FINAL BUSINESS PLAN polished
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Transcript of FINAL BUSINESS PLAN polished
Cover Page
Table of Contents
1.0 Executive Summary....................................................................................1Chart: Highlights.........................................................................................1
1.1 Objectives................................................................................................21.2 Mission.....................................................................................................21.3 Keys to Success........................................................................................2
2.0 Company Summary.....................................................................................22.1 Company Ownership...............................................................................22.2 Start-up Summary....................................................................................3
Table: Start-up............................................................................................3Table: Start-up Funding..............................................................................4Chart: Start-up............................................................................................5
3.0 Products and Services.................................................................................54.0 Market Analysis Summary..........................................................................5
4.1 Market Segmentation..............................................................................5Chart: Market Analysis (Pie).......................................................................6Table: Market Analysis................................................................................6
4.2 Target Market Segment Strategy.............................................................74.3 Service Business Analysis.........................................................................7
4.3.1 Competition and Buying Patterns......................................................75.0 Competitive Edge........................................................................................7
5.1 Marketing Strategy..................................................................................85.2 Sales Strategy...........................................................................................8
5.2.1 Sales Forecast....................................................................................8Table: Sales Forecast................................................................................9Chart: Sales Monthly................................................................................9Chart: Sales by Year...............................................................................10
5.3 Milestones.............................................................................................106.0 Management Summary............................................................................10
6.1 Personnel Plan.......................................................................................10Table: Personnel.......................................................................................11
7.0 Financial Plan............................................................................................117.0 Financial Plan............................................................................................11
7.1 Important Assumptions.........................................................................11
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Table of Contents
Table: General Assumptions.....................................................................117.2 Break-even Analysis...............................................................................127.2 Break-even Analysis...............................................................................12
Chart: Break-even Analysis.......................................................................12Table: Break-even Analysis.......................................................................12
7.3 Projected Profit and Loss.......................................................................137.3 Projected Profit and Loss.......................................................................13
Table: Profit and Loss................................................................................13Chart: Profit Monthly................................................................................14Chart: Profit Yearly....................................................................................14
Chart: Gross Margin Yearly.......................................................................157.4 Projected Cash Flow..............................................................................16
Table: Cash Flow.......................................................................................16Chart: Cash................................................................................................17
7.5 Projected Balance Sheet........................................................................18Table: Balance Sheet.................................................................................18
Additional notes
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Potato Flour Kenya
1.0 Executive Summary
Potato Flour Kenya is a potato processing company located in Moi Ndabi, Naivasha County in the republic of Kenya. It can be described as a company in the food processing sector, primarily crushing, drying, milling, packaging and distributing potato powder (flour) .This Company targets the largely untapped organic food sector, so this is its main selling point.
Potato Flour Kenya(PFK) has a mission of supplying quality, organic food that improves health, enhance community development and increases food security in Kenya.Additionally,it has a vision of being the leading processor of quality potato powder and products in Kenya and the larger East African region.
Our choice of Moi Ndabi was informed by the strategic location between Nakuru and Naivasha, as well as the fact that, this area is fertile with good climatic condition for growing of potatoes.
PFK seeks to create a new niche in the food industry, generating sales by more than Ksh.2, 520,000 over the next three years while at the same time, maintaining a gross margin of at least 70%. PFK has a philosophy of "organic is the best" regarding both product and service, PFK will seek establish itself as a purveyor in the sale of potato powder/flour in Kenya, mapping out entire eateries, restaurants, supermarkets, bakery industry and to some extent, the military-with these long shelf product.Indeed, the later is one of our competitive advantage over other perishable, unhealthy, processed foods. This business plan lays out our company concept, philosophy and forecasted financials. PFK hopes to clinch the $10,000 seed money so as to duly launch our business later this year.
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Chart: Highlights
1.1 Objectives
1. Attain sales of Ksh.1, 500,000 in the first year.2. Increase second year sales by 33% and maintain it in the third year.3. Increase production capacity by the third year of business.
1.2 Mission
PFK is a food company that will holistically be dedicated to providing T quality, organic food that improves health, enhance community development and increases food security in our country.
1.3 Keys to Success
Dedication to quality organic product High level customer satisfaction. Giving back to the community. Enhancing food security
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Empowering the youth
2.0 Company Summary
Potato Flour Kenya (PFK) is a premier potato flour processing company based in Moi Ndabi, Naivasha. It focuses on potato powder making to be used as food additive, ingredient flour in making chapattis, doughnuts, bread rolls, biscuits, baby formula, and juice among a host of other products. Its main raw material shall be potatoes obtained from farmers. It shall use improvised crushers, dryers, sorters and milling machines to process the product.
2.1 Company Ownership
PFK is a partnership of youths coming together to form the company. It has the intention of converting to a limited company and later sells shares to other young people in the country. At the moment, it is registered with a group of 5 young people.
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2.2 Start-up Summary
PFK estimates start-up costs come to Ksh.1000, 000 which is mostly improvised solar dryers, sorters, packaging maching, sealant and sealant. To augment the start-up costs, we shall seek further funding from outside the seed capital. Below are our assumptions shown in Table 1 and Illustration 2?
Table: Start-up
Start-up Ksh.
Requirements
Start-up ExpensesLegal 50,000 Office Supplies 20,000 Beginning Inventory 450,000 Consultancy 20,000 Allowances 50,000 Insurance 30,000 Land lease 30,000 Design & Construction 300,000
Advertisement 50,000
Total Start-up Expenses 1000,000
Start-up AssetsCash Required 1000,000 Start-up Inventory 0
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Other Current Assets 0 Long-term Assets 0 Total Assets 0
Total Requirements 1000,000
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Table: Start-up Funding
Start-up FundingStart-up Assets/expense to Fund 1000,000
Total Funding Required 1000,000
Assets Non-cash Assets from Start-up 0 Cash Requirements from Start-up 840,000 Additional Cash to be Raised 160,000 Cash Balance on Starting Date 1000,000 Total Assets 1,000,000
Liabilities and Capital
LiabilitiesCurrent Borrowing 0 Long-term Liabilities 0 Accounts Payable (Outstanding Bills) 0 Other Current Liabilities (interest-free)
0
Total Liabilities 0
Capital
Planned InvestmentInvestor 1 840,000 Other 0 Additional Investment Requirement 160,000 Total Planned Investment 1,000,000
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Loss at Start-up (Start-up Expenses) (1,000,000)Total Capital 1,000,000
Total Capital and Liabilities 1000,000
Total Funding 1,000,000
Chart: Start-up
3.0 Products and Services
PFK will be involved in selling potato powder(flour crushed with peels).This powder will be uniquely packaged into 25g,50g,75g,100g,150g,200g and so on targeting various segments of the market. The product will be used as a food additive(seasoning),ingredient flour mixed with other flours to make chapattis,mandazi,doughnuts,biscuits,cakes,bread rolls, baby formula and
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juice. PFK will also target the Kenya military that have a special demand for foods with long shelf life. PFK will supply the products to eateries, hotels, supermarkets, retail outlets, wholesalers, direct industries such as bakers as well as home deliveries. Our sales people will offer individualized service for our various clients. Promotions will also be organized on weekends at various joints and offer samples in new markets.
.
4.0 Market Analysis Summary
Potato Flour Kenya will mainly focus on local markets, with a special bias on restaurants, eateries, retail outlets, wholesale shops, supermarkets as well as bakeries.
4.1 Market Segmentation
PFK has divided its market into four different segments: organic foods enthusiasts, bakers, retailers/wholesalers, mothers weaning babies with formula food and even the military. These groups of people inter-relate when it comes to certain food commodities.
Organic foods are beginning to fill up shelves in supermarkets as more and more people seek alternative foods from the fast foods. These organic foods include millet flour, soya flour, cassava flour, amaranthus flour (terere) and so on. Mothers introducing their babies to dry foods would certainly want to make formula food for their babies. Potato powder would come in handy instead of mashing potatoes with boiled bananas.
Hoteliers have clients with a fine taste for special meals. They can make do with potato soup gravy with other vegetable soups, served as an appetizer. We are targeting 3-5 star hotels as well as other hotels and eateries.
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Bakeries are nowadays sprouting all over major towns. They use wheat flour, cassava flour, and soya flour among others to flavour their cakes, bread rolls, biscuits, cakes doughnuts and so on. Our product will easily find its place among this flour due to its great potato flavour.
Wholesalers, supermarkets and retail outlets are the best stokers of products .Our clients wishing to use the product in their homes will readily find the product in these outlets.
Lastly, word around is that the military are known to stock foods with long shelf life. Our product will find ready market from the military forces. With a contract to supply the army with such a product, PFK will have an enviable business with little or no competition.
Chart: Market Analysis (Pie)
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Table: Market Analysis
Market Analysis
Year 1 Year 2 Yea 3 Year4 Year 5Potential Customers
Growth
Weaning moms
15% 250,000 300,000 350,000 400,000 400,000
Organic food enthusiasts
10% 200,000 250,000 300,000 350,000 380,000
bakeries 20% 250,000 300,000 350,000 400,000 400,000
Wholesalers 25% 350,000 400,000 450,000 500,000 500,000
military 10% 200,000 250,000 300,000 300,000 360,000Hoteliers 20% 250,000 300,000 350,000 350,000 360,000Total 100% 1500,000 1800,000 2100,000 2,300,000 2,400,000
4.2 Target Market Segment Strategy
As earlier noted,PFK will target certain segments of the consumer population, mainly weaning moms, organic foods enthusiasts, bakeries,wholesalers,hoteliers and to an extent, the military. From our analysis, these groups will find great use of our product range.
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4.3 Service Business Analysis
PFK will curve a niche for itself and position itself strategically among other players in the same sector such as:
1. Traditional food stores: they supply other flours such soya,millet,cassava,wheat etc
2. Bakeries : they supply bread rolls,biscuits,doughnuts,cakes etc3. Supermarket: stock local flours as aforementioned including imported
ones.4. Processing Companies such as Midland which process potato chops,
flakes etc
4.3.1 Competition and Buying Patterns
Potato Flour Kenya anticipates competition from established companies such as Midland as well as foreign farms pitching tent in Kenya’s potato hub, Nyandarua County. We are also cognizant of imported flours such as tapioca, popular food flavours.There are other cheaper flours such as cassava and soya. We shall ensure we harmonize prices with the current market prices and ensure we offer a quality product.
5.0 Competitive Edge
PFK’s competitive edge is our unique niche in the market as the sole suppliers of potato powder. Research in Kenyan market has shown that the product is not currently available. If we combine this near monopoly status with high quality product and aggressive marketing, we shall hold a huge share of the market before it even floods with the same product.
5.1 Marketing Strategy
PFK will employ consumer education as one of its marketing strategies will be education of the consumer .Through fliers, newspaper advertisements,
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online and special holiday promotions, PFK will seek to encourage people to eat healthy organic products.
We also considered Moi Ndabi as ideal location. Most of the other potato firms are coalesced in Nyandarua County, hence our choice of location, slightly outside the competing businesses. This place lies between Nakuru and Nairobi, both of which will provide a ready market. The area is also ideal for growth of potatoes, if the current firms are anything to go by.
5.2 Sales Strategy
1. PFK will promote itself as a company as well as the product. Our sales people will target all viable markets and entice the market with our product which has a wide array of uses. Our prices will be pocket friendly.
2. We shall use customer friendly team of young people who shall be able to explain the product to people even in their places of work about our great product.
3. The Annual Total Sales chart provides a summary of our ambitious sales forecast as shown.
5.2.1 Sales Forecast
Looking at our sales forecast, there are estimates for the first year of operations beginning in Jan of 2015.There is an anticipated growth in the sales volume owing to increased promotion and consumer education. This increases the sales volume by about 20%. In the third year of our operation, we anticipate an even more increase in sales volume due increased expenditure on promotion, field camps as product awareness. The growth is projected at 20%. We project this to grow to over 50% in the subsequent years.
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Table: Sales Forecast
Sales Forecast Year 1 Year 2 Year 3
SalesBakeries 250,000 300,000 350,000 Wholesalers 350,000 400,000 450,000 Organic Food enthusiasts 250,000 300,000 350,000 Hoteliers 250,000 300,000 350,000 Weaning moms/military 300,000 350,000 400,000 Total sales 1400,000 1,650,000 1900,000Direct Cost of Sales Year 1 Year 2 Year 3Bakeries 100,000 150,000 200,000 Wholesalers 80,000 80,000 80,000 Organic Food Enthusiast 50,000 50,000 50,000 Weaning moms/military 50,000 50,000 50,000
Subtotal Direct Cost of Sales 280,000 330,000 380,000
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Chart: Sales Monthly
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Chart: Sales by Year
5.3 Milestones
PFK intends plans to make profit within the first year of operation. This will be achieved through investment into the business in addition to the main investor. Focus will be mainly be geared towards growth and expansion. We shall also seek other venture capitalists such as Pearl Capital Partners (PCP) to expand our capital base. This will through conversion of our company into a limited liability company with view of raising funds.
6.0 Management Summary
PFK will avoid unnecessary expenses, we will keep a low number of; ideally three part-time sales people and a supervisor will suffice apart from the management team. Heads of finance, administration, marketing and ICT will not be on salary but will earn stipends for the first year of operation...
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6.1 Personnel Plan
Our Personnel Plan has the founder at the top, then heads of finance, administration, marketing and ICT. Initially, my team will operate without salary and earn stipends within for the better part of the first year of operation.
Our sales persons will earn a commission based on sales volume to be determined once we start operations. We shall also roll out a reward scheme for hardworking workers and turn them to permanent employees. With anticipated expansion, we shall issue shares to other young people and open branches to other parts of the country.
Table: Personnel
Personnel Plan Year 1 Year 2 Year 3
Director 0 100,000 100,000 Head of Finance 0 100000 100000 Head of Administration 0 100000 100000 Head of Marketing 0 100000 100000Head of ICT 0 100000 100000 Clerks/Salesmen 180000 100000 100000
Total Payroll 180,000 600000 600000
7.0 Financial Plan
Potato Flour Kenya seeks to invest the seed money ksh.840, 000 plus additional ksh.160, 000 into the potato flour business. For this to be possible, we must combine reinvest the money for expansion.
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7.1 Important Assumptions
PFK has made a number of assumptions on this financial plan. These are:
We assume the current growth of the economy will grow at 4.78 will continue on an upward trend without recession in our anticipated growth and expansion period. Additionally, we assume that there shall be no technological changes or new product(s) that shall make our products obsolete in the foreseeable future.
PFK makes an assumption that this seed capital of Ksh.840, 000($10,000) and our additional ksh.160, 000 shall suffice to meet our financial needs to start operations of the company.
Table: General Assumptions
General Assumptions Year 1 Year 2 Year 3
Plan Month 1 2 3Current Interest Rate 8.5% 8.5% 8.5% Long-term Interest Rate 6.61% 6.61% 6.61% Tax Rate 0% 0% 0% Other 0 0 0
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7.2 Break-even Analysis
PFK’s break-even analysis will assume all start-up (fixed) costs such as rent, insurance and machines. Others are the recurring costs such as electricity, payroll, and water and so on. Our BEP shall be the intersection of revenue and total cost. We anticipate that we shall be able to break-even by the end of the first year of our operation.
Chart: Break-even Analysis
Assume our monthly revenue is ksh.420, 000(as shown in our sales by month) and total cost is ksh. 1,000,000. We assumed:
Price per Unit Ksh.60Variable Cost per Unit Ksh.30Total Fixed Cost Ksh.83,333
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(1000000/12)
Then
We have, p = 60v = 30, andFC = 83,333
Breakeven Point in Sales Units (x) = 83,333 ÷ (60 − 30) = 83,333 ÷ 30= 4,166.65units
Where p=price,v=variable cost,FC= fixed cost
Break-even Point in Ksh. = Ksh.60 × 4166 =K.sh. 249,960
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even 249,960
Assumptions: Variable Cost per unit 30 Estimated Monthly Fixed Cost 83,333
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7.3 Projected Profit and Loss
PFK will compute P&L with an assumption that our sales will increase yearly. As earlier noted, we anticipate a 33% increment in our sales margin with the hope of hitting our target gross margin 70%. A survey by Tegemeo Institute of Agricultural Policy and Development shows that Nairobians spend the greatest proportion of their budget on staples at 32%, which is highest among other food samples that had been taken in a study.
Table: Profit and Loss
Sample Profit and Loss Year 1 Year 2 Year 3
Sales 1,400,000 1,650,000 1,900,000 Direct Cost of Sales 280,000 330,000 380,000 Other Production Expenses 0 0 0 Total Cost of Sales 280,000 280,000 280,000
Gross Margin 1,120,000 1,320,000 1,620,000 Gross Margin % 80% 80% 85.26%
ExpensesPayroll 180,000 600,000 600,000 Sales and Marketing and Other Expenses
400,000 180,000 200,000
Depreciation 0 0 0 Leased Equipment 0 0 0 Utilities 100,000 120,000 150,000 Insurance 32,000 32,000 32,000
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Total Operating Expenses 612,000 932,000 932000
Profit Before Interest and Taxes
508,000 388,000 688,000
EBITDA 508,000 388,000 688,000 Interest Expense 0 0 0 Taxes Incurred 81,280 62,080 110,080
Net Profit 426,720 325,920 577,920 Net Profit/Sales 30.5% 19.75% 30.4%
Chart: Profit Monthly
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Chart: Profit Yearly
Chart: Gross Margin Monthly
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Chart: Gross Margin Yearly
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7.4 Projected Cash Flow
With the 6 products expected to move evenly throughout the year, our cash flow is expected to look as below:
Table: Cash Flow
Pro Forma Cash Flow Year 1 Year 2 Year 3
Cash Received
Cash from OperationsCash Sales 1,400,000 1,650,000 1,900,000 Subtotal Cash from Operations 1,400,000 1,650,000 1,900,000
Additional Cash Received0 0 0
New Current Borrowing 160,000 0 0 New Other Liabilities (interest-free)
0 0 0
New Long-term Liabilities 0 0 0 Sales of Other Current Assets 0 0 0 Sales of Long-term Assets 0 0 0 New Investment Received 0 0 0 Subtotal Cash Received 1,560,000 1,650,000 1,900,000
Expenditures Year 1 Year 2 Year 3
Expenditures from OperationsCash Spending 612,000 932,000 932,000 Others 0 0 0 Subtotal Spent on Operations 612,000 932,000 932,000
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Additional Cash SpentSales Tax etc 81,280 62,080 110,080 Principal Repayment of Current Borrowing
0 0 0
Other Liabilities Principal Repayment
0 0 0
Long-term Liabilities Principal Repayment
0 0 0
Purchase Other Current Assets 0 0 0 Purchase Long-term Assets 0 0 0 Dividends 0 0 0 Subtotal Cash Spent 693,280 655,920 1,042,080
Net Cash Flow 866,720 994,080 857,920 Cash Balance 533,280 655,920 1,042,080
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7.5 Projected Balance Sheet
The PFK balance sheet will be as follows:
Table: Balance Sheet
Balance Sheet Year 1 Year 2 Year 3
Assets
Current AssetsCash 533,280 655,920 1,042,080 Inventory 500,000 500,000 500,000 Other Current Assets 0 0 0 Total Current Assets 1,033,280 1,155,920 1,542,080
Long-term AssetsLong-term Assets 0 0 0 Accumulated Depreciation 0 0 0 Total Long-term Assets 0 0 0 Total Assets 1,033,280 1,155,920 1,542,080
Liabilities and Capital Year 1 Year 2 Year 3
Current LiabilitiesAccounts Payable 612,000 932,000 932,000 Current Borrowing 0 0 0 Other Current Liabilities 0 0 0 Subtotal Current Liabilities 612,000 932,000 932,000
Long-term Liabilities 0 0 0 Page 26
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Total Liabilities 612,000 932,000 932,000
Paid-in Capital 1000,000 1000,000 1000,000 Retained Earnings (426,720) (325,920) (577,920)Earnings 573,280 674080 422080 Total Capital and liabilities 1,573,280 1,674,080 1,422,080
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Appendix
ADDITIONAL NOTES
1. Problem statement detailing bottleneck and holistic impact
Potatoes come second after maize in terms of importance, only surpassed by maize. It employs about 2.5 million the production chain. A big problem prevailing in the food sector such as potatoes is value addition an establishment of value chains in which the government has failed to invest. For the longest time, potatoes are viewed as a poor man’s crop. As a result, farmers suffer from huge crop failure, crop loss due to poor storage facilities, crop diseases, lack of subsidized fertilizers and chemicals, fluctuating prices, exploitation by middlemen, lack of loan facilities as well as infrastructural handicap. Farmers are unable to produce process and market their produce. The food security is threatened when the farmer as the producer is unable to obtain certified seeds due to perennial shortage and prohibitive costs. They are thus condemned to cyclical poverty, scaring off the youth into this otherwise lucrative sector.
Potato flour Kenya (PFK) wishes to take the route less travelled by many that is processing the potato tuber to a more marketable product at the point of harvest: potato flour. Potato flour is obtainable by washing, crushing, drying and milling the potato tuber. This is then delivered for sale to supermarkets as a food additive, blending ingredient for other flours to make porridge, potato ,gluten-free bread,cakes,doughnuts ,biscuits and soup gravy .As it stand now, there is no other known company in Kenya processing potato flour.
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This product will be more nutritious as the contents will be preserved (including the peel) and as consumers shift towards highly refined foods owing to health concerns, this product will find a niche in the market. It has the competitive edge in that there are no competitors in the market. 2. INDUSTRY DESCRIPTIONPotato Flour Kenya (PFK) intends to venture into the food processing sector. There is no other processor of potato powder on a commercial scale in the country. This makes it a rather unique niche as the demand for potato products increase. It is a well known fact that 80% of Kenyans depend on agriculture for livelihood. Potatoes are the second staple food after maize in terms of consumption. This shows the potential that potato and potato products have in feeding the over 40 million Kenyans for generations to come. Potato powder (flour) is not just a good idea, it is a business opportunity. There is only one well known potato processing company in Kenya(Midland ltd) against the backdrop of 40 million Kenyans who consume potatoes, yet potato tuber is one of the top 3 food crops in Kenya, only comparable to rice and maize.The immediate competitor (Midlands have too much in its hands in terms of producing packed potato chips. This creates a gap in provision of potato flour to be used as thickener for soups, additive for cakes and bread and so on.
Risks and Uncertainties
The risks involved include the small market share this company may have to grapple with before being recognized, the high cost of certified seeds, pests and diseases affecting the potato crop, high cost of insuring the crop; the low reception of the new product i.e. it may take time to be received in the market, tax implications, middlemen who may raise cost of potato produce; the cost of machines to process the flour; infrastructural problems, crop failure and storage problems. Others may include available alternatives such as
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tapioca, cheaper imported flour as well as eating habits of the entire population. However, with proper marketing strategies, these challenges can be overcome.
Mitigation
To mitigate these, the company would embark on a marketing strategy to popularize use of potato powder, hence increase its share of the market as well as lobby Kenya Seed Company to lower cost of certified seeds. This company would seek long term leases with farmers so that it is able to obtain an entire produce directly from them, thereby eliminating brokers and middle men. This company will seek an insurance cover for the potato crop to ensure that it recovers in case of crop failure. Use of only certified seeds will ensure high quality potato seeds that are disease resistant. To overcome infrastructural handicap, the potato powder factory will be set up in areas where there is high production of potatoes such as Nyandarua (although we have a suitable site at Moi Ndabi) so that farmers will be able to deliver their crop easily.The company will seek to obtain improvised millers assembled locally so as to cut heavy cost of machine for milling potatoes. In furtherance to that, it will incorporate use of solar driers to dry potatoes so as to cut cost of electricity. To cushion farmers against high cost of growing potatoes, potato Flour Kenya (PFK) will apply for Kilimo salama, a Syngenta Foundation for Sustainable Agriculture product as well as Uwezo packages. This will make cost of seeds, fertilizers and chemicals affordable. To minimize storage problems, the company will invest in coolers to store harvested produce awaiting processing.
3. BUSINESS DESCRIPTION
Potato Flour ltd will process flour from potatoes with this being the main product. Potatoes with their skins will be boiled to break loose the starch. Then they will be dried and ground to flour using an improvised grinder or miller. Converting potato to powder adds its shelf life up to 24 months. This flour will be sold to
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supermarkets, shops, eateries and restaurants. The powder could be used to make glutten free bread and rolls, potato flavour, soup gravy, added to other flours for making cakes and so on.
Machines Required
-Crusher
-Steam boiler
-dryer
-sealing Machine
-Packaging machine
-Standard scale
Production Processes
Due to the high cost of cooler, Potato flour Kenya will not store harvested potatoes for the time being. Once harvested and washed, the tubers will be weighed and washed. A grinder will be used to grind them to pulp before being dried in a dryer. The dried pulp will then be milled. Workers will remove any lumps before the flour is packaged in 25g, 50g, 100g, and 200g.250g packets.
Cost and Funding
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The potato project can be set up if locally made machines are used. The cost may go up if imported machines are used, hence the choice of local ones. This company hopes institutions such as private equity firm Pearl Capital Partners (PCP) among other investors will come in due course to fund acquisition of more sophisticated equipment like coolers, humidifiers, graders and sorters.
4. MARKETING STRATEGY (SWOT ANALYSIS)
Potato flour will use the Strengths, Weaknesses, Opportunities and Threats approach to cut a niche in the market.
Strengths
One of the main strengths of this company will be little or no competition in the industry. No other company has been identified to date that is currently undertaking production of potato flour at a commercial scale. Unlike other companies which require a huge market to start, this is a low capital start-up due to availability of raw materials and the fact that only one product(flour) is being processed.Lastly,the existing market is stable as this is a food industry, so demand will be high with low risk on investment.
Weaknesses
This company will lack prior experience as well as financial capacity to invest in the state-of-the art equipment such as coolers for potato harvest. It will however minimize risks and maximize on strengths.
Opportunities
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There are opportunities for business in the food industry such as Five Star Hotels, snack manufacturers, retail markets, and supermarkets, online as well as for export.
Threats
This business, just like other industries is prone to threats such as running out business, other businesses offering superior flour products ,restrictions in entry into the business and loss of serious market share due to serious competition from alternative products. This company will cut a unique niche in the market that wills strength its hold of a sizeable share of the industry through scalability.
Online Marketing Strategies
Potato Flour Kenya (PFK) will consider a tetrad of industry markers ie target market, product& services, market analysis and competition.
Marketing is a vital aspect of a business. Potato flour ltd shall employ in various marketing strategies to reach the customers. Online marketing is an almost free marketing platform. Thanks to internet, businesses are able to interact easily. Companies are able to advertise their products and/or services online through their website portals. Potato flour shall start a website as well as reach customers through social media such as Facebook and twitter. Other marketing strategies include use of sales people, targeting various supermarkets, major eateries and restaurants.
The powder will be packaged in convenient packs, resembling other flours such as maize meal to appeal to customers at displays in various outlets. It shall also engage nutritionists to encourage healthy eating as well as conduct food testing seminars at major supermarkets to encourage people to take healthy potato flour in place of refined products. Data collected from such field tests will be useful in determine the market potential.
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The company shall use ICT in handling its supplies. This app will help our suppliers negotiate better prices with others, hence eliminate middlemen and offer us good prices. The company shall incorporate use of apps such sokoshambani and develop others for marketing its products.
Customer Target
Potato flour will target the health conscious customers tired of refined foods such French fries, yet want to enjoy potato products. Supermarkets and retail outlets are nowadays awash with organic foods and various types of flour such as millet, coconut, amaranthus, and cassava flour and so on. It will compete for space in the shelves on the strengths outlined in this business plan.
Pricing Strategy
Established companies have a large workforce and huge overheads. As a result, their product prices are always prohibitively high. Potato Flour Kenya (PFK) will have a special pricing strategy that will be pocket friendly. This will be enabled by low capital investment, anticipated low overheads and maximization of profits.
Website
The firm shall develop a vibrant site to market its products.1. Social media
Use of social media sites such as Facebook, twitter, linkedin and Instagram shall help the company reach a bigger online market. It is more cost effective Vis-a Vis the print and audio media.
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3. AppsThe firm shall invest in apps to improve communication between it and the farmers to enable them to stay updated on crop prices, disease prevention, harvesting techniques among other vital statistics.
5. ORGANIZATION
Management Team
Potato Flour Kenya (PFK) will work with a team of selected youth who have the energy and the drive to run an entrepreneurship. It will seek skills in management, finance, ICT and marketing.
ORGANIZATION MODEL
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MARKETING
SALES PERSONS
ICT
DIRECTOR
FINANCE
A/Cs CLERK
ADMIN
CLERK
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Communication
Potato Flour Kenya will enhance communication at all levels. We shall work as a team and use the following communication tools:
1 Website
The firm shall develop a vibrant site to market its products.2. Social media
Use of social media sites such as Facebook, twitter, linkedin and Instagram shall help the company reach a bigger online market. It is more cost effective Vis-a Vis the print and audio media.
3 Apps
The firm shall invest in apps to improve communication between it and the farmers to enable them to stay updated on crop prices, disease prevention, harvesting techniques among other vital statistics.
Sustainability
Sustainability of Potato Flour Kenya has a three-pronged approach: Social, economic as well as environmental. How is potato flour going to impact on the social front? Will it improve human life? The answer is in the
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affirmative. As noted earlier, value addition is the way to go for food security. It will be more nutritious, last longer and feed more mouths. There is a trend in the society for healthier eating and potato flour will just be on time for the revolution.
On the economic front, potato powder will be an affordable delicacy, owing to the low prices it will be retailing. The versatility of this product will imply that it will find so much use in the food industry for years to come. The emergence of bakeries mixing flours to make various delicacies (see backward and forward linkages next) will fuel this industry to greater heights.
Environmentally speaking, growth of potatoes will incorporate Generally Accepted Practices (GAP) hence protecting the soil from pollution, degradation and so on. The factory will produce little effluents, given the little wastages involved in the production of the flour; hence this will be an eco-friendly venture.
Forward and Backward Linkages
Back ward linkages refer to a situation where the growth of an industry leads to the growth of the industries that feeds it. In this context, Potato flour will spur growth in the potato production sector. More and more farmers will grow potatoes and create an even bigger demand for the produce especially in the countryside.
On the other hand potato powder production would bring about forward linkages due to the bakeries and other food dealers and especially organic flours.
Reliability
Can the idea of potato powder be reproduced elsewhere in any of our 47 counties and be successful? Absolutely! Kenya is an agriculturally driven economy, employing over 2.5 million people. Besides, potato crop grows in many counties in Kenya, so a potato factory can be put up in those areas. As long climatic conditions
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favour growth of potatoes, potato factories will sprout forth. Potato flour has been inspired by Midlands Ltd, a potato factory and the only one of its kind in Nyandarua County.
Potato Crop Chain Identification
With value chain indirectly employing over 2.5 million it’s vital to understanding potato crop value chain. First is to identify the chain the crop chain follows right from the inputs such as seeds, fertilizers, production, processing, wholesaling, retailing, all the way to the final consumer. Potato Flour ltd has considered differentiation as ideal in defining this product chain. Attractive Packaging and cutting the middle men will help offer personalized service, strengthen the supply chain and give the company an edge over competitors. The trade off will be on economies of scale, perishability, embracing biotechnology as well as technological advances. All these are important factors that will help create a niche in the crop chain.
Competitiveness
How competitive will this firm be in its ability to sell and supply goods and services in our diverse market, vis-a-vis the ability and performance of other firms? Potato Flour Kenya(PFK) will ride on a platform of vibrancy i.e. the youth have a lot of energy to aggressively market products, sale points such as new product with value addition, untapped social media , quality product and packaging. It is also notable there are no identifiable business rivals at the moment hence there is a chance of a monopoly.
Employment to Youth
Potato Flour Ltd will seek to empower youth economically by employing them in the production process in areas such as procurement of labour, production, finance, administration and marketing. This will be particularly being visible once the company replicates in other areas of the country.
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Benefit to Community
This company will seek the community through supply of potatoes to the firm for processing, as well as formation of co-operatives to improve their productivity and increase their incomes. The firm will help them get access to certified seeds, loans from Syngenta such as Kilimo salama from Syngenta.
Contacts
NAME: POTATO FLOUR KENYA (PFK)
MARKETING TITLE: BUSINESS AND MARKETING PLAN FOR POTATO POWDER
DATE PREPARED: 16/7/14
CONTACTS: JANE WANJIRU MAINA, 2614, NAKURU,
PHONE: +254726416643,
FAX:
EMAIL: [email protected]
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PHYSICAL LOCATION: MOI NDABI
WEBSITE: www.potatoflourkenya.co.ke
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