Poultry Keeping

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INTRODUCTION

DSCRIPTION

The name of the FARM proposed is............... POULTRY FARM

LOCATION

POULTRY FARM wil be located in ainabkoi centre in kabios building along wanacnhi hotel along days
road

The FARM will have its own address, telephone number. For its to enhance communication with its
customers. The address wil be

POULTRY FARM
P.O.BOX 43,
AINABKOI
TEL:

OWNERSHIP

The FARM is akind of sole proprietorship that deals with rearing and selling of chicken and their
products and the owner intends to contribute all the capital necessary for the start of the FARM.

TYPE OF FARM

poultry farm will operate as a whole sale retail type of FARM.

PRODUCT / SERVICE

The main products in POULTRY will be meat and eggs since the FARM deals with both layers and
broilers because of high demang from wanachi hotel and schools at ainabkoi center.

The services that the FARM will ofer include employement of qualifies personel

Delivery of products to the customers.

JUSTIFICATION

There is high demand fro meat and eggs from wananchi hotel and ampath organization within
AINABKOI

GOALS AND OBJECTIVES OF THE FARM

The following will be the major goals of the FARM:

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i) To maximize profits and this will only be archieved through hard working dedication
and patience.
ii) To offer quality products
iii) To create employment.

The FARM will conduct a market survey in advance on its intended market. This will enable the
FARM to describe its market and their challenges.

It will also adapt some integrated marketing and offers like promotion, advertising and fair
prices thus satisfying the targeted customers.

POTENTIAL CUSTOMERS

The potential customers wil be from within AINABKOI location other customers will include
ampath organization.

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ADVERTISING AND PROMOTION STARTEGY

There shall be types of sale promotion which are:

a) Direct promotion
b) Indirect promotion

Direct promotion

This shall be done by advertising through:

 Radio stations e.g. advertise in radio using different languages so that a wide range of
people (population) are reached
 He also aims to use the most popular radio station; citizen, other radio stations would
include; KBC, Sayare, Radio Injili and Q fm

 Open filed forums – this will be addressed through chief barazas, church gatherings,
awareness campaigns which will directly meet the people and interact with them face
to face at work place, or outside fields to have their views and feelings about the
FARM services.

Indirect Promotion

a) by printing T-shirts, paper bags and receipt books which have the FARM names and logo
b) By using posters i.e. use of awareness materials manual, guidelines and pictures portraying
the FARM location as well as the address.
c) Incentives – giving incentives to workers e.g. commission, payment of overtime does to
employees and after sale services like transport for those who purchase goods at wholesale
and large quantities.

PRICING STRATEGY

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Pricing remains the stepping store to nay FARM it can either lead to growth and expansion of
that particular FARM or the fall down (collapses) of the FARM. This will also make a data of
calculating the entrepreneurs. Prices in comparison to those of his competitors.
Example

Item Amount
Feeds 2500
Electricity per unit 42
Labour cost 500
Drugs i.e. vaccines 500

Total cost of production 3542

Total cost production of eggs is

Ksh = total cost of production = 3542 = 4.4275


Average eggs laid 8000

The minimum average of eggs laid is 800 eggs

Total cost of production per chick = 4.43

Hence entrepreneur’s price for one egg will be 4.40.


The entrepreneur aims at making 80% profit for his sales. This means that
her pricing for single egg.

X * 100 = 80%
4

X= 80 * 4.40 = 3.52
100

Therefore the entrepreneur’s price for a single egg will be Ksh. 3.50 + 4.40 = 7.9

4
Approximately 8 shillings.

Discounts and Credits

since the entrepreneur’s will just be new in the field he will not be offering any sales on credit
for the first one year of his operation.

This will ensure that there is no money left outside the FARM at the end of that year for the
proper running of and management of the FARM enterprise.

To maintain his regular customers he will offer discounts for frequent customers at 7 shillings
per egg to those who busy more than 10 trays per day.

SALES TACTICS

a) Sales in the proposed FARM will be done in two ways


i) Direct selling where the manager (owner) will keep all the FARM records of
in and out of the FARM.
ii) Indirect selling through hawkers who uses motorbikes where they would be
paid according to commissioning.
b) The FARM would recruit literate staff with good communication skills and
hardworking.
- To maintain them is though giving them reward every year.
- Increasing their salaries.
c) Distributors like hawker are given commission while retail shopkeepers at for
places / distant areas the products are transported to them..

PRODUCTION PLAN / OPERATION PLAN

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Production facilities and capacity

Equipment Quantity Cost per unit Total cost


(Ksh.) (Ksh.)
Refrigerator 2 80000 160000
Egg quality 2 50000 100000
Egg tray 19 1000 19000
Registrar - 1000 -
Weighing scale 12 3000 6000
Feeding trough 10 700 7000
Water trough 10 700 700
Slaughtering 1 1000 1000
bench 22 500 1000
Bruins 22 50 1000
Knives 5 100 500
Sharpening file 10 100 1000
crates
Total 393750

A detailed purchase pattern of the above facilities is shown in the finance plan.
Equipment and machinery will be purchased before starting up the FARM.
The entrepreneur would only need to hire a pick up for transportation of eggs
during rainy season and when there is more demand.

The cost of hire will be 5 shillings for every kilometer covered.

Care and maintenance


Servicing of machines such as bicycle and other equipments will be done twice a
year.
All replacements of the work out part will be done on daily basis.

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Production Strategy

The FARM will rent a building in Anabkoi trading center the premise will have sales
room and a small office.

The costs of production of materials are as shown in the table below for the first
month:

Item Quality Cost ksh.


Chick mash 100 kg 100
Layers mash 100 kg 1500
Drugs and treatment 2000
Sawdust 100kg 600
Labour 1500
Total 21850

As for transport of these materials the entrepreneur will be requesting his seller to
deliver them up to his enterprises as part of after sale services as per the
agreement made.

The entrepreneur permanent employee will only be direct workers who will be
eight numbers. He should be having two years experience workers who could tell
when the chicken is sick and not productive. They should also be able to maintain
and care for the equipment and materials.

RISK STRATEGIES

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POSSIBLE RISKS

The possible risks that could be faced by the FARM include the following:
i) Chicken being stolen
ii) Eggs getting cracked
iii) Chicken attacked by diseases

HOW TO REDUCE RISKS

For security purposes poultry farm will insure the FARM against such risks like : fire
theft and injury. It will insure under insurance cover of united insurance company
which has got a branch at Eldoret

EXIT AND HARVEST STARTEGIES.

The FARM exit and harvest for the proposed FARM would be the initial public offering
because:
i) Loan is easily obtained from the government
ii) It creates job opportunities to the public

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FINANCIAL PLAN.
This plan shows the financial analysis of the FARM intended to implement the FARM successful
The following are financial objectives and goals that the FARM will look up in order to achieve
desired goals.

PREOPERATIONAL COST

These are expenses that will be incurred before sarting the FARM operation.
The table below show the list of expense and their cost.

FORMATION EXPENSES KSHS KSHS KSHS


Trade licence 1200
Permit 80
Rent 6000
Electricity 3500
insurance 3200 47700
Fixed assets
Equipment 2000
Raw materials 100000
Finished goods 6000
Cash at bank 8000
Furniture and fittings 10000
Debtors 5000
100000 123700

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ESTIMATION OF WORKING CAPITAL

Working Capital Requirements for the first three years of operation.

KSHS

Particulars

Current assets

Cash at hand 70000

Cash at bank 140000

Stock 260000

Debtors 20000

Total 480000

Liabilities

Creditors 60000

Bank overdraft 15000

Total 75000

Working capital = capital assets – current liabilities


480000 - 75000 = 405000

CAPITALISATION

The proposed FARM will obtain its funds from the following
Loan from commercial bank 120000
Family contribution 110000
Own contribution 40000

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Total 270000

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PROFORMA INCOME STATEMENT

Proforma income statement for year one

Item Ksh. Ksh. Ksh.


Sales 23112500
Opening stock
Add purchases 1609700 1609700
Less closing stock (218100) 1391600
Gross profit 9200900
Less expenses
Salaries 258000
Rent 39000
Insurance 3200
Electricity 14300
Transport 50200
Advertisement 146000
Licence 1200
Telephone 10200
Loan repayment 60000
Loan interest 6000
Maintenance 4000
Creditors 11800
Miscellaneous 11800 484300 484300
Provision for tax 10% 434660 436600
Net profit after tax 393920

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PROFORMA INCOME STATEMENT

Proforma income statement for year Two

Item Ksh. Ksh. Ksh.


Sales 2489000
Opening stock 218100
Add purchases 1622000 1609700
Less closing stock 578520 1261580
Gross profit 1227420
Less expenses
Salaries 1637600
Rent 36000
Insurance 3200
Electricity 10700
Transport 55000
Advertisement 15320
Licence 1200
Telephone 11900
Loan repayment 60000
Loan interest 6000
Maintenance 17000
Creditors 20500 506580
Miscellaneous
Provision for tax 10% 72084 720840
Net profit after tax 648756

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PROFORMA INCOME STATEMENT

Proforma income statement for year Three

Item Ksh. Ksh. Ksh.


Sales 578520 3084000
Opening stock 1686000
Add purchases (1406300) 858220 858220
Less closing stock 2225780
Less expenses
Salaries 295416
Rent 45600
Insurance 4200
Electricity 14800
Transport 51700
Advertisement 22500
Licence 1200
Telephone 16900
Loan repayment 60000
Loan interest 6000
Maintenance 9000
Creditors 20000
Miscellaneous 22900 570216 570216
Provision for tax 10% (248335) 1655564
Net profit after tax 1407229

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BALANCE SHEET

BALANCE SHEET FOR THE FIRST YEAR.

ITEM KSHS KSHS KSHS


Fixed assets
Equipment 2000
Land 1000
Refrigerator 6000
Feeding trough 8000
Accessories 5000
Fixtures and fittings 1000
Weighing scale 5000 109000
Less accumulated depreciation 10% 10900
98100
Current assets
Stock 218100
Debtors 135640
Cash at hand 25000 603740 603740
701840
Short term liabilities
Creditors 2000
Insurance payable 3200
Other accruals 3000 8200
Total current assets 8200
Long term liabilities
Bank loan plus interest 126640
Capital 171700
Add net profit 392940
701840

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BALANCE SHEET FOR THE SECOND YEAR.

ITEM KSHS KSHS KSHS


Fixed assets
Equipment 2000
Land 1000
Refrigerator 6000
Feeding trough 8000
Accessories 5000
Fixtures and fittings 1000
Less accumulated depreciation 46% (16000)
Weighing scale 5000 109000
98100
Current assets
Stock 578520
Debtors 14136
Cash at hand 2700000 862656 762656
955656
Short term liabilities
Creditors 1000
Insurance payable 3200
Other accruals 2000 6200
Total current assets 6200
Long term liabilities
Bank loan plus interest 126000
Capital 174700 823456
Add net profit 648756 823456 955656

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BALANCE SHEET FOR THE THIRD YEAR.

ITEM KSHS KSHS KSHS


Fixed assets
Equipment 15000
Land 2000
Refrigerator 7000
Feeding trough 6000
Accessories 4000
Fixtures and fittings 8000
Less accumulated depreciation 48000 97000
Weighing scale 10% (14550)
82450
Current assets
Stock 14063
Debtors 51479
Cash at hand 200000 1657779 1657779
1740229
Short term liabilities
Creditors 800
Insurance payable 3200
Other accruals 3000 7000
Total current assets 7000
Long term liabilities
Bank loan plus interest
Capital 200000
Add net profit 1407229 1607229 1607229
1740229

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BREAK EVEN CALCULATION ANALYSIS

Break even level is the level of output where expenses and sales are equal and at this level
the FARM neither incur any loss nor make any profit.
To arrive to this point fixed cost variable cost and sales are considered

BREAK EVEN ANALYSIS FOR YEAR ONE

Variable expenses Value Fixed expenses Value (Ksh)


(Ksh)
Electricity and water 14300 Salaries 158000
Transport 50200 Insurance 3200
Advertisement 14600 licence 1200
Telephone and postage 10200
Repair and maintenance 4000
Cost of goods 109000
miscellaneous 11800
Total cost 214100 Total

Break even point = variable expenses * 100%


Sales
= 214100 *100
2312500

= 9.26%
= 9%
= 100 – 9%
= 91%
= fixed expenses * 100%
Sales

= 262400 *100
91

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= 388351.65
= Ksh 288351.65

Variable expenses Value Fixed expenses Value (Ksh)


(Ksh)
Electricity and water 10700 Salaries 263760
Transport 55000 Insurance 3200
Advertisement 15320 Rent 3600
Repair and maintenance 6000 Video desk machine 66000
Cost of goods 10000
miscellaneous 20500
Telephone and postage 11900
Total cost 219420 Total 368960

BREAK EVEN ANALYSIS FOR YEAR ONE

Break even point = variable expenses * 100%


Sales
= 219420 *100
2489000

= 8.8%
= 9%
= 100 – 9%
= 91%
= fixed expenses * 100%
Sales

= 262400 *100
91
= 405450.549
= Ksh 405451

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PROFITABILITY RATIOS YEAR 1

Gross profit percentage = Gross profit * 100%


Sales

920900 * 100%
2312500

= 39.8%

Return on equity = net profit * 100%


Owners equity + net taxed profit

392940 * 100%
150000 + 392940

= 72.4%

Return on investment = Total Net profit * 100%


Total investment

392940 * 100%
270000

= 146%

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PROFITABILITY RATIOS YEAR 2

Gross profit percentage = Gross profit * 100%


Sales

1227420 * 100%
2489000

= 49.3%

Return on equity = net profit * 100%


Owners equity + net taxed profit

648756 * 100%
150000 + 648756

= 81.2%

Return on investment = Total Net profit * 100%


Total investment

648756 * 100%
3689600

= 175%

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PROFITABILITY RATIOS YEAR 3

Gross profit percentage = Gross profit * 100%


Sales

2225780 * 100%
308400

= 72.2%

Return on equity = net profit * 100%


Owners equity + net taxed profit

1407229* 100%
203000 + 140722

= 86%

Return on investment = Total Net profit * 100%


Total investment

1407229 * 100%
675216

= 208%

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DESIRED FINANCING.
The FARM required a financial support from various sources that it can run without any
financial obstacles
The financial boost is as shown below

Description Amount (ksh)


Bank loan 12000
Family contribution 11000
Personal savings 40000
Total 27000

PROPOSED CAPITALISATION
The proposed capitalization for the FARM as below
Descrition Amount (kshs)
Pre operational cost 174700
Cash at bank 54600
Cash at hand 40700
Total 270000

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