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MAKERERE UNIVERSITY BUSINESS SCHOOL

MASTER IN BUSINESS ADMINISTRATION


SMALL BUSINESS MANAGEMENT
BUSINESS PLAN
COURSEWORK

PREPARED BY
KATENDE EMMANUEL
2012/HD10/2123U

TABLE OF CONTENTS
TABLE OF CONTENTS.................................................................................................................ii
EXECUTIVE SUMMARY............................................................................................................iv
PART A: STRATEGIC PLAN.........................................................................................................1
Introduction......................................................................................................................................1
Vision...............................................................................................................................................1
Mission............................................................................................................................................1
Objectives........................................................................................................................................1
Core Values......................................................................................................................................1
ENVIRONMENTAL ANALYSIS...................................................................................................2
Market Trends..................................................................................................................................2
Market Growth.................................................................................................................................2
Competition.....................................................................................................................................2
CLIENTS, PRODUCTS AND MARKET ANALYSIS...................................................................5
Market Summary.............................................................................................................................5
Market Analysis...............................................................................................................................5
Market Demographics.....................................................................................................................5
Market Needs...................................................................................................................................5
INSTITUTIONAL ANALYSIS.......................................................................................................6
Organisational Structure..................................................................................................................6
Swot Analysis..................................................................................................................................7
Success Strategies............................................................................................................................8
PART B; OPERATIONAL PLAN...................................................................................................9
Production Plan................................................................................................................................9
Objectives........................................................................................................................................9
Strategies..........................................................................................................................................9
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Assumptions....................................................................................................................................9
Key Issues........................................................................................................................................9
Precautions.....................................................................................................................................10
Marketing Plan...............................................................................................................................11
Objectives......................................................................................................................................11
MARKET SITUATION ANALYSIS.............................................................................................11
Target Markets...............................................................................................................................11
Positioning.....................................................................................................................................11
Marketing Mix...............................................................................................................................12
Marketing Research.......................................................................................................................12
HUMAN RESOURCE PLAN.......................................................................................................14
Objectives......................................................................................................................................14
Strategies........................................................................................................................................14
Hr Requirements............................................................................................................................14
INVESTMENT PLAN..................................................................................................................15
Objectives......................................................................................................................................15
Strategies........................................................................................................................................15
APPENDICES (FINANCIAL PLANNING).................................................................................16
Appendix I: Projected income statement (UGX)...........................................................................17
Appendix II: Projected Cash Flow Statement (Amount in UGX).................................................18
Appendix III: Projected Balance Sheet (Amount in UGX)...........................................................19

EXECUTIVE SUMMARY
PROJECT:

PROPOSED CHICKEN REARING

PROJECT LOCATION

KIRINYA BUKASA, WAKISO DISTICT

CONTACT PERSON:

MS ARINAITWE MERCY

TEL:

+256-773 113 685, +256-702754914

EMAIL:

arinaitwemercy@yahoo.com

The name of the company is Mercys Quality Poultry Farm, which will be a sole
proprietorship. The company is currently not in existence and therefore the purpose of this
business plan is to kick start the business. The farm will be located in Kirinya - Bukasa,
Kyadondo East, Wakiso District.
The farm will start by supplying the poultry products such as eggs, within Wakiso district and
later supply neighboring districts, In the due course the farms products will be supplied and
consumed all over the country and also gradually expand internationally. Mercys quality Poultry
Farm will deal in broilers and layers producing eggs and later selling off the birds as off layers.
Layer birds are hens purposely reared for the production of eggs which starts normally at the age
of 5months from the time they are hatched. A tray of eggs costs UGX 7500. After a year of egg
production the birds (off layers) are then sold off for chicken meat production .An off layer bird
is sold at UGX10000.
Mercys Poultry Farm is looking forward to an increase in the prices of eggs and due to
increasing developments in the food and beverage industry, the growing demand for eggs in the
Southern Sudan and

increasing prices of poultry feeds due to scarcity of major feeds

components such maize brand due to climate changes.

PART A: STRATEGIC PLAN


INTRODUCTION
The name of the company is Mercys Poultry Farm. Its registered office and distribution center
will be located in Bweyogerere, along Jinja road.
VISION
To become the overall suppliers of quality poultry products in Uganda.
MISSION
To provide eggs and off layer birds in Uganda and internationally.
OBJECTIVES

The company aims at producing the best quality eggs and off layers and selling to all the
regions of the country.

The company is starting as a sole proprietorship with the aim of growing into a
partnership bringing on board national and international investors to expand the market.

CORE VALUES
Mercys Poultry Farm has the following as its core values:

Mercys Poultry Farm puts the customers interests first.

All business dealings are conducted in a moral and upright manner.

Quick response to our customers

Courteousness and empathy in our business dealings

Teamwork.

Concern for employees interests.

Transparency and accountability at all times.

ENVIRONMENTAL ANALYSIS
MARKET TRENDS
The market for poultry products, particularly eggs is driven by the prices of poultry feeds. The
prices of poultry feeds are in turn driven by the climate, which affects the growth of major
components such as the maize brand. As such, the price eggs which is determined by the price of
poultry feeds, determines the demand.
Due to the East African integration more markets have opened up, more over with the customs
duty adjustments that allow free trade around the region, it is a great opportunity for Mercys
poultry firm to market and sell their products over a large market base and maximise
profitability.
There is an increasingly high demand for eggs in the Southern Sudan as well as in the local
Ugandan market especially in the food and beverage industry mostly bakeries. All these are
dissatisfied market segments as demand is exceedingly higher than supply.
MARKET GROWTH
The market for eggs and chicken is growing rapidly in Uganda and internationally
The two products are known to be highly nutritious and are highly recommended by nutritionists
for people of all ages such as children, adults and even the elderly.
Nutritionists continue to recommend white meat such as chicken, over red meat such as beef due
to scientific studies which show that high consumption of red meat causes health complications.
The northern Uganda and Southern Sudan have now attained political stability, therefore more
people are settling there and others setting up businesses there. There is therefore high demand
for food because of the increasing population as well as the fact that for years production of food
there was hindered by the war hence scarcity.
COMPETITION
There is stiff competition from companies offering the same products as that Mercys Farm
intends to produce. These companies are well established and are relatively big in terms of their
operations. for example Ugachick, Bulemezi, Kagoodo among others. These companies produce
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a wide range of poultry products such as they produce eggs, broilers birds for meat, they sell off
layer birds, some farms such Hill top farm produce poultry feeds for their birds as well as for
sale to other poultry farmers, Ugachick also possesses an incubator they produce one day old
chicks for rearing and also sell to other poultry farmers, some farms also sell birds feathers to
decorators.
The mentioned poultry farmers produce quality products due to adequate resources that they
possess and are located in the out skirts of the city where they have land for expansion.
Their prices are fairly stable since they have reduced production costs by producing most of their
raw materials such as poultry feeds and production of a day old chicks.
They have outlets and distribution centres all over the city which enable them reach a wide base
of their customers.
They have penetrated the markets, for example Uga chick is known for production of quality
meat which is well packaged while Biyinzika is known for production of quality eggs. In
addition, they continue to market their products through advertising on televisions and local
radio stations.
These companies employ skilled labour for effective control of quality. The labour force is also
large so as to ensure timely delivery of products to customers.
However the firms have not spread out widely to open branches in the country as they are mostly
located in or near by Kampala leaving a lot of untapped opportunities such as proximity to
customers in the North, West, East and Southern parts of Uganda.
There is also upcoming competition from Quail farming which originates from West Africa.
Quails also produce eggs, which are physically different from those, produced by hens but are
more nutritious and used for a variety of purposes. For example quail eggs are known to be a
major component for manufacture of ARVs. Quails are currently being reared by not more than

10 farmers in Kampala, though their demand is growing rapidly mostly in international hotels as
well as traditional healers.
Quail eggs are the size of hen eggs making them easier to package and transport even over
long distances.
Most people are not yet familiar with Quail farming and its benefits but as soon as they get
acquitted with it then many farmers as well as customers are likely opt for it. Among the
advantages to farmers is that, a tray of quail eggs costs UGX 20,000 yet 1000 birds would feed
on a 60kg bag of feeds for a month as each bird eats approximately 2gms a day. The customer
would be interested in the high nutrient content.

CLIENTS, PRODUCTS AND MARKET ANALYSIS


MARKET SUMMARY
The market is basically composed of food and beverage operators such as restaurants and
bakeries, supermarkets and wholesaler shops.
MARKET ANALYSIS
The market is generally readily available although it requires some effort of marketing.
MARKET DEMOGRAPHICS
The nearest market to the farm is Bweyogere which happens to be a busy trade area along Jinja
road. There are also a number of supermarkets located in Kireka and Bweyogerere,which is with
in a radius of less than 10km from the farm.
MARKET NEEDS
The market needs a reliable supplier of the products, for example supermarkets that buy eggs for
resale need a dependable supplier.
Customers also need quality products.
Customers also need products delivered closer to their destinations than incurring transport costs
to obtain a product from the suppliers premises.

INSTITUTIONAL ANALYSIS
ORGANISATIONAL STRUCTURE

Managing Director
Marketing manager

Production manager

Accounting manager

Employees

Managing Director
In charge of the overall running of the organisation and to make sure that the activities of the
organisation are driven by the inner goals and objectives in the right direction, as well as seeking
for smooth and broad running of the organisation.
Marketing manager
The marketing manager is in charge of screening products to the market and to see that strategies
set do favour profit maximisation of the organisation. He will be answerable to the managing
director.
Production Manager
The production manager is in charge of ensuring that products meet a set standard.
Accounting Manager
The Accounting manager is in charge of handling the finances of the business.
Current state and dynamics of the company
Mercys Poultry Farm which is currently not in existence is looking forward to an increase in the
prices of eggs and derivative products due to increasing developments in the food and beverage
industry, increasing prices of poultry feeds. However, it is expected that more people will
6

participate in poultry farming which will lead to fluctuation prices, poultry feeds are also likely
to increase.
Strategic plan
Mercys Poultry Farm will set up a maize garden on 2acres of land in Luwero district. This is to
cover up a major part of the poultry feeds expenses. The farm will therefore vertically integrate
to cover most of the input costs, hence increasing profitability.
SWOT ANALYSIS
Strengths
Mercys Poultry Farm will be able to produce the poultry feeds from maize grown on available
2acres of land in Luwero district; the farm will have skilled labor to handle the quality of the
farms products.
The farm will possess a delivery van that will be used in transportation of feeds and also delivery
of eggs to the distribution centre as well as customers premises according to the terms of sale.
The farm possesses premises of a capacity of 3000 birds. There are five structures each with a
capacity of 600 birds in place. The farm shall therefore incur no cost of construction or rent.
Weaknesses
The farm has limited funds, with only half the required funds available.
Lack of skilled labour force.
Opportunity
The Ugandan tax on agricultural produce is low compared to other areas of trade.
The formation of The East African Community hence a wider market where farm can sell her
products.

Threats
There is stiff competition from well known and established poultry farmers like Uga chick,
Kagodo, Bulemeezi and others.
SUCCESS STRATEGIES
Mercys poultry Farm will grow maize to cater for the poultry feeds, which is hiking at a high
rate that is maize brand.
Off layers are to be sold giving way to new brand of layers, in such a way that the process is
continuous.
Marketers will be with imparted more skills to handle markets.

PART B; OPERATIONAL PLAN


PRODUCTION PLAN
OBJECTIVES
Mercys Poultry farm aims at producing at the lowest possible costs while at the same time
maintaining quality.
STRATEGIES
The farm will obtain maize brand from the maize garden and supplement it with the other
components from reliable suppliers so as to have quality feeds that will enable production of
quality eggs and healthy off layers.
The farm will introduce broiler birds which are purposely meant for meat production. The major
benefit with broilers is that they have a shorter payback period (mature within 5months).The
money obtained from the sale of broilers shall be used as working capital for the farm.
The farm will be located in Bukasa Kirinya where there is land that can favour expansion.
Also, the location is close to the main road which favours quick access to the market.
ASSUMPTIONS
Mercys Poultry farm assumes that the increasing demand for eggs, will lead to increase in
production from small scale to large scale.
When the market price of feeds increase some farmers will drop out hence an increase in the
market.
KEY ISSUES
Increase in production should not have an effect on the quality of the products.
Production should be tailored to meet market needs while beating competition.

PRECAUTIONS
At the age of 4months nests shall be constructed and installed in the poultry houses in
preparation for egg production. The nests help in easy identification and collection of eggs before
they are broken by the birds.
The farms operation manager shall ensure that the immunization schedule is strictly observed.
When the birds fall sick they will be separated from the healthy ones.
A veterinary doctor shall be contacted monthly to check on the birds as a preventive measure to
prevent poultry diseases.

10

MARKETING PLAN
OBJECTIVES

To create product awareness first in the area of operation and consequently in the entire
country.

To create customers for the product both nationally and internationally.

MARKET SITUATION ANALYSIS


The farms products generally have a large market which is not met. There is high demand for
eggs while the supply is low, with most of the poultry farmers operating at subsistence level. The
large scale poultry farmers are considerably few and are largely producing for international
markets leaving a dissatisfied local market which serves as a market opportunity for Mercys
Poultry farm.
TARGET MARKETS
The farm will target neighbouring supermarkets, hotels, and wholesalers. Having conquered the
neighbouring markets, the farm will then target markets all over Kampala and later on
neighbouring Districts.
POSITIONING
The farm will have a distribution centre in Bweyogerere where customers will obtain the eggs
without having to go up to the farm.
STRATEGIES
The farm will first of all carryout a market research so as to know the prices of the competitors,
so as set a good market entry price say lower than the competitors.
The farm shall use a delivery van to bring the products closer to the customers at our distribution
centre in Bweyogerere. Customers buying more than 100 trays of eggs to a destination not more
15km from the distribution centre will have the eggs delivered free of charge.

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MARKETING MIX
The Product is basically eggs which will be obtained after 5months of rearing the birds and after
a year of egg production, the birds will be sold off as off layers.
The process of egg production starts where the birds are 5months old. At this stage the poultry
feeds will be changed from growers mash to layers mash.
Nests will also be placed in the poultry houses where the birds con drop the eggs for easy
collection and to minimise breakages as much as possible.
Once the eggs are collected, they shall be placed on paper trays for easy and safe transportation.
Promotion shall be carried out through advertising on local radio stations and local magazines.
Also promotion discounts shall be offered to large scale customers, say 5% discount on every
100 trays of eggs bought.
The Price ;A tray of eggs will cost UGX 7500 a price which is slightly lower than that of
competitors who sell their eggs at UGX 8000 Per tray .This price was arrived at after a thorough
market research.
The people refer to all persons responsible for the growth and development of the business. This
includes human resources, who are involved in the production activities of the farm, the
customers who bring revenue to the organisation and suppliers of feeds to the farm. The farm
will ensure good relations with all people mentioned so as to ensure business growth.
MARKETING RESEARCH
The farm has carried out market research from various sources such as the internet, competitors
existing customers for poultry products so as obtain vital information on the current market
situation.
12

Among others, it was found out that most of the poultry farmers, do not deliver their products to
the customers premises.
Due to the East African integration more markets have opened up, more over with the customs
duty adjustments that allow free trade around the region, it is a great opportunity for Mercys
poultry firm to market and sell their products over a large market base and maximise
profitability.
There is an increasingly high demand for eggs in the Southern Sudan as well as in the local
Ugandan market especially in the food and beverage industry mostly bakeries. All these are
dissatisfied market segments as demand is exceedingly higher than supply.

13

HUMAN RESOURCE PLAN


OBJECTIVES
Mercys Poultry Farm aims at having a well trained human resource with adequate knowledge
about poultry keeping.
The farm also aims at employing adequate staff such that all farm activities are carried out
efficiently and within the time frame.
STRATEGIES
The farm will take employees to visit the well established farms such as Biyinzika so as to obtain
practical knowledge.
The farm will invite different poultry experts to come and train its employees.
HR REQUIREMENTS
The farm requires permanent employees in charge of activities such as:
The operations manager -1 person
Store keeping-1 person
Providing feeds and water for the birds-6 people (2 people per poultry house)
Truck driver for eggs delivery -1 person

14

INVESTMENT PLAN
OBJECTIVES

Within 4 of years operation, the farm should have expanded to a capacity of 10,000 birds

The farm will acquire an incubator so as to carry out the hatching process, in that way
production costs shall be reduced and also act as control measure for quality of the
chicks.

STRATEGIES
The farm shall reinvest after selling off the off layers and eggs so as expand the premises to
reach a capacity of 10,000 birds.
Having operated for four years, the farm shall obtain a loan from a recognised financial
institution at a fairly low interest rate to be paid back with in a period of 2 years. The funds
obtained shall be used to acquire an incubator.

15

FINANCIAL PLAN
ASSUMPTIONS AND RISKS

Mercys poultry farm, assumes that the prices of poultry products will remain stable.

It is also assumed that the entire farms produce shall have ready market and therefore be
sold off.

The farm also assumes that the marketing function shall be effective to create fast product
awareness and market share growth.

It is also assumed that all the chicks bought shall survive to maturity hence not less than
95% returns on investment is expected.

The projected risks include:

There is a possibility of the projected operating expenses being less than the actual
operating expenses. This may be due to unforeseen occurrences such as inflation.

The competitors responses are unpredictable. The competitors may for example reduce
the prices of eggs in to increase their market share, making it hard for the farm to use
pricing as a marketing strategy.

Some birds may die due to the break out of poultry diseases such as coccidiosis.

The Government may come up with policies that do not favour poultry farming.

The birds may not start laying eggs at the expected time (5months)

16

Appendix I: Projected income statement (UGX)


Year 1

Year 2

Year 3

Year 4

Year 5

Total Sales Revenue

47,400,000

57,354,000

72,552,810

95,951,091

126,895,318

Less: Direct Expenses

9,480,000

11,470,800

14,510,562

19,190,218

25,379,064

Gross profit
Other income
Fundraising activities
Less:

37,920,000

45,883,200

58,042,248

76,760,873

101,516,255

Depreciation

2,080,000

2,080,000

2,200,000

2,200,000

2,200,000

Indirect Expenses

27,916,800

28,763,328

31,161,578

34,563,593

42,450,809

Profit (Loss) Before Interest &


Tax
Loan Interest

7,923,200

15,039,872

24,680,670

39,997,280

56,865,445

Profit (Loss) Before Tax


Corporate Tax
Profit after Interest and Tax
Dividends

7,923,200
30
% 2,376,960

15,039,872

24,680,670

39,997,280

56,865,445

4,511,962

7,404,201

11,999,184

17,059,634

5,546,240

10,527,910

17,276,469

27,998,096

39,805,812

1,052,791

1,727,647

2,799,810

3,980,581

10
% 554,624

Retained Earnings

4,991,616

9,475,119

15,548,822

25,198,287

35,825,230

Cumulative Retained Earnings

4,991,616

14,466,735

30,015,558

55,213,844

91,039,075

17

Appendix II: Projected Cash Flow Statement (Amount in UGX)


Year 0
Cash Inflows
Opening cash balance
Friends & family
Grant

Cash Outflows
Pre-operating
Expenses
Capital Expenses
Working Capital

Year 2

(6,223,680)

(1,421,040)

10,276,320

Year 5

27,026,931

53,609,919

47,400,000

57,354,000

72,552,810

95,951,091

126,895,318

41,176,320

55,932,960

82,382,100

122,978,022

180,505,237

2,823,600

802,956

1,226,037

1,887,461

2,496,168

37,396,800

40,234,128

45,672,140

53,753,811

67,829,873

6,800,000
8,700,000
1,000,000

Loan repayments
Taxation

2,376,960

Dividends

Closing cash balance

9,829,290

Year 4

7,563,610

Operating expenses

Total Outflows

Year 3

2,712,710

Fundraising activities
Revenue
Total Inflows

Year 1

4,511,962

7,404,201

11,999,184

17,059,634

554,624

1,052,791

1,727,647

2,799,810

16,500,000

42,597,360

46,103,670

55,355,169

69,368,103

90,185,484

(6,223,680)

(1,421,040)

9,829,290

27,026,931

53,609,919

90,319,753

18

Appendix III: Projected Balance Sheet (Amount in UGX)


ASSETS:
Non current assets
Net non current assets
Current assets
Inventory
Debtors
Cash
Prepayments
Total current assets
Total Assets
Equity and Liabilities
Equity & reserves
Share Capital
Retained Reserves
Owners Equity
Non current liability
Current Liabilties
Accruals
Creditors
Total current liabilities
Total Equity & Liabilities

Year 1

Year 2

Year 3

20,170,000

19,040,000

18,990,000

17,740,000

16,490,000

955,900
4,779,500
9,829,290

1,209,214
6,046,068
27,026,931

1,599,185
7,995,924
53,609,919

2,114,922
10,574,610
90,319,753

3,318,960
23,488,960

15,564,690
34,604,690

34,282,212
53,272,212

63,205,028
80,945,028

103,009,285
119,499,285

2,712,710
4,991,616
7,704,326

2,712,710
14,466,735
17,179,445

2,712,710
30,015,558
32,728,268

2,712,710
55,213,844
57,926,554

2,712,710
91,039,075
93,751,785

14,868,234
916,400
15,784,634
23,488,960

16,316,401
1,108,844
17,425,245
34,604,690

19,141,257
1,402,688
20,543,945
53,272,212

21,163,419
1,855,054
23,018,473
80,945,028

23,294,191
2,453,309
25,747,500
119,499,285

790,000
3,950,000
(1,421,040)

19

Year 4

Year 5

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