BUSINESS PLAN: meat point butchers

TABLE OF CONTENT PAGE
1. Executive Summary…………………………………………. 3
2. Introduction…………………………………………………..4
3. The business firm and the industry……………………………5
4. the product…………………………………………………….6
5. Markets………………………………………………………..7
6. Marketing……………………………………………………..8
7. Design and development………………………………………9
8. Manufacturing and operation………………………………….10
9. Management……………………………………………………11
10. Benefit and justification of the project…………………………12
11. Financial aspect and project worthiness………………………..12
12. conclusion……………………………………………………….13
13. Annex ………………………………………………………….14
14. Documents required to accomplish the project………………….16
15. Reference:………………………………………………………..17













PROJECT AT A GLANCE

REQUEST FOR TSHS 7,300,000 FOR CONSTRUCTION OF A BUTCHERY


PROJECT NAME: MEAT POINT BUTCHERS

PROJECT APPLICANT: JARED OSENO

PROJECT OWNER: JARED OSENO

PROJECT TARGET:
1. To provide high hygiene standard, reliable, variety and high quality goat meat.
2. To provide employment opportunities to the youth
3. To meet high demand for goat meat
4. To improve the income of the owner

PROJECT LOCATION: USA-RIVER, ARUSHA

PROJECT CONTACTS:
Director,
Meat Point Butchers,
P.O. Box 778,
Usa River, Arusha.





















1. EXECUTIVE SUMMARY
MEAT POINT BUTCHERS will be a company which is generally like any other butcheries but its mission specifies and makes it different from others. MEAT POINT BUTCHERS is going to practice all necessary ethical manipulation in seeing that the company runs at a profit which can sustain it for unforeseeable future period.
1.1. Purpose of the plan
The main purpose of this plan is to enable the proprietor of MEAT POINT BUTCHERS to acquire a Bank loan before January, 2009. This will facilitate the expansion of the business so that it can operate on the large scale and therefore enjoy the economies associated with large scale operation.
1.2. Mission of The Business
MEAT POINT BUTCHERS shall be selling goat meat of different weights to the Usa River community and the neighbourhood with the aim of supporting the government effort to eradicate poverty among the youth without compromising the standard and the benefits expected to accrue to the consumers.

1.2. The Finance needed and its purpose
There are some other businesses in place which sell almost the same products that MEAT POINT BUTCHERS would like to venture in but they do it with very little capital such that they have failed to meet the demand of the customers. It is on this basic ground that MEAT POINT BUTCHERS is now requesting a bank loan of Tshs7,300,000.
The project’s initial cash outlay is expected to be Tshs10,300,000. Out of this Tshs3,000,000 will come from the family’s past saving and Tshs7,300,000 from the bank loan. The family’s saving will entirely be used to rent the business premises including the building. The loan will be used to acquire equipments such as weighing scale, hooks, refrigerator, knives, a file (a sharpener) and a computer; furniture and fittings, a pick up and the stock in terms of goats.



1.3. The Project Description
The project requires 6 large rooms which will serve as an office, refrigeration room, the sales room, kitchen for roasting goats’ meat, a changing room and a store. The project also requires a large space for the customers who will need to enjoy the roasted goats’ meat. Besides that, we shall also require to construct a slaughter house, manure pool and a shed to keep goats waiting to be slaughtered.
This business venture will require a half hectare of land for providing parking yard for our customers who would like to eat roasted goat meat. There will be two gates, one for off-loading and production personnel entrance and the other for entrance of our customers.
The capital being requested is needed before January, 2009 so that we can start to operate in the beginning the year 2009. The company shall start paying back the loan after the first year of operation at the agreed rate between the MEAT POINT BUTCHERS and the BANK. The collateral shall be our equipments and the log book of our vehicle.

1.4. Highlights of Financial projections
The project economic life is expected to be 5 years and the loan repayment period also covers the same period. The project will operate as a sole proprietorship. A some of Tshs10,300,000 will be needed at the beginning of in the first year as working capital covering the preliminary expenses. Later years revenue generated from the project operations will provide working capital. We shall also set aside Tshs1,500,000 to cater for unforeseen contingency.
2. INTRODUCTION
Goat meat is a common delicacy admired by many but because of its scarcity, some customers stay without it for such a long time. The scarcity does not arise from the livestock keepers’ point of view but on the processors side. Most of the people eat it during the funerals, wedding, and when they patron bars during drinking spree but these occasions hardly occur. The house wives, the teetotalers and the youth have always been on the lacking side. MEAT POINT BUTCHERS will in this respect facilitate the availability of the product to all.
Livestock keepers, on the other hand will get ready market for their goats and there is no doubt at a better price. The contribution to the government revenue will also be enhanced through tax payment and license acquisition. It is therefore due to these benefits that we thought of establishing a butcher of its own kind in order to meet the needs of the majority stakeholders.


3. THE BUSINESS FIRM AND THE INDUSTRY
3.1. Purpose of the Firm
The purpose of this company is to undertake the processing of goat meat for Usa River community and the neighbouring communities. This is aimed at fulfilling the customer’s needs of hygiene standard, reliable, variety and high quality goat meat. The company also aims at supplying goat meat at the least cost possible in order to maximize profit. This kind of strategy will enable the company to service loan and at the same time meet the need of the owner and the entire community.
3.2. Historical Background
MEAT POINT BUTCHERS was launched in June, 2005 with main objective of selling beef to the consumers in Usa River. Due to the low capital, the proprietor could adequately cope up with the competition from well established butchers which had the ability to slaughter on cow/bull per day. So the proprietor took the initiative of changing the business product from selling beef to selling goat meat in January, 2006.
Changing the operation of the business enabled the firm to operate at a profit margin of 30%. However the demand for goats’ meat has been increasing every year. It is on this ground that the owner has thought of operating MEAT POINT BUTCHERS on a large scale.

3.3. Past performance record
Due to its low capital, MEAT POINT BUTCHERS used to perform on small scale. However, since the beginning of this year, it has been able to slaughter a minimum of two goats during the week days and 5 goats during the weekends. This could enable the business to earn Tshs.30,000 to Tshs.50,000 per day.
3.4. Short term objectives
To distribute goat meat to the entire Usa River division,
To increase the income of the proprietor and the family,
To meet the high demand for goat meat in Ngarasero, Usa River,
To increase the food variety in the area,
To provide high hygiene standard, reliable, variety and high quality goat meat and
To provide employment opportunities to the youth.
Long term objectives
To supply high quality goat meat around Arusha region,
To increase the number of employees and
To capture export market.
3.5. Description of the Industry
Livestock industry in Tanzania is still a potential industry in the sense that very little investment has been done in the sector. Most of the products are only but locally consumed with very little exports done. The livestock keepers still keep indigenous breed with very little output in terms of beef, skin and hides, milk, bones and manure.
High concentration has been in beef. Goat meat, mutton and other domestic animals have actually been ignored and only left for sacrifice and ceremonies.

4. THE PRODUCT
Since we shall be the producers of customer oriented products, we will also provide other benefits like hygienic, ready to eat meat in form of roasted meat with constant supplies. This will make our product different from our competitors thus attracting our customers more. Neither the price nor the quality of the products will vary in different segments but we shall strive to perform our activities with as minimum cost as possible.
We shall sell our products in 3 different units, that is, 0.5kg, 1kg and 2kgs. The sales will be made to both who would wish carry the product home and those who would want to eat it as roasted meat.
The by-products such as tripe (utumbo), liver, and head will be sold to small butchers and soup makers around, Hides and skins will be sold to Tannery industry in Arusha through the vendors, Bones and blood will be sold for dog feed and kitchen and Manure will be sold to farmer.
The uniqueness of our product will revolve around the packaging, pricing and after sale services. Well motivated worker will always be able to serve the customer with great smile. The customer’s complains relating to selling meat with more bones will be avoided since a goat has very light bones and where necessary debonning will be done.
5. MARKETS
5.1. Our customers
Our customer will be from all walks of life. Since our products will be sold at different small units, we shall be able to attract both rich and average income earners. Many of our comers will come from our community and upon being advertised we shall also draw customers from the neighbourhood.

5.2. Market segments
Our target customers will be grouped in two major segments which are also helpful in the distribution strategy. These are:
The local community and
The neighbouring communities.
Under these major segments we have sub-segments each having its customers.
Both our local community and neighbouring communities’ customers need similar products with characteristics such as high quality product, durable products, constant supply, varieties and convenient sizes, products usable instantly, soft meat and reasonably priced product that is time saving.

5.3. Competitors
MEAT POINT BUTCHERS competitors are the local butcheries around which deal in selling beef. However, we shall have a niche over these butchers since customers would want to buy meat which is not stale and also the durability element which the butchers do not offer. With reference to other sellers in other communities our product will also tend to much cheaper because of low cost of labour.
The roasting element in our service is also unique in the sense that other butchers do not practice this. They only target domestic consumers but not luxury lot.
5.4. Characteristics of our Product
The critical success of our firm revolves around the characteristics of its products as described below:
High quality products which are free from foot and mouth diseases
Reasonable price which is affordable,
Convenient in size,
Constant in supply,
Durability, roasted meat can stay for a longer time and can be instantly used and
Hygiene product which is highly treated and free from sickness.
5.5. Competitors Response
We are sure that our competitors shall not sit back and watch as we take their customers and the market share. We expect them to react in all manners to bring our business down to ashes especially now that we are dealing in highly demanded goat meat. We also realize that we have indirect competition from those selling products like fish and pork. This is not a big threat since in the Islam dominated area, we are confident to say that we have greater advantage over pork and fish producers as more people like roasted goat meat.
Having had the market share of up to 60%, we will be ready to compete. We shall maintain and expand our market for we want to be ahead of our competitors.

6. MARKETING
Marketing may be defined as all activities and procedures that enable the smooth movement of items that have value from a source (seller) to a destination (buyer) in the exchange for other items that also have value. This may be described under the following sub-heading
6.1. Sustainable Competitive advantage
These advantages include:
Sales force that will reach our customers in both local and neighbouring communities,
Constant supply due to outstanding distribution strategy of depots and
Attractive packaging methods that is easy to carry.

6.2. Pricing Policy
Our products will be priced as follows:
0.5 kilogram will be sold at Tshs.1,500,
1 kilogram will be sold at Tshs. 3,000 and
2 kilogram will be sold at Tshs.6,000.
However, the price of our products can change in accordance with the changes in the cost of production.
6.3. Advertising and promotion
We shall penetrate the market through extensive promotion. This will be done through various ways as follows:
· Posters and painting on the walls of shops and buildings. This will be able to lure even the illiterates,
· Radio Injili which is locally listened to. We shall aim for certain times like before and after news
· Arusha Times which is widely read by the locals and the neighbouring communities This will be done in the front space.
· Billboards which will be strategically placed on the main and busy roads. These billboards will be attractive in order to catch the attention of the passersby.
6.4. Growth strategy
We do not intend to stop promoting our products until we are sure that they are regionally accepted and taken as one of the products in the shopping list. However, after the end of the second year, we will reduce our advertisement in radios and newspaper. We shall make sure that the products are well distributed and made available to the customers at all times when they need them.
We shall also increase the depots by 100% in the year 2010 to ensure constant supply in order to achieve our goal of 60% growth in the market share.
7. DESIGN AND DEVELOPMENT
The production level will increase according to the projected increase in sales forecast for each year respectively from 2009-2013 at the rate of 20%, 30%, 40%, 50% and 60%. In the future, that is, in 10 years time, we aim at producing canned goat meat for both local and foreign consumption.

7.1. Difficulties experienced and potential risks
Foot and mouth diseases,
Rift valley fever,
Electricity cut off,
The employees welfare,
Political stability,
Climatic changes and
Hygiene
8. MANUFACTURING AND OPERATION
The process of manufacturing begins where the livestock keepers bring their goats to the MEAT POINT BUTCHERS. In the time of scarcity, we may be forced to go and buy the goats from auction markets such as Kikatiti, Mbauda, Moshi, and Makanya in Same. We would like point out that we shall not face the shortage of raw materials since we have millions of goats in Tanzania.
8.1. Physical Location of the Business
The proposed location of the project will be at Ngarasero in Usa River in Meru District, Arusha region. Ngarasero will serve as the best alternative because it is more densely populated along the old Moshi road and surrounded by many bars, guest houses, small business enterprises and good infrastructure in terms of electricity and water.
8.2. Steps in Manufacturing
The following are the steps which are undertaken in manufacturing section:
· The goats are received at the off loading bay where they are inspected by both veterinary government officer and our quality controller,
· The animal may be kept in our shed in case our refrigerator,
· The animal is then slaughtered by a Moslem who is employed specifically for this job,
· The slaughtered goat is then hooked by its hind legs before skinned,
· This second inspection then takes place where the inspectors checks the head, heart and the lungs to determine whether the animal is fit for consumption or condemned.
· The goat is then split into two pieces and kept in a deep freezer waiting to be sent either to the sales section or roasting section.
· The by- products such as head, intestines, heart, lungs and liver are sold to the waiting customers. The skins are also sold immediately.

9. MANAGEMENT
The overall management of MEAT POINT BUTCHERS will be vested in me as a Managing Director as well as the owner of the business. My wife will serve as my assistant as well as a cashier and a secretary. As a managing director, I shall also serve as a purchasing officer. An accountant will be required to serve as a book keeper and clerk as well.
The personnel required are all in the production organization but crucial process is to have:
Production manager who will supervise all the production process
A highly qualified and well paid meat inspector who will collaborate with the government meat inspectors to adhere to the standard we require,
5 skinning men who will use pressure knives to avoid damaging the skin
4 men who will work as roasters
10 girls who will work as waiter
4 security guards to man both gates

In the sales and distribution department, we shall have 7 sales persons and two drivers. We shall also require 6 cleaners and one Moslem for slaughtering.
Overall, the project needs a total of 43 well motivated workers who will work in two shifts in order to avoid to being tired because tired worker make mistakes and cause accidents especially in roasting and skinning.
Training to our staff will be conducted through the following:
Workshop and seminars- this will be conducted by both public health and veterinary officers,
On job training – this will be while working. This method is cheap and more practical and could have a lasting impact and
Attend shows and exhibitions- this will open up the employees’ mind in absorbing the ways of producing new products in the market.
Other benefits to employees will include medical, housing and performance incentives such praise, salary increment annually, promotions and retirement benefits.

10. BENEFITS AND JUSTIFICATION OF THE PROJECT
MEAT POINT BUTCHERS is committed to its mission and purposes of seeing that it is able to create and keep customers within the 5 years of forecast. This business will be able to meet all her obligations comfortably and still be able to earn a gross profit of 300%. And out of which it will able to secure all the expenses and still retain practicable figure of Tshs365,513,000 This is possible because of plenty of resources such as cheap goats, cheap labour and good government policy on Small and Medium Enterprise Development Policy of our country.
The economic life of the project is long enough to allow the following:
Repayment of loan and interest amounting to Tshs32,860,000.
Payment of tax (VAT) which is 20% at the end of the project implementation period.

11. FINANCIAL ASPECT AND PROJECT WORTHINESS
11.1. Assumptions and considerations
It has been assumed that:
The project economic life will be 5 years,
The bank loan to be secured will be repaid within period of 5 years with one year grace period and
Interest rate is 30% per annum.
11.2. Project viability
The project has a Net Present value (NPV) of Tshs144,380,000 at a discounting rate of 30% and Tshs.109,664,000 at a discounting rate of 40% which shows that it is worth undertaking.
In view of this analysis, the project is both financially and commercially viable and worth undertaking.

12. CONCLUSION
Since the project has the capacity to repay back the bank loan it is therefore recommended for funding.




































ANNEX I




CASH FLOW FORECAST IN TSHS.’OOO
ITEM/YEAR
0
2009
2010
2011
2012
2013
CASH INFLOW






Equity
3000





Term loan
7300





Sales Revenue

72,000
79200
87120
95812
105393.2
Depreciation

400
400
400
400
400
TOTAL INFLOW
10300
72400
79600
87520
96212
105793.2







CASH OUTFLOW






Investment
10300





Operating cost

7240
7960
8752
9621.2
10579.32
Payment

7250
6812
6734
6386
5678
TOTAL OUTFLOW

14490
14772
15486
16007.2
16257
Net cash flow

57910
64828
72034
80204.8
89536.2
Opening Balance


57910
122738
194772
274976.8
Closing Balance

57910
122738
194772
274976.8
365,513





















ANNEX II


DISCOUNTED CASH FLOW IN TSHS.’000
ITEM/YEAR
0
2009
2010
2011
2012
2013
Net Benefit
(10300)
57910
64828
72034
80204.8
89536.2
DF 30%
1
0.769
0.592
0.455
0.35
0.122
Discounted cash flow
(10300)
44532.79
38378.176
32775.47
28071.68
10923.4164

NPV=144,380

DF 40%
1
0.714
0.51
0.26
0.186
0.133
Discounted cash flow
(10300)
41347.74
33062.28
18728.84
14918
11908.3146

NPV=109,664




























(C) DOCUMENTS REQUIRED TO ACCOMPLISH BEFORE THE BUSINESS GETS FINANCIAL ASSISTANCE
· Business license issued by Meru municipal council,
· Tin number for tax purposes,
· Certificate of registration and
· Health certificate.
(d) Way of overcoming huddles anticipated in executing the business
· Always to have goat meat inspected before releasing for sale,
· Employing highly qualified veterinary officers,
· Goats to be inspected before and after slaughtering and
· To emphasized on good refrigerators.



















REFERENCE:
1. Bagavath & Pillai, R.S.N. (2006). Management Accounting. S. Chand & Company Ltd, Ram Nagar, New Delhi.
2. Engler, Calvin. (1988). Management Accounting. The Maple-Vail Book Manufacturing Group, United States of America.
3. Investment appraisal: An introduction. Provided in class