Phone Number: 0911475193

December, 2021
Addis Ababa, Ethiopia
Contents
1. Executive Summary...........................................................................................................................2
2. Introduction of the retail industry......................................................................................................3
3. Description of business and target markets........................................................................................4
3.1. Shop History...............................................................................................................................4
Number of sales persons=6..............................................................................................................5
3.3. Our Mission and Vision Statement............................................................................................5
4. PRODUCTS AND SERVICES.................................................................................................................6
4.1. Product Description...................................................................................................................6
Casual Wear......................................................................................................................................6
5. MANAGEMENT............................................................................................................................10
5.1. Organizational Structure..........................................................................................................10
5.2. Job Roles and Responsibilities.................................................................................................10
6. MARKET ANALYSIS....................................................................................................................11
6.1. Market Trends..........................................................................................................................11
6.2. Our Target Market...................................................................................................................12
6.3. Our competitive advantage.....................................................................................................12
6.4. Swot Analysis...........................................................................................................................12
6.5. Sales and Marketing Strategy..................................................................................................13
Company Development.............................................................................................................13
7. FINANCIAL PLAN........................................................................................................................15
7.1 Requirements............................................................................................................................15
7.2 Use of Funds..............................................................................................................................15
7.3 Assumptions..............................................................................................................................15
7.4 Balance Sheet............................................................................................................................15
PROJECTED BALANCE SHEET......................................................................................................16
7.5. Income Statement Projections................................................................................................17
7.6 Cash Flow Projections...............................................................................................................18
8. CONCLUSION AND RECOMMENDATION...............................................................................19
APPENDIX.........................................................................................................................................20

1
1. Executive Summary
Mesele Mengesha Boutique is a retail business established in 14/06/2003 E.C. with the aim of
importing and selling fashionable readymade clothing to women and men of different ages.
We have located our boutique in two shops located in Addis Ketema and Cherkos areas of
Addis Ababa city. Expansion plans include potentially franchising our retail store and/or
building a well-recognized brand name. In turn, we would hope to penetrate a sizable portion
of the online retail market.
With the change in the trend in fashion market Readymade Garment have become very
popular. Most of the people used to wear readymade garments have become very popular.
Most of the people used to wear Readymade Garment in case of time saving activity.
Especially ladies, kids, teenage girls and college going girls have taken very much interest in
new designs and fashionable garments.
Mesele Mengesha Boutique is a sole proprietor business established by Ato Mesele
Mengesha in Addis Ababa city in year 2003 E.C. Ato Mesele Mengesha has been running
different businesses since his childhood just starting by working with businessmen and then
gradually moved to own his own businesses. This boutique is established in two different
shops located in Addis ketema and Cherkos areas of the city.
I owner decided to open a readymade garment shops to introduce new category of clothes in
the market which may be something different from the clothes already available in the market
and imported.
The owner of the shop is Mesele Mengesha and has engaged six workers in two shops who
will contribute to the sales and profits in the business and the capital is also invested by
owner.
The shops basically targets teenage girls and boys and college going girls as our shop has the
availability of wide variety of Curtis, tops and other accessories.
The other clothes which are available in my store are for the daily wear, party wear and for
the ceremonies.
My shop basically has jeans & trousers, shirts & tops, skirts, track suits, night wear and bath
wear. So, my shop has the products which are related to active wear, workout gear, leather
garments, headgear and baseball jackets. It covers almost all types of customers. My shop
also provides the facility for the repair such as stitching of the clothes and altering of the
clothes.
Mesele Mengesha Boutique recognizes the importance of marketing. And to that end, we
plan to promote our retail business with an ambitious, targeted marketing campaign, which

2
will include local media coverage, print advertising and a direct-mail campaign. Our goal is
to keep our marketing budget to no more than 5% of our gross annual sales, and we have so
far partnered with local organizations such as the Ethiopian Chamber of Commerce.
2. Introduction of the retail industry
The technology advances each and every sector has been rapidly developed like a
government Sector, Engineering Sector and many more then how can the “Ready Made
Garment Shop” become backward. Each and every person wants to look like a hero and
heroine. As the fashion takes place they want to wear more fashionable clothes. In movies
actor and actresses are wearing different types of dresses. Every person wants to look like
them. With the increase in fashion every person want to wear that type of cloths. Some
people purchase cloth material and visit at the tailor shop for stitching the dresses they like.
But it takes too much time. Fashion is growing up day to day. Readymade garment Shops are
opened. People are satisfied from Readymade garment Shop and people also save their
valuable time. Readymade garment Shop provides better design dresses to customers.
With the change in the trend in fashion market readymade garment have become very
popular. Most of the people used to wear readymade garment shop have become very
popular. Most of the people used to wear readymade garment in case of time saving activity.
Especially ladies have taken very much interest in new designs and fashionable garments

Players in the Global Ready-Made Garment manufacturing industry produce men, women
and children’s apparel. The industry includes manufacturers that purchase fabrics and those
that manufacture the fabrics themselves and have fixed operational facilities.

If you observe trends in the Global Ready-Made Garment Manufacturing industry, you will
agree that the industry has greatly benefited from an increasing number of consumers
choosing to purchase more garments at lesser prices. In few of that, the revenue in this
industry is expected rise going forward.

Rising disposable income levels across both developed and emerging economies are expected
to be the main driving force behind the industry’s renewed growth. Rising per capita
disposable income, coupled with the steady upward trend in the global population, will give
way to rising demand for ready-made garment.

The Global Ready-Made Garment Manufacturing industry is indeed a major sector of the
economy of the world and the industry generates over $696 billion annually from more than
284,571 ready-made garment manufacturing companies scattered all around the world.

3
The industry is responsible for the employment of over 11.6 million people. Experts project
the readymade garment manufacturing industry to grow at a 4.5 percent annual rate.

Retail is Ethiopia's largest industry. It accounts for over 10 per cent of the Ethiopia's GDP
and around eight percent of the employment. Retail sector is one of Ethiopia's fastest growing
sectors with a 5 percent compounded annual growth rate. Ethiopia's huge middle class base
and its untapped retail industry are key attractions for global retail giants planning to enter
newer markets. Driven by changing lifestyles, strong income growth and favourable
demographic patterns, Ethiopian retail is expected to grow 12 per cent annually.

A number of factors are driving Ethiopia's retail market. These include: increase in the young
working population, hefty pay-packets, increasing working-women population, increase in
disposable income and customer aspiration, increase in expenditure for luxury items, and low
share of organized retailing. Ethiopia's retail boom is manifested in sprawling shopping
centers, multiplex- malls and huge complexes that offer shopping, entertainment and food all
under one roof.

Retail consists of the sale of goods or merchandise from a fixed location, such as a
department store, boutique or kiosk, or by mail, in small or individual lots for direct
consumption by the purchaser. Retailing may include subordinated services, such as delivery.
Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or
products in large quantities from manufacturers or importers, either directly or through a
wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often
called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers
see the process of retailing as a necessary part of their overall distribution strategy. The term
"retailer" is also applied where a service provider services the needs of a large number of
individuals, such as a public utility, like electric power.

3. Description of business and target markets

3.1. Shop History
The shop “Mesele Mengesha” is a type of store or a readymade garment shop for children,
women, teenage girls, kids, infants, gents and boys established in year 2003 E.C. The
clothing line that is unique, special, comfortable, and fun. My store targets the people which
belong to middle class and upper middle class. However, my store has no collection of the
raw materials but works for readymade garments.

4
My shop has brought the store look to the masses, and made it simple and affordable for
anyone to get the readymade garment store look. All of their tops, bottoms, basics and
accessories from each individual line coordinate with one another, making it easy for anyone
to put together a well coordinated and princess worthy outfit.

Store name: - Mesele Mengesha Boutique

Shop 1 address: - Addis Ketema sub city,Woreda 08 House No .224/4

Addis Ababa,Ethiopia

Shop 2 address: -Cherkos,

Addis Ababa, Ethiopia

Business Licence No: 24/1/2/00/60/2003

Date of issuance: 2003 E.C.

Tin No: 0017342451

Number of sales persons=6

3.3. Our Mission and Vision Statement
 Our vision is to establish a readymade garment shops whose products will not only be
sold in Addis Ababa, but all across the country.
Our Mission is the following:
1. To increase the sales by 10%.
2. To satisfy different types of consumers i.e. teenage girls, women and kids.

3. Have an increase in new customer base yearly.

4. To create demand for different pattern of clothes.

5. To introduce new creative things in the market.

6. To obtain a return on equity of at least 30%.

5
4. PRODUCTS AND SERVICES
4.1. Product Description
Casual Wear
The "casual wear" is only one of the phrases used to describe the trend away from pin stripes
and high heels.  Other terms include business casual (usually means the Dockers-khakis-polo
shirt look), business appropriate (a step-up from casual), business ready (meaning that a
traditional suit must be ready to wear at all times), corporate casual, clearly casual, resort
casual"(definitely not allowed in the office), refined casual wear (acceptable provided that
you understand what it is) and perhaps most appropriately casual confusion.

I have a variety of products to suit the needs of every individual, whether they are dressing
for success or for an afternoon of leisure. 
Some of the company's products includes:-
o Men's Pullover, Long Sleeve, Small to 5XL: 
o Men's/Women's Pullover, Short Sleeve, Small to 5XL: 
 T-Shirts (100% Cotton)
o Men's, Long Sleeve, Small to 5XL: 
o Men's, Short Sleeve, Small to 5XL: 
o Women's, Long Sleeve, Small to 5XL:  (100% Ladies Cotton)
o Women's, Short Sleeve, Small to 5XL:  (100% Ladies Cotton)
 Denim Jackets (100% Cotton Denim)
o Men's, Small to 5XL: 
o Women's, Small to 5XL: 
 Denim Pants (100% Cotton Denim)
o Men's/Women's: 

Active wear/Sportswear
At leisure lifestyle apparel, from yoga pants to terry track suits, is on the rise, and I offer a
range of high-performance clothing for active sport, trekking, climbing, and travel that is
suitable for the street, and practical for the gym.  The collection is characterized by modern,
comfortable, high-tech fabrics and functional, ergonomic designs. 
The active wear product includes the following:-
 Sweatshirts (100% Cotton)
o Men's/Women's, Long Sleeve, Small to 5XL: 

6
 o Men's/Women's, Short Sleeve, Small to 5XL: 
 Sweat suits (Velour)
o Men's/Women's, Small to 5XL: 
Sports styling will continue to dictate many casual designs throughout 2021, although natural
looks where the fabric makes the statement will also be important.  Sportswear and sports
styling will continue to grip consumers who desire comfort in everyday wear, yet, as couch
potatoes, hardly ever indulge in the activities for which the clothes were originally designed. 
Workout Gear
The colorful fashion trainers, rather than traditional running trainers, will accommodate the
massive shift in shoe buying habits.  Keyholes, zip inserts, and satin contrast strips and
bindings will continue to feature in mass casual wear emphasizing the sporty feel.
I offer a line of workout gear that brings together a combination of high-end, high-tech, and
unique fabrics with today’s hot fashion trends. 
The store workout gear includes:-
 Workout Tops (100% Spandex)
o Women's, Small to 3XL: 
 Workout Bottoms (Coordinating) (100% Spandex)
o Women's, Small to 3XL: 
 Socks (100% Cotton)
 Women's, Fits Up to Shoe Size 15: 
 Jacket (Cotton/Polyester Blend)
o Women's, Small to 3XL:  
Smart consumers are driving the performance fabrics of today.  They want products with
more comfort, more durability, and more fashion, which in turn will make their lives easier. 
In answer to the consumers' needs companies such as follow-me, appeal are developing
techniques that manage moisture better, so it dries faster improving dye-techniques to
enhance color-fastness and designing garments that keep people warm without weighing
them down. 
Leather Garments
The leather motorcycle jacket is much more than a coat - it's a mentality.  From the early
twentieth century, airplanes, automobiles, and motorcycles redefined freedom, idealized
speed, and captured the hearts of men and women alike.  The leather jackets developed to
protect pilots, racers, and motorists from the elements came to symbolize a romantic sense of

7
rugged adventure.  In particular, motorcycle jackets maintained this ideal for decades to
come.  I carry on this American-made tradition of the classic, leather, motorcycle jacket.
 Motorcycle Jackets (100% Black Leather)
o Men's/Women's, Small to 4XL: 
 Leather Pants (100% Black Leather)
o Men's/Women's, Small to 4XL: 
Leather jackets are the most versatile and classic article of clothing the consumer can own. 
They may be extremely stylish and popular, following fashion trends from year to year, but
the truth is that they are never out of style.
Consumers can find leather jackets in various shapes and sizes or different lengths (such as
trench coat, knee, three quarter, and hip), depending upon the consumer's body type, height,
style, and taste.  Even square-shaped, leather bomber jackets have made their return and
continue to be popular.  All leather jackets are stylish. 
Baseball Jackets
Ever since hip-hop innovators and style aviators Outcast appeared on MTV sporting old
school Houston Astros jerseys with rainbow colors and 70s flavor, the rap world has seen a
trend toward old school/vintage sports apparel.  Since then, others have been seen in videos
"discovering" forgotten logos and athletes.  Retail stores' shops showcase styles that by
today's standards would be considered out of place for men playing on the field. Vibrant
colors and rainbow designs that were once the norm in the seventies and eighties, has been
replaced with more conservative color schemes, or with shades of gray and black.
I have in my store a line of new, satin baseball jackets that mimic those worn by teams of the
past.  They are made of thick, lined satin with attention to the finest details.
 Baseball Jackets (Satin and 100% Cotton)
o Men's/Women's, Small to 5XL:  Rs.250.00
The affair with the retired logo is merely another trend in hip hop's long evolution.  A sports
symbol can symbolize far more than one might expect.  While wearing the traditional, current
logo of a local team can still symbolize an artist's claims of his/her roots, recent styles of
sporting wear attest to more than locality, signifying pure fashion for fashion's sake in an
ever-changing culture.
Headgear
During the summer, fedoras and mesh caps made of natural grasses found favor among both
men and women.  Another common sight was unlikely combinations of feminine clothes and

8
baseball caps, while, as an extension of the layered look, turbans were also a hit.  This fall has
witnessed the renewed popularity of the rounded, visored berets known as "caskets" that have
been a conspicuous presence since last year.  Hats and caps are coming out in a variety of
materials, colors, and shapes, including woolen caps with designs knitted in and hats made of
furry materials like angora.
As to why hats have become entrenched as a fashion accessory over the past few years, we
believe that headwear offers the easiest means of self-expression in the context of a general
trend for casual fashion.  Even a person dressed in a simple outfit like pants and a T-shirt can
instantly express his or her personal style just by putting on a hat.
Hats are becoming as much an integral part of young people's wardrobes as other fashion
items, and I have a variety of hats to suit everyone's taste. 
These include the following:-
 Ski Hat (Wool)
 Men's/Women's, One-Size-Fits-All
 Beanie (Polyester/Cotton)
o Men's/Women's, One-Size-Fits-All 
 Fitted Baseball Cap (Cotton)
o Men's/Women's, One-Size-Fits-All 
 Sun Visor
o Men's/Women's, One-Size-Fits-All
Hats have always combined fashion with practicality, offering protection from both the
summer sun and the winter cold.  Right now, hats are experiencing a boom in popularity that
has made them an essential item regardless of the season.  More and more people are wearing
hats of distinctive designs that, unlike the past hat booms are not constrained by fashion
trends.

9
5. MANAGEMENT
5.1. Organizational Structure
As a small business, we will have a small staff. Owner will assume leadership roles within
the company and will be responsible for daily operations, overseeing marketing efforts,
buying merchandise and managing inventory and all other administrative duties. A small
sales staff will assist owner with securing sales, assisting customers and general maintenance
of stock on the floor.
5.2. Job Roles and Responsibilities
General Manager:
 Develops strategic plan by studying technological and financial opportunities;
presenting assumptions; recommending objectives.
 Accomplishes subsidiary objectives by establishing plans, budgets, and results
measurements; allocating resources; reviewing progress; making mid-course
corrections.
 Coordinates efforts by establishing procurement, production, marketing, field, and
technical services policies and practices; coordinating actions with corporate staff.
 Builds company image by collaborating with customers, government, community
organizations, and employees; enforcing ethical business practices.
 Maintains quality service by establishing and enforcing organization standards.
 Responsible for supervising all the employees
 Ensures that the organization operates within stipulated budget.
Sales and Marketing Manager
 Manages external research and coordinates all the internal sources of information to
retain the organizations’ best customers and attract new ones
 Models demographic information and analyzes the volumes of transactional data
generated by customer purchases
 Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
 Identifies development opportunities; follows up on development leads and contacts;
participates in the structuring and financing of projects; assures the completion of
development projects.
 Responsible for supervising implementation, advocate for the customer’s needs, and
communicate with clients
 Develops, executes and evaluates new plans for expanding sales

10
  Documents all customer contact and information
 Helps to increase sales and growth for the company
Accountant/Cashier:
 Responsible for preparing financial reports, budgets, and financial statements for the
organization
 Provides managements with financial analyses, development budgets, and accounting
reports; analyzes financial feasibility for the most complex proposed projects.
 Responsible for financial forecasting and risks analysis.
 Performs cash management, general ledger accounting, and financial reporting
 Responsible for developing and managing financial systems and policies
 Responsible for administering payrolls
 Ensures compliance with taxation legislation
 Handles all financial transactions for the organization
 Serves as internal auditor for the organization

6. MARKET ANALYSIS
6.1. Market Trends
In recent time, the clothing industry relies more on mass market sales for them to make the
kind of income that will sustain the business. The mass market takes care of a wide range of
customers that cuts across both the rich and the poor. Most of the new clothing lines that are
trying to catch up with the market ensures that they produce ready-to-wear clothes using
trends set by leading fashion labels.

What they do is that they try to see the direction of the trend as established by renowned
fashion brands before producing their own versions of the original look by making use of
cheaper fabrics and simpler production processes which can easily be done by machines.
They can comfortably sell such product at a cheaper price to the masses who can’t afford to
buy the original which is often way too expensive.

Clothes manufacturers now leverage on the runway – fashion expo to promote and attract
market for their products. Any fashion designer who is recognized in Paris, Milan, New York
City, or London can comfortably become a global recognized fashion label.

Small startup garment manufacturing companies leverage on small markets such as

companies, churches, schools, organized groups and sport fans to sell their clothes. These
group of people can order large quantities of customized clothes for special purposes.

11
For example, a political party may enter into a business deal with a ready – made garments
manufacturing company to help them mass – produce shirts to be used by their supporters
during political rallies and campaigns.

6.2. Our Target Market

When it comes to selling readymade garments, there is indeed a wide range of available
customers. In essence, our target market can’t be restricted to just a group of people, but all
those who reside in the locations where we intend retailing our readymade garment shops and
also we distribute to different business partners across the country.

6.3. Our competitive advantage

A close study of the global readymade garment manufacturing industry reveals that the
market has become much more intensely competitive over the last decade. As a matter of
fact, you have to be highly creative, customer centric and proactive if you must survive in this
industry. We are aware of the competition and we are prepared to compete favorably with
other garment importing companies.

Another competitive advantage for Mesele Mengesha Boutique is the quality and robust
wealth of experience of its management team. Our management team have worked on
readymade garment retail business for long time.

Lastly, our employees will be well taken care of, and their welfare package will be among the
best within our category in the industry, meaning that they will be more than willing to build
the business with us and help deliver our set goals and achieve all our aims and objectives.
We will also give good working conditions and commissions to freelance sales agents that we
have recruited from time to time.

6.4. Swot Analysis

Strengths
 Experience and understanding of the fashion industry
 Unique shopping experience with exceptional customer service
 Great store location
 Large and growing consumer base
Weaknesses
 Untested market in the country
 While market is large, it is a niche market
Opportunities

12
  Outstanding shopping experience will lead to repeat business
 Growing online clothing store of Boutique
 Establish Mesele Mengesha Boutique clothing line
Threats

 Cost and effectiveness of marketing to women

 New retail shops that may or may not open in the future

 Political instability in the country

 Impacts of current pandemic on the consumption patterns of the society

6.5. Sales and Marketing Strategy

Pricing Strategy
We will earn profits by selling our merchandise. Our pricing structure will remain flexible, as
we will implement suggested retail pricing on common brands as well as the standard
practice of keystoning prices. Additionally, we will use a value-based pricing structure,
which measures the value of our products to our customers such as easy access, quality,
customer service and styles flattering to our target consumer. We will implement end of
season sales, holiday and overstock sales, multi-buy savings and promotional coupons at
strategic intervals.
Company Development
As our company grows and our boutique earns a positive reputation, several opportunities
will open to us. And we are considering some options already. Should we choose to remain a
small local boutique, we will develop and grow our company by increasing existing clothing
lines and expanding our selection to include additional products. Within five years, we will
assess the potential for franchising our stores in select locations.
Additionally, as we build our business, we plan to simultaneously develop an online clothing
store for Mesele Boutique. The power and ease of an online storefront is obvious to us, and
we plan to develop one quickly and efficiently. We also see the potential for regional and/or
national expansion at some point.
Our online clothing store will help to spread awareness of our product line and brand to a
wider community.

13
Sources of Income
Mesele Mengesha Boutique is in business to retail a wide range of readymade garments in
Ethiopian market. We are in the industry to maximize profits and we are going to go all the
way out to ensure that we achieve our business goals and objectives.
Our source of income will be the retailing of a wide range of;
 Outer clothing (work wear and uniform, leisure wear, sportswear, suits, pants, dresses,
ladies’ suits, blouse, blazers, jackets, cardigans, pullovers, coats, sports jackets, skirts,
shirts (short- or long-sleeved), ties, jeans, shorts, T-shirts, polo shirts, sports shirts,
tracksuits, bathing shorts, bathing suits, bikinis etc.)
 Underclothing/Underwear – lingerie (e.g. underpants, undershirts, briefs, socks,
stockings, and pantyhose).

Sales Forecast

One thing is certain when it comes to the readymade garments retail business, if you import a
wide range of garments, you will always attract customers cum sales and that will sure
translate to increase in revenue for the business.

We are well positioned to take on the available market in and around Addis Ababa and we
are quite optimistic that we will meet our set target of generating enough income from the
first six month of operations. Below is the sales projection for Mesele Mengesha Boutique, it
is based on the location of our business and other factors as it relates to readymade garments
retailers in Ethiopia;
 First Fiscal Year: 13,500,000
 Second Fiscal Year: 14,850,000
 Third Fiscal Year: 16,335,000

14
7. FINANCIAL PLAN
7.1 Requirements
In order to operate this business we require ETB 10,197,500 (Ten Million One hundred Ninety
Seven thousand five Hundred and 00/100 cents) out this 4,900,000 is through short term loan
from a bank of Abyssinia which repaid within 3(Three years) with interest rate of 13.5 %
semi-annually and with equal installment payments. The remaining Birr 5,297,500 will be
settled through the sales of inventories on hand and receivables collected from trade
customers.

7.2 Use of Funds

We will use the funds we obtain from investment in this boutique business plan to pay for
purchase inventory, a cash register, computer equipment and an inventory management
system. We will use the remainder of the start-up funds to cover operating expenses, such as
rent, utilities, wages and marketing to increase retail sales.
7.3 Assumptions
 We base our projections on the assumption that the economy, consumer spending habits
and population growth in Ethiopia will continue for the foreseeable future.
 It is assumed selling prices of the products and purchase costs of the inventory will

increase by 10% per annum.

 It is assumed that for smooth business operation the company will hold inventory for

three months.

 We must also assume that our present and future suppliers will continue to sell inventory

to us at prices that allow us to maintain our present margins. It is also important that we

are able to hire reliable employees at reasonable wages.

7.4 Balance Sheet

Mesele Mengesha Boutique will launch with 5,297,500 in equity capital and 4,900,000 in
loans. Credit amounts and supplier terms for inventory will appear in our balance sheet as
short-term liabilities.

15
PROJECTED BALANCE SHEET
Description Year1 Year2 Year3
ASSETS
Current Assets
Cash at Bank 197,992.47 800,791.71 1,239,570.88
Trade Receivables 1,500,000 1,650,000 1,700,000
Inventory 3,599,507.53 4,311,673.17 5,197,840.49
Total Current Assets 5,297,500 6,762,464.88 8,137,411.37
Property & Equipment
BUILDING 50,000,000 48,500,000 47,000,000

VEHICLES 2,100,000 2,288,000 2,516,800

Total Fixed Asset 52,100,000 50,788,000 49,516,800
Total Assets 57,397,500 57,550,464.88 57,654,211.37
LIABILITIES AND CAPITAL
Short-Term Liabilities
Loan From Bank 2,300,000
4,900,000 3,260,000
Short-Term Liabilities 2,300,000 4,900,000 3,260,000
Capital 150,000 150,000 150,000
Retained Earning 54,947,500 52,500,464.88 54,244,211.37
Total Capital 55,097,500 52,650,464.88 54,394,211.37
Total Liabilities & Capital 57,397,500 57,550,464.88 57,654,211.37

16
7.5. Income Statement Projections
Based on our marketing plans, location, store size and product offerings, we expect to collect
annual sales of Birr 13,500,000 in year one, 14,850,000 in year two and 16,335,000 in year
three.
Our average cost of goods sold will be 75%, which leaves us with a gross margin of 25%. We
will become profitable on a monthly basis before the end of our first year.
In our third year, we will earn net income of Birr 2,640,935.5. The accompanying income
statement demonstrates our company’s profitability.
Forecasted Profit and Loss Account on the Investment Project
Year
Today 1 2 3
13,500,00
Forecasted Sales Amount
- 0 14,850,000 16,335,000
Cost of 10,197,50
sales Total - 0 11,190,500 12,282,800
Purchase Costs - 9,750,000 10,725,000 11,797,500
Labor costs for Sales - 180,000 198,000 217,800
Cost for Store - 240,000 240,000 240,000
Depreciation on invested equipment - 2,500 2,500 2,500
Other expenses for sales - 25,000 25,000 25,000
Gross margin - 3,302,500 3,659,500 4,052,200
Administrative expenses (related to the Project) - 30,000 30,000 30,000
Operating profit - 3,272,500 3,629,500 4,022,200
Financial costs (Interest payment) - 661,500 468,261 248,935
Other expenses - 500 500 500
Profit before tax - 2,610,500 3,160,739 3,772,765
1,131,829.
Tax - 783,150 948,221.70 5
2,212,517.3 2,640,935.
Net profit after tax - 1,827,350 0 5

17
7.6 Cash Flow Projections
Our business will collect immediate payment from customers, so our cash flow statement will
be substantially similar to our income statement. Our cash flow statement clearly
demonstrates our ability to cover all bills.
Forecasted Cash flow Statement on the Investment Project
Year

Today 1 2 3

Operating Cash flow 0

1,827,350 2,212,517.30 2,640,935.5
Investing Cash flow -200,000

Free Cash flow -200,000

1,827,350 2,212,517.30 2,640,935.5
Free Cash flow Balance -200,000 1,827,350 2,212,517.30 2,640,935.5

Financial Loan 4,900,000

Cash Repayment for

-1,624,637.59
Flow loan principal 0 -1,431,398.75 -1,843,963.66

1,84

Debt balance 4,900,000 3,468,601.25 3,963.66 0

Others

TOTAL 4,900,000 -1,431,398.75 -1,624,637.59 -1,843,963.66

Net Cash flow 4,700,000 395,951.25 587,879.71 796,971.84

Discounted free cash flow -200,000 1,589,187 1,605,052 1,585,946

Discounted Free Cash flow

Balance -200,000 1,389,187 2,994,240 4,580,186

18
8. CONCLUSION AND RECOMMENDATION
The performance of the retail business is projected to generate sufficient revenue to the
promoter with annual revenue of Br. 13,500,000 in the year 1.

The viability analysis of the next three (3) years operations indicate that the company is a
healthy investment in that it will pay back the current injected loan within three years of
operations. Furthermore, it generates sufficient amount of cash to cover the loan Br.
4,900,000.00, and other related expenses. The cash from the project can leverage for other
investment. The project has also the capacity to repay its loan within the agreed time frame.
Hence, it is our recommendation to bank of Abyssinia to finance the requested loan for
Mesele Mengesha Boutique.

19
 APPENDIX
1. Loan Amortization

Payment Beginning Scheduled Ending Cumulative

Date Balance Payment Principal Interest Balance Interest
01/12/202
2 4,900,000.00 2,092,898.75 1,431,398.75 661,500.00 3,468,601.25 661,500.00
01/12/202
3 3,468,601.25 2,092,898.75 1,624,637.59 468,261.17 1,843,963.66 1,129,761.17
01/12/202
4 1,843,963.66 2,092,898.75 1,843,963.66 248,935.09 - 1,378,696.26

20