GroFin

do you finance small enterprises in developing countries who wish to begin penetrating into export business

Do you finance the poor people in the philippines who has land in the rural but lack of support from the government. Like giving employment to rural areas financing agricultural produce like hot pepper and find good global market. we have a lot of resources the land the manpower but lack of market and financial assistance. Or to develop some areas for ecotourism project.

would like to know if you can part finance the construction of hostel nea one of the up-country univercities in kenya. you will use the head title and the completed hostel as your colateral and the loan to be repayed through the guranteed rent from the institution. thank you

The above business is the is viable in my rural home to help about ten people from the community to find self employment however some funds are needed for it to start. Most of the funding will buy machines to use on the site. Your assistance will be highly appreciated. Thank

Dear sir,
we are Cameroon Union of dairy Cooperative Societies located at the north west part of Cameroon.we are already actively inolved in the production and marketing of dairy products, however, we lack funds to help us produce and exploit the potential market before us.we are fowarding our business plan to your organization for any possible support of any kind.
below is a copy of the Business plan.

CAMEROON DAIRY COOPERATIVE UNION

Business plan
CONTACT PERSON HAROLD OMONDI OMOLLO
SMALL BUSINESS ADVISOR / VSO VOLUNTEER
ORGANIZATION: HEIFER INTERNATIONAL CAMEROON
TEL; +23775010998
BOX 467 BAMENDA CAMEROON

The proposed name of the Business is Cameroon Dairy Cooperative Union Milk project. The union intends to have milk cooling plants set at strategic centers so as to tackle the excess milk from all the societies and to manage the market and marketing problems of their products. The venture is meant to supplement the on going activities of the union. It will operate as joint partnership and in collaboration between Heifer International Cameroon and the Cameroon Dairy Cooperative Union.
The major activity of the business will be producing packaging and selling of:-
• Fresh milk
• Fresh yoghurt
• Butter
• Cheese
• manure
The other activities of the business are:-
• Setting up A micro finance institution to support the financial needs of the farmers
• Education and trainings to farmers
• Selling of the agricultural produce e.g. manure and animal feeds, bulls etc.

The principal customers are:-

• Walk in clients (Individuals)
• Local milk consumers.
• Hotels, Hospitals, Schools, Supermarkets, Shops, public and private institutions whole. Sellers, retailers among others.

The choice of business location

We have chosen different locations for the cooling tanks because of the results of the feasibility study showing that:-
• Farmers around these areas produce higher quantity of milk compared to other areas.
• Heifer international has placed higher number of animals and so the economy of scale and scope can easily be enjoyed.
• These places are already enjoying goodwill by the virtue of the fact that, cooling tanks can be accessed by both members and non members of the societies e.g. the Rock firm in Santa.
• Most of the current supply of animal production comes from these areas.
• The market survey has revealed that an average farmer within these areas can produce up to 20 liters per day when their animals are not fed properly. This can go up to 30 to 35 liters per day when they embark on serious feeding programme. This feeding system has not been improved because:-
 Farmers fear that when they feed their animals properly, then they will not have an outlet to sell the excess milk and increase in the number of liters means increase in the feeding needs of the animals but they do not have reliable place where they can constantly get money to buy some of the nutritive food components such as corns, wheat, cotton cake, kernel etc for their animals.
 The area can also reliably supply between 2000 to 3000 liters per day when other things are held constant.
 Conclusively, since these areas has such potentials, any strategy that will absorb these excess produce like the milk cooling plant will revitalize the economy of these community, and the entire Cameroon as a whole.

The infrastructures existing at the planned business locations are:-

There are permanent building structures with sites already preserved for cooling plants. In some areas, the proximities to the highways are also convenient. Most of them are adequately joined by reliable feeder roads having access to electricity, water and communication facilities.

The most important resource for running these plants is the raw materials. Looking at the locations, the lowest supply of milk from these areas can still make the plants operational even during lower seasons. The peak season of the areas can make the plants realize enough capital that can enable them to go for milk outside the areas during low season if need it be, but the supply from other societies will also support the intended supplies.

Looking at the potential at stake and the monopoly the union currently enjoy, there is possibility of restocking the Bamenda town out lets so that the potential customers get the run for their money.

Most of the manpower for use is the indigenous and the centers around can also accommodate the technicians who will be employed to man the various cooling plants.

These sites can be reached easily by the union officials and the donors.

Justification of the business venture

The specific needs and challenges which the venture will satisfy include:-

• Markets and marketing problems
• Sustainability of both the societies and the union after Heifer International Cameroon pulls out.
• Financial support realised directly and indirectly from the business proceeds
• Creation of employment to the locals.
• The achievement of the Heifer International mission statement of “passing on the gift”.
• Fresh milk has higher nutritional content than powdered milk which will improve the health of the consumers especially the children who are the majority.
• The animals are increasing in number and this noble support from Heifer Project International will take care of the surplus produce both in the short and long run terms.
• The product will eventually replace the importation of milk (import substitution and export promotion).
• It is the vision of Heifer Cameroon to see families taking fresh milk produced locally.
• Looking at the market dynamics, the union is able to sub contract some of its activities to the individual societies where individual farmers will be answerable to.
• In the distribution Chunnel, the union will use the wholesalers and the retailers to participate in the markets and marketing process.
• There is growth potential around since the technical support shall be provided for by Heifer International Cameroon at the start up stage of the business.
• The major supporter the Heifer International Cameroon is currently giving out animals to farmers. This is guarantee to the continuous milk supply.
• We are currently enjoying the monopoly because of the rich experience Heifer International offers to us together with it’s expertise in the dairy industry. Therefore, anybody who wants to challenge the status quo must get ready to provide additional animals first and then build goodwill and trust which is deeply rooted in farmers.
• This very goodwill of Heifer International will and has made the union earn good name.
• The unique animals provided to the farmers are here to stay and so the industry has a lot of potential to grow.
• The union is currently enjoying the support of the local leaders, the government of Cameroon and the international donors like the UNDP, ILRI etc.

CONTRIBUTION TO THE LOCAL COMMUNITY

• The business venture shall create employment to the local communities.
• It shall make good use of the surplus products and other local resources which has been going to waste.
• It shall promote the indigenous technology like selling of locally made animal feeds and manure.
• It will offer technical services among other social responsibilities to the entire community and the economy at large.
• The business has the potential of attracting other business services which are currently missing within the communities like hotels, markets, schools and other supportive industries that will be able to use either the raw materials or the by product.
• The business will pay tax to the local council and the government.
• The communities will also have cooling tanks placed at strategic points such that they will be able to get the much needed service of the business like the facilitation of milk collection by the union among others.
• It will buy the milk from farmers thereby improving the level of income which will raise their standard of living.
• The society will then have surplus money to invest in other activities that can make them be self reliant.
• The proceed got from the business will be shared equally among the communities in their endeavor to drive away poverty.

THE INDUSTRY

The proposed business belongs to the service industry in the sense that: -

• It shall offer technical services to its customers.
• It will offer ready made products fit for human consumption which is the core of a hotel as a service industry.
• The business will also operate as a manufacturing industry in that it will process and sell yoghurt, butter, cheese animal feeds among other manufactured products.
• We are setting up medium scale enterprise to link up the small scale businesses with the large scale enterprises. This has always been a missing link in Bamenda and Cameroon in general. Such intervention will definitely promote the industrialization and liberalization of the Cameroon economy.
• Considering the number of players in this particular industry in the North West province, most of them operate in small scale. Looking at the capacity and the capability we have, we are able to operate a medium scale industry which will eventually translate to a large scale enterprise (company).
• The industry will also be able to absorb the waste and the unused products from the farmers and other stakeholders who may wish to intervene in one way or the other.

TECHNOLOGY IN USE

Most of the technology in use for the industry will be labour intensive. For example, milk harvesting will be done by the farmers and actual management will be done by technicians. Capital intensive will also be used to install the necessary machines needed.
We are therefore planning to use the modern but simple technologies which can blend with the resource we have around. The envisaged number of employees shall also be dictated by the law of demand and supply.
The basic capital for equipment is________________________
The degree of competition here is monopolistic. The general level of sales / profitability for firms operating in the industry is always above 50%. Some of the seasonal factors we are likely to face are the peak and low seasons for the raw materials and the animal feeds. The prevalence of the law of supply and demand is also a factor to recon with.

THE INDUSTRIAL TRENDS AND PROSPECT

In our business cycle, we anticipate growth in sales within 2 years, stability in the third year and possible decline incase any potential competitor enters into the market. Venture of this nature costs a lot of capital at its initial stages. At its second stage of growth, we shall then strategize and come up with other investment opportunities as alternatives incase the business will be in its maturity and decline stages.

TRENDS AND PROSPECTS OF TECHNOLOGICAL DEVELOPMENT

The technology is quite dynamic and so the prospective business shall be based on a sound dynamic foundation and market research shall be continuous process for it to compete well. We shall adopt the latest technological systems with a view to improve productivity. For example, as mentioned earlier, the plant will be based on the simple but modern technology like the use of the local knowledge in the production and the process of raw materials.

THE COMPETATIVE TRENDS IN THE INDUSTRY

Some of the competitive trends we have are:-

Product innovation

The business shall try to improve what it has already like the packaging of the products and continous improvement of its output. We are also in the process of inventing our own blends and brands. This will be our unique market points. Some of the invention strategies are the design and implementation of the packaging system we will adopt.

THE PRODUCT AND SERVICES

Our products and services are:-
• Yoghurt
• Fresh milk
• Cheese
• Butter
• Manure
• Technical services

The main features of the products and services shall be packaging the products in 250ml, 500ml and l liters containers well blended with attractive food colorants, packageged in the most recent containers, designed to go with the current taste of time. Coated in fine texture and made out of recycled materials. Our quality shall pass through the set standards of the ministry of health.

The benefits the customers shall obtain from the products and services are:-

• Low cost fresh milk and animal products
• Easily available products
• Products of 1st class protein and higher nutritional value
• Demand driven and user friendly products.
• Customer oriented products
• Higher sensitivity to customers demand
• The warranty of locally manufactured products

UNIQUE FEATURES

The unique features giving us the competitive advantage over other competitors are:-

• The pricing / costing of our products
• Reliability and convenience of our products
• Packaging and the richness of the products
• Continuity and consistency in supply
• Use of local taste and blends
• The unique technical support from Heifer International like the supply and maintenance of the Dairy animals.

PATENTS / TRADE SECRETS

The business shall be registered so as to give the legal back up among other property features. The union shall also empower the societies agreement with Heifer International Programme such that they will be bound to sell their milk only to the union. And not other un authorized parties.
The business secrets and other trade weapons are already in the Union strategic plans

ENTRY AND GROWTH STRATEGY

• The Union shall continue with its product and market research in the target area so that it can gain acceptance in the market through the identification of the prevailing opportunities.

• The market niche is already secured through the competitive advantage we have over others, like milk supply and the support from the societies.

• Our market segmentation will divide the target area into axes or regions of which we intend to put milk cooling tanks at various strategic areas followed by central processing plants.

• Other growth strategy for use is the timely payment to farmers so that they can continue supplying quality and quantity products. For example, the current competitor is really underpaying the farmers and in any case, the same peanut pay takes more than six months before getting it in bits.

• One of the weaker point observed from the competitor is that they base their pricings on verbal talks and heresy evidence without looking deep into cost/costing implications. This has exploited the farmers to the extent that they are being paid as low as 180 to 200 francs per liter of milk as they sell the same for 500 francs.

• Looking at the average compound feeding, the costs of animal feeds are also on the rise. However, Heifer international together with ILRI are currently doing research to see the possibilities of supplying other leguminous plants that can subsidize the cost of feeds which will also be able to make the animals produce more milk. This strategy will benefit the farmers in the sense that they will now spend less to get more instead of say spending more than 200 francs to feed the animals at a cost per litre and sell at the same 200 or less.

As a union we are negotiating with Heifer international for the supply of the basic necessities like the capital to allow the purchase of van which can help in the collection and distribution of milk and other products.
Other entry mix is the advertisements using posters, billboards, radio and television broadcasts, one to one promotion and tele marketing.

PREVAILLING OPPORTUNITIES

Some of the prevailing growth opportunities for the business are:-

 Support from other development partners like the Heifer International Cameroon, government agencies and other stake holders.

 The 5years plan of the business is a clear indication of the future capacity and capability of the business.

 The prevailing political goodwill the Union enjoys through Heifer International support.

The plan for growth and expansion beyond the entry are:-

 Tuning round the proceeds got from the business.
 Negotiation for external sources of finance e.g. the business loan from the local financial and non financial institutions.
 Continous fundraising for the project.
 Hiring of highly motivated staffs.
 Further financial support from the Heifer international Cameroon.
 Investing in local initiative project that can help the business expand rapidly.
 Continous supply of milk to major businesses in Duala and Younde Among others.
 The market survey also has it that 37% prefers getting their milk from the cooperative union store, 27% from other stores, 17% from home and 19% at their offices.
 The usage of locally available resources which could have gone to waste without proper utility.
 To offer immediate services this could not have been offered by the local communities and the government.
 The animal statistics from heifer international report is clear support that the business will be sustainable.

We shall organize Animals trade fairs where farmers can get the market to sell the extra animals (heifers and bulls) plus those with health complications like the miscarriage problems and the fierce bulls so that we can either use the money to buy other better and productive animals or use the proceeds for other socio economic purposes.
The opening will be an offer made to the whole world which shall be advertised through the local media so that any interested parties from and outside Cameroon can get access to the opportunity only upon consultation with our donor agency, who will analyze the sale implication in the overall objective of small scale dairy program.
The strategy shall be based on routine periods as we target companies and individuals that use animal products as raw materials.

MARKETING PLAN

Some of the potential customers are;-

 Local hotels
 Hospitals
 Private and public institutions
 Supermarkets
 Staffs from other NGOs
 Walk in clients etc

The outstanding and sensitive issues the customers will be looking for are;-

 Quality and quantity of the milk
 Quality control and certified milk ready for human consumption
 Continous supply of the products
 Customer satisfaction

From the survey we have conducted, we are certain that our products will be consumed daily.

The purchasing pattern shall be;-

 High frequency in the morning,
 Moderate frequency during mid day
 High frequency in the afternoon and evening.

We expect high frequencies during dry seasons e.g. between November to February and low frequencies during March to end October.

The approach towards marketing is;-

1. Research,
2. Advertisement
3. Product promotion

There are five divisions in the North West province and one division in the western province where we currently have the affiliated societies. The placement of the coolers will also consider their disparities.

THE COMPETITION

The already established competitors are;-

1. Sotra milk
2. Margacam proposed
3. Camle in bafusam
The sole competitor, which is the SOTRA milk, has an out let at Bafusam, Mini factory at Bamenda, and collection point at Santa through the milk cooling plant that was established by the UNIDO.

Our strategy of locating Milk cooling plants and at convenient places will give us an upper age over our competitors in the sense that, 99% of the Heifer supported farmers will then have an access to a cooling and processing plants. About 98% of the farmers in these divisions signed an agreement with Heifer international which binds them to honour the mutual obligations. This will therefore guarantee the union constant milk supply.
These competitors doesn’t supply animals or have any formal contract signed with the farmers and so the farmers may deliver their milk to them at will.

The size of our competitor as earlier mentioned is on small scale basis. Looking at its sales volume, number of employees and the number of the brands,
The firm size compared to that of the competitors is as follows.

Current Sales volume

Product Qty Cost/unit Sales/day Sales/week Sales/month Sales/year
Fresh milk 40 liters 250 10000 70000 300,000 3,600,000
yoghurt 10 liters 1000 10000 70000 300,000 3,600,000
cheese 3500 10000 70000 300,000 3,600,000
Butter 1000 2500 17500 75,000 900,000
Total 32500 227500 975,000 11,700,000

NUMBER OF EMPLOYEES

 1 manager
 1 union accountant
 1 marketing officer
 1 sales person
 14 book keepers
 1 administrative assistant
 1 watchman at the union main store
 7 cooling plant attendants
 1 field supervisor
 13 commission agents
 1 driver

NUMBER OF BRANDS

We have six brands namely;-
 Yoghurt
 Fresh milk
 Cheese
 Butter
 Manure
 Ice cubes made from yoghurt

Some of the advantages we have over other competitors are;-

 We are currently enjoying economies of scope and economies of scale.

 The comparative advantage over the others due to range of products we offer.

 The capacity and the capability of our potential which can meet both the local and outside demand.

 We have the competitive advantage of the non price competition due to the economies of scale, we are able to adjust our prices to favour our farmers and still break even. This is a feasible idea since we have moved through various supermarkets in Bamenda and noted that the competitors’ prices are always double our prices. For example, a litre of milk we sell at 250 francs when most of them are selling the same at 500 francs.
 There is the cut throat competition in the sense that our varieties will definately offer varieties that will continue dominating the market. This is clearly supported by the fact that we already have established network through the already existing 13 cooperative societies. They will be our outlets and we will be able to avail our products even to the remotest part of the localities and their environs.

 Our market survey has also indicted that the use of other market outlets or sale points based at strategic places will be another ideal marketing strategy.

 The ability of the business is also able to open and maintain the said outlets profitably. This has not been exploited fully by the competitors.

 The blend of the brand promotion strategies like the use of fliers, bill board, one to one, telemarketing, advertisement through local radio stations will definitely outdo our competitors strategies since they are not using any of them currently

The overall strengths of our competitor are;-

 It has established goodwill with some of the farmers and local businesses around.

 Since it is the sole processor and supplier of powdered milk, it has controlled the market for quite some time.

 It has also been able to take over the services of the cooling plant at Santa and so using this to dictate milk prices at the disadvantage of farmers. The status quo cannot be challenged because it enjoys the monopoly.

 It has also established Good rapoo with the business acumen within and without.

 It is enjoying the political goodwill specifically in the dairy sector.

 It has been able to create employment and supplying its products to the local communities around.

NOTE

At some point in time, it will be very difficult to compete adequately in the face of the above strengths. However, we shall use concerted efforts and strategic interventions/ planning techniques so that we can fit well in the market. Some of the facts for considerations are;-

 The buyer
 The seller
 Fear of entry and exit
 Market forces e.g. the demand and supply.
 Government policies and the socio economic performance
 The SWOT analysis of both the competitors and ours
 The industry and other competitors

THE COMPETITORS SWOT ANALYSIS

1. BENEFITS TO CUSTOMERS

 It currently enjoys the monopoly and so dictates the market prices of milk and its products.

 It can avail the much needed products no matter the quality or the quantity of the products.

2. TECHNOLOGY

 It is not currently using the most modern technological machines that can guarantee quality and efficiency.

 It is still struggling to get better machines.

3. LOCATION

 Its processing machines are in Bamenda which is not the area where most of its raw materials are found.

 It has a collection point at Santa even though there is no formal agreement that can guarantee continous and strict supply of milk.

4. MANAGEMENT

The management is not satisfactory because farmers take as long as 6 months and more without payment of their produce. If any payment is made, then it is in piece meal basis or in bits. This is sign of liquidity problems for the company.

PRICING STRATEGY

The current products are;-

 Yoghurt
 Fresh milk
 Cheese
 Butter
 Manure
 Ice cream

Current consolidated DEMAND in the North West Province;-

Product Qty per day Cost per unit Amount
yoghurt 382 liters 1000 francs 382,000
fresh milk 165 liters 250 francs 41,250
cheese 4 units 4500 francs 18,000
butter 20 units 1500 francs 30,000
manure 100kg 1000 francs 5,000
total 476,250

Expected average sales (per week)

PRODUCT Qty per week Cost per unit Amount (francs)
yoghurt 1500 litres 1000 francs 1,500,000
Fresh milk 1000 litres 300 francs 300,000
cheese 300 units 4500 francs 1,350,000
butter 200 units 1500 francs 300,000
manure 10 units 1000 francs 10,000
3,460,000

The expected sales per month is therefore 3,460,000 x 4 weeks = 13,840,000 francs

CALCULATION OF PRODUCTION COST

Yoghurt per litre

Ingredients Quantity per litre Unit cost amount
milk 200 200
culture 50 50
sugar 75 75
container 150 150
others 200 200
total 675

Fresh milk (10 litres)

ingredients Qty per day Unit cost Amount(francs)
Compound feed 4 times 200 francs 800
storage 1 whole day 500 francs 500
Water 200 francs 200
Others (300-600) 500 francs 500
total 10 litres 2000

NOTE

COMPOUND feed is the average food component given per day.

Therefore, the cost per litre is 2000/10 litres = 200 francs.

Average cost per container 125 francs. We buy milk from the farmers in cans then package them into ideal suitable containers.

Cheese

Item Qty Cost per unit Amount
Milk 1 kg 2000 2000
Rinehart 300 300
firewood 500 500
salt 200 200
electricity 500 500
total 3500

Note

It takes 5 days to process and it stays for a month before it is fully ready for consumption

Butter

Item quantity Cost per unit amount
milk 1 litre 200 200
others 800 800
Total 1000

MATERIAL COST

Products Qty per week Cost per unit Amount (francs)
Yoghurt 1500 litres 675 1,012,500
Fresh milk 1000 litres 200 200,000
Cheese 300 units 3500 1,050,000
Butter 200 units 1000 200,000
Manure 10 units 1000 10,000
Total 2,472,500

Therefore, the material cost per month in 2,472,500 x 4 = 9,890,000 francs

PRICE SUMMARY

Product Whole sale price per litre Retail price per litre
Yoghurt 800 francs 1000 francs
Fresh milk 280 francs 300 Francs
Cheese 4300 francs 4500 francs
Butter 1300 francs 1500 francs
manure 800 francs for 100kg 1000 francs for 100kg

The above prices are based on the quantity per unit that a customer can purchase. The system will work only when the wholesale purchase is above 500 litres. Any purchase below 500 liters falls within retail price.
The society will buy milk as the major raw materials from the farmers at 200francs. Package and sell the related products to the union at the cost price above. The union will then load the profit margin and sell at the recommended retail and wholesale prices.

PRICING ASSUMPTIONS

 Government policy
 Market forces eg, demand and supply
 Profit margins
 Other uncertainties
 Production cost
 Socio economic conditions

Note

The selling price will be variable according to the dictates of the law of Demand and supply (market forces). However, the fluctuations cannot go below the cost price stated above. Instead, they can increase further.

INCOME AND EXPENDI TURE
PER MONTH
Sales 13,840,000

Purchases 9,890,000

GROSS PROFIT 3,950,000

Other Expenses

Salaries 40,000
Wages 1,381,200
Rent 150,000
Electricity 60,000
Telephone 130,000
Transport 140,000
Water 6000
Loan -----
Security 20,000
Advertisement 112,500
Others 1,629,500 3,669,200

NET PROFIT 280,800

CASH FLOW PROJECTION

Details 1st month 2nd month 3rd month 4th month 5th month 6th month TOTAL
SALES 13,840,000
PURCHASES 9,890,000
GROSS PROFIT 3,950,000
EXPENSES
Salaries 40,000
Wages 1,381,200
Rent 150,000
Electricity 60,000
Telephone 130,000
Transport 140,000
Water 6000
Loan ---------
Security 20,000
Advertisement 112,500
Others 1,629,500
NET PROFIT 280,800

MODE OF PAYMENT

The payment terms for our products are;-

1. Cash
2. Bankers’ draft
3. Crossed cheques

CREDIT PROVISIONS

 The customer must apply formally.

 The credit worthiness must be evaluated through the appraisal criteria

The appraisal criteria focuses on;-

The 6 C’s of credit namely;
• Capacity to repay
• Character
• Collaterals
• Credit history
• Capital contribution
• conditions
The above criteria shall be used in all credit conditions e.g., micro credit scheme.

DISCOUNTING POLICY

We shall adopt discount allowed policy where we offer discount to customers based on the volume, nature of purchase and the marketing strategy. Both discount allowed and discount received shall all appear in the financial records like in the three column cash book. Other factors for consideration in the discounting policy are;
• Socio economic growth
• Government policy
• Inflation rates etc.

The discount from the storage facilities shall be 10% to 40%. We are also using 20 % as commission bench mark.

AFTER SALE SERVICE

 We will give free gifts like T-shirts, Caps or free products incase of any big bulk purchase say 1000 litres and above. This shall then be followed by the discounting policies like the discount allowed package.

 We shall in the long run do door delivery by including delivery cost in our pricing.

 Subsidized trainings and other services shall be offered to needy clients.

 The cost of after sale services will be below 10% of the cost of purchase. This can also be applied both for the cash and credit sales.

 The application of guarantee supporting the marketing efforts, hotline consulting, customer support and combination of services that enhance sales.

SALES TACTICS

The selling tactics we shall use are:-

Sales forecast

This is the research done so as to indicate the quantity and quality of sales and the expected gross sales income during the planning period. We will therefore, prepare a projection for sales for the 1st three years.

Staging of sales

Stage 1

We will identify distributors before December 2006 namely in;-

1. Bafusam
2. Younde
3. Duala
4. Bamenda
Plus the use of the societies stores as the outlets.

In some very far distant and remote areas such as Mbisimbobi farmers Dairy cooperative society in Mbi Talla Ndung Sub Division shall have its own cooling plant to serve Ndung sub division Nkambe and its neighbours.

Koutaba Dairy Farmers Produce and Marketing Cooperative Society koutaba sub division Noun will also have its own cooling and processing plant with the view to serve the western and the up coming societies there.

Dzekwa Dairy cooperative Society doesn’t have the numbers of animals that can support a cooling plant for now. We are still giving it time to grow. However, we intend to put a freezer there so as to preserve their current products.

Feed the nation and Ngamte Dairy Cooperative Societies can have their cooling plant at Bambui.

Bamendankwe and Akum Dairy Cooperative Societies can have their cooling plant set at Bamendankwe village.

Bali and Mughamo Dairy Cooperative Societies shall have their cooling plant set at Bali.

Njinikom and Kikfuini Dairy cooperative Societies shall have their cooling plant set at Njinikom trading centre. The center can as well serve the Fundong Farmers.however there is a cooling plant currently being constructed by UNIDO at fundong trading centre.

We shall then have central distribution out let being managed by the Union plus other sub outlets in all the 13 cooperative societies and other designated outlets.

Ayembe Bon mbei Cooperative Society shall use the cooling plant set at Santa by UNIDO. Its store at Santa will be one of the Union’s outlets.

Note

To ensure quality control, we will sell ONLY sealed products safe and certified by the relevant authorities and so the union will not have its own designated cooling plant but fridges and freezers for preservatives and other quality control systems.

We have already formulated prototype and implementation techniques. We shall therefore inform the general public about our terms and condition of being a distributor.
Some of the issues for considerations here are;-

Outlets which are not owned by the societies shall;-

1. Be able to deposit one million francs with us

2. Must be able to provide reliable transportation facilities.

3. Must have deep freezers and fridges.

4. Must be willing to pay 50000 francs on application.

5. Must be willing to get our products at Wholesale price and be able to show the liquidity ratio of the business. (Acid test ratio).

Some of the benefits they are entitled to are:-

They are entitled to credit facilities for not more than 1,000,000 francs both in stock and otherwise.

STAGE 2

We shall continue defining our AIM and implement the definite sales objectives as reflected in our business plan and the budgeted expenses for activities during this stage. We anticipate a lot of expenses at this formative stage. It will have lot of marketing / product research.

STAGE 3

At this stage, a lot of sales promotion and aggressiveness shall be used. We expect to see significant signs of growth here. This will be the first clear period of sustained profitability after recapturing the start up\and the initial research expenses while reflecting the five years development plan.
This is the break even stage where we expect not to start making profits or losses. At this point in time, we expect to recover cost associated expenses. We have already identified potential customers in Younde Bafusam, Fumbot, and Fumban among others.

STAGE 4

Will be the stage where we progress as planned. We still expect rapid growth during this period. The business then expect to start realizing profits at this point up to the point it will attain maturity and so, we will need second round financing for the products and market expansion. This stage will need us to start involving professional management as opposed to the entrepreneurs so as to enhance public offering. At this stage, we will start planning for risk management and the strategic management techniques so that we can adequately take care of eventualities such as the uncertainties like, competition and the decline stage of the business. This shall be achieved through exploration of other investment opportunities as alternatives.

OTHER SALES TACTICS

We intend to sell directly to our esteemed customers through our established out lets and so we shall use commission agents so that we pay them on commission basis. We shall then involve the services of the marketing manager who shall coordinate the activities of the commission agents and also be responsible in searching and managing orders in places such as:-

• Schools
• Hospitals
• Hotels
• Supermarkets
• Private enterprises
• Offices
• Missions

The marketing officer shall be remunerated according to the number of orders brought into the business and the outcome of the efforts all based on commission. The union shall provide facilities for use such as;-

1. Cooling containers
2. Uniforms
3. Trolleys etc.

NETWORKING ACTIVITIES

We shall employ both horizontal and vertical integration networking systems. Our most important Arms are:-

 Production (Animal health, nutrition feeding, breeding and management)

 Marketing (collection, processing, distribution)

 Consumer (taste, purchasing power)

We intend in the near future to computerize (where possible) all our societies outlets so that at a glance, we can know the reorder level of each unit, the quantity in stock, work in progress, sales performance and even stock balancing.

ADVERTISING AND PROMOTIONAL STRATEGY

The promotional strategies include the option of applying the promotional tools like the promotional mix got from advertisements e.g., public relation, point of purchase displays and the direct delivery. We are currently using very colourful brochures plus the use of local media services. The application of local language in our advertisement will highly be used.

We are already setting up the publicity department that shall also have the sampling policies to provide individual users with packet of instructions, distributors and commercial clients with technical data and other logistical data for use. We are already set to participate in the trade fairs, displaying our product ie in supermarkets, hotels, petrol stations and other strategic places.

We have set aside budget for the annual trade fairs where we will be using burners, video presentations and visual demonstrations.

The core of our promotional activity is the hands on demonstration of the quality control testing of the products to our potential customers and farmers. This is so because most of our customers and the farmers need sensitization on the use and storage of fresh milk. The major strategy here is to budget for significant tests like giving the customers samples or selling to them at extremely lower prices possibly at cost price. Such risk sharing approach will definitely have bigger budget. However, such measures are taken so that we can be in the market in the near future as we use the same chance to expand the market and research opportunities.

Note
The advertisement will be continous activity. The vote head set for advertisement is approximately 1,350,000 francs. The effectiveness of the advertising shall be measured by the:-

 Sales volume
 Enquiries
 Number of customers reached
 Supply and demand from within and outside Bamenda.

THE ENVISAGED DISTRIBUTION PROBLEMS

1. The logistic problems especially timely delivery at any designated point.

2. High distribution cost

3. Uncertainties like accidents and other eventualities such as risk problems.

4. Climatical conditions

SOLUTION

 We are already planning to purchase a van that can support the distribution means that is reliable and fully coordinated.

We will also apply other logistical techniques such as:-

1. Transportation matrix

2. Assignment model

3. Queuing theory etc

THE ORGANIZATIONAL PLAN

BOD

MANAGER

ACCOUNTANT ADMINISTRATIVE MARKETING
ASSISTANT OFFICER

BOOK KEEPER COMMISSION SALES
AGENTS PERSON

QUALIFICATION OF MANAGER

 Degree holder in business administration marketing option or other relevant social sciences.
 Must have accounting knowledge with at least 5 years experience in a busy company or industry.
 Must be 35 year and above.
 Masters and other relevant accounting courses will be added advantage.
 Must be computer literate and be able to work with minimum supervision.
 More description shall be reflected in the job description document.

UNION ACCOUNTANT

 1st degree in business administration or Bachelors of commerce accounting option plus 2 years Experience.
 Must have other accounting knowledge.
 Be at least 28 years old.

ADMINISTRATIVE ASSISSTANT

Diploma in secretarial courses plus at least 3 years experience in a busy organization
Must be computer literate and a first hand copy typist.
Other details are in the policy document

MARKETING OFFICER

 Any 1st degree in market/marketing related fields or Diploma in marketing with at least 3 years experience in a busy marketing firm.
 Must have the ability to coordinate the commission agents activities.
 Must be willing to be paid on commission basis and as per the laid down procedures. More of the requirements are reflected in the job description document.

BOOK KEEPER

Must have relevant accounting courses such as:-

 Diploma in cooperative management or cooperative audit
 Other accounting courses like CPA qualifications.
 Be computer literate.
 Be willing to work anywhere as assigned
 More qualifications are reflected in the job description document.

COMMISSION AGENTS

 Must have basic knowledge in marketing
 Be wiling to be paid on commission
 Be ready to work anywhere as assigned.
 More qualifications are reflected in the job description document.

SALES AGENT

 Will work together with the book keeper in the union main stores
 Must have at least certificate in sales and marketing
 Must be willing to work any where as assigned
 Other assignments are reflected in the policy document.

NOTE

Their remunerations are reflected in the job description document

THE BOARD OF DIRECTORS (BOD)

This is the strategic organ of the business. It is responsible in overseeing the future of the business. This organ is very independent from the management or the tactical team. They are entitled to allowances of which are detailed in the policy document.

DESIGN POLICY DOCUMENT

PERSONEL SUMMARY

1 manager
1 union accountant
1 marketing officer
1 sales person
14 book keepers
1 administrative assistant
1 watchman at the union main store
7 cooling plant attendants
1 field supervisor
13 commission agents
1 driver

Total employees are 42. This figure is the result of monthly labour requirement for the union. for further reference, look into how the figure is arrived at. More details about their job description are in the policy document.

SUPPORTING STAFF AND SERVICES

Our banker shall be the SGBC.The account shall be operated by the Union President, Union Secretary, and Union treasurer. The Programme Manager or the country director of Heifer International Cameroon shall be counter signatory to this account. The union accountant and the manager must ensure that all financial and administrative records are kept and updated.

The union shall hire the services of a lawyer who shall be consulted from time to time over legal issues such as drafting of legal documents among others.

The business or the management advisor shall be the country director of heifer international or his appointee.

The business shall independently hire the services of quality control specialists. However, we intend to employ our own eventually.

The current physical address of the union is;-

Cameroon Union of Dairy Cooperative Societies Limited c/o Heifer international Programme, P.O. Box 467 Bamenda Cameroon.

We request heifer international to take care of the networking and communication cost at this initial stages but we are planning to be independent the soonest possible.

OPERATIONAL PLAN

Some of the facilities for use are;-

Milk Cooling Machines
Deep freezers
Milk processing plant
Lactometers
Milk cans
Motor Vehicle
Quality Control Facilities
Packaging materials

The business shall use the services of both the direct and indirect labour plus other direct costs like raw materials such as milk and other animal products. We will therefore use the absorption costing in calculating the break even point for the business.
We are considering other overhead costs like electricity, water, rent, discounts salaries and wages maintenance and any other costs that cannot be identified directly with the product.

The general manufacturing process involve:-

1. Production (animal health, nutrition feeding and management)

PLAN A

The farmers shall forward their milk to the societies outlets. The Milk shall then be certified through quality control checks and the quality ones shall be accepted into the milk cooling tanks, while the uncertified ones shall be returned back to farmers. The societies shall then jointly process various products through the same quality controlled standards and sealing them instantly as they await collection by the union van. The union van shall pass by these collection points once or twice a week. Given percentage shall be sold locally as instructed by the union with due regards of the local demands. The collected processed stock shall then be delivered at the union deports ready for sale and dispatch to various destinations. They shall still be stored under ideal conditions so as to guarantee their quality.
Farmers shall then be given ledger card where the bookkeeper shall be recording the number of litres delivered. A copy for the same shall be kept at the society. The bookkeeper shall then prepare summary of all milk delivered to the society and the ones to be forwarded to the union and as instructed by the Union. Another copy of the summary shall be retained by the society as it forwards the other to the union main deport. This summary then shall be the basis of any payment to the societies which will pay individual farmers.

PLAN B

We shall appoint a management team from among the societies who have skills and the ability specifically to:-

 Coordinate central mass production at designated points
 To supervise the quality and quantity of the raw materials and the finished products
 Train others on the production operation and management of our products
 To ensure that all the necessary conditions are met.

The selection criteria for this team is;-
They must be trained individuals who are specialized in the production of our various products. We shall then have a technician possibly a veterinarian who will then coordinate the whole production process. This team will coordinate its activities with the strategic team (the BOD) and the functional team who does the actual implementation of the plan.

The bookkeeper must always update the farmers’ ledger cards. Reflecting all litres brought in and the litres taken out with their financial relevancies.
We shall strive to network and computerize the system such that anybody at any outlet can know how many litres or stock we have at any cooling point. This will be very necessary in arranging the logistics for milk collection and so book keepers should be computer literate.

We have made arrangements where we request heifer international to extend microfinance to farmers so that they can take care of production and marketing issues to needy farmers. They will then either pay through milk delivery or in cach installments. The micro credit can also be extended to other items that might be needed in the production process above.

The union shall offer the packaging materials bearing the union logo. These materials shall be issued under strict control of the union authority so as to avoid misuse by unauthorized persons.
We are again requesting for capital so that we can pay farmers instantly at their point of delivery so as to motivate and promote the immediate financial need that might improve milk production. This will be our major strength since our competitors pays only after selling the milk.

We are soon fine tunning the micro finance system to meet this need. Note that all the arrangements (micro finance) shall be on loan basis repayable with interest.

The demand and supply at these various points plus the union’s distribution points shall be an indicator of when and where the animals are highly needed. This shall also help Heifer International in its plans to place more animals strategically.

MARKETING

Upon production, the union will then price the products both for retail and wholesale pricings. These standard prices shall be used uniformly in all the outlets so as to promote standardization and uniformity. After pricing the products, they shall then be sent to various distribution channels such as wholesalers, retailers and individual consumers.

Atleast over 96% of the purchases should be on cash basis with exceptional cases that meets credit facilities.

As mentioned above, we intend to make instant payment to every delivery even if they are not sold and so it will be upon the marketing team to ensure that the stock is all sold.
Other marketing strategies that we shall apply are:-

Consumer feedback

This the final user of our products, and we shall ensure that we use information from them so as to improve our products and services either by putting contact points in all our outlets and carrying out routine visits to the various distribution chunnels.however, they can visit any of our channels. Their feedback shall help us in;-

 Improving the existing products
 To produce different products
 To diversify our market
 In meeting the customers taste and preference.

Note

Some of the key features we shall involve are:-

 Quality control compliant
 Customer satisfaction
 Demand driven products
 Approval and compliance of the health authorities
 Market oriented products

PRODUCT DEVELOPMENT

Every successful business starts with a preconceived business idea. This includes the concept of the product or service, markets and growth potentials. This will then push us to look into two factors namely;-
• The business must survive in the short run. This will be achieved by making quick adjustments on the inventories to eliminate slow moving items or the complex decisions like restructuring the business debts when the business becomes thin.

• The business must be positioned to achieve the long term objectives. Our business concept will always coincide with the growth prospects. This means that our products will be positioned so as to take advantage of growth markets. we shall position them by selling them in specific market niches like direct union marketing to ;-

 Hotels,
 Businesses
 Hospitals
 Missions
 Market places
 Schools etc.

We shall categorize our product concepts into the following classes but reinforcing brand recognition

1. CONSUMER GOODS

These are the individual products individual customers buy for their own personal use. The effectiveness of this class will be noted since we shall be encouraging distribution methods making the purchasing method convenient and enjoyable. The business will re enforce this fact through enhanced selling points.
There is need for us to come up with good packaging system such that customers feel that they have their individual perception of value.

2. INDSTRIAL PRODUCTS (INSTITUTIONAL SALES)

These are the products we will sell to other organizations as raw materials, process materials, supplies and services. They shall be targeting the users like the big cooperative unions, individual and cooperate entities both in Duala, Younde, Bamenda among other places.

Packaging of the products.

The cost of packaging is very expensive thereby increasing the cost of production and so at one point in time, the union will then purchase its own package system. This will be Economical on industrial packaging but it can as well do the consumer packaging as loss leader. Both cases will then be applicable here.

NOTE

We shall endeavor to use the most recent but simple state of art technology. We shall recycle our containers where possible.

Subsidy of the packing cost

The purchasing department will set a system where it purchases the used containers from the customers at minimal fee and resale the same to the manufacturing companies for recycling purposes. This will promote sustainable environment policies. The subsidy will benefit the Union, societies, and companies and even individuals who will be willing to sell the containers.
The replenishment of the depleted packaging stock shall always be observed as foretold so that the flow of production operation and management cycle will be complete always.

The patented rights of the same packaging materials shall always be observed with the view of curtailing the scrupulous users.

PRODUCTION FACILITIES AND CAPACITY

The machinery and equipments needed for production are:-

Items Date needed Number required cost Installation cost total
cooling machines 1st dec06 8
Deep freezers 8
Sealing machines 28
lactomers 14
Milk cans 14
Motor van (fridged) 2
Quality control facilities 14
Packaging containers 1,400,000 150
computers 9 500,000

MACHINES TO BE HIRED

Machine/equipment When Cost

Plans for maintaining and repairing machinery and equipment is that it shall be taken by Heifer International in the Ist year of installation then the subsequent years shall be taken care of by the proceeds from the business.

LAYOUT OF THE PROPOSED OUTLETS

We shall lease various outlets at strategic places considering factors like:-

 Volume of milk
 Number of heifers within an area
 Electricity
 Number of farmers
 Accessibility
 Markets
 Local demand
 Water
 Security
 Other social amenities

Terms and conditions for the lease agreements and the cost implications shall be negotiated beforehand by the respective societies in consultation with the union.

The hygienic conditions of these premises shall always be paramount to us.

PRODUCTION OPERATION AND MANAGEMENT

Milk shall be delivered by the individual farmers to the cooling plants it will then be tested before being transferred into the cooling machine. The sales person shall then record the litres delivered in both the client’s ledger card and the society’s ledger card and giveback the unaccepted milk. This shall be done next to the cooling machine. The cards shall then be forwarded to the book keeper for updates and any immediate payment if need it be by the sales person. the book keeper will therefrom raise a receipt in triplicate and pass the original copy to the customer through the sales person, retain a copy in the society’s file and leave one in the counterfoil incase there is any payment. The book keeper will always raise payment vouchers from the ledgers cards of farmers. The society technicians shall then process the milk into various products. Upon completion, they will forward the finished products to the store of which the book keeper will take inventory thereof showing the quantity produced, the materials used and their prices work in progress etc.

The book keeper will always prepare the summary of packaged products to be delivered to the union and the quantity to be sold locally. The summary will then be forwarded to the manager of the union for further action.

A list of payment invoice will always accompany the above documents especially in cases where the society is not in a position to pay farmers immediately so that the union can then on lend the societies to pay their members.

Upon delivery of the product to the union main outlet, the book keeper and the sales person will inspect and record them in their relevant records like the ledger summary and send a copy to the respective society.

The union book keeper will prepare the consolidated summary of all products delivered by various societies detailing their cost implications and quantities. It will be forwarded to the union accountant who will analyse and recommend their payments to the manager. The manager will scrutinize and authorize the payments. The union accountant will therefore take the approved payments and pass over to the book keeper to make the final payments.

Sales across the counter shall take the following format;-

The sales person prepares requisition order as requested by the customer (stating the quantity, details and the amount for payment) in triplicate. The customer will then take the 2 copies plus the stated amount to the bookkeeper who will stamp the original copy as paid and retain the other copy for recording purposes. The customer will then give the stamped copy to sales person who will then give out the request and signing the delivery acknowledgment on the original clients copy.

NOTE

The work space must allow room for future expansion.
OTHER EQUIPMENTS NEEDED FOR THE BUSINESS.

ITEMS DATE QUANTITY COST/UNIT INSTALATION TOTAL
Telephone 1st dec 2006 1 PABX
Mobile phones 1st dec 2006 8 8000 Francs
furnitures 1st dec 2006
Fixtures fittings 1st dec 2006
Cooling tins
Vending containers
Office supplies 1,261,700
Total


PRODUCTION STRATEGY

Refer to the material costing under pricing.

MATERIALS AVAILABILITY

HEIFER PROJECT INTERNATIONAL has already increased the number of animals to farmers around the strategic area. The already existing animals are also giving birth and so there is continuity in the supply of the raw materials through out the year.
This fact can as well be supported by the marketing survey document prepared by Heifer project international. The summary of the animal statistics is also another corroborative evidence for the same. Below is the summary

Society name cows Mature bulls Heifers Young bulls Heifer calves Bull calving Total
Ayembe Bonmbei Dairy Coop Society 51 2 14 12 2 1 82
Akum Dairy Coop Society 30 11 13 8 11 7 80
Cooper valik Dairy Coop Society 33 2 9 12 14 5 75
Fundong Dairy Coop Society 11 4 3 2 0 1 21
Bamendankwe Dairy Coop Society 18 1 2 2 0 7 30
Bali nyonga Dairy Coop Society 14 5 6 2 5 3 35
Ngamte Dairy Coop Society 16 1 2 8 3 2 32
Feed the nation Dairy Coop Society 9 1 2 2 0 0 14
Mbisimbobi Dairy coop 8 2 1 0 4 4 19
Kikfuini Dairy coop society 4 2 1 2 2 1 12
Njinikom Dairy Coop Society 4 2 1 1 2 0 10
Mohghamo Dairy coop Society 1 1 3 0 0 0 5
Dzekwa Dairy Coop society 5 0 0 0 0 3 8
Quarantine station Dairy Coop Society 3 7 0 0 0 0 10
Agha Dairy coop
Society 5 0 0 0 2 3 10
Shiengo Dairy Coop Society 5 0 0 0 2 0 7
Total 208 41 57 51 47 33 450

TRANSPORTATION MODEL

We shall use the assignment model and the transportation matrix so as to identify the most convenient and cost effective ways of transporting products and raw materials to and from the distribution and the outlets.

We are currently proposing specific dates where the union van can visit these outlets and collect products. More information about the logistics is already in the network activities.

THE MONTHLY LABOUR REQUREMENTS

Product Cost per unit Units per month Hours per month Total
Fresh milk 200 francs 30,000 litres 90 2,700,000
Yoghurt 675 francs 45,000 litres 150 6,750,000
Cheese 3500 francs 9000 litres (4.5 kg) 150 1,350,000
butter 1000 francs 6000 liters (3 kg) 120 720,000
Total 90,000 510 11,520,000

Note

Number of workers needed per month = Total number of production hours
Units produced per month

= 11,520,000
90,000

= 128 workers

Assuming that the union takes 1/3 of the total number of production hours to produce and package the products and use the rest of the time for other activities and the society spends approximately 2/3 of hours for the same. Then,

Total production hours for the union is = 1/3x 11,520,000 = 3,840,000

Therefore 3,840,000
90,000

= 42 employees. This will be the break even number of employees for the business to be cost effective.

On the same strength, the society’s time will be 2/3 x 11,520,000 =7,680,000

Hence, 7,680,000 ÷ 90,000

= 85 employees for the societies. This divided by the 13 active societies gives around 6 active members from each society to participate in each production. For the society to be cost effective. This number is also close to the 6 products of the societies.

Summary.

The 85 employees for the societies and 42 for the union = 128 which is the number of total workers needed for the whole business.

COST OF PRODUCTION OF LABOUR PER MONTH

Number of direct workers × cost per hour × number of hours per month = total cost of production

Therefore

128workers x 400 francs x 510 = 26,112,000 francs

The total cost of production of labour per month is therefore 26,112,000 francs

The other external factors that will likely affect the business are;-

 Socio economic performance
 Government policies
 Market forces (demand and supply)
 Uncertainties e.g. risk
 Inflation

We have therefore embarked on the research on risk and strategic managements so that we can have the basis where we can manage the above externalities with a view to minimize their impact.

GOVERNMENT REGULATIONS

The regulations, compliances and approvals that will affect the business are:-

Permits/licenses required Source Cost
Business permits
Quality control certificate
Health check certificate

Before we begin operation, we need the approvals and compliances of the above documents.
We shall continue liaising with the relevant authorities so as to ensure that all the legal requirements are met.

FINANCIAL PLAN

PRE OPERATIONAL COSTS

Items Date needed Number required cost
cooling machines 1st dec06 8
Deep freezers 8
Sealing machines 28
lactomers 14
Milk cans 14
Motor van (fridged) 2
Quality control facilities 14
Packaging containers 1,400,000 150
computers 9 500,000
Installation cost
Licenses/permits
electricity
Box coolers 20
Human resource. 42
Market/product research 1,350,000
contingencies
Total

WORKING CAPITAL

The capital requirements for the first three years are

Item Year 1 Year 2 Year 3 total
Stock of raw materials
Stock in progress
Stock of finished goods
debtors
Total

PROFORMA PROFIT AND LOSS ACCOUNT

The proforma profit and loss account for the first year is

YEAR 1

Sales

Less; Direct costs
Raw materials
Direct labour cost
Fuel
Packaging

GROSS PROFIT (A)

OVERHEADS/EXPENSES

Salaries and wages
Rent
Water
Electricity
Telephone
Advertising
Commission
Stationary
Postage
Transport
Lease of equipment
Bank charges
Maintenance/repairs
Security
Depreciation provision
Others
TOTAL OVERHEAD EXPENSES (B)
TRADING PROFIT ACCOUNT IS (A) – (B)
LESS; Depreciation

Net profit before tax

YEAR 2

Sales

Less; Direct costs
Raw materials
Direct labour cost
Fuel
Packaging

GROSS PROFIT (A)

OVERHEADS/EXPENSES

Salaries and wages
Rent
Water
Electricity
Telephone
Advertising
Commission
Stationary
Postage
Transport
Lease of equipment
Bank charges
Maintenance/repairs
Security
Depreciation provision
Others
TOTAL OVERHEAD EXPENSES (B)
TRADING PROFIT ACCOUNT IS (A) – (B)
LESS; Depreciation

Net profit before tax

Profit and loss account brought forward (from year 1)

Profit and loss account carried forward (P&L From year 1 + Year 2)

YEAR 3

Sales

Less; Direct costs
Raw materials
Direct labour cost
Fuel
Packaging

GROSS PROFIT (A)

OVERHEADS/EXPENSES

Salaries and wages
Rent
Water
Electricity
Telephone
Advertising
Commission
Stationary
Postage
Transport
Lease of equipment
Bank charges
Maintenance/repairs
Security
Depreciation provision
Others
TOTAL OVERHEAD EXPENSES (B)
TRADING PROFIT ACCOUNT IS (A) – (B)
LESS; Depreciation

Net profit before tax

Profit and loss account brought forward (from year 2)

Profit and loss account carried forward (P&L From year 1 + Year 2)

PRO-FORMA BALANCE SHEETS

Balance sheet at start up

YEAR 1

FIXED ASSETS

Premises
Plant and equipment
Vehicle at cost
Furniture / fittings at cost
Others (A)

CURRENT ASSETS

Stock of raw materials
Stock of finished goods
Debtors
Deposit Account
Bank and cash
Others (B)
CURRENT LIABILITIES

Creditors
Tax
Long term loan from HPI
Others (C) (B)-(C) = D

Net current assets (A) + (D)

FINANCED BY

Capital
• Introduced
• Profits

Long term loan
Borrowing
Loan from HPI
LESS: Repayments

YEAR 2

FIXED ASSETS

Premises
Plant and equipment
Vehicle at cost
Furnitures / fittings at cost
Others (A)

CURRENT ASSETS

Stock of raw materials
Stock of finished goods
Debtors
Deposit Account
Bank and cash
Others
(B)
CURRENT LIABILITIES

Creditors
Tax
Long term loan from HPI
Others (C) (B)-(C) = D

Net current assets (A) + (D)

FINANCED BY
Balance from year 1
Capital
• Introduced
• Profits

Long term loan
Borrowing
Loan from HPI
LESS: Repayments

PROJECTED CASH FLOW STSTEMENT

1ST YEAR OF OPERATIONS

Receipts Jan Feb. March April May June July Aug Sept Oct Nov Dec TOTAL
Cash sales
Credit sales
Capital Introduced
Other Income
TOTAL(A)
PAYMENTS
Cash Purchases
Credit Purchases
Salaries/Wages
Rent/water
Tax
Electricity
Insurance
Commission
Maintenance
/repairs
Leasing
Drawings
Interest charged
Capital expenditure
Telephone
Postage
Stationery
Transportation
Vehicle running cost
Others
TOTAL (B)
Net cash flow (A-B)
Bal b/f
Net Balance

BREAK EVEN ANALYSIS

1. What will our sales and total direct cost be?

We shall calculate the gross profits as follows

GROSS PROFIT = SALES – TOTAL DIRECT COSTS

2. The gross profit margin will then be;-

GROSS PROFIT MARGIN = GROSS PROFIT X 100
SALES

3. The total overheads/expenses for Year 1

= Total Overheads / expenses

4. BREAK EVEN LEVEL WILL THEN BE

Overheads / expenses X 100
Gross Profit Margin

FINANCIAL REQUIREMENT

The total amount needed to start off the business is

Item Amount
Preoperational Costs
Working Capital
Fixed Assets
Others
TOTAL

NOTE

The proposed capitalization and ratio analysis will also be done for the respective years.