ADMAS UNIVERSITY
DEPARTMENT OF ACCOUNTING AND FINANCE
MOTOR VEHICLE STREAM
Course title- Entrepreneurship For Employability
Section: - 1
NAME OF THE STUDENTS AND ID NUMBER
1 YONAS KETEMA .................................... 8721/16
2 ALAZAR LEMA ...................................... 8574/16
3 ERMIAS GULUMA ...................................8914/16
4 MATIOL AMSALU ................................. 8614/16
5 TSINAT TEKALIGN .............................. 8958/16
6 FENET TELILA..................................... 8507/16
7 MIHRET ABERA................................ .. 8530/16
8 HABTAMU MULUGETA………………… 85101/16
Submitted to : Ketema. T.(instructor )
Submission Date:March,10-2016 E.C
Executive Summary
Automobile spare Parts Shop is in the auto parts stores industry to service a wide range of clients
and of course to make profits, which is why we will ensure we go all the way to make available a
wide range of auto parts from top manufacturing brands in the world from importers. The auto
parts stores industry includes stores/shops that retail new and used automotive parts and
accessories, repair automobiles and install automotive accessories.
Our Automobile spare Parts Shop will be opened in Bishoftu, Ethiopia and we will ensure that
we do all that is permitted by the law of Ethiopia to achieve our aim and ambition of starting the
business. Our product and services offerings are Selling automotive parts and accessories
(critical parts (new), critical parts (used), maintenance parts, accessories and performance parts),
Distributing automotive spare parts, and repairing automobiles and installing automotive
accessories.
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1. Description of Product or Service
The auto parts stores industry includes stores/shops that retail new and used automotive parts and
accessories, repair automobiles and install automotive accessories.
Automobile spare Parts Shop is in the auto parts stores industry to service a wide range of clients
and of course to make profits, which is why we will ensure we go all the way to make available a
wide range of auto parts from top manufacturing brands in the world from importers.
We will ensure that we do all that is permitted by the law of the Ethiopia to achieve our aim and
ambition of starting the business. Our product and services offerings are listed below:
✓ Selling automotive parts and accessories (critical parts (new), critical parts (used),
maintenance parts, accessories and performance parts)
✓ Distributing automotive spare parts
✓ Repairing automobiles and installing automotive accessories
The truth is that, the startup capital for opening an auto parts stores especially when it involves
establishing a standard auto parts stores with products from various automobile companies. But if
you choose to start a spare part store like the average mom and pop business, then you would not
have to stress yourself because you will only need minimal startup capital to launch the business.
The tough part as it relates to startup costs most likely are the need to establish a supply of auto
parts from wholesalers or directly from auto parts manufacturing companies. This is so because an
auto parts business cannot be started without sourcing products for sale. Regardless of low barriers
to entry, the competitive nature of the industry make it very difficult for new operators to break
even within a short period in the industry.
Lastly, the auto spare parts industry is open for aspiring entrepreneurs to launch their business in
the industry. One good thing about auto spare parts stores business is that the business can be
opened in any part of the world and if proper market survey and feasibility studies are conducted,
then you can rule out profitability of the business.
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2. Market Feasibility:
2.1 Product or Service Marketplace
If you are conversant with the Auto Parts Stores Industry, you will quite agree that the changes in
disposable income, consumer sentiment, and ever changing trends are major growth drivers for
sales in this industry. No doubt, a massive rise in consumer confidence has also contributed in
helping the industry experience remarkable growth, but uneven performance in these drivers has
led to slightly constrained revenue growth for the industry.
Our Automobile spare Parts Shop will be opened in Bishoftu,, Ethiopia and we will ensure that
we do all that is permitted by the law of Ethiopia to achieve our aim and ambition of starting the
business. Our product and services offerings are Selling automotive parts and accessories
(critical parts (new), critical parts (used), maintenance parts, accessories and performance parts),
Distributing automotive spare parts, and repairing automobiles and installing automotive
accessories.
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2.2 Identification of Specific Market
Perhaps it will be safe to submit that the auto parts retail stores industry has one of the largest
ranges of customers; almost every automobile owner would have one reason or the other to
purchase automobile parts and accessories.
In view of that, we have conducted our market research and feasibility studies and we have ideas
of what our target market would be expecting from us. We are in business to retail a wide range
of auto parts to the following groups of people and corporate organizations:
✓ Car owners
✓ Auto repair, maintenance and servicing garages
✓ Transport companies
✓ Haulage companies
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2.3 Marketing Strategy
We hired experts who have good understanding of the auto parts retail stores industry to help us
develop marketing strategies that will help us achieve our business goal of winning a larger
percentage of the available market.
In order to continue to be in business and grow, we must continue to sell the auto parts and
accessories that are available in our store, which is why we will go all out to empower or sales and
marketing team to deliver. In summary, our Auto Spare Parts Shop will adopt the following sales
and marketing approach to win customers over:
✓ Open our auto parts retail store in a grand style with a party for all.
✓ Introduce our auto parts retail store by sending introductory letters alongside our brochure
to organizations, households, auto repair, maintenance and servicing garages, transport
companies and other key stakeholders.
✓ Ensure that we have a wide range of auto parts and accessories from different brands at all
times.
✓ Make use of attractive hand bills to create awareness and also to give direction to our auto
parts retail store
✓ Position our greeters to welcome and direct potential customers
✓ Create a loyalty plan that will enable us reward our regular customers
✓ Engage on road shows within our neighborhood to create awareness for our auto parts retail
store.
✓ List our business and products on yellow pages ads (local directories)
✓ Leverage on the internet to promote our business
✓ Engage in direct marketing and sales Encourage the use of Word of mouth marketing
(referrals)
✓ Join local chambers of commerce and industries to network and market our products
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3. Technical Feasibility:
3.1 Technology Considerations
Despite the fact that our auto parts retail store is well located, we will still go ahead to intensity
publicity for the business. We are going to explore all available means to promote our auto parts
retail store.
As a matter of fact, our publicity and advertising strategy is not solely for winning customers over
but to effectively communicate our brand. Here are the platforms we intend leveraging on to
promote and advertise our company:
✓ Place adverts on community based newspapers, radio stations and TV stations.
✓ Encourage the use of word of mouth publicity from our loyal customers
✓ Ensure that our we position our banners and billboards in strategic positions
✓ Distribute our fliers and handbills in target areas in and around our neighborhood
✓ Contact corporate organizations, households, landlord associations and auto repair,
maintenance and servicing garages by calling them up and informing them of our Auto Parts
Stores and the products we sell
✓ Advertise our auto parts retail store business in our official website and employ strategies
that will help us pull traffic to the site
✓ Brand all our official instruments and ensure that all our staff members and management
staff wears our branded shirt or cap at regular intervals.
✓ Join local chambers of commerce and industries to network and market our products
✓ Leverage on the internet to promote our business
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3.2 Payment Options
The payment policy adopted by our Auto Parts Store will be all inclusive because we are quite
aware that different customers prefer different payment options as it suits them but at the same
time, we will ensure that we abide by the financial rules and regulation of Ethiopia.
Here are the payment options that our Automobile Spare Parts Shop will make available for our
clients.
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✓ Payment with cash
✓ Payment via bank transfer
✓ Payment via credit cards / Point of Sale Machines (POS Machines)
✓ Payment via online bank transfer
✓ Payment via check
✓ Payment via mobile money transfer
✓ Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our client make payment
for the purchase of auto parts and accessories without any stress on their part. Our bank account
numbers will be made available on our website and promotional materials to clients who may want
to deposit cash or make online transfer for our products and services.
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4. Financial Feasibility:
4.1 Start Up Expenditure (Budget)
In setting up any business, the amount or cost will depend on the approach and scale you want to
undertake. If you intend to go big by renting / leasing a big facility, then you would need a good
amount of capital as you would need to ensure that your employees are well taken care of, and that
your facility is conducive enough for workers to be creative and productive.
This means that the start-up can be either low or high depending on your goals, vision and
aspirations for your business.
The materials and equipment that will be used are nearly the same cost everywhere, and any
difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for
starting an auto parts retail store business, it might differ in other countries due to the value of their
money.
These are the key areas where we will spend our start – up capital on;
✓ The total fee for registering the business in Ethiopia – 750 birr.
✓ Legal expenses for obtaining licenses and permits as well as the accounting services
(software, P.O.S machines and other software) – 3,300 birr.
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✓ Marketing promotion expenses for the grand opening of our Auto Spare Parts Shop in the
amount of 3,500 birr and as well as flyer printing (2,000 flyers at 50 cent per copy) for the
total amount of 4,500 birr.
✓ The cost for hiring business consultant – 2,500 birr.
✓ Insurance (general liability, workers’ compensation and property casualty) coverage at a
total premium – 24,000 birr.
✓ The cost for payment of rent for 12 month at 10,000 birr per square feet in the total amount
of 120,000 birr.
✓ The cost for shop remodeling (construction of racks and shelves) – 20,000 birr.
✓ Other start-up expenses including stationery (500 birr) and phone and utility deposits
(2,500 birr).
✓ Operational cost for the first 3 months (salaries of employees, payments of bills et ail) –
60,000 birr
✓ The cost for start-up inventory (stocking with a wide range of auto parts and accessories
from different manufacturing brands) – 400,000 birr
✓ The cost for counter area equipment – 9,500 birr
✓ The cost for store equipment (cash register, security, ventilation, signage) – 13,500 birr
✓ The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone,
TVs, Sound System, tables and chairs et al): 100,000 birr.
✓ The cost of launching a website: 1000 birr
✓ The cost for our opening party: 7,000 birr
✓ Miscellaneous: 10,000 birr
We would need an estimate of seven hundred seventy nine thousand and fifty
Ethiopian birr (779,050 birr) to successfully set up our auto spare parts retail shop
in Bishoftu Please note that this amount includes the salaries of all the staff for the
first month of operation.
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4.2 Generating Funds / Startup Capital for our Auto Spare Parts Shop
Our Auto spare Parts Shop is decided to restrict the sourcing of the startup capital to 3 major
sources. These are the areas we intend generating our startup capital;
✓ Generate part of the startup capital from personal savings
✓ Source for soft loans from family members and friends
✓ Apply for loan from my Bank
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5. Organizational/Managerial Feasibility:
Our Automobile Spare Parts Shop does not intend to start an auto parts retail store business like
the usual mom and pop business around the street corner; our intention of starting an auto parts
retail store business is to build a standard and one stop auto parts retail store outlet in
Bishoftu,Ethiopia.
Although our auto parts retail store business might not be as big as Advance Auto Parts, AutoZone
Inc., Genuine Parts Company, and O’Reilly Automotive Inc. et al, but will ensure that we put the
right structure in place. We will ensure that we hire people that are qualified, honest, customer
centric and are ready to work to help us build a prosperous business that will benefit all the
stakeholders (the owners, workforce, and customers).
In view of that, we have decided to hire qualified and competent hands to occupy the follow ing
positions;
✓ Chief Executive Officer (Owner)
✓ Store Manager
✓ Human Resources and Admin Manager
✓ Merchandize Manager
✓ Sales and Marketing Manager
✓ Information Technologist
✓ Accountants / Cashiers
✓ Sales Agents / Customer Services Executive
✓ Cleaners
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5.1 Organization Structure
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6. Conclusions:
The automobile spare parts industry is open for aspiring entrepreneurs to launch their business in
the industry. One good thing about auto spare parts stores business is that the business can be
opened in any part of the world and if proper market survey and feasibility studies are conducted,
then you can rule out profitability of the business.
Based on our feasibility study we can conclude that opening an Automobile spare parts shop in
Bishoftu,, Ethiopia is a profitable business if the minimal startup capital to launch this business
is obtained.
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