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1.0 Introduction
This hand book is designed to lead you through the necessary steps in writing your
own business plan.
While there may be some elements of the finished documents that would benefit from
professional inputs from accountants, marking experts e.t.c, you should be able to write
the main elements of this plan you self.
I believe that it is important for the person who will have to carry out the plan to have
ownership of all the ideas to present it in person, which is more difficult if you have not
been closely involved in preparing it. A second reason is that writing the plan helps you
hone its contents. Sitting in front of a business partner or prospective investor is a bad
time to find you are not utterly familiar with the plan or that there is a hole in the logic
you hadn’t thought of.
I have been approached by people who want help with the actual writing of a
business plan. Generally they seen not to be confident in their ability to write compelling
English, it is alright to get someone to help in this regard but the owner of the plan, the
person who will sell it to investors really needs have a good grip of the grand plan.
It is in realization of this problem that I set out to write this handbook as a guide to
prospective entrepreneurs.
The ubiquitous requirement of a business plan and/or a feasibility study by investors and
financing houses in Nigeria as a vital condition of an application for business funding has
been the nightmare of many would be successful entrepreneurs. Many have the ideas of
what to do in their heads but when it comes to putting it down in an acceptable format as
a business plan, the prospects has frightened and frustrated many away from what would
otherwise be a successful business dream.
The factory will produce palm kernel oil and palm kernel cake as its main product. Palm
kernel oil is a main raw material in the production of edible vegetable oil and palm kernel
cake is a major raw material in the production of assorted animal feeds.
The installed capacity of the factory is 864 metric tones of palm kernel oil per annum and
1164 metric tones of palm kernel cake per annum. About 108 metric tones per annum of
a minor by-product called palm kernel oil sludge will also be produced. Because all
things may never be equal given the Nigerian situation, this consultant will base this plan
on a conservative production estimate of 482 metric tones of palm kernel oil, 650.7
metric tones of palm kernel cake and 60.25 metric tones of palm kernel oil sludge per
annum. A conservative sales revenue of N121 million will be generated in the first year
of operation and will grow steadily at a yearly average of 10% subsequently. The
projections contained herein are authentic and will be used as the budget for the business.
In order to ensure that success is achieved in meeting the critical requirements the
following steps must be taken.
It is also on cash and carry basis. Sometimes, buyers even pay in advance in order to
secure an expected batch of products. Prices of the main products i.e PKO and PKC
fluctuate up and down depending on the season of the year. However, the prices of the
raw materials i.e palm kernel nuts also fluctuate along with the PKO. That is, if the price
of the PKO falls then the price of palm kernel nuts also falls and vice versa. A good
strategist can make a fortune if he takes advantage of these price movements
The major threat to the business is scarcity of palm kernel nuts. If a factory lacks palm
kernel nuts, it may not enjoy periods of rising prices. Another problem is irregular supply
of electricity. However, if an entrepreneur knows the various localities and villages, then
the sourcing of palm kernel will be very easy. If the entrepreneur has sufficient funds in
working capital, the sky will be his limit as he is likely to out compete his colleagues in
the business. The issue of power outage can be arrested if an electric generating plant is
bought. Finally, the business is very rewarding with very little risk or fear of failure.
Period A: This period begins in January and last up till the end of March. During this
period activity is rather stepped down in the industry. Kernel nuts suppliers feel reluctant
to supply. Palm kernel oil prices do not move upwards rapidly. Profit margin tends to be
very slim during this period.
Period B: This period starts from April down to July. This is a period characterized by
the lowest price of palm kernel nuts in the year. The mills are at advantages, for they
could stock both palm kernel nuts and palm kernel oil in order to maximize profit in the
next period.
Period C: This period may begin from August or September up to November and
December. Price of kernel nuts and oil move upwards rapidly during this period. Any
kernel nuts bought and crushed during this period is sure to yield huge profits. Both the
price of palm kernel oil and palm kernel cake move rapidly upwards during this period.
Period D: This period between December and January is a risky period. Price of palm
kernel nuts are normally high but palm kernel oil (PKO) buyers do not demand oil as
much. Sharp and sudden fall in oil price is more prevalent during this period. Mills
should be very careful in order to avoid sudden fall in price and consequent looses.
However on a final note, the availability of palm kernel nuts all year round is guaranteed
and plentiful. It only takes an experienced purchasing officer to grade and price them
accordingly.
The local government revenue department collects fees from palm kernel nuts traders in
the various village markets. The state government “produce-departments” also impose
levies on palm kernel nuts movement at the various state boundaries as traders convey
palm kernel nuts from the source to the factory. In all the gross domestic product (GDP)
of the national economy is positively impacted. The socioeconomic desirability of the
project can never be over emphasized.
The proposed business would positively affect the socio-economic development of the
host community and the country at large.
Some of the benefits include
Employment generation: The business would generate employment both directly and
indirectly. About 12 persons will be directly employed at the inception and numerous
others that would be indirectly employed from the activities of the enterprise
Sources of government revenue: The proposed business would generate revenue to the
government through payment of various taxes, levies and permits to the local, state and
federal governments.
Increase in gross domestic product (GDP): The gross domestic product of the country would
receive an added boost as a result of the activities and operation of the business
enterprise.
The above makes the business socio-economically desirable
The main kernel crushing machine in this project is Hogis model EK200-K which can
each crush 7.5 metric tons of palm kernel nuts in a 24- hour operation. The machine is a
simple machine made up of a 45- Killowatts electric motor, a gear box/main drive, a
main shaft/worms arrangement and a cage and bars compartment. All these are mounted
on a rectangular main frame solidly supported by three iron blocks. On top of the
machine is a hopper through which the palm kernel nuts are fed into the machine. At the
back end is the electric motor and at the front end is the cage and bars arrangement.
The main cage is where the crushing activities take place. The main cage is lined with
specially designed strong iron bars laid side by side, and nut spacers in between them.
These form open slots from where the expelled oil drains out. The bars are very well laid
so that there would be no clogging of oil or loss of solids in the main cage.
The extra heavy duty main expeller shaft in the cage is made of ringed worms that are
assembled sequentially such that the worms snake round the shaft from back end to the
tip. The thrust of the pressure worm is taken upon a large thrust ball bearing which makes
for smooth crushing operation.
An adjustable cone is mounted at the front end of the main shaft. For maximum oil yield
and to obtain the desired thickness of the cake, the cone point is adjusted to the desired
pressure region. For maximum performance during press operation the adjustment should
be three and half threads-in of the main shaft.
Another important part of the factory is the Filter press machine. This is the machine that
separates sludge, dirts and debris from the clean oil. It is a rectangular structure with
filtration chambers arranged within the rectangular structure. The filtration chambers are
separated by filtration mediums made of polyester untreated tarpaulin. These filtration
mediums trap the sludge, dirts and debris and allow clear golden clean oil to pass and
collect through piping into a trough through which it descends by gravity into the
secondary tank underground. The filter press machine is made in Nigerians and they are
equally very good and durable.
There is also an array of automation of processes by elevators, conveyors, pump,
gearboxes, sprocket and electric motors if complete automation is desired.
Another vital machine is the Kernel shaker, which is a machine that separates shells,
debris and unwanted materials from the palm kernel nuts. This machine is important
because unscrupulous suppliers of raw materials wickedly mix shells and debris with the
main raw kernel nuts in order to gain more weight. The kernel shaker helps to remove all
the shells in a given batch of kernel nuts before that batch is crushed.
The factory should be equipped with a good welding machine of 200 amperes and above.
There should be an electric filling machine, an electric drilling machine, a wench, a tool
box of spanners and screw drivers, an oxygen acetylene welding equipment and other
sundry tools. Other optional equipment should be:
(1) A serviceable electric generating plant of between 500 and 1000 KVA capacity. (2)
Be a good weighing equipment preferably 500 kg weigh scale. (3) goods trucks for
sourcing of raw materials. An oil tanker of 10 metric tones capacity is also desirable but
can be done without.
4.1 THE PRODUCT
The palm kernel oil is the main output of any palm kernel oil expelling factory. The palm
kernel cake (PKC) is a major by-product and palm kernel sludge (PKSL) is a minor-by
product. Palm kernel oil (PKO) is the major raw material for the production of edible
vegetable oil. Ninety percent of what is called “groundnut oil” in our market by ordinary
housewife today is in fact vegetable oil made from palm kernel oil (PKO). Original
groundnut oil which is three times more costly than refined vegetable oil made from palm
kernel oil, cannot be afforded by a majority of Nigerian housewives. Again PKO is a
major raw material of soap making companies. It is also used by food and confectionery
industry.
The palm kernel cake (PKC) is a major by-product of a palm kernel oil expelling factory.
Palm kernel cake (PKC) is consumed by animal feeds production companies. Most of the
animal feeds such as chicken feed, pig feeds, etc are all made with PKC.
Solvent extraction plants are another major consumers of palm kernel cake (PKC) these
days. These solvent extraction plants buy the palm kernel cake and further extract oil
from it using a chemical process. What remains after the chemical extraction is called de-
oiled cake (DOC). The increasing demand of de-oiled cake (DOC) by Chinese and Indian
Companies has even made PKC to be in such high demand that its contribution to profit
is most of the time more than the main product oil. Another byproducts is the palm kernel
sludge (PKSL). This is used by people who produce black soap for medicinal purposes.
The focus will be on vegetable oil refineries and soap making companies. We shall
narrow down to vegetable oil refineries since their demand is far above the currents
supply by a very large margin.
That is to say that these refineries demand more than 1000 metric tons per day while all
the local producers cannot met up to this demand per day. In short, these vegetable oil
refineries do not depend on local producers for their daily needs of PKO. They import
from abroad from time to time to augment the short fall. However, they book up all the
outputs from the available local producers even before they are produced.
These refineries include Ohms Oil, Golden Oil Plc, BUA Group, Hallmark Oil Ltd, Ray
Oils Ltd, Shell Oil Mills Ltd, all in Lagos state, Rom Oil Mills, Ibadan , General Agro
Industries Portharcourt, Willson Nig. Ltd., Nsukka. Aniuzo International Ltd., Emene,
Enugu, Planet Oils Ltd., Aba. Udeagbala Holdings, Aba, Nifex Vegetable Oil Ltd., Aba,
Envoy Vegetable Oil, Onitsha, Star Arrival Oils, Onitsha, Chickason Group, Nnewi,
Camella Vegetable Oil, Owerri, Jilnas Vegetable Oil, Umuahia, to mention but a few.
The above mentioned refineries go about daily to search for palm kernel oil wherever
they can find any. These refineries are all located within the southern states of Nigeria.
Our proposed capacity at present is 72 metric tones per month and the estimated demand
per day is more than 1000 metric tones. Our task is to ensure that we meet up with our
production target of 72 metric tones per months in order not to disappoint our selected
customer who may have paid in advance. Again we need to ensure that we maintain a
standard quality for our products.
It is conventional in the crude palm kernel oil market that buyer’s bear most of the burden
and cost of distribution since due to the high demand they elect to come with their oil
tankers and even wait for the oil to be produced. This helps to eliminate the marketing
and distribution headache for the producer.
The palm kernel cake (PKC) is a major by-product and sometimes contributes to a great
extent to the overall profit. The animal feed industry is constantly demanding palm kernel
cake as raw material for their products. The feed millers also book for the PKC in
advance. Thereby eliminating the need for any elaborate marketing plan.
The palm kernel sludge is further reprocessed in order to extract crude oil used mainly in
black soap making.
The palm kernel oil is normally sold in drums and tanks. The middle men and end users
usually come with their haulage tanker vehicles and drums for collection at the mill. The
product could also be delivered to them by the producing company depending on agreed
terms. The palm kernel oil will be stored in tanks ready for pick up by the customers or
from where it could be delivered to the customers as agreed.
The palm kernel cake is normally packaged in 50kg bags and the customers have them
delivered in lorry load of bags or they come with their own vehicle for pick up from the
mill.
The plan is to customize the empty bags with the company name and logo properly
printed on the empty bags to differentiate the product from those of competitors the
others. This is a good strategy as most of the palm kernel cake in the market today are all
packaged in plain bags or second hand empty bags used by other companies for their own
goods. It is easy to adulterate palm kernel cake with sand, sawdust or rice husk etc. but
the plan is to differentiate the pure and high quality palm kernel cake by branding and
printing company’s own bags.
The palm kernel sludge are stored in open tanks and drums and the customers come to the
mill for pick up. They inspect the quality right there at the mill before they would trans
load to their own containers after purchase.
Below Mr. Joseph Okeke in the structure are the maintenance/ factory manager, a
welder/factory supervisor, two machine operators, four factory hands/labourers, one
cashier/accountant and two security guards.
6.0 MILESTONES:
The milestones describes what is hoped to be achieved in the next five years.
The table below describes the milestones.
s/n Activity Funding Time line
1 Feasibility Personal January 2015
study/business fund
plan
10 Production proper
continues May2018 – May 2019
11 Production proper
continues
May2019 – May 2020
12 Production proper
continues
6.2 FINANCING PLAN
1. Equity contribution 1,000,000
2. Term loan 5,000,000
Opportunities
Proximity to the busiest markets
Competitive pricing
Government incentive supports agricultural and agro-related businesses
There is a large demand for palm kernel oil and palm kernel cake
Potential to create employment opportunities
Possible business expansion into oil palm plantation and palm oil processing
Improving national economic environment
High prospects due to continuing economic stability
Godwin Ozor
Has laoreet percipitur ad. Vide interesset in mei, no his legimus verterem. Et nostrum imperdiet
appellantur usu, mnesarchum referrentur id vim.
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