Business prospects in your village

Prepared for:
Md. Iftekharul Amin
Assistant professor
Couse: Marketing Management (M 302)





Prepared by:
Noushin Wadud Khan
Roll: RH-58
20
th
Batch (section A)



IBA, University of Dhaka
15
th
April 2014
1. Background:

1.1 DHAMRAI UPAZILA
Dhamrai Upazila is located about 40 kilometers north west of the capital city of Dhaka. It is one
of the six Upazilas of Dhaka district. The Upazila is surrounded by the Upazilas
of Mirzapur and Kaliakair and Nagarpur on the north, Singair on the south, Savar in the east
and Saturia on the west. The total area of Dhamrai Upazila is 307.4 km.
[1]
It has 57,297 units of
households. The Upazila consists of one Pouroshova (Municipality), 16 unions and 398
villages.
Due to its proximity to Dhaka and Savar the population of Dhamrai has a wide range of
occupational diversity starting from farmers to, garments workers, remittance earners,
government service agents, and even some business men.



Fig: Location of Dhamrai Upazila in Dhaka

1.2 THE VILLAGE OF DIMUKHA
The village is Dimukha is under the Chowhat Union which is a part of the Dhamrai Upazila. The
Chowhat Upazila is at the extreme north of Dhamrai. The village is about 67km from Dhaka
and has an area of about 500 acres, most of which is used for agricultural purposes. The village
has a population of 8537 according to the population census conducted in 2011. The name
Dimukha can be broken down to di- and -mukha: which in Bengali means two heads or
two mouths. Many people say the name dates back to the times when it acted as a resting place
for travelers from Tongi on their way to Dhaka. Others say the name suggests that the people of
the village love to eat.
Due to the good quality of its soil the village has always been an agricultural community.
Although majority of the residents were previously farmers due to diversification of occupation
the number has now dropped to about 30% of the total workforce. Around 25% of the workforce
is remittance workers. A further 25% in involved in government services while the rest are
involved in small businesses, fish farming or other varied jobs. The tendency seems to be
shifting from government services and farming to being remittance workers or businessmen.
While the men are the main earning head of the family only a very small portion of the women
are involved in economic activities.
In recent years the farming community has shifted their focus from the production of rice and
jute to other things. The latest addition to the portfolio of the farmers is the production of
flowers. Due to its proximity to Dhaka and availability of a good transport route the farmers are
chose to produce a wide range of flowers for their third crop of the year. As they have begun to
see that flowers give more profit than regular crops now more and more farmers are shifting to
production of flowers like Rajanigandha (tuber rose), Rose, Marigold and Gladiolus for
commercial purposes.


Fig: Map of Dhamrai Upazila

2. Business idea:

2.1 OVERVIEW
The production of flowers is relatively a new avenue for most farmers and hence there is no
proper channel for transporting and marketing these flowers. My business proposition is aimed
setting up a reliable supply channel for the flower farmers. Setting up a separate transport
system should not only help reduce their uncertainty and encourage them to become more
involved in flower production. The farmers work on a co-operative basis to determine which
field to harvest and then transport the flowers mainly to Shahbag, Dhaka and a few other
surrounding areas. Although there is an availability of a good transport system the major
problem faced by farmers in this area is finding adequate transport at the right time. As most
of the available trucks and vans are used to transport rice, jute or vegetables the flower farmers
face a constant threat of not being able to find transport for their produce. Often due to this
uncertainty they have to pay a premium price so they can book the trucks which considerably
raise the cost of transport. In addition there always exists the en route tolls and chadas that
need to be paid. The trucks are under the control of the middlemen who ask for exorbitant prices
for even the smallest of deliveries. The smaller the delivery the higher the premium that needs to
be paid.
The business will comprise of two small trucks with a capacity of 500kg each. Considering the
scale of the business the trucks will be leased on contracts from trucking companies for a 6
month period. The base of operations will be situated at my paternal grandfathers estate, in
a small building adjacent to the house, which is currently being built for storage and other
purposes. The office will have 2 employees for handling the day to day businesses. There will
also be an accountant based in Dhaka for handling the financials.

2.2 CURRENT SCENARIO
The flower industry in Bangladesh shows a fast paced growth. In order to meet this demand
more farmers and their families are now diversifying to the production of flowers, not to mention
the higher margin for profit. About 5% of the total available land in Dimukha, which is almost
20 bighas is used to cultivate flowers presently. Around 80 families are involved in the flower
business and they mostly work as a group. Support for the farmers is given by the local
government. The fields used are located close together to ensure consistency in the quality of
flowers. The harvest takes about 2-3 months from the date of planting the seeds. Seeds are
planted on different fields at different times so that there is a consistent supply year round. Each
day the farmers combined harvest a small portion of the total land and the profit is shared among
the group. For maximum shelf life (3-5 days if soaked in water, 5-7 hours normally) flowers
should be cut early in the morning or in the evening. However if not stored and packaged
properly the shelf life of flowers can decrease considerably. Due to unavailability of transport the
packaging suffers and shelf life deteriorates, and often many flowers are destroyed in the
process. Daily about two small truckloads of flowers is harvested and sent to Dhaka via the
middle men. As the scale is small the premium paid for the trucks is higher than regular, around
Tk.2000-3000 whereas the regular rate is tk. 1200-1500.

2.3 JUSTIFICATION
Many farmers say that the profit from flower cultivation per bigha is 1.5 times more than that
from any other crop they produce. A small portion of the women in the flower farming families
are actively involved in the flower production activities. Mrs. Fatima Hossain one of the few
females involved in flower production says her main concern is the transportation of her flowers.
She mentioned that the village sells almost TK. 30,000 worth of flowers weekly, of from which
they make Tk. 3000-5000 in profits. However, due to lack of proper transport channels this
profit can be cut down to as much as Tk.1000. Further sharing of the profit can brings the
family profit to about only Tk.200-400 per week. So setting up a constant channel for flower
transport will not only encourage more farming activity but also hopefully encourage more
women to get involved in economic activities rather than sitting idle.

2.4 TARGET CUSTOMERS
The target customer base for the idea is quite small, i.e. restricted only to the horticulture
families which totals to 80 households. The total yield daily yield transported can amount to 700
kgs, which due to packaging and storage constraints needs to be transported via two trucks.

2.5 SWOT ANALYSIS
Strengths:
There is no such existing service available, which would make me the first entrant into
the market
The customer base is small so starting on a small scale is feasible
The distance from Dhaka is comparatively small so fuel and other expenses will be low
As the operation base is right on the main road transportation to and from the base is
easily accessible.
By setting slightly lower prices it will be possible to attract customers easily, as they
community works in a group.
Weaknesses:
As the scale is small, if some farmers refuse to co-operate then there could be some
losses.
As a new business it might be difficult to expand if customer base increases suddenly.
If either of the trucks are notable to deliver on a particular day it might harm the
reputation of the business
According to the plan it is only a one way transport system as nothing is being
transported back from Dhaka.
Opportunities:
By expanding the customer base to other farmers there is a huge potential for growth
Expansion of the business will lead to requirement of more employees thereby increasing
scope for employment
Trucks can also be used for transporting other goods, not only flowers.
Collaboration with local business men could allow the firm to use the trucks to transport
goods form the city and making use of the idle time
Threats:
Entering into the market is easy so competitors could come up quickly

3. Investment plan

The investment will take place in two stages: the initial investment and the subsequent
investments over the years in running and expanding the business. Of all the profits in the
business 50% will be reinvested in the business and the rest will go to the owner, in this case me.

Initial investment Amount (BDT)
Trading/ operating license 5000
Furniture 2000
Truck leasing (6 monthly) (2*5000*6)= 60000
Total: 67000


Other expenses: (monthly) Amount (BDT)
Employee salary 10000
Accountant salary 7000
Fuel and maintenance 30000
Office supplies 300
Total: 47,300

4. Marketing plan

The need for an intensive marketing plan for this business is not necessary as the target base is
limited. The initial stages of marketing involve a door-to-door awareness program to let the
farmers know that there is such a service available to them. This should add a personal touch to
gain the confidence of the farmers. Also there will be miking done in the area so that the
farmers and potential customers are aware of the service. As mentioned before the location of the
office being on the main road is easily accessible, also the location of the grounds is on the way
to the daily marketplace, and therefore known to everyone in the locality. The main medium of
communication will therefore be by word of mouth.
To encourage farmers of fair practices the price rate will be posted on a board inside the office.
Initially discounts will be given to those who transport in greater amounts and to those who pay
fully before delivery.