A question two ardent readers, David Kamande and Kevin, asked me recently set me thinking.
“I want to start rearing poultry but I don’t have the start-up capital,” they wrote.
For a long time, I have had a way of going round the question for one reason— the answer boils down to a document called a ‘business plan’, which is not only necessary for success of any business but also offers a powerful tool for seeking funding.
My challenge has been how to guide readers through the key steps required to develop a business plan without overwhelming them with meaningless technical explanations and industry jargon.
At last, I found a way out and what I want to do in the next paragraphs is to ask David and Kevin to respond to a couple of questions that I would use to tease out what they are trying to achieve.
As a matter of fact, poultry business is broad, having many areas to invest in like egg production, rearing birds for meat, hatching day-old chicks, building skills of other farmers and production and sale of feeds, supplements, drugs, vaccines and equipment.
Therefore, when I get an answer like “my plan is to start with 1,000 broilers or Kienyeji birds,” I always know there is plenty of work to do.
And when I probe further, I get an answer like this, “My plan is to undertake chicken egg production. My business will entail sourcing layers of Leghorn breed from Kenya Hatcheries Ltd as day-old chicks. The chicks will be raised in a specially made brooder using supplemental heat for two weeks before being transferred to cages.”
UNDERSTANDING BASIC CONCEPTS
“I will feed them on chick mash from week one to eight before changing to growers mash. The caged birds will be fed on layers mash from week 19 when they start laying eggs. The eggs will be packed in crates, labelled and transported to the local market. I will use quality feeds from known company.” In industry jargon, this passes for a concise “description of the business product or service”.
For beginners, I normally skip the next two steps in the outline of a business plan — vision and mission, and value proposition — and instead go straight to assess their understanding of basic concepts like disease control, farm biosecurity, housing plans, and general management of issues like feeding, watering, and administration.
In industry jargon, this fourth step of developing a business proposal is referred to as the ‘critical factors for success’ and in poultry business, if you get these right, you mitigate against risks.
Now, I am always blunt to a fault about understanding risks involved in running a poultry business. “You can’t make money in any business unless you understand the critical factors for success and the risks involved.” If you are a regular, the free poultry handout that I normally share with readers focuses on this key step.
If the purpose for developing a business plan is to raise money, you need to convince the financier that you understand the poultry industry well and its contribution to the national and local economy. Here, you can’t run away from quoting numbers.
LARGELY UNTAPPED POTENTIAL
The fact of the matter is that although poultry industry in Kenya contributes a great deal to our economy, its potential has remained largely untapped. If you recall, I wrote sometime back and referenced data from the Food and Agricultural Organisation (Seeds of Gold July 9, 2016): “Agriculture contributes to about 30 per cent of our gross domestic product.”
Sorry, I digress from the business plan to explain why poultry industry remains a virgin territory especially for many small-scale farmers. Besides inability to access credit, high interest rates for loans, high cost of feeds and poorly defined marketing outlets, there is a dire lack of technical know-how and business skills.
In my case, I used my personal savings and sacco loans to fund my start up.
However, I still needed to draft a business plan because from my reading, 90 per cent of all businesses fail in the first two- years as a result of poor planning.
In the next article, I will explore the other aspects of a business plan like developing an operational plan, start-up cost for infrastructure, production programme, quality control, marketing plan and projected revenue.