Agro Business Management Manual for Implementors and Agro Dealers

8/13/2019 Agro Business Management Manual for Implementors and Agro Dealers

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AGRO BUSINESS MANAGEMENT

MANUAL FOR

IMPLEMENTORS AND AGRODEALERS

The Zambia Agro Dealer (ADAPT) Project

CARE Zambia

July 2010


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AGRO BUSINESS MANAGEMENT

MANUAL FOR

IMPLEMENTORS AND AGRO DEALERS

Compiled by: Vivian C Mthetwa

Linus Mponda

Edna Maluma

Published by: CARE Zambia, ADAPT project


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i. Foreword

CARE Zambia ADAPT project is increasing the access of 91,000 remote, rural smallholder farmers

to quality, affordable inputs by creating a network of 500 agro-dealers.

To achieve this, one major project activity include conducting business management and technical

training of recruited agro-dealers in the remote areas. The main objective of this training is to

respond to the capacity gaps of the agrodealers that were identified during the training needs

assessment so as to strengthen their business management skills so that they can better manage

their businesses as well as poise them for sustained further growth. The project also collaborated

well with private sector (input suppliers) in trying to achieve this objective.

This training manual is to be used as a step by step guide by anyone conducting a training for

agrodealer development works or even by the agrodealer themselves who wish to update/refresh

their knowledge in agrodealer business development. It is through the use of this manual that has

built agrodealer skills and confidence to run their businesses which in turn has resulted in input

suppliers gaining confidence in the starter agrodealers that has resulted in viable and sustained

linkages between agrodealers and suppliers. This has also resulted in a better service to the farmer

our ultimate target, in terms of variety, quality seed brands, affordability and availability within

their location.

Our appreciation go to all those involved in putting up this manual together. It is our hope that this

manual will provide guidance to all those seeking to develop agrodealer works in Zambia.

Peter Manda

Project manager

ADAPT PROJECT


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ii. Acknowledgements

The authors would like to thank many partners who made valued contributions to thecompilation of this manual. Special thanks go to CARE ZAMBIA ADAPT project manager Mr.

Peter Manda and the project coordinator Ms. Catherine Pongolani who initiated the idea of

writing the manual. They guided the process of developing this manual. Specific gratitude is

extended to the provincial coordinators of the ADAPT project in eastern province Mr. Noah

Simpasa and Ms. Mukonde Siafunda for the role they played during the training of agro

dealers where experiences referred to in this manual were drawn from. They also provided the

pictures used in the manual.

Extensive work was done by the co-authors of this manual Mr. Linus and Ms. Edna Maluma.

This included them spending a lot of time gathering which are part of the manual. They

brought in their practical experiences from the field where they were involved in training agro

dealers in central province. Their contributions are appreciated.

Recognition is also given to the many agro dealers who attended the trainings in eastern and

central provinces of Zambia. The participation made it possible for the authors to concretise the

approach in designing this manual.

The training of agro dealers and subsequent development of this manual would not have been

possible without the financial support from .

VIVIAN C MTHETWA


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iii. How to use this manual

The ADAPT project has been working in three provinces in Zambia (copperbelt, eastern and

central) to facilitate the processes of ensuring that farmers in these areas get good quality seed

and other farm inputs and implements. This would result in farmers households having

improved income and livelihoods. The target vehicles for reaching out to the farmers are agro

dealers. ADAPT works agro dealers assisting them to improve their businesses such that they

are able to supply the farmers with all their agricultural input needs.

ADAPT has now produced this manual AGRO BUSINESS MANAGEMENT MANUAL which

gives training in practical business skills essential for agro dealers. The manual has been

designed to train agro dealers. The manual has been designed to training agro dealers in the

skills of running a business. It is also targeted at implementers like ADAPT staff who train and

mentor agro dealers directly. You should use this manual to:

Train agro dealers so that they gain knowledge of business and understandfactors that lead to business success.

Give handouts (checklists) to agro dealers to use as reminders of what theyneed to do in their businesses. The checklists are important during checklists are important

during follow up of agro dealers. The person following up on agro dealers will use these to

assess what the agro dealer is implementing.

When working with agro dealers, implementing organisations that wish to deliver both

business and technical training to the agro dealers should be organisations that:

Have an organised system of reaching out to the agro dealers Have officers on the ground to work with the agro dealers Have long term plans of continuing such support in a sustainable manner Work with the ministry of agriculture and cooperatives Have commitment for the development of farmers in the farming communitiesThis manual provides useful information to the agro dealers as reference material in the annex

of this manual.


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Contents

i. Foreword ................................................................................................................................................... i

ii. Acknowledgements .............................................................................................................................. ii

iii. How to use this manual................................................................................................................... iii

1. INTRODUCTION TO ZAMBIA AGRO DEALER PROJECT.............................................................4

1.1 What is ADAPT and how does it work?............................................................................................4

1.2 The ADAPT agro dealer .......................................................................................................................4

1.2.1 An ideal agro dealer..................................................................................................................4

1.2.2 Selection criteria for agro dealers ............................................................................................5

1.3 Matching grants in ADAPT project ....................................................................................................5

1.3.1 Rationale for finding .................................................................................................................5

1.3.2 Agro businesses eligible for funding ......................................................................................6

1.3.3 Grant amounts and utilisation................................................................................................6

1.4 ADAPT reporting systems for agro dealers......................................................................................7

1.4.2 Farmer information ...............................................................................................................................7

1.4.3 Grant utilisation....................................................................................................................................7

2. UNDERSTANDING THE AGRO BUSINESS IDEA............................................................................8

2.1 Objective .................................................................................................................................................8

2.2 What products can an agro dealer stock? ..........................................................................................8

2.3 Who are the customers for the agro business? ..................................................................................9

2.4 Which customer needs will the business satisfy? .............................................................................9

2.5 How will the agro dealer reach his/her customers?...................................................................... 10

2.6 Checklist.............................................................................................................................................. 11

3. LEGAL REQUIREMENTS FOR AGRO DEALERS........................................................................... 123.1 Objectives............................................................................................................................................ 12

3.2 What are legal issues for agro dealers?........................................................................................... 12

3.3 Seed certification and control institute (SCCI) licence.................................................................. 12

3.4 Council trading licence...................................................................................................................... 12

3.5 Environmental council of Zambia licence...................................................................................... 13

3.6 Patents and companies registration office (PACRO).................................................................... 13

3.7 Business premises.............................................................................................................................. 14


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3.8 Contracts.............................................................................................................................................. 14

3.9 Health and safety in an agro business:........................................................................................... 15

3.10Checklist.............................................................................................................................................. 16

4. MARKETING..................................................................................................................................... 16

4.1 Objectives............................................................................................................................................ 16

4.2 What is marketing?............................................................................................................................ 17

4.3 Importance of marketing.................................................................................................................. 17

4.4 Market research.................................................................................................................................. 17

4.5 The 5Ps of marketing......................................................................................................................... 18

4.5.1 Products................................................................................................................................... 18

4.5.2 Price.......................................................................................................................................... 18

4.5.3 Place......................................................................................................................................... 18

4.5.4 Promotion................................................................................................................................ 18

4.5.5 The business person............................................................................................................... 20

How to be a successful sales person........................................................................................................ 20

4.6 Checklist.............................................................................................................................................. 22

5. STOCK MANAGEMENT..................................................................................................................... 23

5.1 Objectives............................................................................................................................................ 23

5.2 What is stock and stock management?........................................................................................... 23

5.3 Importance of stock management.................................................................................................... 23

5.4 Guidelines to better stock management......................................................................................... 23

5.5 Stock taking......................................................................................................................................... 24

5.6 Stock records template...................................................................................................................... 25

5.7 Checklist.............................................................................................................................................. 26

6. RECORD KEEPING............................................................................................................................... 27

6.1 Objectives............................................................................................................................................ 27

6.2 What is record keeping?.................................................................................................................... 27

6.3 Importance of record keeping.......................................................................................................... 27

6.4 Types of records................................................................................................................................. 27

6.4.1 Daily cash record.................................................................................................................... 27

6.4.2 Profit and loss statement....................................................................................................... 29


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6.5 Checklist.............................................................................................................................................. 30

7. COSTING AND PRICING.................................................................................................................... 31

7.1 Objectives............................................................................................................................................ 31

7.2 What is costing?.................................................................................................................................. 31

What is pricing?.............................................................................................................................................. 31

7.3 Importance of costing........................................................................................................................ 31

7.4 Types of costs...................................................................................................................................... 32

7.5 Costing process for agro products................................................................................................... 33

7.6 Pricing of agro products.................................................................................................................... 36

7.7 Break-Even Point (BEP)..................................................................................................................... 36

7.8 Checklist.............................................................................................................................................. 37

8. FINANCIAL PLANNING................................................................................................................ 38

8.1 Objectives............................................................................................................................................ 38

8.2 Importance of financial planning..................................................................................................... 38

8.3 A sales and cost plan......................................................................................................................... 38

8.4 Cash flow plan.................................................................................................................................... 39

8.5 Budgeting............................................................................................................................................ 41

8.6 Savings and investment.................................................................................................................... 41

8.7 Checklist.............................................................................................................................................. 43

9. ANNEXES............................................................................................................................................... 44

9.1 Elements of a business plan.............................................................................................................. 44

9.2 Association formation....................................................................................................................... 48

What is an association?............................................................................................................................. 48

Objectives of an Association..................................................................................................................... 48

Who will form an association?................................................................................................................. 48

Benefits of working with/through an association................................................................................. 48

Why do associations fail? (Reasons for failure)..................................................................................... 50

Roles and responsibilities of association members and officers.......................................................... 50

Linkages...................................................................................................................................................... 51

Guidance and training............................................................................................................................... 51

Guidelines for formation of an association body.................................................................................. 51


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1. INTRODUCTION TO ZAMBIA AGRO DEALER PROJECT1.1

What is ADAPT and how does it work?

ADAPT, is an agro dealer project run by Care International in Zambia in three provinces. It is

funded by the alliance for Green Revolution in Africa. The project is in three provinces and

three districts of each province. In the Copperbelt province the project is in Masaiti,

Lufwanyama and Mpongwe districts. Lundazi, Katete and Petauke districts in Eastern

province and Chibombo, Mumbwa and Kapiri Mposhi for the Central province.

The project has trained over 441 agro dealers in the three provinces in the last two years of its

implementation.

The objectives of the project are to enable supply chain actors to:

Actively pursue the smallholder market, Improve the affordability, timeliness, range, and volume of inputs and services reaching

smallholder farmers in targeted areas.

Strengthen enabling environment for expansion of agro inputs in smallholder markets ofsparsely populated areas.

Activities of the project include actively:

Recruiting, training and certifying of agro dealers, Conduct demand creation activities among smallholder farmers, Facilitate linkages between Supply chain actors (Suppliers, Agro-Dealer and Smallholder

farmers) and Output markets,

Use innovation fund to buy down Agro-dealers risks of rapid expansion into smallholdermarket

Develop agro dealer associations in targeted districts and Conduct Monitoring and Evaluation (M&E)

1.2The ADAPT agro dealer

1.2.1 An ideal agro dealer An ideal agro dealer is one who is able to supply the right inputs to the farmers, at the right

price, right quantity and right time.

An ideal agro dealer is one who is able to make inputs needed available in the right season. An ideal agro dealer is one who understands farmer needs and is able to explain the uses of

different products he stocks.


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1.2.2 Selection criteria for agro dealersRecruitment of Agro Dealers was based on their:

location (distance from town), financial management capacity, past experience in business, project commercial viability and Significant number of households to benefit from the agro dealer business.Why we recruit Agro Dealers?

Many smallholder farmers are faced with difficult in accessing inputs which mostly are found

in town centres located very far from their communities.

Therefore the aim of recruiting Agro dealers is basically to mitigate the problems smallholder

farmers face when it comes to input access such as distance travelled etc. The Agro dealers

recruited enable smallholder farmers to access the needed inputs easily and hence this helps

them to cut down on costs such as transportation.

1.3Matching grants in ADAPT project1.3.1 Rationale for findingTo help buy down the barriers to entry for start-up agro-dealers in these areas, ADAPT has

provided aid in the form of matching grants. This Innovation Fund matching grant requires

that agro dealers assume 50% or more of the investment risk and that the investment is tailored

to their business models and needs.

The goal of the Fund is to stimulate local community based agro dealers adoption of

approaches to promote, market, and cost effectively distribute larger volumes of seeds and

other agro inputs and services to rural areas currently underserved by stationary district

center- based retail facilities. This grant, called the Innovation Fund, allows for agro-dealers to

make initial investments that they would not be able to afford otherwise.


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Before and After Pictures for Christine Dakas One Sister Agro Shopin MwanjabanthuPetauke

1.3.2 Agro businesses eligible for fundingCARE Zambia (ADAPT project) has available an innovation fund open to all agro dealers

including females in the project sites.

Potential recipients to the awards are advised to apply through the relevant DistrictCoordinators.

The District Coordinators will appraise the applications on a pass or fail basis dependingon how the proposed concept is aligned to ADAPTs objectives.

District Coordinators will scrutinize the proposals which meet the pass mark anddiscuss with the applicants areas of improvement with a view of revising the proposals.

The proposed so reviewed will be submitted to the Business Advisor for finalassessment at ADAPT HQ in Lusaka.

1.3.3 Grant amounts and utilisationAgro dealers are requested to apply for grants up to ZK 5 000 000.00. Compelling applications

that fall slightly above this range may be considered. The goal of the Fund is to stimulate agro

dealers to adopt approaches that will promote, market, and distribute large volumes of seeds

and other agro inputs to rural areas in the 9 selected districts. The proposed action should target

the small holder market and the strategy to grow/expand the market should be very clear.The

innovation fund has been designed to help small upcoming agro dealers with:

Upgrading of business premises ( painting, Shelving, burglar bars, doors, windows) Advertising ( bill boards, point of sale leaflets, market fairs) Demand creation ( Demos, field days) Limited seed inventory Seed Kiosks


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Mobile seed sells through the use of Zam-bikes & Carts Protective clothing for shop employees Improve packaging of hybrid seeds and agro chemicals in appropriate and right

packages

Promotion of business (t shirts, chitenge material, field demonstrations) Hiring of technical expertise for a specified time period

1.4ADAPT reporting systems for agro dealers

Key performance indicators among others to measuring business growth are that of sales by

volume and value. Reporting for Agro-dealership is looked at from two stand points;

For self reflection(for Agro-dealers)

For accountability and learning purposes for ADAPT and any other stakeholders

1.4.1 Sales InformationUsing the cash sales, Agro-dealers are to compute the sales (value) disaggregated by type of

product. The same picture applies for volume of sales. This information informs the Agro-

dealer on how healthy the business is.

1.4.2 Farmer information

While the project focuses on developing ideal Agro-dealers-business development, the

ultimate impact as regards food security is at small holder farmer level. With this regard,

linkages or relationships between the customer (SHF) and the Agro-dealers is

established at transaction point. At this stage, the Agro-dealer uses the customer

tracking form, to collect data on the farmer. The data collected includes

# of customers(SHF) accessing Agro inputs from Agro-dealers per month

Location of farmers

Value and Volume of products purchased

1.4.3 Grant utilisationGrant utilization is measured using both the quantitative and the qualitative form. A cost

benefit analysis is measured (ROI).

In terms of qualitative measurements, changes as contributed by the innovation fund/ grant are

also measured. This is done using the categorization matrix as developed by the ADAPT team

where parameters such as, shop branding, Sales, number of transactions are assessed.


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2. UNDERSTANDING THE AGRO BUSINESS IDEA2.1Objective

To enable participants to Have a clear understanding of what an agro business is Decide what types of products they will stock Plan how they will reach their customers

2.2What products can an agro dealer stock?In an agro business, products are all items that agro dealers buys to sell to their customers.

Before an agro dealer decides on what products they will stock in their business, they need to:

Identify who their customers are Understand clearly the geographical coverage of where their customers are located Find out what the needs of the customer are in the area of agro inputs For the required agro inputs by potential customers find out who sells the products and

if they satisfy the needs of the farmers

Decide then what products to stock remembering that every product should satisfy aparticular need of the customers. The simple rule is that if you cannot sell it, d o not

stock it. In any agro business all products bought for resell should be in demand.

Stocking goods without demand will tie up business finances in goods unsold thereby

reducing possible profits and funds for reinvesting into working capital. The categories

of products that can be sold by an agro dealer are:o Seeds which include maize seed and vegetable seedso Grain preservativeso Veterinary drugso Agricultural chemicalso Farm implementso Poultry feed and drugs

Product Display in a Shop


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2.3Who are the customers for the agro business?The primary aim of ADAPT introducing agro dealership is to ensure that farmers receive

the right inputs at the right time at affordable prices. Farmers are the key customers for agro

dealers. Customers are the people or other businesses that want your products and services

and are willing to pay for them.

It is important to understand that every customer has his/her specific needs and not

everyone who comes to your shop is willing to buy. Therefore, efforts should be made to

entice such a person with satisfactory services so as to make him/her your customer. It is

easy to lose a customer than to find one. Remember the common saying that customer is

the king, so attend to him/her as a king. The agro dealer needs to understand the following

factors about customers:

Who they are: if you sell to other businesses, find out what size they are. For example,are they small agro dealers and where they are located?

What they do: this helps to understand what your business customers are trying toachieve.

Why they buy: if you know why customers buy a product or service, it is easier tomatch their needs to the benefits your business can offer.

When they buy: if you approach a customer just at the time they want to buy, you willmassively increase your chances of success. You can plan t open your shop when they

want to buy.

How they buy: for example some people prefer to buy from a phone while others prefera face-to face meeting.

How much money they have: you will be more successful if you can match what youare offering to what you know your customer can afford.

What they expect from you: for example, if your customers expect reliable supply of aparticular product and you do not disappoint them, you stand to gain repeat business.

What they think about you: if your customers enjoy dealing with you, they are likely tobuy more. And you can only tackle problems that customers have if you know what

they are.

What they think about your competitors: if you know how your customers view yourcompetitors, you stand a much better chance of staying ahead of your competitors.

2.4Which customer needs will the business satisfy?Agro dealers shops are usually located within the geographical location of their customers.

The reason for this type of setup is to ensure that the agro products and services required by

the farmers are easily accessed. For products and services to be bought, they should be

fulfilling specific needs of the farmers in general are:

To have access to inputs and implements at affordable prices and at the right time To have up to date information on all aspects of farming To be exposed to new farming technologies which when applied will result in

improved productivity. This will in turn bring about increased income at farmer

household level.


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To have agro dealers who will supply all their seed they need which is of goodquality and is from reputable companies.

2.5How will the agro dealer reach his/her customers?The process of getting the products and services to the agro dealers need to put in place. It is

important to ensure that the agro shop is located at a place close to where the customers can

reach easily. Some agro dealers limit themselves to putting up a shop at a place close to

where they reside in order to be able to secure their products. This is good but it may not

work well all the time. It is also better to consider how far the shop will be located from the

customers.

There are different ways in which agro dealers can make sure they reach their customers.

Some of the options they may engage in would be:

Setting up an agro shop at a location that customers can easily reach. Such a placewould be like a common business place where many farmers go to buy products for

household needs and farming needs. Such places are usually well established

business places, so there would be many agro dealers selling the same products to

farmers. The customer is the one who goes to the shop to buy the products. If any

agro dealer decides to take this option, they need to be ready to put strategies for

competition in place as they will be competing with many other agro dealers in the

same location.

They can set up the agro shop as in the option mentioned above. They employ asystem of taking the products to specific areas for customers who maybe far away

from the shop. They can do this like once every two weeks. The consideration tomake in this instance is the transport cost that will be incurred and how it affects the

price of the products. Some agro dealers have found the use of the ZAMBIKE to be a

cost effective mode of transport for this activity.

This option allows the agro dealer to have two ways of getting the products to the

customers. Firstly by customers coming to the shop and secondly the agro dealer

takes the products to where the customers are.

Agro dealers can have shops in central places and also have agents who are locatedin far off areas where customers reside. The agents could have small shops.

Agro dealers can have multiple shops located in different places. These shops can bekiosks that can be at places where there are many customers. The agro dealers needs

to place an employee at the kiosk to manage the sales. The agro dealer needs to put a

system for managing the kiosk ensuring profitability is achieved.


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2.6ChecklistCHECKLIST ON UNDERSTANDING THE AGRO BUSINESS IDEA

ACTION POINT TICK

In my shop I will stock the following categories of products:- Maize seed- Vegetable seed- Grain preservatives- Farm implements- Poultry feed- Poultry drugs- Agricultural chemicals

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

I know my circumstances very well.My circumstances are:

..............................................................................................................................

.............................................................................................................................

.............................................................................................................................

.............................................................................................................................

My business will satisfy the needs of my customers.The specific needs of my customers are:

.............................................................................................................................

.............................................................................................................................

.............................................................................................................................

.............................................................................................................................

I will setup the agro shop in the following way:- A shop at a common business place- A shop at a common business place but also deliver to distant

places

- A shop in my area and have agents in other places- More than one shop in different places

[ ]

[ ]

[ ]

[ ]


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3. LEGAL REQUIREMENTS FOR AGRO DEALERS3.1Objectives

To enable the agro dealers:

Identify all legal issues addressing agro business especially agro seed and chemicalsellers

Understand the different requirements for registering agro business with differentauthorities and getting the relevant certificates

Understand the specifications of an ideal agro shop Learn how to manage contractsAgro dealers operate their businesses in an environment that has rules and regulations on

how such businesses should be run. The government through its different ministries anddepartments has put in place different regulations that the Agro dealer has to abide by.

These regulations concern among others business registration, seed sellers license, trading

licenses.

3.2What are legal issues for agro dealers?Legal issues for agro dealers are regulations that the government has put in place through the

different ministries and departments for Agro dealers to follow so that they operate their

businesses in an acceptable way. The Agro dealer needs to get specific certificates and licenses

to prove that they are following these regulations.

3.3Seed certification and control institute (SCCI) licenceThis certificate allows the Agro dealer to sell seeds and chemicals in their shops. The ministry of

agriculture and cooperatives has set up the seed certification and control institutes in different

locations of the country. In Zambia, these are found in Lusaka, Eastern Province and on the

Copperbelt Province. At present it is K15, 100 per application. Inspectors from the institute will

then come to the agro shop to conduct inspection of the premises. They will look out for:

The size of the shop The ventilation in the shop The shelving especially if the shop will stock chemicals What other products being sold in the shop

The license will be issues when the inspectors are satisfied that all the aspects are according to

requirements. This license has to be renewed annually.

3.4Council trading licence


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3.7Business premisesThere are specifications on how the agro shop should be set up. For the licenses to be given, the

Agro dealer should make sure that the shop is at the expected minimum standard. Specific

things to ensure are in place are that:

The shop is big enough to accommodate the stock There is enough ventilation to allow free air circulation. This is good for both the

products and the people working in the shop

There are no foodstuffs being sold in the shop The shelves for the products are in place

You should avoid putting products like fertiliser on the floor. It is important that before you

start renovating or constructing the shop, you consult with experts from either the ADAPT

office or the agriculture extension officers from the ministry of agriculture and cooperatives.

3.8ContractsThe Agro dealer undertakes numerous business transactions to meet the business objectives.

He/she acts as a distributor/agent for suppliers, regularly buys and sells goods for resell and

accesses several services (hiring employee, renting ) to run the business. In some cases, the

Agro dealer has appointed agents who represent and make sales on behalf of the Agro dealer

on a commission basis. In so doing, it is important that the terms of all the transactions with

the suppliers and agents are clear and of mutual benefit to both parties. Having a contract is

thus vital to make sure that services/goods are delivered timely, savings are made and to ensure

that there is effective communication among parties involved in the various business

transactions.


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3.9Health and safety in an agro business:Considering that most agrodealers recruited are start ups who lack skills in safe use and handling

of chemicals, as revealed by the training needs assessment, it is critical that Agrodealers receive this

knowledge and skills needed to run their businesses in a safe manner in order for them to be

certified and allowed to stock chemicals by the environmental council of Zambia. Otherwisewithout this training and certification they run the risk of having their products confisticated and

their business closed.

Instead of ADAPT delivering the training, the project engaged CropLifeto conduct technical

training in safe use and handling of chemicals. CropLifeZambia is a local private sector association

of agricultural chemicals importers and distributors and is the member of the international

CropLifeassociation representing the global crop protection industry. Crop life Zambia is the only

organisation in the country conducting safe use and handling of agro chemicals as well as certifying

its trainees as approved by the Environmental council of Zambia which is the public environmentalregulatory body.


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3.10 ChecklistCHECKLIST FOR LEGAL REQUIREMENTS

ACTION POINT TICK

My business is registered with PACRO [ ]

I have a business bank account[ ]

I have a certification and control institute licence[ ]

I have a council trading licence [ ]

I have a licence from ECZ [ ]

My business premises comply to the minimum expected standardsfor an agro shop

[ ]

4. MARKETING4.1ObjectivesTo enable the agro dealers to:

Understand the importance of marketing in a business Plan how to use the 5Ps of marketing in their business Decide what promotional activities they will use in their business


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4.2What is marketing?Marketing is everything you do to find out who your customers are and what they need and

want. It is how to satisfy them and make a profit by providing the products or services they

need, setting prices that they are willing to pay, getting your products or services to them,

informing and attracting them to buy your products or services

4.3Importance of marketingMarketing is important for several reasons:

The agrodealer will stock the products that need all the time. Marketing will give an indication on what prices to charge for varied products, and still able

to make a profit for traders.

Promoting your products by advertising and good customer service will attract customersservices to buy from your slop.

Marketing will help you know your customers and competitors fully. It is essential to do amarket research and learn your customers and competitors. Find out about your customers

and competitors. Find out if there are enough customers.

4.4Market researchMarket research is the process by which business people go out to find information about their

customers and competitors. It is important to always listen to what your customers need and do

not need. When their needs change, change your products and services to satisfy the new needs.

When you know what your customers want, you can provide those products or services and

increase your sales. If you sell products which need packaging, you can also change the

packaging to suit the needs of your customers.

In a market research, the following information should be obtained:

Which different kinds of customers want your products or services? What products do they want? What prices are they willing and able to pay? Where are the customers and where do they usually buy? How often and how much do they buy? Who are your competitors and what do they offer? What are the gaps in the market? What are the gaps in the product range? What is the competition doing? How should we advertise? What should our message be?

Remember that the customer is the most important person for your business success. More

satisfied customers means larger sales and profits.


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4.5The 5Ps of marketingThe 5 Ps of marketing are like stepping stones between your business and your customers. To

reach your customers and increase your sales, you will need to learn and use all five Ps of

marketing. All 5 Ps are very important and must be strong. If one or more Ps are missing, it

becomes a challenge to reach your market effectively.

Use each of the 5 Ps to satisfy your customers and improve your sales. Satisfied customers will

come back to buy some more from your business and will tell other people to buy from your

business. The 5 Ps are discussed one at a time.

4.5.1 ProductsAll businesses sell products or services in order to make profits and be successful. People buy

products for various reasons. The characteristics of the products will influence the customers

decision to buy. The characteristics for agro products include:

- Product quality- Colour of product- Function of the product- Packaging of the product

4.5.2 PriceTo set the price can be difficult but it is very important. Your business may have very good

products or services, but if your prices are wrong, you will not sell much. When you work out a

price on a product or service, you need to know the product cost. Remember your total profit

from sales depends on how much profit you make on each product or service and how many of

each product or services you are able to sell.

How to set your prices

In general, your prices must be low enough to attract customers to buy and high enough to give

a profit. You must have certain information before you decide what prices to charge your

customers. To set your prices you need to know your costs, know how much customers are

willing to pay, know your competitors prices and know how to make your prices more

attractive.

4.5.3 PlacePlace means location where your business is situated. Location is especially important for

agro dealers who need to be where their customers are. Place, also means different ways of

getting your products or services to your customers. Your business may have good products at

prices that customers are willing to pay, but sales may still be low. The reason may be that

customers do not know where to buy your products or services. This has been discussed in

chapter 2.5.

4.5.4 Promotion


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Your business should know how to attract customers for them to buy your products and

services. Your business may be located in a good place, have good products at prices that

customers are willing to pay, but your sales may still be low because you do not tell people

about your business and what it can offer. Promotion means informing and attracting the

customers to buy your products or services. Do not sit and wait for customers to come to you,

instead promote the products you can sell more and increase your profits by:

Advertising- making customers interested (inform, remind and persuade) usingcommunity radio programmes, TV, posters, newspapers, brochures, etc.

Sales promotion- getting customers to buy more through discounts Direct selling Visiting targeted customers Sponsorships promote community programmes (social responsibility) Exhibiting at Agriculture shows and community meetings

There are promotional activities unique to agro dealers. In order to increase business

performance the agro dealers can be involved in the following promotional activities:

Seed fairs:Most agro dealers stock maize seed. In the process of stocking maize seed,some agro dealers become agents or stockists of particular maize seed. Such agro dealers

association, the ADAPT project or the seed company can spearhead the organisation of a

seed fair. Seed fairs are organised for a particular location targeting farmers in the area.

Farmers are given chance to find out specific information about each type of maize seed.

They also have opportunity to buy the seed.

Demonstration plots: Some agro dealers work with the seed companies so that they aregiven seed for planting in a demonstration plot. At an agreed time, farmers in that area

where the plot is are invited to come and see how the seed performs with good

management. Farmers are able to see this performance and can decide to buy the seed

from the agro dealers shop. Agro dealers are encouraged to grow different varieties of

crops in demonstration plots and apart from rain fed maize which is commonly grown.

The agro dealers can also have demonstration plots for vegetable crops as well as

technology demonstration like irrigation equipment

Field days: These are open days when farmers and other partners promoting agrodealers businesses come on an appointed day to learn what has been done at a

demonstration plot. Agro dealers who are not hosting the demonstration plots are

encouraged to attend field days so that they could also do the same. Common field days

cover rain fed crops especially maize.


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Demo Plo Field Day

4.5.5 The business personIn customer care, the relationship between the customer and the agro dealer is extremely

important. The quality of customer care is particularly highly dependent on the agro dealer,

therefore the agro dealer needs to have good customer care skills especially communication

skills. Whoever is in charge of the shop should be a well trained person in customers care. The

shop owner who is not sensitive to customer needs and lack communication skills could make

the business lose customers. The shop attendants or employees of Agro dealers should be

motivated to provide better services to the customers.

How to be a successful sales person

To improve your skills as a salesperson and increase your sales you need to know your

customers and their needs, know how to treat your customers and know your products and

how to sell them

Know your customers and their needsCustomers are different, some are careless with their money and some never have enough

money. Try to understand and get to know every customer. Find out what the customer really

needs by listening and asking questions. Then satisfy the customers need by giving advice andoffering suitable products or service.

Know how to treat your customersSuccessful sales people try to see things through the customers eyes. This means that you

should try to think of yourself as a customer. Treat your customers the way you like to be

treated when you are a customer. Greet your customers. Call them by their names.

If you are already serving a customer, greet new customers and tell them that you will soonhelp them.


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Be polite and friendly so that customers feel welcome and enjoy visiting your business.Smiles and friendliness cost nothing.

Dress well- look tidy and clean. Offer your help. Do not talk too much. Listen carefully to what your customers say and ask questions to

find out what they need.

Be patient. Give the customers time to ask questions and decide what they want to buy. Always be honest and trust worthy. For example, tell your customers both good and bad

points about a product or a service.

Do not disagree with your customers if they decide they do not want a product. Allowthem to say no. Never argue with a customer. Make your customers feel they are right.

Thank your customers for coming to your business. Know your products and how to sell themTo gain respect and trust from your customers and sell well, you need to know your products.

Your customers may ask many questions about your products. Be sure you know the answers.


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4.6ChecklistCHECKLIST FOR MARKETING

ACTION POINT TICK

I have done market research and I have the following information:o Who my customers areo What customers want and needo How much my customers are willing to payo Who my competitors areo What products my competitors offer and their process

[ ]

[ ]

[ ]

[ ]

[ ]

I know what products will be stocked in the shop [ ]

My business premises are located:o Near the customerso Far away from customers

[ ]

[ ]

I will only undertake the following promotional activities:o Community radio programmeso Painting the shopo Visited targeted customerso Exhibiting at agriculture showso Attending seed fairso Hosting demonstration plotso

Hosting field days

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

I know how to treat customers well [ ]

My workers in the shop treat all the customers well [ ]


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5. STOCK MANAGEMENT5.1ObjectivesTo enable the participants to:

Understand the importance of stock management in a business Use stock records Do stock taking5.2What is stock and stock management?Stock is all the products that the business has for sale. In the case of the agro dealer, stock is the

goods a business buys from other businesses and keeps to resell. It includes seed, fertilizer,chemicals, packaging materials, agricultural equipment, etc.

Stock control means organizing the way you:

Receive your stock Record your stock Store your stock Arrange your stock Check your stock Re-order your stock

5.3Importance of stock managementGood stock management helps to keep:

The right goods and materials, the right amount of stock- not too much or too little Helps to keep your stock in good condition Prevents stock from being lost through pilferage and other means Re-ordering stock at the right time.

5.4Guidelines to better stock management Keep the right amount of stock Always think of what the customers want and make sure that you do not run out of

stock. Keep enough stock as possible. This means less money tied in stock and more

money for the business

Stock goods that sell quickly; know which products sell quickly and the ones that sellslowly. Buy products that sells quickly because that means more sells and more money

for the business

Avoid having stock that sells slowly as this will tie up your money


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Offer stock that does not sell quickly at a discount if the customers cannot buy it at theregular price as long as it is not at a loss

Arrange and display stock in an orderly manner; arrange and display goods neatly sothat it is easy for the customers to see and for easy checking and counting. Keep similar

goods in groups and near each other

Keep goods that are easy to steal in safe places Check stock regularly; always check that you have the right amount of goods that is

needed. Check to find out if stock is missing and check for damaged stock or stock that

is not in good condition. Try to sell such stock at a discount. Check stock to find out

when to order more

Keep stock records Use the stock records to know which goods sell well and which sell badly. This helps to

know which goods to buy. Use the stock records to find out which goods to re-order,

when to order and what quantities are needed.

5.5Stock takingStock taking is a system of physically counting and writing down all the stock in the business

on a stock taking list. It is important to know exactly:

What kind of stock is available How much stock is available The condition of the stock

Importance of stock taking

It helps to find out if there is missing stock. The problem of missing stock can be an error in

filling in stock cards, theft or something else. When stock is counted it helps to find out:

If any stock is damaged and not in good condition Which goods sell quickly and which sell slowly When to re-orderIt is good to do stock taking regularly but also when something is wrong and when you suspect

goods are being stolen. Remember that it is not good for the business to close for stock taking.

When the business closes then you are not selling and there are no sales. It is better to do stock

taking at a time that will not inconvenience your customers.


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5.6Stock records template

STOCK CARD

PRODUCT:

Date In Out Balance


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5.7ChecklistCHECKLIST FOR STOCK MANAGEMENT

ACTION POINT TICK

In order to manage stock well in the shop I always:- Record all stock in stock daily cards- Record all stock received- Arrange stock well- Follow the first in first out rule- Make sure stock does not run out before ordering some more- Stock goods that sell quickly

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

I routinely and systematically carry out stock taking [ ]

I can calculate the re order levels for all products [ ]


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6. RECORD KEEPING6.1ObjectivesTo enable the participants to:

Understand the importance of keeping records Use a daily cash record Use a simple analysis book6.2What is record keeping?Record keeping means to write down how much money your business receives how much

money your business pays out. It also means writing down the types and quantities of productsthe business receives and types and quantities of products go out of the business.

6.3Importance of record keepingRecords are important management tools that enable business owners to:

Provide the business person with a history of what has happened in the business Assess the physical and financial performance of the business. Assess how a business is progressing over a given period Facilitate advisory services to business persons wishing to borrow money for investment,

sales and marketing of products and services.

To legal responsibilities of the business like paying taxes6.4Types of recordsBusinesses keep different types of records. The business owner usually decides on what type of

business records for their business considering the size of the business and the employees

assigned to compile the business records. All records in the business should have relevant use.

They should also be easy enough for the business owner to understand and interpret. Similarly

agro dealers need to keep records that will add value to the running of the business. They canstart with simple records but as the business grows new records will have to be introduced in

that particular business. The simple records an agro dealer can employ are: the daily cash

records and the simple analysis book.

6.4.1 Daily cash recordThis is where all money from all sales is recorded on a daily basis. The products sold, quantity

and the price are recorded. The daily cash record will only show money coming into the

business through sales. It will not show the money the business is spending. As a result, it

cannot be used on its own as a complete business record. It works well when you also use thesimple analysis book.


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Presentation on Record Keepingduring training

Daily cash Record

Date:

Details Quantity Unit price Total

Total for the day


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6.4.2 Profit and loss statementFollow the following example to make a profit and loss statement. The daily records must be up

to date and accurate in order to make a correct profit and loss statement. Follow the steps

below:

Sales K 5,000,000

Cost of Goods Sold K 2,000,000

Gross profit K 3,000,000

Indirect costs K 700,000

Net profit K 2,300,000

The profit and loss statement is made on a monthly basis. As the agro dealer compares business

performance by comparing the profit and loss statements for the different months, there will be

a realisation that the business might make losses in certain months and profits in other months.

Though this is expected the trend should not be that in one year, there are more months were

the business makes losses than were it makes profits. It is for this reason that business people

should also make a profits and loss statement every quarter and annually.


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6.5ChecklistCHECKLIST FOR RECORDS KEEPING

ACTIVITY TICK

In my business I keep the following recordso Daily cash recordso Simple analysis booko Other records: ................................................................................

[ ]

[ ]

[ ]

I make profit and loss statement:o Monthlyo Per quartero Annually

[ ]

[ ]

[ ]

I compare the records for previous months to learn from differencesin business performance

[ ]

I am able to fill in all records without problems [ ]

All my workers can fill in all records in my business [ ]


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7. COSTING AND PRICING7.1ObjectivesTo enable the participants to:

Identify the types of costs in a business Cost the products and services in the business Understand how to price products and services profitably7.2What is costing?

Costing is the process of calculating how much you have spent to produce a product or offer aservice, before you can price that product or service at a profit.

What is pricing?

Pricing is the process of determining how much your products or services will be sold for after

carefully calculating the total cost of one product. The fundamental point to be noted under

pricing is that the prices chosen for the enterprises various products and services should give

that enterprise some profit to ensure sustainability and growth.

What is a price?

A price is a figure, which is arrived at after adding a profit margin to the unit cost of products.

7.3Importance of costingIf you know your costs, you are able to:

Set your prices in such a way that you make a profit Identify which items are most costly in the running of your business and if it is possible to

reduce certain costs

Avoid overpricing yourself out of competition (over pricing is charging prices which arewell above the average market prices)

Avoid under pricing yourself to bankruptcy (under pricing is charging prices which arewell below the unit cost of production)

The information you need to do effective costing comes from your own records of all your

transactions. That is why your record keeping must be in good order before you can do your

costing properly.


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7.4Types of costsThere are two types of costs involved when an entrepreneur is calculating his costs of

producing a product or service namely:-

Direct Costs Indirect Costs

The Direct Costs may also be broken down into two sub-costs namely Direct Labour Cost and

Direct Material Costs. For certain businesses, you may even have direct expenses. For

instance, a hammer mill running on diesel will have maize as the direct material; the hammer

mill operators wage as the direct labour cost and the diesel as the direct expense.

Direct costs are those costs which become part of the products or services which you produce,

for instance:-

A Farmers Costs

A farmers direct material costs are input costs such as:-

Seed Fertiliser Pesticide (where applicable)

A farmers direct labour costsare costs incurred for the payment of:

Clearing Ploughing Planting Application of fertilizer Weeding Harvesting Packaging Etc.Indirect Costs

Indirect costs are the costs of all other items, which you need in running your business but are

not in any way easily traced to products or services you sell. These may include: -

Rent of building Electricity Water Telephone Transport Salaries and wages for all workers who are not directly involved in production, e.g. the

owners salary, the security guards and the cashier


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Stationery Postage Repairs and maintenance Insurance Depreciation (wear and tear of fixed assets)

Fixed Assets

Every business utilises certain fixed assets in its operation process. Fixed assets may fall under

the following categories: -

Land and buildings Machinery/equipment Furniture and fittings Motor vehicles

A retailer and Wholesaler have only direct material costs and indirect costs. There are no direct

labour costs for a retailer and wholesaler as he is not involved in production, but only sells that

which has already been produced elsewhere.

For a retailer and wholesaler, such as an agro dealer business or agro dealer agents, the direct

costs are the cost of goods, which they purchases for resale.

7.5Costing process for agro productsTo calculate the total cost of each product the following steps are taken:

Step one: Calculate direct material costs

List all the products that you will order for resell. Each type and size of products shouldbe listed separately. If costing is for a new business, the list of products should comprise

of all the products that will be in the opening stock

State the quantity required for each product listed Indicate the unit cost for each product. This is the amount of money paid for the

product. Calculate the total cost of the same products by multiplying the required quantity by

unit cost.

Add up the total cost column to get the total amount for material costProduct Quantity

required

Unit cost Total cost

(K)


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Total Material

cost

Step two: Calculate indirect costs

1. List all the indirect costs. Indirect costs are calculated on a monthly basis. Differentbusinesses have different indirect costs

Item Monthly costs

Rent of building 100,000

Electricity 50,000

Water 20,000

Salaries 300,000

Transport 50,000

Interest on loan 50,000Repairs and maintenance 100,000

*Depreciation 91,666.67

Total Indirect Expenses761,667

Step three: Calculate the indirect cost percentage

2. Total material cost divided by total indirect cost and then multiply by one hundred will giveyou the percentage.

Total indirect cost X 100 =.....%

Total material cost

Step four: Calculate total cost product

Indirect cost percentage=


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PRODUCT UNIT COST INDIRECT COST

PER PRODUCT

(unit cost x indirect

cost percentage

TOTAL COST

PER PRODUCT

PRICE


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7.6Pricing of agro productsSome questions to consider when pricing are:

What is the cost or break-even price? What are the competitors prices? How much of a premium can you get above the competition? Can the majority of the customers afford the price? Does it encourage sales of related items? Are sales soaring or slumping?Importance of pricing

Pricing ensures that:

The prices you charge are able to give your enterprise a profit The prices you charge are not pushing you out of competition The prices you charge reflect the value and quality of your products and services7.7Break-Even Point (BEP)It is important to know how many items should be sold before an Agro dealer can make a

profit. BEP refers to the number of units of agro products one should sell before making a profit

or loss. It is a point where neither a profit nor a loss is made. To calculate the BEP, establish

fixed costs per month total all variable costs (monthly costs that fluctuate according to the

volume of operations such as direct costs plus all indirect costs except fixed costs) and calculate

the unit variable cost by dividing the total variable costs by total quantities of an agro product

purchased i.e. fertilizer. Remember that the formula works well if you are stocking few items

otherwise calculating BEP for each item if you stock more than 4 products can be cumbersome

and allocation of fixed and variable costs to each product may be arbitrary. The following

formula is used to calculate BEP:

BEP in Units = Fixed Costs / (Unit Selling Price - Unit Variable Cost)

Taking the example of selling fertiliser above, if monthly fixed costs are K2, 000,000. Unit Selling

Price K280, 000 and Unit Variable Cost K200, 000, the BEP will be as follows:

BEP = 2,000,000/280,000-200,000

BEP = 25 Bags

This means that the Agro dealer will make losses if bags of fertiliser sold are less than 25. The

Agro dealer should sell more than 25 bags in order to make profits.


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8. FINANCIAL PLANNING8.1ObjectivesBy the end of the session, the participants will:

Understand the importance of making sales and costs plans and cash plans Know how to use budgeting as a financial planning, performance monitoring and control

management tool

Know how to ration working capital Understand and appreciate the importance of making savings and investments in business

for growth and expansion purposes.

8.2Importance of financial planningIn any business it takes some time before money from sales starts to come in. During this

period, the business is very vulnerable and it is important to keep a close eye on the financial

situation. It is important that the business makes a profit and has enough cash to run the

business. A business must have higher sales than cost at all times otherwise it will run out of

cash. It is important to plan for both profit and cash flow and while running the business there

is need to follow up on the sales, costs and cash flow. The Agro dealer needs to plan and

monitor the financial situation of the business by doing the following;

Making a Sales and Costs Plan

Making a Cash flow Plan Keeping records and comparing with both plans every month Taking action if anything goes wrong8.3A sales and cost planA sales and costs plan will show the Agro dealer, the sales, costs and profit the business is likely

to have each month. A sales and costs plan is made annually. Forecast the costs to be rather

higher than you think and the sales a bit lower. This way you will make sure that your business

can survive even if things do not go well. The Agro dealers needs to seek for information when

making this plan and should avoid guessing.

To make a sale and cost plan, the Agro dealer needs to follow these steps:

Step 1. Forecast sales for each month of the year

Step 2. Forecast direct material costs per item

Step 3. Forecast indirect costs for each month of the year

Step 4. Calculate total direct material and indirect costs for each moth of the year.

Step 5. Complete the sales and cost Plan.


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An example of a Sales and Costs Plan Format that the Agro dealer can Use.

Details Jan Feb March April May June July Total

1.Sales

2.Direct Material costs

3.Gross Profit(1-2)

4.Indirect Costs

5.Net profit(3-4)

8.4Cash flow planThis is a forecast which shows how much cash you expect to come into and go out of the

business each month. The cash flow plan will help the Agro dealer make sure that the business

does not run out of cash at any given time.

Reasons a business may run out of cash

You have to buy materials/goods before you sell anything. This means that cash goes outbefore cash comes in.

If you give credit to customers you do not get paid immediately. You often have to buymore goods or materials before the credit customers pay you.

You need to buy equipment that will help the business to make profit in the future, but youhave to pay for the equipment before you earn the profit.

How to make a cash flow plan

To make a cash flow plan, follow the following steps. Steps 1-4 are for CASH IN. Steps 5-9 are

for CASH OUT.

Step 1 Cash at the start of the month:This is the amount of cash you expect to have in the

cash box plus the money you expect to have in the bank. If you are starting in the month of

January determine the cash at hand for this month.

Step 2 Cash in from sales:This is cash sales during the month. You look at your sales and

costs plan to find the forecasts for the cash sales for each month.

Step 3 Any other cash:This is the amount of cash you expect to get from other sources such

as a bank loan, a donation or grant. Forecast any other cash in for the month of January

Step 4 Total Cash in:You add up all the cash in amounts from steps 1 to 3. This is the total

cash expected to come into the business per month.


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Step 5 Cash out for direct material costs: This is the amount of cash you forecast the

business will pay to buy goods. You find the amount in the sales and costs plan. For the month

of January you forecast the cost as projected in the sales and costs plan.

Step 6 Cash out for indirect costs:This is the amount of money the business forecasts topay for the indirect costs in each month. The costs for the month of January are obtained from

the sales and costs plan.

Step 7 Cash for planned Investment:This is the amount that the business will pay for any

planned investment. There is need to forecast when this investment will be made.

Step 8 Interest and Loan Repayment:This is the amount that the business has to pay to

service any loan obtained. Forecast how much will be paid monthly to service the loan.

Step 9 Any other cash: any other costs the business is likely to pay out, such as renovations.

Step 10Total cash out:Add up all the cash out amounts from steps 5 to 9. This is the total cash

amount that is expected to go out of the business. Calculate this for the month of January.

Step 11Cash at the end of the Month:Subtract the total cash out from the total cash in. This is

the cash at the end of the month in this case for the month of January. Cash at the end of the

month is cash at the start of the next Month i.e. the cash at the end of January is the cash at the

start for the month of February.

An example of a cash flow plan

Ca

shin

Jan Feb March April May June

1.Cash at start of the month

2. Cash in from Sales

3.Any other cash in

4.TOTAL CASH IN

Cashout

5. Cash out for direct material costs

6. Cash out for indirect costs

7. Cash out for planned investment

8. Loan repayment

9. Any other cash out

10. TOTAL CASH OUT

11. CASH AT THE END OF THE MONTH

(4-10)


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8.5BudgetingBudgeting is another important tool that will assist the Agro dealer to ensure that spending is

within projected expenses. A budget can be defined as a plan quantified in monetary terms,

prepared for a defined period of time showing income and expenditure to be generated andincurred respectively. In the case of the Agro dealer, it is important to make a budget before

undertaking any activity. This will include:

Estimating sales volumes and income Identifying the activity to be undertaken. E.g. purchasing of goods for resell. Identifying the goods to be bought and other support activities e.g. seed, fertilizer,

pesticides, fungicides, transport, lunch etc

Identifying the quantities required for each item e.g. 50 x 3g Rape seed, 100 x 100gdithane M45.

Costing for each item to be bought e.g. 50x 3g rape seed x K4500/3g rape seed= K225000. Summing up all the costs. Add up all the costs to determine the total budget required to

buy the goods for resell.

When the goods are bought, the Agro dealer needs to compare the planned budget and the

actual expenditure. This will help in understanding the over or under expenditure. In the case

of an over expenditure, there will be need to identify ways to control expenses contributing to

the over expenditure.

Importance of budgeting

Control over costs such as not allowing costs that were not planned for. Basis for comparison and assists in evaluation. Assists in Planning as you take into account the expenses and income from the previous period. 8.6Savings and investmentIn any business the profit realized is expected to assist in increasing the scale of the business. If

the scale of the business increases it is likely that the business will expand in terms of

introducing new products or outlets. Agro dealers therefore need to plan for such growth andexpansion. The utilization of profit realized from the business needs to be carefully planned.

The Agro dealer can either save or invest the profits realized.

What is savings?

Accumulated wealth/ money put aside for future use. Money or anything of value that is

deliberately put aside to grow in value and can be used in future.


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8.7ChecklistCHECKLIST FOR FINANCIAL PLANNING

ACTIVITY TICK

I make financial forecasts in my business by making:o A sales and cost plano A cash flow plan

[ ]

[ ]

I often do budgeting for the business [ ]

I often keep savings in the business account [ ]

I reinvest business profits into the business [ ]


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9. ANNEXES9.1Elements of a business planBusiness Planning is a process of establishing the current situation of a business and identifying

the new and desirable destination in the future and indicating how that destination will be

arrived at in a specified period of time. Business Planning also includes the processes of

identifying the key players (investors, family members, friends or relatives and customers) who

will be part of the process and the roles each of those will play in realizing the intended goal.

When planning for business it is important to answer the following questions:

Where is my business now? Where is it going? What should I do for my business to get there?

How will it get there? Who are the potential investors? Who are the suppliers? Where are the

customers? Who are my competitors? When shall my business reach that destination?

The end result of the business planning process is to produce a business plan which is a written

document prepared by the entrepreneur. It is a written document which contains estimates of

future sales, (agro inputs to be ordered) production, future costs and future profits.

Executive Summary

This part of the business plan is written at the end but presented at the beginning in the

business plan. It should address a number of issues or questions that anyone picking up the

written plan for the first time would want to know. It should address the following:

What is this business? How is it different or unique? Who are the individuals starting this business? How will they make the money and how much? How much will it cost?The Business Idea

The business Idea sets out the basic concept that the entrepreneur is attempting to develop.

Investors consider it very important because they can determine the amount of investment

needed without having to read through the entire plan. It describes:

The name and address of the company The names of entrepreneurs, telephone number, fax number, mobile number, email address

and website address if available


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The nature of business (products or services to be sold) The different types of customers The amount of financing needed and the sources.a. Environmental and Industry AnalysisThis is sometimes referred to as the SWOT analysis of the business as already discussed in topic

1 above. Critical issuesin environmental and industry analysis include:

What are the major economic, social, technological, legal and political trends on a national and

international level? What are the total industry (agriculture) sales over the past five years?

What is the anticipated growth in this industry? How many new Agro dealers have entered this

agricultural industry in the past three years? What new products have recently been introduced

in agricultural industry? Who are the closest competitors? How will your business operationsbe better than competitors? Are the sales of your major competitors growing, declining or

steady? What are the strengths and weaknesses of each of your competitors? What trends are

occurring in your specific market area? What is the profile of your customers? How does the

profile of your customers differ from that of your competitors?

b. Description of the BusinessThis is about you and what you say about your business. It provides a complete overview of

products, services and operations of your business. In describing your business, you should beable to answer the following questions: What is the mission of the business? What are the

reasons for going into this business? Why will you succeed in this business? What development

work towards this business has been completed to date? What are your products and services?

Describe your products or services (if you are farming) including any trademark etc? Where

will your business be located? Is the building rented or of your own? Old? Does it need

renovations? Why is this building and location right for your business? What office equipment

will be needed? What skills do you have and / or will you need to successfully implement the

business plan?

c. Marketing PlanThis describes market conditions and strategy relating to how products and services will be

packaged, distributed, priced and promoted. It is in this section where an Agro dealer analyses

the 7 Ps of marketing (product, price, promotion, place, processes, people and physical

evidence) and determine the right mix to enhance the business.


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9.2Association formationWhat is an association?

An association is a group of persons organised for a common purpose.

Objectives of an Association

Some of the objectives of an association/ cooperative should be to;

Facilitate farming business operations for its members. Make money for its members. Enlighten members on economic and marketing developments. Protect members from unfair treatment in business dealings. Lobby for better services from government and other market players for its members. Provide a forum for exchange of ideas and information relating to members needs.Who will form an association?

People who know and trust each other People who have a common interest People who need each other People who will gain a clear advantage (usually in financial terms) by working together People who appreciate all the benefits of acting together. There must be a clear advantage

(usually commercial) in associating. If not, it is a waste of time and money. An association

should be able to improve the economic status of its members by working hard on their

behalf.

Benefits of working with/through an association

Reducing input prices by bulk purchase (discount benefits) Availability of products and services will be known Reduced transport costs.Other befits of working with the groups include:

a. Provision of marketing information and adviceMembers can benefit from a poll of information which should be compiled and kept by the

secretariat. Government and other stakeholders find it easy to disseminate information

using associations.


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b. Improved market information flow and awarenessMembers are able to share information and become more aware of the economic

environment through association meetings. Suppliers and other collaborators can a

Agro Business Management Manual for Implementors and Agro Dealers

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Transcript of Agro Business Management Manual for Implementors and Agro Dealers