BUSINESS PLAN ON LIQUID SOAP PRODUCTION
Evergreen
Group is a Nigerian Conglomerate that was founded by a group of young Nigerian
entrepreneurs with the aim of inventing and making international standard ‘made
in Nigeria’ goods. Rock solid, a multipurpose liquid soap came to life as a
result of this company philosophy. The general operating environment in our Rock
solid production factory is set in line with the standard organization of
Nigeria (SON) requirement to enhance product registration. The Environment
Impact Assessment (EIA) of the product process has shown that no hazardous
waste is generated in the product process.
The
company gives priority attention to industrial safety by training all her staff
on industrial safety requirements and standard. The company also provide safety
gadget such as cover-all, safety boots, hand gloves, nose and mouth mask to all
production staff and visitors to the factory.
By focusing on its strengths, its key customers, and the underlying
values we need, Evergreen Group will
increase sales of Rock solid to more than N356,160,000 in eight years, while
also improving the gross margin on sales, cash management and working capital. This
business plan leads the way. It renews our vision and strategic focus: adding
value to our target market segments, our distributors and our customers. It
also provides the step-by-step plan for improving our sales, gross margin, and
profitability. This plan includes this summary, and chapters on the company,
products and services, market focus, action plans and forecasts, management
team, and financial plan.
STRENGTH
Ø
The name and logo of the
company which connotes quality of high standard.
Ø
The competence available to
the company due to the profiles of the directors (qualified and seasoned
business men and women)
Ø
The quality of technical
staff that is well trained and disciplined.
Ø
The high quality of our
products will be certified by relevant regulatory bodies.
Ø
The company’s investment in
backward integration for the purpose of
providing for its basic raw material inputs that can hardly be matched by
our competitors.
WEAKNESS
Ø
Newness in the market
Ø
Marketing management is not
given appropriate emphasis as at present.
Ø
Erratic power supply and
outages from the Power Holding Company of Nigeria
OPPORTUNITIES
Ø
The market has
opportunities for liquid wash formula products development and brand
extension.
Ø
The continuing trend of
customers to quality product offers a significant opportunity for the company
products.
THREATS
Ø
The company’s products are
threatened by Government policies on importation. Multi-nationals are
allowed to bring in international products at competitive prices or less.
Thereby forestalling the growth of local and indigenous companies.
Ø
Bank interest rates, high
inflation rates, coupled with dwindling consumer disposable income are
affecting availability and cost of capital, operating costs and consumer
demand.
FEASIBILITY STUDY
START
UP CAPITAL
A working capital of Fifty Thousand
(N50,000.00) Naira is required to
start operation. The founders/owners of the company will contribute the sum of One Hundred Thousand (N100,000.00) Naira in the same proportion. This will be the start
up capital for the first year and as the business boom, it will increase.
OBJECTIVES
1. Sales increasing to more than N356, 160,000 by the Eight year.
2. Continue gross margin at a minimum of 35%, and maintain that level.
3. Become the Liquid soap of
choice for every Nigerian by Year 8
MISSION
Our mission is to create
value for our customers and shareholder by continually improving health and
reducing preventable illnesses through the use of Rock solid.
TARGET
MARKET AND CHARACTERISTICS
Ø
The liquid washing formula
market is a huge market in Nigeria that is growing fast due to increase in
population and the desire to have a quality formula by low, the medium and high
income earning class.
Ø
Our potential customers are people from the
ages of 10 – 60 years which will include both male and female
gender.
COMPANY SUMMARY
Evergreen Group was founded in Uyo, Akwa Ibom
State, and created as a partnership between 5 young and dynamic entrepreneurs
but the company will soon be incorporated as a Limited Liability
Corporation. Evergreen Group carries our research and develops in science
and Engineering field with the objective of commercializing such to create
value to the economy and create jobs for the millions of unemployed Nigerians.
COMPANY OWNERSHIP
EVERGREEN
group of companies has Etim Bronson, Edet Edet, Ukpong Abasiodiong, Toyomfon
Linus and Itemobong Ibia as partners, owners and executives. The
executive team own 100% of the equity in Evergreen Group. Evergreen group currently
own 100% equity in the Rock solid brand but will share with investors to raise
capital to achieve its objectives.
2.2 COMPANY LOCATIONS AND WORKING HOURS
The Management team of the Evergreen Group uses has
an operational office at umuokomoche Nekede. Open from Monday to Friday .
COMPETITIVE
COMPARISON
1.
Our competitors in the
market are the likes of Morning Fresh, Mama etc. These product limits theirs to
dash washing formula but we have made our product to be a multi- purpose
product which includes car washing, kitchen utensils, cloth washing and for
general washing purposes.
2.
We will also make use of
our marketing strategy to penetrate into the market and create a sound,
strong relationship between our product and customers.
Break
Even Analysis
BEP = FC-VC
Where
SP BEP = Break Even Point
FC = Fixed Cost
VC = Variable Cost
SP = Selling Price
Fixed Cost
Transportation =
4,000.00
Technical Assistance =
3,000.00
Packaging =
2,500.00
Fuel
= 3,000.00
Insurance =
3,000.00
Membership
= 2,500.00
Marketing =
7,500.00
Raw Material =
10,000.00
Total
Fixed Cost =
N35,500.00
Variable Cost
General Admin =
2,000.00
Interest =
8,350.00
Others =
3,150.00
Energy
= 5,000.00
Maintenance =
2,000.00
Total
Variable Cost = N20,500.00
Therefore BEP = 35,500 – 20,500 300 = 50.00 Formula
300
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3.0 PRODUCTS
Rock solid has three basic
product sizes: 250ml intended for hand washing especially in public places such
as day care facilities, hospitals, restaurants etc. while the 500ml and 1000ml
line is meant for large scale uses such as in homes for washing of plates etc.
3.1 PRODUCTION DESCRIPTION
PRODUCTION PROCESS/PLAN
Stage 1: Measured
quantity of the thickener is soaked in the dissolution Tanks for a specified
period of time.
Stage 2: The
dissolved thickener is stirred for even distribution before the addition of
alkaline salt and then sieved.
Stage 3: A measured quantity
of the alkyl benzene sulphonate is added slowly and stirred gently until the
foaming disappears to slurry liquid.
Stage 4: Then
necessary additives/blending agents are added to produce the required texture
and flavor.
Stage 5: Some
laboratory test are carried out to check the physical and chemical properties
of the products
Stage 6: Packaging
for sale
SALES LITERATURE
In order to sell our product
while creating familiarity and a positive brand image, we will develop
brochures and literature to emphasize the safety and beneficial attributes
of using soap especially Rock solid, many of which may not be readily apparent
to an interested party. These will be delivered both to persons during a
sales presentation and by direct mail.
The Industrial and Institutional Liquid soap
industry of which we are a part is quite fragmented, but contains several
well known main competitors such as Morning Fresh, Mama Gold as well as other
generic brands. The industry is stable and growing; between 2014 and 2017 it
grew by an average of 4% annually. Within the I&I sector there is fierce
competition for market share among the existing popular soap offerings, leading
to lean profits on soap sales.
DISTRIBUTION PATTERNS
Distribution in the liquid soap industry is
provided by regional providers. These distribution companies usually serve a
large portion of the market based on the respective size of the market,
delivering to the organizations monthly or bi-monthly depending on demand and
usage patterns. Food services typically receive deliveries of cleaning products
once a month. Hospitals typically have a distribution system that operates on monthly
deliveries of large quantities. Restaurants typically have a weekly
delivery schedule while domestic users get from shop outlets.
COMPETITION AND BUYING PATTERNS
Commercial customers select soap based on the
necessary minimum safety regulations for the intended user; restaurant and
hospital regulations require anti-bacterial/microbial. Customers will typically
select a product based on price, distributor availability, and convenience.
Distributors will deliver a complete order of cleaning and maintenance products
to customers. Major competitors sell to a variety of customers through
distributors who receive generic soap from bulk producers,
then repackage and deliver it along with other products it
sells, utilizing the same distribution systems.
CUSTOMER MANAGEMENT
The
company will maintain a good relationship with its customers first of all by
maintaining its high product quality. We will also introduce excellent customer
services standards and make our customers feel revered. Customer’s loyalty
reward schemes, promos amongst others things will also be embarked upon to
appreciate our customers.
ADVERTISING & SALES
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Planned promotion /advertising type
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Expected business improvement
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Online advertising
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Online advertising will create
awareness for Rock solid and bring hits to our website which will bring sales
both online and offline.
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Social
Media such as Facebook, google +, twitter etc
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There
are a lot of potential customers on the social media thus having a social
media presence will lead to general awareness about Rock solid and will thus
lead to sales online and offline.
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Handbills
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Handbills
placed at strategic public places and given hand to hand will create
awareness for Rock solid prompting its sales from shelves in stores
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Stickers
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Stickers
to be pasted on vehicles, Bags, Laptops etc will create awareness prompting
sales from store shelves
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Posters
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Posters
pasted at strategic public places and sales outlets will create awareness for
Rock solid prompting its sales from shelves in stores
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Banners
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Banners
at strategic public places especially at sales outlets such as stores and
supermarket will create awareness for Rock solid prompting its sales from
shelves in stores
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Website
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An
official product website will provide an online platform where information about
the product and an integrated online sales portal for customers. This will
lead to sales online and wholesale and in stores.
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Radio
and TV
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The
product will be advertised during some popular Tv and Radio programs. This
will create awareness and generate sales.
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Word
of mouth
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The
owners and staffs of products parent company will tell their family, friends
and associates about the product and this will further be communicated to
other potential customers. This will create awareness and lead to sales.
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STRATEGY
SALES & MARKETING
OBJECTIVES
Our
sales team will be headed by the marketing/sales manager along with marketing
executives. The company owners and staff will also be involved in the sales
drive. The techniques to be employed include word of mouth, online, tv, radio
and print media Advertisement, placing banners and posters in strategic
locations etc. Our sales goal/target is to sale all containers of Rock solid
produced each month.
UNIQUE SELLING POSITION
We have a strategic advantage over our competitors
to succeed in the market even where other similar products may have failed
because of the unique high quality of Rock solid which is made from demagogically
friendly raw materials and cost effective for our customers too.
SALES & DISTRIBUTION CHANNELS
We
will outsource the distribution of our product to a good distributor with a
good distribution Network.
FINANCIAL
PLANNING
KEY FINANCIAL INDICATORS
Sales - Our sales are projected to grow at a
consistent rate of 2% yearly, and we believe this accurately reflects the average
yearly 2% increase in the volume of product produced in a year and the complete
confidence we have in the social acceptance of our product and properly
utilized distribution channels.
Gross Margin - As we grow, become more efficient, and gain
economics of scale we begin to see a huge growth in our margins.
Operating Expenses - We see an increase in the number of
operating expenses that we will incur but the increasing gross margins are
enough to offset these increments. The increase is due to larger costs
involving advertising, promotion, marketing, and payroll expenses.
Inventory Turnover - Our preliminary forecast suggests that for
us to be flexible in meeting customer demand we will need to maintain a minimal
inventory stock at our production factory. We estimate that, on average, we
will keep two weeks’ worth of inventory on hand.
Collection days - We will collect our accounts receivable on
an average of 120 days. In 2016 and 2017 we will have the cash to cover
unexpected costs or expenses hence the decision to allow a longer collection
period.
PROJECTED PROFIT AND LOSS
Our profit and loss
projections reflect our expectation that monthly fixed costs will remain
constant over the course of any year.
Cost of goods sold
increases at a decreasing rate, as economies of scale make soap production
cheaper per unit as production volume increases. Based on these projections the
company will become profitable in the 4th month of the first year.
CONCLUSION
This business is the first
of its kind in northern Nigeria. If adequately planned and managed on good
advice as envisage in this proposal, it will be a model in the country and will
expand to be the largest in the country. It is highly profitable, worthwhile,
satisfying occupation and feasible based on the in-depth analysis shown in this
proposal from year one to three. On the whole, the business plan does not claim
to be all inclusive. What we tried to do is to give the basis on which an ideal
fish farm could operate profitably. As the business progresses,
unavoidable risks, especially those of environmental factors could evolve
thereby causing some slight changes to the set up.
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