STATIONARY SHOP BUSINESS PLAN

1. Executive summary

•Stationary

shop is a start-up business located in walaita zone sodo Town,SNNPR .The firm specializes in the sales of
home electronics, specificallyincluding, computer, Photo copy, Laminator, printers and different
printingstationeries equipments.

•The firm will target people who place great importance in there, electronicequipment and own higher-
end electronics, where supply them would bemore cost effective.

1.1Objectives

•Stationary is a growth-service oriented business. Its five years goal is to become a regional leader in
printing stationary and machines with shops inthe sodo Town area. With this in mind, the objectives
over the next threeyears for stationary shop are sated

1.2 Mission

•The mission of stationary shop is to provide high quality, convenient andcomprehensive computer,
printer, copy machines, and stationary at a lowcost. The most important aspect of our business is trust.
It is the goal of ourfirm to have 100% customer satisfaction in regards to quality, friendliness And time to
completion, and discover new ways to exceed the expectationsof our customers while doing so at the
lowest possible cost.

1.3 Keys to Success

In the computer, printer, copy machines, and stationary supply and sale firm builds its client base one
customer at a time and mostly through establishedmarketing practices (ads, newspapers, etc.). With this
in mind, the keys tosuccess for stationary shop are:

•High-quality work.

•Attention to professional appearances at all times.

•Knowledgeable technicians that are friendly, customer oriented, and willtake the time to explain to
customers the intricate nature of our businessand our work.

2. Company Summary

•Stationary shop is envisioned to be the low cost leader in the sodo areathat will also be able to
eventually provide service making it the localleader in comprehensive computer, printer, copy
machines, and stationary

[Type text] Page 1

The company is as partnership registered in the state of SNNPR under

wolaita zone, sodo City Administration and owned by partner’s .Initial

facilities will contain a sales area, office room in the back of the shop,office space and storage for parts
and equipment.

•The company is seeking a loan from sodo town omo Micro Finance and NIB international Bank of
Ethiopia sodo Branch in order to finance thestart of operations for the company. The owners will be
putting upadditional capital of own as equity.

2.1 Start-up Summary

•The data obtained for the start-up comes from marketing informationgathered from sodo Town during
feasibility study to start the businessand with other small stationary shops that have started their own

business, in addition to partners’ previous experience within the

industry. Inflation has been taken into account between the estimates ofthese fellow business owners to
start and the current prices for expenseditems.

•Capital costs

Purchase price of business

Training 4000 Office equipment

Desks

5000

Chairs

4000

Safe

12000

Computers, printers

42000

Fax, phone system

15000

[Type text] Page 2

Vehicles

40000

Plant and machinery:

Storage

100000

Business Structure:

Registration

2000

Professional fees

44000

Reference materials:

Land

6000

Building costs:

100000

Toilets, plumbing anddrainage

10000

Total capital costs:

384,000

Operating Costs

Wages

22000

Advertising

6000

[Type text] Page 3

Electricity and gas

1000

Sales tax

Payroll tax

4400

Interests

12522

Freight

35000

Motor vehicle expenses

10000

Total

130,522

Total startup cost for thebusiness

514,522

• Initial funding of the business

•As the partnerships, we have 300,000 of our own money (shares) to invest inthe business and the
closing balance in the projected start up summaryshows that, in addition to this, some 214522 will be
required over the firstyear.

•We also had preliminary discussions with NIB Bank of Ethiopia sodoBranch manager and, subject to the
provision of a documented business planand To wolaita zone omo Micro finance in sodo for the
provision of loan.

After the first year, starting the repayment of loan to creditor within threeyears.Repaymentschedule

Year1

Year 2

Year 3

[Type text] Page 4

Total

Principal

71,507

71,507

71,507

214,521

Interest

7,151

7,151

7,151

21,453

Total 78,658

78,658

78,658

235,974

3. Products and Services

• Stationary shop offers a wide range of services as outlined in thedetailed sections below. It is
ultimately the goal of the company tooffer a one-stop facility for all stationary needs, including both
salesand printing servicing. In this way the company can offer greater perceived value for the customer
than many other shops which onlyoffer sales.

.The firm is highly competitive with suppliers having a great deal of power in setting and negotiating the
prices of products and services. Inaddition, because the customers see the service as undifferentiated
anda "commodity" with little value separation between competitors, buyer power is also very high.
Finally, the barriers to entry are moderatelylow, and the large numbers of competitors in this field, the
pricing forsuch services is very competitive. The only way to have an advantagein this firm is a low cost
leadership principal applied aggressively or to create higher switching costs through the building of
strong business-to-customer ties. It is the aim of stationary shop to create a competitiveadvantage
through both the low cost strategy and by offering greatervalue through its broader supply of product
and giving service line.

[Type text] Page 5

3.1 Product and Service Description

•Supply and sale of computer

•Supply and sale of stationary.

•Maintenance and installation of printer, photo copy and etc

•Supply of Computer installation of software’s

•Future products and services that MULEGETA TADESE stationary shopwill prepare to institute include
computer, Photo copy and internetservice also investigating the possibility of offering a new product
lineand Photo entertainment at some future date.

3.2 Sourcing

•Stationary shop will be obtaining most of its parts through established dealersand directly through App
Company of Addis Ababa branch, Jupiterelectronics and the relevant stationary. As part of the
company's low coststrategy, the company will seek to purchase parts in large quantitieswhenever
possible to take advantage of volume discounts. In addition, thecompany will aggressively seek to
procure its parts from other suppliers fromAddis Ababa in order to start forming close relations with
such companies.

3.3 Technology

•The company will continue to seek new ways to provide a better servicethrough technology.

3.4 Competitive Comparison

•The stationary firms in sodo Town are highly competitive. Each companywithin this field has high labor
costs, low margins, and a high intensity ofcompetition.

•Suppliers have a great deal of power in setting and negotiating the prices oftheir products and services
to customers. Therefore, these companies can setwhatever price they wish to. Furthermore, labor is the
single most importantexpense in this industry, and salaries for such individuals are well known andnot
very flexible.

•The large number of competitors in this field including substitutes means that pricing for such services
are very competitive. The only way to have anadvantage in this industry is a low cost leadership principal
appliedaggressively to all aspects of the business or to build up customer relations toa point where the
switching costs are raised.Based on this analysis, stationary shop will pursue a low cost leadership
strategy as primary competitive advantage. Furthermore, the company will simultaneously build up its
product and service line to take advantage of the limited opportunity tocreate higher switching costs
through enhanced value creation and to spread outcosts.

[Type text] Page 6

3.5 Future Products and Services

•Future products and services that stationary shop will prepare to instituteinclude computer, Photo
copy and internet service also investigating the possibility of offering a new product line at some future
date. Stationary will start implementing these new products or services in the followingtime periods:

•Computer writing, printing and Photo Copy service (3

Rd Qtr 2012).

Stationary sales (4

th

Qtr 2012).

•Internet Service (1st Qtr 2013).

•Computer, printer, photo copy and laminator sales (2nd

Qtr 2014).

•Photo entertainment (3 rd

Qtr 2015).The capital investment needed for such expansion will primarily come fromthe company's
accumulated operating cash account. It is anticipated thatsome of these product/service expansions
that require significant inventory,such as new sales, may require additional cash inflow such as loans.
Thecompany will be preparing proposals for various lending institutions (Omomicro Finance of Sodo/Nib
Bank of Ethiopia Sodo Branch/Saving andCredit Cooperative of Sodo Town/ in anticipation of this need.

3.6. SWOT Analysis

•A SWOT (strengths, weaknesses, opportunities and threats) analysis can provide a lot of useful
information for a business. It can give direction tothe business and its marketing strategies. The results
need to be concise,relevant and interesting. The report should give an understanding of thebusiness
aims, and key issues and objectives should flow from it easily.

Key issues

•Drawn from the SWOT analysis, the significant issues for electronicsshop are:

•inexperience and lack of brand awareness

•sufficient funds for projections but limited resources for growth

[Type text] Page 7

needed. As technology progresses, long-term planners within thismarket expect to see new
opportunities for stationary replace quicklyarise.

3.7 Service Business Analysis

•Much of the stationary shop firm analysis is contained in thecompetitive comparison section. However,
the key points are that theindustry is highly competitive and that most firms have little power toaffect
the forces that influence them or to affect the price levels that themarket determines.

•In order to capture this position and achieve its benefits of high marketshare and profitability, the
company is expected to have higher start-upcosts and lower profits within the first few years as the
company investsin better and more efficient facilities and equipment than mostcompetitors and
engages in aggressive pricing to capture market share.The company will rigorously evaluate every aspect
of the company toimprove efficiency and lower costs. It is expected that management willexpend a
great deal of energy in cost management and the reduction ofthings such as marginal customer
accounts and marketing expenses.Once in operation, management will concentrate on
developingestablished procedures that will create the most effective serviceexperience. Finally, as part
of this low cost leadership strategy, thecompany plans to vertically integrate to include original sales and
broadservices that will spread costs and serve all major customer types so asto build volume.

3.7.1 Competition and Buying Patterns

•Customers traditionally purchase services in this industry because ofeffective advertising and
reputation. The customers wish to bereassured that they will receive prompt and reliable service and
have anunderstanding service representative will listen to their problems andseek to solve them in a fast
and professional manner. Currently the largest problem that faces small firms is product/service
awareness. Bythe use of effective and widespread advertising (FM Debub, FM Sodoand debub negarit
news paper), stationary shop expects to be able tocapitalize on the weakness of the style of passive
promotion and toleverage greater product awareness into higher market share. There isno seasonality
to this industry although there is some slight increase inservicing sales during the Christmas season.

3.7.2 Business Participants

•As stated before, the electronic shop is highly fragmented. In fact, there areso many small providers
that any company in this industry is facing a purelycompetitive environment.

•It is these companies that have the largest market share and have theopportunity to compete by
differentiating on customer service or product/service range.

•As stated before, stationary shop will seek a low cost leadership approach inthe Areka Town and the
firm will seek to out price and acquire market sharein order to then compete with the regional
firms.Areka Town that will bestationary shop main competitors in its first few years of operation.
Theyare:

[Type text] Page 8

•

Muluken TV Shop.

•Sisay the TV Man.

•Dishish repaire .

4. Strategy and Implementation Summary

4.1 Marketing Strategy

•Direct mailers.

║Discounts.

• Newspaper ads.

•Referrals through other local businesses.

•Debub FM Radio, sodo, and ETV advertisement.

•The company's aim is to overcome the traditional small firm's passiveform of advertising and
promotion by sending our message to thecustomer, instead of having the customer look for a firm when
they needour services. The firm plans to build market share through serviceawareness, value creation,
competitive price, availability, and attractiveservice experience, all leading to the purchasing of our
services.

4.1.1 Pricing Strategy

•MM Electronics shop exists in a purely competitive environment where eachfirm must be a price taker.
In other words, the firm has no ability to affectthe market price of its services, regardless of how many
TVs/DVDs orVCRs it sold. In this case, therefore, marginal revenue (the revenue incurred by producing or
servicing one more unit) is equal to the price charged.

•What all of this means for the company is that the we must seek to chargeour clients at the market
price (or lower). As long as marginal costs do notexceed revenues, the company's method to maximize
short-run profits is toservice the various electronic devices at maximum capacity.

4.1.2 Promotion Strategy

•The company's promotion strategy will take the form direct mailers, price discounts, radio and TV and
advertisements in newspapers. TEexpects to spend a large amount on marketing in the first two years
inorder to build up product awareness and service value in the minds ofour customers.

5.2 Competitive Edge

[Type text] Page 9

•

MM Electronics' competitive edge lies in its ability to provide qualityand fast electronic repair and sale at
lower cost than any local smallcompetitor. This positioning of the company provides protection
againstthe power of suppliers by creating more flexibility to cope withincreasing costs. In addition, this
approach will provide returns evenduring economic downturns and when other unforeseen problems
arise.

5. Sales Forecast

• Since the electronic shop sale product is, operationally, a job-shopenvironment, it is somewhat
difficult to estimate sales. For job-shops, eachindividual product or service is tailored or unique to that
job, and is onlyinitiated once an order is made.

• The sales forecast is based on the estimated number of electronics the firmcould service that are
currently and available yearly market demand for ourservices.

6. Management Summary

•The company is registered as Partnership owned and managed by partners , the Managers of firm
expected with a Degree inB.management from Hawassa university.

6.1 Personnel Plan

•MM electronics' initial staffing will consist of Mr. Muluken, and two part-time technician trainees.
Accounting, bookkeeping, and marketingconsulting services will be outsourced. The company's
intermediategoal is to have four full-time, fully trained technicians at the originalfacility, plus a full-time
office manager. However, management hasdecided to await future developments before determining
the best timeto bring on such personnel.

7. Financial Plan

7.1 Break-even Analysis

•The company's break-even analysis is based on an average firm's runningcosts within this industry,
including payroll, and its fixed costs for suchthings as rent, utilities, etc. As MM Electronics shop
operates as a job-shop, with each task a unique, customized service, it is difficult toestimate revenue per
unit and variable costs. The reader must understandthat there is a high degree of variance within these
estimates.

7.2 Business Ratios

•The Business ratios give an overall idea of how profitable, and at what risklevel, Tsega Electronics will
operate at. The ratio table gives both time seriesanalysis and cross-sectional analysis by including
industry average ratios.Industry Profile ratios are based on Standard Industrial Classification (SIC)code

[Type text] Page 10

7622, Radio and Television Repair. As can be seen from thecomparison between industry standards and
ABC Electronics own ratios, here are some differences. Most of these are due to the fact that there is
avery large variance in assets, liabilities, financing, and net income betweencompanies in this industry
due to the vast differences in company size. Thereader will also note that there is a fair amount of
variability between thevarious years. This is due to the fact that the company is expected to growquickly
and have a large variance in profitability from year to year at first.

•Overall the company's projections show a company that faces the usual risksof companies in this
industry and one that will be profitable in the long-run.The company shows that it has higher advertising
and start-up costs thanother competitors; however management has deliberately overstated costsand
minimized profits in order to create a "safe" or "buffer" zone in case ofhard times or other
unforeseeable problems. Pre-tax return on net worth and pre-tax return on assets appears to be very
high, especially within the firsttwo years, however again this is due to the fact that the company will
befacing highly variable revenue and costs over the first few years

[Type text] Page 11