You are on page 1of 22

BUSINESS PLAN

ON

CASSAVA CULTIVATION AND PROCESSING

SUBMITTED BY: BENE OBAH


.

LOCATED AT:

PHONE NO:

E-MAIL: beneobah@mail.com

DATE: August, 2017


TABLE OF CONTENT

1.0 Executive Summary........................................................................................................................... 1


1.1 Objectives...................................................................................................................................... 2
1.2 Mission.......................................................................................................................................... 2
1.3 Keys to Success.............................................................................................................................. 2
2.0 Company Summary......................................................................................................................... 2
2.1 Company Ownership.................................................................................................................... 2
3.0 Products........................................................................................................................................... 4
4.0 Market Analysis Summary.............................................................................................................. 4
4.1 Market Segmentation................................................................................................................... 5
4.2 Target Market Segment Strategy................................................................................................. 6
4.3 Industry Analysis......................................................................................................................... 6
4.3.1 Competition and Buying Patterns......................................................................................... 7
5.0 Strategy and Implementation Summary........................................................................................ 7
5.1 SWOT Analysis............................................................................................................................. 7
5.1.1 Strengths................................................................................................................................. 7
5.1.2 Weaknesses............................................................................................................................ 7
5.1.3 Opportunities......................................................................................................................... 8
5.1.4 Threats................................................................................................................................... 8
5.2 Competitive Edge......................................................................................................................... 8
5.3 Marketing Strategy...................................................................................................................... 8
5.4 Sales Strategy............................................................................................................................... 8
5.5 Milestones.................................................................................................................................... 11
Chart: Milestones.......................................................................................................................... 11
6.0 Management Summary.................................................................................................................. 12
6.1 Personnel Plan............................................................................................................................. 12
7.0 Financial Plan................................................................................................................................. 19
7.1 Start-up Funding........................................................................................................................ 20
7.2 Break-even Analysis.................................................................................................................... 14
7.3 Projected Profit and Loss............................................................................................................ 15
7.4 Projected Cash Flow................................................................................................................... 23

Page 1
Executive Summary

OZION LA PALM is a farm project located at... The company is seeking funding of
N .. for immediate cultivation of the land, building and purchase of Cassava
stems and other assets necessary for their Cassava cultivation and garri processing
operation.

During the Year 1 start-up phase, OZION LA PALM Farms will require a period of time to
raise and cultivate the products the company intends to market for sale. As soon as the
company has accumulated sufficient product to sell, OZION LA PALM Farms will establish a
customer base at local point of sale in Ebonyi state. The projected Profit and Loss for Year 2
and Year 3 for OZION LA PALM Farms reflects the company operating at the expected full
capacity. After the demand of this market has been adequately serviced, OZION LA PALM
Farms plans to consider expanding operations by including various other venues to market
their Garri including but not limited to obtaining shelf space at small local markets and
stores businesses within Ebonyi State and possibly expanding the product line to include
fufu processing.

Page 2
CHAPTER 1

1.0 Introduction

Commercial cassava farming is one aspect of farming in Nigeria that is capable of


bringing quick cash to farmers in Nigeria. Cassava cultivation happens to be one of the
most favoured agricultural engagements, and garri/fufu is always in hot demand all year
round. Because of the high demanding nature of Nigerian soups for garri, the prospect for
this project is high. Right now the demand for Cassava products especially Garri remain
overwhelmingly high in Nigeria.

1.1 Objectives

The objective of OZION LA PALM Farms for this business plan is to obtain funding for
the following:

Leasing a land
Purchasing machinery and equipment.
Purchasing Cassava stems, herbicides etc
Purchasing fencing.
Hiring employees.
Advertising and marketing expenses.
Irrigation

1.2 Mission

The mission of OZION LA PALM Farms is to establish a Cassava cultivation and garri
processing business capable of servicing the local community by creating jobs and
producing healthy, high-quality products that customers will benefit from.

1.3 Keys to Success

The key to success for OZION LA PALM Farms will be to produce healthy, high-quality
products with minimum waste while providing customers with service that is superior
to the competition.

1.4 Location:

Page 3
Location of the farm is . The choice of this location is because of its good
road network for easy market access and distribution ease.

1.5 Contribution to national and local economy

The farm will provide employment in the first year for at least 5 persons. By five years at
full capacity it would employ about 20 persons. Contractors and suppliers will also
benefit. Nationally, it will reduce cash flight or loss in Forex and generate about N10million
per annum in revenue. The banks, insurance companies and Agricultural consulting firms
shall all be beneficiaries with the attendant tax going to the government. O ZION LA
PALM Farms shall also have helped the jobless local youths find a means of expressing
their entrepreneurial skill which will help reduce joblessness and discourage social vices.

Page 4
CHAPTER 2

2.0 Company Summary

O ZION LA PALM Farms is a business operation that will provide the local community and
beyond with Cassava end product like garri and fufu. The company will establish a
customer base at the local farmers' markets in Ebonyi and expand operations through
internet marketing and strategically placed adverts to other venues in Nigeria. The
company's products may be acquired at various local point-of-sale markets, they may be
picked-up at the business location or they may be freshly delivered to the customers in
other parts of Nigeria.

2.1 Company Ownership

O ZION LA PALM Farms is a project/business located within Ebonyi state. The


company is principally owned and operated by BENE OBAH as CEO of the company.
Within the structure of the organization, O ZION LA PALM Farms will have; 1) FARM
MANAGER 2) ACCOUNTANT 3)MACHINE OPERATORS 4)FARM WOKERS

2.2 Details of Salary Schedule

s/n Designation Monthly Salary

1. Managing Director : N70, 000

2. FARM MANAGER: N 50,000

3. ACCOUNTANT : N 40,000

4. MACHINE OPERATORS: N 40,000

5FARM WORKERS: N 20,000

2.3 Start-up Requirements

s/n Equipment Units required Cost per Unit Value


Page 5
N N
1 Water Tanker 2 75,000 150,000

2 Machetes 10 3000 30,000

3 Shovel 10 4000 40,000

4 Wheel barrow 5 8000 40,000

5 Tractor 1 WILL BE RENTED 160,000

6 Planter 1 WILL BE RENTED 40,000

Bore 1 400,000
7 hole(pumping
machine and
installation)

8 Stainless 1 350,000 350,000


Grater , 5HP
9 Automated 1 250,000 250,000
Dewatering
Machine
10 Sieves 50 1,000 50,000
11 Lister, 1 350,000 350,000
Generator
12 Peeling 1 1,500,00 1,500,000
Machine
15 Automated 500,000 500,000
Stainless
Fryer

Total 3,860,000

S/N Raw material Unit Required Cost per unit Value


N N
1 Cassava Stems 600 bundles of 900 540,000
Page 6
50 stems

3 Palm oil 40,000

Total 580,000

CONSUMABLES

Materials Unit required Cost per unit Value


N N
herbicides 20bottles 1,700 34,000

Fertilizers 40 bags 6000 240,000

Customized bags 300,000

Transportation Transportation 20,000


of stems and
fertilizers

Diesel 600 liters 250 150,000


744,000
Total

CHAPTER 3

Page 7
3.0 Market Analysis Summary

Cassava cultivation and garri processing is a big business that has generated individual
incomes of up to N20, 000,000 a year for a network of farmers, input suppliers and fufu
traders in Nigeria between 2013-2015. The presence of garri or fufu in daily diet has been
strongly associated with reduced risk for hunger for the middle income earners. Some
components of cassava are strongly antioxidants and function to modify the metabolic
activation and detoxification/disposition of carcinogens and even influence processes that
alter the effect of malnutrition especially Cassava specie laden with vitamin A. With all this
benefit no wonder that governments in the country are making efforts to Increasing its
production. An important observation, however, is that commercial cassava production
and garri processing is intensive and is at its peak through all seasons. Three factors
discourage intensive production during the wet season. One is the high incidence of pests
and diseases; another is that farm sites are located in low-lying areas that are flooded
during the rainy season; and thirdly, and most important, is the decline in cassava prices as
a result of increased supply to the urban markets from the rural areas during the wet
season. Some problems associated with the business include lack of access to land, credit
and appropriate technologies.

O ZION LA PALM farms is a project/business that exercises care and diligence in


managing operating expenses while providing a variety of healthy products that customers
will enjoy and consider an exceptional value.

3.1 Market Segmentation

The target market for garri is very huge as almost every home and everyone takes this
product. However, more people are likely to take one colour of garri than the other
depending on their location. We intend to carry out a thorough market survey that will
allow us determine the quantity that would be needed to be processed for each colour
of garri.

Even though almost everyone takes garri in one form or the other, we are still required
to market our product so as to become a preferable brand to our customers, either
existing or potential. Our target market includes; households, schools, restaurants,
hotels, caterers, students, single males and females.

Page 8
3.2 Target Market Segment Strategy

O ZION LA PALM farm will establish a customer base at the various local farmers'
markets and proceed to solicit customers through internet marketing. The website will
include pictures of the farm and their products as well as a brief description of the
products and services offered by the company. The company's products may be
acquired at the various local point-of-sale markets, they may be picked-up at the
business location or they may be freshly delivered to the customers all over Nigeria.

3.3 Industry Analysis

O ZION LA PALM farm is determined to take advantage of increased consumer


awareness in the value of vitamin A laden cassava consumption in cassava products like
garri and fufu. As of 2008, there were approximately 1 million cassava farmers in Nigeria
and thousands of garri producers. The growth in the number of cassava farmers and
garri consumers has increased steadily, similar to the growth of Nigeria. Garri
processing industry has increased by rates of approximately 20% per year for more than
20 years. When the Bank for Agriculture first began tracking cassava farmers in 1994,
there were approximately only 40,000 - 80,000 growers in the West at that time. As this
market continues to grow, processing and selling garri/fufu and cassava food products
will continue to be a viable and attractive economic option for a growing number of
producers such as Emmanuel farm.

CHAPTER 4

4.1 Description of the products

The company shall produce a total of line of 2 products, Garri and Cassava. Garri is the
principle line of business and the produced end product known as Garri shall be packaged
in four different packets that shall be differentiated by weight. The smallest packet shall be
Page 9
a 0.5 kg packet, the next one shall be a 1 kg packet, and the next packet shall be a 2 kg
packet and 5 kg packet of garri. The pricing of these products shall be as shown in the
revenues and cost estimates section which has been done on a per kilogram basis.

4.2Competition and Buying Patterns

The competition for O ZION LA PALM farm consists of several rural farmers and
households. The lower yields and higher prices are factors to consider for the company
to compete in the market. O ZION LA PALM farm will have a competitive advantage
because cassava products like garri and fufu is easily affordable with the increasing
trend of garri and fufu consumers and the premium pricing for healthier, more
nutritious products. This will permit O ZION LA PALM farm to operate successfully in
their target area.

4.3 Strategy and Implementation Summary

After O ZION LA PALM farm has accumulated sufficient product (garri) to sell, the
company will establish a customer base at local point of sale farmers' markets. After
this objective has been met, and the company adequately meets the demand within the
immediate local target market area, we intend to expand operations. It is our intention
to be the first company in the area to supply Vitamin A laden cassava garri to the
growing trend of consumers seeking healthier eating alternatives.

4.4 SWOT Analysis

The companys strengths, weaknesses, Opportunities and threats are as shown in the table below;

Strengths Weaknesses

The companys main strength is the The business is a startup and the
concrete nature of its business future is always uncertain for most
proposition startup companies

The company has a superior The initial stages of the business


customer service strategy requires an enormous amount of
investment
The organizational structure shall
be function-based and each There is limited amount of funds to
employee shall have a clearly start and run the company
defined strategy and goal plan

Page 10
Opportunities Threats

The Garri production industry is This being a new entity there is a


still untapped threat from new business entrants

The Nigerian government has There is a threat of other more


Entrepreneurial programs that is of established companies starting this
great assistance to business line of business thus leading to stiff
startups competition that the company
might not be able to cope with.
The population of Nigerians who
consume cassava products like garri
and fufu as a whole is increasing on
a daily basis

The above strengths, weaknesses, opportunities and threats shall form part of the basis of
evaluating the business performance of the company in future.

CHAPTER 5

5.1 . RISKS ANALYSIS

Discussed below is the key risks and issues that O ZION LA PALM FARMS may likely face.
The possible mitigation effort is also given.

Page 11
Financial Risk

In terms of the financial risk, this emanates from the fact that the owners contribution is
less compared to the funds required from potential investors. Hence, the gearing ratio is
therefore not as desirable.

Solution: To mitigate this risk, the project members shall strive to reinvest at least 60% of
the profits into the business so as to improve the gearing ratio. This business will strive for
a good return on investment. In the first year of operation, employee costs will be
minimized so as to ensure that this risk is minimized.

Market Risk

There is a potential market risk in terms of competition from local garri farmers and
suppliers we will have to compete for market share with these local businesses.

Solution: To mitigate this, the business will focus on a specific market segment and strive
to understand the customers better than the competitors.

Human Resource Risk

The project will employ technological innovation with skilled, knowledgeable and
competent staff in significant areas such as business management, financial management,
costing, entrepreneurship and technical aspects relating to garri processing and farm
management.

Solution: It will be important for the owners, management and employees to be well
trained. Moreover, a loss of key personnel is likely to affect the business adversely.

Solution: To mitigate this risk, the business will promote and cultivate a culture of sharing
knowledge and skills amongst the members and employees. The business will approach
agencies such as SMEDAN for business training sessions. The business will also be part of
agriculture related trainings.

Economic Risk

Another risk facing O ZION LA PALM farms is an economic risk. On a global level, there
is currently an economic recession, as such the unemployment rate has gone up meaning
Page 12
that few people have buying power and the fact that consumers have tighter budgets as
compared to other excellent financial years. Furthermore, an economic risk may emanate
from the high electricity charges. This may ultimately outlook high inflation that renders
expenditure items and other costs to be expensive. The depreciating naira is also a factor to
consider as it also affects prices of procurements such as herbicides for the cassava farm
and other essentials. This risk is external and out of the control of the business.

Solution: There will be likelihood to implement energy saving measures such as the use of
energy saving bulbs, inverters, Solar panels etc. O ZION LA PALM FARMS will look into
alternative energy sources such as solar power and inverters. The business will strive not to
pass on the costs of production to consumers as it understands that affordability is one of
the key success factors in the industry.

Disease Outbreaks
There is a risk of outbreak of diseases that could adversely affect cassava farm even weeds
attacks too.

Solution: Personnel will ensure that the farm is well monitored for weds and that diseases
and make sure the farm is secured from other eventual security risks.

5.2 Competitive Edge

The competitive edge for O ZION LA PALM farms is the fact that it is Far from the city
center, the cost of labor is much cheaper, so the cost of production could be reduced.
The various competing farms in the area are all traditionally run operations that utilize
crude forms of farming. The organization will run automated operations and unlike
other competitors.

5.3 Marketing Strategy

The companys main line of business shall be processing and packaging of Garri. As
soon as the business has grown, the company will begin to establish a customer base at
local point of sale farmers' markets. After this objective has been met, and the company
sufficiently meets the demand within the immediate local target market area and
beyond, we intend to expand operations. Expansion of the operations may include
offering the company's products at local stores markets, soliciting local restaurants and
eating establishments, approaching various local businesses to consider offering them

Page 13
their products at their outings and functions and targeting an expanded market area
through internet sales of the company's products.

5.4 Sales Strategy

We will build and establish a customer base with point of sale sites at various farmers'
markets throughout the local area. In an effort to insure customers are satisfied with
the freshness of their products, the business offers customers the option to have their
purchase freshly delivered or they may pick up their purchase directly from the
business location if they do not wish to carry their purchase with them from the point
of sale locations. They will also have a website for easier access into other markets in
Nigeria.

CHAPTER 6

6.1 BASIC FINANCIAL ASSUMPTIONS

1. Sales growth 10% per Annum


2. Inflation effect on cost of sales and operating expenses 10% per Annum
3. Depreciation of assets 10% straight line basic
4. Staff strength 6
5. Selling price per bag of garri (50kg) N5,000
6. Estimated bags of garri to be sold to at least break even 150 Bags/month

6.2 PROJECT COST


S/N Item Details Amount
Page 14
N
1. Land For growing the cassava and 1,500,000.00
processing

2. Building Open roofed place and a store 500,000


where the processing will take
place

3. . Equipment 3,860,000

4. Working Capital operational expenses 2,950,000

5. Preliminary expenses Money spent before business 120,000


kicks off

6. Contingency fee 10% of project cost 446,500

Total 9,376,500

6.3 LOAN REQEUST

Source Amount % of Total


N
EQUITY 1,500,000 18.6
Loan Proceeds 7,876,500 81.4
Total Funds sourced 9,376,500 100.00

6.4 Monthly Loan Repayment Plan

Payment Beginning Scheduled Principal Interest Ending


Month No. Balance Payment Balance
N N N N N

7,876,500 170657.5 131275 39382.5 7745225


1 1

2 2 7745225 170001.13 131275 38726.13 7613950

3 3 7613950 169344.75 131275 38069.75 7482675

Page 15
4 4 7482675 168688.38 131275 37413.38 7351400

5 5 7351400 168032 131275 36757 7220125

6 6 7220125 167375.63 131275 36100.63 7088850

7 7 7088850 166719.25 131275 35444.25 6957575

8 8 6957575 166062.88 131275 34787.88 6826300

9 9 6826300 165406.5 131275 34131.5 6695025

10 10 6695025 164750.13 131275 33475.13 6563750

11 11 6563750 164093.75 131275 32818.75 6432475

6432475 163437.38 131275 32162.38 6301200


12 12
2004569.28 429,269.3

13 13 6301200 162781 131275 31506 6169925

14 14 6169925 162124.63 131275 30849.63 6038650

15 15 6038650 161468.25 131275 30193.25 5907375

16 16 5907375 160811.88 131275 29536.88 5776100

17 17 5776100 160155.5 131275 28880.5 5644825

18 18 5644825 159499.13 131275 28224.13 5513550

19 19 5513550 158842.75 131275 27567.75 5382275

20 20 5382275 158186.38 131275 26911.38 5251000

21 21 5251000 157530 131275 26255 5119725

22 22 5119725 156873.63 131275 25598.63 4988450

23 23 4988450 156217.25 131275 24942.25 4857175

24 24 4857175 155560.88 131275 24285.88 4725900

334751.3

4725900 154904.5 131275 23629.5 4594625


25 25

Page 16
26 26 4594625 154248.13 131275 22973.13 4463350

27 27 4463350 153591.75 131275 22316.75 4332075

28 28 4332075 152935.38 131275 21660.38 4200800

29 29 4200800 152279 131275 21004 4069525

30 30 4069525 151622.63 131275 20347.63 3938250

31 31 3938250 150966.25 131275 19691.25 3806975

32 32 3806975 150309.88 131275 19034.88 3675700

33 33 3675700 149653.5 131275 18378.5 3544425

34 34 3544425 148997.13 131275 17722.13 3413150

35 35 3413150 148340.75 131275 17065.75 3281875

36 3281875 147684.38 131275 16409.38 3150600


36

240233.3

37 37 3150600 147028 131275 15753 3019325

38 38 3019325 146371.63 131275 15096.63 2888050

39 39 2888050 145715.25 131275 14440.25 2756775

40 40 2756775 145058.88 131275 13783.88 2625500

41 41 2625500 144402.5 131275 13127.5 2494225

42 42 2494225 143746.13 131275 12471.13 2362950

43 43 2362950 143089.75 131275 11814.75 2231675

44 44 2231675 142433.38 131275 11158.38 2100400

45 45 2100400 141777 131275 10502 1969125

46 46 1969125 141120.63 131275 9845.63 1837850

47 47 1837850 140464.25 131275 9189.25 1706575

48 48 1706575 139807.88 131275 8532.88 1575300

145715.3

Page 17
49 49 1575300 139151.5 131275 7876.5 1444025

50 50 1444025 138495.13 131275 7220.13 1312750

51 51 1312750 137838.75 131275 6563.75 1181475

52 52 1181475 137182.38 131275 5907.38 1050200

53 53 1050200 136526 131275 5251 918925

54 54 918925 135869.63 131275 4594.63 787650

55 55 787650 135213.25 131275 3938.25 656375

56 56 656375 134556.88 131275 3281.88 525100

57 57 525100 133900.5 131275 2625.5 393825

58 58 393825 133244.13 131275 1969.13 262550

59 59 262550 132587.75 131275 1312.75 131275

60 60 131275 131931.38 131275 656.38 0

1,802,983 51197.28

Page 18
CHAPTER 7

7.1 FINANCIALS

Projected income statement

3 YEARS STATEMENT OF COMPREHENSIVE INCOME PROJECTION


Year 1 Year 2 Year 3
N N N
Sales 9,000,000 9,350,000 9,970,500
Expenses (3,980,000) (4,184,800) (4,560,000)

Gross Margin 5,020,000 5,165,200 5,410,500


DEPRECIATION 386,000 386,000 386,000
AMMORTIZATION 24000 24000 24000

PROFIT BEFORE 4,610,000 4,755,200 5,000,500

Page 19
INTEREST&TAXES
LOAN INTEREST 429,269.3 334,751.3 240,233.3

NET PROFIT BEFORE 4,180,730.7 4,420,448.7 4,760,266.7


TAX

TAX (836,146.14) (884,089.74) (952,053.34)


Net Profit 3,344,584.56 3,536,358.96 3,808,213.36

CASH FLOW PROJECTION


Year 1 Year 2 Year 3
Inflows
Equity 1500000 1500000 1500000
Revenue from sales 9,000,000 9,350,000 9,970,500
discount received - - -
Outflows (3,980,000) (4,184,800) (4,560,000)
EXPENSES
TAX PAID (836,146.14) (884,089.74) (952,053.34)

NET PROFIT 3,344,584.56 3,536,358.96 3,808,213.36

PROFITABILITY ANALYSIS

S/N Year 1
1. Gross Margin
Gross income 5,020,000

Page 20
Sales 9,000,000
55.8%
2. NET PROFIT Margin
Net income 3,344,584.56
Sales 9,000,000
37.2%
3. Return on INVESTMENT
Net Income 3,344,584.56
Total Assets 9,376,500
35.7%

CHAPTER 8

CONCLUSION
From the analysis, the business is viable and will break even in the first year if given the
necessary attention and energy.

Page 21

You might also like