BUSINESS PLAN For SABRU FARMS & ALLIED SERVICES CONCEPT

ALIYU N. MUSA

Sabru Farms

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TABLE OF CONTENT Page 1.0 Executive Summary 2.0 The Business Concept 3.0 Business Model/Strategy 4.0 Product and Service 5.0 Industry and Competition 6.0 The Market 7.0 Milestone 8.0 Management and Ownership 9.0 Business Risk and Mitigating Factor 1 6 7 8 9 11 12 13 14

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Executive Summary 1.0 Overall perspective The value of the current existing market for protein products generally (beef, poultry and fish) amounts to approximately N8.58M while current production is just enough to serve not more than 40% of the existing market. 1.1 Company Description Sabru Agro Allied Ventures commenced business operation in 2002 producing only poultry. The company now desires to activate and develop its cattle fattening section for the production of beef. It is located at No. S.W. 81 Estu Yisa Quarters, off Masaba Road Bida, Niger State. However, the cattle section is to be located at Minna, the Niger State capital for the obvious reasons of proximity to market etc. 1.2 Vision and Mission Statement To become a world class agricultural, agro-allied Business Outfit by the year 2030 engaged in the production of high quality livestock, chicken, food (crop) and sweeteners for global food security. Mission To create value for our customers through quality products at competitive prices, utilizing modern state of the art technology and skilled personnel for the continued improvement of our products and pursuing a growth rate of 25% quarterly for the ultimate development of all stakeholders. 2.0 Value Proposition Sabru Agro-allied ventures is established on the values of truth, integrity, trustworthiness and social responsibility founded on God consciousness borne out of the conviction that ultimately we shall return to Him. 2.1 Current Status The business started operation with a start up capital of N40, 000.00 and an only pen with maximum capacity of 200 birds. It has done several rounds of production. Currently the business can be valued at N480, 000.00 only. It was registered as a company on. 2.2 Development Strategy The business will peruse a vertical integration strategy. This is to be pursued in three phases. Phase one will focus on broiler and eggs production. At phase two a cereal farm will be set up to grow corn
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and soya beans while the final phase is for the establishment of cattle fattening section and a chicken feed mill. The farm will produce raw materials for the feed mill and the cattle fattening section, the mill will produce feeds for the poultry while both the poultry and the cattle farms will provide manure fertilizing the cereals farm. These strategic phases can be developed either simultaneously or at varying times depending on availability of funds. 2.3 Development expenses estimate. The cost of executing the strategy is estimated at N50, 000, 000.00 only. While N5, 000,000 would be required to start the cattle farm. 3.0 Target Market Description 3.1 The Opportunity There has been a steady increase in number of hotels and fast food companies in major cities of the country. Similarly, the lifestyle of most Nigerian households have changed with wives taking up paid employments thereby bringing about change in domestic purchasing pattern due to the need for such stuffs that are ready for use in meals preparation. This, in addition to change in the structure of the population with larger number of youth and adolescents has the tendency to support increase in demand for beef and other meet products. Also, the extension of working hours because of involvement in multilevel income generating activities has the potential to increase patronage of restaurants and food canteens. All these are favourable to further growth and development of the market for meet. The livestock section of Sabru Farms is located at Kadna Village via Tungan Goro, Minna. Therefore, the specific target market for our product includes the following: I. Local cattle markets within Niger State and environs such as Mariga, Tungan Mallam, Lambata etc. II. III. Butchers within Minna and neighbouring towns. Staff Cooperative and Multi-purpose Societies of State and Federal Institutions e.g. College of Education, Minna, National Examination Commission (NECO), IBB University etc. Community-based groups
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IV.
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V.

Individuals and group purchases for ceremony and festivities.

3.2 The Business Model With the above indices the organization intends to go into cattle farming and has developed a simple business structure. This is to enhance effective supervision and control as well as incur lower overhead expenses. 4.0 Product and Service 4.1 Product description The product is mature cattle. We also intend to sale hygienically packed meat. This is dressed by slaughtering, removal of outer skin and thoroughly washing the beef before packaging kilogram sizes. 4.2 Pricing strategy This is market driven. So, all efforts must be made to keep costs at the reasonably low level without compromising quality. 4.3 Differentiation from existing products Constant examination and use of appropriate Medicare on our cattle shall be the organisations corporate practice. Out of our recognition of their status as living things, we shall convey our products in trucks in accordance with humane and international standard without subjecting them to degrading conditions. Hygienic processing and packaging of beef to eliminate or drastically reduce bacterial contact and contamination in order to enhance healthy consumption. Sale of beef in kilogram in order to give our clients satisfaction for their money. 4.4 Current stage of development. The business is already into production of poultry. It commenced operation in 2002 and was registered with the Corporate Affairs Commission on March 8th, 2010. 4.5 Distribution/Channel strategy Direct delivery approach will be used. We shall convey cattle to local markets and all the other clients as earlier indicated above. In addition, we shall operate sales outlets for beef at strategic
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locations (as may be approved by the authorities) in Minna, Suleja, Bida and Kontagora. 4.6 Sales/Marketing Strategy Direct e-marketing approach will be used to establish relationship with our target customers. This is because of the highly structured nature of the customers, which they use to create barrier against smaller businesses. This approach will thus be used to break such barriers in order to bring our products to their notice. For individual household and restaurants direct sales is the strategy adopted. This is done in different ways, though. People come to the site of the pen to purchase whatever quantity they desire. While restaurants are contacted and their orders taken; the quantity ordered for is prepared and delivered thereafter. Fresh beef can also be picked up from our butchery measured in different sizes (in kgs). We would also sell full grown cows at attractive prices.

5.0 Industry and Competition 5.1 Industry Cattle raring is relatively old an occupation which, over time, has been left in the hands of fulanis and small time mixed farmers. So, except in large farms which are few and scattered in the country, modern technology is under-utilized. This is because sustainable operation in the industry requires patience, expertise and experience while large scale involvement is capital intensive. Hence, some restriction in the entry into the industry. It can be said that Livestock farming is a relatively old occupation and can be traced to the Operation Feed the Nation Agric programme of the then Military Government (1976-1979). Therefore, activities in the industry are not new. However, the level of its development in large scale operation is still low. Only about five major (large) farm holders exist in this country. Smaller farm holdings that exist are concentrated in the southern part of the country. In the north few of this kind of farms can be found only sporadically spread across Niger, Plateau and Kaduna State with an only hatchery in Kaduna. Obasanjo, Folawiyo, Sandas and Tunes farms were established within late 70s and early 80s while Zartec, Chi (Ajanla) and UAC farms came into existence in the 90s. There is generally a wrong perception among people that Livestock farming is a venture that every individual who has the interest can go into. But the fact is that it is not an industry that venturing into
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it is quite easy. This is for two major reasons. One is the fact that it involves dealing with delicate creatures that expertise and experience is very essential. Therefore, although people wake up reason is that it is capital intensive. But this fact is covert that people realize it only after starting with the business. It requires abundant fund to be able to provide enough feeds to avoid animal starvation between breeding periods. Equality the implements are expensive particularly when standard quality is to be emphasized. Therefore, the industry is not yet developed to full capacity. Similarly, industry entry and effective sustained operation is not easy. Hence, there is room for a serious entrant who has prepared himself to operate effectively and contribute his quota.

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5.2 Competition. However, significantly discernible product differentiation by us can be a huge competitive advantage. Industry competition cannot be said to be fierce, despite the contribution of the industry to the effort to meet protein requirement of Nigerians, because the major farms or producers have not covered even up to 60% of the entire market. Some other key players in the market are the Fulani whose cattle is thought of as family and is not eager to slaughter as meat and mixed farmer who has only dominated one particular segment of the market i.e. hotels and fast food providers. These sources do not Nigerians of a consistent source of meat. The structure of such customers which is very organized also puts then at advantage as it forms a barrier against smaller businesses, while directing their patronage to these larger producers, leaving household consumers not properly serviced. 5.3 Market place Conservatively, total value of the market for livestock products can be estimated at N8.5 billion per annum. Approximately only 40% of this has been covered so far. This can be categorized as below.

Customers Hotels Fast food providers Households Total

Requirement (kg) Total value (N) 8,640,000.00 3,715,200,000.00 7,894,737.00 3,394,736,910.00 3,202,107.00 1,376,906,010.00 19,736,844.00 8,486,842,920.00

5.4 Customers. There are three major categories of customer that make up the market. These are hotels, fast food outfits/restaurants and household. The number of the fist two groups is increasing continuously in our major cities while the third group also has the potential for improvement due to increase in roles and consequent income improvement.

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6.0 Management and Ownership 6.1 Prompters/Ownership of business The business was established as a sole professorship initiated by Mal. Aliyu N. Musa having the sole ownership. However, the vision nursed by the initiator requires huge financial outlay to accomplish or actualize. This huge financial requirement can only be met when the capital and ownership structure is modified. Hence, the business will be incorporated as a limited liability company creating opportunity for interested individuals to subscribe for participation for up to 65%, while the initiators shall retains the remaining 35% ownership. 6.2 Organizational Structure SABRU AGRO VENTURE ORGANOGRAM Board of Directors General Manager

Manager Fin./Admin

Manager Livestock

Manager Cattle Fattening

Manager (Cereals)

Adm. Off. Accountant Secretary Cashier Office Assistant Attendants (Broiler) Drivers, Cleaner And Security Attendants (Layers)
Farm Attendant Farm attendant (Corn) (Soya Beans)

Attendants (Cattle)

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6.3 Key Management Staff 1. Mal. Aliyu N.Musa (General Manager) B.Sc Sociology 1990 PGD Computer Science 1998 PGD Management 1999 Fate AEP 17 Student 2005 MPPA 2010 2. 3. Ismail Bala [Farm Supervisor (on commission)] HND Animal Science 2003 Abdullahi Ndagi Abubakar [Farm Attendant (on commission)] Diploma, Public Admin 1999

7 Business Risk and Mitigating factor 7.1 SWOT Analysis 1. Strengths Initiator to succeed in taking the business to great heights Readiness to acquire basic knowledge and skill relevant to the business. Initiators personnel management skills Readiness to hire personnel with relevant expertise Initiators positive emotions about innovation Initiators acquisition of entrepreneurial skills Business policy of focus on logical execution of the development strategy 2. Weaknesses Limited funds Limited knowledge of diseases and symptoms Inadequate expert involvement 4. Opportunities Growth in hospitality industry Change in household consumption pattern Ban on importation of frozen foods including beef and poultry products Increase in roles and the consequent income improvement.

3.

Threat Inflation Fluctuation in feeds availability following changes in agricultural fortunes

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 Unsteady power supply Fluctuation in the prices of petroleum products 8.0 Environmental Consideration Both political and economic environment is favourable to meet production business. Government policy of banning imported poultry products and the development of hospital industry create more conducive environment for the industry. 8.1 Major Risks and Mitigants The major risk facing Livestock farming in particular and livestock business generally is the current increase attacks. This is clearly evidenced by the recent experience at the International scene beginning with the break out of mad cow disease in Europe. This was followed by the most recent bird flu that attacks domestic birds in the Asian countries. These infections have the tendency for transnational transmission. Traditionally, there are vital viral diseases that can cause enormous loss in Livestock farms. These include fowl pox, coccidiousis, gumboro, new castle etc. However, birds can be vaccinated against all of these infections. This risk shall be mitigated effectively by the prompt administration of vaccines at the appropriate age and stage of growth. For infections that have tendency for vaccine failure e.g. fowl cholera, vaccination would be repeated to forestall such possibility. In addition, litters would be cleared constantly at shore regular intervals. Also, adequately spacious facilities would be provided so as to avoid congestion. Both of these factors create conditions favourable for the outbreak of disease. Similarly, management would ensure that principal officers keep abreast with the developments relating to those diseases that are prevalent at the pathogenic feature and mode of transmission of such conversant with nature, management skills of when there is any outbreak. The second risk is market gloat. This occurs annually between February and March. During this period there is always so much supply of Livestock product while the demand is very low. Two factors could be deducted to be responsible for this situation. First is that this is not a period of any festivity, be it religious or socio cultural so there is no such need that could warrant extra demand. Related to this is that the period is mostly preceded with religious and social festivities, which always leave gap in peoples purse.
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Secondly, the Nigerian economy is still dominated by Government activities such that the beginning of the year all major business transaction and thus trips are suspended until Government business begins to pick up and people are able to reliably determine the direction of economic activities. Based on this primary knowledge it is the policy of management to structure its production process such that this period would fall within the breaking period of the company. This way we would be able to avoid the effect of this phenomenon.

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FINANCIALS
This is where SABRU FARMS count her chicken before the hatch while confirming that all her strategies and concepts yield profits. Here all anticipated costs are seen in summary and the prospect of embarking on the business becomes visible. The financial is the result of all other sections. BREAK EVEN ANALYSIS: The management of SABRU FARMS is determined to make profit while providing quality service. We are poised to assure investors return on investment, break even analysis show how much income you must earn to pay your expense. After twelve months SABRU FARMS starts making profit on her investment. REVENUE PROJECTIONS
EXPECTED INCOME NO OF CATTLE UNIT COST TOTAL INCOME 30 NGN 90,000.00 50 NGN 90,000.00 70 NGN 90,000.00

DURATION YEAR 1 YEAR 2 YEAR 3

NGN 8,100,000.00 NGN 13,500,000.00 NGN 18,900,000.00

LABOUR COST
Role Number of persons 1 2 5 Salary-annual(N) Year 1 600,000 240,000 1,560,000 Salary-annual(N) Year 2 Salaryannual(N) Year 3 600,000 600,000 240,000 1,560,000 360,000 1,800,000

Farm Manager Cattle rearers TOTAL

FIXED COST DESCRIPTION Cost of building Livestock Pen Cost of renovating Livestock pen Office Supplies Marketing & Advertising Travel/Transportation Feeding Equipment Communications-internet and calling cards Mortality allowance(2.5% of cost of cattle) Vaccine and Medical care for cattle TOTAL Sabru Farms YEAR 1 N800,000.00 N240,000.00 N200,000.00 N500,000.00 N150,000.00 N300,000.00 YEAR 2 YEAR 3 N0.00 N0.00 N200,000.00 N300,000.00 N240,000.00 N240,000.00 N200,000.00 N200,000.00 N800,000.00 N1,000,000.00 N0.00 N0.00 N300,000.00 N300,000.00

N101,250.00 N168,750.00 N236,250.00 N250,000.00 N300,000.00 N450,000.00 N2,541,250.00 N2,208,750.00 N2,726,250.00 Page 13

EQUIPMENT COST

DESCRIPTION Office Supplies Feeding Equipment Vaccine and Medical care for cattle TOTAL

YEAR 1 N240,000.00 N150,000.00 N250,000.00 N640,000.00

YEAR 2 N240,000.00 N0.00 N300,000.00 N540,000.00

YEAR 3 N240,000.00 N0.00 N450,000.00 N690,000.00

WORKING CAPITAL- YEAR 1 DESCRIPTION MONTHLY

Salaries and wages Cost of feeds Cost of purchasing 30 cattle Office Supplies Marketing and Advertising Transport and Travel Vaccine and Medical care for cattle Communication TOTAL N70,000.00 N21,000.00 N112,500.00 N20,000.00 N16,666.67 N41,666.67 N20,833.33 N25,000.00 N327,666.67

YEARLY
N840,000.00 N252,000.00 N1,350,000.00 N240,000.00 N200,000.00 N500,000.00

N250,000.00
N300,000.00 N3,932,000.00

WORKING CAPITAL-YEAR 2 DESCRIPTION MONTHLY

Salaries and wages Cost of feeds Cost of purchasing 50 cattle Office Supplies Marketing and Advertising Transport and Travel Vaccine and Medical care for cattle Communication TOTAL N70,000.00 N35,000.00 N562,500.00 N20,000.00 N16,666.67 N66,666.67 N25,000.00 N25,000.00 N820,833.33

YEARLY
N840,000.00 N420,000.00 N6,750,000.00 N240,000.00 N200,000.00 N800,000.00

N300,000.00
N300,000.00 N9,850,000.00

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WORKING CAPITAL-YEAR 3 DESCRIPTION MONTHLY

Salaries and wages Cost of feeds Cost of purchasing 70 cattle Office Supplies Marketing and Advertising Transport and Travel Vaccine and Medical care for cattle Communication TOTAL N80,000.00 N49,000.00 N787,500.00 N20,000.00 N16,666.67 N83,333.33 N37,500.00 N25,000.00 N1,099,000.00

YEARLY
N960,000.00 N588,000.00 N9,450,000.00 N240,000.00 N200,000.00 N1,000,000.00

N450,000.00
N300,000.00 N13,188,000.00

Balance Sheet
For August,2010- March 2011 Current Assets Cash Accounts Recievable Inventory Prepaid Expenses Total Current Assets Fixed Assets Land Building Furniture Fixtures less acumulated depreciation Total Fixed Assets other Assets Total Assets Liabilities Current Liabilities Accounts Payable N0.00 N0.00 N8,042,300.00 N500,000.00 N7,340,000.00 N0.00 N0.00 N0.00 N7,840,000.00 N202,300.00 N0.00 N0.00 N0.00 N202,300.00

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Accrued Payroll Taxes Payable Long Term Liabilities Total Current Liabilities Net Worth Share Holders Equity Retained Earnings Total Net Worth Total Liabilities And Net Worth

N0.00 N0.00 N5,642,300.00 N5,642,300.00 N5,642,300.00 N1,000,000.00 N1,400,000.00 N2,400,000.00 N8,042,300.00

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Cash Flow Projections Representing the Duration it would take to pay back loan

Installment 1

Installment 2

Installment 3

Installment 4

Installment 5

Installment 6

Installment 7

Installment 8

Total

Cash Receipts Income From Sales Cash Sales Collections Total Cash From Sales Income From Financing Interest Income Loan Proceeds Total Cash From Financing Other Cash Receipt Total Cash Receipt N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N675,000.00 N0.00 N675,000.00 N5,400,000.00 N0.00 N5,400,000.00

N0.00 N2,600,000.00 N2,600,000.00 N190,000.00 N3,465,000.00

N0.00 N580,000.00 N580,000.00 N5,000.00 N1,260,000.00

N0.00 N580,000.00 N580,000.00 N4,000.00 N1,259,000.00

N0.00 N580,000.00 N580,000.00 N2,000.00 N1,257,000.00

N0.00 N580,000.00 N580,000.00 N1,300.00 N1,256,300.00

N0.00 N0.00 N0.00 N0.00 N675,000.00

N0.00 N0.00 N0.00 N0.00 N675,000.00

N0.00 N0.00 N0.00 N0.00 N675,000.00

N0.00 N4,920,000.00 N4,920,000.00 N202,300.00 N10,522,300.00

Cash Disbursements Expenses Cost of Goods Operating Expenses Commisssions Loan Payments N0.00 N0.00 N67,500.00 N0.00 N337,500.00 N461,777.78 N67,500.00 N565,000.00 N337,500.00 N460,777.78 N67,500.00 N565,000.00 N337,500.00 N458,777.78 N67,500.00 N565,000.00 N337,500.00 N458,077.78 N67,500.00 N565,000.00 N337,500.00 N456,777.78 N67,500.00 N565,000.00 N337,500.00 N456,777.78 N67,500.00 N565,000.00 N337,500.00 N456,777.78 N67,500.00 N565,000.00 N2,362,500.00 N3,209,744.46 N540,000.00 N3,955,000.00

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Income Tax Payments Equipment Purchase Installation Of Equipment Reserve Total Cash Disbursement

N144,000.00 N640,000.00 N0.00 N0.00 N851,500.00

N144,000.00 N0.00 N0.00 N0.00 N1,575,777.78

N144,000.00 N0.00 N0.00 N250,000.00 N1,824,777.78

N144,000.00 N0.00 N0.00 N250,000.00 N1,822,777.78

N144,000.00 N0.00 N0.00 N250,000.00 N1,822,077.78

N144,000.00 N0.00 N0.00 N250,000.00 N1,820,777.78

N144,000.00 N0.00 N0.00 N250,000.00 N1,820,777.78

N144,000.00 N0.00 N0.00 N250,000.00 N1,820,777.78

N1,152,000.00 N640,000.00 N0.00 N1,500,000.00 N13,359,244.46

Net Cash Flow

N2,613,500.00

(N315,777.78)

(N565,777.78)

(N565,777.78)

(N565,777.78)

(N1,145,777.78)

(N1,145,777.78)

(N1,145,777.78)

(N2,836,944.46)

Opening Cash Balance Cash Receipt Cash Disbursements

N0.00 N3,465,000.00 (N851,500.00)

N2,613,500.00 N1,260,000.00 (N1,575,777.78)

N2,297,722.22 N1,259,000.00 (N1,824,777.78)

N1,731,944.44 N1,257,000.00 (N1,822,777.78)

N1,166,166.66 N1,256,300.00 (N1,822,077.78)

N600,388.88 N675,000.00 (N1,820,777.78)

(N545,388.90) N675,000.00 (N1,820,777.78)

(N1,691,166.68) N675,000.00 (N1,820,777.78)

N0.00 N10,522,300.00 (N13,359,244.46)

Ending Cash Balance

N2,613,500.00

N2,297,722.22

N1,731,944.44

N1,166,166.66

N600,388.88

(N545,388.90)

(N1,691,166.68)

(N2,836,944.46)

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DESCRIPTION

YEAR 1

YEAR 2

YEAR 3

SUMMARY salaries for five staff (N25,000Each for 4 staff and N50,000 for manager) End of year bonus for staff Required to construct livestock pen Required for repairs of livestock pen Cost of purchasing cattle to be fattened(Year 1=30,Year 2=50,Year 3=70) Cost of purchasing livestock feed for the year Purchase of office stationery Printing of flyers posters, radio jingles and Tv adverts travels for marketing and transportation of Cattle and beef for sale Cost of Feeding trays and watering cans

Salaries & Wages Staff Bonuses(10% of salaries) Cost of building Livestock Pen Cost of renovating Livestock pen Cost of purchasing cattle Cost of feeding livestock Office Supplies Marketing & Advertising Travel/Transportation Feeding Equipment Communications-internet and calling cards Mortality allowance(2.5% of cost of cattle) Vaccine and Medical care for cattle TOTAL OPERATING COST EXPECTED INCOME PROVISION FOR TAXES PROFIT AFTER TAX

N840,000.00 N84,000.00 N800,000.00 N4,050,000.00 N252,000.00 N240,000.00 N200,000.00 N500,000.00 N150,000.00 N300,000.00 N101,250.00 N250,000.00 N7,767,250.00 N8,100,000.00 N0.00 N332,750.00

N840,000.00 N84,000.00 N0.00 N200,000.00 N6,750,000.00 N420,000.00 N240,000.00 N200,000.00 N800,000.00 N0.00 N300,000.00

N960,000.00 N96,000.00 N0.00 N300,000.00 N9,450,000.00 N588,000.00 N240,000.00 N200,000.00 N1,000,000.00 N0.00

N300,000.00 internet subscription and calling cards.

N168,750.00 N236,250.00 N300,000.00 N450,000.00 For Vet Services N10,302,750.00 N13,820,250.00 N13,500,000.00 N18,900,000.00 Estimated sale of two cows and 70kg of beef per day N1,012,500.00 N2,184,750.00 N1,417,500.00 N3,662,250.00

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