ODA BULUTUM UNIVERSITY

COLLEGE OF SOCIAL SCIENCE AND HUMANITY

COURSE TITLE: ENTREPRENEURSHIP

COURSE CODE: MGMT 1012

BUSINESS PLAN ON FARMERS GROUP FRUIT-FARM PARTNERSHIP (CHIRO,

ETHIOPIA)

PREPARED By : ID NO

1. Addisu Sisay 0974

2. Tize Yichilal 0600
3. Alem Alelign 0534

Submitted To: Nawi M

Submission Date: 11/04/2014

Chiro:Ethiopia
FARMERS GROUP FRUIT - FARM PARTNERSHIP (CHIRO ETHIOPIA)

ADDRESS CHIRO ETHIOPIA

i
 TABLE OF CONTENT

Contents page
1.1.2.The Market; -..................................................................................................................................................3
1.2 .Financial Considerations;-................................................................................................................................3
1.3.Cardinal issues...................................................................................................................................................3
1.3.1.Mission;-.........................................................................................................................................................3
1.3.2. Vision:-..........................................................................................................................................................3
1.4 The business......................................................................................................................................................4
1.4.1 Introductions.................................................................................................................................................4
1.4.2 business mission.............................................................................................................................................4
1.4.3 key success.....................................................................................................................................................4
1.7Management Summary......................................................................................................................................5
1.7.1.Organizational plan........................................................................................................................................5
2.2 Competitors.......................................................................................................................................................6
2.3 Market Segmentation........................................................................................................................................6
2.4 Competitive and market Strategies...................................................................................................................7
2.4.1 Marketing Strategy.........................................................................................................................................7
2.4.2 Pricing Strategy Farmers................................................................................................................................8
3.1Wages.................................................................................................................................................................9
4.1.Strengths:.........................................................................................................................................................10
4.2. Weaknesses:...................................................................................................................................................10
4.3. Opportunities:.................................................................................................................................................10
4.4. Threats:...........................................................................................................................................................10
5.1 Project location and Facilities.........................................................................................................................11
5.2 Project cost......................................................................................................................................................11
5.2.1 Fixed cost.....................................................................................................................................................11
5.2.2 Operational cost............................................................................................................................................12
6.1 Projected Cash Flow........................................................................................................................................13
6.2 Projected Profit and Loss................................................................................................................................14
7.3 Projected Balance Sheet................................................................................................................................16

ii
iii
 1. BACKGROUND OF AGRICULTURE FRUIT FARM

Farmers Group's plans to concentrate on vegetables as its primary product. This includes
growing carrots, potato, tomato, white onions and red onions. The partner's farm will have a
capacity sufficient to produce in excess of 200,00 quintals of vegetables per year.

The partner’s plans to utilize traditional and some advanced plant technologies to produce new
cultivars of vegetable and already mentioned above type of fruit. This strategy will allow
Farmers Group to produce crops during most of the year and will allow double cultivation of the
greenhouses with almost no additional heating necessary in the winter months.

1
 1.1EXECUTIVE SUMMARY
The partnership:- Farmers Group is a Fruit-farm based partnership, located in oromia region,
chiro werda 03 kebele whose mission is to provide high quality, nutritional, and flavorful
vegetables for consumption in both near and remote regions of the Ethiopia. Additionally the
partners will provide high quality planting materials for use nationwide. The idea behind the
business is to provide healthy and delicious vegetables and fruit to the public.

The overall objective of the business is to provide high quality and quantity fruits product to
public in order to get the expected profit and to satisfy the consumer and to achieve and exceed
sales forecasts to enable us to be operating at capacity, we would also have a claim to create job
opportunity, increase the capacity and usingn nwe technology and plans to expand the business
in different area and also to expand the initial business in size. In the first year the business
forecast a profit .. The reason for obtaining such positive gaining or profit can be mainly
attributed to:

The profitability of the farm industrial

The presence of good market price

Absence of strong competitors due to economies of scale

Usage of few permanent workers

1.1.1 Name and Address Of The Business

The name of partnership is Farmer group fruit -farm partnership this name establish bese on
agreement of farmers and located un chiro ,03 kebele

This location is a great opportunity to get different kinds of customer from chiro town society,
oda bultum town society and rift college college campus and chiro town society and chiro
industrial parks

2
1.1.2.The Market; -

With government subsidies and intermediaries, farmers' markets have extended throughout the
year and the number of farmers who sell that product increased. So many loca l peoples of
Ethiopia are now getting their fresh food directly from the famers who grew it.

This makes for an excellent environment for an industry participant such as Farmers Group that
is willing to compete in a niche market and be first to the market with new products.

1.2 .Financial Considerations;-

The partners seeking birr 510,000 in both short-term and long-term loans to finance the purchase
of Farmers Group's new farm, upgrade the facilities, and cover start-up expenses and first year
losses. It is estimated that the partners will begin to make a profit in Year two of operations. The
partners do not expect to have any cash flow problems during the first five years of operations.

1.3.Cardinal issues
1.3.1.Mission;-

Farmers Group is a Fruit-farm based partnership, whose mission is to provide high quality,
nutritional, and flavorful vegetables for consumption in both near and remote regions of the
Ethiopia.

1.3.2. Vision:-

The vision of fresh a Fruit-farm is generating sufficient profit that will make the owner
competent at national level with five years.

3
1.4 The business

1.4.1 Introductions

Farmers Group addisu tize and abn are being formed to engage in fruit-vegetable farms activity.

The partners are a combination of cutting edge, highest quality, and efficient food technology
and production. It is committed to the improvement of food taste and nutritional quality.

1.4.2 business mission

Farmers Group is a Fruit-farm partnership, whose mission is to provide high quality, nutritional,
and flavorful vegetables for consumption in both near and remote regions of the Ethiopia.

1.4.3 key success

1. It uses various types of promotional (Advertisement) mechanism to attract other customers

2. It Provide good qualit product at affordable price

3 Satisfying customer interests by providing quality fruit product

4 The presence of good market price due to the weakness of competitor in the area

1.4.4 short-term objectives

 To be self-employed.
 Presence of job opportunity to local people in order to reduce unemployment rate.
 Pay tax to government in order to enhance economic growth of the country.
 To attract customer and achieve for casted sales by advertising and promotion.

1.5. long term objective

To be able to hire full time members of staff to form reliable and healthy team working in the
fruit farming, allowing the partners to meet on the day to day problems, to meet customers and

4
suppliers, making great promotions and supervising the general function of the fruit-farm in
order to form and expand the business further.

1.5

1.6. key personnel

Manager:- tizie yichilal BA Degree in Horticulture or plants sciences, and Practical

experience gained from variety of establishments.

Accountant: - kebede

Level qualification in accountant and related filed BA degree he has a good working experience
of local suppliers, professional adviser and book keeping experience. Then, he candidate of
graduate by BA degree in Accounting at oda bultum University in 2014year

1.7Management Summary

1.7.1.Organizational plan

Farmers Group's management team is led by addisu, Business Manager, who has extensive
knowledge or experiences of the industry. The partnership management philosophy is based on
responsibility and mutual respect. Farmers Group has an environment and structure that
encourages productivity and respect for customers and fellow employees.

Overall, Farmers Group will have 20 personnel. The partners expect to employ ten temporary
employees during the equipment re-location phase, four employees on a permanent basis,
and three part-time employees. The Farmers Group team is organized into three groups:

Management; - Management will be responsible for supervising and participating in the daily
operations of the facility. Management consists of:

 Tizie Business Manager, Full Time

Mesert Management Trainee, Full Time
Abent Management Trainee, Full Time

5
Daily Maintenance; - This group will consist of the rest temporary employees and part-time
employees:

Contract Personnel; - They will be utilized initially for the moving and setting up of the
vegetable farm, greenhouses, and the building of the fruit composting facility.

2. Market and competition

2.1 Market

With government subsidies and intermediaries, farmers' markets have extended throughout the
year and the number of farmers who sell that product increased. So many local peoples of
Ethiopia are now getting their fresh food directly from the farmers who grew it. This makes for
an excellent environment for an industry participant such as Farmers Group that is willing to
compete in a niche market and be first to the market with new products.

Farmers Groups will concentrate on:

• Chiro live vegetable markets nationwide that sell organic produce.

• Fresh farmers' markets.

• Fall and winter greens market.

2.2 Competitors

There is fruit-farm that provides similar product/service. Example;- the MM Fruit- farm, the
local agricultural farm, and the Elifory Fruits - farm. Each of these competitors has produce
stands as well as selling to local farmers' markets. However, with the exception of the local
agricultural farm, none of the others focus on a niche market and depend heavily on federal
subsidies

2.3 Market Segmentation

6
The target customers include oriental vegetable markets demanding organic and semi-organic
green vegetables, vegetable processors, and private individual buyers through direct selling and
farmers markets. In its greens production the partners will target virtually all main food outlets.
The partners may also plans to use the mass media like radio, TV etc. as one of its marketing
channels in the future.

2.4 Competitive and market Strategies

The partners, by acquiring an existing profitable vegetable farm with all the necessary custom-
innovated equipment, will gain a significant industry advantage. The partner’s goals in the first
year are to:

• Prepare the future site.

• Relocate and expand fruit- vegetable system and get it operational.

• Integrate greens culture into the system.

• Have the composting system in full production by early spring of the second year.

Farmers Group's main competitive advantages are:

• Efficient production utilizing greenhouses.

• Reduced overhead by fully realizing crop output potential and economies of scale
through joint costs.

2.4.1 Marketing Strategy

Farmers Group will initially market and supply its products to target customers. The partners is
further exploring marketing opportunities on the billboard, newspaper and magazines but
gradually in the future, the partners would like to set up an mass-media and website to market its
products.

7
The partners will utilize aggressive advertising strategies to further market its products. These
strategies include the promotion of products through the sponsoring of spots on cooking shows
and exhibitions, and also engaging prominent chefs to help promote this fledgling industry.

2.4.2 Pricing Strategy Farmers

Group's pricing for vegetables will exceed the average market price for the following reasons:

 Taste sampling at outlets will be encouraged.

 Unparalleled flavor superiority will addict greens tasters.
 Promotion of pesticide-free, fumigant-free cultural techniques of soil, environment,
ozone, and health-friendly production techniques.

2.4.3 Sales Strategy

As in the past, live cars will be delivered by contract carriers in special oxygenated tanks
carrying, 100 quintals vegetables or more, and will be continued as demanded.

The partner's average sales cycle from first contact to closing of the sale is approximately 6 to 18
days for fruit products. Farmers Group plans to shorten this cycle.

Furthermore, the partner’s estimates that from first contact to sale conclusion, the cycle for fresh
vegetables will run 4 days or less. Composted products sale cycle should run from three to 18
days. Direct sales contacts of vegetable markets by delivery personnel, as well as cold calling by
telephone of potential market outlets, will also be employed.

8
 3.SELLING
In and out house sales: - different types of fruit such as potato, tomato, carrot, and white
and red onion are all potentially sales and need to be actively sold.

3.1Wages

Each employee paid 25 birr per day morning starting from 2:00 am up to 6:30 am and afternoon
starting from 7:30am up to 11:30am at local time. So the annual cost of labor in terms of
monthly and weekly salary and fringe benefit is estimated to be birr 153000.

9
 4. SWOT ANALYSIS

4.1.Strengths:

 Market conditions are favorable.

 The service style is new to the area.
 Strong focus on quality, health, and competitive priced.

4.2. Weaknesses:

 Difficulty to expand The Farmers Group at the present location.

 Shortage of capital.
 Lack of experience.

4.3. Opportunities:

 Affordable production cost.

 Minimum financial requirement is needed to establish the business.
 Small numbers of competitors
 The Farmers Group can supply the demand of different levels of customers.
 It is a good place for students to communicate each other.

4.4. Threats:

 During summer seasons there will not be sales.

 A main competitor has lowered their prices and started a price war with our Group

10
 5.PROJECT DETAIL

5.1 Project location and Facilities

The proposed project is located in oromiya region chiro woreda, away from asabe tefery 5 km.
The operation will utilize:

 One small greenhouse, enclosing the vegetable area.

 Horticultural greenhouse.
 Filters, water treatment devices.
 Backwash facilities.
 Outdoor vegetable facilities.
 Business office building.

5.2 Project cost

5.2.1 Fixed cost

A. Land
The required land covering total area of an eight (8) hectors for the project and its
estimated total cost is birr 350, 000.
B. Tankers

Tankers having appropriate standard and quality is capacity of 50000 liters for storing water and
with their accessories will be purchased and installed at estimated cost of birr 155,000.

11
5.2.2 Operational cost

A. Man power requirement

The proposed project is estimated to create totally 17 employees i.e. four (4) permanent
employment, (ten) 10 temporary employment and three (3) part-time employment opportunity,
ranging from manager, accountant and guards. The annual cost of labor in terms of monthly and
weekly salary and fringe benefit is estimated to be birr 153,000.

E. Utilities and other operational cost.

The total cost for utilities (generator power, water pump and telephone and other operational cost
such as facilitates modification, seed, organic herbicides/pesticides and research and
development are estimated to birr 91,000.

12
 6.FINANCIAL ANALYSIS
The total investment cost of the project is estimated at birr 850,000 out of which birr 550000 is
capital cost and birr 300,000 is working capital. Concerning about the source of finance,
510,000 (60%) is covered by saving and credit association and the remaining cost of the
project birr

340,000 (40%) is financed by the partner. The proposed project generate revenues will be
for Year 1 to Year 5 are birr 40,000, birr 50,000, birr 65, 000, birr 85,000 and birr 97,000
annually respectively and commutative net cash inflow of birr during the projected life of the
project. The internal project before tax is 28% and the net percent value of birr and break-even
point of the project point at 5 years.

6.1 Projected Cash Flow

The chart and table below contain the cash flow assumptions and projections for Farmers Group
during the first five years of plan implementation.

Fruit-vegetable Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received
Cash from Operations
Cash Sales Birr Birr Birr Birr Birr
143,750 175,000 212,500 222,275 231,833
Cash from Receivables Birr Birr Birr Birr Birr
431,250 525,000 637,500 666,825 695,498
Subtotal Cash from Birr Birr Birr Birr Birr
Operations 575,000 700,000 850,000 889,100 927,331
Additional Cash Received
Sales Tax, VAT, Received Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Subtotal Cash Received Birr Birr Birr Birr Birr
575,000 700,000 947,000 889,100 927,331

13
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from
Operations
Cash Spending Birr Birr Birr Birr Birr
117,500 111,000 111,000 111,000 111,000
Subtotal Spent on Birr Birr Birr Birr Birr
Operations 117,500 111,000 111,000 111,000 111,000
Additional Cash Spent
Sales Tax, VAT, Paid Out Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Subtotal Cash Spent Birr Birr Birr Birr Birr
117,500 111,000 111,000 111,000 111,000
Net Cash Flow (birr (birr Birr (birr1 (birr
5,420) 59,803) 22,073 1,040) 19,104)
Cash Balance Birr Birr Birr Birr Birr
239,980 180,177 202,250 201,210 182,106

6.2 Projected Profit and Loss

As the profit and loss table shows, Farmers Group expects a steady growth in profitability over

the next few years.

Fruit-vegetable Profit and Loss

Year 1 Year 2 Year 3 Year 4 Year 5
Sales Birr Birr Birr Birr Birr
575,000 700,000 850,000 889,100 927,331
Direct Cost of Sales Birr Birr Birr Birr Birr
391,000 478,100 578,850 601,032 627,803
Other Birr 10,000 Birr Birr Birr Birr 10,000

14
 10,000 10,000 10,000
Total Cost of Sales Birr Birr Birr Birr Birr
401,000 488,100 588,850 611,032 637,803
Gross Margin Birr Birr Birr Birr Birr
174,000 211,900 261,150 278,068 289,528
Gross Margin % 30.26% 30.27% 30.72% 31.28% 31.22%
Expenses
Payroll Birr Birr Birr Birr Birr
117,500 111,000 111,000 111,000 111,000
Sales and Marketing and Birr 11,400 Birr Birr Birr Birr 17,550
Other Expenses 11,100 16,550 15,300
Depreciation Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Payroll Taxes Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Other Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Total Operating Birr Birr Birr Birr Birr
Expenses 141,980 136,600 142,050 140,800 143,050
Profit Before Interest and Birr 32,020 Birr Birr Birr Birr
Taxes 75,300 119,100 137,268 146,478
Interest Expense Birr 54,664 Birr Birr Birr Birr 26,495
47,845 39,095 32,095
Taxes Incurred Birr 0 Birr Birr Birr Birr 24,996
5,491 16,668 21,035
Net Profit (birr22,644 Birr Birr Birr B irr94,987
) 21,964 63,337 84,139

15
;6.3 Projected Balance Sheet

We project solid cash balance and net worth over the years of the plan.

Fruit-vegetable Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current
Assets
Cash Birr Birr Birr Birr Birr
239,980 180,177 202,250 201,210 182,106
Accoun birr0 Birr0 birr0 birr0 birr0
ts
Receiva
ble
Invento Birr Birr Birr Birr Birr
ry 55,760 24,586 9,767 31,136 32,475
Accum Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
ulated
Depreci
ation
Total Birr Birr Birr Birr Birr
Assets 1,045,7 954,763 982,017 982,346 984,581
40
Liabiliti Year 1 Year 2 Year 3 Year 4 Year 5
es and
Capital
Current
Liabiliti
es
Accoun Birr Birr Birr Birr Birr
ts 6,984 44,043 55,960 57,150 59,399
Payable
Total Birr6,98 Birr44,0 birr55,9 Birr57,1 Birr59,3
Liabiliti 4 43 60 50 99
es
Paid-in Birr500, Birr500, Birr607, Birr607, Birr607,
Capital 000 000 000 000 000
Retaine (birr684 (birr732 (birr730 (birr676 (birr602
d ,600) ,244) ,280) ,943) ,804)
Earning

16
s
Total Birr Birr Birr Birr Birr
Capital 292,756 289,720 430,057 504,196 589,182
Total Birr845, birr954, birr982, birr982, birr984,
Liabiliti 740 763 017 346 581
es and
Capital
Net Birr Birr Birr Birr Birr
Worth 292,756 289,720 430,057 504,196 589,182

17