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KIBABII UNIVERSITY
NAME: EMMANUEL KIPKORIR
REG NO: COM/0046/
COURSE TITLE: ENTERPRENEURSHIP
COURSE CODE: CSC 421
Bett's Butchery Business Plan Executive Summary Overview Bett’s butchery, is a specialty butcher shop to be launched in the coming months in Kibabii University gate Centre. It will sell a wide menu of meats to customers including all shoppers in and restaurants around Kibabii, Tuuti, Bukakanachi, etc.. This store will be located at the area around Kibabii center, which is a perfect location for a meat store, and this area will be a one- stop shopping for customers' especially students’ daily foods. Additionally, Bett’s butchery will be establishing an online ordering website to accept wholesale order from restaurants. The Company Bett’s butchery is established as a limited liability company with 70% ownership by Emmanuel Bett and 30% ownership by Dalton Langat, who are experienced retail food-service managers and currently own Simba Inn Restaurant in Kericho. Encouraged by Mr. Ezekiel Kamau, who had been the successful owner of Ezkam Meat Store for over 20 years in Bungoma. Ezekiel will work for the store for the first 6 months. During the 6 months, he will train us everything about how to manage the meat store. Products and Service Bett’s butchery will sell pork, beef, poultry, lamb, fish, dairy products and some other food. The products will be purchased from the shoppers of Kibabii and restaurants in Bungoma, who place wholesale order online and delivered by us. The sales staff will offer suggestions of substitutions or help customers fulfill their purchases in order to make sure all customers leave satisfied. The Market Kenya’s red meat industry includes beef and veal, pork, lamb and mutton, goat, rabbit. The red meat industry had annual shipments worth Ksh194 Million in 2020.
Kibabii is one of the fastest growing centers in Bungoma, and the fastest growing city in Bungoma. The population of Kibabii has been steadily growing because of Kibabii University population which has steadily been growing over the years. The population growth rate of Kibabii is increasing at a faster rate as compared to other centers in Bungoma. Competition Competitors for Bett’s butchery will be grocery stores, Gate butchery and Dart butchery. Bett’s butchery will hire Eugine for at least 6 months, who is the former owner of Gate Meat Shop, he brings with him existing relationships with the best suppliers of meat as well as an understanding of the craft of butchering, and all his 20-year existing customer resources. Financial Considerations Funding for the launch of the business will be provided primarily from a family, Emmanuel Bett and Dalton Langat. They will contribute Ksh60,000 from their savings to launch the business. The remainder of financing will be made up from their Line Credit Ksh40,000. The business will reach positive net profit before depreciation in its third month of operation, allowing for expedited repayment of its loan obligations from the second year, as well as for dividends to be paid to the owners. In 2018, revenue of the former meat shop in Kibabii was around ksh700,000, from Statistics Kenya meat retail prices in 2017 have been growing up by at least 10% comparing to 2015, the annual sales are expected to grow at lease by 15% since the new meat shop has much more traffics comparing to the former meat shop. Therefore, Bett’s butchery’s revenue is expected to reach at least Ksh850,000 in first year. Net Profit before depreciation will reach Ksh39,300. Please see details as follows: SALES, COST & PROFIT PLAN YEAR1 YEAR2 YEAR ANNUAL SALES 850,000 950,000 1,050, Gross margin (based on 36% margin rate) 306,000 342,000 378, Rent 108,000 108,000 108, Staff Payroll 90,000 98,000 104, Owner Payroll 45,000 45,000 45, Banking & Transaction costs 5,000 5,500 6, Insurance 2,000 2,000 2, License and permits 8,500 8,500 8,
Start-up expenses for Bett’s butchery include construction of store, construction of walk-in freezer and cooler, and the normal legal expenses for consultation and permitting, store insurance, one month's rent, the development of a website with e-commerce capabilities to take orders and sell meats directly. Inventory on-hand at any given time must be low as all meats, must be kept extremely fresh and so will be ordered on a weekly basis or even more often. Other current assets include table meat and bone saw, meat grounder, knives, cleavers, protective clothing, retail scale, cash register, etc... Long-term assets include meat refrigerated display cases, wall glass door freezer and cooler display, and cooler, other display shelves, etc. A significant amount of cash is required to fund the first year of operations until the business reaches break-even. START-UP REQUIREMENTS START-UP EXPENSES Store Construction 30, License 7, Insurance 2, Rent 9, Website Development 5, TOTAL START-UP EXPENSES 53, START-UP ASSETS Cash 5, Start-up Inventory 40, Other Current Assets 15, Long-term Assets 150, TOTAL START-UP ASSETS 210, TOTAL REQUIREMENTS 263, Products
In order for one-stop shopping for customers, Bett’s butchery will provide 70% meat products, 5% poultry product, 9% fish product, 10% dairy and 6% other food products on a regular basis. The products will be purchased from suppliers within Bungoma County to have minimal impact on the running cost through trucking costs and to maintain product freshness. Products will be purchased as whole animals and butchered in the store by trained butchers. They will be sold while fresh. While products may be replenished within a few days, there is the possibility of certain items running out because of high sales and going out of stock until new shipments may arise. The sales staff will offer suggestions of substitutions or help customers fulfill their orders through special orders in order to make sure all customers leave satisfied. Market Analysis Summary It’s been a turbulent few year for the Kibabii meat industry, especially beef and pork. Droughts and harsh winter temperatures have sent prices for beef cattle soaring. Meanwhile, the pork sector has been pummeled by higher feed costs, and a resulting jump in the price of live pigs. These events in turn put serious pressure on beef and pork processors. In fact, when Kibabii’s last remaining butchery went bankrupt, it said it could no longer pay its bills due to the climbing cost of live animals. It’s no surprise either that the price increases have made themselves felt at the grocery checkout. According to the 2019 University of Nairobi Food Price Report, meat accounted for the biggest food price rise in Kenya last year – up 12.4 per cent compared with 2.8 per cent for food overall. Demand for alternative sources of protein is being driven by Kenya’s changing immigration patterns, and by restaurant chefs on the lookout for different tastes and textures that meats such as bison, rabbit and goat can provide. Large and small processors and retail chains are also making the most of rising consumer interest in how their food is produced to create a variety of “free-from” lines. Kenya Meat Commission, for example, specializes in packaged meats and snacks it positions as “clean and lean” (produced without preservatives, nitrites or GMOs) and sourced primarily from Kenyan animals that have been raised naturally and humanely. “Many of our customers have food allergies, food sensitivities or dietary restrictions,” explains Neilson. “But another segment is looking at where and how the animals were raised. For these customers, it’s important to know that the animals have not been confined in cages or gestation crates and that they’ve been raised without antibiotics.” Market Segmentation Bett’s butchery potential customers are all the Kibabii University students, Restaurants and hotels around Kibabii and families around Kibabii.
Business customers and retail customers will be grown as separate revenue streams, but will reinforce each other. Marketing Strategy The marketing strategy of Bett’s butchery is to establish anticipation of the store's opening in Kibabii so that it can hit the ground running with retail sales immediately upon launch. To that end, the following tactics will be used: a. Direct mail of flyers to a select list of 500 Students. b. Launch of the website in anticipation of opening. After opening, the following tactics will be used going forward: a. Direct mail to additional students and households with higher incomes. b. Search engine marketing via local Google ads. c. Email newsletter describing developments in meat offerings to business customers and certain households. Sales Strategy The sales strategy for the business includes both retail sales and business sales strategies. Customers will be greeted with a standard greeting and served to meet their satisfaction with the greatest care taken to provide quick service to walk-in customers. Retail sales will be based on the marketing of the store and its location, explained in the marketing plan section. At an operational level, orders will be taken in person by clerks working the floor of the store (two on duty at any given time), or by the office clerk over the phone or Internet. Orders for specific cuts will be transmitted from these clerks to the butchers on duty who will prepare the cuts. They will be packaged, priced, and prepared for sale by the floor clerks. The business sales strategy relies on prospecting by Emmanuel Bett and Dalton Langat to establish sales to restaurants. They will research, contact, and present to these businesses, drawing on their past sales experience. As owner of the business, they will work to maximize this revenue stream to increase profits. Sales Forecast Retail sales will be the greatest driver of sales growth and represents the best margins for the business, with a 100% markup over cost. Special orders are more expensive to provide, but will provide a vital line of business that will encourage high-income customers to use the store.
Products sold to businesses will be sold at lower rates, but costs will also be reduced through bulk ordering and the ease of working with businesses in an ongoing way. The cost of sales to businesses will be 65% as well. This category, including restaurant and hotel sales, will also represent a large portion of sales. The presence of the store and the brand name it establishes will allow restaurants and hotels to advertise the fact that they purchase their meats from Bett’s butchery without any fear, as customers will see it as a mark of quality. SALES FORECASE YEAR1 YEAR2 YEAR SALES Retail Regular Sales 790,000 800,000 850, Retail Special Sales 30,000 50,000 70, Restaurant Sales 30,000 100,000 130, TOTAL SALES 850,000 950,000 1050, DIRECT COST OF SALES Retail Meats & Other Products 503,500 505,500 535, Special Order Meats 19,500 32,500 45, Business Meats 21,000 70,000 91, SUBTOTAL DIRECT COST OF SALES 544,000 608,000 672, Milestones Emmanuel Bett will manage all marketing and sales activities. As mentioned earlier, the business's website must be completed months before opening to provide information for those who see flyers and ads prior to the launch. MILESTONES Milestone Start Date End Date Website Development September 1, 2022 October 30, 2022 Design Flyers and Ads October 1, 2022 October 31, 2022 Direct Message Campaign November 1, 2022 N/A Search Engine Marketing November 1, 2022 N/A
START-UP FUNDING
Start-up Expenses to Fund 53, Start-up Assets to Fund 210, TOTAL START-UP FUNDING REQUIRED 263, ASSETS Non cash Assets from Start-up 205, Cash Assets from Start-up 5, Additional Cash Raised 0 Cash Balance on Starting Date 5, TOTAL ASSETS 210, LIABILITIES & CAPITAL LIABILITIES Current Borrowing 0 Long-term Liabilities (Line credit of Andrew & Nina)
Accounts Payable (Outstanding Bills) 0 TOTAL LIABILITIES 60, CAPITAL Planned Investment Emmanuel Bett 130, Dalton Langat 130, Additional Investment Required 40, TOTAL PLANNED INVESTMENT 300, Loss at Start-up (Start-up Expense) (150,000) TOTAL CAPITAL 150, TOTAL LIABILITIES & CAPITAL 210, Total Funding 360,
Important Assumptions Interest rates and the tax rate reflect the current economic environment that Bett’s butchery will operate within. Projected Profit and Loss Additional direct cost of sales reflects the costs of packaging, M-pesa transaction fees, and other direct costs of the meat preparation and order fulfillment processes. Gross margins are based on the industry markup for butchered meats. Marketing expenses will be higher in the first year to announce the opening of the firm and will drop after that. Most expenses will show small increases each year as the business will remain in the same location over the first three years. Profit will rise sharply over the first three years as sales are spread over these relatively stable expenses and more customer source. PROFIT & LOSS (MONTHLY) M1 M2 M3 M4 M5 M6 M7 M SALES 55,000 60,000 65,000 70,000 75,000 77,000 78,000 78, COST OF SALES Direct Cost of Sales 35,200 38,400 41,600 44,800 48,000 49,280 49,920 49, Other Cost of Sales 0 0 0 0 0 0 0 0 Total Cost of Sales 35,200 38,400 41,600 44,800 48,000 49,280 49,920 49, Gross Margin 19,800 21,600 23,400 25,200 27,000 27,720 28,080 28, Gross Margin % 36% 36% 36% 36% 36% 36% 36% 36% OPERATING EXPENSES Rent 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9, Staff Payroll 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7, CEO & COO Payroll 4,166 4,166 4,166 4,166 4,166 4,166 4,166 4, Banking & Transactional cost
Insurance 167 167 167 167 167 167 167 167 License 292 292 292 292 292 292 292 292 Health Inspection (^83 83 83 83 83 83 83 ) Telephone and Internet 100 100 100 100 100 100 100 100
Net Profit % 1% 3.77% 6.27% Projected Cash Flow The business will pay back its long-term loan over the first three years of operation. Cash on hand will allow for dividends to be paid to the partners in the second and third years of operation. CASH FLOW SHEET CASH RECEIVED YEAR1 YEAR2 YEAR Cash From Operations Cash Sales 850,000 950,000 1,050, Total Cash From Operations 850,000 950,000 1,050, Additional Cash Received Sales Tax (GST+PST) 0 0 0 New Current Borrowing 0 0 0 New Other Liabilities (interest-free) 0 0 0 New Long-term Liabilities 0 0 0 Sales of Other Current Assets 0 0 0 Sales of Long-term Assets 0 0 0 New Investment Received 0 0 0 Subtotal Additional Cash Received 0 0 0 Subtotal Cash Received 850,000 950,000 1,050, EXPENDITURES YEAR1 YEAR2 YEAR Expenditures from Operations Cash Spending 0 0 0 Bill Payments 810,700 883,200 953, Subtotal Spent on Operations 810,700 883,200 953,
Additional Cash Spent Sales Tax (GST+PST) Paid Out 0 0 0 Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment 0 0 0 Long-term Liabilities Principal Repayment
Purchase Other Current Assets 0 0 0 Purchase Long-term Assets 0 0 0 Dividends 0 30,000 50, Subtotal Additional Cash Spent 20,000 50,000 70, Subtotal Cash Spent 830,700 933,200 1,023, Net Cash Flow 19,300 16,800 26, Cash Balance 24,300 41,100 67,
