CHAPTER 1.

I N T R O D U C T I O N

1.1 Overview of the Chapter

This chapter outlines the foundational aspects of starting a dairy farming business. It includes an
introduction to the concept, justification for the business, a description of the product/service, legal
structure, business name and location, type of business, purpose, vision, mission, values, objectives
and goals, history of the industry, and reasons for the business's existence.

1.1 Introduction

The dairy industry is a crucial component of the agricultural sector, providing essential nutrients
through a variety of dairy products. Dairy farming involves the production and sale of milk and milk-
based products, which are staple foods in many diets worldwide.

1.2 Justification of the Business

With the increasing global demand for dairy products, starting a dairy farming business presents a
lucrative opportunity. The nutritional benefits of dairy products, coupled with their widespread use in
various cuisines, ensure a steady market. Additionally, advancements in dairy farming techniques and
technology enhance productivity and profitability.

1.3 The Product/Service

The business will offer a range of dairy products, including:

Fresh Milk: Pasteurized and homogenized milk.

Cheese: Various types, such as cheddar, mozzarella, and gouda.

Yogurt: Regular, Greek, and flavored varieties.

Butter: Unsalted and salted butter.

Cream: Heavy cream, light cream, and sour cream.

Ghee: Clarified butter, widely used in cooking.

Buttermilk: Traditional and cultured varieties.

1.4 Legal Structure of the Business

The business will be structured as a Limited Liability Company (LLC) to provide flexibility and
protect the owner's personal assets from business liabilities.
1.5 Name and Business Location

Name: Pure Dairy Farms

Location: The business will be located at Kimathi, Nyeri County known for its agricultural activities
and mainly due to its ideal conditions for dairy farming.

1.6 Definition of Business

i) Type: The business will operate as a combination of manufacturing, retail, and wholesale. It will
produce dairy products, sell directly to consumers, and distribute to retailers and food service
providers.

ii) Is this a new start, expansion, or acquisition? This is a new business startup.

1.7 The Business Purpose

1.7.1 Business Vision

To become a leading provider of high-quality dairy products, recognized for our commitment to
sustainability, animal welfare, and community engagement.

1.7.2 Business Mission

To produce and deliver nutritious, delicious, and sustainable dairy products that support healthy
lifestyles and contribute to the well-being of our community.

1.7.3 Business Values

Quality: Commitment to producing the highest quality dairy products.

Sustainability: Implementing environmentally friendly farming practices.

Animal Welfare: Ensuring ethical treatment and care of dairy animals.

Community: Supporting and engaging with the local community.

Integrity: Operating with honesty and transparency.

1.7.4 Business Objectives and Goals

Short-term Goals:

Establish the dairy farm and production facilities.

Launch the brand and achieve initial sales targets within the first year.

Develop relationships with local retailers and food service providers.

Long-term Goals:

Expand product lines to include organic and specialty dairy products.

Increase production capacity and market reach.

Achieve a significant market share in the regional dairy market within five years.

1.8 History of the Business or Industry

The dairy industry has a rich history, dating back thousands of years. Modern dairy farming has
evolved with technological advancements, improving efficiency, milk quality, and animal welfare.
The industry has seen significant growth, driven by rising global demand for dairy products and
increasing awareness of their nutritional benefits.

1.9 State Why This Business Should Exist

Motivation of the Entrepreneur

The entrepreneur is motivated by a deep-rooted passion for agriculture and a desire to provide high-
quality, nutritious dairy products to the community. With a background in agricultural science and
business management, the entrepreneur aims to create a sustainable and profitable dairy farming
business.

Benefit to the Community or Industry

The business will provide fresh, locally produced dairy products, supporting the local economy and
promoting health and wellness. It will create jobs, contribute to rural development, and implement
sustainable farming practices that benefit the environment. By prioritizing animal welfare and
community engagement, Pure Dairy Farms will set a standard for responsible dairy farming and make
a positive impact on the industry and community.

CHAPTER 2. PRODUCTS AND/ OR SERVICES

Purpose of the Product/Service Section

The purpose of the product/service section is to detail exactly what the business offers to customers
and what makes these offerings desirable. This section provides a clear understanding of the products
and services provided, highlighting their features, uniqueness, and competitive edge.

Product Oriented Businesses

Product Mix
Fresh Milk:

Description: Pasteurized and homogenized milk.

Features: High nutritional value, fresh from the farm, available in various fat percentages (whole, 2%,
skim).

Unique Selling Point: Sourced from well-cared-for cows with a focus on ethical treatment and quality.

Cheese:

Description: Various types such as cheddar, mozzarella, gouda.

Features: Aged for flavour, made from high-quality milk, no artificial additives.

Unique Selling Point: Handcrafted, artisanal quality with a focus on traditional methods.

Yogurt:

Description: Regular, Greek, and flavoured varieties.

Features: High in probiotics, thick and creamy texture, available in multiple flavours.

Unique Selling Point: Made with natural ingredients, supports digestive health.

Butter:

Description: Unsalted and salted butter.

Features: Rich flavour, smooth texture, no artificial preservatives.

Unique Selling Point: Made from fresh cream, ideal for cooking and baking.

Cream:

Description: Heavy cream, light cream, and sour cream.

Features: Versatile usage, rich and thick consistency.

Unique Selling Point: Fresh and natural, no additives.

Ice Cream:

Description: Various flavours and types, including premium and regular.

Features: Creamy texture, made with high-quality ingredients.

Unique Selling Point: Premium quality, unique and traditional flavours.

Ghee:

Description: Clarified butter, widely used in cooking.

Features: High smoke point, rich in flavour, long shelf life.

Unique Selling Point: Made using traditional methods, high purity.

Buttermilk:

Description: Traditional and cultured varieties.

Features: Tangy flavour, rich in probiotics.

Unique Selling Point: Made from fresh cream, supports digestive health.

Key Product Features

Freshness: Products are delivered quickly from farm to customer, ensuring peak freshness.

Quality: High-quality ingredients with no artificial additives.

Sustainability: Environmentally friendly farming practices and ethical animal treatment.

Artisanal: Handcrafted products using traditional methods for superior taste and quality.

Product Protection

Trademarks: The business name "PureDairy Farms" and product names will be trademarked to
protect brand identity.

Patents: While the products themselves are traditional, any unique processes or packaging methods
developed could be patented.

Copyrights: Marketing materials, including product descriptions, labels, and logos, will be
copyrighted.

Service Businesses

Service Offerings

Delivery Service:

Description: Home delivery of dairy products.

Features: Convenience, freshness, scheduled deliveries.

Customer Benefits: Fresh products delivered directly to the door, saving time and effort.
Farm Tours:

Description: Educational tours of the dairy farm.

Features: Insight into dairy farming practices, animal care, and product processing.

Customer Benefits: Educational experience, transparency in production processes.

Subscription Service:

Description: Regular delivery of dairy products on a subscription basis.

Features: Customizable product selection, discounts for subscribers.

Customer Benefits: Convenience, cost savings, guaranteed supply of fresh products.

Event Catering:

Description: Providing dairy products for events.

Features: Customizable catering options, high-quality products.

Customer Benefits: Unique and high-quality dairy options for events, tailored to customer needs.

Service Features

Convenience: Services designed to make purchasing and enjoying dairy products easy and convenient
for customers.

Customization: Options to tailor services to individual preferences and needs.

Transparency: Providing insight into farming and production practices, building trust with customers.

Service Protection

Trademarks: Service names and any unique service models will be trademarked.

Copyrights: Service descriptions, promotional materials, and educational content will be copyrighted.

Product Risks

Potential Risks and Mitigation Strategies

Product Liability: Risk of contamination or spoilage. Mitigation: Implement strict quality control and
hygiene practices, regular inspections, and certifications.

Professional Liability: Risk of misinformation during educational tours. Mitigation: Ensure accurate
and up-to-date information is provided, and guides are well-trained.
Ease of Duplication: Competitors may replicate product offerings. Mitigation: Focus on quality, brand
reputation, and customer loyalty. Implement unique processes or packaging that can be patented.

Supply Chain Disruptions: Risk of delays or shortages in raw materials. Mitigation: Develop strong
relationships with suppliers and maintain a backup supply chain plan.

By addressing these factors, PureDairy Farms aims to provide high-quality, desirable dairy products
and services while managing potential risks effectively.

CHAPTER III. MANUFACTURING AND/ OR OPERATIONS PLAN (include

picture of plan)

3.1 Overview of the Chapter

This section describes the location, physical facility, space requirements, major equipment, labour
force, sources of supply, and layout that are required to provide dairy products. Emphasis is given to
the production process, inventory control system, and purchasing and production control systems.

3.2 Location of the Business

i) Impact of Location on Ability to Reach Customers:

The business will be located in Nyeri County due to its ideal conditions for dairy farming. This
location provides easy access to a large customer base within the state and neighbouring regions.
Proximity to major highways and transportation networks facilitates distribution.

ii) Physical Characteristics of the Current or Proposed Location:

The proposed location is a rural area with ample land for dairy farming, milking facilities, and
production buildings. The site includes existing barns and fields suitable for grazing, ensuring that
cows have access to natural, healthy diets. The rural setting also supports expansion plans.

3.3 Physical Facilities

Existing Status and Required Changes:

i. Vehicle Access:

Existing: The location has accessible roads for vehicles.

Required Changes: Upgrade roads for better access to large delivery trucks.

ii. Inventory Storage:

Existing: Basic storage facilities are available.

Required Changes: Construct temperature-controlled storage for dairy products.

Equipment, Fixtures, and Furniture:

Existing: Basic dairy farming equipment.

Required Changes: Purchase advanced milking machines, pasteurizers, and packaging equipment.

iii. Utilities:

Electricity, heat, air conditioning, venting, wastewater systems need upgrading to support new
equipment and comply with environmental regulations.

iv. Merchandise Display and Customer Seating:

Existing: Not applicable.

Required Changes: Build a small retail area with seating for farm tours and events.

v. Product Preparation Space:

Existing: Limited space.

Required Changes: Expand facilities to include dedicated areas for cheese making, yogurt production,
and other dairy products.

vi. Compliance with Regulations:

Ensure facilities comply with current and future environmental regulations and other legislation
related to dairy production.

vii. Expansion Capability:

The location has ample land for future expansion of both the dairy herd and production facilities.

3.4 Labour & Supply of Raw Materials (Inputs)

3.4.1 Sources of Supply:

Feed Supply: Multiple local suppliers for cattle feed to avoid dependency on a single source.

Equipment and Machinery: Reputable suppliers with a track record in the dairy industry.

Packaging Materials: Various suppliers to ensure consistent availability and competitive pricing.

3.4.2 Supply Alternatives and Supplier Factors:

Feed Pricing and Quality: Regularly compare prices and quality from multiple suppliers to ensure the
best deal.
Equipment Reliability: Choose suppliers known for durable and efficient equipment, with good
maintenance and support services.

Packaging Suppliers: Diversify suppliers to avoid interruptions due to shortages or price hikes.

3.4.3 Labour Requirements:

Labour Force:

Dairy Farmers: 5-8experienced dairy farmers for daily operations.

Production Staff: 6-10employees for processing, packaging, and quality control.

Sales and Marketing: 3-5 staff for sales, customer service, and marketing activities.

Maintenance Staff: 2-3 staff for equipment maintenance and facility upkeep.

Administrative Staff: 2-3 staff for administrative and financial tasks.

Labour Cost Estimates:

Dairy Farmers: Ksh15,000 - Ksh20,000 monthly per farmer.

Production Staff: ksh22,000 - Ksh35,000 monthly per worker.

Sales and Marketing Staff: Ksh30,000 - Ksh36,000 monthly per staff member.

Maintenance Staff: Ksh30,000 – Ksh40,000 monthly per worker.

Administrative Staff: Ksh32,000 – Ksh45,000 monthly per staff member.

By outlining the manufacturing and operations plan, PureDairy Farms ensures a structured approach
to producing and delivering high-quality dairy products efficiently while maintaining the capability
for future growth and compliance with regulatory standards.
 CHAPTER IV. MARKET ANALYSIS

4.1 Introduction

This chapter provides a comprehensive market analysis for the dairy farming business. It includes an
overview of macro and micro environmental trends, industry analysis, internal environment, market
size, target market, demand documentation, competition analysis, product/service differentiation, and
sales strategy.

4.2 Macro Environmental Trends (PESTEL Analysis)

4.2.1 Political

Trends: Government policies supporting agriculture, subsidies, and trade agreements.

Impact: These policies can provide financial assistance and improve market access for dairy products.

4.2.2 Economic

Trends: Fluctuations in dairy prices, consumer purchasing power, and economic growth.

Impact: Economic stability can increase consumer spending on dairy products, while economic
downturns might reduce demand.

4.2.3 Social

Trends: Increasing consumer preference for organic and locally sourced products, health
consciousness.

Impact: Higher demand for organic dairy products and opportunities for branding and marketing
based on local production.

4.2.4 Technological

Trends: Advances in dairy farming technology, automated milking systems, and genetic
improvements in cattle.

Impact: Improved efficiency and productivity, better quality control, and enhanced product offerings.

4.2.5 Environmental

Trends: Sustainability concerns, climate change, and environmental regulations.

Impact: Need for sustainable farming practices, compliance with environmental laws, and potential
for eco-friendly branding.

4.2.6 Legal

Trends: Food safety regulations, animal welfare laws, and labeling requirements.

Impact: Ensuring compliance with legal standards to avoid penalties and build consumer trust.

4.3 Micro Economic Situation Analysis

4.3.1 Labor Markets

Trends: Availability of skilled labor in the dairy industry, wage rates.

Impact: Labor availability can affect operational efficiency and costs.

4.3.2 Trade Unions

Trends: Influence of trade unions on labor conditions and wages.

Impact: Negotiations with trade unions might affect labor costs and working conditions.

4.3.3 Customer Profiles

Trends: Demographic characteristics, consumer preferences, and buying behavior.

Impact: Tailoring products and marketing strategies to meet the needs of different customer segments.

4.3.4 Creditors, Suppliers

Trends: Relationships with suppliers, credit terms, and supply chain stability.

Impact: Reliable suppliers and favorable credit terms are crucial for maintaining smooth operations.

4.4 Industry Analysis (Overview)

4.4.1 Degree of Competition in the Industry

Trends: High competition among dairy producers, both local and international.

Impact: The need for differentiation through quality, branding, and customer service.

4.4.2 The Dominant Economic Features of the Industry

Trends: Capital-intensive nature, economies of scale, seasonal variations.

Impact: Significant initial investment and cost management are essential.

 4.4.3 The Drivers of Change in the Industry

Trends: Technological advancements, consumer trends, regulatory changes.

Impact: Adapting to new technologies and changing consumer preferences is crucial.

4.4.4 The Key Success Factors in the Industry

Trends: Quality control, efficient supply chain, strong branding, and customer loyalty.

Impact: Focus on these factors to gain competitive advantage.

4.4.5 Summary of Opportunities and Threats from Macro, Micro, and Industry Variables and
Strategic Responses

4.4.5.1 Summary of Opportunities and Threats from Macro, Micro, and Industry
Variables and Strategic Responses

MACRO FACTORS

Factor Opportunities Threats Business Strategic

Response

Engage in policy
Political Government support Policy changes
advocacy

Implement cost
Economic Economic growth Price volatility
management strategies

Changing consumer Diversify product

Social Health consciousness
preferences offerings

Technological Invest in R&D and

Technological Rapid obsolescence
advancements technology updates

Adopt sustainable
Environmental Sustainability demand Climate change
farming practices

Ensure strict adherence

Legal Food safety regulations Legal compliance
to regulations

MICRO FACTORS
Factor Opportunities Threats Business Strategic
Response

Offer competitive
Availability of skilled
Labor Markets Wage increases wages and training
labor
programs

Maintain open
Improved labor
Trade Unions Labor disputes communication
relations
with unions

Conduct market
Targeted marketing Diverse consumer
Customer Profiles research and
opportunities needs
segmentation

Develop multiple
Creditors, Suppliers Stable supply chain Supply disruptions supplier
relationships

INDUSTRY ENVIRONMENT

Factor Opportunities Threats Business Strategic

Response

Competition Differentiation High competition Focus on quality and

opportunities customer service

Economic Features Economies of scale High capital Secure funding and

investment manage finances
prudently

Drivers of Change Innovation and Market saturation Stay ahead with

consumer trends innovation and market
research

Success Factors Strong branding and Operational challenges Invest in brand

customer loyalty building and
efficiency
4.4.5.2 Internal Environment

4.5.5.2.1 Governance and Management

Composition: The governance structure will include a board of directors with diverse expertise in
agriculture, finance, and marketing. Management will consist of experienced professionals in dairy
farming and business operations.

Culture: Emphasis on transparency, sustainability, innovation, and customer-centricity.

4.4.5.2.2 Internal Business Processes

Use of Applications: Implement modern ERP systems for inventory, production, and financial
management.

Quality Management: Adhere to stringent quality control measures and continuous improvement
practices.

4.4.5.2.3 Resources and Capabilities of the Business

Physical Resources: State-of-the-art milking machines, pasteurizers, and storage facilities.

Human Resources: Skilled labor, training programs, and employee retention strategies.

Technological Resources: Advanced farming and production technologies.

Financial Resources: Adequate capital for initial setup and expansion, prudent financial
management.

Table 4.5.4

Factor Strengths Weaknesses Strategic

Responses*

Governance and
Strong leadership and Potential bureaucratic Streamline decision-
Administrative
governance delays making processes
Structures

Internal Business
Initial implementation Gradual implementation
Efficient ERP systems
cost and training
Processes
Resources and capabilities

Physical resources Regular maintenance

Modern equipment High maintenance costs
schedules

Human resources Competitive wages and

Skilled labor Labor shortages
training programs

Technological resources Cutting-edge Rapid technological Continuous R&D

technology changes investment

Financial resources Prudent financial

Adequate funding Financial risk management and
diversified funding

4.5 Description of Total Market

4.5.1 Present Size of the Entire Market (Total Available Market)

To determine the present size of the dairy market in Kenya, we can consider data from
sources such as the Kenya National Bureau of Statistics (KNBS), local chambers of
commerce, and industry reports. According to recent statistics, the dairy sector in Kenya
contributes approximately 4% to the country's GDP and serves a population of over 47
million people. The demand for milk and dairy products is growing, driven by population
growth, urbanization, and increased health awareness.

4.5.2 Market's Growth Potential

Kenya's dairy market has significant growth potential due to:

 Population Growth: Kenya's population is projected to continue growing, increasing the

overall demand for dairy products.

 Urbanization: As more people move to urban areas, the demand for processed and
packaged dairy products is likely to rise.

 Health Trends: Growing awareness of the nutritional benefits of dairy products will drive
consumption.

 Government Support: Policies aimed at improving the dairy sector, such as subsidies and
improved infrastructure, will support market growth.

4.5.1 Target Market

The target market for the dairy farming business can be segmented based on demographics
and psychographics.
Demographics:

 Geographic Location: Urban centers like Nairobi, Mombasa, and Kisumu.

 Age: Primarily young families and middle-aged individuals.

 Income: Middle to high-income households.

 Education: Educated consumers who are health-conscious.

Psychographics:

 Likes: Preference for high-quality, organic, and locally sourced products.

 Dislikes: Avoidance of products with preservatives and artificial additives.

 Tendencies: Regular consumption of dairy products, preference for convenience, and

willingness to pay a premium for organic products.

Target Market Size:

 Size Estimate: Approximately 20% of the urban population, translating to around 9.4 million
potential customers.

 Percentage Anticipated: Initial penetration of about 5-10% of the target market within the
first year.

Strategies to Attract and Keep the Market:

 Marketing Campaigns: Use social media, local events, and educational campaigns about the
benefits of organic dairy products.

 Customer Loyalty Programs: Offer discounts, loyalty points, and subscription services.

 Quality Assurance: Maintain high standards of quality and hygiene to build trust.

Market Expansion Strategies:

 Product Diversification: Introduce new dairy products like cheese, yogurt, and flavored
milk.

 Geographic Expansion: Expand distribution to more urban centers and eventually rural
areas.

 Partnerships: Collaborate with local retailers, cafes, and restaurants.

4.5.2 Documentation of Demand for Market or Service

To validate the demand for dairy products, the following documentation can be used:
Published Statistics:

 Industry Reports: Data from the Kenya Dairy Board and other industry associations
indicating trends in dairy consumption.

 News Articles: Reports from reputable news sources highlighting the growth and challenges
in the dairy sector.

Primary Market Survey:

 Customer Surveys: Conduct surveys to gather data on consumer preferences, purchasing

habits, and willingness to pay for premium dairy products.

 Focus Groups: Organize focus groups to gain deeper insights into consumer attitudes and
preferences.

Contracts, Letters of Commitment, Letters of Interest:

 Contracts: Secure agreements with local retailers, supermarkets, and restaurants to stock and
sell your products.

 Letters of Commitment: Obtain commitments from health-conscious groups, schools, and

institutions interested in purchasing organic dairy products.

 Letters of Interest: Gather expressions of interest from potential customers through pre-
launch campaigns and events.

4.5.3 Analysis of Competition

Who are they?

 Brookside Dairy Limited: The largest milk processor in Kenya, owned by Kenyatta family.

 New KCC (Kenya Cooperative Creameries): A government-owned entity.

 Githunguri Dairy (Fresha): A cooperative known for its milk and yogurt products.

 Daima Dairy (Sameer Agriculture & Livestock Limited): Known for a variety of dairy
products.

Where are they located?

 Brookside Dairy: Located in Ruiru, near Nairobi.

 New KCC: Has multiple processing plants across Kenya, including Nairobi, Eldoret, and
Nyahururu.

 Githunguri Dairy: Located in Githunguri, Kiambu County.

 Daima Dairy: Located in Nairobi.

How do they compare to your business?

 Brookside Dairy: Large scale, extensive distribution network, strong brand recognition.

 New KCC: Government backing, wide product range, historical significance.

 Githunguri Dairy: Cooperative model, strong community ties, good quality control.

 Daima Dairy: Diversified product range, aggressive marketing.

Sales Volume

 Brookside Dairy: Estimated sales volume of over 1 million liters per day.

 New KCC: Around 800,000 liters per day.

 Githunguri Dairy: Approximately 500,000 liters per day.

 Daima Dairy: Around 300,000 liters per day.

Number of Employees, Locations, Customers

 Brookside Dairy: Over 5,000 employees, 10+ locations, millions of customers.

 New KCC: Approximately 3,000 employees, 12 locations, wide customer base.

 Githunguri Dairy: Around 1,500 employees, 3 locations, regional customer base.

 Daima Dairy: About 800 employees, 4 locations, diverse customer segments.

Is their business steady, increasing, or decreasing?

 Brookside Dairy: Increasing, with ongoing expansion and acquisition strategies.

 New KCC: Steady, with government support and consistent demand.

 Githunguri Dairy: Increasing, due to cooperative support and quality products.

 Daima Dairy: Steady, with a focus on diversification and market penetration.

Competitors' Strengths and Weaknesses

 Brookside Dairy:

o Strengths: Brand recognition, extensive distribution, diverse product range.

o Weaknesses: High operational costs, dependency on large-scale farming.

 New KCC:
 o Strengths: Government support, extensive infrastructure, brand heritage.

o Weaknesses: Bureaucratic inefficiencies, slower innovation.

 Githunguri Dairy:

o Strengths: Strong community ties, high-quality products, cooperative model.

o Weaknesses: Limited distribution, dependency on local suppliers.

 Daima Dairy:

o Strengths: Aggressive marketing, diverse products, flexible operations.

o Weaknesses: Smaller scale, brand still growing.

What have you learned by observing them?

 Brookside Dairy: Importance of brand strength and distribution network.

 New KCC: Value of government support and infrastructure investment.

 Githunguri Dairy: Power of community engagement and cooperative models.

 Daima Dairy: Effectiveness of aggressive marketing and product diversification.

Table 4.5.3: Competitor Analysis

Description of
Strengths Weaknesses Strategic Response
Competitor
Brookside Dairy Brand recognition, High operational Focus on niche
extensive costs, dependency markets, organic
distribution, diverse on large-scale products, lower
product range farming operational costs
Government Innovate faster, lean
Bureaucratic
support, extensive operations,
New KCC inefficiencies,
infrastructure, brand partnerships with
slower innovation
heritage local farmers
Strong community Expand distribution,
Limited distribution,
ties, high-quality invest in supply
Githunguri Dairy dependency on local
products, chain, leverage
suppliers
cooperative model cooperative model
Aggressive Emphasize quality,
marketing, diverse Smaller scale, brand targeted marketing,
Daima Dairy
products, flexible still growing expand product
operations range

4.5.4 Product/Service Differentiation (Unique Selling Proposition)

What unique niche of the market will this business fill?

 This business will fill the niche for high-quality, organic dairy products that cater to health-
conscious consumers and those preferring locally sourced products.

Has anyone attempted to fill this niche? If not, why?

 There are few attempts to fill this niche, mostly by small-scale organic farms with limited
reach. The lack of large-scale attempts is due to the higher costs and complexities involved in
organic dairy farming.

Are there a patent, trademark, copyright, or trade secret that will give you a head-start
on the competition?

 Potential for trademarking the brand to protect its identity. Developing proprietary methods
for organic dairy farming could also be a valuable trade secret.

Where do you believe you have a business advantage?

 Product: High-quality, organic products.

 Price: Competitive pricing due to local sourcing and efficient operations.

 Service: Personalized customer service and subscription delivery models.

 Delivery Time: Quick delivery within urban areas.

Breakeven Point

 Projected breakeven within 18-24 months.

4.5.6 Product/Service Differentiation (Unique Selling Proposition)

What unique niche of the market will this business fill?

 This business will fill the niche for high-quality, organic dairy products that cater to health-
conscious consumers and those preferring locally sourced products.

Has anyone attempted to fill this niche? If not, why?

 There are few attempts to fill this niche, mostly by small-scale organic farms with limited
reach. The lack of large-scale attempts is due to the higher costs and complexities involved in
organic dairy farming.

Are there a patent, trademark, copyright, or trade secret that will give you a head-start
on the competition?
  Potential for trademarking the brand to protect its identity. Developing proprietary methods
for organic dairy farming could also be a valuable trade secret.

Where do you believe you have a business advantage?

 Product: High-quality, organic products.

 Price: Competitive pricing due to local sourcing and efficient operations.

 Service: Personalized customer service and subscription delivery models.

 Delivery Time: Quick delivery within urban areas.

4.6 Sales Strategy

4.6.1 Pricing Policy

What is the relationship between the price you will charge and the image of the business
you are trying to create?

 The pricing strategy will reflect a premium yet affordable image, emphasizing quality and
health benefits of organic products.

How will you price?

 Mark-ups: 20-30% over production cost.

 Profit Margins: Aim for 15-20% net profit margin.

 Discounts: Offer introductory discounts and bulk purchase discounts.

Breakeven Point

 Projected breakeven within 18-24 months.

4.6.2 Distribution Strategy

Describe the channel of distribution you will use to reach your target market.

 Direct to Consumer: Via online orders and home delivery.

 Retail Partnerships: Collaborations with supermarkets and health food stores.

 Institutional Sales: Supplying to schools, hospitals, and corporate cafeterias.

How does the competition get its product to the market?

 Competitors primarily use large retail chains, direct sales to consumers, and distribution
networks covering both urban and rural areas.
Describe how the product will be available when and where the customer wants it.

 Ensuring a robust supply chain and logistics system to maintain product availability in retail
outlets and timely home deliveries.

4.6.3 Communication Strategy

4.6.3.1 Promotional Efforts

Promotional Activity Tactic Cost

Advertising Social media ads, billboards $5000
Direct Mail Flyers and brochures $2000
Radio and Television Local radio and TV spots $3000
Ads in health and lifestyle
Magazines, Newspapers $2500
mags
Outdoor Sign, Poster Billboards in urban areas $1500
Trade Shows Booth at agricultural shows $1000

4.6.3.2 Personal Selling

Personal Selling Activity Tactic Cost

Customer Service Training staff $2000
Ongoing education
Knowledgeable Staff $1500
programs
Complimentary Products Free samples with purchases $1000
Community Involvement Sponsoring local events $1200

4.6.3.3 Publicity or Free Advertising

Publicity or Free
Advertising Tactic Cost
Activity
Announcing new
Press Release $300
products
 Interesting Events Hosting farm tours $500
Creating a short
Documentary $800
documentary
Social media
Video Clips $400
engagement

4.6.3.4 Sales Promotions

Sales Promotions Activity Tactic Cost

Temporary Promotions Offering samples $1000
Coupons Discount vouchers $500
Rebates Cash-back offers $700
Grand Openings Launch events $1500

4.6.3.5 E-communication

E-communication Activity Tactic Cost

Facebook Targeted ads $1000
Website SEO and content marketing $1500
Instagram Influencer collaborations $1200

CHAPTER V: GOVERNANCE & MANAGEMENT PLAN

Name of Academic & Experience Responsibility in Projected Allowances
Director & professional the business remuneration
contact qualifications
addresses

CHAPTER VI: FINANCIAL ANALYSIS

DESCRIPTION AMOUNT

Land $ 5,000

Building 40,000

Remodeling/Improvements 15,000

Inventory 15,000

Furniture 400

Fixtures & Equipment 9,300

Utility Deposits 1,000

Licenses and Permits 500

Outdoor Sign 1,400

Advertising 2,000

Association Fee 180

Office/Operating Supplies 220

Working Capital 10,000

TOTAL STARTUP COSTS $100,000

6.2 Source and Uses for the Funds

 DESCRIPTION LOAN OWNER TOTAL
INJECTION

LAND $ 5,000 $ 5,000

BUILDING 40,000 40,000

REMODELING $ 15,000 15,000

INVENTORY 15,000 15,000

MAJOR CAPITAL EQUIPMENT AND 9,700 9,700

FURNITURE (FF&E) (see break down
next page)

DEPOSITS 1,000 1,000

WORKING CAPITAL 10,000 10,000

OTHER STARTUP COSTS 300 4,000 4,300

TOTAL $ $ 30,000 $100,000

70,000

6.3 CAPITAL EQUIPMENT LIST (Assets schedule)

 MAJOR CAPITAL MODEL COST CONDITION SUPPLIER
EQUIP. &
Furniture

Refrigerator - Soda AX199 $ 2,000 New Acme Equipment

Refrigerator - Beer AX199 2,000 New Acme Equipment

Refrigerator/Freeze BX215 2,500 Rebuilt Acme Equipment

r

Dry- Aisle 300 $ 1,000 New Expert Displays

storage
shelving

Security Camera ZZ23456 8 New Live Eye, Inc.

0
0

Electronic Cash BL222 1,000 New NCR

Register

Furniture 4 Used Thrifty Furniture

0
0

TOTAL CAPITAL $ 9,700

EQUIPMENT

6.4: Proforma Income Statement (I&E Account ) projections

TOTAL GROSS SALES $250,000

Less Credit Card Service Charges 3,000

ADJUSTED GROSS SALES $247,000

Less Cost of Goods Sold 178,750

GROSS PROFIT ( Adj. Gross Sales - $ 68,250

COGS)
OPERATING EXPENSES

Gross Wages 19,400

Payroll Expenses 2,910

Supplies 560

Repairs & Maintenance 640

Advertising and Promotion 1,000

Accounting and Legal 600

Telephone 720

Utilities 6,825

Insurance 1,500

Taxes & Licenses 1,200

Bank Charges 300

Other Expenses:

Depreciation 3,948

Amortization 864

Miscellaneous 360

TOTAL OPERATING EXPENSES $ 40,827

OPERATING PROFIT (Gross Profit – $ 27,423

Operating Expns )

INTEREST Paid on loan, ( a separate (8,304)

“Expense”)

PROFIT BEFORE TAXES $ 19,119

INCOME TAXES (2,868)

 NET PROFIT AFTER TAXES $ 16,251

6.5 Proforma Balance Sheet projections

ASSETS LIABILITIES

CURRENT ASSETS CURRENT LIABILITIES

Cash in bank 10,000 Current maturities of 1,77

long- term debt 7

Deposits 1,000

Inventory 15,000

TOTAL $
CURRENT 26,000
ASSETS

FIXED ASSETS LONG-TERM

LIABILITIES

Land 5,000 Note payable to Valley 68,22

Bank 3

Building 55,000

FF&E 9,700 TOTAL LIABILITIES $

70
,0
00

TOTAL FIXED ASSETS $

69,700

OTHER ASSETS
 Start-up Costs 4,300

TOTAL OTHER $
ASSETS 4,300

NET WORTH $
30
,0
00
(100,000 - 70,000)

TOTAL ASSETS $100,0 TOTAL $

00 LIABILITIES AND 1
NET WORTH 0
(70,000 + 30,000) 0,
0
(70,000 + 30,000) 0
0

CHAPTER VII ASSUMPTIONS USED & RISK ANALYSIS IN THE CASH FLOW
PROJECTIONS

4.5.3 Analysis of Competition

Who are they?

 Competitors in the dairy farming industry include large-scale commercial dairy farms,
organic dairy farms, and local dairy cooperatives.

Where are they located?

 Competitors are located both locally and regionally, with some large commercial
farms operating nationwide.
How do they compare to your business?

 Sales Volume: Large commercial farms typically have higher sales volumes due to
economies of scale, while organic and local farms may have smaller but more
specialized markets.

 Number of Employees: Larger operations employ more staff, including specialized

roles, whereas smaller farms may have fewer employees but more direct owner
involvement.

 Number of Locations: Large commercial farms may have multiple locations,

whereas local and organic farms typically operate from a single site.

 Number of Customers: Large farms serve a wide customer base, including

supermarkets and wholesalers, while local farms may focus on direct-to-consumer
sales and local retailers.

Is their business steady, increasing, or decreasing?

 Large commercial farms: Generally stable with potential for slow growth or decline
due to market saturation.

 Organic/local farms: Increasing due to growing consumer preference for organic and
locally sourced products.

What are your competitor's strengths and weaknesses?

 Strengths: Economies of scale, established distribution networks, brand recognition,

and extensive resources.

 Weaknesses: Less flexibility, higher operational costs, potential disconnect with local
markets, and less focus on niche segments.

What have you learned by observing them?

 The importance of strong branding and customer loyalty programs, the need for
efficient supply chain management, and the potential for differentiating products
based on quality and local sourcing.

Description of
Strengths Weaknesses Strategic Response
Competitor
Large High operational
Economies of scale, Focus on niche markets,
Commercial costs, market
distribution networks local branding
Farms saturation
Health-conscious Highlight organic
Organic Dairy Higher production
market, premium practices, premium product
Farms costs, limited scale
pricing lines
Local Dairy Community support, Smaller scale, limited Emphasize local sourcing,
 Description of
Strengths Weaknesses Strategic Response
Competitor
direct-to-consumer direct customer
Cooperatives distribution
sales relationships

4.5.6 Product/Service Differentiation (Unique Selling Proposition)

What unique niche of the market will this business fill?

 The business will focus on providing high-quality, organic dairy products sourced
from a local, sustainable farm.

Has anyone attempted to fill this niche? If not, why?

 Some local and organic farms are already in this niche, but there is still room for new
entrants due to increasing demand.

Are there patents, trademarks, copyrights, or trade secrets that will give you a head
start on the competition?

 Potential trademarks for the brand name and logo, as well as unique packaging
designs and proprietary feed formulas for cattle health.

Where do you believe you have a business advantage?

 Product: High-quality, organic dairy products.

 Price: Competitive pricing with a premium segment for organic products.

 Service: Excellent customer service and direct farm-to-consumer sales.

 Delivery Time: Efficient local distribution ensuring fresh products.

4.6 Sales Strategy (Projected Budgets)

4.6.1 Pricing Policy

Relationship Between Price and Business Image

 The pricing strategy will reflect the premium quality and organic nature of the
products, positioning the business as a high-end dairy provider.

How will you price?

 Mark-ups: 30-40% mark-up on organic products.

 Profit Margins: Aim for a 20-25% profit margin.

  Discounts: Seasonal promotions and bulk purchase discounts.

Breakeven Point

 Calculated based on fixed and variable costs, expected to be reached within 2 years of
operation.

4.6.2 Distribution Strategy

Channels of Distribution

 Direct-to-consumer sales through a farm shop and online store.

 Partnerships with local organic food stores and supermarkets.

 Subscription-based home delivery service.

How does the competition get its product to the market?

 Larger farms use wholesale distributors and supermarket chains.

 Organic farms use local retailers and direct sales at farmers’ markets.

Availability

 Ensure products are available fresh through timely delivery schedules and efficient
inventory management.

4.6.3 Communication Strategy

4.6.3.1 Promotional Efforts

Promotional Activity Tactic Cost ($)

Advertising Print ads in local newspapers 1,000/month
Direct Mail Monthly newsletters to customers 500/month
Radio and Television Local radio spots 2,000/month
Magazines, Newspapers, Trade
Articles and ads in food magazines 1,500/month
Journals
Billboards and posters in strategic
Outdoor Sign, Poster 1,200/month
locations
Trade Shows Booths at local and regional trade shows 3,000/show
Novelties Branded calendars, pencils, magnets 500/month

4.6.3.2 Personal Selling

Personal Selling Activity Tactic Cost ($)

Customer Service Training for knowledgeable staff 1,000/month
 Personal Selling Activity Tactic Cost ($)
Complimentary Products/Services Free samples at events 1,000/month
Community Involvement Sponsoring local events 2,000/year

4.6.3.3 Publicity or Free Advertising

Publicity Activity Tactic Cost ($)

Press Releases News coverage of unique offerings 500/month
Interesting and Special Events Farm tours, tasting events 1,000/month
Documentary and Video Clips Social media videos 1,000/month

4.6.3.4 Sales Promotions

Sales Promotion Activity Tactic Cost ($)

Temporary Promotions Free product samples 1,000/month
Coupons Discount vouchers 500/month
Rebates Cashback offers 1,000/month
Grand Openings Event costs 3,000/event

4.6.3.5 E-communication

E-communication Activity Tactic Cost ($)

Facebook Social media ads 1,000/month
Website SEO and content marketing 2,000/month
Email Campaigns Regular newsletters 500/month

By addressing these areas comprehensively, the dairy farming business can strategically
position itself in the market, effectively compete with existing players, and achieve
sustainable growth.

4o