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A BUSINESS PLAN ON POULTRY FARMING IN BAMENDA-

CAMEROON

 By writersdeskadmin  February 3, 2019

 Bamenda, Business Plan, Chicken meat, Egg, Poultry Farming

Chicken Republic – Poultry Farm

(Business
Plan with Feasibility Study)

A Group Assignment

Prepared on 1st February, 2019

By
Accounting Students

University
of Bamenda

GROUP
MEMBERS    

N Name        Matricule
Number
o
1. Asemot
Assoumou Clarence UBa16M158
2 Anye
Rogernough Fru UBa16M471
3 Ndi
Emmanuella Ngani UBa18M0483
4 Niba
Kelisia Bihnwei UBa16M102
5 Ndongo
Colette Chantal UBa16M236
6 Wirndzem
Medrade Wiybam UBa16M040

CONTENTS

Introduction…………………………………………………………….…..………3

Executive
Summary…………………………………………………..……………3 

General
Financial
summary

General
Business objective…………………………………………………….……4

Guiding
principles and Values………………………………………..……………5

Critical
success factor……………………………………………………………….6

SWOT
analysis……………………………………………………………………..7

The
Product and competition ……………………………………….………………9

Description
of the Farm

The
product

Competitors

The
Management………….……………………………………………………….10

Training
and development

Evaluation
and control

Target
market………………………………………………………………………11

Market
overview

Market
needs

Strategy
and implementation…………………………………………………….…12

Marketing
plan

Financial
Plan……………………………………………..………………………14

Sales
forecast

Personnel
plan

Budget

Cash
flow assumption

Loans
and investment.

Project
appraisal and financial statement …………………………………………17
Methodology

Major
assumption

Conclusion……………………………………………..………………………….19

Profit
and loss statement

Balance
sheet

INTRODUCTION

A
business plan clearly sets out the objectives of a business (the
self-sufficient school). It states exactly how
the business intends to operate
and how it will become profitable.

A
good business plan will keep anyone focused on his objectives. It will help him
plan for the future,
because he will have already planned his activities. It
will lay down a budget and predict future cash-flow so
that the business person
will stay on-track in his or her drive towards the goal of a self-sufficient school.
It
will also help someone identify areas that he might have overlooked or areas
that require more thought
and planning.

EXECUTIVE SUMMARY

General

The
Cameroonian economy is highly dependent on the import of goods and services to
meet the domestic
demands in the country. A large component of the imports
consists of a variety of food products, ranging
from agricultural products,
canned goods and poultry. As a result, the government has been on a constant
lookout for ways to negate this dependency and become self-sufficient. Poultry
farming was introduced to
serve this purpose in Cameroon.

Our
proposed business model in this document has many similarities to various
poultry firms in different
parts of the world. The plan emphasizes on the
importance of the eggs produced at the poultry farm be of
best quality and that
it should clearly differentiate itself with its larger size and weight.

The
major market that has been identified for the purpose of this study is the
domestic market in
Bamenda in particular and Cameroon in general. The reason
being that a product of this nature should
normally command a good price to generate
a reasonable return on the investment. The importance of a
sound management and
obeying fundamental business principles is also emphasized. This our business
plan identifies the high investment cost and the high cost of chicken feed as
the biggest obstacle for the
success of this proposed poultry farm.

FINANCIAL SUMMARY

Financial Highlights
The
proposed investment in this plan is financially feasible. The Net Present Value
is negative at BDT
228,280.92 over a period of 3 years and has a payback period
4+ years. The Internal Rate of Return (IRR) of
the project is -3%. The following
are some financial highlights for the projected 3 year term.

General Business Objective

Some
important objectives of the proposed business should be to:

1.
Introduce the product to a targeted market where the eggs will fetch the
highest average price.

2.
Develop a sustainable business, able to survive off its own cash flow

3.
Increase income and job opportunities for Cameroonians and bring
diversification to land-based
economic activities.

4.
Give confidence to the Cameroonians to invest and engage in similar commercial
ventures.

5.
Seek and secure the required funds to finance the proposed plans.

7.
Become a reliable and stable and supplier of eggs in Cameroon.

8.
Ensure that the potential customers are informed of the product’s unique
attributes.

9.
Develop the range of markets, and opportunities for consumption of the locally
produced eggs and
encourage participation, understanding and engagement.

10.
Generate a reasonably good return on investment to the investors within a
reasonable amount of time
through sustainable and eco-friendly investment
practice

Guiding Principles and Values

Any
business that wants to be successful must follow certain principles and uphold
certain values. The
management of our proposed business venture believe in the
following:

Responsibility
is to be given to the customers. Hence, the foremost importance should be given
to ensure
that high quality products are delivered to the customers. The
management should value the customers as
well as its employees and distributors
and every possible effort should be made to sustain the lowest
possible costs
in order to pass the benefits of increased margins to the owners of the
business, its
employees and the community in which it operates.

The
management should always inspire and respect the employees by recognizing their
merit. It should
always be the management’s belief that the employees should be
adequately compensated.

Leadership
should be a key guiding principle of the business. It should engage itself by
involving, leading by
example, trust and confidence of the industry, positive
promotion of talent and market innovation. Using
all the distinctiveness and
diversity of skills of the employees, the management should ensure that the
business is always open to and actively seeking out new perspectives and
challenges, capitalizing on new
opportunities and promoting the access and affordability
benefits of the product and experiences offered.

Last
but not least, Openness should be a key ingredient of all guiding principles.
Straightforward
communication, listening, clear dialogue and reflections on the
industry and the business’ priorities in
relation to it should certainly be a
core principle in all its engagements.

Critical Success Factors

•
Securing of start-up capital.

•
Suitable size space and good location for the production facility.

•
Management commitment to excellence and customer’s satisfaction.

•
Emphasis on production of high quality eggs.

•
Consistency in the product, in terms of quality, taste and size

•
Proper management, administration, marketing and good financial management.

•
Existence of suitable infrastructure to support the business in Bamenda.

•
Conduct an effective marketing and promotions strategy.

•
Products to be delivered to the distributors in unspoiled condition without
damage to the eggs.

•
That wholesale prices remain constant for a reasonable period of time in order
to gain the confidence of
distributors.

•
Utilization of appropriate and efficient equipment to meet the set objectives.

•
Keeping the eggs fresh through proper storage and handling.

•
Trained manager and employees working on the production lines.

•Effective
coordination, communication and relationship management with sponsors/lending/aid
agencies
and other stake holders.

•
Accessibility and responsiveness to the needs of the customers.

SWOT Analysis

Strengths

•
Competitive price
•
Transport costs are lower as opposed to transport costs of imported poultry
products

•
Being a labor-intensive activity, it can provide employment opportunities for
women and youth in the
Bamenda, which will attract support from stakeholders
like government and others

•
Close coordination ensure that the needs of the local community are considered
when the infrastructure
is developed and the operations are carried out.

Weaknesses 

•
High cost of imported chicken feed in the absence of locally produced feed.

•
Properly establishing and operating poultry units require high startup costs,
especially for setting up of
the layer house and the rearing house.

•
Intensive training will be required to generate awareness and stress the
importance of appropriate
operational techniques and procedures.

•
Limited information available on trade and marketing on the locally produced
poultry products

•
Lack of infrastructure due to limited rearing and laying units

Opportunities

•There
is a high demand for eggs by Beckers, companies and families in Cameroon.

•
Expanding egg production units could lead to economics of scale

•
Fresher and more convenient than importing

•Labour
availability due to high unemployment levels among women and youth in Bamenda.

•
Easier for community owned and managed businesses to attract funding and
technical assistance from
aid agencies.

Threats

•
Disease outbreaks like “chicken flow” may threaten the quality and supply of
stock and finished goods

•
Inflationary factors which may drive up the investment and operational costs
(especially the cost of feed)
may not make the farm financially sustainable.

•
Inability to achieve economies of scale may limit the ability to improve
efficiency

•
Competition from other poultry production units in the long run could be a
possibility
•
Inefficient management practices could turn what would be a lucrative,
sustainable economic activity into
an inefficient project causing economic and
financial losses

THE PRODUCTS AND THE COMPETITIONS

Description of the Farm

This
is a partnership business where the main activity of the firm is to provide
quality product through the
Bamenda city and other parts of Cameroon. We will
buy and rear a good breathe of chicken in a well build
poultry farm. The chicken
and eggs will be distributed to restaurants, super shops, hotels, community
centers, bakeries and catering houses in and out of Bamenda city. Prolong the
sufficient supply to the
customer is one of our most important purpose. We want
to supply and extend beyond Bamenda with
affordable prices.

1. Name:
Chicken Republic Poultry Farm
2. Address
of the firm: Factory: Ndamunkong, Second Tap.

     Office: Opposite Hope Baptist

Church-Ndamunkong

     Owners’ equity of the project: It is

mainly a partnership business.

Details
of Entrepreneur:

NO Name Management
.
1 Asemot
Assoumou Clarence Managing Director
2 Anye
Rogernough Fru Manager [Operation]
3 Ndi
Emmanuella Ngani Manager [Marketing]
4 Niba
Kelisia Bihnwei Manager [Sales]
5 Ndongo
Colette Chantal Manager [HR]
6 Wirndzem
Medrade Wiybam Manager [Finance]

The Product

The
eggs produced at the Chicken Republic Poultry Farm should be of top quality and
shall differentiate
itself with its larger size and weight. The eggs produced
in the farm will be of 60g per egg compared to
common imported white eggs of
45g per egg. The eggs will be produced in an environmentally friendly
manner.

The
price of the eggs will be competitive considering the high quality and
freshness of the eggs in
comparison to the price of imported eggs of the same
quality. The proposed Chicken Republic Poultry
Farm will have the capacity to
produce 250 eggs per day, and the eggs shall be sold to the market at 80 per
egg in the first year of operations. To ensure a non-stop stable supply of eggs
to its customers, one rearing
house and another layer houses (26′ x 36′ each)
shall serve to maintain a continuous supply.

Competitors

Once
the product is introduced, small businesses which are more organized in this
kind of production and
distribution may see the opportunity and seize it
before the product is firmly established in the targeted
markets. Other forms
of competition will emerge from importers of similar size and similar
quality eggs.
However, the key target market for the locally produced eggs
would normally be high quality local produce.
Hence, competition will be
limited and prospects for locally produced eggs are expected to remain good.

THE MANAGEMENT

Training and Development

The
management should always inspire and respect the employees by recognizing their
merit.

It
should always be the management’s belief that employees should be adequately
trained and
compensated. Personnel training and remuneration should be
regularly reviewed to keep up with market
developments and to keep staff
motivated. Competition in the long run can affect staff turnover and hence
sufficient emphasis on staff training is critical to maintain stability in the
operations.

Evaluation and Control

The
management should evaluate the effectiveness of this plan and the feasibility
study in meeting its
goals. Regular quarterly meetings should at least be held
to assess and evaluate the results of each
quarter. The plans should then be
reviewed if needed and new goals should be re-assessed and developed
for the
periods ahead.

Proper
internal controls should be utilized to achieve its goals and objectives. It
should be the means by
which the resources should be directed, monitored, and
measured and should play an important role in
preventing and detecting fraud
and protecting the business’s resources, both physical.

TARGET MARKET

Market analysis

The
City of Bamenda is the most populated city in the northwest region of Cameroon.
Also, Douala and
Yaounde cities are over populated cities in the country. Thus,
there is no equilibrium between demand and
supply and more or less suppliers
fail to satisfy the customers. Most of all, in food business eggs and
chicken
are daily product and so there is a great prospect succeeding in the business
because stable
demand is guaranteed. Each and every one needs chickens and
eggs. Eggs are the ingredients of cake,
bread, omelet etc. So restaurant,
bakery, hotel, community centers need eggs and chickens every day. As
the different
customers have high demand of chickens and eggs, we have a high prospect
of success.
Market Needs

The
target market prefers finest quality eggs whose origins are familiar to them. Quality,
fresh produce
coming from known environments have an edge over similar products
imported from unfamiliar
producers.

The
concept of ‘ethical purchasing’ and ‘positive buying’ would be an important
driving force in making
purchasing decisions at high end resorts. The facts
that the eggs purchased contribute to job creation in
the community and
empowerment of workers or contribute to the betterment of other disadvantaged
people are very important factors taken into consideration in the target market.

STRATEGY AND IMPLEMENTATION

MARKETING PLAN

Positioning

The
eggs farmed at the Chicken Republic Poultry Farm should be emphasized as being
of first-class quality
and distinguish themselves with its larger size and
weight of 60g per egg compared to common imported
white eggs of 45g per egg.
The fact that the eggs are produced in an environmentally friendly manner must
also be highlighted.

Pricing

Pricing
for the eggs should ideally be market driven based on the weight of the egg and
the targeted
market segment. Its pricing structure should be based upon the
targeted clients and a survey of egg
suppliers and their prices in and out of
Bamenda. For the purposes of this study, we have assumed the
tourist market as
the key market and estimated a selling price of 80CFA per egg in the initial
year of
production. The price of the eggs are highly competitive considering
the high quality and freshness of the
eggs when compared to the price of
imported eggs of the same quality. For the purposes of this study, it
must be
noted that the cost of feed has been assumed to be at 50% lower than the actual
cost of feed, if
imported. It would not be possible to maintain a selling price
of 80 per egg unless cost of feed is minimized
by 50% or a subsidy or a grant
is given to the Chicken Republic Poultry Farm.

Promotion

Brochures
and documentaries should be prepared capturing the farming process and benefits
of the farm
to the local community. Such material should be carefully packaged
and distributed to in the Bamenda city
and other targeted places.  Invitations should be sent to the resort
managers and other key staff to visit
the farm and experience the role the farm
plays in the community.

This
could be used as a good opportunity to negotiate contracts and impress them to
associate with the
farm in providing technical and financial support.

Distribution
It
is unlikely that a farm of the proposed size in this plan would require several
distribution channels to sell
its produce. Networking with one or two resorts
will be sufficient to ensure that the entire production will
be purchased by
them.

FINANCIAL PLAN

Sales
Forecast

1st Year 2nd Year 3rd Year

Unit
Sale Eggs
Chicken
Meat 19200
0 288000
1200 288000
1300
Price
per unit Egg
Chicken
meat 7.00CFA
0.00 7.50
120.00 8.00
130.00
Sales
Eggs
Chicken
meat 1314000 2,160,000 2304000
0.00 144000 169000
TOTAL
SALES 1314000 2304000 3473000
Direct
Cost per Unit
Eggs
Chicken 3.40
0.00 3.42
0.00 3.46
0.00
meat
Direct
cost Eggs
Chicken
meat 652800
00 984960
00 996480
00
Total
Direct Cost Gross
Margin
Gross 652800 984960 996480
Margin % 691200
52% 1319040
61% 1476520
64%

About the Sales Forecast

Due
to the nature of this business, egg production can only commence from 3.5
months onwards. Egg
production will continue for 12 months and then a new cycle
will commence thereafter. It is assuming that
the proposed investment will
include 2 farms of 300 Birds each, with planned production cycles starting
immediately one after the other to ensure a stable supply of eggs to the
market.

It
is estimated that each cycle of 300 Birds will produce 250 eggs per day. Income
is also expected from
sale of chicken for chicken meat at the end of each
cycle.

PERSONNEL PLAN

Personnel Table

Year 1 Year 2 Year 3

Manager
Administrator 1,20,000FRS
96,000FRS 1,32,000 1,44,000
Contract labor[3] 1,20,000FRS 1,00,000 1,04,000
1,26,000 1,30,000
3,36,000
FRS 3,58,000 3,78,000
About the Personnel Plan

It
is assumed that a total of 5 employees will be sufficient to operate a poultry
farm of 1000

01 Manager who shall be responsible for

the daily management of the farm site.
01 Administrator to assist the Manager
in the management and financial Areas.
03 Contracted labor to undertake the
daily farm work including cleaning, Feeding and other
minor works.

BUDGET

Budget Table

Year 1 Year 2 Year 3

Expenses(CFA) Salary
Employ 336000
11000 358000
12000 378000
13000
related
Marketing
and promotion
55000
60000 55000
60000 56000
60000
Rent
Utilities
Office
suppliers 20000
18000 20000
20000 20000
22000
Packaging
Vaccination 20000
24000 22000
25000 25000
25000
Total 544. 000 572. 000 599. 000
Major purchase Poultry
shed 900.000 000 000
Component
&
equipment’s
TOTAL 900.000 000 000

LOANS AND INVESTMENTS

Loans
and Investments Table

1st year 2nd year 3rd year

Equity
investment 12,00,000 CFA 00CFA 00CFA
12,00,000 CFA 00CFA 00CFA

Sources of Funds

For
the purposes of this study, it is assumed that the initial investment will be
funded either by 100%
equity or by a mix of grant aid and equity. It would not
be feasible to set-up the business through debt, as
it would erode the limited
excess cash flow generated from sales in the form of interest.

Alternative
interested parties could seek soft loans through various government managed
loan schemes to
minimize the burden on its cash flow.
Use of Funds

Funds invested in the proposed business

will be utilized as follows:

1. Equipment
for 04 Layer House of 1000 Birds: 400,000 CFA
2. Freight
& Handling Costs of Imports: 50,000.00 CFA
3. Physical
Structure for 04 Poultry Sheds (Material Cost and Labor): 280,000 CFA
4. 02
Sets Automatic DE beaker: 80,000 CFA.
5. Other
Accessories: 50,000.00 CFA
6. Water
Storage Tanks: 40,000CFA

PROJECT APPRAISAL AND FINANCIAL

STATEMENTS

Methodology

In
order to assess the financial feasibility of the project, two basic methods
were used for project
evaluation, namely the Payback Period method and the Net
Present Value (NPV) method. The payback
period method evaluates the project,
based on the period of recovery of the initial investment. For this
purpose,
the future cash flows generated by the project are compared with the initial
cash outlay in order
to determine the period required to recover the investment.
The Net Present Value method attempts to
evaluate the project by taking into account
the time value of future cash flows. For this purpose, the
estimated future
cash flows are discounted by the cost of capital in order to arrive at cash
flows at present
value. The net cash flows at present value are then compared
with the initial investment in determining the
feasibility of the project. As
an initial step in evaluating the feasibility, we have projected the future
cash
flows of the proposed project. In order to forecast the future, several
assumptions were made with regard
to both the supply and demand side, operating
revenues and related costs. These assumptions are
detailed in the relevant sections
of the feasibility study.

Major Assumptions

All
specific assumptions are shown the detailed Financial Statements and in the
accompanying Business
Plan. The following are some selected assumptions from
the table:

• All financial figures are presented in

Francs CFA.

• The financial projections are for a

period of 3 years.

• Capital: 100% Equity/Grant

• No inventory or finished goods will be

kept in store. Eggs shall be dispatched to customers on a daily
basis.

Production
It is assumed that the facility will
have a production capacity of producing 800 eggs per day from 3.5
months
onwards.

Selling
Price

• It is assumed that 100% of the sales

will be generated from the market/segment• Price of each egg bottle
with full packaging
has been estimated at 7.00 CFA in year 1

Direct
Costs & Overheads

All assumptions made for direct expenses

and overheads are shown in the financials and are self-
explanatory.

Dividends

For
the purposes of this feasibility, no assumptions have been made for payment of
dividends. Availability
of healthy cash reserves from year 2 onwards indicates
availability of sufficient funds for business
continuity

CONCLUSION

The
analysis of the project shows that the investment is not highly profitable
within the first 3years but
financially sustainable with positive cash flows
throughout. Net cash flow is positive throughout the first
three years. The
projections show a healthy cash flow from the 2nd year onwards. Dividends can
be paid
each year from the 2nd year onwards.

The
baseline discount rate used in the projections was at 11.75%, which is the
assumed and expected cost
of capital for a business of this nature.

The
Net Present Value (NPV) of the project for a 3-year period at a 11.75%
discounting factor resulted in a
negative value of 4, 56,562 CFA and a payback
period of 4 years. Internal Rate of Return (IRR) is a not
favorable at
-3%.

Although
there is sufficient cash flow to sustain the business over a 3 year period,
based on the above
results and subject to the assumptions made, the proposed
poultry farm business appear to be financially
feasible over a period of 1
year.

Finally,
a stable supply of the various kinds of feed required is essential for the
success of such a project.
Even more important would be the cost of such feed.
This study shows that the cost of imported feed is
too expensive to make
the project feasible.

Therefore,
it is essential that a low cost alternative for securing feed supplies is
guaranteed. The need to
explore low cost feed options for such projects will
remain an important issue for consideration.

PROFIT
AND LOSS STATEMENT
 Year
1 Year
2 Year
3
Revenue Direct
cost Gross
margin 1344000 2304000
984960 2473000
996480
Gross
margin% Expenses(CFA) 652800 1319040
61%
1476520
64%

Salary
Employ related
Marketing and 691200 358000
12000 378000
13000
promotion
Rent
Utilities
Office 52%
55000
60000 56000
60000
suppliers
Packaging
Vaccination
Total 336000 20000
20000 20000
22000
expenses Operating
income Interest 11000 22000
25000
25000
25000

Incurred
Depreciation and 55000 572000
747040
599000
877520

Amortization
Income Taxes
60000 00
300000
00
00
300000
00

Net
Profit Net
Profit / loss 20000 447040 20% 577520 24%
18000
20000
24000

544000
147200

00
300000
00

(152.800)
(11%)

BALANCE
SHEET

As of period’s end Year 1 Year 2 Year 3

Cash
Accounts Receivable
Inventory
Total 300000
00 673444
00 1214587
00
Current Assets Long-Term Assets 00
300000 00
673444 00
1214587
Accumulated Depreciation
Total
Long- Term 900000 900000 900000
Assets Total Assets Accounts Payable (300000) (600000) (900000)
Sales Taxes Payable
Short-Term Deb
Total 600000 300000 00.00
Current Liabilities Long-Term Debt
Total 900000 00 973444 00 1214587 00
Liabilities Paid-In Capital
Retained Earnings 00
00
00
00 00
00
00
00 00
00
00
00
Earnings
Total
Owner’s Equity Total 00
00
00

Liabilities & Equity 1200000

00 12,00,000 12,00,000
(152800)
(152800) 294240
1047200 447040
577520

1047200 1494240 2071760

1494240 2071760

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