SMALL BUSINESS MANAGEMENT ASSIGNMENT

For: Questions and answers email: theotherwomaninmarriage@gmail.com

Here are the questions of Small Business Management to expect in the forthcoming exams.

1.a. Define the term small business and explain clearly the criteria used for defining what exactly a “small Business” is in different countries

b. What are the rationales for studying Small Business Management in Nigeria?

2. How can prospective small business owner/manager goes about evaluating the financial picture of a new business? Consider the following financial terms in your discussion.

(i) Sources of funds

(ii) Use of funds

(iii) Cash flows

3. Develop a comprehensive essay entitled: “ The Impact of Small Businesses on the Economic Activities of Federal Capital Territory, (FCT)”

4. Write explanatory notes on each of the followings:

(i) Planning as Tools for Decision Making in Small Business

(ii) Small Business and Big Business (Comparative Analysis)

(iii) Scientific methods of market analysis for Small Business

5. How would you evaluate the potentials and performance of the current Federal Government Subsidy Reinvestment Empowerment Programmed (SURE-P) with regards to small businesses in Nigeria?

6. Budgets are plans as well as control. Discuss this statement with regards to SALES and CASH BUDGETS for Small Business.

SOLUTION:

FEASIBILITY STUDY FOR BROILER FARM

The Other Woman In Marriage

Reg. No. 07069373637

Department: Business Admin

Group: A

Course: Small Business Management

Code:

1 INTRODUCTION

1.1 Project Brief

The broiler farm is a project of livestock sector, in which, the day old chicks (DOCs) are raised on high protein feed for a period of six weeks. This business can be started both in rural and semi-urban areas in sheds. The Poultry sheds can be acquired on rental basis. These sheds have all the required facilities for the broiler farm. The rent cost varies between Rs 1 to Rs 2 per square feet depending upon the location and facilities at the farm.

The broiler birds are sold to traders and the whole sellers markets in the urban areas. Sometimes birds can also be sold directly to the shopkeepers in the urban markets. Broiler farming is a profitable venture depending on the demand of the meat in the market. Annually, six flocks of birds will be raised on the same premises of a farm.

1.2 Opportunity Rationale

Broiler meat is the cheapest source of animal protein available in the country. The time required for raising broiler birds is lesser than that for big animals. The consumption of white meat is increasing due to growing health consciousness in the masses.

According to the Agriculture Statistics of Pakistan the per capita consumption of poultry meat is increasing at a rate of 4% per annum. It correlates with the income level of the consumers. The existing daily availability of protein quantity per capita in Pakistan deriving from animal source including beef, mutton, poultry and fish combined amounts to 11

grams.

This is far less than the recommended daily dietary protein allowance from

animal source of 26 grams according to the World Health Organization standards. Figure 1-1 shows the shortage of protein availability in Pakistan.

1.3 Total Project Cost

A broiler farm with a population of 7,500 birds that is established in a rented building, needs a capital investment of about Rs 64,040 for purchasing farm machinery and equipment. In addition to this, a sum of Rs 343,284 is required as working capital, which will be used for purchasing day old chicks and raw material (feed & vaccines) etc.

1.4 Proposed Capacity

A broiler farm of about 5,000 thousand birds is considered to be an economically viable size, which will justify fixed and operational costs. In this pre-feasibility study, all the calculations have been based on a flock size of 7,500 birds, with raising six flocks per year. There will be a lag time of two weeks for cleaning and fumigation of the farm.

2 CURRENT INDUSTRY STRUCTURE

The generation line of broiler comes from pure line, which is imported. This produces grand parents for parent stocks and parent stock end up in producing the final product. The farmers get day old broiler from hatcheries. These hatcheries maintain their breeder farms, or in some cases, purchase their hatching eggs from breeder farms. These breeder farms depend on producers of parent stock.

Poultry feed mills are the major player in the poultry industry, which produce a specific formula feed mix. Poultry feed consists of rich protein elements like grains, gluten, blood meal, fishmeal and soyabean meal. The major component of cost of production of chicken meat accounts for feed cost.

In the year 1997, in Pakistan, there were about 15,732 broiler farms that produced 198.6 million broilers in the year 2000 down from 290 million birds. Broiler

3 MARKETING

The marketing of chickens follows the traditional channels of distribution.

Generally, broilers are distributed in the market through middlemen (Arti) and wholesalers. The role of Arti is to identify a farm and negotiate the price. In some cases, the middleman provides Day Old Chicks and other farm inputs (feed, etc.) to the broiler farmers and then agrees to buy back the mature birds from them.

Birds are transported to the urban market and are sold to retailers or market-street poultry shops. Birds are sold on live-weight basis. The time spent in getting broilers from the farm to the retail shop is brief. Although collection and handling of birds has improved with the use of loader vechiles, but it is an established fact that greater the distance between the poultry producer and consumer, more complicated is the marketing system including their collection, handling and transportation to the consumer or processing plants. The processing plant produces dressed chicken (slaughtered and cleaned). However, a very small amount of dressed chicken is available in the local retail market. The integrated processing units distribute frozen and dressed chicken packed in whole or cut-ups to the consumer through retail shops under their brand names.

The trick in marketing is quick availability of market information of chicken supply and demand, which will determine the selling price.

4 FARM MANAGEMENT Farm input required for a broiler farm includes farm equipment (drinkers, feed trays, brooders, and feeders), electronic fixtures and other consumer items (feed, vaccines & medicines, rice-husk or saw-dust, water, electricity, etc.).

4.1 Day Old Chicks

The chicks should be of uniform size, active, alert and bright eyed. The shank or leg covering (skin) of healthy chicks appears bright and shiny.

4.2 Brooding

Proper brooding temperature is required to keep the chicks in comfort. Coal or sawdust is burnt for supplying heat at the stage of brooding in the poultry farm. In the first week, 95ºF is quite comfortable. For the first one week, it is also essential to observe four to five times daily the condition (temperature) of the chicks. They should neither huddle nor move away from the brooding hover, but should be moving around evenly. As chicks grow, the temperature may be reduced at a rate of 5ºF per week until approximately 70ºF is reached in the sixth week.

4.3 Feeding

Broilers are usually fed with the following two types of ration:

• Broiler starter: It is fed to the broiler birds up to five weeks of age.

• Broiler finisher: It is fed to the broiler of more than five weeks of age and

continued till the age of marketing.

Feeding three or four times each day will stimulate feed intake and prevents wastage. Percentage requirement of different ingredients in starter and finisher diet is given in

Table 4-1:

Table 4-1: Broiler Starter & Finisher Diet

Ingredients	Starter Diet (% required)	Finisher Diet (% required)
Maize	44.25	44.10
Rice Polish	10.00	20.00
Fish meal	6.00	5.30
Meat Meal	6.00	5.50
Bone meal	0.75	0.6
Salt	0.25	0.25
Mineral and Vitamin Mixture	0.1	0.1
Groundnut cake	15.00	11.00
Sunflower cake	15.00	11.00
Blood meat	0.25	0.2
Limestone	0.5	0.7
Animal fat	100.00	100.00
Total	100.00	100.00

This starter and finisher feed can be obtained in prepared form, from the feed mills.

4.4 Housing

The chicks should be kept in a clean, dry and well-ventilated room. Broiler house should have proper ventilation as this provides the birds fresh air and carries off moisture. The entire building including litter and all equipment should be fumigated.

4.5 Feeders

It is essential to provide adequate feeder space. Ideally, one pan type feeder is sufficient for 50 birds. Therefore, for 7500, birds 150 feeders would be more than enough.

4.6 Lighting

Most broiler growers provide 24 hours light during brooding and early growing period. Recent research conducted in windowless buildings, using intermittent lighting of 1-2 hours period, has indicated significantly improved feed efficiency.

Initially, for first fifteen days, light intensity should be 40-60 watts per 200 sq. ft of space and this can be replaced by 15 watts bulb in the beginning of third week. The feasibility has taken monthly electricity charges of Rs 2000.

4.7 Drinkers

Adequate drinking space should also be provided to the birds. The drinker should contain fresh, clean and cold water. It is necessary to provide extra water during summer. One drinker is sufficient for 50 birds.

4.8 Litter

Litter is spread on the floor to prevent the direct contact with the floor. Straw, ricehusk and sawdust are generally used for making the litter. It should be dry and free of moulds. Caked or moldy material should be removed and refilled with fresh materials. Extensively wet and dusty litter should also not be used. Using new litter for each flock is good for raising disease-free broiler.

4.9 Vaccination

Vaccination can be provided to chicks through injections, can also be mixed in the water and also through eye drops. Average vaccination price per bird mostly varies between Rs 2-5. The feasibility has taken cost of vaccination at Rs 2 per bird.

4.10Fumigation and Spraying

It is essential to check all equipment and walls of the broiler house carefully that they are clean, and washed with disinfectant solution, and dried. The rooms should be white washed and sprayed before the arrival of birds.

Disinfectant solution can be prepared with Phenol, Potassium Permanganate, Carbolic Acid and Formaline. A solution of Sodium Hydroxide/Caustic Soda with warm water can also be used to clean the house.

To sanitize the broiler house from germs and insects, it is fumigated with Formaldehyde Gas, which is produced by putting Formaline on Potassium Permanganate. The rooms should be vacant and sealed for 30 minutes after the fumigation so that the gas infiltrates in every corner of the room.

In the pre-feasibility report, the cost of fumigation has been taken as Rs 1,074 per flock

5 MANPOWER REQUIREMENTS

Semi skilled workers are needed to look after the feeding, vaccination and cleaning operations at the farm. A single person can handle 3,000 birds easily. Two people will be hired to mange the operations of a broiler farm of 7,500 birds. Each attendant is given a monthly salary of Rs 3000.

6 FARM EQUIPMENT

Various types of farm equipment are needed for feeding, drinking and handling the birds. List of farm equipment, which will be needed, is as under:

Table 6-1 Farm Equipment

Farm Equipment	No.	Unit Price	Amount
Brooder	15	450	6,750
Drum Heater	3	1,200	3,600
Small Drinkers	38	60	2,280
Large Drinkers	112	180	20,160
Small Feeder	38	75	2,850
Large Feeder	112	125	14,000
Shifting Box³	8	1,800	14,400
Total Machine Cost	326		64,040

7. LAND AND BUILDING

Table 7-1 Space Requirement

Space Requirement	Required Area (Sq.Ft)
Management building	100
Shed Space (1 Sq.ft/bird)	7,500
Store Room	86
Rooms for Guard and Workers	144
Total Project Space Requirement	7,830
Rental Cost/Sq.f.	0.9
Total Building Rental Cost per month	7,047

7.1 Recommended Mode for Acquiring Land

It is recommended that the proposed project should be started in a rented shed. These sheds are located along roadsides around cities and rural areas.

This option will help us to save on the capital cost required for constructing sheds. Rental cost of Rs 0.9q.ft4 per month prevails in the market. Advance rent for one year is paid.

7.2 Suitable Locations

Suburban and rural areas around the major cities of the country are the suitable areas for setting up a poultry farm. Setting up a farm at an isolated place will minimize the risk of disease.

Proximity of the farm to the city enables the farmer to have a quick communication with the market for the purchase of Day Old Chicks, farm inputs (feed, etc.), and selling of mature birds.

7.3 Infrastructure Requirement

Poultry's farming needs to be handled tactically, right from the selection of the site to the final stage when the birds are sold. The farm should be located at a place where transportation of birds and feed can be handled easily.

The entrepreneur should make sure that the following things are available at the farm site before setting up the farm:

• Electricity connection

• Drinking quality water

8. PROJECT COST

Table 8-1 Project Economics

Account Head	Total Cost
Machinery & Equipment	64,040
Total Capital Cost	64,040
Raw Material inventory	285,720
Upfront Building Rent	84,564
Total Working Capital	343,284
Total Project Cost	407,324

Table 8-2 Project Return

	Project
IRR	43.03%
Payback Period (years)	3.94
NPV	469,957

Table 8-3 Financing Plan

Financing		N
Equity	50%	203,662
Borrowing	50%	203,662

9 KEY SUCCESS FACTORS

• Farm Supervision

Proper technical supervision of the enterprise is the key to the success of a broiler farm. Farm employees should be aware of the feeding and drinking habits of birds. The farm supervisor should be vigilant and should ensure timely feeding and vaccination, so that the birds stay healthy and disease-free.

• Market Information

The entrepreneur should be well aware of the supply and demand of chicken in the city. This will help the entrepreneur to negotiate well the sale price of birds. The price of chicken meat fluctuates tremendously during a year. Usually, the selling price at the farm gate varies from Rs 36-Rs 42 per kg.

• Mortality Losses

Mortality can only be controlled if the farm conditions are hygienic. Mortality losses should be kept below 5% by timely vaccination & medication.

10 THREATS

The poultry industry has some inherent issues, which cannot be controlled by an individual entrepreneur. Following are some threats faced by this industry: -

• Disease Epidemic

Diseases like New Castle are extremely dangerous. They can eradicate the entire bird population, so the birds need to be protected against such type of diseases, by proper vaccination and medication.

• Government Regulations

When the government imposed a ban on marriage dinners, the industry suffered heavy losses at the time of inception of this law. Ban on marriage dinners has reduced chicken consumption by 40%.