BUSINESS PLAN

FOR

Processing of Instant Food Products

Prepared by:
Blossom Food Specialties LImited
1-2, Block LM, Industrial Park,
Owo/Benin Expressway, Akure,
Ondo State, Nigeria.
Telephone: 08036143238, 08054453085
E-mail: [email protected]

June, 2014
 TABLE OF CONTENT
Chapter Page

Table of Content i

Executive Summary 2

1.0 BUSINESS OVERVIEW 5

1.1 Description of Business 5

1.2 Vision and Mission Statement 6

1.3 The Objective of the Company 6

1.4 Value Proposition 6

1.5 Critical Success Factor 7

1.6 Current Status of the Business 8

1.7 Description of the Business Industry 8

1.8 Contribution to Local and National Economy 10

2.0 MARKETING PLAN 11

2.1 Description of Products 11

2.2 Product Packaging and Delivery 11

2.3 The Opportunity 12

2.4 Pricing Strategy 12

2.5 Target Market 14

2.6 Distribution Strategy 15

2.7 Promotional Strategy 15

2.8 Competition 16
2.9 Competitive Analysis Tables 18

3.0 PRODUCTION PLAN 21

3.1 Description of the Location / Factory 21

3.2 Raw Materials Needed 21

3.3 Production Equipment Table 22

3.3.1 Office Equipment 23

3.3.2 Utilities Requirement & Cost 23

Equipment Depreciation (Table 3.1) 24

Cost Forecast (Table 3.3) 25

3.4 Production Process / Techniques 26

3.5 Production Cost 28

Direct Material Cost Per Product (Table 3.2) 31

Cost Assumptions 32

3.6 Stock Control Process 32

Opening Stock (Table 3.4) 32

3.7 Pre-operating Activities and Expenses 33

3.8 The Milestones 34

Table 3.7: Milestone 34

4.0 ORGANISATIONAL AND MANAGEMENT PLAN 35

4.1 Ownership of the Business 35

4.2 Profile of the Promoter 35

4.3 Key Management of Staff 35

Table 4.1: Salary Schedule 36

5.0 FINANCIAL PLAN 37

5.1 Financial Assumptions 37

5.2 Start up Capital Estimation 37

Table 5.1: Required start up capital estimate 37

5.3 Source of Capital 38

Table 5.2: Source of Funds 38

5.4 Security for Loan 38

5.5 Loan Repayment Plan 38

Table 5.3: Loan Repayment Schedule 38

5.6 Financial Projections 38

Table 5.4: Profit and Loss Plan 38

Table 5.5: Cash Flow Plan 38

6.0 BUSINESS RISKS AND MITIGATING FACTOR 39

6.1 Business Risks 39

6.2 SWOT Analysis 41

 EXECUTIVE SUMMARY

A. Concept

The management of Blossom Food Specialties Limited has conducted both

primary and secondary research into the Nigerian processed and packaged food
market and has identified a significantly underserved segment; which are the
young working class adults in both public and private sectors within it. Our
company’s products are uniquely positioned to serve this segment. The products
are of high quality, natural, free of artificial food additives and are produced with
the use of modern equipment to ensure full compliance to high standard.

The management estimates that the underserved segment of the market will
generate N30 Million naira of sales and that our company will capture up to 15%
market share by the first year.

Company Description

In July, 2010, Blossom Food Specialties was formed as a proprietorship by Mr.

Ajayi, J. Tunde. The company was established to go into food processing. Our
company, trademarked as Blossom Foods, later became a limited liability in
February, 2012 when Prof. Olusegun Adewoye and Mrs. Ajayi, O. Tomilola
became directors of the company. Blossom Foods is currently in the growth
stage and expects to move rapidly towards further growth and profitability.

Vision

To be ranked among the world’s leading manufacturers of instant food

products.

Mission Statement
 Blossom Foods is a creative maker of instant food products that offers
unparalleled quality of food products in its natural state. We value integrity,
creativity and respect our relationships with each other, our customers and
the world at large.

Industry Analysis

The food industry has expanded rapidly in the past several years, and growth is
expected to continue at higher rate with the increasing growth of Nigerian
population. USDA GRAIN report shows that Nigeria‘s retail food imports are
estimated at $750 million in 2010 and projected to increase by 20 percent in
subsequent years. Changing demographics and lifestyles are resulting in
increasing consumer demand and preference for packaged retail foods.

Products

Blossom Foods’ main products are Instant Pounded Yam Flour (Iyan), Instant
Plantain Flour (Elubo Ogede) and Instant Yam Flour (Elubo Isu). The products
are of high quality, natural, free of artificial food additives and are produced with
the use of modern equipment.

i. Instant pounded yam flour

Instant pounded yam flour is one of the food items that defy socio-economic
class, religious and ethnic boundaries. The average consumption rate of yam
and it by-products in Nigeria is estimated at 0.5 - 1.0 kg daily says Market
report Portal.
It contains carbohydrate as high as 75% of the nutrient in yam. When
prepared it can be eaten or served with various sauces.

ii. Instant Plantain Flour

This product is highly nutritious. It is good source of potassium and vitamins A

& C. High in dietary fiber, energy booster – because it is high in
carbohydrates.
 The peels of plantain are of economic importance. It constitutes valuable fodder for
goats and sheep. In addition, when the peels and the stalk are burnt, the resultant
ash is used to produce local black soap. Ready markets exist for this in the
neighborhoods.

iii. Instant Yam Flour:

Instant yam flour (Elubo Isu) is a staple food, which is consumed by almost
every tribe in south-west Nigeria. It contains carbohydrate as high as 75% of
the nutrient in yam. When prepared it can be eaten or served with various
sauces.

Target Market

The management of Blossom Food Specialties Limited recognizes an enormous

unmet need in the processed and packaged food market. Generally we target
young working class youths and working class adults in both public and private
sectors. Their ages range between 20 and 55 years. This segment of the market
has tremendous potentials that has not been fully tapped by any of our
competitors in the industry.

Marketing and Sales Strategy

Blossom Foods’ marketing strategy is to represent its products as the best and
most logical solution to customers’ needs. We are positioning the company as
the highest quality producer of Instant Pounded Yam Flour (Iyan), Instant
Plantain Flour (Elubo Ogede) and Instant Yam Flour (Elubo Isu) in the market
place. The company will use a variety of marketing approaches and materials
including trade shows, seminars and distribution of handbills.

Sales of the company’s products will be handled by an external sales force. An

advertising firm will be hired to assist with building brand awareness and
generating sales leads.
Competition

Our company faces competition from Ola-Ola pounded yam flour, Ayo-Ola
Poundo yam, Olu Iyan, Miller’s Poundi and Endy’s Poundo yam. These
companies specialize in instant pounded yam flour, and do not provide the same
quality and price that Blossom Foods does. Ayo-Ola and Miller also produce
plantain flour (Elubo Ogede) and yam flour (Elubo Isu) as we do but not of the
same quality, as our products contain 100% raw materials.

Management

The management team of Blossom Foods includes executives with successful

backgrounds in the processed and packaged food industry and experience with
startup operations.

Mr. Ajayi, J. Tunde is company’s Managing Director. Mr. Ajayi has held
management positions with Blossom Investments Company Limited for 12 years.
His accomplishments include growing sales revenue and introducing new line of
business that brought the company to an enviable position.

Mrs. Ajayi, O. Tomilola is company’s Marketing Manager. She has extensive

experience in manufacturing, agro-allied and clearing and forwarding industries
for 15 years.

Operations

Blossom Foods operates from 1-2, Block LM, Ondo state Industrial Park, Akure.
It makes its products from at this location. Key suppliers are Greenyard Ventures,
Aisida Yam Supplier and some local farmers.

FINANCIALS
By achieving its sales target, Blossom Foods will position itself for profitability
and self funded growth. Below is a brief summary of the company’s Profit and
Loss Statement for the next two years.

Sales = N66,152,500.00

Gross Profit = N19,104,983.00

Operating Expenses = N5,889,600.00

Pre-tax Income = N8,484,520.31

Sources of Funds

Management is seeking an investment of N5,168,250.00 in addition to the

N10,538,500.00 already invested by the directors of the company and BOI.
Proceeds will be used to finance the company’s on-going start-up expenses, the
enhancement of its systems and infrastructure, and the cash shortfall until cash
flow breakeven is achieved.

Other significant uses of the funds being sought are for opening stock and
purchase of two medium size rotary dryers of 200kg capacity each.

Break-Even and Profitability Point

Blossom Foods needs to sell 37,483 units to reach break-even point amounting
to N19,978,439.00 in the first year. In the same vein, we shall reach profitability
by selling 37,484 units. Due to our projected monthly sales of 5,060 units, we
shall begin to make profit from the middle of August in year 1.

RISKS / MITIGATION

Identified risks are financial risk, fire outbreak, employee accident and food
poisoning. To mitigate against the risks we shall seek for investors to reduce
financial risk; while insurance policy shall be obtained to take care of other risks.
 CHAPTER ONE

1.0 COMPANY DESCRIPTION

1.1 Basic Corporate Information

(a). Identity of the Business:

The name of the business enterprises shall be: BLOSSOM FOOD

SPECIALTIES LIMITED.

(b). Company Address:

1 - 2, Block LM, Ondo State Industrial Park, Ilesha/Owo expressway,

Akure. Ondo State.

1.2 Vision and Mission

Mission

Blossom Foods is a creative maker of instant food products that offers

unparalleled quality of food products in its natural state. We value integrity,
creativity and respect our relationships with each other, our customers and
the world at large.

Vision

To be ranked among the world’s leading manufacturers of instant food

products.

The Objectives of the Company

a). Our company aims at producing up to 300 tons of our products in the
first two years of commencement.

b). We aim at reducing post-harvest losses of yam and plantain in Ondo

state to about 15% in one year of operation.
1.3 About the Company

Blossom Food Specialties Limited is a limited liability company that was

incorporated on 2nd February, 2012 by Corporate Affairs Commission with
registration number 2149397.

The management of Blossom Food Specialties Limited has conducted both

primary and secondary research into the Nigerian processed and packaged food
market and has identified a significantly underserved segment; which are the
young working class adults in both public and private sectors within it. Our
company’s products are uniquely positioned to serve this segment. The products
are of high quality, natural, free of artificial food additives and are produced with
the use of modern equipment to ensure full compliance to high standard.

The company began production in February, 2014. NAFDAC registration of

company’s products commenced at the same month. We started selling the
products in March, 2014. It will reach profitability in December, 2014.

1.4 Value Proposition

Integrity
Our products shall be natural and free of artificial food additives. We shall
give what we promise. Our commitment to the highest standard will be the
foundation of our customers trust in our instant food products.
Quality
We shall offer qualitative products and services in all we do. Quality
marketing, customer care, staff welfare etc. are our focus. We will accept
nothing less.
Respect
We respect everyone irrespective of status; and strive to earn respect of
everyone.
1.5 Core Products
i. Instant Pounded Yam Flour

Instant pounded yam flour is one of the food items that defy socio-economic
class, religious and ethnic boundaries. The average consumption rate of yam
and it by-products in Nigeria is estimated at 0.5 - 1.0 kg daily says Market
report Portal.
It contains carbohydrate as high as 75% of the nutrient in yam. When
prepared it can be eaten or served with various sauces.

ii. Instant Plantain Flour

This product is highly nutritious. It is good source of potassium and vitamins A

& C. High in dietary fiber, energy booster – because it is high in
carbohydrates.

The peels of plantain are of economic importance. It constitutes valuable fodder for
goats and sheep. In addition, when the peels and the stalk are burnt, the resultant
ash is used to produce local black soap. Ready markets exist for this in the
neighborhoods.

iii. Instant Yam Flour:

Instant yam flour (Elubo Isu) is a staple food, which is consumed by almost
every tribe in south-west Nigeria. It contains carbohydrate as high as 75% of
the nutrient in yam. When prepared it can be eaten or served with various
sauces.

The management has taken the following steps to protect these products:
a. Trademark registration
The trademark name is Blossom Foods.

b. National Agency for food and drug administration and control (NAFDAC)
registration numbers of the products are as shown below:
 Blossom Instant Pounded Yam Flour (Iyan) No. 08-1190L.
 Blossom Instant Plantain Flour (Elubo Ogede) No. 08-1234L.
 Blossom Instant Yam Flour (Elubo Isu) No. 08-1191L
1.6 Future Products

Blossom Food Specialties Limited has identified other products that it

believes will effectively complement its current offerings. These are listed
below:
 Instant Beans Flour with recipe.
 Instant Soya Beans Flour
 Instant Pre-mix Grains Flour

1.7 Industry Analysis

The food industry has expanded rapidly in the past several years, and growth is
expected to continue at higher rate with the increasing growth of Nigerian
population. USDA GRAIN report shows that Nigeria‘s retail food imports are
estimated at $750 million in 2010 and projected to increase by 20 percent in
subsequent years. Changing demographics and lifestyles are resulting in
increasing consumer demand and preference for packaged retail foods.

i. Sensitivity to Economic Cycle and Seasonality

Traditionally, the processed and packaged food industry has been heavily
impacted by economic trends. The industry depends solely on raw materials
that are seasonal – yam tubers and unripe plantain. In spite of this, sales are
expected to be consistent throughout the year.

ii. Barriers to Entry

The costs of infrastructure, product development, staffing and technology

make it difficult for new companies to establish themselves in the processed
and packaged food market. In addition, existing customers have been
reluctant to try new products because of the time and effort involved in
switching allegiances.

iii. Opportunities

Blossom Foods is poised to take advantage of the economic trend through

the launching its products to the market. There is substantial opportunity for
growth for a regional company such as Blossom Foods to capture market
share and develop a profitable business.
 CHAPTER TWO
2.0 Business Organisation

2.1 Directors and Company Formation

Blossom Food Specialties Limited is a limited liability company owned by

three directors, Mr. Ajayi Jimoh Tunde, Mrs. Ajayi, O. Tomilola and Professor
Olusegun Adewoye. The business employs two of the owners, and plans to
employ fifteen (15) skilled and unskilled workers.

2.2 The Profile of the Directors

Mr Ajayi, Jimoh Tunde,

He holds a B.Sc. Degree in Food Science and Technology from Obafemi

Awolowo University, Ile-Ife, Osun State. He attended food processing
training at Federal Institute of Industrial Research, Oshodi (FIIRO), as well
as Entrepreneurial Development Training at EDC, Lagos, to mention a few.

He is a member of Nigerian Association of Small-Scale Industrialist (NASSI),

Ondo State Chapter. He is an Associate member of Nigerian Institute of
management. Mr. Ajayi, is the Managing Director of Blossom Food
Specialties Limited. He has acquired a wealth of experience cutting across
consultancy, manufacturing and marketing of agro-allied products.

He was a runner-up at the year 2000 Young Managers Competition of

Nigerian Institute Of Management, South-Western Zone.

Ajayi, Tomilola Olaide (Mrs.)

She holds an Ordinary National Diploma (OND) in Marketing from Lagos

State Polytechnic, Isolo, Lagos.

She started her entrepreneurial skill by assisting in the management of a

restaurant in Lagos. Mrs. Ajayi, has been an Marketing Executive Director
of Blossom Investments Company Limited, based in Abuja for twelve
 years. Her company carries out business of cleaning and fumigation
services. With over 15 years’ experience across manufacturing industries,
clearing and forwarding, and micro finance institute, Tomilola brings her
deep marketing skill to bear on her present occupation.

Professor Olusegun O. Adewoye

Prof is the former Director-General and Chief Executive of National Agency

for Science and Engineering Infrastructure (NASENI).

He is an erudite scholar, astute administrator and dedicated technocrat.

He has won seveal awards, among which are: Fellow of Science Association
of Nigeria, and the Distinguished Fellowship Platinum Award of the Institute
of Environmental Accountants, to mention just few.

2.3 Staffing
Blossom Foods currently runs its business with a staff of 10 full time and 4
part-time employees. Each is responsible for a different function, although
management has created a system of cross-functional training that will
keep its business running smoothly despite illness or casual leave.

The staff is organized along the following framework:

(I). Production Manager

He shall be in charge of production of all our products at the same time

see to the quality of all the products. He shall be involved in the supply of
food raw materials to ensure that all meet required standard before
processing. He/she must possess HND or B. Sc in Food Science and
Technology with 2-3 years of experience.
 (ii). Sales/Marketing Manager

The responsibility is to carry out publicity and advertisement. Ensure that

the products get to the customers on time and at all times. Qualification for
this position is OND/HND in Marketing, with two years experience. We
may consider an OND with five years experience.

(iii). Quality Assurance Manager

He/she shall manage our laboratory. Ensures all samples of products are
analyzed for various quality parameters as well as meet specification of
government regulatory bodies. He/she must possess a B. Sc. in
Microbiology or Biochemistry with a minimum of two years experience.

Details of Salary Schedule

SN Designation Job Specification No Rate Monthly
Salary

1. Managing Director Coordinates all the running. 1 N80,000 N80,000

2. Production In charge of factory 1 N40,000 N40,000

Manager operations.

3. Sales/Marketing To carry out publicity, 1 N30,0000 N30,0000

Manager advertisement and sales.

4. Factory Workers 4 in factory, 4 in packaging 6 N10,000 N60,000

5. Cleaner/Office Ensures cleaning 1 N10,000 N10,000

Assistance environment at all times.

Contract/Casual Peeling of yam tubers, 4 10,000 40,000

workers plantain and beans.

TOTAL SALARY N260,000

2.3 Core Competencies / Unique Selling Proposition

As entrepreneurs, we are desirous, not only in selling or marketing our

products, but of building truly successful and stable brands.

We shall strive at the following:

1. Increase our number of leads.
2. Increase our conversion rate.
3. Increase the number of times customers buy from us.
This will increase our revenue generation per sale.

Our Brands

By our brands, we intend to let our customers know that we are promise keepers.
They shall know our products by the natural taste, our colours, our logo and the
appearance of our marketing staff. Our company shall strive to be consistent in
what we claim to be all the time; so that we can continuously earn customers trust
and loyalty.

To achieve this, we shall carry all our employees and suppliers along to know
what we stand for.

CHAPTER THREE

3.0 MARKETING PLAN

Blossom Foods’ marketing strategy is to communicate its competitive differences
particularly as they relate to the needs of its target customers. Our ability to
produce quality instant food that is free of artificial food additives is what set us
apart and all our marketing efforts and tactics focus on driving this point home.

3.1 Target Market

Blossom Foods operates in the south-west region of Nigeria and targets
consumers that loves quality instant packaged food that is stress-free and easy
to prepare.
 i. Market Size and Trends
The population of the south-west region is 28 million as indicated by National
Population Commission. Recent studies show that the region is growing at
3% annually, and analysts predict that future growth will be 5% per year until
2017. This may be due to changing demographics and lifestyles resulting in
increasing consumer preference for wide range of convenience, processed
and packaged foods.

ii. Economy
USDA GRAIN report that the economy recorded impressive growth of 7.85
percent in 2010 and 7.72 percent as of the second quarter of 2011 compared
to 5.2% forecast for sub-Sahara Africa and food inflation has been on a
downward trend from 14.1% in October 2010 to 9.7% in October 2011.

iii. Strategic Opportunities

With its products, Blossom Foods is in an excellent position to address and fill
the stated needs of customers in its market. Our marketing efforts will focus
on positioning the company as the best solution to these needs. It is note

worthy to know that average Nigerian spends 72.97 percent of his or her

earnings on food with little for discretionary spending.

Generally we target young working class youths and the adults between the ages
of 25 and 55 years, working in both public and private sectors.

Blossom Food Specialties Limited will focus on attracting customers in the

following segments:

1. The public servants

2. Executive businessmen and women
3. The bankers
4. Major canteen and popular eateries
5. Students of higher institutions
6. Supermarkets
More families are shifting from the traditional ways of preparing food to readily
made instant food to reflect their new status. These groups are the one that are
willing to spend their money on quality processed foods.

In addition, there are also several economic and cultural trends that have
contributed to the growing in demand for instant food products:

 Increasing number of women in the workforce

 Increasing number of woman-owned businesses
 Growing number of higher-income households
 Privately owned businesses working longer hours
 Decreasing amount of leisure time
 Premium placed on convenience.

3.2 Market Analysis

Potential Customers Growt Year 1 Year 2 Year 3 Year 4 Year 5

h
1. Public 5% 375,000 393,750 413,438 434,109 455,814
Servants

2. Executive 10% 150,000 165,000 181,500 199,650 219,615

businessmen
and women

3. Bankers 10% 60,000 66,000 72,600 79,860 87,846

4. Students of 10% 207,000 227,700 250,470 275,517 303,069

higher
Institutions

10% 100,000 110,000 121,000 133,100 146,410

5. Eateries
10% 180,000 198,000 217,800 239,580 263,538

6. Supermarkets
Total 1,072,000 1,160,450 1,256,808 1,361,816 1,476,292
The above analysis shows the stability and the growth rate of the market.

Market Analysis
Public Servants Executive Businessmen Bankers
Students Eateries Supermarkets
17%
35%

9%

19% 6%
14%

3.3 Distribution strategy

We have different channels to sell our products to the customers; the best way to
get to them at minimal cost is a crucial decision. We have adopted the following
channels as shown in the diagram:

Distribution Channel

BLOSSOM FOODS
 DISTRIBUTOR/SALES AGENT

WHOLESALER

Supermarkets/Local stores RETAILER

Our company began sales in March, 2014 through a marketing company –

Masterminders Resource Concept, Akure, who buys and distributes the products
within the city and beyond.

This company sells in large quantity to wholesalers, who in-turn sells to the
retailers.

Another distribution channels is direct sales. There are some of the customers
among the public servants and the bankers who may not have the time to go the
market for shopping; we shall reach them through direct sales. They find this
more convenient and time saving.

3.4. Promotions

We shall reach our customers through advertisement, trade shows, flyers,

product packaging, movable signage at strategic public buildings, establishing
sales promotions in honour of a particular celebrations e.g. Valentine, Easter,
etc.

3.5 Competition

Blossom Food Specialties Limited has performed extensive analysis of its

competitors in the processed and packaged food market in south-west region
of Nigeria. The following types of firms offer either direct or indirect
competition:

i. Yusol International Limited makers Ola-Ola instant Pounded Yam Flour

 ii. Ayo-ola Foods Limited producers of instant pounded yam flour, beans
flour, cassava flour (fufu), plantain flour and rice flour.
iii. Frijay Consult Limited produces instant pounded yam flour, plantain
flour and beans flour.

iv. Daylay Foods Processing Nigeria Limited producer of instant Pounded

Yam Powder.
v. Crystalfocus Ventures, produces instant yam flour (Amala isu).
vi. Honeywell Plc makers of wheat flour and semolina.
vii. Nigerian Flour Mills Plc producer of Semovita.

3.5.1 Competitor Analysis

The table below shows comparative analysis of our major competitors. They offer
the only realistic challenge to our company’s share of the market.
Table 3.3 (a)

Factors Blossom Food Ayo-Ola Foods Yusol Daylay Foods P.Nig

International Ltd
Specialties Ltd Ltd Ltd
Products Instant Pounded yam Instant Pounded Instant Pounded Instant Pounded yam
flour, instant plantain
yam flour, instant yam flour powder.
flour, instant yam flour
plantain flour,
beans flour and
Cassava flour.
Price Our prices are good Very good and The price is the The price is cheap for
for the quality we attractive prices. highest in the the quantity been
intend to offer. The prices are market those that offered. The price does
affordable to appreciate good not correspond to
many. quality do not acceptability.
have problem
with the price.
Quality We shall produce They have good Very good quality. Good quality product
quality products with products but mixed Most of the with good texture,
good taste, texture with some food quality colour and smoothness.
and natural flavor and additives. Their parameters such But the product fails to
colour. We shall products are as texture, taste bring out the natural
adhere to high quality consistent with and slurry are flavour of pounded yam.
parameters using good texture and present. The raw It is suspected to have
100% raw materials smoothness. material used is been mixed with rice
void of food additives. short of 100%. flour and cassava flour.
They use artificial
 colour to enhance
the colour of the
product.
Location We are located in The company is They are located The company is located
Akure. We are close located close to in Lagos, where in Akure, Lagos and
to the target market one of the major they process the Republic of Ireland.
and also to the source markets in Lagos, raw materials,
of raw materials. which makes it and export it to
easier for them to their branch office
penetrate their in USA for the
immediate completion of the
environment. product.
Quantity We shall be They have the More quantity is The quantity introduced
increasing our highest quantities targeted at the to Nigerian market is
production capacity of their products in foreign markets much less than the
on a gradual but the Nigerian than the Nigerian quantity exported to the
steady basis. The market than the markets. The Republic of Ireland.
quantity of each foreign market. company Their product is
product is aimed at The net weights of packages their packaged in 2kg.
our target market size. their products are product into 0.9kg
At the start, the net 0.9kg, 1.8kg and and 1.8kg.
weight of each 4.8kg.
product shall be 1kg.
Reliabilit Our Company will They are reliable. Very reliable to Their reliability can be
y ensure reliability at
Attend to their target trusted.
every level of
customer’s market. Effective
operations. Products
complain with delivery channels
shall always be made
urgency. But once through dedicated
available with prompt
in a while, staff.
delivery. We shall especially during
avoid any form
the end of the
disappointment to our
year, they fail to
customers. meet the demand
of their customers.
Sales We shall use direct Their distribution They sell their They use the dealership
and sales and dealership product through method to sell their
network cut across
Distributi method in major distributors product in Nigeria. They
on markets for the entire south- located in various have sales agents
methods distribution of our markets within abroad.
west, the FCT, and
products. Lagos. They
major cities in the concentrate more
on supermarkets
country. They
outside Lagos.
have distributors in
the U.K., USA,
 Canada and
Belgium.

Advertis The use of handbills, They have Display of product Internet advert and
ement radio jingles and branded delivery in the market display of product in the
motor arcade carnival vehicles that places and market.
to create publicity create awareness through social
shall be our method. to the people. Also media networks.
In addition, we shall through internet
advertise through advertisement
social media
networks/internet. We
shall construct a small
branded display
stands for our dealers.
Packagi Our packaging shall Good packaging The packaging is The product is well
ng be design to be but they can very simple and packaged with double
attractive, inviting and improve on the transparently wraps. The design is
distinct. It shall stand design of the attractive. But it beautiful, it should be
out among others. packaging stands a chance ranked among the best.
material. to lose its identity
among other
products.

3.5.2 Competitors Reaction

We anticipate that our competitors will definitely react to our entry into the
market. They are likely going to react in one or all of the following ways:

 Increase their production level to flood the market.

 Step up their promotions and give more incentives.
 Look out for our weakness and take advantage of it.

Whatever their reactions, we are determined to establish our presence and share
the market with them.

3.6 Competitive Advantage

Our advantage over others is the ability to deliver consistently high quality
instant food products.
 1. Blossom instant pounded yam flour, plantain flour and yam flour contain
100% raw food materials. The three products are free of food additives.
Similar products in the markets are unnecessarily coloured and flavoured.
2. Our company concentrates on the use of good and attractive packaging
materials that will make our products very distinct and noticeable among
others when displayed on shelves.
3. Our location is more accessible and convenient to our customers.

3.7 Pricing Strategy

The method adopted for setting our prices is prevailing market price
method. We intend to have an introductory price that is 5% less than the
prevailing market price.

Proposed Price List

Products Cost of Factory Market
Product/Unit Price/Unit Price/Unit
Instant Pounded 537.00 650.00 750.00
Yam Flour
Instant Plantain 346.00 600.00 450.00
Flour
Instant Beans 216.00 450.00 400.00
Flour
3.8 Sales Forecast

Management projects that Blossom Foods will achieve sales revenue of 32.3
million in year one. This figure will grow to 33.9 million in year two. The sales
chart below is drawn from the sales forecast.

Sales Chart
 35000000

30000000

25000000

20000000 Sales
Gross Margin
15000000 Net Profit

10000000

5000000

0
Year 1 Yeaar 2

See Excel for Sales forecast: Table 3.4.

3.9 Actual Sales details: 24TH November, 2013 TO 16TH April, 2014.

INSTANT PLANTAIN FLOUR

Month Qty Qty Productio Amount Profit

Produced Sold n Cost @ Sold @ Margin (N)
(KG) (KG) N346/Unit N550/Unit
DEC.’13 36.9 25 8,650.00 13,750.00
Jan. ‘14 50.5 23 7,958.00 12,650.00
Feb. ‘14 91.0 47 10,034.00 15,950.00
Mar. ‘14 71.0 18 11,764.00 18,700.00
April ‘14 48.6 16 5,536.00 8,800.00
TOTAL 298 127 43,942.00 69,850.00 25,908.00
BALANC 171.0Kg
E

INSTANT POUNDED YAM FLOUR

Month Qty Qty Production Amount Profit

Produced Sold Cost @ Sold (N) Margin
(KG) (KG) N537/Unit (N)
Jan. ‘14 56.5 43 23,091.00 25,800.00
Feb. ‘14 91.3 69 20,943.00 23,400.00
Mar. ‘14 81.0 46 24,702.00 27,600.00
April ‘14 36.9 31 13,962.00 15,600.00
TOTAL 314.30 189 101,493.00 113,400.00 11,907.00
BALANC 125.3 Kg
E

INSTANT YAM FLOUR

Month Qty Qty Production Amount Profit

Produced Sold Cost @ Sold @ Margin (N)
(KG) (KG) N216.5/Uni N450/Unit
t
Jan. ‘14 20.5 15 3,247.50 6,750.00
Feb. ‘14 51.0 33 7,144.50 14,850.00
Mar. ‘14 35.0 29 6,278.50 13,050.00
April ‘14 21.9 21 4,546.50 9,450.00
TOTAL 127 97 21,000.00 43,650.00 22,650.00
BALANC 30 Kg
E
Summary

Quantity Produced = 739.30 Kg

Quantity Sold = 413.00 Kg

Quantity of Products Remaining = 326.3 Kg

Total Amount Sold = N226,900.00

Profit Margin = N60,465.00

CHAPTER FOUR

4.0 OPERATION/PRODUCTION PLAN

A key to the success of our company is the production process. Our ability to
effectively manage this aspect of our business enables us to keep costs down
and at the same time provide quality products.

4.1 Description of Location / Factory

Blossom Foods operates its business from 1-2 Block LM, Ondo state
Industrial Park, Akure, and comprise about 3500 square feet of office
space and the factory.
The facility is provided by the state government on rent for a total cost of
N150,000 annually.

4.2 Raw Materials Needed / Suppliers

i. Instant Pounded Yam Flour

Materials Description Key Supplier Comment

Yam White Yam, Wholesome Yam Dealers Dealers are best
Tubers from Abuja and suited for this job.
Ogbese, Akure.

ii. Instant Plantain Flour

Material Description Key Supplier Comment

s
Plantain Unripe Joshua Farms, Buying directly from source
Wholesome Fatuase Housing will prevent mixture of
Plantain Estate, Akure. immature plantain with the
mature ones.

4.3 Production Equipment / Capital Expenses

Table 4.1: List of Equipment and
Depreciation Values
Equipment Unit Cost Value Life Monthly
Span Depreciation
(Months)
Parboiler   1 350,000 60
350,000.00 5,833.33
Slicing Machine   1 250,000 60
250,000.00 4,166.67

Cabinet Dryer   1 1,100,000 120

1,100,000.00 9,166.67
Hammer Mill   1 400,000 60
400,000.00 6,666.67
Mixing Machine   1 550,000 60
550,000.00 9,166.67
Sealing machine   1 280,000 60
and Coding 280,000.00 4,666.67
Machine
Weighing Balance   2 60,000 48
(Digital and 120,000.00 2,500.00
Manual)
Power Generating   1 1,337,000 120
Set 1,337,000.00 11,141.67
Pulverizer and   1 930,000.00 60
Washing machine 930,000.00 15,500.00

Electronics   1 350,000 48
(Moisture meter, 350,000.00 7,291.67
PC, Tv, AC, etc)
Furniture and Two   1 161,000 60
Water Tanks 161,000.00 2,683.33
Rotary Dryers   2 650,000 60
1,300,000.00 21,666.67
Delivery Van   1 1,680,000 60
1,680,000.00 28,000.00
        1
- -
TOTAL    
8,808,000.00 128,450.00
 Table 4.2: OFFICE EQUIPMENT / ACCESSORIES
Particulars Source Qty Unit Price Amount
Furniture & Fitting John Wood
Furniture, Industrial 1 set 65,000 65,000
Park, Akure
Air Conditioner LG Store,
2Hp Oyemekun Rd, 1 60,000 60,000
Akure
Carpet / Rug Nobel Carpet 20 1,500 30,000
36 Sqm Hospital Rd, Akure
LED TV Set 21” LG Stores 1 26,000 26,000
Desktop Pc Lasco Computers
Oba-Adesida Road, 1 70,000 70,000
Akure
Total 251,000

Table 4.4: Utilities

S/N Particulars Qty Used Qty Used Unit Price Monthly
Daily Monthly (N) Cost (N)
1. Electricity 10 kwh 600 kwh 12 7,200.00
2. Fuel (Diesel) 10L 150L 160 45,000.00
3. Water 30L 4000 N1 4,000.00
4. Gas 10.94kg 175kg 250 43,750.00
5. Office Stationeries 50 papers 4,500 5.00 22,500.00
6. Laboratory Analysis 3 8,000 24,000.00
7. Charcoal 30 850 25,500.00
Total N150,950.00

4.3 PRODUCTION PROCESS

The production process consists of simple operations which have been

mechanized. The unit operations are:
i. Yam Selection and Weighing
 ii. The Washing
The selected tubers are washed properly to removed adhering
sand.

iii. Peeling and Slicing

The washed tubers are carefully peeled manually with stainless
knives. The peeled tubers are then mechanically sliced to desirable
thickness in a slicing machine made of stainless steel blades.

i. Parboiling
The yam slices are blanched in a boiling water for some minutes./

ii. Drying
The balanced yam slices are dried in a dryer at specified drying
temperature for few hours. The dried yam chips are stored in air-
light containers.

iii. Milling
The dried yam chips are pulverized directly into flour of uniform
particle size distribution.

iv. Packaging
The yam flour is packed into air-light, moisture proof packaging
materials.

a. Flow Diagram for Instant Pounded Yam Flour:

Flow Diagram for the production process is shown below:

 Yam Selection and Weighing

Washing

Peeling

Slicing

Parboiling

Drying

Milling

Packaging

b. Flow Diagram for Instant Plantain Flour production:

Selection and Weighing

 Washing

Peeling

Slicing

Drying

Milling

Cooling

Packaging

a. Flow diagram for the production of Instant Yam Flour:

Yam Selection and Weighing

 Washing

Peeling

Slicing

Drying

Milling

Cooling

Packaging

4.4 PRODUCTION COST

The following assumptions are made in arriving at the proposed production
program
Proposed Production Program
 Rate of Production Instant Pounded Instant Plantain Instant Beans
Yam Flour Flour Flour
No. of working hours/day 8 8 8
No. of days/week 4 1 1
No. of shifts/day 1 1 1
Output/Input Ratio 3:5 2:3 4:5
Percentage yield 60% 67% 80%
Volume of production/day 420kg 400kg 400kg

3.2 Direct Material Cost per month

Instant Pounded Yam Flour

Direct Materials Qty / Size Cost Per Unit Amount (N)

1. Raw Material (Yam) 11,200 kg 150.00 1,680,000.00
2. Packaging Nylon 6,720 18.00 120,960.00
(Equivalent to yield)
3. Packaging Cartons 672 110.00 73,920.00
4. Transportation - - 40,000.00
5. Cooking Gas 175 kg 260.00 45,500.00
6. Labour 101,818.00
7. Electricity 112 kwh 11.37 1,274.00
Total Cost N2,063,472.00
Cost per unit N537.00

Instant Plantain Flour

Direct Materials Qty / Size Cost Per Unit Amount (N)

1. Raw Material (Plantain) 2,400kg 160.00 384,000.00
2. Packaging Nylon 1600 units 18.00 28,800.00
(Equivalent to yield)
3. Packaging Carton 160 units 110.00 17,600.00
4. Transportation - - 20,000.00
5. Labour - - 19,090.00
6. Electricity 32 kwh 11.37 363.84
 Total Cost N469,853.84
Cost per unit N346.00

Instant Pounded Yam Flour

Direct Materials Qty / Size Cost Per Unit Amount (N)

1. Raw Material (Yam) 11,200 kg 150.00 1,680,000.00
2. Packaging Nylon 6,720 18.00 120,960.00
(Equivalent to yield)
3. Packaging Cartons 672 110.00 73,920.00
4. Transportation - - 40,000.00
5. Labour 101,818.00
6. Electricity 112 kwh 11.37 1,274.00
Total Cost N1,063,472.00
Cost per unit N216.00

Operating Expenses (Bi-monthly)

See the Excel software for the Table 4.5

COST ASSUMPTION
1. The demand is expected to be low during the first quarter of the year. The
money in circulation will be low. Our sales is expected to drop, we do not
wish to commit too much money into production.
2. The sales are expected to increase as we approach the Easter festival.
3. During the rainy season, rainfall could limit supplies of raw materials and
sales.
4. Sales are expected to be high at the fourth quarter of the year which is the
period we are launching into the market. This is a festive period; demand
for food items will be high.

See Excel for Cost Forecast: Table 4.6

4.5 Stock/Inventory Control Process

Blossom Food Specialties Limited management is committed to an efficient
supply. The current lead time from production order to finished product is two
weeks. We shall put in place a system to manage our supply chain which will
enable us to keep our inventories at the lowest possible levels.
Finished goods are held in inventory at our finished product store managed by
the Store Keeper. It is this place that handles order and supply of products to our
customers.

Table 4.4: Opening Stock

Stock / Item Quantity Unit Total
Cost

Yam tubers 15 40000

600,000.00
Plantain 50 8000
400,000.00

Printing Cylinder 15 70000

1,050,000.00
Printing on Pouches 80000 15
1,200,000.00
Diesel 650 155
100,750.00
Cooking Gas 30 3500
105,000.00

Packaging Carton 6000 110

660,000.00

Charcoal/Briquetes 120.00 850

102,000.00
TOTAL    
4,217,750.00

4.6 Milestones
Table 3.7 Milestones

Activity Funding Budget Year Year Year Year Year

1 2 3 4 5
1. Opening Business Loan & 6,000,000 
Personal
2. Acquisition of Personal 2,000,000 
additional Van
3. Acquisition of land Personal 2,000,000 
for permanent site
4. Commencement Loans & 20,000.00 
of Structure Personal
5. Land for Farming Personal 1,000,000 
6. New Equipment Loans & 10,000,00  
Personal 0
7. New care for Personal 2,000,000 
 company
8. Quality Control Loans & 6,000,000 
Dept. Personal
s

CHAPTER FIVE

5.0 Financial Plan

The following topics and tables outline our financial plan. We plan to turn a
significant profit, but we will structure the business so as to maintain a healthy
cash flow.

5.1 Important Assumptions

The financial plan depends upon important assumptions, most of which are
shown in the following table. The key underlying assumptions are:
  We assume a slow-growth economy, without major recession.
 We assume that there are no unforeseen changes in the expectancy in
the popularity of our products.
 We assume access to investments and financing are sufficient to maintain
and fulfill our financial plan.
 We also assume tax at 5% of net profit; and insurance at 5% of total
capita expense.

Table 5.1: PRE-OPERATING ACTIVITIES AND EXPENSES

Item Description Amount
Rent of the factory two year 300,000.0
0
Equipment See Table 4.1 for Details 8,808,000.0
0
Factory Extension and For all the painting, re-fixing 941,800.0
Generator Shed 0
Plumbing works, Installation and 344,250.0
Accessories and Commissioning 0
Machine Installation
Business and product C.A.C, Trademark, Nafdac 512,000.0
registration, Training, registration, NEPC 0
Consultancy services, registration, and Bar-coding.
Equipment installation
TOTAL   10,906,050.0
0

5.2 Break Even Analysis

We want to minimize surprises (good or bad) in our business. We do know that

“good surprises” are desirable but may create havoc when it is not prepared and
planned for. Break- even point and other financial projections will help us avoid or
minimize it.

Break-Even Point Calculations

Sales Price = N533.00

Variable Cost = N366.00
 Contribution = N533 - N366 = 167
Fixed Cost = N6,259,677
Break-even units = 6,259,677/167 = 37,483 units

Breakeven sales = 37,483 x N533 = N19,978,439

A total sale, for our company to reach break-even point is Nineteen Million,
Nine Hundred and Seventy-Eight Thousand, Four Hundred and Thirty-Nine
Naira.

Break-Even Projected Projected Contribu Cost of Average

sales/Year Sales Volume Fixed Cost tion Variables / Selling
(N) per Year (N) Unit (N) Price (N)
(Kg)

19,978,439.00 60,725 6,259,677.00 167 366.00 533.00

5.3 Profitability

Quantity of products to sell in order to make profit in the year is 37,484 units
amounting to N19,978,972.00.

5.3.1 Month of Profitability

Projected average monthly quantity to sell is 5,060. Since the quantity that will
give profit is 37,484 units, then dividing 37,484 by 5,060 will give 7.4. This figure
translates to 7.4th month in the first year. Our month of profitability shall be
around the middle of August in year one of our operation.

Table 5.2: Required Startup Capital Estimate

 ITEMS AMOUNT COMMENT
Pre-operating Expenses 10,906,050.00  
Opening Stock 4,217,750.00  
Initial Operating Expenses -6
months 1,748,850.00  
Total Startup Capital
Estimated 16,872,650.00  
SOURCES OF FUNDS AMOUNT %
Directors' Fund /Equity 8,704,150.00 52%
Loan/Grant/Investors 8,168,500.00 48%
Total Funds Sourced 16,872,650.00 100%

5.4 Investment Opportunity

From the above table, the amount needed from the investors is N8,168,500.00.
Amount already taken as loan from Bank Of Industry is N3,000,000.00. The
repayment schedule for the loan is as shown below. The company has paid for
four months amounting to over N460,000.00.

Given the financial results expressed above, management is seeking an

investment of N5,168,500.00. Proceeds will be used to finance the company’s
on-going start-up expenses, the enhancement of its systems and infrastructure,
and the cash shortfall until cash flow breakeven is achieved.

Other significant uses of the funds being sought are for opening stock and
purchase of two medium size Charcoal Rotary Dryers of 200kg/day capacity
each.

-
Table 5.3: Loan Repayment Schedule
Monthly Monthly Principal +
Month Principal Principal Interest Interest Cumulative
           

0 3,000,000.00        

1 3,000,000.00 - 50,000.00 50,000.00 50,000.00

2 3,000,000.00 - 50,000.00 50,000.00 100,000.00

3 3,000,000.00 136,363.64 50,000.00 186,363.64 286,363.64

4 2,863,636.36 136,363.64 50,000.00 186,363.64 472,727.27

5 2,727,272.73 136,363.64 50,000.00 186,363.64 659,090.91

6 2,590,909.09 136,363.64 50,000.00 186,363.64 845,454.55

7 2,454,545.45 136,363.64 50,000.00 186,363.64 1,031,818.18

8 2,318,181.82 136,363.64 50,000.00 186,363.64 1,218,181.82

9 2,181,818.18 136,363.64 50,000.00 186,363.64 1,404,545.45

10 2,045,454.55 136,363.64 50,000.00 186,363.64 1,590,909.09

11 1,909,090.91 136,363.64 50,000.00 186,363.64 1,777,272.73

12 1,772,727.27 136,363.64 50,000.00 186,363.64 1,963,636.36

13 1,636,363.64 136,363.64 27,272.73 163,636.36 2,127,272.73

14 1,500,000.00 136,363.64 27,272.73 163,636.36 2,290,909.09

15 1,363,636.36 136,363.64 27,272.73 163,636.36 2,454,545.45

16 1,227,272.73 136,363.64 27,272.73 163,636.36 2,618,181.82

17 1,090,909.09 136,363.64 27,272.73 163,636.36 2,781,818.18

18 954,545.45 136,363.64 27,272.73 163,636.36 2,945,454.55

19 818,181.82 136,363.64 27,272.73 163,636.36 3,109,090.91

 20 681,818.18 136,363.64 27,272.73 163,636.36 3,272,727.27

21 545,454.55 136,363.64 27,272.73 163,636.36 3,436,363.64

22 409,090.91 136,363.64 27,272.73 163,636.36 3,600,000.00

23 272,727.27 136,363.64 27,272.73 163,636.36 3,763,636.36

24 136,363.64 136,363.64 27,272.73 163,636.36 3,927,272.73

GRAND
TOTAL   3,000,000.00 927,272.73 3,927,272.73

5.5 Ratio Analysis

Ratio analysis establishes the relationships between quantities in the financial

statements. The goal is to determine the strengths and weaknesses of a
business through evaluation of its financial statements and also to understand
the relationship between management strategy and financial results.

Profitability Ratios
i. Gross Profit Margin: Gross Profit divided by Sales multiply by 100%
Gross Profit Margin = 19,104983/66,152,500 *100% =
28.9%

ii. Net Profit Margin: Net Profit divided by Sales multiply by 100%

Net Profit Margin = 9,505,757.00/66,152,500*100% =

14%

5.6 SWOT ANALYSIS

 DESCRIPTION IMPLICATION

Our team comprises of well High level of production process

experienced professionals including a and quality of products are
professor in engineering. Our products ensured. We have cost and price
and packaging are of high quality. Our advantages. Cost of raw materials
response time to the customers is and transportation are lower when
prompt due to our nearness to the you buy from the source and
STRENGHT target market. The source of our raw transport through a short distance.
materials is close to us.

Our track record is low compare to our Acceptability of the products will be
competitors. Raw materials are very slow. Our production may
seasonal, and we have low financial slow down due to lack of enough
WEAKNESS capability. We don’t have delivery vans capital to buy raw materials that
that can offer timely delivery of can last till next season. Marketing
products. and after-sales follow-up will be
hindered since we have to depend
on commercial vehicles.

Distribution distance and the market Nearness to the source of raw

size are opportunity. Growth rate of the materials and the target market
market, improved consumer spending reduces cost of production and
patterns and the civil servants new that of transportation. Generally
status brought about by “minimum this environment provides avenue
OPPORTUNITY
wage” – an increase in salary. for marketing and sales.

Present political tension in Ondo state. Political instability may hinder cash
Inconsistent government policy on the flow in the system, which in turn
Industrial Park where our factory is may affect sales. Other threat
situated. Erratic power supply. Lack of factors listed will definitely increase
maintenance of the infrastructures and cost of production. Break-even will
THREAT
available facilities in the Park. be under threat and net profit will
reduce drastically.
 CHAPTER SIX
6.0 Business Risk and Mitigation Factor

6.1 Identified Risks

The food processing factory is associated with some risks which include:
i. Fire hazard / outbreak
ii. Machine breakdown
iii. Employee accident
iv. Food poisoning
v. Pilfering / Theft
i. Fire Hazard / Outbreak
Fire Hazard or Outbreak refers to a situation when the factory and/or its
machinery ignite as a result of error committed by member of staff on the use
of equipment and gas cylinder or a result of unforeseen circumstances.
In order to prevent such occurrences, the management shall ensure strict
compliance to instructions on the usage of the machineries and gas cookers.
All electrical appliances must be switched off before the company closes for
the day. Industrial fire extinguisher must be installed at strategic point in the
factor.
In addition, comprehensive insurance policy shall be put in place to cushion
the effect of any unforeseen circumstances.

ii. Machine Breakdown

Machine breakdown is a situation where the equipment ceases to function
due to technical fault. This is peculiar to industrial machines because they are
used on daily basis to carry out production process. This can happen as a
result of negligence to maintenance of the equipment.
In order to avoid this situation, control measures shall be put in place to
provide adequate servicing for all machines. The age of the machines shall
also be considered, so that if the value has depreciated, then an option of
replacement shall be facilitated.

iii. Employee Accident

When unexpected unpleasant accidents occur to any member of staff,
especially in the factory, it is referred to as employee accident. This may
occur when the employee loss concentration while operating the
machines, or as a result of carelessness, which may cause injury, burns,
cut etc.
To curb this accident, operators must be well trained and vast in the used
of the equipment. He/she must be sensitive and conscious to the factory
environment.
However, First Aid Boxes shall be made available in the company. If the
case is serious, such a victim shall be rushed to the hospital that is located
within the Industrial Park.

iv. Food Poisoning

Food Poisoning refers to a situation where the food is contaminated. This
may occur as a result of poor hygiene condition of the factory
environment, poor sanitation of the employee and through the influx of
pest. Since micro-organisms that cause food poisoning exist everywhere,
adequate measures shall be put in place to prevent this occurrence. We
shall ensure that all employee are certified medically fit. Training on food
handling and personal hygiene shall be carried out as regular as possible
disinfectant water shall be placed at entry points for staff to deep their
hands for washing before the commencement of production.

v. Pilfering / Theft
The issue of stealing by workers is a challenge to us. Profit making begins
to fall short of projections if pilfering and theft are not curbed.

We intend to be very alert and proactive to this situation. Our supervisors

shall be made responsible for every item in the factory. Store manager
and administrative manager shall be responsible for their respective
departments.
All members of staff shall submit two letters of undertaking by their
guarantors; anyone caught in the act shall pay for the stolen item or their
guarantor be made to pay. Such person shall be dismissed.
 APPENDICES

Pictures of Some Factory Equipment and Products

Off-loading Drying Machine Cabinet Drying Machine
Power Generator (100KVA) High Pressure Washing Machine
Loading the Pulverizer into the Delivery Van Company’s Delivery Van
Pulverizer Parboiler