Eritrea Free Zones Authority

Massawa Free Zone

 

Guide To Submission of Business Plan

 

   Introduction

The business plan is the company’s perspective of the rationale for establishing the proposed operation in Eritrea. It will be the vehicle used by the Authority to determine the suitability of the project for Massawa Free Zone.

 

1.   Investor

 

Requirement for corporate profile of Promoting Company for the past three years, including details of the ownership structure, history, growth, performance, product categories/range, customer base, marketing & sales, operational facilities i.e. premises/plant, patents held, manufacturing regulatory compliance requirements, financial track record i.e. annual audited accounts, etc.

 

2.   Proposed Project

 

Implementation strategy for the proposed Eritrea Free Zone project’s initial 3 years of the business would need to be outlined in detail, including plans for the management, control and growth of the business. 

·        Range of activities to be undertaken from Eritrea including, if appropriate, products to be manufactured in Eritrea, manufacturing process, key steps involved, nature of production plant, etc.

·        Sourcing of raw materials i.e. sub-assemblies, packaging, labelling, etc.  

·        Marketing campaigns undertaken to support projected level of sales, projected level of international sales, key customers, pricing arrangements, etc.  

 

3.                                   Financial Projections

 

Detailed Financial Projections (including Cash Flow, Profit & Loss Account & Balance Sheet) for the initial three years of the life of the proposed Eritrean project are required.  These should show clearly the funding being invested by the promoters and what form the funding will take e.g. amount being invested by way of ordinary equity and bank borrowings, (evidence of capacity to provide the level of funding should be demonstrated), etc. 

 

There is a requirement to demonstrate that the Financial Projections are both realistic and attainable.  The validity of the assumptions underpinning the annual projections e.g. level of business actually secured, rationale for profitability margins and level of projected expenses need to be outlined and justified. 

 

 

 

4.   Commercial Viability Aspects

 

Need to demonstrate the commercial viability prospects of the proposed project including the reasons as to why the promoters believe the project will succeed and be profitable in the longer term.   The key competitive advantages over other or similar products in the market place should be outlined.

 

5.   Strategy to Acquire Planned Market-Share

 

Need to specify in detail the market entry strategy; markets that will be served by the Eritrea project including the rationale for approach and strategies that will be implemented to acquire and grow market share in the long-term etc. 

 

6.           Competitive Forces

 

Main structural forces of the industry that determine the strength of competition and the level of industry profitability need to be outlined. 

Consideration should be given to:

·      Threat of entry of new companies

·      Existing competitors

·      Substitute products

·      Power of buyers

·      Power of suppliers of raw materials.

7.    Market Analysis 

 

Factors, which should be considered to include:

Target market size (monetary)

·      Market growth rate & trends

·      Alternative products

·      Environmental aspects

 

8.   Competitive Position

 

Further views under the following headings would be appreciated:

 

Marketing, Sales & Distribution

·      Factors which determine success in the market- place

·      Marketing Programmes which will give the company a competitive edge

·      Effectiveness of sales and distribution efforts relative to competitors

                                                                                                

Technology

·      Technologies used in the manufacturing process. How competitive will the manufacturing costs be?

·      Commitment to ongoing R&D expenditure to maintain dominant position.

·      Quality control procedures relative to industry requirements.

 

Raw Materials

·      Need to specify the sources and nature of the raw materials. Will company enjoy any advantage over competitors in cost or quality? etc…

 

   9.   Financial

 

The Board of the Eritrea Free Zone Authority will have to be satisfied that it is dealing with a company, which is solvent, liquid and profitable.  For this reason, it is necessary for evidence to be produced by the promoters to the effect that they have access to the level of funding required by the project.  That is why it is important requirement that copies of the promoter’s audited accounts for the last three years be made available together with all notes and relevant information.

 

  10.   Planning Assumptions

 

To assist Eritrea Free Zone Authority in its appraisal of the Business Plan, there is a requirement to provide the following:

  • Manpower projections indicating the number and skill type of employee for each category stage of operation.
  • Machinery and Equipment listing including the source of supply.
  • Details of Planned Product Development and Marketing Expenditures including royalties, commissions or fees payable.
  • Need to specify any environmental implications.
  • Configuration of Premises required to house proposed project.

 

   END