,091,963 17,946,561 18,843,889
expense
Profit before tax 387,133,746 490,842,814 619,982,510 724,669,177 841,958,932
and interest

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Depreciation 6,553,000.00 6,553,000.00 6,553,000.00 6,553,000.00 6,553,000.00

EBITDA 393,686,746 497,395,814 626,535,510 731,222,177 848,511,932
(Earning before
tax, interest and
depreciation)
Interest 11,296,560 9,037,248 6,777,936 4,518,624 2,259,312
expense
Income Tax @ 131,543,015.10 168,631,947.95 214,621,600.81 252,052,693.54 293,894,866.90
35%
Net profit 244,294,170.90 313,173,617.62 398,582,972.93 468,097,859.43 545,804,752.82
24% 26% 27% 29% 31%

Table: Cash Flow Statement

Production Year
Cash in flow 0 1 2 3 4 5
Owners' equity 202,480,000
Existing Bank 0
Loan
Additional Bank 68,464,000
Loan
Net Profit 0 244,294,171 313,173,618 398,582,973 468,097,859 545,804,753
Depreciation 6,553,000 6,553,000 6,553,000 6,553,000 6,553,000

Total Cash in 270,944,000 250,847,171 319,726,618 405,135,973 474,650,859 552,357,753

flow
Cash out flow
Replacement 0 0 0
loan repayment 13,692,800 13,692,800 13,692,800 13,692,800 13,692,800
Capital 0 - - -
Expenditure
Working capital 0 - - -

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Existing Working 205,414,000

capital
Pre-operating 0
expenses and
interest
Total Cash out 205,414,000 13,692,800 13,692,800 13,692,800 13,692,800 13,692,800
flow
Net Cash Flow 65,530,000 237,154,371 306,033,818 391,443,173 460,958,059 538,664,953
Cash balance 442,568,371 748,602,189 1,140,045,361 1,601,003,421 2,139,668,374

Table: Balance Sheet Statement

Description Investment Production Year

ASSETS 0 1 2 3 4 5
Current Assets
Cash 205,414,000 442,568,371 748,602,189 1,140,045,361 1,601,003,421 2,139,668,374
Other Current 0 0 0
Assets
Total Current 205,414,000 442,568,371 748,602,189 1,140,045,361 1,601,003,421 2,139,668,374
Assets
Fixed Asset
Vehicles 64,000,000.00 57,600,000 51,200,000 44,800,000 38,400,000 32,000,000
Furniture & 380,000.00 342,000 304,000 266,000 228,000 190,000
fixture
Other equipment 1,150,000.00 1,035,000 920,000 805,000 690,000 575,000
Total Fixed 65,530,000 58,977,000 52,424,000 45,871,000 39,318,000 32,765,000
Asset
Pre-operating 0 0 0 0
Costs including
interest

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By: Biftu Baha Oromiya Share Co.
 Business Plan for Operation of a new In-Land Freight Transport Services Dire Dawa, 2021

Total Asset 270,944,000 501,545,371 801,026,189 1,185,916,361 1,640,321,421 2,172,433,374

LIABILITIES
Short term - - - -
liability
Long term 68,464,000 54,771,200 41,078,400 27,385,600 13,692,800 0
liability (Bank
Loan)
Sub Total 68,464,000 54,771,200 41,078,400 27,385,600 13,692,800 0
CAPITAL
Owner's Equity 202,480,000 202,480,000 202,480,000 202,480,000 202,480,000 202,480,000
Retained 0 244,294,171 557,467,789 956,050,761 1,424,148,621 1,969,953,374
Earnings
Earnings 244,294,171 313,173,618 398,582,973 468,097,859 545,804,753
Sub Total 202,480,000 446,774,171 759,947,789 1,158,530,761 1,626,628,621 2,172,433,374
Total Liability & 270,944,000 501,545,371 801,026,189 1,185,916,361 1,640,321,421 2,172,433,374
Capital
Net Worth 202,480,000 446,774,171 759,947,789 1,158,530,761 1,626,628,621 2,172,433,374

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By: Biftu Baha Oromiya Share Co.